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Home My WebLink About208-200 0 • Image Project Well History 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. Q O - c O Well History File Identifier Organizing (done) ❑ Two -sided III II 111III IIII ❑ Rescan Needed II I11111 I 1 7 R E AN DIGITAL DATA OVERSIZED (Scannable) Col Items: ❑ Diskettes, No. ❑ Maps: reyscale Items: ❑ Other, No/Type: ❑ Other Items Scannable by a Large Scanner ❑ Poor Quality Originals: OVERSIZED (Non - Scannable) ❑ Other: ❑ Logs of various kinds: NOTES: ❑ Other:: BY: Maria Date: / / ifill /s/ ( 11 p Project Proofing I 11111 b BY: Maria Date: 0 /s/ Scanning Preparation Pre aration x 30 = 3 l 0 + ((2 = TOTAL PAGES 36 (Count does not include cover sheet)� /�� BY: Date: ( C ' /s/ W ` Production Scanning III 1111111 II I111 Stage 1 Page Count from Scanned File: '3 7 (Count does include cover eet) Pa.e Count Matches Number in Scanning Prep ration: YES NO BY: Date: l o p 1i /s/ Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Maria Date: /s/ Scanning is complete at this point unless rescanning is required. I 11111111 I II I ReScanned 111 1111111 III I BY: Maria Date: /s/ Comments about this file: Quality Checked III 11111111111111 10/6/2005 Well History File Cover Page.doc DATA SUBMITTAL COMPLIANCE REPORT 9/29/2011 Permit to Drill 2082000 Well Name /No. HANNA 1XX Operator AURORA GAS LLC API No. 50- 283 - 20131 -00 -00 MD TVD Completion Date 12/16/2008 Completion Status Current AV UIC N REQUIRED INFORMATION Mud Log Yes Samples No Directional Survey No DATA INFORMATION Types Electric or Other Logs Run: (data taken from Logs Portion of Master Well Data Maint Well Log Information: Log/ Electr Data Digital Dataset Log Log Run Interval OH / Type Med /Frmt Number Name Scale Media No Start Stop CH Received Comments Well Cores /Samples Information: Sample Interval Set Name Start Stop Sent Received Number Comments Cores and /or Samples are required to be submitted. This record automatically created from Permit to Drill Module on: 1/8/2009. ADDITIONAL INFORMATION Well Cored? Y / N Daily History Received? Y / N Chips Received? Y / N Formation Tops Y / N Analysis Y / N Received? — • Comments: �� ;� t yp r t d Compliance Reviewed By: Date: Zg1 �� • w ', , i ;� L L.- ..:e ,Lt-?..) U 1.! t\ . -:: L r--� r i . ! \ d..I�`t.1 / SARAN PALKN, GOVERNOR AND T GAS ALASKA OIL A1� GAS / 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMAIISSION / ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 Bruce Webb FAX (907) 276 -7542 Aurora Gas LLC 1400 W. Benson Blvd., Ste 400 Anchorage AK 99503 Re: Exploratory, HANNA No.1 Aurora Gas LLC Permit No: 208 -200 Surface Location: 1679' FWL, 1634' FSL, SEC.22, T14N, R9W, S.M. Bottomhole Location: 1679' FWL, 1634' FSL, SEC.22, T14N, R9W, S.M. Dear Mr.Webb: Enclosed is the approved application for permit to drill the above referenced exploration well. All dry ditch sample sets submitted to the Commission must be in no greater than 30' sample intervals from below the permafrost or from where samples are first caught and 10' sample intervals through target zones. This permit to drill does not exempt you from obtaining additional permits or approvals required by law from other governmental agencies, and does not authorize conducting drilling operations until all other required permits and approvals have been issued. In addition, the Commission reserves the right to withdraw the permit in the event it was erroneously issued. A weekly status report is required from the time the well is spudded until it is suspended or plugged and abandoned. The report should be a generalized synopsis of the week's activities and is exclusively for the Commission's internal use. Operations must be conducted in accordance with AS 31.05 and Title 20, Chapter 25 of the Alaska Administrative Code unless the Commission specifically authorizes a variance. Failure to comply with an applicable provision of AS 31.05, Title 20, Chapter 25 of the Alaska Administrative Code, or a Commission order, or the terms and conditions of this permit may result in the revocation or suspension of the permit. When providing notice for a representative of the Commission to witness any required test, contact the Commission's petroleum field inspector at (907) 659 -3607 (pager). Sincerely, 1 • Daniel T. Seamount, Jr. Chair DATED this 7 day of January, 2009 cc: Department of Fish & Game, Habitat Section w/o encl. Department of Environmental Conservation w/o encl. I STATE OF ALASKA ALA OIL AND GAS CONSERVATION COMM ION PERMIT TO DRILL A._k 1 u 20 AAC 25.005 la. Type of Work: 1b. Current Well Class: Exploratory 0 Development Oil ❑ l c. Specify if well is proposed for: Drill 0 , Redrill ❑ Stratigraphic Test ❑ Service ❑ Development Gas ❑ Coalbed Methane ❑ Gas Hydrates ❑ Re -entry ❑ Multiple Zone ❑ Single Zone ❑ Shale Gas ❑ 2. Operator Name: 5. Bond: Blanket 5 , Single Well ❑ 11. Well Name and Number: AURORA GAS, LLC Bond No. NZS 429815 HANNA No. 1 3. Address: 6. Proposed Depth: 12. Field /Pool(s): 1400 W. Benson Blvd., Suite 400, Anchorage, AK 99503 MD: 5000' • TVD: 5000' ' Undefined 4a. Location of Well (Governmental Section): 7. Property Designation: Surface: 1679' FWL, 1634' FSL Sec. 22, T14N, R9W, S.M. • ADL 390103 Top of Productive Horizon: 8. Land Use Permit: 13. Approximate Spud Date: same DNR Oil and Gas Lease 1/28/?00(1 A 12 /* 0 Total Depth: 9. Acres in Property: 14. Distance to Nearest same 1280 • Property: 1,634' FSL 4b. Location of Well (State Base Plane Coordinates): .40 IZ $ 10. KB Elevation 15. Distance to Nearest Well Surface: x-2§$2 VC t y 3,-4• Zoi 4 (Height above GL): 105 feet Within Pool: approx. 2 miles to Pretty Cr. Unit #2 16. Deviated wells: Kickoff depth: feet 17. Maximum Anticipated Pressures in psig (see 20 AAC 25.035) Maximum Hole Angle: degrees Downhole: 2400 psi • Surface: 1900 psi • 18. Casing Program: Specifications Top - Setting Depth - Bottom Cement Quantity, c.f. or sacks Hole Casing Weight Grade Coupling Length MD TVD MD TVD (including stage data) Driven 13 -3/8" 68 K -55 welded 80 15 15 95 95 driven, not cemented 12 -/14" 9 -5/8" 36 J -55 LTC 1000 15 15 • 1000 , 1000 292 sx (111 bbl) 8 -1/2" 7" 23 & 26 K -55 & L -80 LTC 5000 15 15 • 5000 • 5000 544 sx (146 bbl) 19. PRESENT WELL CONDITION SUMMARY (To be completed for Redrill and Re -Entry Operations) Total Depth MD (ft): Total Depth TVD (ft): Plugs (measured): Effect. Depth MD (ft): Effect. Depth TVD (ft): Junk (measured): Casing Length Size Cement Volume MD TVD Conductor /Structural Surface Intermediate Production Liner Perforation Depth MD (ft): Perforation Depth TVD (ft): 20. Attachments: Filing Fee ❑ BOP Sketch 5 Drilling Program 0 Time v. Depth Plot 0 Shallow Hazard Analysis ❑ Property Plat 5 Diverter Sketch 5 Seabed Report ❑ Drilling Fluid Program 5 20 AAC 25.050 requirements ❑ 21. Verbal Approval: Commission Representative: Date 22. I hereby certify that the foregoing is true and correct. Contact Printed Name Bruce D. Webb Title Manager of Land and Regulatory Affairs Signature (_ Phone (907) 277 -1003 Date 12/16/2008 Commission Use Only Permit to Drill API Number: Permit Approval See cover letter for other Number: �� 50- Zi3 3 --ZO /3 / -- Oa Date: 1 • 1 . OC1 requirements. Conditions of approval : If box is checked, well may not be used to explore for, test, or produce coalbed methane, gas hydrates, or gas contained in shales: g Other: Samples req'd: Yes[ ®�V � <\ ` ❑ No[ Directional svy req'd: Yes❑ No ‘3 t.ZE��C \Vlr4. `L'i •J'Iti \NOV - �Q�cC�.; l ►�7 Lot aciw'{a►+7 0a t `c.i# d 40 APPROVED BY THE COMMISSION DAT . e'' , COMMISSIONER /S O . Form 10 -401 Revised 12/2005 " ti BFL JAN 0 8 2009 Su•mit in Duplicate N\ ' Il l I\AL • • - Aurtora Gas, LLC www.aurorapower.com December 16, 2008 Tom Maunder, Senior Petroleum Engineer State of Alaska Oil and Gas Conservation Commission 333 W. 7 Avenue, Suite 100 Anchorage, AK 99501 Re: Application for Permit to Drill Hanna #1 Exploratory Gas Well Dear Mr. Maunder: Aurora Gas, LLC (Aurora) hereby requests approval to allow the drilling, perforating, completing, testing and production of the Hanna #1 exploratory gas well at a location on the west side of the Cook Inlet, between the Pretty Creek and Lewis River gas fields. The surface location of the Hanna #1 is 1,679' FWL and 1,634' FSL within Section 22, T. 14 N., R. 9 W., S.M. Attached is a plat depicting the location of this proposed gas well. The Hanna #1 well is planned to be a straight hole to a depth of 5,000 feet, drilled from an ice pad that will be adjacent to the Beluga Highway, south of the Chugach Electric power plant. The drilling rig to be used is the Aurora Well Service #1 (AWS #1). Please find the attached information as required by 20 AAC 25.005 for your review. Pertinent information included in this application is as follows: 1. Application for Permit to Drill, Form 10 -401. 2. Plat showing surface location. 3. Proposed summary drilling program. 4. Proposed casing program. 5. Proposed cementing program. 6. Proposed drilling fluids program. 7. Summary of drilling hazards. 8. Time versus depth plot. 9. Schematic of proposed wellbore and completion. 10. Aurora Gas does not anticipate the presence of H2S. However, H2S and other gas • monitoring equipment and alarms will be utilized. 1400 West Benson Blvd., Suite 410 • Anchorage, AK 99503 • (907) 277 -1003 • Fax: (907) 277 -1006 6051 North Course Drive, Suite 200 • Houston, TX 77072 • (713) 977 -5799 • Fax: (713) 977 -1347 • 1 The following are Aurora Gas' designated contacts for reporting responsibilities to the Commission: Completion Report: Ed Jones, Exec. V.P. — Engineering and Operations 20 AAC 25.070 (713) 977 -5799 Geologic Data/Logs: Bruce Webb, Manager of Land and Regulatory Affairs 20 AAC 25.071 (907) 277-1003 If you have any questions or require additional information, please contact me at 277 -1003 or Mr. Ed Jones at (713) 977-5799. ank you for your time and assistance. Sincerely, Bruce D. Webb Manager, Land and Regulatory Affairs attachments • 1 SCALE / 1 inch = 500 ft. / 0 500 750 1000 / f / AV III6" <lin Grid ,_,_ N // , P / /___,-.-......_____ 4._ NORTH / / / , / ` J / / J / / / SEC. 22 T1'4'RI R9W S.M., AK ./ • HANNA #1 Ao AS- STAKED /0 BLDG. / GRID N:2663335.019 �� `Oc, / vO \00 GRID E:346459.051 LATITUDE: 61 °17'12.662 "N / / �� ■ OF.A 4 fi LONGITUDE: 150°52'22.391V ELEV. 88' MSL •• ` Q4 �,`P. `�' 5,�� 0 ili 0 1679' FWL • MI is o so D RAINAGE - / / M. SCOTT McLANE_ _o m P /SED PAD S /, ® ' . 4928 -S � � / / C FO ' . �.... P , 0 / ' NOTES , P RO .111 ►e °�� / / 1) BASIS OF COORDINATES IS ALASKA STATE • PLANE NAD 27 ZONE 4 FROM AN OPUS / / 0 SOLUTION UTILIZING CORS STATIONS KEN1, � TSEA AND ZAN1 CONVERTED WITH NADCON. / • ;4- 2) BASIS OF ELEVATION IS FROM DATUM IS / CD NAVD88 FROM THE OPUS SOLUTION. ALL ELEVATIONS SHOWN HEREON WERE TAKEN ON GROUND. GRID N:2661723.494 / / 3) SECTION LINES SHOWN HEREON ARE GRID E:344760.333 BASED ON PROTRACT VALUES. SEC. 21 LATITUDE: 22 61°16'56.569"N LONGITUDE: 150 °52'56.707 "W / / Aurora Gas P OA - 20 08 -717 / / / Beluga River SEC. July 9, 2008; Sheet 1 of 2 SEC. 28 SEC. 2 / . .• -L._ • HANNA NO. 1 WELL AS- STAKED SURFACE LOCATION DIAGRAM McLane Consulting Inc APPLICANT: ENGINEERING /MAPPING /SURVEYING /TESTING - .. P.O. BOX 468 SOLDOTNA, AK. 99669 • -- , , VOICE: (907) 283 -4218 FAX: (907) 283 -3265 EMAIL: msmclaneamcIanecg.com PROJECT NO. DRAWN BY: DATE: SEC. LINE LOCATION: DEC 11, 06 OFFSETS: PROTRACTED SECTION 22 063116 MSM 1679' FWL TOWNSHIP 14 NORTH, RANGE 9 WEST 1634' FSL SEWARD MERIDIAN, ALASKA • Hanna #1 Drilling Pr Aurora Gas, g og ram HANNA #1 Hanna #1 is a grass -roots well targeting Beluga Gas Production. It is located about mid -way between the Lewis River and Pretty Creek Gas Fields (about 2 miles from each field). Hanna #1 will target Beluga Tsuga 2 -3 to 2 -4 sands, with shallower Sterling sands as possible secondary objective. • Pre Rig work 1. Stake & survey the Hanna GL is 88'. 2. Construct a 200' x 300' ice pad configured for AWS #1 with drilling support. Build sufficient cuttings containment for planned drilling program, and build containment for diverter line. 3. Install 13 -3/8" conductor to 80' below ground level. Install cellar & mousehole. Cut off conductor as needed to accommodate diverter system. Drilling Procedure 1. File & insure all necessary permits and applications are in place. 2. MIRU AWS #1 in drilling configuration. 80' of 13 -3/8" conductor has been pre - installed. Install 13 -5/8" VG LOK head. 3. Rig up diverter & mud loggers. Test & calibrate all PVT / gas sensor equipment. Provide 24 -hr notice to AOGCC inspectors for chance to witness diverter test. 4. Notify AOGCC & pertinent agencies when ready to start drilling operations. 5. Prepare spud mud system / weight up to 11.5 ppg. Load, strap & drift 1000' of 9 -5/8" 36# LTC surface casing. 6. PU 12 -1/4" mill tooth bit & drill to 1000', using 8" stabilized BHA. Watch for gas in shallow coals and sands. Attempt to TD in siltstone or claystone, avoid setting surface shoe in a coal bed or sand. If possible, adjust TD to put cement head at floor. 7. Condition hole for running 9 -5/8" surface casing, POOH, LD 12-1/4" BHA. 8. Run & cement new 9 -5/8" 36 #, J -55 LTC casing @ 1000', installing 1 centralizer / joint centered on the 1 4 joints above shoe, & 1 centralizer every 2 joint across the collars there after. Shoe joint connection at float shoe and float collar must be Baker- Locked. Cementing will be single stage using 12.0 ppg accelerated Class G /pozzolan cement at 100% excess volume. Be prepared to treat cement returns with retarder. 9. RD cementers, nipple down diverter, cut casing and install 11" 3M wellhead. 10. RU and test 11" 3M BOP stack and 5M choke manifold. Test stack and surface equipment to 3,000 psi. Pressure test 9 -5/8" casing to 1,500 psi for 15 minutes or as Prepared by Ed Jones Page 1 of 11 Aurora Gas, Hanna #1 Drilling Program required on approved Permit to Drill. Mud weight to drill out should be at least 10 ppg at this point, do not cut back if higher, up to 10.5 ppg. 11. PU 8 -1/2" Mill Tooth Bit & RIH w/ 6 -1/4' collars, 4 -3/4" collars, stabilizers, and jars. Drill out shoetrack. Condition / treat mud as needed for cement contamination, drill 20' new formation. Pull back into shoe & perform FIT / LOT up to 16.0 ppg EMW maximum with low volume test pump. Record results. 12. Continue drilling 8 -1/2" hole to 5000' TVD/MD or other depth as directed by Aurora Gas geologist. Monitor well and volumes carefully. Be prepared to shut well in and weight up immediately if flow or excessive gas build up in mud is noticed. Monitor hole cleaning and drilling trends, prepare to short trip if needed. Anticipated mud weights required are 10.0 -10.5 ppg. Do not exceed fracture gradient determined in step 11. If possible, adjust TD to put cement head on floor. While drilling, load, tally & drift 7" casing on racks. 13. Condition hole, short trip and prepare for running wireline logs. 14. POOH, rack back drillstring and RU wireline BOP's and lubricator and logging tools. Log 9 -5/8" cased -hole section w /gamma ray sensor, Log OH section with logging suite including resistivity and porosity logs as directed by Aurora Gas. RD wireline. 15. RIH w/ 8 -1/2" drilling assembly to TD & condition hole for running 7" casing. Ensure cementing head has proper connections or proper cross -over and is available for quick rig up. 16. POOH while laying down drillpipe & BHA, RU to run casing. Verify cementer's equipment is ready. 17. Install 7" pipe rams. ` - if )- t ) i `.- 18. Run 7" 26# L - 80 LTC casing until all used except save 1 joint for landing joint, then run 7" 23# K - 55 LTC casing for balance, installing 1 centralizer per joint centered on 1 4 joints above shoe, 1 centralizer every 2nd joint in open hole & every 3rd joint inside surface casing (use Turbolator centralizers below /thru each pay sand. Shoe joint connection at float shoe, float collar & stage tool landing collar must be Baker- Locked (80'shoetrack). While running casing, fill every 3 joint. Be prepared to wash to bottom. 19. RU cementers, cement per attached cementing program from TD to surface. A sufficient amount of 12.0 ppg Class G/Poz lead cement will be pumped to cover from 2500' up thru the annulus from the 9 -5/8" shoe to surface (this may change if shallower pay is encountered). This will be followed by sufficient amount of 15.8 ppg Class G tail cement to cover from TD back to 2500'. Excess will be calculated using caliper log data —top of tail slurry will be determined following evaluation of the logs. Plug will be bumped with clean 9.5 KC1/NaC1 brine. If possible reciprocate pipe while displacing cement. Land casing & WOC 20. RD cementers, nipple down stack, land casing in slips & cut casing (after minimum of 18 hours WOC time). Prepared by Ed Jones Page 2 of 11 Aurora Gas, Hanna #1 Drilling Program 21. Install 11" X 7-1/16" tubing spool, 7-1/16" X 11" DSA, mud cross and reinstall BOP stack. Pressure test BOP and surface equipment to 3,000 psi. Pressure test casing to 2,000 psi for 15 minutes and record results. 22. Install 2 -7/8" pipe rams. 23. RIH w/ bit & casing scraper on 2 -7/8" tubing to float collar. Displace well w/ filtered KC1/NaC1 brine (wt. to be determined from MDT data). Continue to clean brine for perforating by running through centrifuge & filtering. POOH. Strap tubing on TOH to validate tally. A MORE DETAILED PROCEDURE WILL BE PROVIDED AT THIS POINT INCLUDING PERFS 24. PU wireline BOP's & lubricator, pressure test all against casing to 2000 psi (or higher if MDT indicated higher gradients). PU GR/CBL /CCL & log 7" casing to surface. LD logging tools & PU perforating guns, RIH to depth as determined from OH logs and perforate zones of interest. Watch for pressures in casing after shooting. POOH, LD perf gun, RD wireline. 25. RIH w/ bit & casing scraper on 2 -7/8" tubing to float collar. Circulate perforating debris from hole. Continue centrifuging & filtering brine until cleaned up. POOH. LD bit & scraper. RU Aurora well test unit, including flare stack. 26. Pick up & assemble completion assembly which will consist of seal bore packer for sump packer to be set above deepest perforated zone, then 2 (or 3) hydraulic packers w/ sliding sleeves between packers —all sliding sleeves are to be closed and a blanking plug is to be run in the XN nipple below deepest packer. Set seal bore packer on wireline. RIH with seal assembly and remainder of completion on new 2 -7/8" 6.5# J -55 8 rd tubing & set completion at appropriate depth, filling tubing as running. Space out, hang off in tubing head & lock down. Pressure tubing to 3000 psi (or as required) to test and to set packers. Install BPV. ND BOP. NU and test tree. 27. Pull BPV and RIH w/ slick line and pull blanking plug. 28. RU & swab in deepest zone. After well cleans up, perform flow test —get stabilized rate (1 hour minimum). Shut in well & record pressure buildup until stabilized with no change in one hour. DO NOT KILL, but rerun blanking plug and set in XN nipple below deepest packer. 29. Add needed KC1 water cushion to tubing (1000'). Open deepest sliding sleeve. Test well as per Step 29. DO NOT KILL, but close sliding sleeve. 30. Repeat Step 30 for remaining shallower intervals (1 or 2). 31. Open zones for initial production (depending upon pressures and test results) —flow to clean up. Shut in. Set BPV in tree. Release rig, RD, and move rig to winter storage area. 32. Pull BPV. Run 4 -point test of initial production zone as per Procedure provided at that time. RD test unit. 33. Clear & clean location. Hand well over to production. 34. File completion reports with proper agencies. Prepared by Ed Jones Page 3 of 11 • Aurora Gas, Hanna #1 Drilling Program Site Access Hanna #1 will be accessible via existing gravel roads currently in use to support production operations at Lewis River Gas Field. Rig Aurora Well Service, Rig No. 1 (AWS 1) will be used to drill the Hanna #1 well. The Alaska Oil & Gas Conservation Commission has information on this rig and equipment as it has been in use for the last (5) years on other Aurora Gas operations. The pits, BOP system & mud equipment configuration will be the same as that used for previous work. Survey Program Both the 12 -1/4" surface hole and the 8 -1/2" production hole will be drilled vertically and the survey program will consist single -shot surveys as required to be obtained at 500' intervals in accordance with rules laid out in 20 AAC 25.050 (a) (1) & (2). Logging Program Mud loggers will be on site for the duration of drilling activities.. Schlumberger will provide wireline logging services as proposed below: Hanna #1 Proposed Logging Program Well Section Depths (fl) OH CH Log Type 12 -1/4" Surface 0' — 1000' Ai N /A: No open -hole logs planned for surface at this time. GR only in cased hole. 8 -1/2" Production 1000' —5000' I Platform Express: Array Induction, Compensated Neutron, Hole Litho- Density, SP, GR, and DSI.. Also MDT and Sidewall cores. 7" Int. Csg 1000' — 3,285' J GR/CBL /CCL Surface — TD 0' — 5000' Mud Logging Services . BOP Equipment Aurora Gas, LLC will use the same BOP system they have been using for the last (5) years which will consist of the following: 12 - 1/4" Surface Hole While drilling the 12 -1/4" surface hole, a 13 -5/8" 5M annular w/ 13 -5/8" diverter spool & 12" diverter line will be used as per 20 AAC 25.035 (c)(1)(A) requiring that the diverter line outlet size be at least 16" diameter or (B) at least as large as the hole size being drilled. Prepared by Ed Jones Page 4 of 11 Aurora Gas, Hanna #1 Drilling Program 8 -1/2" Production Hole An 11" 3000 PSI WP Schafco (Shaffer Equivalent) BOP system will be used which is configured with an 11" 3000 PSI WP annular preventer, (1) 3000 PSI WP double gate with a set of pipe rams installed sized to fit the pipe being run and a set of blind rams and (1) 11" 3000 PSI WP rated drilling spool. BOP tests will be performed to 3000 psi. The annular preventer will be tested to 1500 psi. Again, this is the same equipment Aurora has been using all along and information on the system is on file at the AOGCC. Drilling Fluids The drilling fluids will be furnished by Baroid or MI, both of whom have extensive experience with drilling activities in this area. An experienced mud engineer will be on site at all times while drilling to monitor properties and make recommendations. Drilling Fluid Properties While Drilling 12 - 1/4" interval to 1000' Beluga Formation Base Fluid 6% KCL Density 11.5 ppg PV 22 — 30 YP 20 — 30 API Filtrate < 5 Total Solids 15 — 25 % Gel & Polymer mud system Drilling Fluid Properties While Drilling 8 - 1/2" interval to 5000' Beluga and Tyonek Formations Base Fluid 6% KCL Density 11.0 — 12.0 ppg PV 22 — 30 YP 20 — 30 API Filtrate < 5 Total Solids 10 —15 % Polymer mud system Drilling Fluid Handling System Shale Shaker, Mud Cleaner, Centrifuge, PVT monitors Drilling Waste Disposal The cuttings will be mixed with Portland cement to dry, put into super sacks, and transported to the Kenai Borough landfill on the Kenai Peninsula. Drilling mud will be held in tanks for reuse or injection at the Aspen Disposal Well. Brine will be placed in tanks for use in future wells. Prepared by Ed Jones Page 5 of 11 Aurora Gas, Hanna #1 Drilling Program Casing / Cementing Program All casing is new. Analysis (attached) indicates casing program as designed provides adequate safety factors for this well. All casing strings with the exception of the 13 -3/8" conductor will be cemented in place using industry standard casing cementing techniques utilizing a casing shoe, float equipment, top and bottom wiper plugs and centralizers installed as needed. 13 -3/8" 68# K -55 Conductor Analysis and Cementing Program The conductor for Hanna #1 will be installed by drilling/driving the 13 -3/8" pipe to 80'SS/95' RKB. Joints will welded together and a drilling shoe will be welded to the bottom joint. No cementing is required. 9 -5/8" 36# J -55 LTC Surface Casing Analysis and Cementing Program The 9 -5/8" surface casing will be cemented from the proposed setting depth of 1000' to surface with an accelerated 12.0 ppg Class "G "- Pozzolan cement system. Capacities: 9 -5/8" Csg. Capacity = .0773 bbl /ft 9 -5/8" Csg X 13 -3/8" Conductor Capacity = 0.0597 bbl /ft 9 -5/8" Csg. x 12 -1/4" OH Capacity= .0558 bbl /ft System Volume: 9 -5/8" X 13 -3/8" Annulus: 80 X 0. 0597= 4.8 bbl 12 -1/4" OH x 9 -5/8" Csg: (1000'- 80') x .0558 bbl /ft x 2 (100 % excess) = 102.7 bbls Shoe Jt: 47' x .0773 bbl/ft = 3.6 bbls Actual volumes to be re- calculated at time of running casing due to potential variation in actual depth from planned. Cement System Weight (ppg) bbl cf sx Accelerated Class G 12.0 111.1 624 292 Yield 2.14 cf /sx Please see attached 9 -5/8" surface casing analysis and specifications. 7" 26# L -80 LTC Production Casing Cementing Program The 7" production casing will be cemented in fully from the proposed set depth of 5000' to surface. A 12.0 ppg lead Pozzolan-mix cement followed with a 15.8 ppg "G" tail cement system will be used. (The top of the 15.8 ppg may be adjusted upward following the logging program, dependent upon the location of upper most potential pay). This program is designed to insure the intended perforating / production intervals are isolated with 15.8 ppg "G" cement. Capacities: 7" 23# csg capacity = .0393 bbl /ft 7" csg X 8 -1/2" OH capacity = .0226 bbl /ft Prepared by Ed Jones Page 6 of 11 Aurora Gas, Hanna #1 Drilling Program 7" csg X 9 -5/8" 36# annular capacity = .0297 bbl /ft Lead System: 9 -5/8" x 7 "Csg: 1000' + 1500' 8 -1/2" open hole 1000' x .0297 bbls /ft x 1 (0% excess) = 29.7 bbls Lead Cement Volume = 29.7 bbl +1500' X .0226 X 1.25 =72.1 bbl Tail System: 8 -1/2" OH x 7" Csg: 5000 -2500' = 2,500' 2,500' x .0226 bbl/ft x 1.25(25% excess) =70.6 bbls Shoe Joint: 85' x .0393bb1/ft = 3.3 bbls Total Tail Cement Volume = 73.9 bbls Actual volumes will be calculated at time of running casing due to potential variation in depth from planned. Cement System Type Cement Weight (ppg) bbl cf sx Lead @ 2.14 cf/sx G -Poz mix 12.0 72.1 405 189 Tail @ 1.17 cf /sx G 15.8 73.9 415 355 Please see attached 7" production casing analysis and specifications. Pressure Calculations Maximum Anticipated Surface Pressure From offset wells in the immediate area, Unocal Pretty Creek #2 and #4, Chevron Pretty Creek 224 -28, and Cities Service Lewis River B - — all within about 2 miles of this location, the maximum anticipated bottom -hole pressures should not exceed a gradient of 9.3 ppg mud weight (the highest pressures and gradients from DST's in these wells were 1872 psi at 4162' in the PC 224 -28 and 1920 psi at 3980' in Pretty Creek 1, .45 psi /ft and .48 psi/ft (9.3 ppg)). Thus, assuming this gradient at 5000', the maximum anticipated surface pressures "MAP" can be calculated by ? ubtraeting the gas gradient of :1 pi/ft from pore pressure gradient cif ; 48 psi / ft and riiultiplyirig by the total TVD d pot Maximum Anticipated Surface Pressure = (.48 - .1) * 5000' = 1900 psi A formation integrity test to 13.0 ppg EMW @ 1041' was conducted while drilling Three Mile Creek #2, the closest operated well to this location. However, to be on the conservative side, a casing shoe strength of 16.0 ppg EMW (or .832 psi/ft) will be assumed. Thus, the estimated Maximum Allowable Surface Pressure during the 7 -7/8" interval is expected to be Maximum Allowable Surface Pressure = (.832 -.1)* 1025' =750 psi Drilling Hazards Shallow gas Shallow gas is a known hazard which exists throughout the area. The northwest side of Cook Inlet is noteworthy for its shallow gas hazard. All responsible personnel will be made aware and Prepared by Ed Jones Page 7 of 11 • Aurora Gas, Hanna #1 Drilling Program a notice of such hazards will be posted in the rig doghouse. There is no record of H2S in the region, however; a gas detection system capable of detecting H2S as well as methane will be installed on the rig with detectors at the floor level, the shale shaker and in the cellar. Coal Seams The Cook Inlet region is rich in coal seams, inter - bedded between the sands, gravels and shales that make up the Beluga and Tyonek formations. Drilling into a coal seam will appear to be a drilling break when drilled with a tri-cone bit. The major hazard of drilling into a coal seam without observing the proper response is the risk of stuck pipe. The proper course of action for preventing stuck pipe is two -fold. First, prior to drilling, insure the drilling fluid system is up to par, per recommendations from the on -site mud engineer. The second step to successfully drilling through coals in the Cook Inlet area is to not get greedy when coals are encountered. When a coal has been encountered, pull back above coal after drilling into it, and circulate, allowing the coal to stabilize. Re- enter, drill some more, and pull back out again. Continue in this fashion until successfully through the coal bed. The key word in successfully drilling the coal beds is patience. It should be remembered that coals behave plastically, and will flow under the weight of the overburden. The deeper the coal, the more pronounced this tendency becomes. For this reason it is critical to maintain the proper weight and viscosity of the drilling fluid to properly remove the coal cuttings, and to hold flowing coals in place. Again, heed the recommended drilling fluid program and advice offered by the on -site Mud Engineer. Well Proximity Risk There is no close approach risk associated with drilling Hanna #1. The nearest well, the Chevron Pretty Creek 224 -28, is about 1 a mile SSW of the Hanna #1 drillsite. Other Risks Sticky bentonitic clays, boulders, lost returns & differential sticking with overbalanced muds and gas influx while cementing or swabbing while tripping pipe. Prepared by Ed Jones Page 8 of 11 • • Aurora Gas, Hanna #1 Drilling Program 2 7/8 6.5# 8rd EUE J -55 Tubing ti-Aurora Gas, LLC d „, * r"" ", tw HANNA #1 Possible 0 hi 13 -3/8" 68# Structural Configuration w Conductor to be drilled to 80' Drill 12 -1/4" Hole to1000' 9 -5/8" 36# Surface Casing set at 1000' . Cement w /12.0 ppg G/Poz Cement 2 -7/8" x 7" annulus to be displaced fit,, over to inhibited packer fluid .1.1, through sleeve @1445' v. . 4 Sliding Sleeve @ — 2720' 0 1 _ _ 1I Hydraulic Set Packer @2750' Sliding Sleeve @ -2850' Lower Sterling Sand, MP NM IA — Top at +/ -2800' E Perforation Intervals to be Hydraulic Set Packer @ 3350' determined by open -hole logging. Beluga Sand, top at +/ -3400' $.1 Sliding Sleeve @ —3440' MD r ... 4y . iiv, iv „ _________________„ " 2 7/8" 6.5# EUE 8rd Tubing w/ Seal Assembly to Retrievable Seal Bore Packer @ 4250 w/ 2.31 profile XN Beluga Sand top '�: at +/ -4300' III t 1111 4M1 Ili 'Nal . f „ Drill 8 -1/2" Hole to 5000' "s 7" 26 & 23# L -80 &K -55 LTCCasing to 5000' • MD / TVD Estimated PBTD @ 4915' Prepared by Ed Jones Page 9 of 11 Aurora Gas, Hanna #1 Drilling Program HANNA 1 DRILLING TIME 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -1000 • -2000 L_ DEPTH -3000 Series 1 -4000 -5000 • • • -6000 DAY Prepared by Ed Jones Page 10 of 11 1 • Aurora Gas, Hanna #1 Drilling Program HANNA #1 Summary of Drilling Hazards POST THIS NOTICE IN DOGHOUSE 4 There is potential for abnormal pressured shallow gas. 4 There is potential for stuck pipe in coals encountered while drilling from surface to TD. Short trips as dictated by drilling trends. Ai There is no H2S risk anticipated for this well. 4 Due to potential for shallow gas kick, very little response time will be afforded to respond. PVT and gas detection systems must be fully operational and functioning at all times, visual flow checks and pit level monitoring are critical. CONSULT THE HANNA #1 WELL PLAN FOR ADDITIONAL INFORMATION Prepared by Ed Jones Page 11 of 11 Lone Creek No.4 Casing Properties and Design Verification Casing Performance Properties: Tensile Strength Internal Collapse Size Weight Yield Resistance TVD MD MW MASP (Inches) lb /ft Grade Cnxn (psi) (psi) Joint Body (ft RKB) (ft RKB) (npg) BF si 9 -5/8" 36 K -55 LTC 3520 2020 489000 564000 1000 1000 11.5 0.82 750 7" 26 L -80 LTC 7240 5410 519000 604000 5000 5000 10.5 0.84 1900 7" 23 K -55 LTC 4360 3270 341000 366000 5000 5000 10.5 0.84 1900 Design Safety Factor* • Size Tensile Burst Collapse 9 -5/8" 16.5 4.7 4.1 7" L -80 4.8 3.8 2.4 7" K -55 3.5 2.3 1.5 * Tensile design safety factors are calculated using pipe weight less buoyancy. Burst design safety factors are calculated at the surface using zero backup on the outside and MASP on the inside. Collapse design safety factors are calculated at the casing shoe using the maximum expected mud weight to be used at the] hole evacuated except for gas gradient on the inside. shoe depth on the outside and the entire cased p g g Casing Setting Depth Rationale 9 -5/8" 1000' MD / 1000' TVD Surface casing to stabilize shallow formations provide an anchor for the BOP stack and • provide shoe strength in the event of a kick. 7" 5000' MD / 5000' TVD Production casing to stabilize and isolate producing interval for production operations. Page 1 of 1 • • Davies, Stephen F (DOA) From: Bruce D Webb [bwebbigaurorapower.com] Sent: Monday, January 05, 2009 9:20 AM To: Davies, Stephen F (DOA) Subject: FW: Shallow Hazards Assessment.PDF - Adobe Acrobat Standard Attachments: Shallow Hazards Assessment.PDF FYI... A signed copy. From: Sheryl McGruder [ mailto :smcgruder @aurorapower.com] Sent: Friday, January 02, 2009 5:16 AM To: 'Bruce D Webb' Subject: Shallow Hazards Assessment.PDF - Adobe Acrobat Standard Good morning Bruce, Please see the attached scanned document requested by Robert: RECEIVED JAN 0 5 2009 Alaska Oil & Gas Cons. Commission Anchorage 1/5/2009 • • MEMORANDUM TO: Ed Jones Executive Vice President Aurora Power. Inc. FROM: Robert E. Pledger Registered Professional Geologist RE: Shallow Hazards Assessment Hanna Prospect Sec 22, T14N, R9W Dear Mr. Jones: I have reviewed available 2 -D seismic data overlying the proposed Hanna No. 1 well location and see no indications of Shallow Hazards. Utilizing PSTM seismic data, there appear to be no velocity variations in the data. Additionally, bed boundaries seem to be consistent and continuous nullifying any indications of shallow gas sources that might create shallow hazards. If there is anything further needed, please let me know. Sincerely, Robert E. Pledger Registered Professional Geologist AAPG, SIPES, AIPG, State of Texas License No. 2033 y E OF -r ROMA TE pcaWR GEOLOGY i RECEIVED 2033 D �' --ENS c r h JAN 0 5 2009 � A/ � s Ot Alaska Oil & Gas Cons. Commission Anchorage Page 1 of • A Maunder, Thomas E (DOA) From: Davies, Stephen F (DOA) Sent: Tuesday, December 23, 2008 10:29 AM To: Bruce D Webb Cc: Maunder, Thomas E (DOA) Subject: RE: Hanna #1 Thanks Bruce. Merry Christmas! While reviewing the Hanna 1 permit application, I did notice that the location is identical to that of the N Pretty Creek 1. The N Pretty Creek 1 permit to drill (and all attendant waivers) were cancelled by the operator on March 8, 2005. So, Aurora must apply for any waivers needed to drill, complete, test and produce Hanna 1. To complete the geologic review of the Hanna 1 permit to drill application, I still need a statement from the project geologist or geophysicist concerning shallow hazards indicators within the seismic and velocity data set. In the meantime, the permit application has been forwarded for further review. I can't speak for the Alaska Department of Environmental Conservation (DEC), but Aurora should consider sending a letter of application requesting the Commission find that the proposed Hanna 1 natural gas exploratory well be classified as a gas -only well as provided for in AS 31.05.030(1), and asking that the Commission report that finding to the DEC. If Aurora were to makes such a request, it must provide supporting documentation to justify a gas -only classification (e.g. production, well test, core, sidewall core, well log and / or mud log information from nearby wells and an explanation of the structural / stratigraphic relationship of Hanna 1 to those wells). Commission evaluation shouldn't take too long. Happy Holidays! Steve Davies AOGCC From: Bruce D Webb [mailto:bwebb @aurorapower.com] Sent: Tuesday, December 23, 2008 9:37 AM To: Davies, Stephen F (DOA) Subject: Hanna #1 Happy Holidays Steve, I did not know if I told you that the Hanna #1 was the Pelican Hill's N. Pretty Creek #1 well. We acquired it from Trading Bay Energy who got it back after a farmout to Pelican Hill. The N. Pretty Creek #1 PTD is 205 -012. l am not sure where that Permit was when Pelican Hill gave up, but I am attaching their old submittal from Arlen Ehm. Do we need a Gas well exemption concurrence from you guys? Bruce D. Webb Manager, Land and Regulatory Affairs Aurora Gas, LLC 1400 W. Benson Blvd., Suite 410 Anchorage, AK 99503 (907) 277 -1003 office (907) 229 -8398 cell 12/24/2008 Page 1 of 2 • • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Friday, December 19, 2008 3:09 PM To: 'Bruce D Webb' Subject: RE: HANNA 1 SHALLOW HAZARDS ASSESSMENT NEEDED Bruce, Did the geophysicist or geologist who mapped the structure note any shallow gas indicators in the seismic or velocity data? Thanks, Steve Davies AOGCC From: Bruce D Webb [mailto:bwebb @aurorapower.com] Sent: Friday, December 19, 2008 3:01 PM To: Davies, Stephen F (DOA) Cc: Maunder, Thomas E (DOA) Subject: RE: HANNA 1 SHALLOW HAZARDS ASSESSMENT NEEDED Steve, Attached is a letter requesting waiver from 20 AAC 25.061(a). If this is not sufficient, please let me know and I will as Ed to prepare something that is more in- depth. Thank you for consideration. Have a good weekend. -Bruce Bruce D. Webb Manager, Land and Regulatory Affairs Aurora Gas, LLC 1400 W. Benson Blvd., Suite 410 Anchorage, AK 99503 (907) 2774003 office (907) 229 -8398 cell (970) 277 -1006 fax From: Davies, Stephen F (DOA) [ mailto:steve.davies @alaska.gov] Sent: Friday, December 19, 2008 1:10 PM To: bwebb @aurorapower.com Cc: Maunder, Thomas E (DOA) Subject: HANNA 1 SHALLOW HAZARDS ASSESSMENT NEEDED Bruce, Regulation 20 AAC 25.061 requires a shallow hazards evaluation for all exploratory or stratigraphic wells. The text of this regulation is attached below. Could Aurora please provide a shallow hazards analysis for the proposed Hanna 1 exploratory well? Thanks for your help, Steve Davies Sr. Petroleum Geologist Alaska Oil and Gas Conservation Commission Telephone: (907) 793 -1224 12/19/2008 Page 2 of 2 Fax: (907) 276 - 7542 • New Email Address: steve.davies @a aska.gov 20 AAC 25.061. Well site surveys (a) For an exploratory or stratigraphic test well, near surface strata to a depth of 2,000 feet in the vicinity of the well must be evaluated seismically by common depth point refraction or reflection profile analysis, or by another method approved by the commission, to identify anomalous velocity variations indicative of potential shallow gas sources. Analysis results must be included with the application for the Permit to Drill (Form 10- 401). (b) For a well drilled offshore from a mobile bottom - founded structure, jack -up rig, or floating drilling vessel, the vicinity of the well must be evaluated by sidescan sonar and other pertinent surveys to determine whether potential seabed hazards to drilling operations are present. Survey results must be included with the application for Permit to Drill. (c) Upon request by the operator, the commission will, in its discretion, waive the requirements of this section if the operator can identify, by other equally effective means, the likelihood of encountering potential shallow gas or seabed hazards or if the commission already has information that substantiates the presence or absence of shallow gas or seabed hazards. History: Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152 Authority: AS 31.05.030 12/19/2008 • • Gas, LLC www.aurorapower,com December 19, 2008 ** *Delivered Electronically * ** Steve Davies, Senior Petroleum Geologist State of Alaska Oil and Gas Conservation Commission 333 W. 7 Avenue, Suite 100 Anchorage, AK 99501 Re: Request for Waiver of Shallow Hazards Analysis Hanna #1 Exploratory Gas Well Dear Mr. Davies: Aurora Gas, LLC (Aurora) hereby requests waiver of the requirements of 20 AAC 25.061(a) pursuant to 20 AAC 25.061(c). The regulation provides, in part: "Upon request by the operator, the commission will, in its discretion, waive the requirements of this section if the operator can identify, by other equally effective means, the likelihood of encountering potential shallow gas or seabed hazards or if the commission already has information that substantiates the presence or absence of shallow gas or seabed hazards." The Hanna #1 proposed gas well is situated between the Pretty Creek and Lewis River gas fields (Units). Wells that have been drilled in the area include E. Lewis River #1 approximately 3 miles to the east, the Lewis River Unit #13 -2 approximately 3 miles north, the Pretty Creek #1 approximately 5 miles west and the Pretty Creek Unit #2 approximately 3 miles south. The Commission has existing shallow hazards analysis and other data from wells in the immediate area, as well as drilling reports, logs and reservoir pressure data. Aurora had recently drilled the Moquawkie #4 development gas well and encountered a shallow gas pressure anomaly at approximately 800 feet. The well experienced a diverter event that lasted approximately 21 hours. Mud weight at the time of drilling was 9.5 ppg, as was typical for Aurora's drilling operations. A dynamic Kill program was successful using a mud weight of 12.8 ppg. Due to the unexpected presence of shallow gas at the Moquawkie #4 well, Aurora has revised its drilling program to include a mud weight of 11.5 ppg during surface drilling operations. Aurora believes this mud weight will mitigate any potential for an unexpected shallow gas anomaly resulting in an uncontrolled loss of drilling fluids. 1400 West Benson Blvd., Suite 410 *Anchorage, AK 99503 • (907) 277 -1003 *Fax: (907) 277 -1 006 6051 North Course Drive, Suite 200 ® Houston, TX 77072 . (713) 977 -5799 « Fax: (713) 977 -1347 • Aurora believes the combination of the mud weight and the history of drilling operations around the Hanna #1 fulfills the requirements of 20 AAC 25.061(c). A Shallow Hazards Analysis summary is included on pages 7, 8 and 11 of the Hanna #1 proposed summary drilling program. Your waiver of the requirements of 20 AAC 25.061(a) will be greatly appreciated. Thank you for your time and consideration. Aurora looks forward to your determination. Best regards, ..,""14C) Bruce D. Webb Manager, Land and Regulatory Affairs Aurora Gas, LLC Page 1 of 2 • Maunder, Thomas E (DOA) From: Havelock, Brian E (DNR) Sent: Friday, December 19, 2008 9:14 AM To: Maunder, Thomas E (DOA) Subject: FW: Special Areas Permit SFSGR for the Hanna #1 Attachments: RE: Aurora Natural Gas Hanna #1 Exploration, (SFSGR) West Cook Inlet; RE: Hanna Well No. 1; Hanna Well No. 1; Hanna SFSGR Application and related info.pdf Hi Tom FYI, in case this is yours. Brian Havelock Natural Resource Specialist Division of Oil 86 Gas Alaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska 99501 907 -269 -8807 Division of Oil and Gas Home Page From: Havelock, Brian E (DNR) Sent: Friday, December 19, 2008 9:00 AM To: Davies, Stephen F (DOA) Subject: FW: Special Areas Permit SFSGR for the Hanna #1 Hi Steve, I meant to cc you on this because the well is a little close to the Pretty Creek Unit boundary. The permit went through a review about a year ago. I plotted the location 1679FWL- 1634FSL_Sec22 T14N R9W Seward from the map provided at: 61 °17'10.72 "N 150 °52'30.67 "W (NAD 83) Brian Havelock Natural Resource Specialist Division of Oil 86 Gas Alaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska 99501 907 - 269 -8807 Division of Oil and Gas Home Page From: Havelock, Brian E (DNR) Sent: Wednesday, December 17, 2008 2:13 PM To: Sharon Sullivan - Unocal; 'Czarnezki, Marta P.'; Gary Williams - KPB ACMP; slee @matsugov.us; (Greg Arthur @chugachelectric.com); ( Julie .d.little @conocophillips.com); Shannon W Martin (SMartin @chevron.com); (tom.arminski @enstarnaturalgas.com) Cc: Bouwens, Kenneth A (DFG); Bethe, Michael L (DFG); Rader, Matthew W (DNR); 'Bruce D Webb' Subject: FW: Special Areas Permit SFSGR for the Hanna #1 FYI The Division is preparing to issue an authorization for this winter drilling project located in T.14N, R.9W, Sec.22, 12/24/2008 Page 2 of 2 Seward Meridian. Brian Havelock Natural Resource Specialist Division of Oil & Gas Alaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska 99501 907 - 269 -8807 Division of Oil and Gas Home Page From: Bruce D Webb [mailto:bwebb @aurorapower.com] Sent: Tuesday, December 16, 2008 2:41 PM To: Bethe, Michael L (DFG); Bouwens, Kenneth A (DFG) Cc: Rader, Matthew W (DNR); Havelock, Brian E (DNR) Subject: Special Areas Permit SFSGR for the Hanna #1 Gentle men, Aurora Gas, LLC has decided to drill the Hanna #1 exploratory well from a winter ice pad as originally planned. The drilling date is anticipated to be January 15, 2009 and end before March 31, 2009. The previous Special Areas Permits FG 05 -11 -004 and FG 07 -11 -001 have expired. Funding for this well has been a challenge. However, it appears to finally be secured. The original application, as approved, was for winter exploration. Aurora Gas had attempted to get the necessary authorizations for a summer drilling operation, but the approval for this type of activity proved to be too difficult. Therefore, Aurora Gas is planning on commencing drilling operations in the winter as originally planned and permitted. A statewide oil and gas bond covering the lease activity is being prepared and will be in place prior to any surface activities. The last permit renewal was issued on January 11, 2007. Aurora Gas, LLC respectfully requests the renewal of the SFSGR Special Areas Permit for the Hanna #1 winter gas exploration well. The project remains as originally planned and as verified in January 2007. 1 have attached a new application, and related applications /authorizations, in case that is required. For a bit of history on this proposed well, please see the attached e- mails. Thank you for your time and assistance. Have a wonderful holiday season! Best regards, -Bruce Webb Bruce D. Webb Manager, Land and Regulatory Affairs Aurora Gas, LLC 1400 W. Benson Blvd., Suite 410 Anchorage, AK 99503 (907) 277 -1003 office (907) 229 -8398 cell (970) 277 -1006 fax 12/24/2008 Page 1 of 2 • • Maunder, Thomas E (DOA) From: Blajeski, Valerie E (DFG) Sent: Tuesday, January 09, 2007 11:06 AM To: 'Michael S Walker' Cc: 'Ben Greene'; Blankenburg, Robert J (DEC); 'Cynthia Espinoza'; 'Dianne Soderlund'; Simpson, Ellen M (DFG); 'Jack Hewitt'; Baumgartner, James R (DEC); Easton, John R (DNR); Aldrich, Lori (DEC); 'Lydia Miner'; 'Margie Goatley'; Fink, Mark J (DFG); 'Mel Langdon'; 'Mike Bethe'; Bettis, Patricia K (DNR); 'Patty Burns'; slee @matsugov.us; 'Ted Rockwell'; Ashton, William S (DEC); 'Ron Stadem'; 'Ed Jones'; 'Bruce D. Webb'; 'Bill Penrose'; Krauss, Brenda K (DEC); Rader, Matthew W (DNR) Subject: RE: Aurora Natural Gas Hanna #1 Exploration, (SFSGR) West Cook Inlet Shane, ADF &G concurs with Matt Rader's comments below regarding the Aurora Gas Hanna No. 1 Exploration project within Susitna Flats State Game Refuge. Valerie E. Blajeski Habitat Biologist Alaska Department of Fish and Game 333 Raspberry Road Anchorage, Alaska 99518 Phone: (907) 267 -2300 Fax: (907) 267 -2464 From: Matt Rader [mailto:matt rader @dnr.state.ak.us] Sent: Monday, January 08, 2007 2:14 PM To: 'Michael S Walker' Cc: 'Ben Greene'; 'Bob Blankenburg'; 'Cynthia Espinoza'; 'Dianne Soderlund'; 'Ellen Simpson'; 'Jack Hewit; 'James R Baumgartner'; 'John Easton'; 'Lori Aldrich'; 'Lydia Miner'; 'Margie Goatley'; 'Mark J Fink'; 'Mel Langdon'; 'Mike Bethe'; 'Patricia Bettis'; 'Patty Burns'; 'Susan Lee'; Ted Rockwell'; 'Valerie Blajeski'; 'William S Ashton'; 'Ron Stadem'; 'Ed Jones'; 'Bruce D. Webb'; 'Bill Penrose'; 'Brenda Krauss' Subject: RE: Aurora Natural Gas Hanna #1 Exploration, (SFSGR) West Cook Inlet Shane, The Division of Oil and Gas has reviewed the proposed modification by Aurora as described in their letter of December 20, 2006 as modified to exclude the placement of gravel, and finds that it is within the scope of the original plan approval and will not cause additional impacts to coastal uses or resources. Matt Rader 907 269 -8776 DNR DO &G 550 West 7th Ave #800 Anchorage, Alaska 99501 http://www.dog.dnr.state.ak.us/oil/ http: / /www. dog.dnr. state.ak.us/ oil /programs /permitting /permitting.htm From: Michael S Walker [mailto:shane walker @dnr.state.ak.us] 12/24/2008 Page 2 of 2 • • Sent: Wednesday, January 03, 2007 12 :32 PM To: Michael S Walker Cc: Ben Greene; Bob Blankenburg; Cynthia Espinoza; Dianne Soderlund; Ellen Simpson; Jack Hewitt; James R Baumgartner; John Easton; Lori Aldrich; Lydia Miner; Margie Goatley; Mark 3 Fink; Matt Rader; Mel Langdon; Mike Bethe; Patricia Bettis; Patty Burns; Susan Lee; Ted Rockwell; Valerie Blajeski; William S Ashton; Ron Stadem; Ed Jones; Bruce D. Webb; Bill Penrose; Brenda Krauss Subject: Aurora Natural Gas Hanna #1 Exploration, (SFSGR) West Cook Inlet To All: Aurora Natural Gas has proposed a modification to a previously found consistent project. Please go to the following address to review all pertinent materials: ftp: / /ftp.dnr.state.ak.us /OPMP /Anchorage /MSW_ID20070 OGAurora NaturalGas_Hannal_Explot Per 11 A.A.C. 110.820(h), please respond by COB on Tuesday, January 9, 2007, with responses to the following questions: 1. Does the proposed modification require a new authorization or change to an existing authorization; and 2. May the proposed modification cause additional impacts to a coastal use or resource? Remember, per 11 A.A.C. 110.820(k), that the following modifications have no additional effect on coastal uses and resources and are not subject to further consistency review: 1. A change in ownership; 2. A change in contractor or subcontractor; 3. A decrease in the impact of the project with no change of purpose; 4. Authorization modifications that are within the scope of the original project that was reviewed; 5. Authorization modifications that are allowed under the original authorization conditions; and 6. Authorization modifications that are meant to clarify requirements in the previously issued authorization. Please contact me if you have any questions. Best, Shane Walker Joint Pipeline Office Liaison Alaska Department of Natural Resources Office of Project Management & Permitting Alaska Coastal Management Program 550 West 7th Avenue, Suite 705 Anchorage, AK 99501 Phone: (907) 269 -7472 Fax: (907) 269 -3981 email: shane_walkerAdnr.state.ak.us web: www.alaskacoast.state.ak.us 12/24/2008 Page 1 of 4 • • Maunder, Thomas E (DOA) From: Blajeski, Valerie E (DFG) Sent: Thursday, January 04, 2007 3:37 PM To: 'Bruce D. Webb' Cc: Fink, Mark J (DFG); 'Michael S Walker; 'Ron Stadem'; Rader, Matthew W (DNR); 'Chad Helgeson' Subject: RE: Hanna Well No. 1 Thank you, I will incorporate the ADF &G requested information into your Special Area Permit project summary. Valerie E. Blajeski Habitat Biologist Alaska Department of Fish and Game 333 Raspberry Road Anchorage, Alaska 99518 Phone: (907) 267 -2300 Fax: (907) 267 -2464 From: Bruce D. Webb [mailto:bwebb @aurorapower.com] Sent: Thursday, January 04, 2007 3:24 PM To: Valerie Blajeski Cc: Matt Rader; Ron Stadem; Michael S Walker; Chad Helgeson Subject: RE: Hanna Well No. 1 Valerie, Aurora Gas WILL NOT be using gravel for any part of this exploration well. For clarification however, the gravel road already exists. Constructing a new gravel road was never considered. The gravel we had considered using would have been for the approach -end of the actual pad, adjacent to the existing gravel road' for the purpose of transitioning from the road elevation to the pad elevation. Further, since the gravel would be removed, the actual impact would be de'minimis, if not non - existent. [ 2006 Mitigating Measure #3 and #10, rather than #21(i) ] We are aware of the Beluga Pipeline R/W and have coordinated activities with Enstar. We have used McLane and Associates to survey the location, including the identification of the pipeline and Chugach Electric R /W. See attached plat. In response to your other questions: 1. The Aurora Well Service rig typically has a 10,000 gallon diesel storage tank the accompanies it. 2. The drilling fluid will be water - based. 12/24/2008 Page 2 of 4 • • 3. Potassium Chloride (KCL) will be used in the drilling fluid at a mixture of approximately 6% (15 to 20 # /bbl). It is granular in 50# sacks. The total amount that will be needed is less than 1000 sacks. Because of the proximity of the well to other available storage locations, only a portion of the total amount will be stored on site and will be replenished as needed. Easy Mud DP (PHPA) will be used in the drilling fluid at a mixture of approximately 0.5# /bbl. It is granular in 14# cans. The total amount that will be needed is less than 65 cans and will be stored on site. 4. As mentioned in the CPQ project description, "... Drilling mud and well cuttings will be removed from the site regularly and processed by Envirotech at Tyonek or disposed of through annular injection." However, should the temporary storage of drilling waste be necessary, we have a DEC Temporary Waste Storage Permit in place. Should additional questions arise, please do not hesitate in contacting me. -Bruce Original Message From: Valerie Blajeski [mailto:valerie _blajeski @fishgame.state.ak.us] Sent: Thursday, January 04, 2007 11:43 AM To: 'Bruce D. Webb' Cc: mark_fink@fishgame.state.ak.us Subject: RE: Hanna Well No. 1 Bruce, As you know the Susitna Flats State Game Refuge (SFSGR) was established to protect fish and wildlife habitat and populations. Entry upon the SFSGR for purposes of exploration and development of oil and gas resources shall be permitted when compatible with the protection of fish and wildlife habitat. Mitigation Measure 21 states that gravel roads will not be allowed during exploration within Special Areas. Essentially if an operation has alternatives available to it that provide the most minimal impact to the Special Area that alternative is what is permitted. ADF &G is reasonably accommodating Aurora Gas LLC as there are other alternatives to using gravel that will allow the company to proceed as planned. Based on your reply below, I take it that Aurora Gas LLC has agreed to not use gravel fill for the Hanna No. 1 Well Project. In addition, ADF &G requires further clarification on your project summary: WiII Aurora Gas LLC be storing fuel for the drilling rig? - -If so what type and how much? Will this be water -based drilling? Will any KCL /PHPA fluid be used and /or stored? —If so what type and how much? How will drill cuttings be dealt with? Under the Pelican Hill Special Area Permit FG -05 -II -0004, Pelican had agreed to stipulations regarding potential project conflicts to the Beluga Pipeline Right -Of -Way. Is Aurora Gas LLC aware of this and is it working with Enstar to minimize potential conflicts? Valerie E. Blajeski Habitat Biologist Alaska Department of Fish and Game 333 Raspberry Road Anchorage, Alaska 99518 12/24/2008 Page 3 of 4 • i Phone: (907) 267 -2300 Fax: (907) 267 -2464 From: Bruce D. Webb [mailto:bwebb @aurorapower.com] Sent: Thursday, January 04, 2007 10:02 AM To: Valerie Blajeski Subject: RE: Hanna Well No. 1 Thank you Valerie, We will be sure our plan reflects your guidance on this issue. It does seem a bit confusing to me though... I could find nothing in 5AAC95 or the Susitna Flats Management Plan that prohibits the temporary use of gravel for exploration pads. And in this case, its just the portion of the pad adjacent to the existing gravel road that we want to place temporary gravel for the ramp down to the finished ice pad level. IN fact, 3# and #11 in the Sale 49 Mitigating Measures that were adopted and attached to the SF Management Plan, and #3 and #10 of the most recent Cook Inlet Areawide Mitigating Measures (2006 ), indicate permanent gravel use for exploration pads, airstrips and roads between pads is allowed. :s there something I am missing somewhere that would help me better understand the ADF &G's hard -line stance on this issue? Your direction to that citing would be greatly appreciated. Don't get me wrong, Pm not arguing... we will build a 4 foot thick snow and ice ramp, and it will probably melt by September... I'm just curious how I missed the authority to prohibit temporary use of gravel after almost 20 years in oil and gas permitting and regulatory compliance. -Bruce Original Message From: Valerie Blajeski [mailto:valerie_blajeski@fishgame.state.ak.us] Sent: Thursday, January 04, 2007 8:51 AM To: 'Bruce D. Webb'; 'Ron Stadem' Cc: mark_fink @fishgame.state.ak.us; 'Michael S Walker' Subject: RE: Hanna Well No. 1 Bruce, ADF &G will not authorize the use of gravel within the Susitna Flats State Game Refuge for exploration projects. This also includes temporary uses as you have described below. Valerie E. Blajeski Habitat Biologist Alaska Department of Fish and Game 333 Raspberry Road Anchorage, Alaska 99518 Phone: (907) 267 -2300 Fax: (907) 267 -2464 12/24/2008 Page 4 of 4 • • From: Bruce D. Webb [mailto:bwebb@aurorapower.corn] Sent: Wednesday, January 03, 2007 3:33 PM To: Valerie Blajeski; 'Ron Stadem' Cc: mark_fink@fishgame.state.ak.us; 'Michael S Walker' Subject: RE: Hanna Well No. 1 Hi Valerie, Would the use of gravel include gravel temporarily placed on Geotextile fabric, over compacted snow and ice, for off road ramp access only? It would be removed with the mats at the end of the drilling program? Let me know if the temporary use, not in direct contact with the ground / vegetative surface is a deal killer, we may be able to use more snow and ice under mats. -Bruce 12/24/2008 Page 1 of 1 Maunder, Thomas E (DOA) From: Blajeski, Valerie E (DFG) Sent: Wednesday, January 03, 2007 3:12 PM To: 'Bruce D. Webb'; 'Ron Stadem' Cc: Fink, Mark J (DFG); 'Michael S Walker' Subject: Hanna Well No. 1 Bruce, I am in process of reviewing /drafting Aurora Gas LLC's ADF &G Special Area Permit (SAP) and wanted to notify you that ADF &G will not be authorizing the use of gravel for exploration within Susitna Flats State Game Refuge. Pelican Hill's previous ADF &G SAP FG05 -II -0004 states that there will be no gravel fills associated with the exploration project. If you can confirm that Aurora Gas LLC will in fact not be adding any addition gravel for exploration purposes I can continue to complete your ADF &G SAP and have the final product to you shortly. Please feel free to contact me at any time at the number below if you have any further questions. -Val Valerie E. Blajeski Habitat Biolo ist Alaska Department of Fish and Game 333 Raspberry Road Anchorage, Alaska 99518 Phone: (907) 267 -2300 Fax: (907) 267 -2464 12/24/2008 i • TRANSMITTAL LETTER CHECKLIST WELL NAME PTD# 2-0 - r) Development Service 1/ Exploratory Stratigraphic Test Non - Conventional Well FIELD: 6c.,O4ra .4' POOL: Circle Appropriate Letter / Paragraphs to be Included in Transmittal Letter CHECK ADD -ONS WHAT (OPTIONS) TEXT FOR APPROVAL LETTER APPLIES MULTI LATERAL The permit is for a new wellbore segment of existing well (If last two digits in Permit No. , API No. 50- API number are - between 60 -69) Production should continue to be reported as a function of the original API number stated above. PILOT HOLE In accordance with 20 AAC 25.005(0, all records, data and logs acquired for the pilot hole must be clearly differentiated in both well name ( PH) and API number (50- - - ) from records, data and logs acquired for well SPACING The permit is approved subject to full compliance with 20 AAC EXCEPTION 25.055. Approval to perforate and produce / inject is contingent upon issuance of a conservation order approving a spacing exception. assumes the liability of any protest to the spacing exception that may occur. It/ DRY DITCH All dry ditch sample sets submitted to the Commission must be in SAMPLE no greater than 30' sample intervals from below the permafrost or from where samples are first caught and 10' sample intervals through target zones. Non - Conventional Please note the following special condition of this permit: Well production or production testing of coal bed methane is not allowed for (name of well) until after (Company Name) has designed and implemented a water well testing program to provide baseline data on water quality and quantity. (Company Name) must contact the Commission to obtain advance approval of such water well testing program. Rev: 1/11/2008 ry> ; Field & Pool Well Name: HANNA 1 Program EXP Well bore seg ❑ PTD#: 2082000 Company AURORA GAS LLC Initial Class/Type EXP / PEND GeoArea 820 Unit On /Off Shore On Annular Disposal ❑ Administration 1 Permit fee attached NA 2 Lease _number appropriate Yes Entire well in ADL 390103 3 Unique well name and number Yes 4 Well located in a defnedpool No Exploratory well 5 Well located proper distance from drilling unit boundary Yes Well will be located_ more than 1500' from the lease boundary 6 Well located proper distance from other wells Yes Nearest well is Pretty Creek Unit 224-28, which lies 1 -1/4 miles to t he SW 7 Sufficient acreage_available in drilling unit Yes Only well in Section 22 8 If deviated, is wellbore platincluded NA Vertical well 9 Operator only affected party Yes Aurora Gas, LLC owns 100% of the working interest in this lease (ADL 3 90103). 10 Operator has_appropriate bond in force Yes Letter of credit NZS429815 11 Permit can be issued without conservation order Yes Appr Date 112 Permit can be issued without administrative app roval Yes SFD 12/19/2008 13 Can permit be approved before 15-day wait Yes 14 Well located within area and strata authorized by Injection Order # (put IO# in comments) (For NA • 15 All wells within 1/4 mile area of review identified ( For service well only) NA 16 Pre- produced injector; duration_of pre -production less than 3 months (For service well only) NA 17 _Ntonconven, gas_conforms to AS31,05.030(1.1.A),(j,2.A -D) NA 18 Conductor st ring provided Yes Engineering 19 Surface _ casing protects aIl_known USDWs Yes Surface casing point is below depths werhe water wells would be reasonably be drilled, <8000 ppm 20 CMT vol adequate to circulate on conductor & surf csg Yes could exist below the surface casing shoe, but production string will be cemented to surface. 21 CMT v_ol adequate to tie- iniong string to surf csg Yes 1 22 CMT will cover all known productive horizons Yes 23 Casing des adequate for C, T, B & permafrost Yes 24 Adequate tankage or reserve pit Yes Rig equipped with steel pits. Capacity is limited, but rig has successfully drilled deeper wells. 25 If a re -drill, has a 10-403 for abandonment been approved NA Drilling waste to Aspen disposal wel l. 26 Adequate wellbore separation proposed Yes No other wells proximate. 27 Itdiverter required, does it meet regulations Yes Plan to dril_12 -1/4" hole with 12" diverter line. This has been approved previously. Appr Date 28 Drilling fluid_ program schematic.& equip list adequate Yes Maximum expected formation pressure 9.2 EMW. MW planned up to 12.0 or as needed. TEM 1/6/2009 29 BOPEs,do they meet regulation Yes r� e 30 BOPE_press rating appropriate; test to_(put psig in comments) Yes MASP calculated at 1900 psi. 3000_psi_BOP testplanned. i/11-C\ 31 Choke_ manifold complies w /API RP -53 (May 84) Yes • 32 Work will occur without operation shutdown Yes '33 Is presence of H2S gas probable No H2S is not known in CI gas production. Rig equipped w ith sensors and alarms. 34 Mechanical_condition of wells within AOR verified (For service well only) NA 35 Permit can be issued w/o hydrogen sulfide measures Yes None reported in adjacentwells drilled through the same geologic section. H2S /methane sensors wiU be used. . _ Geology 36 Data presented on potential overpressure zones Yes Expected gradient is 9,2ppg EMW; will_be drilled with 11.0 - 12.0 ppg mud, Mudloggingequipment will be used _ Appr Date '37 Seismic analysis of shallow gas zones Yes all drilling activities. 2 -D seismic data and associated velocity data show no indications of shallow hazards SFD 1/5/2009 38 Seabed condition survey(if off - shore) NA 39 Contact name /phone for weekly progress reports [exploratory only] Yes Bruce Web, 907- 277 -1003 Geologic Engineering P te , , • lic This proposed well was originally permitted by Pelican Hill Oil and Gas as PTD 2050120 on 2/12/2005. PTD 2050120 expired 2/12/2007. Aurora Gas, LLC Commissioner: Date: Co missioner: Date o er Date owns 100% of the working interest in this lease (ADL 390103). i