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Home My WebLink AboutCO 349• • Image Projecfi Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. C ~~_ ~ Order File Identifier Organizing (done) RESCAN ~olor Items: ^ Greyscale Items: ^ Poor Quality Originals: ^ Other: ,..~.,dea uuumiiuiuii DIGITAL DATA ^ Diskettes, No. ^ Other, No/Type: a =~.~~e~e~ iiiumiAiiuim OVERSIZED (Scannable) ^ Maps: ^ Other Items Scannable by a Large Scanner OVERSIZED (Non-Scannable) ^ Logs of various kinds: NOTES BY: Maria Date: ~ I I t) IC Project Proofing BY: Maria Date: O Scanning Preparation x 30 = BY: Maria Date: ~, I ~ ~~ Production Scanning = TOTAL PAGES ~ ~ ,n (Count does not include cover sheet) ,/~/~ !s/ IVY II III IIIIIIIIIII VIII Stage 1 Page Count from Scanned File: --~~ (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: _~ YES NO BY: Maria Date: ~ I ~ ~ b ~ /s/ r r r Stage 7 If NO in stage 1, page(s) discrepancies were found: YES NO - r BY: Maria Date: /s/ Scanning is complete at this point unless rescanning is required. III II IIII III II I I III ReScanned III IIIIIIIIIII VIII BY: Maria Date: /s/ Comments about this file: Quality Checked III IIIIII III IIII III ^ Other:: ~~ iuiuuiiii~iim~ 10/6/2005 Orders File Cover Page.doc • • INDEX CONSERVATION ORDER N0.349 Milne Point Unit 1.) September 14, 1994 BP Exploration (Alaska), Inc. Requests expansion of pool rules 2.) October 11, 1994 Notice of Public Hearing, Affidavit of Publication Conservation Order No. 349 STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re: The Application of BP Exploration ) Conservation Order No. 349 (Alaska) Inc. to expand the affected area ) of Conservation Order No. 173. ) Kuparuk River Field Kuparuk River Oil Pool December 16 1994 IT APPEARING THAT: 1. By letter dated September 14, 1994 BP Exploration (Alaska) Inc. (BPS requested an expansion of the Kuparuk River oil pool rules area to include a portion of the pool northwest of the Milne Point unit delineated subsequent to the issuance of Conservation Order 173. 2. Notice of public hearing was published in the Anchorage Daily News on October 11, 1994. 3. The .Commission received no protest or request for hearing regarding the petition. FINDINGS: 1. The Kuparuk River oil pool (KROP) rules boundary is currently defined by the affected area of Conservation Order No. 173. 2. The oil accumulation within the Kuparuk River Formation in the Kuparuk River Field was initially thought to be principally a single entity, within a single trap composed of both structural and stratigraphic elements. 3. Subsequent to establishing the KROP rules boundary, the oil accumulation and trap configuration has been more completely delineated through a combination of exploratory and development activities. 4. Extensive faulting and stratigraghic discontinuities create numerous pressure barriers and trapping elements in the KROP. Conservation Order No~49 December 16, 1994 Page 2 5. The structure of the developed area of the KROP in the Milne Point Unit is similar to the northwest trending horst blocks found in the adjacent Kuparuk River Unit and may form a separate trap, down dip and northeast of the Kuparuk River Unit structural closure. 6. Several oil water contacts exist in the Milne Point Unit KROP. 7. KROP hydrocarbons trapped within the Milne Point Unit have not been shown to be in pressure communication with any portion of that resource currently under development in the Kuparuk River Unit. 8. 3-D seismic data and four exploratory wells (NW Milne #1, No Point #1, L-14 and L- 15) in the currently undeveloped northwestern portion of the Milne Point Unit (]~1VVMP) have proven the Milne Point Unit structure extends into this area. 9. The NW Milne #1, No Point #1, L-14 and L-15 wells encountered oil bearing Kuparuk River Formation stratigraphically equivalent to the Milne Point Unit KROP. 10. No oil water contact has been observed in the Kuparuk River Formation in the NWMP exploratory wells. 11. The reservoir characteristics of the Kuparuk River Formation in the NW Milne #1, No Point #1, L-14 and L-15 wells are similar to those in other portions of the Milne Point Unit and similar to those in the Kuparuk River Unit. 12. Milne Point Unit, Kuparuk River Formation oil properties range in API gravity from 21 degrees in the southeast to 26 degrees in the far northwest. Average NWMP oil properties are; 1) initial solution gas oil ratios of 300 standard. cubic feet per stock tank barrel of oil, 2) a viscosity of 3 centipoise at 178 degrees Fahrenheit, 3) initial reservoir pressure of 3,500 pounds per square inch at a datum of 6,800 feet subsea, and 4) a bubble point pressure of 2,250 pounds per square inch. 13. The Alaska Department of Natural Resources approved the expansion of the Milne Point Unit to include the NWMP area on March 2, 1992. 14. BPX is operator of the Milne Point Unit. 15. BPX intends to initiate development activities in the NWIVIP, Kuparuk River Formation. CONCLUSIONS: 1. Detailed analysis of subsurface data obtained through development and exploratory activities in the Kuparuk River and Milne Point Units indicate the KROP may be composed multiple separate oil accumulations. Conservation Order No~49 ~ Page 3 December 16, 1994 2. The KROP has been shown to extend into the NWMP. The northern extent of the pool has not been determined. 3. The physical attributes of the KROP in the NWMP are very similar to the previously defined part of the pool. 4. Development of the KROP in the NWMP can be conducted under existing KROP rules without causing waste or jeopardizing correlative rights. 5. Expansion of the KROP area into the NWMPU is warranted. NOW, THEREFORE IT IS ORDERED THAT the Kuparuk River oil pool rules area described in Conservation Order No. 173 is repealed and hereinafter pertains to the following described area: T9N, R6E, U.M. SECS. 1,2,11,12,13, and 14. T11N, R10E, U.M~, ALL T9N, R7E, U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13, 14,15,16,17 and 18. T9N, R8E U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13, 14,15,16,17, and 18. T9N, R9E, U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,15,16,17 and 18. T9N, R10E U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11 and 12. T10N, R6E, U.M. SECS. 1,2,3,4,9,10,11,12,13,14,15,16,21, 22,23,24,25,26,35 and 36. T10N, R7E, U.M. ALL. T10N, R8E, U.M. ALL. T11N, R11E U.M.. SECS. 3,4,5,6,7,8,9,10,11,14,15,16,17,18, 19,20,21,22,23,24,25,26,27,28,29,30,31,32, 33,34,35 and 36. T12N, R7E, U.M. SECS. 25,26,35 and 36. T12N, R8E, U.M. ALL T12N R9E U.M. ALL T12N, R10E, U.M. ALL T12N, R11E, U.M. SECS. 3,4,5,6,7,8,18,19,20,29,30,31,32 and 33. T13N, R8E, U.M. SECS. 13,14,23,24,25,26,27,28,33,34,35 and 36. Conservation Order No: 349 December 16, 1994 T10N, R9E, U.M. ALL. T10N, R10E, U.M. ALL T10N, R11E, U.M. SECS. 5,6,7,8,17,18,19 and 20. T11N, R6E, U.M. SECS. 25,26,35 and 36. T11N, R7E, U.M. SECS. 1,2,3,4,9,10,11,12,13,14,15,16, 17,18,19,20,21,22,23,24,25,26,27,28,29, 30,31,32,33,34,35 and 36. T11N, R8E, U.M. ALL T11N, R9E, U.M. ALL DONE at d 'V G~ 'Q' ~ '~~ ''~~ 1 v,~ y~° ?'ION GO~~' David W. Johnston, 1GC 1994. Alaska Oil nd Gas Conse ation Commission Russell A. Douglass, Co 'ssioner Alaska Oil and Gas Conservation Commission ~~s-----~ ---~.~ ckerman Babcock, Commissioner Alaska Oil and Gas Conservation Commission AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for reheating must be received by 4:30 p.m. on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30 day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). T13N, R9E, U.M. ALL Page 4 T13N, R10E, U.M. ALL T13N, R11E, U.M. SECS. 7,8,16,17,18,19,20,21,28,29,30,31,32 and 33. T14N R9E U.M. SECS. 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15, 16,17,18,20,21,22,23,24,25,26,27,28,29,32, 33,34,35 and 36. T14N, R10E U.M. SECS. 15;16,17,18,19,20,21,22,27,28,29,30, 31,32,33,34 and 35 T15N, R9E U.M. State lands within SECS. 25,26,27,31, 32,33,34,35, and 36. ~2 • L._~ Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of BP Exploration (Alaska) Inc. for expansion of the affected area of Conservation Order No. 173 BP Exploration (Alaska) Inc. by letter dated September 14, 1994 has requested an expansion of the affected area of Conservation Order No. 173. The expansion would include the Northwest Milne area and bring the entire Milne Point Unit into the Kuparuk River Field pool rules boundary. A person who may be harmed if the requested order is issued may file a written protest prior to 4:00 p.m. October 26, 1994 with the Alaska Oil and Gas Conservation Commission (hereinafter the Commission), 3001 Porcupine Drive, Anchorage, Alaska 99501, and request a hearing on the matter. If the protest is timely filed and raises a substantial and material issue crucial to the Commission's determination, a hearing on the matter will be held at the above address at 9:00 a.m. on November 16, 1994 in conformance with 20 AAC 25.540. If a hearing is to be held, interested parties may confirm this by calling the Commission's office, (907) 279-1433, after October 26, 1994. If no protest is filed, the Commission will consider the issuance of the order without a hearing. If you are a person with a disability who may need a special modification in order to comment or to attend the public hearing, please contact Diana Fleck at 279-1433 no later than November 10, 1994. Russell A. Douglass Commissioner Alaska Oil and Gas Conservation Commission Published October 11, 1994 STATE OF ALASKA ADVERTISING ORDER NO. ADVERTISING ORDER A~. c~:?,-5-1!~-(?lei A~GENCY CONj~~p T DATE OF A.O. F R ~~ PHON E o M ~t)ric;t; i9o~i X7`3-1433 .3 U U 1 ~ O r Cal i`)11?. r' L'+ Y: 7_ V ~' DATES ADVERTISEMENT REQUIRED: T O U ~'it~.l PUhl,zatlin~: (~O~tlj?all,y g 16'3~t.1 I~r .E~aY;].e iti.v~r T1c>oJ~ tci L ! (.; cl ~ ~ n (~ _( s~ E T~ ~ j1, ?` :~ +~ ~ 17 _ ~ :'a (~ ~ SPECIAL INSTRUCTIONS: H E R AFFIDAVIT OF PUBLICATION UNITED STATES OF AMERICA ~ _ 960-Public Hearing STATE OF ss INVOICE D MUST REFERENCE ~ ~~ ~ THE ADS NOTICE OF PUBLIC HEARING ; ~ ~ DIVISION. ALASKA OIL AND GAS ~ A CERTI IT OF PUBLICATION CONSERVATION COMMISSION VOICE. M UST B BEFORE ME, THE UNDERSIGNED, A NOTARY PUBLIC THIS DAY Re: The application of BP Exploration (Alaska)Inc.forexpansionofthe t t ~-"" affected area of Conservation ' n ,~I' ~ I ~ order No.17s. TION HERE. ' PERSONALLY APPEARED t`-+c.~ ` (A,I~L.Q_,IrWHO, BP Exploration (Alaska) Inc. by letter dated September 14, 1994 has requested an expansion of the af- BEING FIRST DULY SWORN, ACCORDING TO LAW, SAYS THAT fectedareaofConservationOrderNo. 173. The expansion would include the ~ Northwest Milne area and bring the HE/SHE IS THE OF Ol entire Milne PointUnitintotheKuparuk River Field pool rules boundary. Apersonwhomaybeharmedifihe /~~ ~ PUBL{SHED AT t'1V IN SAID DIVISION requested order is issued may file a written protest prior to 4:00 p.m. October 26, 1994 with the Alaska Oil AND STATE OF~~,A-- AND THAT THE and Gas Conservation Commission (hereinafter the Commission), 3001 Porcupine Drive, Anchorage, Alaska 99501, and request a hearing on the ADVERTISEMENT, OF WHICH THE ANNEXED IS A TRUE COPY, WAS matter. If the protest is timely filed and raises a substantial and material issue crucial to the Commission's deterrni- PUBLISHED IN SAID PUBLICATION ON THE ~~ DAY OF nation,a hearingonthematterwillbe _ I Q~/ ~ held at the above address at 9:00 a.m. on November 16, 1994 in con- ,.~^ ' j K_X/1 19~ AND THEREAFTER FOR ~ (ormance with 20 AAC 25.540. if a _, hearing is iobe held, Interested parties may confirm thfs by calling the CONSECUTIVE DAYS, THE LAST PUBLICATION APPEARING ON THE commision's office, (907) 279-1433, after October 26, 1994. If no protest i ~ ~ ~ is filed, the Commission will consider the issuance of the order without a . DAY OF 19 , AND THAT THE hearing. If you are a person with a disability who may need a special modification RATE CHARGED THEREON {S NOT IN EXCESS OF THE RATE in order to comment or to attend the public hearing, please contact Diana Fleck at 279-1433 no later than CHARG PRIVATE INDIV DUAL November 10, 1994. RussellA.Douglass,Commissioner ,~ - Alaska Oil and Gas Conservation i n i C - - ~ omm sss o AO-02-5-14-018 SUBSCRIBED AND SWORN TO BEFORE ME Published: October 19, 1994. , THISo~Z DAY OF r~~- 19~ NOT Y PUBLIC FOR STATE OF MY COMMISSION EXPIRES 9'~" `~~ 02-901 (Rev. 6-85) PUBLISHER ` ~ ~ Tfie Chugiak -Eagle River Alasko Sftxr October 19 1994 960-Public Tearing ~OTICE OF PUBLIC NEARIN STATE OF ALASKA ~-C~ RV -TTt3L1~7'CDM~UIISSION e: a applica ion oration (Alaska) Inc. for expansion of the affected area of Conservation Order No. 173. BP Exploration (Alaska) Inc. by letter dated September 14, 1994 has requested an expansion of the af- fectedarea ofConservation Order No. 173. The expansion would include the Northwest Milne area and bring the entire Milne Point Unit into tine Kuparuk River Field pool rules boundary. A person who may be harmed if the requested order is issued may file a written protest prior to 4:00 p,m. October 26, 1994 with the Alaska Oil and Gas Conservation Commission (hereinafter the Commission), 3001 Porcupine Drive, Anchorage, Alaska 9950.1, and request a hearing on the matter. If the protest is timely filed and raises a substantial and material issue crucial to the Commission's determi- nation, ahearing onthe matterwill be held at the above address at 9:00 a.m. on November 16, 1994 in con- formance with 20 AAC 25.540. if a hearing is to beheld, interested parties may confirm this by calling the commision's office, (907) 279-1433, after October 26, 1994. If no protest is filed, the Commission will consider the issuance of the order without a hearing. If you are a person with a disability who may need a special modification in order to comment or to attend the public hearing, please contact Diana Fleck at 279-1433 no later than November 10, 1994. RussellA. Douglass, Cornmissianer Alaska Oil and Gas Consevtaiion Commission AO-02-5-14-018 Published: October 19, 1994. ~k9583 STOF 0330 AO-02514012 $55.10 AFFIDAVIT OF PUBLICATION STATE OF ALASKA THIRD JUDICIAL DISTRICT SS. Eva M Kaufmann being first duly sworn on oath deposes and says that .she is the Advertising Representative. of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on: October 11, ,1994 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. \ r signed ~~~..~'1. Eva M. Kaufm Classified Advertising ep. 257-4296 Alaska Oil atM GeA Conservation Cammissiaa Re: The application of BP Exploratipn (Alaska) Inca Ipr e3cpansion of itre affected area of.Corgt-Vetion Order No. 173, BP Exploration (Alaska) lnt. by letter dated September 1~, 1994:has requested an ex-: pehsiorr of the affected area of Conservation Order No. 773. The expansion would include the Norihwesf MilftB'area and bring the entire Milne Point Unit into h1® iC~a'uk Rive!! Field-pool rules boundary. A person ~rAto may be harm- ed %if fhe. requested order is' issued.-may fife a yYtstten pro• test. prior. to 4:00'p: m, October §6, .1944 with rite Alaska OII and .Gas Conservation-:Com- mission (hereinafter the Gom- mission), 3001 Porcupine OriVe, Anchorage, Ataska~ 99501, and request a hearing on the matter. if The protest:is timely filed and raises a! sub• hearing is to be held, infertst- ed part4es mey conffritt this by calling'Nle'Commtssion soffice :(907? 279.1433 offer October 2d, '1994. If no protest is filed, the Commission will consider the .issuance of the order wBhout a hearing. tt you are a person with a disabrlit¢' Who may need a spetial'motfification in order to'comihenf 6r to attend the Publichearing,-Please contact Diana Fleck at. 279-1433 no later than November 70, 1994. /s/Russell A. Douglass, Commissioner, Alaska Oil and Gas Conservation Commission Puti,October 11, 1994_ __ Subscribed and sworn to ~C j~2,.~ be re me this ......'. day of r ~~. MY COMr~niSStON EXPIiiES JUIY 24, 1996 ............ 19...... ........ ......... .. .. .. ... 1994 No blic in and for the ate of Alaska. Thud Division Anchorage, Alaska MY COMMISSION EXPIRES: ~1 BP EXPLORATION September 14, 1994 Mr. David Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Dear Mr. Johnston, BP Exploration (Alaska) Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 99519-6612 (907) 561-5111 BP Exploration (Alaska), Inc., as operator of the Milne Point Unit request an extension of the Kuparuk River Oil Pool Rules to include an area referred to as the Northwest Milne area. The expansion of the Pool Rules to this area will bring the entire Milne Point Unit under the Kuparuk River Oil Pool Rules. The expansion is necessary due to planned operations in this area. Please direct any questions or concerns regarding this matter to me at 564- 5232 or to Randy Frazier 564-4556. Sinc rely, ~~ Bruce J. Policky Exploitation Manage Milne Point Unit A~~ska ~}-~ ~ pncb nnsyCemm C ~~~~ G~ ~` ~~P ~ ~ 194 1gS10n Introduction BPX, Inc., as Operator of the Milne Point Unit, is requesting the Alaska Oil and Gas Conservation Commission to extend the jurisdiction of the Kuparuk River Oil Pool Rules to include an area of the Milne Point Unit referred to as Northwest Milne. (See Attachment I) This extension of the Kuparuk Pool Rules is warranted because geological and engineering data indicates the productive interval in Northwest Milne correlates directly to the adjacent productive interval in the developed portion of the Milne Point Unit. Northwest Milne is comprised of seven Net Profit Share leases located immediately northwest of the original Milne Point Unit. These leases were acquired at the State of Alaska Oil and Gas Lease Sale No. 39 held May 17, 1983. (See Attachment II). During the lease sale Conoco, Inc., acquired two leases (ADL-355018 and ADL-355017.) Conoco, Inc., farmed into and became operator of the five remaining leases held by Amerada and Maxus in late 1991. The Alaska Department of Natural Resources approved the expansion of the Milne Point Unit to include the Northwest Milne area on March 2, 1992. The expansion was effective, retroactively, as of January 1, 1992. (See Attachment III) BPX acquired Chevron's interest in the Milne Point Unit (MPU) effective September 1, 1993 and acquired Conoco's interest and became operator effective January 1, 1994. BPX currently holds 91.19% with partner OXY USA, Inc. holding the remainder. Correlation of Northwest Milne to the Original Milne Point Unit An overview of the Kuparuk formation in the Milne Point Unit can be seen in the attached map. (See Attachment IV) The proven portion of Kuparuk extends beyond the developed portion of the Milne Point Unit into the Northwest Milne Point area. This has been verified through 3D seismic interpretation and from results of five exploration wells. Extensive 3D seismic was obtained over the Milne Point Unit in 1990. The survey included a portion of the then non-unitized Northwest Milne area. Seismic interpretation indicates the main structural trend of the Lower Kuparuk formation runs from the southeast to the northwest into the Northwest Milne area. While numerous fault blocks are seen along this trend, it is clear that the Northwest Milne area is geologically contiguous with the developed portion of the Milne Point Unit. The overall Milne structure can be described as a faulted northwest plunging horst. (See Attachment V) The structure is similar to the northwestern trending horst blocks found in the adjacent Kuparuk field, and forms a separate trap down dip and northeast of the Kuparuk structural closure. The Milne Point horst RECEIVED SEP 1 9 1994 Qiaska Oil & Gas Cons. Commission AnchoraA • ~ is a subsidiary structure on the northeast flank of the larger anticlinal feature containing the Kuparuk field. Within the field area, complex faulting has rearranged the overall structure into a series of individual fault blocks. Differential movement of these faults have demonstrably impacted the distribution of hydrocarbons. This has created variable oil water contacts in the Milne Point field. Hydrocarbons have been proven in the Northwest Milne area in the Kuparuk River Formation. The primary intervals of interest are the A3, A2, and Al sands, the lowest three units in the lower Kuparuk sequence. (See Attachment VI) These reservoirs are prolific. producers at Milne Point and the adjacent Kuparuk River Unit. Based on well logs from L and C Pads, the No Point #1 well, and Northwest Milne #1 well, the lower Kuparuk reservoir has been shown to consist of three sands sharing a common oil accumulation. (See Attachment VII) Results from four wells drilled in the Northwest Milne area are as follows: NW Milne #1 1992 Discovery welt with 17 feet of oil bearing Al sand. No OWC encountered. Base of sand at 7205' subsea(ss). This well flowed 426 BOPD, 250 GOR, 26.4 deg API, and 3580 psi @ 7127' TVD ss, in an unfractured state and delineates the northwest limit of the proposed development area. No Point #1 1994 37' of oil bearing A3, A2, and Al sands. No OWC encountered. Base of sand at 7186' ss. Confirmed northwestern F Pad development area. L-14 1994 42' of oil bearing A3, A2, and Al sands and 10' of B sand. No OWC encountered. Base of sands at 7185' ss. Confirmed northeastern portion of development area. L-15 1994 Spudded May 26, 1994. Found 61' of oil bearing A3, A2, and Al sands and 6' of oil bearing B sand confirming the heart of A sand thickness in the Northwest Milne area. No OWC encountered. Base of sands at 7259' ss. The reservoir characteristics in these wells are identical to those in other portions of the Milne Point Unit and similar to those in the Kuparuk River Unit. Oil properties in the Kuparuk reservoir within the Milne Point Unit have been very consistent. Kuparuk oil gravity averages 22 API (varying from 21 API in Cascade to the southeast, to 26 API in the far northwest, as measured in the Northwest Milne #1 well. Initial solution gas/oil ratios are approximately 300 SCF/STBO. At the 178 deg F reservoir temperature, oil viscosity is typically 3 cp. Initial reservoir pressure is 3,500 psi at the datum depth of 6,800 feet TVD subsea. Bubblepoint pressure, 2,250 psi, is significantly below initial pressure. RECEIVED S EP 1 9 1994 Alaska Oii & Gas Cons. Commission Anchorai- C7 Conclusion All available geological and engineering data supports the conclusion that the productive formation underlying the Northwest Milne area is an extension of the productive Lower Kuparuk formation found in the developed portion of Milne Point Unit. Northwest Milne #1, No Point #1, MPL-14 and MPL-15 establish the existence of additional oil reserves beyond the developed portion of the Milne Point Unit. Our request for the Kuparuk River Oil Pool Rules to be extended to include Northwest Milne is based on the conclusion that the Kuparuk formation found in these wells is the same productive formation found in the remainder of the Milne Point Unit. RECEIVEC~ S EP 1 9 199 Alaska Uil & Gas Cons. Commission Anchorat, Attachment I NORTH SLOPE, ALASKA - MILNE POINT UNIT fe Unit Boundary - ~ Northwest Milne area - ADL355020 ADL355022 ADL355018 ADL355017 ADL319717 f f-s: t"°"M`""~: ~ ADL025509 ADL047434 ADL047433 ADL047432 _... ~ ~ ~ ~ co ~ ~ ~ ~ ~ N ~ M ~~X# ~` O Q ADL025514 ADL025515 °a °a ADL047437 ADL 047438 °a a R..,,,m.~,... ADL355019 MiLNE PT. ADL355021 ADL355016 • • t7 ~~ I_.. A :7 I ~~ ~~ aie3ke uu 8~ Q~& Cans. Commis~ian An~itt~r;~. Attachment II Northwest Milne Leases Lease ADL 355017 ADL 355018 ADL 355022 ADL 355021 ADL 355016 ADL 355019 ADL 355020 RECEIVED SAP 1 9 1994 aia;ka 0~i & Gas Cons. Commission Anchora~:~> Leaal Description T14N, R10E, UM Sec. 27-29, 32-35 T14N, R10E, UM Sec. 30-31 T14N, R9E, UM Sec. 25-27, 34-36 T14N, R9E, UM Sec. 16-18, 20-21, 28-29, 32-33 T14N, R9E, UM Sec. 11-15, 22-24 T14N, R10E, UM Sec. 15-22 T14N, R9E, UM Sec. 1-3, 10 T15N, R9E, UM Sec. 25-27, 34-36 T14N, R9E, UM Sec. 4-9 T15N, R9E, UM Sec. 31-33 Attachment III MILNE POINT UNIT THIRD EXPANSION OF THE UNIT AREA DEFERRAL OF CONTRACTION OF MILNE POINT UNIT AREA DECISION AND FINDINGS OF THE COMMISSIONER ALASKA DEPARTMENT OF NATURAL RESOURCES MARCH 2, 1992 RECEIVED SEP 1 9 1994 Alaska Oii & Gas Cons. Commission Anchorage • MILNE POINT UNIT THIRD EXPANSION OF THE UNIT AREA DEFERRAL OF CONTRACTION OF MILNE POINT UNIT AREA I. INTRODUCTION AND BACKGROUND The Milne Point Unit. is an oil and gas unit located on the Alaska North Slope immediately northwest of the Prudhoe Bay .Unit, and to the northeast of the Kuparuk River Unit. It was approved by the Alaska Department of Natural Resources on October 29, 1979, effective retroactive. to September 28, 1979. The Milne Point Unit Agreement was modeled after the State of Alaska's Standard Unit Agreement form, which provides for operation of the leases within the unit area as a single entity without regard to lease boundaries and diverse ownership of the leases. The unit is operated in conformance with annual plans of development and operation approved by the Department of Natural Resources. Conoco Inc. on its own behalf and on the behalf of two other Working Interest Owners, is the Unit Operator of the Milne Point Unit. On August 19, 1981, the Department of Natural Resources approved the first expansion of the Milne Point Unit Area to include a total of all or portions of 11 State of Alaska leases. The expanded unit area after this first expansion comprised approximately 21,072 acres. On December 8, 1983, a second expansion of the Milne Point Unit was approved by the Department to include all or portions of seven State of Alaska leases, approximately 14,.672 acres. The unit area after this second expansion included a total of seventeen State of Alaska leases comprising approximately 35,744 acres. The second expansion of the Milne Point Unit was retroactively effective to June 1, 1983. II. APPLICATION FOR THIRD EXPANSION OF MILNE POINT UNIT AREA On October 22, 1991, Conoco Inc., the Unit Operator, on behalf of itself and four other Working Interest Owners, made an application for a third expansion of the Milne Point Unit Area. The third expansion proposes to add all or portions of seven leases comprising approximately 35,409 acres, fora total expanded Unit Area of 71,153 acres. The expansion area is situated in the Beaufort Sea, offshore and northwest of the current Milne Point Unit Area. The other Working Interest Owners include Amerada Hess RECEIVED SEP 1 9 1994 Aiaska Uil & Gas Cons. Commission Anchara:;~t • ~ • Milne Point Unit Expansion March 2, 1992 Page 2 Corporation, Chevron U.S.A., Inc., Maxus Exploration Company, and OXY USA Inc. All seven of the leases proposed to be included within the Milne Point Unit Area as a result of this third. expansion are Net Profit Share leases acquired in the State of Alaska Oil and Gas Lease Sale No. 39 (May 17, 1983). Two of the leases, ADL 355016 (Tract 19) and ADL 355017 (Tract 15), provide for a 40 percent net profit share and 12.5 percent royalty to the state. The other five leases proposed in the unit expansion, ADL 355018 (Tract 16), ADL 355019 (Tract 20), ADL 355020 (Tract 21), ADL 355021 (Tract 18), and ADL 355022 (Tract 17), provide for a 30 percent net profit share and 12.5 percent royalty to the state. The Working Interest Owners of the leases proposed for expansion have committed their interest in these lands to the Milne Point Unit Agreement (as .amended) and have ratified the Unit~Agreement (as amended). The proposed expansion of the Milne Point Unit Area would conform and modify certain provisions of the individual oil and gas leases to be added to the unit so that development of the area could be conducted on a unit-wide basis rather than on a lease-by-lease basis. Approval of the expansion would extend the joint, cooperative development of the unit area in conformance with approved .Unit Plans of Development and Operation. As part of the application to expand the Milne Point Unit Area, Conoco Inc. also requested a one year extension of the scheduled contraction date of the current Milne Point Unit, subject to the performance of the Exploration Plan submitted along with the unit expansion application. The scheduled unit contraction date is December 1, 1995. The requested deferral would coincide with the proposed term of the exploration plan for the expansion area, that is five years, and make the automatic contraction of the unit December 31, 1996. Public notice of the proposed Third Expansion of the Milne Point Unit Area was published. on December 13, 1991 in the Anchorage Daily - News and in the Barrow Sun. Copies of the proposed expansions were .also provided to interested parties in conformance with 11 AAC 83.311, as well as to the Alaska Department of Environmental Conservation, the Alaska Department of Fish and Game, the Alaska Department of Natural Resources, Division of Land, and the Alaska Oil and Gas Conservation Commission. During the 30 day public notice period allowed under 11 AAC 83.311, no comments were received by the division. However, a comment from the North Slope Borough was received after the 30 day public notice period. The North Slope Borough was concerned about zoning issues DECEIVE S FP 1 9 194 ~t~ska uti & Gas Cons. Co-nmission Anchora;~ Milne Point Unit Expansion March 2, 1992 Page 3 in the proposed expansion area, but no objection was made to the expansion of the Milne Point Unit area at this time. The Third Expansion of the Milne Point Unit Area is .proposed to be effective as of .12:01 a.m. January 1, 1992. III. GEOLOGICAL AND ENGINEERING CHARACTERISTICS, PRIOR EXPLORATION ACTIVITIES AND EXPLORATION ACTIVITIES PROPOSED FOR THE EXPANSION AREA Staff members of the Division of Oil and Gas met with Conoco, the Milne Point Unit Operator, to discuss confidential and nonconfidential information in support of the application for expansion of the Milne Point Unit Area. Conoco presented a geological narrative, a structure contour map, net pay contour maps, and a stratigraphic cross-section supporting the proposition that potentially productive intervals in the proposed expansion area correlate directly to the productive intervals within the current Milne Point Unit. In addition, Conoco conducted a 2-D seismic program over portions of the expansion area in the early 1980's, and a 3-D program over portions of the expansion area in 199.0. No wells have been drilled to date in the expansion area. As part of the expansion application, Conoco submitted a plan of exploration for the evaluation of all the acreage within the proposed expanded area. An outline of the plan stipulates the following: 1) 1992 - drill the NW Milne No.l well from a gravel island on ADL 355018 (Tract 16) to a bottomhole location on ADL 355021 (Tract 18). 2) 1993 - perform a shallow water seismic survey on ADL 355016 (Tract 19), ADL 355021 (Tract 18), and ADL 355022 (Tract 17). 3 ) 1994 - drill a second exploratory well from the gravel island to a bottomhole location within the expanded area. 4) 1995 - expand the gravel island and drill a third exploratory well to a bottomhole location within the expanded area. 5) 1996 - drill a reservoir evaluation well, and drill a fourth exploratory well to test ADL 355019 (Tract 20) and ADL 355020 (Tract 21). The bottomhole location of the fourth exploratory well is to be within one of these two tracts. RECE1~~ ~xasKa. iii & Gas Cons. Corimission gnchor~.;;= • Milne Point Unit Expansion March 2, 1992 Page 4 IV. DISCUSSION OF DECISION CRITERIA In accordance with the applicable regulations (11 AAC 83.301 - 11 AAC 83.395), the Commissioner will approve an expansion of an existing oil and gas unit if the Commissioner finds that such expansion is necessary or advisable to protect the public interest. In determining whether a proposed expansion is in the. public interest, the Commissioner will consider the following criteria: (1) the conservation of all natural resources; (2) the prevention of economic and physical waste; and (3) the protection of all parties of interest, including the state. In evaluating the above criteria, the commissioner will consider: (1) the environmental costs and benefits of unitized exploration and development; (2) the geological and engineering characteristics of the potential hydrocarbon accumulation or reservoir proposed for unitization; (3) prior exploration activities in the proposed unit area; (4) the applicant's plans for exploration or development of the groposed unit area; (5) the economic costs and benefits to the state; and (6) any other relevant factors (including mitigation measures) the commissioner determines necessary or advisable to protect the public interest. A discussion of these criteria and considerations follows. (A) The Conservation of All Natural Resources. Unitization of reservoirs is generally recognized as a prudent means of conservation. By unitizing the proposed expansion area, exploration and delineation activities can be optimized and surface impacts can be reduced. Inclusion of the seven leases within the Milne Point Unit provides the most practical method for maximizing oil and gas recovery from the expansion area, while at the same time minimizing negative impacts on other resources. By including the seven leases under the terms and conditions _. of the Milne -Point Unit Agreement, conservation of both surface and subsurface resources through the unitized (rather than the lease-by-lease) development of the prospective reservoir(s) will be promoted. Although the extent of any oil and gas which may be contained in the prospective reservoir(s) has not been determined, the Milne Point Unit Agreement will promote the goals of accelerating oil and-gas exploration and maximizing recovery from the leases should a commercial discovery of hydrocarbon reserves be made. (B) The Prevention of Economic and Physical Waste. Assuring proper allocation of hydrocarbons to each affected lease is ~E~EIVE~ SEA 1 9 ~99~ ~t~ska 13U $~ Gas Cons. Commission AnGhOr~,~; r ~ - i Milne Point Unit Expansion March 2, 1992 Page 5 only one concern in resource allocation, as economic and physical waste can still occur if equitable cost sharing formulas and well integrated exploration and development plans for the affected area do not exist. Both of these components are necessary to ensure that physical and economic recovery from all reservoirs included within the unit boundaries are maximized. The benefits of unitization are especially applicable to marginally economic areas, particularly the periphery of reservoirs. In such areas, added reserves that would not be producible economically on their own are often gained through unitized development. Capital savings as a result of not duplicating facilities and consolidating reservoir evaluation and management allows less profitable areas of a reservoir to be tested, developed, and produced, and pressure maintenance and secondary and tertiary recovery operations applied on a reservoir-wide basis. In the proposed expansion, the state believes that prevention of economic waste will be effected by accelerated development and production of the projected hydrocarbon reserves if the affected tracts are committed to the Milne Point Unit. The operation of the expanded areas as part of the Milne Point Unit will, therefore, significantly enhance the probability of early production from this area. (C) .The Protection of All Parties in Interest. Including the state. One aim of unitization is the protection of the - economic interests of all working interest owners of a common .oil and gas reservoir. Unitization conserves natural resources and prevents economic waste by eliminating the many competing .interests for delineation and operation of common reservoirs while retaining separate interests and accounts for equitable sharing of costs and benefits based on original ownership. By ratification of the Milne Point Unit Agreement and Unit Operating Agreement, each individual working interest owner is assured an equitable allocation of costs and revenues commensurate with the value of its lease(s). The expansion of the Milne Point Unit extends these benefits and protection to leases considered likely to be capable of contributing production from the Milne Point reservoirs. The state's economic interest is protected by maximizing any physical recovery of hydrocarbons that may exist in the expansion area. Maximizing hydrocarbon recovery in turn assures that the production-based revenue accruing to the state is also maximized. Accelerated development of the affected tracts will contribute to the economic well-being of RECf1VE SrP 1 9 1994 a~~aska uii & Gas Cons. Corrtmissii Anchoro4 • Milne Point Unit Expansion March 2, 2992 Page 6 the state as a result of the time value of the revenues received, and the additional subsurface information obtained due to early development and production. Unitized operations within the expansion areas also minimize impacts to the area's cultural, biological, and environmental resources. Protection of the state's interest in .the allocation of production and costs is discussed in Part VII of the Decision. V. DISCUSSION OF CONSIDERATIONS The following matters were considered in .evaluating the criteria discussed in Part IV, above. (A) The Environmental Costs and Benefits of Unitized Exploration or Development. .The area encompassed. by the proposed Milne Point Unit third expansion is habitat for a variety of fish, waterfowl, shorebirds and marine mammals. Oil and gas activity in the proposed unit expansion area may impact some habitat. The extent of this impact will depend on a number of variables, including the measures taken to mitigate the impact; the overall effectiveness of these measures; the availability of alternative habitat; and the ability of the fish and marine mammals to adapt to some displacement and changes in their habitat. If ongoing measures (seasonal restrictions on specific activities in certain areas, required consolidation of facilities, regulation of waste disposal, etc.) are continued to minimize surface impacts, the anticipated oil and gas development activity within the proposed expansion area is not likely to significantly impact bird, fish, and mammal populations. In any case, the impact of oil and gas related activity on habitat and subsistence activity will be less under the terms of the proposed Unit Agreement, including its exploration plan, than if the leases were to be developed and produced individually. Unitization will enable exploration, development and production of any hydrocarbons which may be discovered with relatively minimal surface impact. The leases which are proposed to be unitized contain a number of stipulations designed to protect the environment. They address such issues as spill prevention control and countermeasure plans, site restoration, construction of pipelines, seasonal restrictions on operations, and avoidance of seismic hazards. Virtually. all lease activities which may occur following unitization are subject to a coastal zone consistency determination, and must comply with t~eE V SEP 1 9 1994 q-aska Uii & Gas Cons. Commission Anchora • - • Milne Point Unit Expansion March 2, 1992 Page 7 both the state and North Slope Borough coastal zone management plans. Further, state unitization regulations require that no operations may be undertaken in a unit area before approval of a proposed plan of operation by the commissioner. A unit plan of operation submitted for approval must include a description of the operating procedures designed to prevent or minimize adverse effects on natural resources and other uses of the unit area and adjacent areas. Further, before undertaking operations within the current unit area and proposed expansion area, the unit operator must provide assurances for full. payment of all damage sustained by the owner of the surface estate (as well as by the surface owner's lessees and permittees) by reason of entering the land. Finally, a unit plan of operations must include plans for rehabilitation of the affected unit area after completion of operations or phases of those operations. (B) The Geological and Engineering Characteristics of the Reservoir. Pursuant to 11 AAC 83.356{a), a unit must encompass the minimum area required to include all or part of one or more oil or gas reservoirs, or all or part of one or more potential hydrocarbon accumulations. Geological and geophysical well data as well as geophysical (seismic) records were evaluated by the state to determine the appropriate boundaries for the proposed unit expansion area. These data included both confidential and non-confidential well logs, geological cross sections, structure contour maps, and net pay contour maps. Based upon that review, the Department of Natural Resources determined that the seven leases are justified for inclusion within the unit under the terms of the applicable regulations governing formation and expansion of an oil and gas unit (11 AAC 83 . 3 Ol - 11 AAC 8 3 . 3 95 ) and the terms and conditions under which the lands were leased from the State of Alaska. The data .provided by Conoco confirm a legitimate geological prospect which may be an extension of the trapping mechanism which led to the oil accumulation within the current boundary of the Milne Point Unit. (C) Prior Exploration Activities Within the Proposed Expansion Area. Prior to acquisition of ADL 355017 and ADL 355018, Conoco conducted a 2-D seismic program over a portion of the proposed expansion area in 1981. A second phase of the seismic program was conducted in 1984. Furthermore, a 3-D RECEIVE SEP 1 9 1994 ~iaska Oil & Gas Cons. Commission Anchora~; • - ! Milne Point Unit Expansion March 2, 1992 Page 8 seismic survey was conducted over a portion of the proposed expansion area in 1990. (D) The Applicant's Plans for Exploration or Development of the Proposed Unit Expansion Area. As part of the expansion application, Conoco submitted a plan of exploration for the evaluation of all the acreage within the proposed expansion area. The working interest owners have committed to drill four exploratory wells, acquire a shallow water seismic survey on ADLs 355021 and 355022, and drill a reservoir•evaluation well (R.EW) within the expanded unit area during the five year term of the plan of exploration. The first well,. NW Milne No. 1, will be a deviated hole drilled from an gravel island on ADL 355018 to an offshore bottomhole location in ADL 355021. Drilling of the well will commence sometime in February 1992, and drilling operations will be diligently pursued thereafter to reach the proposed total depth of the well. Construction of the offshore drillsite is underway at this time. The second unit well, the third well and the fourth well are scheduled to be commenced in the first quarter of 1994, 1995, and 1996, respectively. The reservoir evaluation well is planned to be drilled to an, as yet, undetermined fault block somewhere in the expansion area during the 1995/1996 winter drilling season. During this 1995/1996 season, the fourth exploratory well is also planned on either ADL 355019 or ADL 355020 to test the northernmost limits of the lower Kuparuk oil accumulation. Completion of these exploratory activities as scheduled will satisfy the performance standards and diligence requirements to which the state and the Milne Point Unit Working Interest Owners have agreed as a condition far expanding the unit area. Should any of the exploratory activities in the exploration plan not be performed as scheduled, the exploration plan will be in default and the information gained from any wells drilled and/or seismic data acquired in the expansion area prior to that time will be used to determine, in the sole discretion of the Department, the appropriateness of retaining any of the expanded area acreage within the then. current Milne Point Unit Area. .These provisions insure that the lease extensions resulting .from unitization pursuant to 11 AAC 83.336(a) continue only so long as the applicants proceed diligently with exploration and development. (E) The Economic Costs and Benefits to the State and Other Relevant Factors. Approval of the third expansion of the Milne Point Unit Area will provide near-term economic benefits to the state through employment associated with the assessment of the hydrocarbon potential of the subject leases. In REC~'vE~ S EP ~ g 1994 ,,~ ~ ~1i1 & Gay C~"g. n ~r. Commissar Milne Point Unit Expansion March 2, 1992 Page 9 addition, should a commercial discovery result, the state's long-term royalty and tax revenues will be enhanced, and private development capital will remain available for alternative oil and gas activity in the state. The Working Interest Owners have provided technical data sufficient to clearly define the prospect under consideration, have committed their diverse lease interests to the Milne Point Unit and have agreed to conduct a plan of exploration which assures a timely sequence of drilling and development activities in order to evaluate and develop all the .acreage within the proposed expansion area. VI. DEFERRAL OF MILNE POINT UNIT CONTRACTION Conoco has requested a one year deferral of the scheduled contraction date of the Milne Point Unit, subject to its continued compliance with the. performance standards and conditions agreed to as a condition of this expansion. In requesting the deferral, Conoco has stated that the one year extension would allow it and the other unit owners time necessary to effectively explore the entire expansion area, continue development of the Kuparuk and Schrader Bluff Pools, and begin an exploratory and delineation program in the areas of potential contraction within the current Milne Point Unit. According to 11 AAC 83.356(b), contraction can be delayed if the circumstances of a particular unit warrant. the deferral.. Postponement of contraction must be evaluated considering the provisions of 11 AAC 83.303. The criteria of that section are (1) promote the conservation of all natural resources; (2) promote the prevention of economic and physical waste; and (3} provide for the protection of all parties of interest, including the state. Analyzing the deferral application under these criteria, the delay of contraction for one year, subject to the continued adherence to__ the conditions and performance standards of the expansion area exploration plan under Section V.(D) above, is justified. Given the performance standards and diligence requirements imposed upon the expansion area exploration plan, a one year delay in the unit contraction to coincide with the five year term of the expansion area exploration plan would promote the delineation of all potential Milne Point Unit Area reserves; and expedite the production of those reserves. Should Conoco and the other unit working interest owners fail to comply with the scheduled activities of the agreed to exploration plan, the unit contraction date would revert to the ~c[heduie~~ ~~ 33[[ 1~ ~~ EE VV ~_~= i 9 19J4 ~~G;x~ ,,,, ~ Gas Cons. Commission Anchorayt Milne Point Unit Expansion March 2, 1992 Page 10 December 1, 1995 date. Otherwise the contraction date is delayed until December 31, 1996. VII. FURTHER AMENDMENT OF THE MILNE POINT UNIT AGREEMENT The proposed expansion of the Milne Point unit will result in the inclusion of seven State of Alaska Net Profit Share leases within the unit boundaries. As a result, the Milne Point Unit Agreement must be modified pursuant to 11 AAC 83.385 to accommodate the terms and conditions of the Net Profit Share leases. The approval of this third expansion of the Milne Point Unit, therefore, is conditioned upon submittal by the Milne Point Working Interest Owners and approval by the state of an amendment to the Milne Point Unit Agreement which will accommodate the inclusion of the Net Profit Share leases in the Milne Point Unit Area to the satisfaction of the state. Such an amendment must be submitted and approved prior to any expansion of the Milne Point Unit Kuparuk Participating Area to encompass any Net Profit Share lease, creation of a new participating area in the expansion area, or before any hydrocarbon production may be allocated to such a lease. In any event, such amendment must be submitted and approved no later than eighteen (18) months .following the effective date of this Decision. In the event such an amendment is not approved within eighteen months, all leases in the expansion area will be contracted out of the Milne Point Unit Area, effective as of July 1, 1993. Similar amendments were required and made to the Duck Island and Kuparuk River Unit Agreements to accommodate inclusion of Net Profit Share leases in these units. Attachment 2 to this Decision sets out the amendments made to the Duck Island Unit Agreement in 1982 - 1983 to accommodate Net Profit Share Leases. The state will require that similar amendments be made to the Milne Point Unit Agreement. VIII. FINDINGS AND DECISION Considering the facts discussed in this document and the administrative record, I find: 1. An opportunity for public comment on the Third Expansion of the Milne Poi::t Unit application was provided in compliance with the public notice requirements of 11 AAC 83.311. RECEIVED SEF 1 9 1994 r~rG;icd u~i & Gas Cons. Commission Anchora~ • Milne Point Unit Expansion March 2, 1992 Page 11 2. Approval of the Third Agreement, predicated upon exploration submitted wits the public interest, and is Lessees' ratification of t a fair and equitable ref .production of hydrocarbons Expansion Milne Point Unit the performance of the plan of ~ it, is advisable to protect in the state's best interest. he Unit Agreement will ensure :.urn to the state from any from the expanded unit area. 3. Based upon the geological, geophysical, and engineering data submitted to the state, the expansion of the. Milne Point Unit to include the seven leases, ADLs 355016, 355017 ,355018, 355019, 355020, 355021, and 355022, is proper and justified. The. Milne Point Unit Agreement provides for further expansions and contractions of the unit area in the future as warranted by additional information. Therefore, the public interest and the correlative rights of all parties affected by this expansion, including the state, are protected. 4. Within sixty (60) days of the Effective Date of the Unit Expansion, the Unit Operator, Conoco, shall submit to the state updated Exhibits "A" and "B" to the Milne Point Unit Agreement reflecting the approved expansion area. 5. The expansion of the Milne Point Unit meets the requirements. of AS 38.05.180(p) and 11 AAC 83.303. 6. For the period which it encompasses, the applicant's plan of exploration for the expansion area provides for exploration and analysis of potential hydrocarbon zones in the expanded unit area, as well as for diligent development activities .prior to ultimate production of hydrocarbons from the expanded unit area. 7. The plan of exploration for the expansion area meets the requirements of 11 AAC 83.303 and 11 AAC 83.341 if the following condition is incorporated into the submitted exploration plan- The proposed exploratory activities with the time lines and dates are the performance standards and diligence requirements which the state and the Milne Point Unit Working Interest Owners agree form the basis for the expansion area. The expansion of the Milne. Point Unit is conditioned upon Conoco's compliance with these specific performance ~ECEIVE~ i 9 1994 ~~aska UU & Gas Cons. Commission Anchor~~ • • Milne Point Unit Expansion March 2, 1992 Page 12 standards. Should any of the exploratory activities outlined in the exploration plan not be performed as scheduled, the exploration plan will be in default. The information gained from any wells drilled and/or seismic data acquired in the expansion area prior to that time will be used to determine the appropriateness of retaining any expansion area acreage within the then current Milne Point Unit Area. 8. Pursuant to 11 AAC 83.341, an annual update to the plan of exploration which describes the status of projects and work completed, as well as any proposed or expected changes to the plan of exploration must be submitted to the state for its. approval. 9. As a further condition of this expansion, the Milne Point Unit Agreement must be amended to accommodate the terms of the added Net Profit Share leases. Such amendment must be submitted to and approved by the state before any expansion of the Kuparuk Participating Area of the Milne Point Unit to include any Net Profit Share lease may be effected, any new participating area formed to include any leases in the expansion area, or any hydrocarbon praduction may be allocated to any Net Profit Share lease. However, in any event, such amendment must be submitted and approved within ei~hteen months of the effective date of this expansion. l0. The economic benefits to the state as a result of unitized development and production of the expanded Milne Point Unit Area outweigh the economic costs to the state in approving the proposed expansion. 11. Considering the provisions.. of 11 AAC 83.303, a delay of contraction of the unit area at this time is warranted, by the circumstances of this Unit. The unit contraction is delayed until December 31, 1996. 12. Expansion of the Milne Point Unit Area to include the additional leases will. provide for the increased conservation of all natural resources including hydrocarbons, gravel, sand, water, wetland, and other valuable habitat. 13. Expansion of the Milne Point Unit to include the additional leases will reduce the amount of surface lands and fish and wildlife habitat that would othe~ i~~ ~~~ 1 g 1994 ~-as~Ca ~-- F~ Gas Cons. Commission Anchora;,: • • Milne Point Unit Expansion March 2, 1992 Page 13 used if the area were to be explored and developed on a lease-by-lease basis. This reduction in the impact on the environment and on subsistence activity in the area is in the public interest. 14. This Third Expansion of the Milne Point Unit Area will be effective, retroactive, as of 12:01 a.m. January 1, 1992. For these reasons and subject to the conditions and limitations noted, I hereby approve the Third Expansion of the Milne Point Unit and the one year deferral of contraction of the Milne Point Unit Area. J es E. Eason, Director Date D ision of Oil and Gas 1 for: Harold C. Heinze, Commissioner Alaska Department of Natural Resources Attachments: Milne Point Unit Third Expansion Leases Amendment to the Duck Island Unit Agreement to Accommodate the Inclusion of Net Profit Share Leases Delegation of Authority from Commissioner to Director, Division of Oil and Gas Hilaept.NWEXP.aDDZOVal.text ~E~EIVE AtasKa !Uit & Gas Cons. Commission Anchors Attachment IV RECEIVED SEP 1 9 1994 plask3 Oil & Gas Cons. Commission Anchorayc ATTACHMENT V TQP LOWER KUPARUK STRUCTURE MAP ~'~ ~~ %,Qe i ?~BB ! ~ ~, i ~ - - e .~,oe ~ ~ ~ ~ ~~~ _ ;/ \~ e6 ~ ~ 7d P e I 'I j i~ ~• i ~ ! ~ ~ t / 1 ~ 1 I O to ~ ~~ee,,~~ I ? ~ \ i ~ WD POIh~ 1 -c 't I O ~3a ; i ~ ~ I v ta -. `ea i fi . BP I\ I • a ~ \ ~ ~ m /l m ( , ` t , , i i aw ` e ~ e ~ ?~ I 6e ~ j ! ! d ~ ~ ~eS xe0 ~ L-t L-5 I 050 ~~ L-.~f ,_ '~ 7166 F L-i _ _ I i - ~ ! ! FF _~ 7 ? `E I ~ o J ~'~~ L-e ~ ~ .o I , 7oet ~•, i ' _ ~ _ -6 ~~70K - ~E1S '~~ ~ ~ J ~ -70x0 L-Z ~ i •6 .e ~ I ~~ F - ~E6 ~ s ! -706 ~, ~ ~; j i ~ oso ~ , I N .~ ! I I i , v ' w .a ~~ 9 v I I l-1Z - C-~.(~_ 2F~ ~ ~• ~ 3C- ~ it -6=7i aa ~~,, x,_ ~~ -E599 1, l~.L 3 ,s ~~P bd ~ ~ 'Fe I ~ ! ~ - ~ ~ ~ ~ I ~ ~ i ' 1 -661 '~ I n ~. ~ fl ~~JJJJ ,RECEIVED a~ c.•~o»«na 'V UYt~ 1V~ ~ lt~~[~YR eVr"• T~~ SEP 19 lyy4 A-dska Uit & Gas Cons. Commission Anchors= BP EXPLORATION -ALASKA Attachment VII Northwest Milne Net Composite A3, A2, and Al Sand Isopach N C. ~ m m ~ ~, -~ n ~~ ~ rn o~ N ',. o ~ rn ~ -~ w N O 7 IKTOK OK 2 • 30- 30-5 .L -14 -~ 45' 2 ~ ~. ATTACHMENT VI NOPOINT-1 Soa29_z245~o : os-92 obro~ os: 2:os n ~~ - ~ ~~ :\ \'C ::i : k TVD~D GR1V1M MWIDso 2 ATR MWD 200 - o • ~;~t~~Shal~ ....._.:~up~ari~~: - - -- - -- - - 1 -~~ -9 5 • - -- --•----- ---- - - -------- - - - - --- - - --- ~ i a~c~-~ - - - -- - - ---- ~~-~-~,~ .... .......... ... .. Y` . ... ... - - - -- - -- - - - - - - - - - - -------- ~--=r-- - - - -------- : <:. 1 •~.s .~~.~.::.. ase- _..... , -~--•- . ~-•- .. M~~ t.,o... =, :::::: • i uv~a~h:~grna i n {~ 1 2 5 Q-- -•---- -- - - ------ .;, Type Log ED SEP 1 9 1994 Northwest Milne Development Area Klasica %li6 & Gas Cons. Commission Anchors ~,-