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Home My WebLink AboutO 038 e e Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. o 0:3 <tj Order File Identifier Organizing (done) o Two-sided 11111111I1111111111 o Rescan Needed 1111111111111111111 R]5CAN vzf Color Items: o Greyscale Items: DIGITAL DATA OVERSIZED (Scannable) D Maps: o Other Items Scannable by a Large Scanner o Diskettes, No. D Other, No/Type: D Poor Quality Originals: OVERSIZED (Non-Scannable) o Other: o Logs of various kinds: NOTES: D Other:: Dale L/- II c¡ /OC> I I Date LI/tc¡ /D0 /s/ t\1P 1111111111111111111 mE ~6 BY: ...~ Project Proofing BY: ~ /s/ Scanning Preparation BY: Date: /111111111 1III111I1 = + = TOTAL PAGES (Count does not include cover sheet) /s/ Production Scanning Stage 1 Page Count from Scanned File: '3" b (Count does include cover sheet) Page Count Matches Number in scan¡ng prraration: V YES ~ Date: If ICf/o(ç If NO in stage 1, page(s) discrepancies were found: YES NO BY: /s/ V\J1f Stage 1 BY: NO Maria Date: /s/ 1111111111111111111 Scanning is complete at this point unless rescanning is required. ReScanned 11111111111 11111111 BY: Maria Date: /5/ Comments about this file: Quality Checked III IItllllll 1111111 10/6/2005 Orders File Cover Page. doc e I. 2. 3. 4. 5. 6. 7. 8. 9. 10. II. 12. 13. 14. 15. 16. 17. 18. 19. January, 2004 February 20, 2004 March 29,2005 March 31, 2005 April 13, 2005 April 14, 2005 May 24, 2005 May 27,2005 June 2, 2005 June 9, 2005 July 18, 2005 August 5, 2005 August 24, 2005 September 8, 2005 --------------------- December 15,2005 ------------------ February 21,2006 June 1, 2006 e Index Other Order 38 Lone Creek Gas Field Lone Creek Custody Facility Report of Produced Gas Disposition E-mail Royalty Value for Lone Creek Field Ltr to Aurora: Potential Waste Determination Aurora request for informal review AOGCC Ltr setting informal review AOGCC Ltr resetting informal review Lt from Aurora to AOGCC Sign in Sheet Response from AOGCC to 5/27/05 Aurora e-mail Aurora response to 6/2/05 informal review Ltr from AOGCC to Aurora Ltr from Emerald to AOGCC re: system Baseline for Fire AOGCC Proposed Decision and Order Various E-mails Aurora Gas payment of fine Marathon request for an errata to Other 38 Other Order 38 Errata Decision 6/14/06 . . STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: Aurora Gas LLC, as Operator of the ) Lone Creek Gas Field; ) Waste Determination ) Other Order 38 January 20, 2006 DECISION AND ORDER On March 31, 2005 the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to Aurora Gas, LLC ("Aurora") informing it that the Commission proposed making a waste determination and requiring payment of a penalty as a result of gas consumed during the January 22, 2004 Lone Creek compression facility fire. The Commission proposed civil penalties under AS 31.05.150(e) in the total amount of $1,621.11 for the wasted gas. Aurora requested informal review under 20 AAC 25.535(d). A May 27, 2005 letter provided discussion points and supporting information for a June 2, 2005 informal meeting. Aurora provided the Commission with additional information dated August 5 and September 8, 2005 addressing the information orally presented during the informal meeting, including an incident report and details about safety system upgrades that have been completed in the Lone Creek gas production handling facility. \. Proposed Decision and Order was sent to Aurora on December 15, 2005. Aurora did not request a hearing. A. Background The gas compression facility at Lone Creek experienced a fire on January 22, 2004 resulting in the uncontrolled release of gas from fuel gas system components that were melted by the fire. Aurora states in its May 27, 2005 letter "the volume of gas lost was estimated at a Decision and Order 38 Page 2 of5 . . January 20, 2006 'maximum of 650 Mcf but the actual amount is unknown." Investigations by Aurora and its insurance provider have been unable to determine a cause for the fire. Two unopened drums of lube oil stored inside the compressor building ruptured and fed a pool fire inside the building that appear to be a contributing factor in the event. Aurora's investigation also notes that the reason for compressor shutdown remains unknown since the control panel was destroyed. A no flow condition at the Lone Creek #1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel to respond. Emergency shutdown was likely caused by either gas detection or high temperature in the compressor building. B. Waste Alaska Statute 31.05.170, paragraph (14)(H) defines waste as "the release, burning or escape into the open air of gas, from a well producing oil or gas, except insofar as and to the extent authorized by the commission." Gas disposition regulations (20 AAC 25.235(d)) establish what constitutes Commission-authorized flaring and venting (i.e., releases that are not subject to a determination of waste). Authorized flaring or venting is generally grouped into safety, lease use, and conservation categories. Gas released because of equipment failure related to a fire in a compression facility does not meet the criteria set forth in AOGCC regulations as authorized flaring. It is clear that the gas released and subsequently consumed during the January 2004 Lone Creek fire meets the statutory definition of waste. C. The Penalty Amount The prevailing value of gas produced at Lone Creek during January 2004, according to the Alaska Department of Revenue was $2.494 per Mcf. Based on this figure, the fair market value of the released gas was calculated to be $1,621.11 (650 Mcf gas), and thus the proposed civil penalty amount. During the June 2, 2005 informal meeting, Aurora requested the . . January 20, 2006 Decision and Order 38 Page 3 of 5 Commission reconsider the proposed civil penalty. Aurora's request was based on its response to the incident, which included prompt investigation, and repairs and upgrades to the affected Lone Creek gas production and processing facility equipment. Included are the following safety system enhancements: a. Fuel gas shutdown valves that provide protection from continuously feeding a fire; these are fail-closed valves; b. Shutdown valve on the compressor inlet; this is a fail-closed valve; c. Automated blow down of the compressor skid; d. Automated ventilation system that is activated on gas detection in the compressor building; e. Fire detection loop with heat sensitive fusible links that will initiate an emergency shutdown signal, resulting in the simultaneous operation of items a. through d. (compressor shut down, wellhead surface safety valve closure, compressor inlet valve closure, compressor skid process piping blow down, and closure of fuel gas valves). Aurora reported the cost of completed upgrades to be approximately $5,000. Aurora further noted in the informal meeting and in written correspondence dated May 27, August 5, and September 8, 2005 that all subsequent compressor skids placed in service by Aurora will be configured similar to the replacement compressor skid at Lone Creek. Decision and Order 38 Page 4 of5 . . January 20, 2006 FINDINGS AND CONCLUSIONS 1. Aurora's uncontrolled release of 650 Mcf of gas on January 22, 2004 constituted waste. 2. No information has been provided by Aurora that warrants a change in the reported volume of gas lost during the fire. 3. For purposes of AS 31.05.150(e), the fair market value ofthe wasted gas was $1,621.11. 4. Under AS 31.05.150(e), Aurora IS liable to pay to the Commission a penalty of $1,621.11. 5. The overall cost of safety system repaIrs and upgrades within the Lone Creek gas compressIOn facility, as described in Aurora's August 5 and September 8, 2005 submittals are realistic. After careful consideration of all relevant facts and the arguments presented by Aurora at the June 2, 2005 informal review conference and in its associated written submissions, the Commission cannot conclude that the waste of gas in this case was caused by Aurora's negligence or failure to follow good oil field engineering practices. Furthermore, the Commission is persuaded that Aurora's actions after the event were responsive and timely, addressing the root problem exposed by the Lone Creek fire. In addition, improvements to the safety systems associated with gas compression facilities are of equivalent or greater value compared to the proposed penalty, particularly in preventing waste and improving personnel safety. It is appropriate to exercise the Commission's discretion not to assess a civil penalty in this case, subject to Aurora's election as set out in the below order. Decision and Order 38 Page 5 of 5 . . January 20, 2006 NOW THEREFORE IT IS ORDERED: 1. Except as provided under paragraph 2 of this order, Aurora shall pay to the Commission a civil penalty of $1,621.11 no later than 30 days after the date this Decision and Order becomes final. 2. In lieu of paying the civil penalty under paragraph 1 of this order, Aurora may prepare and distribute to all Alaska operators and the Alaska Oil and Gas Association a safety alert outlining safety system improvements for gas production and processing facilities. If Aurora chooses this alternative, it shall provide the Commission, no later than 30 days after the date this Decision and Order becomes final, a draft safety alert for the Commission's review and approval before distribution. 3. This Decision and Order becomes final on the 11 th day after the date of its issuance shown below, unless within 10 days after the date of issuance Aurora files a written request for a hearing under 20 AAC 25.535(d). If Aurora timely files a written request for a hearing this Decision and Order will be of no effect. DONE at Anchorage, Alaska and dated January 20, 2006. ~ Commissioner . Decision and Order 38 Page 5 of 5 . January 20, 2006 NOW THEREFORE IT IS ORDERED: 1. Except as provided under paragraph 2 of this order, Aurora shall pay to the Commission a civil penalty of $1,621.11 no later than 30 days after the date this Decision and Order becomes final. 2. In lieu of paying the civil penalty under paragraph 1 of this order, Aurora may prepare and distribute to all Alaska operators and the Alaska Oil and Gas Association a safety alert outlining safety system improvements for gas production and processing facilities. If Aurora chooses this alternative, it shall provide the Commission, no later than 30 days after the date this Decision and Order becomes final, a draft safety alert for the Commission's review and approval before distribution. 3. This Decision and Order becomes final on the 11th day after the date of its issuance shown below, unless within 10 days after the date of issuance Aurora files a written request for a hearing under 20 AAC 25.535(d). If Aurora timely files a written request for a hearing this Decision and Order will be of no effect. DONE at Anchorage, Alaska and dated January 20, 2006. ~ Commissioner ._-,~---,->---"-""'< ~..'---.._----_.,~------....~,_..._.....,..,>...",-... ,.... "..~...,._...,_._........_.~---,...-~,....,","', __....__!o....'~....~,.........._._ ,_... UNITED STATES POSTAL SERVICE First-Class Mail Postage & Fees Paid USPS Permit No. G-10 '~e1r: Please print your name, address, and ZIP+4 in this box · ~ ~~ f)Ô0{!ê-- '., ~ ~ i 17:) j(/ 7/Ä-4y¿ #/ØtJ ~ ~ r17lc¿/lLq!7~{) I :J r :It o w > - W Ü ii, I, ,/1/,111 ¡ I, t III /II Ill! Iii /1/'/" ,i/,/'/II" iIl/lii, /1/11/ .J] t:[ r:::J I"'- m U1 I"'- U1 M r:::J r:::J r:::J r:::J .J] M M U.S. Postal ServiceTM CERTIFIED MAllrM RECEIPT 1Domð"diic Mall Only; No Insurance Coverage ProvIded) U1 r:::J r:::J I"'- u S Postage $ 0.63 Certified Fee Return Receipt Fee 1.B5 (Endorsement Required) Restricted Delivery Fee (Endorsement Required) Total Postage & Fees $ 4.BB PS Form 3800, June 2002 See Reverse for Instructions .. Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. . Print your name and address on the reverse so that we can return the card to you. . Attach this card to the back of the mail piece, or on the front if space permits. C. Date of Delivery 1. Article Addressed to: ç¿ :7õñ f??X41l H¿¡/¿;/cZ e~~~ n'-',T"" WOO tv' KC7I?¿O/Z (;) II ..' !~:::l~rtified Mail 0 Express Mail I /;~/J ~:/ íh £/5 .¿::' ^/ g ~:~~~r~~iI ~~~~ Receipt for Merchandise ~/ )~. /0 L1/ '/V....:;· 4. Restricted Delivery? (Extra Fee) 0 Yes DYes o No 2. Article Number (Transfer from servic PS Form 3811, August 2001 7005 1160 0001 5753 7086 Domestic Return Receipt 102595·02·M·0835 e e STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Decision and Order No. 38 Re: Aurora Gas LLC, as Operator ofthe ) Lone Creek Gas Field; ) Waste Determination ) June 14, 2006 ERRATA NOTICE TO DECISION AND ORDER NO. 38 Marathon Oil Company ("Marathon"), by letter dated June 1, 2006 requested the Commission clarify the role of the Kenai Gas Field monitoring station in the discovery of a no flow condition from the Lone Creek Gas Field resulting from a compression facility fire. Clarification is noted below and a corrected version of Order No. 38 is attached. Sentence 6 of Section A ("Background") is replaced with the following footnote: ¡Decision and Order No. 38 originally issued January 20, 2006 included the following statement: "A no flow condition at the Lone Creek #1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel . to respond." A letter dated June 1,2006 from A.B. Schoffmann (Marathon) requested the Commission acknowledge that Marathon was not responsible for monitoring Aurora's field production. In response to Marathon's request, the Commission hereby acknowledges that as part of routine pipeline dispatch practice, Marathon questioned Aurora about the loss of flow into the Marathon-operated Beluga Pipeline on January 22, 2004. Marathon did this in an effort to understand why gas delivery to the Beluga Pipeline from the Lone Creek facility was less than the flow nominated for delivery, but Marathon was not responsible for monitoring Lone k field production. . DONE at Anchorage, Alaska and date athy P. oerster, Commissioner Alaska Oil and Gas Conservation Commission e e STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: Aurora Gas LLC, as Operator of the ) Lone Creek Gas Field; ) Waste Determination ) ) ) Other Order 38 January 20, 2006 Corrected June 14,2006 REVISED DECISION AND ORDER On March 31, 2005 the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to Aurora Gas, LLC ("Aurora") informing it that the Commission proposed making a waste determination and requiring payment of a penalty as a result of gas consumed during the January 22, 2004 Lone Creek compression facility fire. The Commission proposed civil penalties under AS 31.05.150(e) in the total amount of$1,621.11 for the wasted gas. Aurora requested informal review under 20 AAC 25.535(d). A May 27, 2005 letter provided discussion points and supporting information for a June 2, 2005 informal meeting. Aurora provided the Commission with additional information dated August 5 and September 8, 2005 addressing the information orally presented during the informal meeting, including an incident report and details about safety system upgrades that have been completed in the Lone Creek gas production handling facility. A Proposed Decision and Order was sent to Aurora on December 15, 2005. Aurora did not request a hearing. A. Background The gas compression facility at Lone Creek experienced a fire on January 22, 2004 resulting in the uncontrolled release of gas from fuel gas system components that were melted by the fire. Aurora states in its May 27, 2005 letter "the volume of gas lost was estimated at a 'maximum of 650 McP but the actual amount is UnknOWfl." Investigations by Aurora and its insurance provider have been unable to determine a cause for the fire. Two unopened drums of lube oil stored inside the compressor building ruptured and fed a pool fire inside the building that appear to be a contributing factor in the event. Aurora's investigation also notes that the reason for compressor shutdown remains unknOWfl since the control panel was destroyed. 1 Emergency shutdoWfl was likely caused by either gas detection or high temperature in the compressor building. 1 Decision and Order No. 38 originally issued January 20,2006 included the following statement: "A no flow condition at the Lone Creek #1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel to respond." A letter dated June 1,2006 from A.B. Schoffrnann (Marathon) requested the Commission acknowledge that Marathon was not responsible for monitoring Aurora's field production. In response to Marathon's request, the Commission hereby acknowledges that as part of routine pipeline dispatch practice, Marathon questioned Aurora about the loss of flow into the Marathon-operated Beluga Pipeline on January 22, 2004. Marathon did this in an effort to understand why gas delivery to the Beluga Pipeline from the Lone Creek facility was less than the flow nominated for delivery, but Marathon was not responsible for monitoring Lone Creek field production. Decision and Order 38 Page 2 of3 e e June 14,2006 B. Waste Alaska Statute 31.05.170, paragraph (14)(H) defines waste as "the release, burning or escape into the open air of gas, from a well producing oil or gas, except insofar as and to the extent authorized by the commission." Gas disposition regulations (20 AAC 25.235(d)) establish what constitutes Commission-authorized flaring and venting (i.e., releases that are not subject to a determination of waste). Authorized flaring or venting is generally grouped into safety, lease use, and conservation categories. Gas released because of equipment failure related to a fire in a compression facility does not meet the criteria set forth in AOGCC regulations as authorized flaring. It is clear that the gas released and subsequently consumed during the January 2004 Lone Creek fire meets the statutory definition of waste. C. The Penalty Amount The prevailing value of gas produced at Lone Creek during January 2004, according to the Alaska Department of Revenue was $2.494 per Mcf. Based on this figure, the fair market value of the released gas was calculated to be $1,621.11 (650 Mcf gas), and thus the proposed civil penalty amount. During the June 2, 2005 informal meeting, Aurora requested the Commission reconsider the proposed civil penalty. Aurora's request was based on its response to the incident, which included prompt investigation, and repairs and upgrades to the affected Lone Creek gas production and processing facility equipment. Included are the following safety system enhancements: a. Fuel gas shutdown valves that provide protection from continuously feeding a fire; these are fail-closed valves; b. ShutdoWfl valve on the compressor inlet; this is a fail-closed valve; c. Automated blow dOWfl of the compressor skid; d. Automated ventilation system that is activated on gas detection in the compressor building; e. Fire detection loop with heat sensitive fusible links that will initiate an emergency shutdoWfl signal, resulting in the simultaneous operation of items a. through d. (compressor shut dOWfl, wellhead surface safety valve closure, compressor inlet valve closure, compressor skid process piping blow dOWfl, and closure of fuel gas valves). Aurora reported the cost of completed upgrades to be approximately $5,000. Aurora further noted in the informal meeting and in written correspondence dated May 27, August 5, and September 8, 2005 that all subsequent compressor skids placed in service by Aurora will be configured similar to the replacement compressor skid at Lone Creek. FINDINGS AND CONCLUSIONS 1. Aurora's uncontrolled release of 650 Mcf of gas on January 22, 2004 constituted waste. 2. No information has been provided by Aurora that warrants a change in the reported volume of gas lost during the fire. 3. For purposes of AS 31.05.150(e), the fair market value of the wasted gas was $1,621.11. Decision and Order 38 Page 3 of3 e e June 14, 2006 4. Under AS 31.05.150(e), Aurora IS liable to pay to the Commission a penalty of $1,621.11. 5. The overall cost of safety system repairs and upgrades within the Lone Creek gas compression facility, as described in Aurora's August 5 and September 8, 2005 submittals are realistic. After careful consideration of all relevant facts and the arguments presented by Aurora at the June 2, 2005 informal review conference and in its associated written submissions, the Commission cannot conclude that the waste of gas in this case was caused by Aurora's negligence or failure to follow good oil field engineering practices. Furthermore, the Commission is persuaded that Aurora's actions after the event were responsive and timely, addressing the root problem exposed by the Lone Creek fire. In addition, improvements to the safety systems associated with gas compression facilities are of equivalent or greater value compared to the proposed penalty, particularly in preventing waste and improving personnel safety. It is appropriate to exercise the Commission's discretion not to assess a civil penalty in this case, subject to Aurora's election as set out in the below order. NOW THEREFORE IT IS ORDERED: 1. Except as provided under paragraph 2 of this order, Aurora shall pay to the Commission a civil penalty of $1,621.11 no later than 30 days after the date this Decision and Order becomes final. 2. In lieu of paying the civil penalty under paragraph 1 of this order, Aurora may prepare and distribute to all Alaska operators and the Alaska Oil and Gas Association a safety alert outlining safety system improvements for gas production and processing facilities. If Aurora chooses this alternative, it shall provide the Commission, no later than 30 days after the date this Decision and Order becomes final, a draft safety alert for the Commission's review and approval before distribution. 3. This Decision and Order becomes final on the 11th day after the date of its issuance ShOWfl below, unless within 10 days after the date of issuance Aurora files a written request for a hearing under 20 AAC 25.535(d). If Aurora timely files a written request for a hearing this Decision and Order will be of no ffect. DONE at Anchorage, Alaska and dated June 1 Daniel T. Seamount, Commissioner Alaska Oil and Gas Conservation Commission a Cathy P. R erster, Commissioner Alaska Oil and Gas Conservation Commission e Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise,ID 83702 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Ciri Land Department PO Box 93330 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 North Slope Borough PO Box 69 Barrow, AK 99723 David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 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 Schlumberger Drilling and Measurements 2525 Gambell Street #400 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 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 e Mona Dickens Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 Baker Oil Tools 4730 Business Park Blvd., #44 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 \~h l\~~ \ IOU \"\ u\ \V Revised Decision Other 38 Lone Creek Gas Field e e Subject: Revised Decision Other 38 Lone Creek Gas Field From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Thu, 15 Jun 2006 14:00:53 -0800 lof2 6/15/20062:01 PM Revised Decision Other 38 Lone Creek Gas Field e e GAubert s>, Stephen a Gamble 2of2 6/15/20062:01 PM #19 e Alaska .et Team Marathon Oil Company P.O. Box 196168 Anchorage, AK 99519-6168 Telephone 907/561-5311 Fax 907/565-3076 June 1, 2006 Mr. Jim Regg Alaska Oil and Gas Conservation Commission 333 West ih Ave, Suite 100 Anchorage, AK 99501 RE: Other Order 38, January 20,2006 Aurora Gas LLC, as Operator of the Lone Creek Gas Field Waste Determination Dear Jim, As we discussed on the phone on May 31, I wanted to address a statement in Section A (Background) of the referenced order relative to Marathon's Kenai Gas Field. The order contained the following statement: "A no flow condition at the Lone Creek # 1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel to respond. " I have discussed the statement with Ed Jones, Executive Vice President Engineering- Operations, of Aurora Gas LLC, who has confirmed my understanding, which is that the Kenai Gas Field is not "Aurora's monitoring station." Aurora maintains their own operators and monitoring. This is independent of any monitoring that Marathon may do of its own gas pipeline infrastructure and its own production operations. Marathon is not responsible to Aurora for monitoring Aurora's field production, nor does it provide monitoring services for any other Cook Inlet producer operations. Relative to the specific incident covered by Other Order 38, Marathon pipeline operators did note a loss of flow from SCADA monitoring at Aurora's Lone Creek input to the Marathon-operated Beluga Pipeline on the date of the incident. Marathon personnel placed a call to Aurora personnel only to attempt to understand why Aurora's facilities were not providing the flow nominated for delivery into the pipeline, how long the interruption may last, and the impact on potential deliveries out of the pipeline for Aurora's customers. This is a normal pipeline dispatch practice, and is not a substitute for producers monitoring their own operations, which must consider more than just flow/no flow situations. e e Marathon requests that AOGCC acknowledge that Marathon is in no way responsible for monitoring of Aurora's (or any other 3rd party operators') production via its facilities the Kenai Gas Field. I appreciate your understanding in this matter and await your guidance on any other information you may require to clarify this situation. Regards, ~,Sc~. A. B. Schoffmann Operations Manager Cc: Ed Jones, Aurora Gas LLC - Houston, TX J. A. Barnes - Marathon Oil Co. CEF - AOGCC Correspondence Attachment - AOGCC Other Order 38 e e STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: Aurora Gas LLC, as Operator of the ) Lone Creek Gas Field; ) Waste Determination ) Other Order 38 January 20, 2006 DECISION AND ORDER On March 31, 2005 the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to Aurora Gas, LLC ("Aurora") informing it that the Commission proposed making a waste determination and requiring payment of a penalty as a result of gas consumed during the January 22, 2004 Lone Creek compression facility fire. The Commission proposed civil penalties under AS 31.05.150(e) in the total amount of $1,621.11 for the wasted gas. Aurora requested informal review under 20 AAC 25.535(d). A May 27, 2005 letter provided discussion points and supporting information for a June 2, 2005 informal meeting. Aurora provided the Commission with additional information dated August 5 and September 8, 2005 addressing the information orally presented during the informal meeting, including an incident report and details about safety system upgrades that have been completed in the Lone Creek gas production handling facility. A Proposed Decision and Order was sent to Aurora on December 15, 2005. Aurora did not request a hearing. A. Background The gas compression facility at Lone Creek experienced a fire on January 22, 2004 resulting in the uncontrolled release of gas from fuel gas system components that were melted by the fire. Aurora states in its May 27, 2005 letter "the volume of gas lost was estimated at a 'maximum of 650 Mcf' but the actual amount is unknown." Investigations by Aurora and its e e Decision and Order 38 Page 2 of 5 January 20, 2006 insurance provider have been unable to determine a cause for the fire. Two unopened drums of lube oil stored inside the compressor building ruptured and fed a pool fire inside the building that appear to be a contributing factor in the event. Aurora's investigation also notes that the reason for compressor shutdown remains unknown since the control panel was destroyed. A no flow condition at the Lone Creek #1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel to respond. Emergency shutdown was likely caused by either gas detection or high temperature in the compressor building. B. Waste Alaska Statute 31.05.170, paragraph (14)(H) defines waste as "the release, burning or escape into the open air of gas, from a well producing oil or gas, except insofar as and to the extent authorized by the commission." Gas disposition regulations (20 AAC 25.235(d)) establish what constitutes Commission-authorized flaring and venting (i.e., releases that are not subject to a determination of waste). Authorized flaring or venting is generally grouped into safety, lease use, and conservation categories. Gas released because of equipment failure related to a fire in a compression facility does not meet the criteria set forth in AOGCC regulations as authorized flaring. It is clear that the gas released and subsequently consumed during the January 2004 Lone Creek fire meets the statutory definition of waste. C. The Penalty Amount The prevailing value of gas produced at Lone Creek during January 2004, according to the Alaska Department of Revenue was $2.494 per Mcf. Based on this figure, the fair market value of the released gas was calculated to be $1,621.11 (650 Mcf gas), and thus the proposed civil penalty amount. During the June 2, 2005 informal meeting, Aurora requested the Commission reconsider the proposed civil penalty. Aurora's request was based on its response to the incident, which included prompt investigation, and repairs and upgrades to the affected e e Decision and Order 38 Page 3 of5 January 20, 2006 Lone Creek gas production and processing facility equipment. Included are the following safety system enhancements: a. Fuel gas shutdown valves that provide protection rrom continuously feeding a fire; these are fail-closed valves; b. Shutdown valve on the compressor inlet; this is a fail-closed valve; c. Automated blow down of the compressor skid; d. Automated ventilation system that is activated on gas detection in the compressor building; e. Fire detection loop with heat sensitive fusible links that will initiate an emergency shutdown signal, resulting in the simultaneous operation of items a. through d. (compressor shut down, wellhead surface safety valve closure, compressor inlet valve closure, compressor skid process piping blow down, and closure of fuel gas valves). Aurora reported the cost of completed upgrades to be approximately $5,000. Aurora further noted in the informal meeting and in written correspondence dated May 27, August 5, and September 8, 2005 that all subsequent compressor skids placed in service by Aurora will be configured similar to the replacement compressor skid at Lone Creek. e e Decision and Order 38 Page 4 of5 January 20, 2006 FINDINGS AND CONCLUSIONS 1. Aurora's uncontrolled release of 650 Mcf of gas on January 22,2004 constituted waste. 2. No information has been provided by Aurora that warrants a change in the reported volume of gas lost during the fire. 3. For purposes of AS 31.05.150(e), the fair market value of the wasted gas was $1,621.11. 4. Under AS 31.05 .150( e), Aurora IS liable to pay to the Commission a penalty of $1,621.11. 5. The overall cost of safety system repaIrS and upgrades within the Lone Creek gas compressIOn facility, as described in Aurora's August 5 and September 8, 2005 submittals are realistic. After careful consideration of all relevant facts and the arguments presented by Aurora at the June 2, 2005 informal review conference and in its associated written submissions, the Commission cannot conclude that the waste of gas in this case was caused by Aurora's negligence or failure to follow good oil field engineering practices. Furthermore, the Commission is persuaded that Aurora's actions after the event were responsive and timely, addressing the root problem exposed by the Lone Creek fire. In addition, improvements to the safety systems associated with gas compression facilities are of equivalent or greater value compared to the proposed penalty, particularly in preventing waste and improving personnel safety. It is appropriate to exercise the Commission's discretion not to assess a civil penalty in this case, subject to Aurora's election as set out in the below order. e e Decision and Order 38 Page 5 of5 January 20, 2006 NOW THEREFORE IT IS ORDERED: 1. Except as provided under paragraph 2 of this order, Aurora shall pay to the Commission a civil penalty of $1,621.11 no later than 30 days after the date this Decision and Order becomes final. 2. In lieu of paying the civil penalty under paragraph 1 of this order, Aurora may prepare and distribute to all Alaska operators and the Alaska Oil and Gas Association a safety alert outlining safety system improvements for gas production and processing facilities. If Aurora chooses this alternative, it shall provide the Commission, no later than 30 days after the date this Decision and Order becomes final, a draft safety alert for the Commission's review and approval before distribution. 3. This Decision and Order becomes final on the 11th day after the date of its issuance shown below, unless within 10 days after the date of issuance Aurora files a written request for a hearing under 20 AAC 25.535(d). If Aurora timely files a written request for a hearing this Decision and Order will be of no effect. DONE at Anchorage, Alaska and dated January 20, 2006. Daniel T. Seamount, Jr. Commissioner Cathy P. Foerster Commissioner #18 · . ~/~JAuro'a Gas, I.I.C February 21,2006 RECEIVED f"EB 2 3 2006 Alaska Oil & Gas Cons. Commission Anchorage Mr. John K. Norman Chairman Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 ~chorage,AJ( 99501-3539 RE: Lone Creek Gas Field; Waste Determination Other Order 38, January 20, 2006 Dear Mr. Norman: Regarding this Decision and Order, while Aurora appreciates the option given us to prepare and distribute to all Alaska operators a safety alert regarding this incident, we have been unable to do so internally in the time since this order issued. Aurora, being a very small company, has very limited internal resources to do such work, and hiring a third party consultant would cost far more than the paying the penalty. Furthermore, I believe that most operators in Alaska generally have more elaborate designs of control and fire/gas detection/suppression systems and that the lessons learned from this incident would not be applicable to their systems. Enclosed is a check for $1621.11 as payment of the civil penalty as per this Order. Thank you for your consideration. cc: Scott Pfoff Chad Helgeson, Emerald Consulting 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799 . Fax (713) 977-1347 1400 West Benson Blvd., Suite 410 . Anchorage, Alaska 99503 . (907) 277-1003 . Fax (907) 1006 . . ._~~.._--_.~- - --".---."~-.'.' -_.-'~'-"--' -".-.,. ~-~_.-..,~_.__....,,-,--.'--~~---~~._~-~----~_..~..._..~._,..._.~..~.~-^--~---~._---._" ..-- PAY TO THE ORDER OF iAurora Gas, LLC 10333 RICHMOND AVE., #710 . HOUSTON, TX 77042 BANK OF TEXAS N.A. BELLAIRE, TEXAS 77401-3951 32-1432-1110 2/21/2006 Alaska Oil & Gas Conservation Commission $ **1,621.11 One Thousand Six Hundred Twenty-One "and 11 /1 00******************************************************************** MEMO Alaska Oil & Gas Conservation Commission 333 West 7th Ave., Suite 100 Anchorage, AK 99501 Other Order 38 11100 7 b 0 31 III I: it it it 0 it L. 31 2 5 I: 7603 fð DOLLARS -g " o ü .s ø · ~ · IL >- o u · OJ M' #17 Re: Other 38 - Lone Creek Enforcement . . Subject: Re: Other 38 - Lone Creek Enforcement From: Jody Colombie <jody _ colombie@admin.state.ak.us> Date: Tue, 21 Feb 2006 12:50:21 -0900 To: Ca Foerster <cath foerste <dan ount@adm' Regg _regg@admi I spoke with Mr. Ed Jones in Houston and he indicated that Aurora was aware that either their safety alert was due or fine today. He at first indicated they Aurora was indecisive as to which way they were going to go. But upon my light pressing he indicated that they would be paying the fine. Jody Cathy Foerster wrote: Jody - Why don't you call them and remind them that today is their deadline and that you don't want them to be in violation? Cathy James Regg wrote: Final Decision and Order #38 - Lone Creek Gas Field Waste Determination Aurora was given 30 days from the date the Decision became final (Jan 20) to provide either payment of a civil penalty ($1621.11; value of the gas wasted), or a draft safety alert outlining safety improvements for gas production and processing facilities. Day 30 was Sunday, February 19. These options were first identified in the proposed Decision and Order dated December 15. Have we received anything or heard from Aurora? If not, how do we handle this failure to respond in the context of the two options provided to Aurora? Jim 1 of 1 2/21/2006 12:55 PM . . Subject: Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOOl From: "Theveny, Daniel C." <DTheveny@cozen.com> Date: Wed, 22 Jun 2005 10:29:21 -0500 To: "Chad Helgeson" <chelgeson@emeraldalaska.com> CC: "Ed Jones" <jejones@aurorapower.com>, "Gerard F. Schaefer, P.E." <schaefer@mde.com>, <cynthia.franklin@stpaul.com>, <W ade.blanks@stpaultravelers.com>, "Gaitano, Terri" <tgaitano@cozen.com>, "Callison, Catherine M." <CCallison@cozen.com> -----Original Message----- From: Chad Helgeson [mailto:chelgeson@emeraldalaska.com] .M... repc~ ~O u,)tA'J \ýf\. ýS~(( ~ ~S>f,~r I did not request a written report from Mr. Schaefer of MDE Engineers, and I have recommended closure of the subrogation file in this matter. Therefore, I do not know if St. Paul Travelers wants to incur the expense necessary for preparation of a written report. Sent: Wednesday, June 22, 2005 8:19 AM To: Gerard F. Schaefer, P.E.; cynthia.franklin@stpaul.com Cc: Theveny, Daniel C.; Ed Jones Subject: Lone Creek Compressor Fire Investigation Report Gerry/Cynthia, The State of Alaska has asked Aurora Gas to provide them with the insurance companies Final Investigation Report on the fire that occurred in the Lone Creek Compressor Building in January 2004. Can you please provide a copy of the Lone Creek Final Investigation Report to Aurora Gas as soon as possible. If you have any questions, please feel free to contact me at 907-258-8137 or Ed Jones at 713-977-5799. Thanks Chad Helgeson Project Manager 907-258-8137 ****************************************** Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient(s) . If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The of 2 8/5/2005 1 :21 PM . . ,. unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other than the intended recipient(s) is not a waiver of any attorney/client or other privilege. Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOO1.eml Letter to AOGCC 080405 LC Fire.doc ¡CH Incident report 8-3-05.pdf · Incident Report.doc of2 8/5/2005 1 :21 PM #16 UNITED STATES POSTAL SERVICE I Ii ¡ First-Class Mail Postage & Fees Paid USPS Permit No. G-10 · Sender: Please print your name, address, and ZIP+4 in l1is box · C/O "'" 0) ~ 20 :ÞC) :::2 Ø) :g. Ci't '0 n ;;; g ~ ~ C"') ~. Ci't lit õ' ::I o fT1 n ¡..-a t.r) AOGCC 333 W 7th Ave, Ste 100 ·Anchorage, AK 99501 r'" ~ ~ Ul 11,1" j ,I," I j ,II "",/ " IlL, L ,,! ¡: ¡: :i " ~ d t 1,1, / ",/,11 SENðEFf: cÖiiÞud'i tHIS SECT/Óf,¡'v" ' , " · Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. · Print your name and address on the reverse so that we can return the card to you. · Attach this card to the back of the mail piece, or on the front if space permits. 1. Article Addressed to: &/ØlJrd Jo/?¿? d«/ó/â- {]195 /L/M ø.ffir;:;¿íþfij¡J /£)rr;0/JL Cflft/3 2. Article Number (Transfer from service , I PS Form 3811, þ",.u, DYes DNa . Type Certified Mail Ç,: ~ ~~ss Mail Registered ~n Receipt for Merchan!.f o Insured Mail 0 C.O.D. 4. Restricted Delivery? (Extra Fee) 0 Yes 7005 1160 0001 5753 7147 102595-02·M-0835 I f'- .:::r ,...::¡ f'- T 1..11 f'- 1..11 ,...::¡ CJ Certified Fee CJ CJ Retum Receipt Fee (Endorsement Required) CJ Restricted Delivery Fee ..D (Endorsement Requ'red) ,...::¡ ,...::¡ Total Postage & Fees $ LI1 CJ CJ f'- ~ÚT ID~' 'Ò5~5' " \\' ..-" Î h"" ',r.. \'.J. ~í-';' ~ostmark. ,.'. 1. 75.:í- Here /' - .\. / ", Clerk.:..J<G$3HH.' , -',_ /..I,':," 4.65 12/15/05 e e STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 Re: Aurora Gas LLC, as Operator of the ) Lone Creek Gas Field; ) Waste Determination ) Other Order 38 December 15, 2005 PROPOSED DECISION AND ORDER On March 31, 2005 the Alaska Oil and Gas Conservation Commission ("Commission") issued written notice to Aurora Gas, LLC ("Aurora") informing it that the Commission proposed making a waste determination and requiring payment of a penalty as a result of gas consumed during the January 22, 2004 Lone Creek compression facility fire. The Commission proposed civil penalties under AS 31.05 .150( e) in the total amount of $1 ,621.11 for the wasted gas. Aurora requested informal review under 20 AAC 25.535(d). A May 27, 2005 letter provided discussion points and supporting information for a June 2, 2005 informal meeting. Aurora provided the Commission with additional information dated August 5 and September 8, 2005 addressing the information orally presented during the informal meeting, including an incident report and details about safety system upgrades that have been completed in the Lone Creek gas production handling facility. Having now completed its review, the Commission issues this Proposed Decision and Order. A. Background The gas compression facility at Lone Creek experienced a fire on January 22, 2004 resulting in the uncontrolled release of gas from fuel gas system components that were melted by the fire. Aurora states in its May 27, 2005 letter "the volume of gas lost was estimated at a Proposed Decision and Order 3. Page 2 of5 . December 15,2005 'maximum of 650 Mcf but the actual amount is unknown." Investigations by Aurora and its insurance provider have been unable to determine a cause for the fire. Two unopened drums of lube oil stored inside the compressor building ruptured and fed a pool fire inside the building that appear to be a contributing factor in the event. Aurora's investigation also notes that the reason for compressor shutdown remains unknown since the control panel was destroyed. A no flow condition at the Lone Creek #1 facility triggered an alarm received at the facility's monitoring station (Kenai Gas Field), causing Aurora personnel to respond. Emergency shutdown was likely caused by either gas detection or high temperature in the compressor building. B. Waste Alaska Statute 31.05.170, paragraph (14)(H) defines waste as "the release, burning or escape into the open air of gas, from a well producing oil or gas, except insofar as and to the extent authorized by the commission." Gas disposition regulations (20 AAC 25.235(d)) establish what constitutes Commission-authorized flaring and venting (i.e., releases that are not subject to a determination of waste). Authorized flaring or venting is generally grouped into safety, lease use, and conservation categories. Gas released because of equipment failure related to a fire in a compression facility does not meet the criteria set forth in AOGCC regulations as authorized flaring. It is clear that the gas released and subsequently consumed during the January 2004 Lone Creek fire meets the statutory definition of waste. C. The Penalty Amount The prevailing value of gas produced at Lone Creek during January 2004, according to the Alaska Department of Revenue was $2.494 per Mcf. Based on this figure, the fair market value of the released gas was calculated to be $1,620.11 (650 Mcf gas), and thus the proposed civil penalty amount. During the June 2, 2005 informal meeting, Aurora requested the Proposed Decision and Order 3. Page 3 of5 . December 15,2005 Commission reconsider the proposed civil penalty. Aurora's request was based on its response to the incident, which included prompt investigation, and repairs and upgrades to the affected Lone Creek gas production and processing facility equipment. Included are the following safety system enhancements: a. Fuel gas shutdown valves that provide protection from continuously feeding a fire; these are fail-closed valves; b. Shutdown valve on the compressor inlet; this is a fail-closed valve; c. Automated blow down of the compressor skid; d. Automated ventilation system that is activated on gas detection in the compressor building; e. Fire detection loop with heat sensitive fusible links that will initiate an emergency shutdown signal, resulting in the simultaneous operation of items a. through d. (compressor shut down, wellhead surface safety valve closure, compressor inlet valve closure, compressor skid process piping blow down, and closure of fuel gas valves). Aurora reported the cost of completed upgrades to be approximately $5,000. Aurora further noted in the informal meeting and in written correspondence dated May 27, August 5, and September 8, 2005 that all subsequent compressor skids placed in service by Aurora will be configured similar to the replacement compressor skid at Lone Creek. FINDINGS AND CONCLUSIONS 1. Aurora's uncontrolled release of 650 Mcf of gas on January 22, 2004 constituted waste. Proposed Decision and order. Page 4 of5 . December 15,2005 2. No information has been provided by Aurora that warrants a change in the reported volume of gas lost during the fire. 3. For purposes of AS 31.05.150(e), the fair market value of the wasted gas was $1,621.11. 4. Under AS 31.05 .150( e), Aurora IS liable to pay to the Commission a penalty of $1,621.11. 5. The overall cost of safety system repaIrS and upgrades within the Lone Creek gas compressIOn facility, as described in Aurora's August 5 and September 8, 2005 submittals are realistic. After careful consideration of all relevant facts and the arguments presented by Aurora at the June 2, 2005 informal review conference and in its associated written submissions, the Commission cannot conclude that the waste of gas in this case was caused by Aurora's negligence or failure to follow good oil field engineering practices. Furthermore, the Commission is persuaded that Aurora's actions after the event were responsive and timely, addressing the root problem exposed by the Lone Creek fire. In addition, improvements to the safety systems associated with gas compression facilities are of equivalent or greater value compared to the proposed penalty, particularly in preventing waste and improving personnel safety. It is appropriate to exercise the Commission's discretion not to assess a civil penalty in this case, subject to Aurora's election as set out in the below order. NOW THEREFORE IT IS ORDERED: 1. Except as provided under paragraph 2 of this order, Aurora shall pay to the Commission a civil penalty of $1,621.11 no later than 30 days after the date this Decision and Order becomes final. Proposed Decision and Order 3. Page 5 of5 . December 15,2005 2. In lieu of paying the civil penalty under paragraph 2 of this order, Aurora may prepare and distribute to all Alaska operators and the Alaska Oil and Gas Association a safety alert outlining safety system improvements for gas production and processing facilities. If Aurora chooses this alternative, it shall provide the Commission, no later than 30 days after the date this Decision and Order becomes final, a draft safety alert for the Commission's review and approval before distribution. 3. This Decision and Order becomes final on the 11 th day after the date of its issuance shown below, unless within 10 days after the date of issuance Aurora files a written request for a hearing under 20 AAC 25.535(d). If Aurora timely files a written request DONE at Anchorage, Alaska and dated Dece Daniel T. amount, Jr. Commissioner for a hearing this Decision and Order will be of no f;$£!f~ Commissioner #15 Tax Division Programs: Oil and Gas Production Tax Prices fð ¡,..- p, nE:.- www.tax.state.ak.us Wetcome to the Tax DM$ion OnLine ç.... ... .......-- 8m Wid;' ....._RsI ()J;id;r~ ..... .}~"'... . x .' _ " _ '.,' _~_ Alaska Taxes Forms Reports Index License Queries Frequently Asked Questions Revenue Sources Book About the Tax Division Web Survey What's New Archive Employment Opportunities Tax Division> Programs> Oil > Prices> Prevailing Value> Cook Inlet As provided under 15 AAC 55.173(b) for gas delivered in the Cook Inlet area, the Department will publish on the 15th of each calendar quarter, the prevailing value for that quarter. This prevailing value is the weighted average price of significant sales of gas to publicly regulated utilities in Cook Inlet. 1121 .., ..., $I.. .... $121 ..., ..., ..., .... 1121 .l~·i'...~~~~·~~~~~";'~~:I~-'.~~:'.~~~~; Pay State of Alaska axes Online Free -- Pay Federal Taxes Online Free Summary of Published Prevailing Values for Cook Inlet Gas Applicable Applicable Production Published Production Published Period PV Period PV 1994 Q1 $1.396 2000 Q1 $1.360 Q2 $1.487 Q2 $1.505 Q3 $1 .433 Q3 $1.588 Q4 $1.303 Q4 $1.651 1995 Q1 $1.396 2001 Q1 $1.776 Q2 $1.487 Q2 $2.141 r9l ~} .433 ~ J2.~~ Q4 $1.303 Q4 $2.494 1996 Q1 $1.425 2002 Q1 $2.533 Q2 $1.477 Q2 $2.566 Q3 $1.388 Q3 $2.541 Q4 $1.496 Q4 $2.348 1997 Q1 $1.541 2003 Q1 $2.280 Q2 $1.707 Q2 $2.245 Q3 $1.764 Q3 $2.262 Q4 $1.789 Q4 $2.366 1998 Q1 $1.843 31M Q1 $2.494 Q2 $1.813 Q2 $2.830 ~ $1.777 Q~1 $3.035 '-.---.- Q4 $1.713 Q4 .931 1999 Q1 $1.715 2005 Q1 $3.005 Q2 $1 .534 Q2 $3.372 Q3 $1.413 Q3 Q4 $1.378 Q4 Tax Home State of Alaska Revenue Home Contact Us Web Survey 1 of 1 6/8/20055:01 PM #14 Lone Creek Fire and Gas Detection System . . Jim, Attached is a letter from Chad Helgeson wI Emerald Consulting to me, responding to your email of Sept. 7th. Please feel free to contact either of us if you have questions or need more info. As is suggested in the letter, if you need more specifics about the system, perhaps an informal face-to-face meeting with Chad would be appropriate and productive, so your questions can be answered in the detail that you need. Regards, Ed J Ed Jones Vice President Engineering & Operations Aurora Gas, LLC 713-977-5799 (Houston) 907-277-1003 (Anchorage) Content-Type: System Upgrades Letter to AOGCC 9-8-05.pdf Content-Encoding: base64 1 of 1 9/13/2005 8:36 AM . . September 8, 2005 '" / EMERALD //\'" Mr. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Ste. 410 Anchorage, AK 99503 Mr. Jones, This letter has been prepared in response to the AOGCC's request for more information on the fire and gas detection upgrades at your facilities since the Lone Creek Compressor Fire. Aurora Fire and Gas System Upgrades Upon the purchase of the replacement Lone Creek Compressor Skid and all subsequent Compressors, Aurora has had the Skid Manufacturer install a Fire Detection loop and automatic ventilation system for the skid in addition to the gas detector. The fire detection loop is a pneumatic loop with multiple fusible links in the system that will melt when the temperature inside the building reaches 170 degrees Fahrenheit. When a fusible link in the system melts, the gas in the tubing vents dropping the pressure in the fire loop, which sends Emergency Shutdown (ESD) signal to the equipment on the pad. When an ESD is initiated the following events occur simultaneously: the Compressor shuts down, the wellhead surface safety valve closes, the Compressor inlet valve closes, Compressor skid process piping is blown down, and the fuel gas valves close. (Cost for Fire Loop and Controls wiring, Approximately $1,000) The fuel gas shutdown valves were added to the system. to provide the necessary protection ITom continuously feeding a fire and also eliminate/extnguish the other fire sources on the pad, (i.e. Open flames in the Line Heater and Reboiler, Generator, and Unclassified Electrical Equipment). The valves are pneumatically operated fail closed valves that have a solenoid that vents the gas from the diaphragms on the valves thus closing the valves in the event of an ESD. (Cost for 2 shutdown valves, solenoid and wiring, Approximately $2,000) The automated ventilation system is set to automatically ventilate upon gas detection at 20% LEL inside the skid. The ventilation system is designed to be able to remove Page 10f2 . . enough air from inside the skid to control a small gas leak from inside the skid. (Cost for automatic ventilation system was $1,819) Please feel free to contact me if you need additional information on the details of this equipment and maybe we can set up a meeting to discuss any additional needs with the AOGCC. Sincerely, Emerald Consulting Group LLC (!II¡l/ / Cha~~n Project Manager Page 2 of2 #13 . . FRANK H. MURKOWSKI, GOVERNOR A"4A~1iA. OIL AND GAS CONSERVATION COMMISSION 333 W. 7'" AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 August 24, 2005 Mr. J. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Suite 410 Anchorage, AK 99503 Re: Lone Creek Proposed Waste Determination Dear Mr. Jones: Aurora Gas LLC ("Aurora") responded to the Alaska Oil and Gas Conservation Commission request for additional information regarding the Lone Creek fire by letter August 4, 2005. Aurora's response provided information described during the June 2, 2005 informal meeting. Additional clarification about the fire and gas detection system upgrades was requested verbally on August 12,2005. These upgrades were the result of recommendations from an investigation completed by Aurora; the Commission has agreed to consider these upgrades in its final decision regarding the proposed waste determination. The Commission intends issue its final decision in thi wish to be considered in the final decision must be r er by August 31,2005. Any information you before that date. cc: Daniel T. Seamount, Commissioner Cathy Foerster, Commissioner Mr. G. Scott Pfoff President Aurora Gas LLC 10333 Richmond Avenue, Suite 710 Houston, Texas 77042 #12 August 5, 2005 Mr. John K. Norman Chairman Alaska Oil and Gas Conservation Commission 333 West 7ft¡ Avenue, Suite 100 Anchorage,AJe 99501-3539 RECEIVED AUG 11 2005 Alaska Oil & Gas Cons, Commission Anchorage RE: Lone Creek Proposed Waste Determination Dear Mr. Norman: Thank you for the opportunity to meet with the Commission on June 2,2005, to discuss this matter. This letter is to respond formally to your letter request of June 9, 2005, to provide the information requested and to correct some facts given in some of my statements in our discussion of June 2nd. Regarding you request, attached are: 1) the 1-1/2 page incident report of the fire (written by Mr. Chad Helgeson on 2/28/04) that was referenced in my letter of May 27, 2005-my apologies that the letter was originally attached as intended. The facts in this report are restated and expanded upon in the report in 2) below. 2) A more complete letter report by Chad Helgeson of Emerald Consulting dated August 3, 2005, which is Aurora's investigative report. This report includes discussion of upgrades to Aurora's safety systems in subsequently installed facilities. 3) A copy of an email Of 6/22/05 from the insurance adjustor, Mr. Daniel Theveny, stating that an investigative report was not written by the fire investigator, Mr. Schaefer ofMDE Engineers. Multiple requests to St. Paul Travelers to provide a report of any kind have been fruitless. Let me apologize for my lack of preparedness at the informal hearing. The focus of my preparation had been on the financial aspects of the fire and consequences, not upon the mechanics of the system. The volume 650 mcf wasted during the fire came from a filing on February 20,2004, ofthe Excess Flare Log attached to the Facility Report of Produced Gas, Form 10-422. In reviewin~ the facts of the incident with Chad Helgeson following our informal hearing of June 2n and to respond to your letter of June 9ft¡, I realized that I had overestimated the volume of gas "flared" and misstated some facts during the hearing, due to my misunderstanding of the facts of the incident. Specifically, I assumed that the gas burned in fire came from the well via the fuel gas system, while in reality, the flow from the well ceased as soon as the compressor went down, as the 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799 . Fax (713) 977-1347 1400 WA..~t BAn~nn Blvrl__ SlJitA 410,. Anr.hnr:iOA. AIR~k:l99503 ,. (9071 277-1003 ,. FRY (907) 1006 . . Letter to Mr. John K. Norman, p.2 August 5, 2005 Suction Control Valve shut automatically, stopping all flow from the well. The SSV should have later also closed, when the solenoid valve on the instrument gas system that energizes and actuates the SSV, was de-energized and closed by either a gas detection of the leaking fuel gas or by the heat destroying the gas-detector sensor and it failing safe. The gas consumed by the fire did indeed come from the fuel gas system, but fuel gas was fed by the volume of gas in the 30" X 30' contactor tower of the dehydration system, which was pressured to about 1000 psi, downstream of the compressor. Thus, our discussions focused on the well flow were somewhat tangential, when in reality it ceased as soon as the compressor went down, which was early in the sequence of events during the fire incident. Regarding other safety matters, please see Mr. Helgeson's attached letter report for the safety system changes that resulted from this conclusion. Please let me know if you need additional information. Sincerely, I dward (Ed) Jones Exec. Vice President, Engineering and Operations cc: Scott Pfoff Chad Helgeson, Emerald Consulting . . Incident Report of Fire at Lone Creek Compressor building on January 22,2004. Information based on what Aurora Operators described to Emerald once arrived on the scene to investigate: 1/22/04 12:10 PM - Gas stopped flowing based on chart recorder at Lone Creek. Approximately 2:00 PM - Marathon Notified Aurora Gas (Ed Jones) that there was no flow from the Lone Creek #1 Facility. Approximately 3 :30 PM - Aurora Operators arrived at the Lone Creek # 1 Meter Site. They did not find anything out of place at the meter site and proceeded to go to the production facilities. Approximately 4:00 PM Operators arrived at the Facility and upon driving to site, identified that there were flames coming out of all three compressor building windows. The flames were going above the roof line of the building. The operators drove directly to the wellhouse and proceeded to shut-in the gas well. The operators then closed the pipeline valves and fuel gas valves and gathered the fire extinguishers located onsite, 8 total, 2ea 20lbs and 6ea 10lbs dry Type ABC chemical extinguishers. Used fire extinguishers on fire through the windows. Approx. 4 extinguishers were used where the fire was the strongest on the window near the cooler side of the building. One operator attempted to through a pipe through the window in the door to have access to more fire fighting area. After spraying the fire with the extinguishers the fire would go down, but kept coming back strong. During the use of the extinguishers the operators heard a loud explosion inside the building. (assumed to be one of two 55-gal drums of30wt compressor oil stored inside the building that ruptured). Approximately 4:30 the operators ran out of fire extinguishers and started calling for help. The people they called were: Ed Jones, Patti, Chad Helgeson, 911, Swanson River Gas Field, Beluga River Gas Field, 3-mile creek facilities, Randy. This is not necessarily the order people were called. (The Nikiski fire department was called by Ed Jones, Chad Helgeson called the Beluga River Maintenance Foreman (Peak) and notified them of a fire located at Lone Creek Site Approximately 5: 15 PM.) Approximately 7:00 the fire department from Beluga arrived onsite. The fire department sprayed 2200 gallons of water foam mixture into building and the fire was out. 8:30 the fire was completely out Fire truck got another load of water and returned to site to cool off equipment and ensure that there was not another flare-up. e . 9:50 PM Operators called Chad Helgeson at home and notified that fire was out and asked to do a site visit the next day. 8:00 AM Chad Helgeson arrived in Tyonek and was picked up by Aurora operators, and proceeded to the Lone Creek Compressor site. Arrived onsite and evaluated area. Entered compressor building. There was no smoke or smoldering of any equipment. Proceeded to take pictures. 12:00 PM Met Warren P. Isham, Assistant Fire Chief of Nikiski Fire Department at the Lone Creek Facility. Walked through the building and assessed the damage with the Asst. Fire Chief. He indicated that there would not be an inspection by the state. 2/ze/¿;( - éÁ$(d /-/eGé4'JpYl . . August 3, 2005 EMERALD It\ ¡ Mr. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Ste. 410 Anchorage, AK 99503 Mr. Jones, The following letter is written as a summmy of the findings fÌ'om the Fire that occurred at Aurora's Lone Creek Gas Compressor on Janumy 22, 2004. This letter has been compiled fÌ'om the observations, emails, phone conversations that occurred during the Fire and subsequently during the Investigation. Below is a chronological description of the Fire that occurred in the Lone Creek Compressor building, explaining what events took place and what was done during the fire. This history of events also explains the discussions I had with the Fire Inspector fÌ'om MDE Engineers. Sequence of Events on January 22, 2004 12:10 PM - Gas Production stopped (info based on chart recorder in dehydration skid). We assume this was when the Compressor shutdown due to fITe in the skid. It is not known why the compressor shutdown (the control panel was burned beyond repair) however it is likely that it shutdown on either gas detection or high temperature in the building. The automated shutdown led to the following sequence of events in the compressor skid, (1) the compressor inlet valve went to a fail safe position and isolated the flow into the compressor, (2) the compressor piping was automatically blowndown through the vent line and (3) a check valve on the discharge piping prevented any flow fÌ'om flowing back into the Compressor piping, (4) The ESD initiated a shutdown of the well Surface Safety Valve. 2:00 PM (Approximately) - Marathon Notified Aurora Gas (Ed Jones) that there was no flow fÌ'om the Lone Creek #1 Facility. 3:30 PM (Approximately) - Aurora Operators arrived at the Lone Creek #1 Meter Site (5 miles away ttom the Production Facility). They did not find anything out of place at the meter site and proceeded to go to the Production Facility. 4:00 PM (Approximately) - Operators arrived at the Production Facility and upon driving to site, identified that there were flames coming out of all three compressor building windows. The operators drove directly to the we1lhouse and Page 1 of4 PM- 20f4 amount as and .. was no .. .. 30f4 . . · A Fire Detection and Shutdown system is now installed in all the of the compressor buildings. · Additional Safety Equipment required on all new compressor stations include o A fail closed inlet valve that closes on a compressor Shutdown. o Automated b10wdown of the compressor skid on a Emergency Shutdown o Automated ventilation system that is activated on Gas Detection in the compressor skid. Without a known cause of this fire it is impossible to prevent this same fire from happening again, however Aurora has mstalled some safety devices which will hopefully mini:m:ize a fire like this in the future and allow for the fire to be extinguished much quicker and easier. The improvements to the safety system since the fire include Fuel Gas Shutdown valves, Fire Detection. If you have any specific questions relating to the fire and the added safety systems to Aurora's equipment, I would be more than happy to discuss them with you. Sincerely, Emerald Consulting Group LLC tl(1f?- Chad Helgeson Project Manager Page 4 of4 . . Ed Jones From: Sent: To: Cc: Theveny, Daniel C. [DTheveny@cozen.com] Wednesday, June 22, 2005 10:29 AM Chad Helgeson Ed Jones; Gerard F. Schaefer, P.E.; cynthia.franklin@stpaul.com; Wade.blanks@stpaultravelers.com; Gaitano, Terri; Callison, Catherine M. Lone Creek Compressor Fire Investigation Report - S1. Paul Travelers File No.: MU05506959 09T001 Subject: I did not request a written report from Mr. Schaefer of MDE Engineers, and I have recommended closure of the subrogation file in this matter. Therefore, I do not know if st. Paul Travelers wants to incur the expense necessary for preparation of a written report. -----Original Message----- From: Chad Helgeson [mailto:chelgeson@emeraldalaska.comJ Sent: Wednesday, June 22, 2005 8:19 AM To: Gerard F. Schaefer, P.E.; cynthia.franklin@stpaul.com Cc: Theveny, Daniel C.; Ed Jones Subject: Lone Creek Compressor Fire Investigation Report Gerry/Cynthia, The State of Alaska has asked Aurora Gas to provide them with the insurance companies Final Investigation Report on the fire that occurred in the Lone Creek Compressor Building in January 2004. Can you please provide a copy of the Lone Creek Final Investigation Report to Aurora Gas as soon as possible. If you have any questions, please feel free to contact me at 907-258-8137 or Ed Jones at 713-977-5799. Thanks Chad Helgeson Project Manager 907-258-8137 ****************************************** Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient(s). If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other 1 . . Subject: Lone Creek Waste Determination From: Ed Jones <jejones@aurorapower.com> Date: Fri, 05 Aug2005 15:01:24 -0500 To: 'Jody Colombie' <jodLcolombie@admin.state.ak.us> CC: '''G. Scott Pfoff" <gspfoff@aurorapower.com>, 'Chad Helgeson' <chelgeson@emeraldalaska.com> Jody, Please forward this message and attachments to John Norman and Jim Regg. Please note that the purpose of this email is to transmit the primary document attached as Letter to AOGCC 080405 LC Fire, which is Aurora Gas's response to Mr. Norman's letters of June 9th and July 29th, regarding this subject, and the other attached documents are attachments to that letter. A signed paper copy of the letter with attachments is being mailed today. Thank you. Ed J. Ed Jones Vice President Engineering & Operations Aurora Gas, LLC 713-977-5799 (Houston) 907-277-1003 (Anchorage) Subject: Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOOl From: "Theveny, Daniel C." <DTheveny@cozen.com> Date: Wed, 22 Joo 2005 10:29:21 -0500 To: "Chad Helgeson" <chelgeson@emeraldalaska.com> CC: "Ed Jones" <jejones@aurorapower.com>, "Gerard F. Schaefer, P.E." <schaefer@mde.com>, <cynthia.ftanklin@stpaul.com>, <Wade.blanks@stpaultravelers.com>, "Gaitano, Terri" <tgaitano@cozen.com>, "Callison, Catherine M." <CCaIlison@cozen.com> I did not request a written report from Mr. Schaefer of MDE Engineers, and I have recommended closure of the subrogation file in this matter. Therefore, I do not know if St. Paul Travelers wants to incur the expense necessary for preparation of a written report. -----Original Message----- From: Chad Helgeson [m~:i ,Ltc}: cjl_elge0:0nH~!'1_E;r,:j).d_alª.sk,(;l_~(;o_f!1] Sent: Wednesday, June 22, 2005 8:19 AM To: Gerard F. Schaefer, P.E.; cyn'!:h.ia.t,r.::ankLi.n@:3ntpaul.ºom Cc: Theveny, Daniel C.; Ed Jones - Subject: Lone Creek Compressor ,ire Investigation Report Gerry/Cynthia, The State of Alaska has asked Aurora Gas to provide them with the insurance companies Final Investigation Report on the fire that occurred in the Lone Creek Compressor Building in January 2004. Can you please provide a copy of the Lone Creek ,inal Investigation Report to Aurora Gas as soon as possible. If you have any questions, please feel free to contact me at 907-258-8137 or Ed Jones at 713-977-5799. Thanks Chad Helgeson Project Manager 907-258-8137 ****************************************** Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient (s). If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to of2 8/5/2005 1 :22 PM . . the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other than the intended recipient(s) is not a waiver of any attorney/client or other privilege. Content-Type: message/rfc822 Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOOI.eml Content-Encoding: 7bit Content-Type: applicationlmsword Letter to AOGCC 080405 LC Fire.doc Content-Encoding: base64 Content-Type: applicationlpdf Cll Incident report 8-3-05.pdf Content-Encoding: base64 Content-Type: applicationlmsword Incident Report.doc Content-Encoding: base64 of2 8/512005 I :22 PM · ... ; ~:3-Auro,.a Gas, LLC Mr. John K. Norman Chairman Alaska Oil and Gas Conservation Commission 333 West th Avenue, Suite 100 Anchorage, AK 99501-3539 RE: Lone Creek Proposed Waste Determination Dear Mr. Norman: Thank you for the opportunity to meet with the Commission on June 2,2005, to discuss this matter. This letter is to respond formally to your letter request of June 9, 2005, to provide the information requested and to correct some facts given in some of my statements in our discussion of June 2nd. Regarding you request, attached are: 1) the 1-112 page incident report ofthe fire (written by Mr. Chad Helgeson on 2/28/04) that was referenced in my letter of May 27, 2005-my apologies that the letter was originally attached as intended. The facts in this report are restated and expanded upon in the report in 2) below. 2) A more complete letter report by Chad Helgeson of Emerald Consulting dated August 3,2005, which is Aurora's investigative report. This report includes discussion of upgrades to Aurora's safety systems in subsequently installed facilities. 3) A copy of an email Of6/22/05fromtheinsuranceadjustor.Mr. Daniel Theveny, stating that an investigative report was not written by the fire investigator, Mr. Schaefer of MDE Engineers. Multiple requests to St. Paul Travelers to provide a report of any kind have been fruitless. Let me apologize for my lack of preparedness at the informal hearing. The focus of my preparation had been on the financial aspects of the fire and consequences, not upon the mechanics of the system. The volume 650 mcf wasted during the fire came from a filing on February 20,2004, of the Excess Flare Log attached to the Facility Report of Produced Gas, Form 10-422. In reviewin~ the facts of the incident with Chad Helgeson following our informal hearing of June 2n and to respond to your letter of June 9th, I realized that I had overestimated the volume of gas "flared" and misstated some facts during the hearing, due to my misunderstanding of the facts of the incident. Specifically, I assumed that the gas burned in fire came from the well via the fuel gas system, while in reality, the flow from the well ceased as soon as the compressor went down, as the Suction Control Valve shut automatically, stopping all flow from the well. The SSV should have later also closed, when the solenoid valve on the instrument gas system that 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799 . Fax (713) 977-1347 1400 West Benson Blvd., Suite 410 . Anchorage, Alaska 99503 . (907) 277-1003 . Fax (907) 1006 · ..... ;~EAurora Gas, LLC energizes and actuates the SSV, was de-energized and closed by either a gas detection of the leaking fuel gas or by the heat destroying the gas-detector sensor and it failing safe. The gas consumed by the fire did indeed come from the fuel gas system, but fuel gas was fed by the volume of gas in the 30" X 30' contactor tower of the dehydration system, which was pressured to about 1000 psi, downstream of the compressor. Thus, our discussions focused on the well flow were somewhat tangential, when in reality it ceased as soon as the compressor went down, which was early in the sequence of events during the fire incident. Regarding other safety matters, please see Mr. Helgeson's attached letter report for the safety system changes that resulted from this conclusion. Please let me know if you need additional information. Sincerely, Edward Jones 1. Edward (Ed) Jones Exec.Vice President, Engineering and Operations cc: Scott Pfoff Chad Helgeson, Emerald Consulting 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799. Fax (713) 977-1347 1400 West Benson Blvd., Suite 410. Anchorage, Alaska 99503. (907) 277-1003. Fax (907) 1006 . . Subject: Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOO I From: "Theveny, Daniel C." <DTheveny@cozen.com> Date: Wed, 22 Jun 2005 10:29:21 -0500 To: "Chad Helgeson" <chelgeson@emeraldalaska.com> CC: "Ed Jones" <jejones@aurorapower.com>, "Gerard F. Schaefer, P.E."<schaefer@mde.com>, <cynthia.franklin@stpaul.com> , <Wade. blanks@stpaultravelers.com>, "Gaitano, Terri" <tgaitano@cozen.com>, "Callison, Catherine M." <CCallison@cozen.com> I did not request a written report from Mr. Schaefer of MDE Engineers, and I have recommended closure of the subrogation file in this matter. Therefore, I do not know if St. Paul Travelers wants to incur the expense necessary for preparation of a written report. -----Original Message----- From: Chad Helgeson [mailto:chelgeson@emeraldalaska.com] Sent: Wednesday, June 22, 2005 8:19 AM To: Gerard F. Schaefer, P.E.; cynthia.franklin@stpaul.com Cc: Theveny, Daniel C.; Ed Jones Subject: Lone Creek Compressor Fire Investigation Report Gerry/Cynthia, The State of Alaska has asked Aurora Gas to provide them with the insurance companies Final Investigation Report on the fire that occurred in the Lone Creek Compressor Building in January 2004. Can you please provide a copy of the Lone Creek Final Investigation Report to Aurora Gas as soon as possible. If you have any questions, please feel free to contact me at 907-258-8137 or Ed Jones at 713-977-5799. Thanks Chad Helgeson Project Manager 907-258-8137 ****************************************** Notice: This communication, including attachments, may contain information that is confidential and protected by the attorney/client or other privileges. It constitutes non-public information intended to be conveyed only to the designated recipient(s) . If the reader or recipient of this communication is not the intended recipient, an employee or agent of the intended recipient who is responsible for delivering it to the intended recipient, or you believe that you have received this communication in error, please notify the sender immediately by return e-mail and promptly delete this e-mail, including attachments without reading or saving them in any manner. The of 2 8/5/2005 1 :21 PM · e unauthorized use, dissemination, distribution, or reproduction of this e-mail, including attachments, is prohibited and may be unlawful. Receipt by anyone other than the intended recipient(s) is not a waiver of any attorney/client or other privilege. Lone Creek Compressor Fire Investigation Report - St. Paul Travelers File No.: MU05506959 09TOO1.eml Letter to AOGCC 080405 LC Fire.doc ¡CH Incident report 8-3-05.pdf . Incident Report.doc of2 8/5/2005 1 :21 PM · e August 3, 2005 EMERALD / , \ Mr. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Ste. 410 Anchorage, AK 99503 Mr. Jones, The following letter is written as a summary of the findings from the Fire that occurred at Aurora's Lone Creek Gas Compressor on January 22, 2004. This letter has been compiled from the observations, emails, phone conversations that occurred during the Fire and subsequently during the Investigation. Below is a chronological description of the Fire that occurred in the Lone Creek Compressor building, explaining what events took place and what was done during the fire. This history of events also explains the discussions I had with the Fire Inspector from MDE Engineers. Sequence of Events on January 22, 2004 12:10 PM - Gas Production stopped (info based on chart recorder in dehydration skid). We assume this was when the Compressor shutdown due to fire in the skid. It is not known why the compressor shutdown (the control panel was burned beyond repair) however it is likely that it shutdown on either gas detection or high temperature in the building. The automated shutdown led to the following sequence of events in the compressor skid, (1) the compressor inlet valve went to a fail safe position and isolated the flow into the compressor, (2) the compressor piping was automatically blowndown through the vent line and (3) a check valve on the discharge piping prevented any flow from flowing back into the Compressor piping, (4) The ESD initiated a shutdown of the well Surface Safety Valve. 2:00 PM (Approximately) - Marathon Notified Aurora Gas (Ed Jones) that there was no flow from the Lone Creek #1 Facility. 3:30 PM (Approximately) - Aurora Operators arrived at the Lone Creek #1 Meter Site (5 miles away from the Production Facility). They did not find anything out of place at the meter site and proceeded to go to the Production Facility. 4:00 PM (Approximately) - Operators arrived at the Production Facility and upon driving to site, identified that there were .flames coming out of all three compressor building windows. The operators drove directly to the wellhouse and Page 1 of 4 . . proceeded to shut-in the gas well. The operators then closed the pipeline valves, fuel gas valves and evacuated all the gas from the Production Facility. The Operators tried to fight the fire with the fire extinguishers on the pad. 4:30 PM (Approximately) - The operators were unsuccessful with putting out the fire and started calling for help. The people they called were: Ed Jones (Aurora Gas), Patti Polk (Aurora Gas), Chad Helgeson (Emerald), 911, Swanson River Gas Field, Beluga River Gas Field (Nikiski Fire Department West Side Operations), and 3-Mile Creek Facilities (Bob Freeman). This is not necessarily the order people were called. (The Fire Department was contacted at Approximately 5: 15 PM and the Fire Department mobilized from Beluga. 7:00 PM (Approximately) - The fire department from Beluga arrived at the Lone Creek Production Facility. The fire department sprayed 2200 gallons of water/foam mixture into building and the fire was extinguished. 8:30 PM - The fire was completely out. The fire department returned to camp to get another load of water and returned to cool off equipment and ensure that there was not another flare-up. January 23, 2004 8:00 AM - I arrived in Tyonek and proceeded to the Lone Creek Compressor site. Conducted an initial investigation and interview with the operators. Documented the damage from the fire with pictures. 12:00 PM - Warren P. Isham, · Assistant Fire Chief of Nikiski Fire Department arrived at the Lone Creek Facility for an informal inspection. Walked through the building and assessed the damage with the Asst. Fire Chief. He indicated that there would not be an inspection by the state and there was only property damage and no injury to human life or safety. February 2&3, 2004 The Fire Inspector (MDE Engineer Gerry Shaefer), the Insurance Company Representatives and I visited the Lone Creek Production Facility. The Fire Inspector and I examined the burned down unit looking for an initiating event associated with the fire. There was so much damage and many different stages of the fire that the inspector was unable to identify a source of the fire. However The inspection identified several design improvements to help minimize the Page 2 of 4 . . amount of damage and duration of a similar fire if it occurred in the future. These improvements have been designed into the replacement compressor as well as the new compressor stations Aurora has constructed since this fire. Observations and Design Improvements for Aurora's Facilities. · There was no evidence of explosion starting the fire. All the windows of the skid had broken inward indicating that an explosion did not cause the windows to break. This indicates that the fire was probably started with Lube Oil. · During the fire many of the plastic encased fuel gas regulators were melted allowing fuel gas to burn freely until the fuel gas system was shut down when the operators arrived. The fuel gas system receives it's gas from downstream of the Glycol Dehydration skid, which is downstream of the Compressor. The well was not open to the fuel gas system, however there is a large storage capacity in the Glycol Contactor Vessel allowing it to be a source for a prolonged duration. Result: Fuel Gas Shutdown valves have been installed at each facility that are fail closed valves and close on an Emergency Shutdown of the Facility. · During the fire there were two unopened drums of lube oil stored inside the building, which eventually ruptured and fed a pool fire inside the building. Result: Aurora only stores enough Lube Oil in the compressor Skids necessary for Operation. There is no bulk storage of lube oil in the compressor buildings. Page 3 of 4 . . · A Fire Detection and Shutdown system is now installed in all the of the compressor buildings. · Additional Safety Equipmènt required on all new compressor stations include o A fail closed inlet valve that closes on a compressor Shutdown. o Automated blowdown of the compressor skid on a Emergency Shutdown o Automated ventilation system that is activated on Gas Detection in the compressor skid. Without a known cause of this fire it is impossible to prevent this same fire from happening again, however Aurora has mstalled some safety devices which will hopefully minimize a fire like this in the future and allow for the fire to be extinguished much quicker and easier. The improvements to the safety system since the fire include Fuel Gas Shutdown valves, Fire Detection. If you have any specific questions relating to the fire and the added safety systems to Aurora's equipment, I would be more than happy to discuss them with you. Sincerely, Emerald Consulting Group LLC tJ//(// ChadH~ Proj ect Manager Page 4 of4 . . Incident Report of Fire at Lone Creek Compressor building on January 22, 2004. Information based on what Aurora Operators described to Emerald once arrived on the scene to investigate: 1/22/04 12:10 PM - Gas stopped flowing based on chart recorder at Lone Creek. Approximately 2:00 PM - Marathon Notified Aurora Gas (Ed Jones) that there was no flow from the Lone Creek #1 Facility. Approximately 3:30 PM - Aurora Operators arrived at the Lone Creek #1 Meter Site. They did not find anything out of place at the meter site and proceeded to go to the production facilities. Approximately 4:00 PM Operators arrived at the Facility and upon driving to site, identified that there were flames coming out of all three compressor building windows. The flames were going above the roof line of the building. The operators drove directly to the wellhouse and proceeded to shut-in the gas well. The operators then closed the pipeline valves and fuel gas valves and gathered the fire extinguishers located onsite, 8 total, 2ea 20lbs and 6ea 10lbs dry Type ABC chemical extinguishers. Used fire extinguishers on fire through the windows. Approx. 4 extinguishers were used where the fire was the strongest on the window near the cooler side of the building. One operator attempted to through a pipe through the window in the door to have access to more fire fighting area. After spraying the fire with the extinguishers the fire would go down, but kept coming back strong. During the use of the extinguishers the operators heard a loud explosion inside the building. (assumed to be one of two 55-gal drums of30wt compressor oil stored inside the building that ruptured). Approximately 4:30 the operators ran out of fire extinguishers and started calling for help. The people they called were: Ed Jones, Patti, Chad Helgeson, 911, Swanson River Gas Field, Beluga River Gas Field, 3-mile creek facilities, Randy. This is not necessarily the order people were called. (The Nikiski fire department was called by Ed Jones, Chad Helgeson called the Beluga River Maintenance Foreman (Peak) and notified them of a fire located at Lone Creek Site Approximately 5:15 PM.) Approximately 7:00 the fire department from Beluga arrived onsite. The fire department sprayed 2200 gallons of water foam mixture into building and the fire was out. 8:30 the fire was completely out Fire truck got another load of water and returned to site to cool off equipment and ensure that there was not another flare-up. . . 9:50 PM Operators called Chad Helgeson at home and notified that fire was out and asked to do a site visit the next day. 8:00 AM Chad Helgeson arrived in Tyonek and was picked up by Aurora operators, and proceeded to the Lone Creek Compressor site. Arrived onsite and evaluated area. Entered compressor building. There was no smoke or smoldering of any equipment. Proceeded to take pictures. 12:00 PM Met Warren P. Isham, Assistant Fire Chief of Nikiski Fire Department at the Lone Creek Facility. Walked through the building and assessed the damage with the Asst. Fire Chief. He indicated that there would not be an inspection by the state. #11 Lone Creek Waste Determination - Aurora Response . . I called Mr. Ed Jones with Aurora this afternoon response to our June 9 letter (requested several letter attached. He indicated that we will have than next week. to find out the status of their items from Aurora) i copy of our information requested no later Once received, I will complete the final decision document. Jim Regg Content-Type: application/msword . lone_creek _waste _info_request. doc Content-Encoding: base64 1 of 1 7/18/20054:14 PM #10 . ~ r;::¡ ::'1 ~ ij b ~.,I ~U' i 'I;" ¡, i: 1 HI ~w . .r;; 'n' J~1~, r:1 17 r:""'¡ ] ,I! :!. 'I' ,~1 if ¡'J..:J ,i ,If ¡ i~ ì, if ifJ'\ j'l . .,.,., \,"~ .~ i1.1 1 if, " ;1!\ j. l:Jjj ",,'\.:, \ 1/1\ i ,;;::' \,'1 I, '\ ,,'\\ 11\ \ ,u 1\ U L\ l::::.J Uu 0 1J \.LLT"û It:~: . FRANK H. MURKOWSKI, GOVERNOR AI,ASIiA. ORAND GAS CONSERVATION COMMISSION 333 W. 7'" AVENUE, SUITE 100 ,ANCHORAGE., ALAS~ 99501-3539 " ÞHONE\'(907) 279-1433 . ')0 F'~ " (~07) ~76-7542 June 9, 2005 Mr. J. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Suite 410 Anchorage, AK 99503 Re: Lone Creek Proposed Waste Detennination Dear Mr. Jones: Thank you for meeting with the Alaska Oil and Gas Conservation Commission on June 2, 2005 to infonnally review the proposed waste detennination resulting from the gas release during the Lone Creek compressor fire in January 2004. We found the presentations by you and Mr. Pfoffto be infonnative and useful, particularly the description of actions taken by Aurora Gas, LLC ("Aurora") in response to its investigative findings. The purpose of this letter is to fonnally request copies of the infonnation referenced during the June 2, 2005 meeting, some of which you have already committed to providing to the Commission. Copies of the following documents are requested regarding the Lone Creek fire: 1) The 1-1/2 page incident report of the fire referenced in your letter dated May 27,2005 (document was not attached to the letter); 2) Aurora's investigation report (if different from above); and 3) Insurance provider's final investigation report. A written overview of the infonnation presented by Aurora during the June 2 meeting that details the upgrades to safety systems at the Lone Creek field would also be appreciated. Included should be sufficient technical detail to help demonstrate how this type of event will be prevented by the upgraded safety system design and what upgrades, if any, remain to be completed. The Commission intends to issue an objective safety bulletin in the immediate future that summarizes the event in generic tenns (without reference to Aurora or the Lone Creek facility) so other operators in Alaska can benefit from Aurora's learnings associ d with the fire and safety system upgrades. Your immediate attention to this request will be apprec' te cc: Daniel T. Seamount, Commissioner Cathy Foerster, Commissioner Mr. G. Scott Pfoff #9 . . ALASKA OIL AND GAS CONSERVATION COMMISSION Date: vi ;¡/Os- T· , .me , : '!.o MEETING - Subiect NAME - AFFILIATION TELEPHONE (pLEASE PRINT) ;:::'d. ~,?J- 4VðY-K ~J ~_S:U~ ~ -/bJC4J/L/Jç- ~ Z77-/tX).5 í.f #8 ~ ,e ..... ; ~~~eAurora Gas, I.I.C May 27, 2005 Mr. John Norman Chairman Alaska Oil and Gas Conservation Commission 333 West ih Avenue, Suite 100 Anchorage, AK 99501-3539 SENT ELECTRONICALLY (via email to Ms. Jody Colombie at iody colombie@admin.state.ak.us) RE: Scheduled Informal Review Lone Creek Proposed Waste Determination Dear Mr. Norman: Thank you for agreeing to meet with Aurora Gas, LLC representatives next week, June 2, 2005, at 1 :30 PM for an informal review of this matter. We look forward to discussing this Waste Determination with you. In summary, Aurora Gas will request that this $1621.00 penalty not be imposed for the following reasons: 1) While this uncontrolled release of gas does not appear to meet any exemption criteria under 20 ACC 25.535 (d), the release and loss of this gas neither appears to be a violation of ( c) of that same regulation, in that the release does not appear to be the result of poor engineering practices nor an intentional nor negligent violation of conservation purposes, as it was an accident of yet undetermined cause, Neither Assistant Fire Chief of the Nikiski Fire Department nor the insurance investigator have been able to determine the cause of the fire. The design of the building that burned had been approved by the State Fire Marshall; the building and compressor came as a package from a fabricator, Propak, with very high standards; and the package had been installed by third-party contractors with professional third- party oversight. 2) The volume of gas lost was estimated at a "maximum of 650 mcf," but the actual amount is unknown. Nonetheless, the loss of revenue to the State caused by the loss rather than sale of this gas was considerably less than the penalty amount: the gas was produced from a lease with CIRI minerals and royalty, not State, so the State was due only severance tax on this volume, and that would amount to less than $200. Thus, payment of this penalty would result in the State's gain due to Aurora's loss. 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799. Fax (713) 977-1347 1400 West Benson Blvd., Suite 410. Anchorage, Alaska 99503. (907) 277-1003 . Fax (907) 1006 · ... ~~.dAulOraGa~LLC AOGCC, 5/27/05, p. 2 3) This incident was an expensive one for Aurora, deferring net income of about $500,000 for about 6 weeks (not recovered until the end of the life of the well) and costing about $45,000 "out-of-pocket" after a reimbursement of about $500,000 by insurance Attached are the following documents: 1) a 1-112 page incident report of the fire during which this gas was lost; and for your convenience, 2) a copy of the Form 10-422, Facility Report of Gas Disposition and Excess Flare Report for January 2004, on which this loss of gas was reported. Please let me know if additional information would be helpful before our informal reVIew. Sincerely, AURORA GAS, LLC J. Edward Jones 1. Edward Jones Vice President, Engineering and Operations Cc: Daniel T. Seamount, Commissioner Cathy Foerster, Commissioner G. Scott Pfaff, President Aurora Gas, LLC 10333 Richmond Avenue, Suite 710. Houston, Texas 77042. (713) 977-5799 . Fax (713) 977-1347 1400 West Benson Blvd., Suite 410. Anchorage, Alaska 99503. (907) 277·1003 . Fax (907) 1006 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION FACILITY REPORT OF PRODUCED GAS DISPOSITION 1. Facility Number 12. Facility Name 28300000081 Lone Creek No. 1 Disposition 3. Field Lone Creek Volume MCF 14. Operator 15. MonthlYear of Disposition Aurora Gas, LLC 1/4/2004 20. For production from multiple pools, list contribution of each pool as a percent of Total Volume. 16. Sold ! 17. Reinjected 205144 Pool Name Lone Creek - Undefined Pool Code Percent 505500 100 - !" Flared or vented 1 hour or less - 9 Flared or vented more than 1 hour (see instr.) 650 ~-_..._-~----,._._.._.-'_._-_.. ....- "--'--~ 1 O. Pilot and Purge - 11. Used for lease operations (specify in Remarks) 3,080 - ~. 1h Authorization> r: ".', 12. Other (see instructions) MCF 2 Safety ¡13. TOTAL VOLUME (ITEMS 6-12) 208,874 MCF Lease Use 14. NGL Gas Equivalent MCF - Conservation 15. Purchased gas Waste: MCF : ~ 1\. Transferred from: - 17. Transferred to: (Express as a negative #) Commissioner Date ~Remarks: Flaredl vented lor more that 1 hour cfue to compressor fire - an "uncontrolled release" of fuel gas - See attached. I hereby certify that the foregoing is true and correct tMest of my knowledge. Signature Q.- ~P-P:/~~7./~ //. //¿) Printed Name J. Ejdw..afd Jones ('/' ~ Phone 713-977-5799 Date Note: All volumes must be corrected to pressure of 14.65 psia and to a temperature of 600 F. Authority 20 2120/2004 AAC25.235. Tille Vice Preseident Form 10-422 Rev. 1/2004 INSTRUCTIONS ON REVERSE SIDE Submit in Duplicate Aurora Gas, LLC Excess Flare Log Fadlity Name Date: LONE CREEK NO. 2/20/2004 I Date & Time Event Gas Steps Taken to BeQin End MCF Planned Description of Inciden CateQory Reason Actions Taken Minimize Recurrence Equipment 1/22/2004 1/22/2004 est at max Lube oil fire in romp Uncontrolled Shut off fuel Install fire loop in new 1200 HRS 1600 HRS of NO bldg melted fuel gas Release Fire gas supply, camp bldg which will i 650 system components then shut well in. Slwell. alJowing gas to escape and catch fire. I - i e . #7 . . r-' !r i? !L '--' FRANK H. MURKOWSKI, GOVERNOR AItASKA. OIL AND GAS CONSERVATION COMMISSION 333 W. 7'" AVENUE. SUITE 100 ANCHORAGE. ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 May 24, 2005 Mr. Ed Jones Aurora Gas LLC 1400 West Benson Blvd, Suite 410 Anchorage, AK 99503 Re: Scheduled Informal Review Lone Creek Proposed Waste Determination Dear Mr. Jones: As discussed with Ms. Jody Colombie on May 23, 2005, as part of the informal review process, the Alaska Oil and Gas Conservation Commission ("Commission") is providing Aurora Gas LLC ("Aurora") an opportunity to submit documentary material and make written and oral statements regarding potential waste determination for the January 2004 gas release at Lone Creek. The informal review meeting is scheduled for June 2, 2005 at 1:30 pm in the Commis- sion's Anchorage office at 333 West 7th Avenue, Suite 100. Copies of all written submissions and a summary of any oral statements planned by Aurora should be provided to the Commission n later than May 27, 2005 so we can make best use of the informal review. cc: Daniel T. Seamount, Commissioner Cathy Foerster, Commissioner Mr. G. Scott Pfaff President Aurora Gas LLC 10333 Richmond Avenue, Suite 710 Houston, Texas 77042 #6 . . FRANK H. MURKOWSKI, GOVERNOR Al'tASIiA OIL AlÐ) GAS CONSERVATION COMMISSION 333 W. 7'" AVENUE, SUITE 100 ANCHORAGE. ALASKA 99501-3539 PHONE (907) 279-1433 FAJ< (907)276-7542 April 14, 2005 Mr. G. Scott Pfoff President Aurora Gas LLC 10333 Richmond Avenue, Suite 710 Houston, Texas 77042 Re: Potential Waste Determination - Lone Creek Gas Release Dear Mr. Jones: The Alaska Oil and Gas Conservation Commission ("Commission") acknowledges receipt of your request for an informal meeting regarding the potential waste determination for the January 2004 gas release at Lone Creek. It is unclear if Aurora Gas LLC ("Aurora") plans to submit documentary material or just present oral statement to the Commission. Should you chose to submit documentary evidence, the Commission requests that at least 14 days prior to the informal meeting. Please contact Ms. Jody Colombie at 907- 793-1221 to schedule the requested meeting. Cc: Aurora Gas LLC 1400 West Benson Blvd, Suite 410 Anchorage, AK 99503 #5 www:aurorapower.com April 13, 2005 SENT ELECTRONICL Y RECE/VËD APR 1 8 2005 A/eab Oil & G· I' Con, C . Anchorage' omrn;"ion State of Alaska Alaska Oil and Gas Conservation Commission Mr. John K. Norman - Chairman Mr. Daniel T. Seamount, Jr. - Commissioner 333 W. 7th Avenue, Suite 100 Anchorage, AK 99501-3539 RE: Potential Waste Determination - Lone Creek Gas Release Dear Mr. Seamount, In response to your letter dated March 31, 2005 in regards to the subject referenced above, Aurora Gas, LLC hereby requests an informal review of this matter. Our initial response is that the proposed penalty is not justified; however, we have not had ample opportunity to familiarize ourselves with the relevant AOGCC regulations (20 AAC 25.235). We will be adequately prepared to discuss the matter in greater detail at the informal reVIew. Sincerely, kj9Q"~ G. Scott Pfoff President GSP/asv cJJM¡M¿R@,m~Jlft¡&~fJH~e~¿te41í!fJ¿ðo~ouston, Texas 77042· (713) 977-5799· Fax (713) 977-1347 1400 West Benson Blvd., S~ite 410· Anchorage, Alaska 99503. (907) 277-1003. Fax (907) 277-1006 #4 ....,(0.:...,..-..,.,..;,>'... . e . .. . "." .~.~." UNITED STATES POSTAL SERVICE First-Class Mail Postage & Fees Paid USPS Permit No. G-10 · Sender: Please print your name, address, and ZIP+4 in this box · RECEIVE[) APí1 - 6 2005 AK Oil & Gas Conservation Commission 333 W 7TH Ave, Ste 100 Alaska Oil & Gas Cons. Com 1ission Anchorage, AK 99501-3539 Anchorage :::.. -::.::1 JYy.;; ('-¡vV' OJ i JI, L L ! I ¡, i ; i L II II i" ; ¡ ¡ II i! 11111 ¡, ! i I ! ! ! It ¡ Ii ¡, iI ! III ¡.. L_ _ /.t..c ^-- U.S. Postal ServiceTM CERTIFIED MAILTM RECEIPT (DomestIc Mall Only; No Insurance Coverage ProvIded) I:J IT! .::t' M M ru LI1 IT! ru I:J I:J I"'- Certified Fee LI1 I:J I:J Return Reclept Fee I:J (Endorsement Required) I:J Restricted Delivery Fee LI1 (Endorsement Required) M IT! :11 SENDER: COMPLETE THIS SECTION · Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. · Print your name and address on the reverse so that we can return the card to you. · Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: ./ll/. ¡:~c?ré(J:,/7r'7. c::7 C /' t7' r é:L (J.c¡ /7 /,/ÓtJ /fJ. ~/7ßJ)vßJV~) ~ rt'llf./ /J IY!Á-IJIC- CtQS{)3 3~ice Type ¡o- Certified Mail 0 Express Mail o Registered ~fj ~ " o Insured Mail 0 C.O.D. 4. Restricted Delivery? (Extra Fee) tic..... DYes 2. Article Number (Transfer from S9r 7002 3150 0005 3521 1430 PS Form 3811 . August 2001 Domestic Return Receipt 102595-02·M-0835 -- .. . , ..... ~ U 1Ã\ lJ Œ ffi) ~ 1Ã\ ~ 1% ~ [ß 1% / FRANK H. MURKOWSKI, GOVERNOR AI,ASIiA. OIL AlVD GAS / CONSERVATION COMMISSION / 333 W. 7'" AVENUE, SUITE 100 ANCHORAGE. ALASKA 99501·3539 PHONE (907) 279-1433 FAX (907) 276-7542 CERTIFIED MAIL NO. 70023150000535211430 RETURN RECEIPT REQUESTED March 31,2005 Mr. J. Edward Jones Vice President Aurora Gas LLC 1400 West Benson Blvd. Suite 410 Anchorage, AK 99503 Re: Potential Waste Determination - Lone Creek Gas Release Dear Mr. Jones: The January 2004 gas disposition report for the Lone Creek field includes 650,000 cubic feet (650 Met) gas flared or vented. Aurora Gas LLC ("Aurora") operates the Lone Creek gas field. The gas flared or vented at Lone Creek on January 22, 2004 was the result of an uncontrolled release caused by a lube oil fire in the compressor building that compromised the integrity of the fuel gas system according to supplemental information provided in the gas disposition report. Alaska Oil and Gas Conservation Commission ("Commission") regulation at 20 AAC 25.235(d) establishes that gas release, flared, burned or permitted to escape into the air constitutes waste except in the circumstances specified in the regulation. The uncontrolled release caused by the lube oil fire damaging the fuel gas system does not appear to meet any of the waste exemption criteria. Pursuant to 20 AAC 25.535, the Commission proposes to impose a penalty on Aurora under AS 31.05.150(e) for the flaring or venting of 650 Mcf of gas on January 22, 2004 at the Lone Creek facility. The proposed penalty is $1,621.11. I As provided under 20 AAC 25.535( c), within 15 days after receipt of this notification Aurora may file with the Commission a written response that concurs in whole or in part with the proposed action described here, requests informal review, or requests a hearing I Proposed penalty based on the Prevailing Value for Cook Inlet Gas for first quarter 2004; Prevailing Value is published by the State of Alaska, Department of Revenue, Tax Division available online at http://www.tax.state.ak.us/programs/ 0 iVprices/prevai lingvalue/ cookinlet.asp. Mr. 1. Edward Jones March 31, 2005 Page 2 of2 under 20 AAC 25.540. If informal review is requested and Aurora disagrees with the Commission's proposed decision or order after that review, Aurora may then request a hearing within 10 days after the proposed decision or order is issued. . . ~ ,~ - If Aurora does not file a timely written response to this notification, the Commission will consider Aurora to hay ccepted by default the proposed penalty described above. However, if Aurora eds ore than 15 days to respond, it may for good cause shown reques tensio 5-day response period. Daniel T. Seamount, Jr. Commissioner cc: Mr. Bruce Kinney Department of Revenue, Tax Division 550 W. ih Avenue, Suite 500 Anchorage, AK 99501 [Fwd: Re: [Fwd: Request for Informal ReView. . Subject: [Fwd: Re: [Fwd: Request for Informal Review]] From: James Regg <jim_regg@admin.state.ak.us> Date: Thu, 14 2005 10:30:51 Attached is letter to Aurora acknowledging receipt of their request for informal mtg per Rob's note. Jim Subject: Date: From: To: CC: john -------- Original Message -------- Re: [Fwd: Request for Informal Review] Thu, 14 Apr 2005 10:04:20 -0800 Rob Mintz <robert mintz@law.state.ak.us> - - dan seamount@admin.state.ak.us cat~y foerster@admin.state.ak.us, jim r~gg@admin.state.ak.us, norman@admin.state.ak.us What I would suggest doing is sending a letter acknowleding receipt of the request and asking if Aurora wants only to submit documentary material, in which case please indicate by when they intend to do so, or if Aurora wants to present an oral statement to the Commission, in which case please suggest a date or dates that would work for them. Dan Seamount <dan seamount@admin.state.ak.us> 4/13/2005 1:25:08 PM Rob, How do we respond? How do we ask them how much time they need to prepare? i assume that the commies shouldn't talk directly to them? thanks, dan -------- Original Message -------- Subject: Request for Informal ReviewDate: Wed, 13 Apr 2005 15:18:05 -0500From: G. Scott Pfoff <gspfoff@aurorapower.com>To: john norman@admin.state.ak.us, dan seamount@admin.state.ak.usCC: jejones@aurorapower.com G. Scott PfoffPresidentAurora Gas, LLCAurora Power Resources, Inc. (713) 977-5799(713) 816-6870 cell Jim Regg <jim regg(ã?admin.state.ak.us> Petroleum Engineer AOGCC lone creek Content-Type: application/msword informal mtg date. doc . - - I Content-Encodmg: base64 1 of 1 4/14/2005 1:35 PM #3 [Fwd: Re: [Fwd: RE: Royalty Value for Lone. Field]] . Subject: [Fwd: Re: [Fwd: RE: Royalty Value for Lone Creek Field]] From: James Regg <jimJegg@admin.state.ak.us> Date: Tue, 29 Mar 2005 16:52:42 -0900 Tó:Jbdy.lC;glôfi1bié<jôdy _cgtg Please prepare attached for Commissioner signature jim -------- Original Message -------- Re: [Fwd: RE: Royalty Value for Lone Creek Tue, 29 Mar 2005 16:50:02 -0900 Rob Mintz <robert mintz@law.state.ak.us> j im reggS9admiJ).state. ak. us Field] Subject: Date: From: To: See attached for suggested edits. The flaring penalty is not based on state ownership of the resource but on police power prohibition against waste of oil or gas. James Regg admin.state.ak.us> 3/29/2005 4:37:46 PM »> Rob - Thanks for the clarification about getting gas disposition reports, although I am still not sure I understand how the state can penalize lost production (waste) when we do not get any royalty from the production in the first place. Thanks for the DOR website; I do not recall that being mentioned to me before, but will use it from now on. Adjusted letter with new gas value. FYI - we used DOG source for Baker waste letter and the PBU A-22 penalty (since there is no prevailing value for NS gas since no sales). I've included a statement of why we are proposing the penalty - gas release does not fit the criteria established for exemption from waste determination per 25.235(d) (1-4). Revised letter attached. And the enforcement procedures of 25.535 are being used because gas disposition rules are silent, statute provides procedure, and I thought that was the guidance you gave when we proposed Baker waste determination. I'm not sure what you mean by "something different under sec. 235" - I don't see anything. Jim Rob Mintz wrote: AS 31.05.027 provides that the Commission's jurisdiction applies tofederal land. I believe federal lessees generally apply for permits todrill, sundry approvals, etc., and file all of the reports requiredunder the Commission's regulations. Isn't that true? There are instances where federal law preempts state regulation, such as in casesof compulsory pooling - where BLM's approval is necessary before a statepooling order can apply to a federal lease - but unless and until wehear otherwise from the lessee or BLM, I think we generally assume that the Commission's regulations apply. I have a couple of questions for you too. I just don't remember, but has it been the practice of the Commission to use the enforcementprocedures of sec. 535 for gas flaring penalties or something differentunder sec. 235? Also, why are you relying on DNR royalty values? I thought we hadgenerally been using DOR's prevailing value for Cook Inlet gas, which ispublished on the DOR 10f2 3/30/20058:32 AM [Fwd: Re: [Fwd: RE: Royalty Value for Lone. Field]] . website. http://www.tax.state.ak.us/programs/oil/prices/prevailingvalue/cookinlet.asp -Also ,---S-eTõres-ayTng--tha t -we propose-to asse-:Ss--pe-nal ties ,--we need------- tomake a proposed determination that waste occurred. I assume the reasonis that the flaring was not consistent with good oil field engineeringpractices under 20 AAC 25.235(c). Something explaining this should be included in the notice sent to the operator. James Regg <jim regg@admin.state.ak.us> 3/29/2005 9:53:12 AM »> Rob - Attached is a draft proposed waste determination for a Lone Creek gasrelease associated with fire in Jan 2004. The letter is structured afterproposed waste determiniation for the Baker platform last year. Intrying to figure out the royalty value for the gas, I received themessge below from Jim Stouffer at DNR. Since production is 100%federal, I've got a couple questions - 1) Why do we get gas disposition reports for federally ownedproduction?2) Is it appropriate for the Commission to make a waste finding forfederal production?Jim-------- Original Message -------- Subject: RE: Royalty Value for LoneCreek FieldDate: Tue, 29 Mar 2005 08:59:06 -0900From: Jim Stouffer<jim stouffer@dnr.state.ak.us>Reply-To:jim stouffer@dnr.state.ak.usTo: 'James Regg'<jim regg@admin.state.ak.us>JimCan not help you on this question since Lone Creek is 100% federallyowned.Jim-----Original Message-----From: James Regg[mailto:jim regg@admin.state.ak.us] Sent: Friday, March 25, 2005 1:39PMTo: jim stouffer@dnr.state.ak.usSubject: Royal ty Value for Lone CreekFieldJim -I I ve spoken t-ü--yoU befõre about royalty values. I am lookingfor a gas value ($ per MCF) for Lone Creek field (Lone Creek #1 well) operated by Aurora for January 2004. I've tried to locate this on DOGwelbsite without success; I'd appreciate any help you can provide. Thanks.Jim ReggAOGCC Jim Regg <iim regg(a¿admin.state.ak.us> Petroleum Engineer AOGCC lone creek 2005-03 flare enforcementl Content-Type: application/msword Content-Encoding: base64 20f2 3/30/2005 8:32 AM #2 .. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION FACILITY REPORT OF PRODUCED GAS DISPOSITION ,/J//v / / e d" C'cyY I ! i/¿JCr Iv /ìqt'C1/tL .J C G¡.:;~ 1. Facility Number 2. Facility Name 2830000008 Lone Creek No. 1 Disposition 3. Field Lone Creek Volume MCF 4. Operator 5. Month/Year of Disposition Aurora Gas, LLC 1/4/2004 20. For production from multiple pools, list contribution of each pool as a percent of Total Volume. 6. Sold 205144 Pool Name Lone Creek· Undefined Pool Code Percent 505500 100 7. Reinjected 8. Flared or vented 1 hour or less 9. Flared or vented more than 1 hour (see instr.) 650 10. Pilot and Purge 11. Used for lease operations (specify in Remarks) 3,080 12. Other (see instructions) Authorization >1 hr: Safety MCF 13. TOTAL VOLUME (ITEMS 6-12) 208,874 Lease Use MCF 14. NGL Gas Equivalent Conservation MCF 15. Purchased gas Waste: ~ 16. Transferred from: 17. Transferred to: (Express as a negative #) 18. Remarks: Flared/ vented for more that 1 hour due to compressor fire - an "uncontrolled release" of fuel gas - See attached. est of my knowledge. I I Printed Name J. Phone 713-977-5799 Date Note: All volumes must be corrected to pressure of 14.65 psia and to a temperature of 600 F. Authority 20 2/20/2004 AAC25.235. Signature Title Vice Preseident Form 10-422 Rev. 1/2004 INSTRUCTIONS ON REVERSE SIDE Submit in Duplicate . .. .. . e Aurora Gas, LLC Excess Flare Log Facility Name Date: LONE CREEK NO.1 2/20/2004 Date & Time Event Gas Steps Taken to BeQin End MCF Planned Description of Incident Cateaorv Reason Actions Taken Minimize Recurrence Eauipment 1/22/2004 1/22/2004 est at max Lube oil fire in camp Uncontrolled Shut off fuel Install fire loop in new 1200 HRS 1600 HRS of NO bldg melted fuel gas Release Fire gas supply I comp bldg which will 650 system components then shut well in. Slwell. allowing gas to escape and catch fire. - , Royalty Value for Lone Creek Field . Jim - I've spoken to you before about royalty values. I am looking for a gas value ($ per MCF) for Lone Creek field (Lone Creek #1 well) operated by Aurora for January 2004. I've tried to locate this on DOG welbsite without success¡ I'd appreciate any help you can provide. Thanks. Jim Regg AOGCC 1 of 1 3/25/2005 2:24 PM #1 , STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS SUMMARY OF ROYAL TIES COOK INLET GAS FOR PRODUCTION MONTH .- January-04 I I I I I I I I I I VOLUMES FROM THE OPERATOR REPORT'1 TOTAL SUBJECT TO ROYALTIES STATE'S ROYAL TV SHARE January-C4 January-04 RIK RE....,SIONf TOTAL REPORTED January-04 CALENDAR January-04 CALENDAR $ PER BBL.MCF MONTHLY (ROYAL TV.N-I<rND) OTHER INTEREST LATE January-04 CALENDAR VOLUME (MCF) YEAR TO DATE VOLUME (MCF) YEAR TO DATE BEFORE FC '2 PRODUCTION FIELD COSTS AMOUNT AMOUNT REPORT REPORTED YEAR TO DATE BELUGA RIVER UNIT Beluaa Sterlina Gas Pool P A U!I.:S!8J CONOCO PHILLIPS AI( 1,257,458.74 1,257,458.74 157,182.45 157,182.45 $2.55835 $402, 127.92 $402,127.92 $402,127.92 CHEVRON 1,282,090.52 1,282,090.52 160,261.42 160,261.42 $2. 73958 $439,048.63 $439,048.63 $439,048.63 MUNICIPAL LIGHT + POVlER 545,780.69 545,780.69 68,222.63 68,222.63 $2.75775 $188,141.24 $5,503.83 $368.93 $194,014.00 $194,014.00 TDT AL BELUGA RIVER UNIT 3,085,329.95 3,085,329.95 385,666.50 385,666.50 $1,029,317.79 $0.00 $5,503.83 $368.93 $0.00 $1,035,190.55 $1,035,190.55 CANNERY lOOP UNIT S_.PAICi'\!\lIiI) MARATHON 28,984.14 28,984.14 3,638.18 3,638.18 $2.57408 $9,364.96 $9,364.96 $9,364.96 TOTAl. IlELUGA PA 28,984.14 28,984.14 3,638.18 3,638.18 $9,364.96 $0.00 $0.00 $0.00 $0.00 $9,364.96 $9,364.96 UDDer Tvonek PA tUPTY} MARATHON 212,543.28 212,543.28 26,790.46 26,790.46 $2.52351 $67,605.88 $67,605.88 $67,605.88 TOTAL UPPER TYONEK PA 212,543.28 212,543.28 26,790.46 26,790.46 $67,605.88 $0.00 $0.00 $0.00 $0.00 $67,605.88 $67,605.88 Sterlina Sands P A 4CLST. MARATHON 157,297.54 157,297.54 19,662.19 19,662.19 $2.47963 $48,754.97 $48,754.97 $48,754.97 TOTAL STERLING SANDS PA 157,297.54 157,297.54 19,662.19 19,662.19 $48.754.97 $0.00 $0.00 $0.00 $0.00 $48,754.97 $48,754.97 TOTAL CANNERY LOOP UNIT 398,824.96 398,824.96 50,090.83 50,090.83 $125,725.81 $0.00 $0.00 $0.00 $0.00 $125,725.81 $125,725.81 SOUTH GRANITE POINT UNIT GRANITE PT SANDS PA I'>Q!'TI EXXONMOBIL AI( PRODUCTION 628.50 628.50 78.57 78.57 $1.00000 $78.56 $0.00 $0.00 $0.00 $0.00 $78.56 $78.56 UNOCAL 209.50 209.50 26.19 26.19 $2.49400 $65.32 $0.00 $0.00 $0.00 $0.00 $65.32 $65.32 TOT AI. SO GRANITE PT P A 838.00 838.00 104.76 104.76 $143.88 $0.00 $0.00 $0.00 $0.00 $143.88 $143.88 HEMLOCK PA (SGHM\ EXXONMOBIL AI( PRODUCTION 60.75 60.75 7.59 7.59 $1.00000 $7.59 $0.00 $0.00 $0.00 $0.00 $7.59 $7.59 UNOCAL 20.25 20.25 2.53 2.53 $2.49400 $6.31 $0.00 $0.00 $0.00 $0.00 $6.31 $6.31 TOTAL HEMLOCK PA (SGHM) 81.00 81.00 10.12 10.12 $13.90 $0.00 $0.00 $0.00 $0.00 $13.90 $13.90 TOTAL SOUTH GRANITE PT UNIT 919.00 919.00 114.88 114.88 $157.78 $0.00 $0.00 $0.00 $0.00 $157.78 $157.78 GRANITE POINT FIELD ACL 17586 IG.BM\ UNOCAL 2,309.00 2,309.00 288.63 288.63 $2.49400 $719.84 $0.00 $0.00 $0.00 $0.00 $719.84 $719.84 TOTAL ADL 17$86 2,309.00 2,309.00 288.63 288.63 $719.84 $0.00 $0.00 $0.00 $0.00 $719.84 $719.84 ADL 17587 (gB~ª) UNOCAL 25.00 25.00 3.13 3.13 $2.49400 $7.81 $0.00 $0.00 $0.00 $0.00 $7.81 $7.81 TOTAL ADL 17587 25.00 25.00 3.13 3.13 $7.81 $0.00 $0.00 $0.00 $0.00 $7.81 $7.81 ADL 18742 IG.B~_Ç UNOCAL 7,288.00 7,288.00 911.00 911.00 $2.49400 $2,272.03 $0.00 $0.00 $0.00 $0.00 $2,272.03 $2,272.03 TOTAL ADL 18742 7,288.00 7,288.00 911.00 911.00 $2,272.03 $0.00 $0.00 $0.00 $0.00 $2,272.03 $2,272.03 TOTAL GRANITE POINT FIELD 9,622.00 9,622.00 1,202.76 1,202.76 $2,999.68 $0.00 $0.00 $0.00 $0.00 $2,999.68 $2,999.68 . . ~ c~(C fusk~ as ProcUlC..kr-,\ '- yu~ > ~l.." ~kr- f'L:~r; s ~A~(O ~/~6 B\f2(~ ,l'E.kr- ~~ Ji9/04 ~ tse,t,~ '\. (4,-1 fici1dt<'-1J !2t(¡~r . Paymenb Received Ihru 02/29104 Pag91 CI GAS MSUM.ßn_2004.Jcls, eru, 4/7/2004 . I I I I VOLUMES FROM THE OPERATOR REPORT >1 TOTPL SUB.ECTTOROYPLTIES STATE'S ROYPLTY SHARE January-04 January-04 RIK REVlSIONI TOTPL REPORTED January-04 CPLENDAA January-04 CPLENDAA $ PER BBl<MCF MONTHLY (ROYAL TY-IN.f<IND) OTHER INTEREST lATE January-04 CPLENDAA VOLUME (MCF) YEAA TO DATE VOLUME (MCF) YEAA TO DATE BEFORE FC '2 PRODUCTION FIELD COSTS AMOUNT AMOUNT REPORT REPORTED YEAA TO DATE IVAN RIIlER UNIT Ivan River Gas Pool P A n:t!\r.;¡ UNOCPL 157,766.00 157,766.00 27,935.70 27,935.70 $2.49400 $69,671.63 $0.00 $0.00 $0.00 $0.00 $69,671.63 $69,671.63 TOT AllVAN RIIlER UNIT 157,766.00 157,766.00 27,935.70 27,935.70 $69,671.63 $0.00 $0.00 $0.00 $0.00 $69,671.63 $69,671.63 ~ Sterlina P A (~JRlJ. MAAATHON 199,186.68 199,186.68 24,898.34 24,898.34 $2.35433 $58,618.93 $0.00 $0.00 $0.00 $0.00 $58,618.93 $58,618.93 TOTAL KENAI UNIT 199,186.68 199,186.68 24,898.34 24,898.34 $58,618.93 $0.00 $0.00 $0.00 $0.00 $58,618.93 $58,618.93 lEWS RIIlER UNIT LR PA#1 (LWS1\ .. UNOCPL 9,420.00 9,420.00 1,177.50 1,177.50 $2.49400 $2,936.69 $0.00 $0.00 $0.00 $0.00 $2,936.69 $2,936.69 TOTAL LR PAfI1 9,420.00 9,420.00 1,177.50 1,177.50 $2,936.69 $0.00 $0.00 $0.00 $0.00 $2,936.69 $2,936.69 lR PA #2 (..WJ;:¡¡ UNOCPL 37,921.00 37,921.00 4,740.13 4,740.13 $2.49400 $11,821.88 $0.00 $0.00 $0.00 $0.00 $11,821.88 $11,821.88 TOTAL LR PA#2 37,921.00 37,921.00 4,740.13 4,740.13 $11,821.88 $0.00 $0.00 $a.00 $0.00 $11,821.88 $11,821.88 TOTAL LEWS RIIlER UNIT 47,341.00 47,341.00 5,917.63 5,917.63 $14,758.57 $0.00 $0.00 $0.00 $0.00 $14,758.57 $14,758.57 N. MIDDLE GROUND SHOAL UNIT/ADL 17595 OiL POOL PA IMGSI) UNOCPL 0.00 0.00 0.00 0.00 $0.00000 $0.00 $0.00 $0.00 $0.00 $a.00 $0.00 $a.00 TOTAL Oil POOL PA 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $a.00 NORTH COOK INLET UNIT North Cook InletPA tNCIN} CONOCO PHilLIPS CO. 4,069,232,00 4,069,23200 508,654.00 508,654.00 $208809 $1,062,115.33 $0.00 $0.00 $a. 00 $0.00 $1,062,115.33 $1,062, 115.33 TOTAL N. COOK INLET UNIT 4,069,232.00 4,069,232.00 508,654.00 508,654.00 $1,062,115.33 $0.00 $0.00 $0.00 $0.00 $1,062, 115.33 $1,062, 115.33 PRETTY CREEK UNIT Beluaa PA te.Rm UNOCPL 56,422.32 56,422.32 8,100.08 8,100.08 $2.49400 $20,201.60 , $20,201.60 $20,201.60 TOTAL PRETTY CREEK UNIT 56,422.32 56,422.32 8,100.08 8,100.08 $20,201.60 $0.00 $0.00 $0.00 $a. 00 $20,201.60 $20,201.60 NORTH TRADING BAYUNIT .. HEMLOCK & G FORM PA tN.ßA.Y.> MAAATHON 116.12 116.12 14.52 14.52 $1.99720 $17.98 $17.98 $17.98 UNOCPL 27.88 27.88 3.48 3.48 $2.49400 $9.98 $9.98 $9.98 TOTAL NO TRADING BAY UNIT 144.00 144.00 18.00 18.00 $27.96 $0.00 $0.00 $0.00 $0.00 $27.96 $27.96 STERLING UNIT STERLING UNIT A ZONE P A t§T..~.ß~. ¡¡TrY -STBlI MAAATHON 6,423.96 6,423.96 803.00 803.00 $1.99720 $2,119.66 $0.00 $0.00 $0.00 $0.00 $2,119.66 $2,119.66 TOTAL STERLING UNIT 6,423.96 6,423.96 803.00 803.00 $2,119.66 $0.00 $0.00 $0.00 $0.00 $2,119.66 $2,119.66 STUMP LAKE UNIT stumo Lake Gas Pool #1 P A lSTMP} UNOCAL 0.00 0.00 0.00 0.00 $0.00000 $0.00 $0.00 TOTAL STUMP LAKE UNIT 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 . I C(}I¡'e Û~ /~OWÇ ·U\.-~, '""*', C!.(».;i;?JOCkl ~ ~ Þò I Ì'-0,~,' ( s ",I\¿~- S I D4 ! ~ ~.v&- BeQUtJ~ ~" ~é~ ~ ~-Á.t~c~.~ lA..vq}- . Payments ReC8lved thru 02129104 Page 2 "'GAS MSUMjan~OO4_xls, eru. 41712004 ,. . I I I I I I -- VOLUMES FROM THE OPERA TOR REPORT '1 TOTAL SUBJECT TO ROYALTIES STATE'S ROYALTY SHARE January~04 January-04 RIK RE\,1SIONI TOTAL REPORTED January-04 CALENDAR January-04 CALENDAR $ PER BBLiMCF MONTHLY (ROYAl TY.JN-KIND) OTHER INTEREST LATE January-04 CALENDAR VOLUME (MCF) YEAR TO DATE VOLUME (MCF) YEAR TO DATE BEFORE FC '2 PRODUCTION FIELD COSTS AMOUNT AMOUNT REPORT REPORTED YEAR TO DATE TRADING BAYFLD ADl18731 fT.B.§fl UNOCAL 0.00 0.00 0.00 0.00 $0.00000 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL TRADING BAY FIELD 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TRADING BAY UNIT Gravlina Gas Sands P A !~IH.ºl MARATHON 1,468,170.00 1,468,170.00 183,521.00 183,521.00 $2.46413 $452,219.39 $0.00 $0.00 $0.00 $0.00 $452,219.39 $452,219.39 UNOCAL 1,150,203.00 1,150,203.00 143,775.00 143,775.00 $2-49400 $358,624.85 $0.00 ($110.84) ($6.18) $0.00 $358,507.83 $358,507.83 TOTAL TRADING BAY UNIT 2,618,373.00 2,618,373.00 327,296.00 327,296.00 $810,844.24 $0.00 ($11084) {$6.1S} $0.00 $810,727.22 $810,727.22 REDOUBT UNIT RU#3 \/\ELL-Tract ODeration-RE02 FOREST OIL 0.00 0.00 0.00 0.00 $0.00000 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL TRACT OPERATION 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 REDOUBT UNIT HEMLOCK PA IREHMI FOREST OIL 0.00 0.00 0.00 0.00 $0.000000 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL HEMLOCK PA 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL REDOUBT UNIT 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 VIlEST MCARTHUR RIVER UNIT ð1.fA!\!IIM.R\IJ FOREST OIL 0.00 0.00 0.00 0.00 $0.00000 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL WMC ARTHUR RIVER UNIT 0.00 0.00 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 NINllCHIK UNIT FALLS CREEK PA /NKFC¡ MARATHON 235,665.76 235,665.76 11,783.29 11,783.29 $2.36166 $27,828.17 $0.00 $0.00 $0.00 $0.00 $27,828.17 $27,828.17 UNOCAL 157,110.51 157,110.51 7,855.52 7,855.52 $2.49400 $19,592.86 $19,592.86 $19,592-86 TOTAL FALLS CREEK PA 392, 776.27 392,776.27 19,638.81 19,638.81 $47,421.03 $0.00 $0.00 $0.00 $0.00 $47,421.03 $47,421.03 Susan Dionne PA {NKSO) MARATHON 199,369.20 199,369.20 24,921.15 24,921.15 $2.13459 $53,196.44 $53,196.44 $53,196.44 UNOCAL 132,912.80 132,912.80 16,614.10 16,614.10 $2.49400 $37,452.40 . $37,452.40 $37,452-40 TOTAL SUSAN DIONNE PA 332,282-00 332,282-00 41,535.25 41,535.25 $90,648.84 $0.00 $0.00 $0.00 $0.00 $90,648.84 $90,648.84 GRASSIM OSKOLKOFF PA /NKGQl MARATHON 285,308.40 285,308.40 35,663.55 35,663.55 $2.36168 $84,226.03 $84,226.03 $84,226.03 UNOCAL 190,205.60 190,205.60 23,775.70 23,775.70 $2-49400 $59,297.34 $59,297.34 $59,297.34 TOTAL GRASSlM OSKOLKOFF PA 475,514.00 475,514.00 59,439.25 59,439.25 $143,523.37 $0.00 $0.00 $0.00 $0.00 $143,523.37 $143,523.37 TOTAL NINILCHIK UNIT 1,200,572.27 1,200.572.27 120,613.31 120,613.31 $281,593.24 $0.00 $0.00 $0.00 $0.00 $281,593.24 $281,593.24 NICOLAI CREEK NICOLAI CREEK #3 ¡NCPB) AlJRORAPOVleR RESOURCES 59,654.00 59,654.00 2,982.70 2,982.70 $2.23000 $6,651.42 $6,651.42 $6,651.42 TOTAL NICOLAI CREEK #3 59,654.00 59,654.00 2,982.70 2,982.70 $6,651.42 $0.00 $0.00 $0.00 $0.00 $6,651.42 $6,651.42 TOTAL COOK INLET GAS 11,909,811.14 11,909,811.14 1,464,293.73 1,464,293.73 $3,484,803.64 $0.00 $5,392-99 $362- 75 $0.00 $3,490,559.38 $3,490,559.38 FOOTNOTES: *1 - Volumes include all liquid hydrocarbons. *2 - Cook Inlet Gas fields are not allowed a field cost deduction. I I e . Payments Received thru 02129104 Page 3 ClGAS MSUMjanj004.xls, eru. 41712004