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• Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. 0 07 (p Order File Identifier Organizing t done Two -sided I 1I 1l1 ll II II1 III ❑ Rescan Needed 1 1111 11 o RES AN DIGITAL DATA OVERSIZED (Scannable) C or Items: ❑Diskettes, No. ❑Maps: Greyscale 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: 1a. /s/ mr _— g Project Proofing 1 11111 I P BY: Maria Date: l} 7ii d— /s/ 1 Scanning Preparation x 30 = + = TOTAL PAGES aVX (Count does not include cover sheet) nd BY: Maria Date: (1/ a. /s/ Production Scanning I 11111 II I Stage 1 Page Count from Scanned File: aq3 (Count does include cover heet) Page Count Matches Number in Scanning Preparation: YES NO BY: Date: c 1, 71/ c .. /s/ ro r 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. ll 1 III ReScanned II I MI 11111 BY: Maria Date: /s/ Comments about this file: Quality Checked II 111111111111 10/6/2005 Orders File Cover Page.doc • • INDEX Other 076 Moose Point #1 1. March 24, 2005 Copy of PTD 205 -038 2. In -house correspondence 3. August 14, 2007 Alaskan Crude status of well 4. April 3, 2008 Alaskan Crude Status of well 5. January 27, 2009 Letter from Alaskan Crude 6. January 27, 2009 AOGCC response to operator 7. February 11, 2009 Request for Reconsideration from operator to DNR re: expired lease 8. April 22, 2009 Operators appeal of AOGCC 2/5/09 decision to retroactively terminate PTD 9. E -mails 10. May 23, 2009 Operators request for the AOGCC to grant operators request to grant PTD 11. May 27, 2009 Operators letter to DNR regarding their letter dated 5/18/09 12. May 29, 2009 Ltr from AOGCC responding to operators letter dated 2/27/09, 4/22/09 and 4/23/09 and said responses 13. June 27, 2009 Operators response to AOGCC 5/29/09 letter X13 e: OGCC May 29, 2009 Letter - -�. ALASKAN CRUDE CORPORAITON RECEIVED 4614 BOHILL ST. SAN ANTONIO, TX, 78217 JUN 2 9 2009 Ph. /Fax (210) 651 -0777 Alaska Oil & Gas Cons. Commission Anchorage June 27, 2009 Daniel T. Seamount, Jr., Chairman 6/27/09 Faxed to Chairman, Daniel Seamount Alaska Oil and Gas Conservation Commission 6/27/09 Faxed to DNR Commissioner, Tom Irwin 333 W. 7th Avenue, Suite 100 Anchorage, Alaska 99501 -3539 Re: AOGCC's May 29, 2009 letter to ACC concerning Moose Pt. # 1 Well /drilling permit PTD # 205 -038 Dear Chairman Seamount: Alaskan Crude Corporation (ACC) thanks you for this opportunity to help clarify and supplement the AOGCC well files concerning ACC's ADL 389922's Moose Pt. # 1 well /drilling permit PTD # 205 -038. ACC will try as best we can to now satisfy your present requests for information. Background A. State Lease ADL 389922 State lease ADL 389922 is a seven -year lease contract. Moose Pt. # 1 well is located on state lease ADL 389922. ACC bought the State - drafted lease contract ADL 389922 unambiguously providing that the primary term of ADL 389922 will automatically extend in the event diligent drilling operations are ongoing "as of the date that the lease otherwise would expire ", December 31, 2008. I State lease ADL 389922 paragraph 4(c)(1) provides, "If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence. this lease will continue in effect until 90 days after cessation of that drilling and for so long as oil or gas is produced in paying quantities from the lease area." 1of19 AOGCC May 29, 2009 Letter On December 31, 2008, ACC did, in fact, perform the diligent drilling operations pursuant to paragraph 4(c)(1) requiring ADL 389922 to automatically extend its primary term beyond the lease's end date, December 31, 2008. Moose Pt. # 1 well diligent drilling operations were ongoing, December 31, 2008. The lease did not automatically terminate, December 31, 2008. The DNR incorrectly terminated ADL 389922 December 31, 2008 by letter dated January 2, 2009. The DNR incorrectly terminated ADL 389922 in the face of the fact that ADL 389922 primary term automatically extended pursuant to lease paragraph 4(c)(1) because Moose Pt. # 1 well's diligent drilling operations were ongoing "as of the date on which the lease otherwise would expire and...continued with reasonable diligence." This action by the DNR clouded the title of the ADL 389922 lease. By letter dated January 27, 2009 the DNR "retract[ed] the January 2, 2009" Notice of Expiration of Lease" ADL 389922 back to December 31, 2008 and reinstated the lease. The DNR commissioner misinterpreted the "90 days" extension clause of ADL 389922 paragraph 4(c)(1) when he reinstated ADL 389922, with his January 27, 2009 Decision on condition that "the well must be completed within 90 days after this [January 27, 2009] decision." This DNR decision again clouded the title of the lease. No provision in the ADL 389922 contract or in law provided authority to the DNR commissioner to declare "the well must be completed within 90 days after this decision." B. Necessity to suspend drilling operations upon Commissioner's January 27, 2009 Decision Most drilling rig components were demobilized after January 1, 2009 from the Moose Pt. # 1 well as a result of the erroneous DNR December 31, 2008 termination of ADL 389922. Drilling was not terminated; rather it was temporarily suspended until this second cloud on the lease title could be cured and weather conditions allow return to the drill site. There simply was not enough time remaining, after the DNR Commissioner reinstated ADL 389922 on January 27, 2009, with only 31 days left (January 27 - February 28, 2009) in the 2 Again, it should be noted, diligent drilling operations clearly had not ceased at the instant December 31, 2008, the date the DNR terminated the lease. 2 of 19 Re: AOGCC May 29, 2009 Letter • remaining winter drilling season, to reenter, rework and complete the Moose Pt. # 1 well pursuant to the conditions stipulated by the DNR Commissioner's January 27, 2009 letter. No meaningful diligent drilling operations work can be safely performed during spring break -up at the Moose Pt. #1 well located on a remote drill site eight miles out an unimproved trail (North Kenai Road) beyond the end of a paved road. Normal spring break -up on the Kenai historically includes almost all of March, April and part of May. It is unreasonable to believe that the Moose Pt. # 1 well could be completed within the 31 days left in the 2008 -09 winter drilling season in a manner satisfying DNR Commissioner's January 27, 2009 letter. The DNR Commissioner's January 27, 2009 letter requiring completion of the Moose Pt. # 1 well by April 27, 2009 is an unreasonable capricious requirement. As directed in ACC 2003 "Plan of Operations" for Moose Pt. # 1 well, ACC originally thought that Moose Pt. # 1 well could be completed in "30 days" in a normal winter drilling season. This statement was made before ACC became aware of the treacherous winter time North Kenai Road travel conditions to the Moose Pt. #1 well site and found out that Moose Pt. # 1 well was improperly plugged and abandoned by the previous operator. Normal reworking /reentry operations could possibly be complete within 30 days only on the condition that the road to the drill site is solidly frozen for 30 days to support a loaded 18 wheeler, drilling mud is properly in place, all drilling equipment is in place ready to turn -to- the - right, and the rig did not break down for repairs during this 30 day period, the support services for well logging and wire line work timely show up when called, no unexpected problems were encountered in the wellbore, and there are no unexpected down hole problems encountered reworking and completing the well. This was not the case. Realistically, ACC requires at least the entire ninety day winter drilling season to safely reenter, complete and flow test the Moose Pt. # 1 well. Flow testing and flow evaluation of the reworked Moose Point #1 well likely may prove that the well must be again reentered and reworked the next winter drilling season to improve hydrocarbon production to qualify the Moose Point #1 well capable of producing in "paying quantities" pursuant to ADL 389922 paragraph 34(5) in order to extend ADL 389922 beyond its primary term. This is a normal event that occurs routinely when drilling and reworking wells. On February 11, and March 30, 2009 White /ACC letters to the DNR Commissioner described how the Commissioner's January 27, 2009 Decision breeched paragraph 4(c)(1) 3 of 19 Re: AOGCC May 29, 2009 Letter of ADL 389922 contract terms providing for automatic ADL 389922 extension, December 31, 2008. On February 11, and March 30, 2009 White /ACC asked the Commissioner to reconsider his January 27, 2009 Decision. On June 10, 2009 the DNR Commissioner reaffirmed his Decision of January 27, 2009 by letter to ACC. ADL 389922 Force Majeure Events ADL 389922 paragraph 34(7) reads, "'force majeure' means war, riots, acts of God, unusually severe weather, or any other cause beyond the lessee's reasonable ability to foresee or control and includes operation failure of existing transportation facilities and delays caused by judicial decisions or lack of them." When the DNR erroneously terminated ADL 389922 on December 31, 2008, Moose Pt. # 1 well diligent drilling operations were tolled and help by Force Majeure. ACC believes the DNR's Commissioner's January 27, 2009 reinstatement Decision caused a force majeure event for ADL 389922 Moose Pt. # 1 diligent drilling operations for several reasons: 1. The DNR gave ACC "90 days" from January 27, 2009 - April 27, 2009 to complete Moose Pt. # 1 well. Note: ACC was diligently drilling Moose Pt. # 1 well December 31, 2008 - January 1, 2009, the date that the DNR wrongfully terminated state lease ADL 389922. Note: As of January 27, 2009, ACC had already demobilized and removed much of ACC's drilling equipment from Moose Pt. # 1 well because the DNR had previously terminated ADL 389922 December 31, 2008. Note: After January 27, 2009, only the month of February had the potential to safely drill Moose Pt. # 1 well. Note: Travel to and from the Moose Pt. # 1 well site during the March -May spring break -up period requires equipment like a small Argo track vehicle or a four - wheeler. Note: Pursuant to state lease ADL 389922 paragraph 34(7), state lease ADL 389922 is in a Force Majeure event because of unforeseen "delays" caused by State actions and "unusual severe weather" conditions causes Moose Pt # 1 well diligent drilling operations [para.4(c)(1)} to be tolled and held. 4 of 19 AOGCC May 29, 2009 Letter Note: There is no "automatic termination" for state lease ADL 389922 so long as diligent drilling operations are ongoing pursuant to the "extension" provisions in state lease ADL 389922 paragraph 4(c)(1). 2. The DNR Commissioner did not advise ACC as to whether the DNR believed Moose Pt. # 1 well diligent drilling operations to be "ongoing," "suspended," or "ceased" at the instant of the DNR's January 27, 2009 Decision. Note: If the DNR believed Moose Pt. # 1 diligent drilling operations to be "ongoing" or suspended as of January 27, 2009, the "90 days" clause of state lease ADL 389922 paragraph 4(c)(1) does not take effect until "after cessation of that drilling." Note: If the DNR believed diligent drilling operations to have "ceased ", the DNR was wrong and did not take into consideration that the DNR caused ACC's Moose Pt. # 1 diligent drilling operations to suspend for 27 days by wrongfully terminating state lease ADL 389922 on December 31, 2008. Note: DNR did not take into consideration that by wrongfully terminating state lease ADL 389922 on December 31, 2008 the DNR caused ACC's Moose Pt. # 1 diligent drilling operations to be suspended for 27 days. Note: Moose Pt. # 1 well diligent drilling operations could not continue from January 2 -27, 2009 without an active lease guaranteed in place; therefore, Moose Pt. # 1 diligently drilling operations were tolled and held because the DNR made an error wrongfully terminating state lease ADL 389922; hence, state lease ADL 389922 is in a Force Majeure event. Note: ACC was diligently drilling in a manner as well as one can reasonably expect to be under the circumstances at that instant, January 27, 2009. 3. The DNR did not notify ACC that ACC was in default of any provision of state lease ADL 389922. Note: Pursuant to state lease ADL 389922 paragraph 20 "Default and Termination: Cancellation" the State must notify the operator when the State believes the operator is in default (i.e. not diligently drilling) of any provision of state lease ADL 389922. Note: Pursuant to state lease ADL 389922 paragraph 20, the operator has 60 days to take corrective actions to comply with the State's "notice of default". 4. The DNR deprived ACC 27 days of 2009 possible winter drilling time. Note: Spring break -up came in early March on the North Kenai Road going to Moose Pt. # 1 well. Note: Only two months, January and February 2009, were available to ACC for safe Moose Pt. # 1 well drilling operations. DNR deprived ACC one of these two drilling months. 5 of 19 Ke: AOGCC May 29, 2009 Letter Note: Again, ACC could not drill at Moose Pt. # 1 well during the first 27 days of January with no active state lease ADL 389922 guaranteed in place. Note: The DNR did not mention /consider the lost 27 winter drilling days of January caused by the DNR's wrongful termination of state lease ADL 389922. Note: The DNR made no attempt to compensate ACC for the lost 27 days of winter drilling time days caused by the DNR's wrongful termination of state lease ADL 389922. 1. The "90 days" clause of state lease ADL 389922 paragraph 4(c)(1) does not take effect until diligent drilling operations have ceased on Moose Pt. # 1 well Drilling operations have not ceased. 2. The DNR did not address if the DNR believed Moose Pt. # 1 drilling operations to have been suspended or ceased at the instant of reinstatement, January 27, 2009. 3. The DNR did not reinstate state lease ADL 389922 back to the exact legal status of drilling operations being ongoing and continuing in full force at the instant the DNR wrongfully terminated ADL 389922, December 31, 2008. 4. The DNR should have reinstated ADL 389922 back to the exact legal position of ongoing drilling operations that ADL 389922 was in at the instant the DNR wrongfully terminated ADL 389922. The ADL 389922 lease contract allows the DNR no authority to do otherwise. In short: The status of ongoing diligent drilling operations is a matter of contractual law. The status of ongoing diligent drilling operations is not a matter of DNR agency expertise. No provision in the ADL 389922 contract or in law provided authority to the DNR Commissioner to declare that ADL 389922 would "automatically terminate" April 27, 2009 in the event that the reworking /reentry of Moose Pt. # 1 well was not completed. The only trigger is the final cessation of drilling which has not, to this date, been determined to have occurred. As of this date, June 27, 2009, the DNR Commissioner has not addressed a date the DNR believes drilling operations have ceased. 6 of 19 Re: AOGCC May 29, 2009 Letter ADL 389922 MOOSE PT. # 1 WELL CANNOT BE PRODUCED UNTIL THE AOGCC HAS CREATED A DRILLING UNIT FOR THE WELL AND HAS INVOLUNTARILY INTERGATED ALL THE PROPERTIES IN THAT DRILLING UNIT (AS 31.05.100). As the DNR is aware, the Moose Pt. # 1 well is located in the north half of section 14, about 100' (100 feet) north from the south half of Section 14. The south half of section 14 is leased to Marathon /Phillips, etc. Marathon /Phillips etc., did not agree to participate in the exploration of the Moose Pt. # 1 well. Should the exploration of Moose Pt. # 1 well prove capable of producing oil or gas, Moose Pt. # 1 well will not be allowed to produce until the AOGCC has created an oil or gas drilling unit and has involuntarily integrated the Marathon /Phillips, etc., lease with ADL 389922. This unitization process could take months if not years to finalize (20 AAC 25.005(b)). In the meantime, the Moose Pt. # 1 well would be required to remain shut -in in suspended status until the AOGCC has created a gas or oil drilling unit for the Moose Pt # 1 well, and has involuntarily integrated all property in this new AOGCC- created drilling unit. So much for being required to produce the Moose Pt. #1 well by April 27.2009 pursuant to the DNR's January 27, 2009 Decision; it simply could not happen. The DNR January 27, 2009 Decision wrongfully unilaterally amended ADL 389922 by imposing new requirements to complete the reworking the Moose Pt. # 1 well and then produce Moose Pt. # 1 well's oil or gas by April 27, 2009. 3 AS 31.05.100(c): When two or more separately owned tracts of land are embraced within an established drilling unit persons owning the drilling rights in it and the right to share in the production from it may agree to pool their interests and develop their lands as a drilling unit If the persons do not agree to pool their interests the commission may enter an order pooling and integrating their interests for the development of their lands as a drilling unit for the prevention of waste, for the protection of correlative rights, or to avoid the drilling of unnecessary wells 4 20 AAC 25.005(b) reads, "A well may not...begin regular production of gas from a property that is smaller than the governmental section upon which the well is located, unless the interests of the persons owning the drilling rights in and the right to share in the production from the quarter section or section, respectively, have been pooled under AS 31.05.100." 7 of 19 • • Re: AOGCC May 29, 2009 Letter The new unilateral amended ADL 389922 contract conditions written in the DNB's January 27, 2009 Decision simply cannot be legally complied with due to current Alaska law or the provisions of ADL 389922. This issue and other erroneous conditions also required by DNR's January 27, 2009 Decision to be done by April 27, 2009 invalidate this Decision. This DNR's January 27, 2009 Decision is fatally flawed. C. Lack of Moose Pt. # 1 Well Viable Gas Markets The first six- and -a -half years of ADL 389922 provided no viable gas market for Moose Pt. # 1 well gas. Consequently, ACC's working interest owners would not agree to invest the risk capital to reenter, rework and explore the Moose Point #1 well when there was no viable gas market for Moose Pt. # 1 well gas. The fall of 2007 Agrium announced that the Agrium Fertilizer plant would be shut down the winter of 2007 -2008 because dependable gas feed stock was not available to Agrium for the cheap gas price that Agrium was willing to pay. February 2008, ACC delivered a 7" 5K BOP stack to Moose Pt. # 1 well. ACC could perform no more drilling operations at Moose Pt. # 1 well at this time because spring break up came early on the Kenai Peninsula, 2008. Mid 2008, a potential gas market for Moose Pt. # 1 well gas developed when the Governor Palin /LNG two year gas - export license agreement was announced providing for the LNG plant to agree to purchase up to 30 mmcf of gas per day from independents such as White and ACC. ACC then had a possible limited gas marketing opportunity, as an independent oil and gas operator, to sell Moose Pt. # 1 well gas to the liquefied natural gas (LNG) plant's export gas license. This is the first time during the seven year primary term of ADL 389922 that this lease has finally had the opportunity to market its gas at an acceptable price. ACC did not learn of the Governor Palin /LNG two year gas export license agreement until after spring break up, 2008. The Moose Pt. # 1 well could not be accessed with drilling equipment and supplies during spring break up and for the rest of the year until December 20, 2008. 8of19 AOGCC May 29, 2009 Letter The Kenai Peninsula experienced some of the wettest and rainiest spring, summer and fall seasons on record. The North Kenai Road was a quagmire of mud, wet peat -bogs, and running streams prior to December 20, 2008. Drilling, reentering and reworking the Moose Point # 1 well is a normal routine wintertime Alaskan drilling operation requiring frozen ground for safe drilling operations. The North Kenai Road did not freeze enough to permit travel with a light pickup truck until December 20, 2008. By December 31, 2008, the last day of ADL 389922's primary term, the North Kenai Road still had not frozen enough to transport anything heavier than a pickup truck could carry. No normal drilling and reworking operation on the Moose Point # 1 well could occur after the 2008 spring- break -up until after the year's end, December 31, 2008, because the North Kenai Road to the Moose Point #1 well -site had became a quagmire of mud, and soft peat - bogs, etc. A DNR representative was present at the Moose Pt. # 1 well site on December 31, 2008 when ACC did performed diligent drilling operations pursuant to ADL 389922 lease paragraph 4(c)(1), December 31, 2008, by installing a 7" SK BOP stack atop the Moose Pt. # 1 well automatically extended ADL 389922 beyond its primary term (December 31, 2008) the date ADL 389922 "otherwise would expire." March 11, 2009 ACC received a letter from McKenzie Transports reporting that a McKenzie trailer "broke through the ice" while traveling to and from Moose Pt. # 1 well. This early spring break -up created a very short two -month winter drilling season for the Moose Pt. # 1 well. 1. History, Present status, Plans for development for Moose Pt. # 1 well A. History The Moose Pt. # 1 well is located on state lease ADL 389922. The Moose Pt. # 1 well was drilled and abandoned, 1978 /1982 by Amerex under drilling permit PTD # 179 -001. March 24, 2005 AOGCC approves ACC's drilling permit PTD # 205 -038 to reenter /rework Moose Pt. # 1 well. After freeze -up the winter of 2005 -2006, the Ideco HD35 BIR drilling rig was mobilized along with its related drilling equipment and transported out the frozen North Kenai Road and placed at the ADL 389922 lease's Moose Pt. # 1 well site. 9 of 19 IP AOGCC May 29, 2009 Letter As described in ACC's April 22, 2009 letter, ACC believes the Moose Pt # 1 well was improperly plugged and abandoned in 1978 by the previous operator with a 4" steel abandonment marker pipe concreted into the 7" casing. The AOGCC is yet to decide if it believes the Moose Pt. # 1 well was properly plugged and abandoned by the previous operator (Amerex). On June 13, 2007, actual boring in the Moose Pt. # 1 well commenced when the upper portion of the 7" casing was milled out to remove a 36" long 4" diameter steel pipe that had been wrongfully concreted inside the well's 7" casing when the well was originally plugged and abandoned back in 1978. Drilling as defined in state lease ADL 389922 paragraph 34 includes many activities in addition to well milling or boring a hole. December 31, 2008, ACC set a 7" 5K BOP stack atop of the Moose Pt # 1 well -head, thereby automatically extending the ADL 389922 lease contract primary term beyond December 31, 2008, pursuant to ADL 389922 lease contract paragraph 4(c)(1). B. Present status The top 36 inches or so of the surface plug have been milled out of Moose Pt. # 1 well's 7" casing during the June 13, 2007 milling operation to mill out the 4" pipe concreted in the 7" casing. Basically the well remains plugged as originally plugged and abandoned. ACC is currently repairing ACC's drilling rig. Moose Pt. # 1 well drilling operations are temporarily suspended till winter- freeze -up comes again on the Kenai. DNR did not address a required suspension of Moose Pt # 1 well drilling activity caused by spring- break -up. All drilling equipment was removed from the Moose Pt. # 1 well site prior to this 2009 spring break up. ACC intends to be back on the Moose Pt # 1 well location after the North Kenai Road and Moose Pt. # 1 well site freeze up this next winter season of 2009 -10. Please note: The DNR erroneously terminated ADL 389922 December 31, 2008 in face of lease automatically extending by virtue of drilling operations ongoing "the date the lease otherwise would have expired." As a result of this erroneous termination of ADL 389922 10 of 19 Ike: AOGCC May 29, 2009 Letter ACC's Moose Pt. # 1 well's diligent drilling operations were tolled and held in diligent drilling operational status. C. Plans for development ACC Moose Pt. # 1 well "plans for development" are already on file with the AOGCC and found in ACC's drilling permit PTD # 205 -038 "Proposed Rig Operations" filed and approved by the AOGCC March 24, 2005. ACC's "Plans for development" have also been filed with ACC's replacement drilling permit "Proposed Rig Operations" submitted April 22, 2009. This application was submitted as a backstop in the event that the original ACC permit to drill for the well was eventually found to be terminated by the AOGCC. The "Proposed Rig Operations" as filed with the AOGCC with ACC's drilling permit PTD # 205 -038 and PTD # 205 -038's replacement drilling permit are ACC's only plans for development until further plans are needed. ACC plans to commence Moose Pt. # 1 diligent drilling operations during the 2009/2010 next winter freeze up. II. 20 AAC 25.070. Records and reports A. 20 AAC 25.070 (1) states the operator shall, "keep a detailed accurate daily record of the actual drilling, completion, workover, repair, and plugging operations, and of the tests required by this chapter; the daily record must be available for inspection at reasonable times by the commission: (A) at the well; and (8) in the state for five years after the date of well abandonment ACC records of daily work and drilling reports were kept at the drill site. ALASKAN CRUDE CORPORATION ADL 389922 MOOSE PT. # 1 DAILY DRILLING REPORT 12 -15 -05 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 12 -16 -05 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 12 -17 -05 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 12 -18 -05 Bulldozing road and building ice bridges on North Kenai 11 of 19 Fie: AOGCC May 29, 2009 Letter Rd. to drill site (plowing snow /building ice bridges) 12 -19 -05 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 12 -20 -05 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -14 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -16 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -17 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -18 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -19 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges) 01 -20 -06 Bulldozing road and building ice bridges on North Kenai Rd. to drill site (plowing snow /building ice bridges 01 -25 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 01 -26 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 01 -27 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 01 -28 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 01 -30 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 01 -31 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 02 -01 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 02 -02 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 02 -06 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 02 -07 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 02 -08 -06 Mobilized Ideco HD35 BIR drilling rig and supplies to drill site 08 -08 -06 ACC re- entered and drilled out the Moose Pt. # 1 well site's water well and installed a new water pump at the site. 08 -09 -06 ACC re- entered and drilled out the Moose Pt. # 1 well site's water well and installed a new water pump at the site. 08 -10 -06 ACC re- entered and drilled out the Moose Pt. # 1 well site's water well and installed a new water pump at the site. 08 -11 -06 ACC re- entered and drilled out the Moose Pt. # 1 well site's water well and installed a new water pump at the site. 06 -13 -07 ACC milled out the 36 inch long 4" steel abandonment marker pipe concreted in the 7" casing in that same day 07 -14 -07 Moving bulldozer out North Kenai Rd. to Moose Pt. # 1 drill site & commenced road and drill site improvement dozing 07 -16 -07 Held crew on standby (due to weather) 07 -17 -07 Held crew on standby (due to weather) 07 -18 -07 Held crew on standby (due to weather) 12 of 19 AOGCC May 29, 2009 Letter 07 -19 -07 Bulldozing and landscaping improvement at the drill site (site improvement) 07 -20 -07 Held crew on standby 07 -21 -07 Held crew on standby 07 -26 -07 Bulldozing and landscaping improvement at the drill site (site improvement) 07 -27 -07 Bulldozing and landscaping improvement at the drill site (site improvement) 07 -28 -07 Bulldozing and landscaping improvement at the drill site (site improvement) 08 -03 -07 Held crew on standby (due to weather) 08 -04 -07 Held crew on standby (due to weather) 08 -06 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 08 -08 -07 Held crew on standby (due to weather) 08 -09 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 09 -21 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 09 -22 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 10 -01 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 10 -02 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 10 -08 -07 Bulldozing and landscaping improvement at the drill site (road improvement) 11 -26 -07 Cutting brush at drill site (landscaping improvement) 11 -27 -07 Bulldozing and landscaping improvement at the drill site (road repair) 12 -01 -07 Bulldozing and landscaping improvement at the drill site (road repair) 12 -02 -07 Bulldozing and landscaping improvement at the drill site (road repair) 12 -03 -07 Bulldozing and landscaping improvement at the drill site (road repair) 12 -07 -07 Bulldozing and landscaping improvement at the drill site (road repair) 12 -07 -07 Hauling pipe to drill site 12 -14 -07 Bulldozing and landscaping improvement at the drill site (snow plowing) 12 -15 -07 Bulldozing and landscaping at the drill site (snow plowing) 02 -15 -08 Alaska Hotshot delivered ACC's new 7" 5K BOP stack to Moose Pt. # 1 well 12 -04 -08 Moved bulldozer to drill site 12 -04 -07 Bulldozing and landscaping improvement at the drill site (snow plowing) 12 -17 -08 Bulldozing and landscaping improvement at the drill site (snow plowing) 13 of 19 40 AOGCC May 29, 2009 Letter . 12 -24 -08 Bulldozing and landscaping improvement at the drill site (snow plowing) 12 -27 -08 Bulldozing and landscaping improvement at the drill site (snow plowing) 12 -31 -08 ACC installed the 7" 5K BOP stack atop the Moose Pt. # 1 well (automatically extending ADL 389922 beyond its primary term, December 31, 2008, the day ADL 389922 "otherwise would expire "). 01 -05 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -06 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -07 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -08 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -09 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -12 -09 De- mooing, and removing drilling supplies from Moose Pt. # 1 well 01 -13 -09 De- mobing, and removing drilling supplies from Moose Pt # 1 well 01 -14 -09 De- mobing, and removing drilling supplies from Moose Pt # 1 well 01 -15 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -16 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -19 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -20 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -21 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -22 -09 De- mooing, and removing drilling supplies from Moose Pt. # 1 well 01 -23 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 01 -26 -09 De- mooing, and removing drilling supplies from Moose Pt. # 1 well 02 -05 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -06 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -07 -09 Bulldozing and landscaping improvement at the drill site (snow plowing road) 02 -09 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -10 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -10 -09 Bulldozing and landscaping improvement at the drill site (snow plowing road) 02 -11 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -12 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -13 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -16 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -17 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -18 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -19 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -20 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -23 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -24 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -25 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 02 -26 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 14 of 19 • AOGCC May 29, 2009 Letter 02 -27 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 03 -02 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 03 -03 -09 De- mooing, and removing drilling supplies from Moose Pt. # 1 well 03 -04 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well; Bulldozing and landscaping improvement at the drill site (snow plowing road) 03 -05 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well; Bulldozing and landscaping improvement at the drill site (snow plowing road) 03 -06 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well; Bulldozing and landscaping improvement at the drill site (snow plowing road) 03 -09 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 03 -10 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 03 -11 -09 De- mobing, and removing drilling supplies from Moose Pt. # 1 well 03 -12 -09 Hauled equipment and bulldozer from drill site 06 -15 -09 Repairing rig hydraulic system and breaks 06 -16 -09 Repairing rig hydraulic system and breaks 06 -17 -09 Repairing rig hydraulic system and breaks 06 -18 -09 Repairing rig hydraulic system and breaks 06 -19 -09 Repairing rig hydraulic system and breaks 06 -22 -09 Repairing rig hydraulic system and breaks 06 -23 -09 Repairing rig hydraulic system and breaks 06 -24 -09 Repairing rig hydraulic system and breaks 06 -25 -09 Repairing rig hydraulic system and breaks B. Completion reports ACC has not entered the 7" casing with a conventional drill bit. Therefore, there has been no further drilling with a normal drill bit to report. ACC will conduct a daily drilling report when drilling commences with a conventional drill bit. C. Workover reports June 13, 2007 ACC milled out the 36 inch long 4" steel abandonment marker pipe concreted in the 7" casing in that same day. ACC has a drilling report available for this 1 -day milling operation reworking this Moose Pt. # 1 well. D. Repair reports June 13, 2007 ACC milled out the 36 inch long 4" steel abandonment marker pipe concreted in the 7" casing in that same day. ACC has a drilling report available for this 1 -day milling operation reworking this Moose Pt # 1 well. 15 of 19 Re: A OGCC May 29, 2009 Letter E. Plugging operations reports Moose Pt. # 1 well was previously drilled, plugged and abandoned in 1978/1982 by Amerex Oil Co.; Moose Pt. # 1 well has not been plugged by ACC. F. 20 AAC 25.534. Tests, surveys, and inspections 1. quality of oil and gas produced i. ACC has produced no oil or gas from the Moose Pt. # 1 well. 2. formation, casing, tubing, or other pressures; i. ACC has not reentered Moose Pt. # 1 well below the surface plugs. ACC has performed no tests on the formation(s), casing, tubing, or other pressures on the Moose Pt. # 1 well. 3. existence of any waste of oil, gas, or reservoir energy i. ACC has not reentered Moose Pt. # 1 well below the surface plugs; therefore, ACC has performed no tests for the existence of any waste of oil, gas, or reservoir energy on the Moose Pt. # 1 well. 4. risk of fluid movement into freshwater i. ACC has not reentered Moose Pt. # 1 well below the surface plugs; therefore, ACC has performed no tests for the risk of fluid movement into freshwater on the Moose Pt. # 1 well. G. 20 AAC 25.070 (2) states the operator will "file with the commission before well completion...a registered land surveyor showing the precise surface location of the well.." 1. ACC is reworking the existing plugged and abandoned Moose Point #1 well. The "plat" for the Moose Point #1 well is already properly filed in the AOGCC Moose Point #1 well file. This "plat" was submitted by Amerex when Moose Pt. # 1 well was originally permitted with Amerex original drilling permit PTD # 179 -001. 2. 20 AAC 25.005 states, "An application for a Permit to Drill must be accompanied by...except for an item already on file with the commission and identified in the application: (2) a plat identifying the property and the property's owners..." 3. ACC filed a plat identifying the property and showing the affected property owners with the drilling permit, PTD # 205 -038, March 24, 2005. 16 of 19 P AOGCC May 29, 2009 Letter H. 20 AAC 25.070 (3) states, the operator will "file with the commission, within 30 days after completion, abandonment, or suspension of the well..." 1. 20 AAC 25.010(c) clearly mandates, "The operator shall file with the commission within 30 days after completion...all information required by ...20 AAC 25.070(3) ..." 1 2. Moose Pt. # 1 well has not been completed; therefore, there ACC has filed no completion, abandonment, or suspension reports. III.20 AAC 25.071 Geologic data and logs 20 AAC 25.010(c) clearly requires, "The operator shall file with the commission within 30 days after completion...all information required by...20 AAC 25.071 [Geologic data and logs]." Moose Pt. # 1 well has not been completed; however we will try to address this request as best we can. Polar Reproductions copied the original Moose Pt. # 1 well geologic data and log files from the AOGCC. Polar Reproductions, in turn, sold these AOGCC copied Moose Pt. # 1 well geologic data and log copies to ACC. The only Moose Pt. # 1 geologic data and logs (referenced in 20 AAC 25.071) in ACC's possession are the copied Moose Pt. # 1 well geologic data and log copies sold to ACC by Polar Reproductions. ACC has no other geologic data or logs for Moose Pt. # 1 well. IV. ACC's April 22, 2009 letter regarding drilling permit (drilling permit - PTD) # 205- 038 "retroactive termination" by the AOGCC February 2, 2009 website In your AOGCC May 29, 2009 letter, regarding the AOGCC decision to retroactively terminate ACC's drilling permit PTD # 205 -038 through the AOGCC's website you write, "...no Commission decision or other action regarding the Moose Point # 1 well exists to appeal." 17 of 19 • • Re: AOGCC May 29, 2009 Letter V. ACC's drilling permit PTD 4t 205 -038 and ACC's drilling permit PTD # 205 -038's replacement ACC finally learned that ACC's drilling permit PTD # 205 -038' appeared to have retroactively terminated March 24, 2007 through AOGCC's state Website on February 5, 2009. In your AOGCC May 29, 2009 letter, you wrote, "Pursuant to 20 AAC 25.005(g), in the absence of ongoing 'drilling operations,' as defined under AS 20 AAC 25.990(23), the permit expired on March 24, 2007." Had ACC believed that drilling permit PTD # 205 -038 was not latched in place after March 24, 2007, ACC would have filed for another free new Moose Pt. # 1 drilling permit. Drilling permits are free. The AOGCC was required to inform ACC about this "enforcement action" terminating ACC's drilling permit PTD # 205 -038 by "a written notification by personal service or by certified mail, return receipt requested" pursuant to 20 AAC 25.535. ACC appreciates AOGCC's consideration as stated in your May 29, 2009 letter that, "If drilling operations commenced before March 24 2007, and have been ongoing, since then, PTD # 205 -038 remains valid..." Moose Pt. # 1 well reentry /reworking operation is a wintertime drilling operation only. The winter drilling season generally is a three month period. This wintertime drilling season generally lasts from the second half of December, January, February, and through the first half of March. March 24 generally falls after spring break up begins. Normal Moose Pt. # 1 well drilling operations can only be performed when winter freeze up conditions allow for safe travel to and from the Moose Pt. # 1 well site and safe drilling can occur. VI. AOGCC's two -year retroactive termination of ACC's drilling permit, PTD # 205 -038 On March 24, 2005, AOGCC approved ACC's drilling permit PTD # 205 -038 to reenter /rework Moose Pt. # 1 well located on state lease ADL 389922. 20 AAC 25.005(g) reads, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." 18 of 19 R • e: AOGCC May 29, 2009 Letter The AOGCC did not notify ACC at any time before, on, or after March 24, 2007 (the date drilling permit PTD # 205 -038 terminated) that PTD # 205 -038 "violated or failed to comply with a provision" of being terminated pursuant to 20 AAC 25.535. 20 AAC 25.535 to clearly states: (a) If the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to comply with a provision of...faJ permit...the commission will, in its discretion, take enforcement action under this section against the person. (b) If the commission proposes to take enforcement action under this section against a person, the commission will send the person a written notification by personal service or by certified mail, return receipt requested. The commission's written notification to the person will (1) state the nature of the apparent violation or noncompliance; (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (3) state the action that the commission proposes to take under (e) of this section; and (4) inform the person of the person's rights and liabilities under (c) - (e) of this section. At no time before, on, or after March 24, 2007 did the Commission send ACC "a written notification" notifying ACC that the Commission took the "enforcement action" which terminated ACC's drilling permit PTD # 205 -038. Please advise ACC if the AOGCC requires any more information. We will help you in any way that we can. Kind Regards, Alas n Crude C . ) o ation y: Da Ba Land Manag CC. by email: James W. White; James A. White; Matt Rader (DNR); Tom Maunder (AOGCC); Kevin Banks (DNR) 19 of 19 Jun 27 09 05:48p Intrepid Produc' n �510777 p.1 • r Joy 2 ■1 ►r -Tuck_ "■■■■ ALASKAN CRUDE CORPORATION 4614 BOHILL, SAN ANTONIO, TEXAS, 78217 ph (210) 651 -0777 FAX TRANSMITTAL SHEET DATE: June 27, 2009 TO: AOGCC ATTENTION: Chairman, Daniel T. Seamount; NUMBER OF PAGES: 20 including this cover page RE: AOGCC May 29, 2009 Letter to Alaskan Crude Corporation #12 SARAN PAL/N, GOVERNOR ALASKA OIL AND GAS / 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION , ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 FAX (907) 276 -7542 May 29, 2009 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7004 1160 0001 3621 2202 James W. White President Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas 78217 Re: Moose Pt. Unit #1 Well PTD No. 205 -038 Dear Mr. White: This letter responds to the following: (1) the February 27, 2009 (February 27 Letter) of Alaskan Crude Corporation (ACC), claiming to respond to the letter dated January 27, 2009, of the Alaska Oil and Gas Conservation Commission (Commission); (2) ACC's letter dated April 22, 2009 (April 22 Letter), which ACC describes as an "Appeal of AOGCC's February 5, 2009 Website Decision to Retroactively Terminate Moose Pt. #1 Well's Drilling Permit 205 -038 March 24, 2007 "; and (3) ACC's application, received April 23, 2009 (Second Permit Application), and follow -up letter, received May 23, 2009, requesting a second permit to drill (PTD) the Moose Pt. Unit #1 well. BACKGROUND On March 24, 2005, the Commission issued to ACC PTD #205 -038. The permit authorized ACC to reenter the plugged and abandoned Moose Pt. Unit #1 well, which was drilled under PTD #179 -001. Pursuant to 20 AAC 25.055(g), in the absence of ongoing "drilling operations," as defined under AS 20 AAC 25.990(23), the permit expired on March 24, 2007. SENDER: COMPLETE THIS SECTION COMPLETE THIS SECTION ON DELIVERY • Complete items 1, 2, and 3. Also complete Bir item 4 if Restricted Delivery is desired. Agent • Print your name and address on the reverse i / ag N6ddressee so that we can return the card to you. [:� Received by ( Printed Name) i C. Date of Delivery • Attach this card to the back of the maiipi� - ► d ). or on the front if space permits. 1.1° + .5 - vc:. ; VY '/4 D. Is delivery address different from item 1? U Yes 1. Article Addressed to: If YES, enter delivery address below: 0 No J /T7f %' /-e- /3 rg f/ e/4 � 4 � /9 . /6 „,,,, 0 ` /(�� / J 3. Se lceType 4//,!' / /�� / �- T Certified Mail 0 Express Mail ❑ Registered Return Receipt for Merchandise l� 9 4n -1 P) '' I/ ❑Insured Mail ❑ C.O.D. *Yes ✓C • i d f 7 4. Restricted Delivery? (Extra Fee) 2. Article Number (Transfer from service fat 7004 116 0 0001 3 6 21 2202 PS Form 3811, February 2004 Domestic Return Receipt 102595 -02 -M -1940 i U.S. Postal ServiceTM ru CERTIFIED MAILTM RECEIPT rru (Domestic Mail Only: RI y No Insurance Coverage Provided) For delivery information visit our website at www.usps.com, _a I 7 Posta $ $0.61 0535 C7 Certified Fee C3 $2.80 09 C1 Retum Reciept Fee fEndorsement Required) Po w CI Restricted Delivery Fee r3 (Endorsement Required) `4.50 Total Postage & Fees $10.21 05/29/2009 O seam - a '5 M1 Sheet Apt Wo :; or FO Box No. j °-- ---- l SYade ZIP +4 . ................ ( . L �- PS Form 3$00, June 2002 See Reverse for Instructions Moose Pt. Unit #1 Well • • PTD No. 205 -038 May 29, 2009 Page 2 of 5 On January 27, 2009 (January 27 Letter), pursuant to 20 AAC 25.070 and 20 AAC 25.300, the Commission asked ACC to provide the following for the Moose Pt. Unit #1 well. 1. detailed report describing the history, present status, and plans for the well; 2. all records referenced in 20 AAC 25.070; 3. all geologic data and logs referenced in 20 AAC 25.071; and 4. an explanation detailing why any required submissions were not made. On February 18, 2009, the Commission posted (on its Web site) a list, dated February 5, 2009, of outstanding drilling permits. The list identified seven permits and, absent ongoing drilling operations, the expiration dates of those permits. The other operators with outstanding drilling permits were BP Exploration (Alaska), Inc. (3 wells), ConocoPhillips Alaska, Inc. (2 wells), and Storm Cat Energy (1 well). On February 27, 2009, ACC responded to the Commission's January 27 Letter. On April 22, 2009, the Commission received the April 22 Letter, which ACC describes as an "appeal" of Commission "actions declaring" PTD #205 -038 "retroactively terminate[d]." This letter is based entirely on the list of outstanding PTDs posted on the Commission's Web site. On April 23, 2009, the Commission received ACC's Second Permit Application for another permit to reenter the Moose Pt. Unit #1 well. On May 23, 2009, ACC submitted a letter stating that the "replacement Moose Pt. #1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt. #1 well drilling permit # 205- 038." I. INFORMATION REQUEST The February 27 and April 22 Letters do not constitute an adequate response to the Commission's January 27, 2009, request for information. A. Requested Information 1. Detailed Report In response to the Commission's request for a detailed report describing the history of, present status of, and plans for the Moose Pt. Unit #1 well, the information provided to the Commission is limited to the following: Moose Pt. Unit #1 Well • • PTD No. 205 -038 May 29, 2009 Page 3 of 5 History 1. Summer 2006 — "[t]he above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed ... leaving still a portion of the 4" steel abandonment marker pipe sticking above ground." April 22 Letter 8. 2. June 13, 2007 — "actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe ...." Letter from James W. White to Tom Irwin, Commissioner, Alaska Department of Natural Resources (DNR) 2 (Jan. 20, 2009); see also Letter from White to Irwin 1 (Jan. 26, 2009); Memorandum from ACC 1 (Dec. 31, 2008)_ 3. Dec. 31, 2008 — a blowout preventer stack was attached to the wellhead. February 27 Letter 1. 4. Feb. 2009 — ACC began removing the drilling rig and related equipment. February 27 Letter 2. Status 1. The surface plug "remains sufficiently intact." February 27 Letter 2. 2. "ACC completely demobilizes the well this spring." February 27 Letter 2. Plans 1. If DNR "properly reinstates the ADL 389922 Lease," ACC will "continue" drilling operations in the 2009 -2010 winter. (February 27 Letter 2) The Commission was able to identify this information only after spending a substantial amount of time reviewing ACC's February 27 and April 22 Letters and the attachments. This information is inadequate; the Commission needs the following: 1. for each day on which, or group of consecutive days during which, work was done at the well, a detailed description of the work that was commenced, ongoing, and completed; 2. an accurate and thorough description of the present condition of the well; and 3. a detailed timeline indicating the ongoing work at the well, work planned to be undertaken, and when ACC expects to complete each ongoing and planned activity. 2. 20 AAC 25.070 Records Moose Pt. Unit #1 Well • • PTD No. 205 -038 May 29, 2009 Page 4 of 5 No "detailed accurate daily" records required pursuant to 20 AAC 25.070 have been provided. Nor has ACC stated that no such records exist. 3. 20 AAC 25.071 Geologic Data and Logs No pursuant s and geologic data required ursuant to 20 AAC 25.071(a) have been provided. g g Nor has ACC stated that no such data and logs exist. 4. Explanation for Not Providing Required Submissions ACC has not stated that all required submissions have been made. Nor has any explanation detailing why a required submission was not made been provided. B. Required Action Because ACC's response to the Commission's January 27, 2009, request for information was not adequate, the Commission is extending to June 30, 2009, the time for ACC to provide an accurate and thorough response. With its response, ACC needs to indicate whether any of the records required pursuant to 20 AAC 25.070, or any of the geologic data and logs required pursuant to 20 AAC 25.071, do not exist or otherwise are not available. If any such records or data and logs are not available, ACC needs to identify each one that is not available and provide an accurate and thorough explanation for why it is not available. If ACC again fails adequately to comply with the Commission's information request, the Commission will consider commencing an enforcement action pursuant to 20 AAC 25.535. However, as noted in the January 27, 2009, letter, responding to the Commission's request does not affect the Commission's right to take any action, including any enforcement action. II. APRIL 22 LETTER ACC's April 22 Letter is described as an "appeal" of a Commission "decision" "retroactively terminat[ing]" PTD #205 -038. No such decision was made. Specifically, even if the permit did expire under 20 AAC 25.005(g), the Commission did not terminate it simply by including it in a posted list of "outstanding" drilling permits, and by identifying on that list its expiration date based solely on the date it was issued. Accordingly, no Commission decision or other action regarding the Moose Pt. Unit #1 well exists to appeal. III. PERMIT APPLICATION At this time, the Commission is taking no action on ACC's application for a second Moose Pt. Unit #1 well PTD. If drilling operations commenced before March 24, 2007, and have been ongoing since then, PTD #205 -038 remains valid; and granting a "duplicate" permit for the well would not be appropriate. Otherwise, PTD #205 -038 expired. If that is the case, in ■ Moose Pt. Unit #1 Well II • PTD No. 205 -038 May 29, 2009 Page 5 of 5 deciding whether to approve ACC's new PTD application for the well, the Commission will consider ACC's response to this letter, the other information ACC submitted, and any other relevant information available to the Commission. Under AS 31.05.090(d)(2), in deciding whether to approve a PTD application, the Commission considers whether the "applicant is in violation of a provision of this chapter, a regulation adopted under this chapter, or an order, stipulation, or term of a permit issued by the commission and the magnitude of such violation." Sincerely, i Daniel T. Seamount, Jr. Chair *11 • I r �► RECEIVED )r- A J J N 0 ?,,,,9 ►;_.. < : _ Aissk* & as Cons. Commission Anchor *p, h. ro-AL - ALASKAN CRUDE CORPORATION 4614 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651 -0777 Kenai, Alaska (907) 335 -1829 Mobile (907) 394 -1829 FAX TRANSMITTAL SHEET DATE: May 28, 2009 TO: Matt Rader Department of Natural Resources FAX NUMBER: 907 -269 -8938 NUMBER OF PAGES: 78 including cover page RE: Amerex ADL 389922 Moose Pt. # 1 Extension Appeal — Response to Matt Rader May 18, 2009 letter to ACC • ALASKAN CRUDE CORPORATION 4614 BOHILL ST.1 SAN ANTONIO, TX. 78217 1 Ph. /Fax 210 - 651 -0777 May 27, 2009 Matt Rader, Natural Resource Specialist Emailed: May 28, 2009 1:23 PM Department of Natural Resources Faxed: May 28, 2009 to 907 - 269 -8938 550 West 7th Avenue, Suite 800 Sent Certified Mailed: May 28, 2009 Anchorage, Alaska 99501 -3560 Re: Your May 18, 2009 letter titled, "Status of Operations at Moose Point #1 Well Plan of Operation LO /CI 03 -019" Subject: In addressing Mr. Rader's May 18, 2009 letter concerning the "extension" of State lease ADL 389922: State of Alaska, Department of Natural Resource, unilaterally amended State lease contract, ADL 389922 firstly, by wrongfully terminating ADL 389922, December 31, 2008, the date ADL 389922 automatically extended pursuant to ADL 389922 para. 4(c)(1); and secondly the State unilaterally amended ADL 389922 para. 4(c)(1) by adding random provisions to the extension of ADL 389922 with DNR Commissioner's January 27, 2009 letter. Dear Mr. Rader: Thank you for this opportunity to clarify these issues addressed in your May 18, 2009 letter. Neither the Lessor, nor the Lessee Has Contractual Authority to Amend ADL 389922 Lease Contract Please see DNR's letter of Tune 26.1987 (attached) to George Trefry (Alaskan Crude Corporation) concerning a previous Appeal case involving ACC vs. DNR in which the DNR states, "The division of oil and gas (division) is fully aware that neither the division nor Alaskan Crude Corporation can unilaterally amend lease terms ". Neither ACC, nor the State of Alaska has the power or authority to unilaterally amend any lease contract without the consent of all parties affected by the amendments. State of Alaska oil and gas lease contract terms remain the same for preventing unilateral amendments to this date for the State of Alaska's ADL 389922's lease contract. In response to your May 18, 2009 letter, ADL 389922 paragraph 4(c)(1) does not require the Lessee (White)or its operator, Alaskan Crude Corporation (ACC) to submit a plan of operations to extend the lease as required by your May 18, 2009 letter. The State - drafted ADL 389922 lease agreement, agreed to by both the State of Alaska and Alaskan Crude Corporation (ACC) contains no provision requiring the working interest owner (Lessee, White) of ADL 389922 to file a monthly or annual work or drilling report 1 of 10 May 27, 2009 ar4 Re: DNR, Matt Rader's May 18, 2009 Letter • • for work performed on the lease during the primary term of the lease. However, I will attempt, as matter of common courtesy, to reply as best I can. Issues Concerning State Lease ADL 389922: It Should be Noted, the State Drafted ADL 389922 Lease Contract The State agreed in DNR's January 27, 2009 letter (attached), that ACC had performed drilling activities required to automatically extend ADL 389922, December 31, 2008, the Last day of this lease's primary term (lease para. 4(c)(1)). Note: Please review ACC's video at this hyperlink documenting ACC's drilling activities on December 31, 2008 at Moose Pt. #1 well: http: / /www.j-outtlbe.com /w at :h''uJ.Z; UGPF>._eyINs ADL 389922 lease paragraph 4(c)(1) simply requires, "If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, the lease will continue in effect until 90 days after the cessation of that drilling..." The DNR, having no contractual authority to unilaterally amended ADL 389922 paragraph 4(c)(1), did attempt to unilaterally amend ADL 389922 paragraph 4(c)(1), by ordering, "the activities observed at the site on December 31, 2008, assembly of the blowout preventer (BOP), equipment staging for BOP placement, presence of a drill rig, and completion of the initial reentry of the existing well plug, can be deemed consistent with the portion of the definition that reads, `...other operations necessary and incidental the actual boring of the hole...'...However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operation; (4) sustained production within 90 days following the cessation of drilling ". ADL 389922 lease contract's paragraph 4(c)(1) does not require that the Moose Pt. # 1 well be "completed" by April 27, 2009. The ADL 389922 lease contract paragraph 4(c)(1) does not require that any well on ADL 389922 must be completed by a specific date after the lease has been automatically extended. The lease only requires that operations be conducted or continued with "reasonable diligence." ACC did not immediately invest more risk effort and risk capital in ADL 389922 lease after this ADL 389922 lease has been breached with DNR's January 2, 2009 letter terminating ADL 389922 on December 31, 2008. And furthermore, ACC did not immediately invest more risk effort and risk capital in ADL 389922 lease after this ADL 389922 lease has been breached with DNR's January 27, 2009 order proposing to unilaterally amending ADL 389922 without contractual authority requiring among other things that the Moose Pt # 1 well be completed by April 27, 2009 and have sustained production from the well. 2 of 10 May 27, 2009 ,,,,['f1(1 Re: DNR, Matt Rader's May 18, 2009 Letter • • The ADL389922 lease contract has no contract clause requiring that all permits must be in perfect place in order for this lease to automatically extend beyond its primary term pursuant to lease contract's paragraph 4 (c)(1). ADL 389922 lease contract's paragraph 4 (c)(1) automatically extends for 90 days after the cessation of diligent drilling operations. The DNR has no authority to place any date (Le. April 27, 2009) for completion of ADL 389922's Moose Pt. # 1 well's work over. ACC's ADL 389922 lease contract is a generic commercial -type oil and gas lease contract between what is in essence two private parties even though, the State is one of the parties: The State of Alaska as Lessor, and James W. White, as Lessee. In matters concerning the ADL 389922 appeals of Lessor's (State of Alaska's DNR's AOGCC's or other state agency's) action, Lessee (White) or its operator (ACC) has the equal and same standing as the Lessor (State) has in the Alaska court system. If the DNR does not like its present state drafted ADL 389922 lease contract's paragraph 4(C)(1), the DNR is free to go back and redraft and amend lease paragraph 4( C)(1) and have the Lieutenant Governor approve a new amended oil gas lease contract for the next State of Alaska oil and gas lease sale. But, now, the DNR must abide by the terms of the present current State drafted ADL 389922 lease contract's paragraph 4(C)(1). The State of Alaska breeched the ADL 389922 contract paragraph 4(c)(1) when the DNR unilaterally, without contractual authority, tried to amend ADL 389922 lease contract to require, "completion of the well ", "active drilling permits ", and "sustained production" "by April 27, 2009" by the lessee (White). At no time has the DNR stated, prior to January 27, 2009, that ACC was in default because ACC was not diligently drilling Moose Pt. # 1 well. To the contrary, the past letter- record up to December 31, 2008 between the State (DNR and its sister agencies) and Lessee White/ operator ACC clearly evidences all the parties mentioned above believed (or stayed mute) that a valid Moose Point # 1 drilling permit was in place on December 31,2008. The DNR Commissioner's January 27, 2009 Order reinstating ADL 389922 to April 27, 2009 did not mention that ACC's Drilling Permit # 205 -038 -0 had been terminated by the AOGCC March 24, 2007. Furthermore, as of January 27, 2009, the date of the DNR Commissioner's Order reinstating ADL 389922, the AOGCC had not declared that ACC's Drilling Permit # 205 -038 -0 had been terminated March 24, 2007. No state agency had declared ACC's Drilling Permit # 205 -038 -0 was not a valid drilling permit as of January 27, 2009, the date of the DNR Commissioner's Order reinstating ADL 389922 to April 27, 2009. 3 of 10 May 27, 2009 3 ®f r+ Re: DNR, Matt Rader's May 18, 2009 Letter • The Eight Mile Long North Kenai Road Quagmire - Hazardous and Seasonal Access to Drilling Operations The ability to haul ordinary oil field equipment to and from Moose Pt. # 1 well ended in early March, 2009. The ability to safely continue drilling operations at Moose Pt. # 1 well is based on the ability to bring drilling rig parts to and from the drill site before the March break up. The ability to service the drilling operation ceased after early March, 2009. The time remaining from early March to April 27, 2009 is a meaningless time frame for normal drilling operations on the Moose Pt. #1 well because there is no normal way to bring in, or out, heavy trucks needed to service a normal drilling operation. Kenai borough road maps show that North Kenai Road runs from the Captain Cook Park, 8 miles to the Moose Pt. # 1 well site and on beyond to the Kenai Peninsula's Point Possession. The platted North Kenai Road is shown to run a long side the 20" Philip's Pipeline to the Phillip's LNG Plant; however, this platted North Kenai Road does not exist. After spring break up, the path for this North Kenai Road to Otter Creek is an 8 mile long quagmire with many peat -bogs, small streams, and marsh -like terrain to cross to get to the Moose Pt. # 1 well located on ADL 389922. After spring break up, and until fall freeze up roughly March thru December (each year), to travel through this 8 mile long quagmire, light four - wheeler or amphibian Argo -type vehicles with tracts are required. Obviously, these types of vehicles have extremely limited weight carrying capabilities. These light weight types of vehicles will not haul ordinary oil field drilling parts and equipment from the Captain Cook Park to ADL 389922's Moose Pt. # 1 well. It should be noted: this path through the 8 mile long quagmire did not freeze up last winter enough to support a light pickup truck until December 20, 2008. The year of 2008 was one of the rainiest and wettest years on record for the Kenai Peninsula, making travel along this path almost impossible after spring break -up. The so- called North Kenai Road was not frozen deep enough to support an eighteen -wheel truck December 31, 2008. It was not until mid - January 2009 that the so- called North Kenai Road could support a light - loaded eighteen -wheel truck and trailer to travel to ADL 389922's Moose Pt. # 1 well. However, the DNR wrongfully terminated ADL 389922 on December 31, 2008 in a letter addressed to Lessee, James W. White dated January 2, 2009 (attached); but the DNR did not reinstate ADL 389922 until the Commissioner issued his order on January 27, 2009 reinstating the lease while remaining mute about the fact that the lease was terminated by the DNR from January 1, 2009 until January 27, 2009 causing ACC to lose 28 days of prime potential winter -time drilling operations, which is almost 50% of the available winter time drilling season (January and February). 4 of 10 May 27, 2009 11 of WI Re: DNR, Matt Rader's May 18, 2009 Letter • • Timeline Affecting ADL 389922 Lease Automatic Extension Pursuant to ADL 389922 Paragraph 4(c)(1) Mr. Rader, the information you requested concerning ADL 389922 has already been sent to the DNR by ACC by the below correspondences: 1. December 31, 2008 ACC filed a Memorandum, subject Discussing the later than normal winter freeze up of the North Kenai Borough Road (attached). 2. January 15, 2009 ACC filed with the DNR a letter: "Re: Wrongful Termination of ADL 389922 (attached). 3. January 20, 2009 ACC formally appealed DNR's decision to terminated ADL 389922 with a letter (attached). 4. January 26, 2009 ACC filed a letter with the DNR titled, "Re: Potential Damages Caused by Improper Termination of ADL 389922 (attached). 5. January 27, 2009 DNR reinstated ADL 389922 in a manner not prescribed pursuant to ADL 389922 lease contract 4(c)(1) (attached). 6. January 27, 2009, AOGCC sent ACC a letter concerning Moose Pt. # 1 well (attached). 7. February 11, 2009, ACC filed a letter with the DNR titled, "RE: Request for Reconsideration -ADL 389922 Notice of Expiration of Lease Term (Corrected Document) (attached). 8. February 18, 2009, DNR denied ACC's request for reconsideration in a letter received by ACC, February 25, 2009 (attached). 9. February 27, 2009, ACC sent a file with pictures to AOGCC titled, "January 27, 2009 Letter from AOGCC's Daniel T. Seamount, jr. Chair addressing work done at Moose Pt. # 1 well (attached). 10. March 22, 2009 ACC receives a letter from McKenzie Transportation describing a March 11, 2009 incident of a McKenzie transport truck falling through the ice while removing drilling equipment from ADL 389922's Moose Pt. # 1 well on the North Kenai Road (attached). 11. March 30, 2009, ACC files a detailed letter to DNR addressing DNR's unilateral amendments to ADL 389922 in DNR's January 27, 2009 letter (attached). 12.April 22, 2009, ACC files an official request with the Alaska Oil and Gas Conservation Commission (AOGCC) , for approval to re -enter the Moose Pt. #1 well to test for gas production potential (attached). 13.April 22, 2009, files a letter with AOGCC, copied to DNR, appealing AOGCC's retroactive termination of ACC's Drilling Permit # 205 -038 -0 (attached). 14. May 18, 2009, ACC receives a letter from DNR titled, "Re: Status of Operations at Moose Pt. # 1 well Plan of Operation LO /CI 03 -019 (attached). . M 23, ACC files a letter with the AOGCC (attached) requesting 15 ay ( ) q E the status of ACC's replacement application for ACC Drilling Permit #205 -038 -0 which the AOGCC retroactively terminated two years earlier, March 24, 2007 through a February 5, 2009 AOGCC website posting (http: / /www,state.ak us /admire /ogc/ drilling /OutPermits /2009JOPermits09 228.pdf). 5 of 10 May 27, 2009 p9q Re: DNR, Matt Rader's May 18, 2009 Letter • Drilling operations have been continued with reasonable diligence. Wrongful Retroactive Termination of ACC's Drilling Permit #205 -038 -0 ACC discovered in April 2009, that on February 5, 2009 through the AOGCC State Website "Outstanding Drilling Permits: Expiration Dates 1/1/2007 thru 2/28 /2009" (http://www.state.ak.usiadmin r()gc driJJing /{)1_ltTk i i11itSJ2 ( }O9 /QPt'rtnits09022i34)(1t) that ACC's Drilling Permit # 205 -038 -0 had retroactively terminated two years earlier, March 24, 2007. Please see ACC's April 22, 2009 Letter (attached). The DNR, no doubt, will take the position that ACC's ADL 389922 could not automatically extend December 31, 2008, because the AOGCC took the position that Drilling Permit # 205 -038 -0 retroactively terminated, March 24, 2007 two years earlier. ACC takes exception to AOGCC's position that Drilling Permit # 205 -038 -0 retroactively terminated and believes that this retroactive termination of ACC's Drilling Permit # 205- 038-0 is erroneous and wrong. 20 AAC 05.005(g) states, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Moose Pt. # 1 well drilling operations did commence within 24 months after the AOGCC approved Drilling Permit # 205 - 038 -0; therefore, pursuant to 20 AAC 05.005(g), Drilling Permit # 205 -038 -0 automatically extended. Even if the AOGCC should prevail in its assertion that the drilling permit did expire, it is not necessary to have a drilling permit in place for the lease to be automatically extended under paragraph 4. Before Moose Pt. # 1 well "normal" drilling rework operations could commence pursuant to 20 AAC 05.005, Moose Pt. # 1 well had to be restored to a condition that would allow normal rework drilling operations to take place. These restoration procedures required ACC to access and prepare the site, acquire any necessary permits, and acquire specially designed milling tools (not ordinary shelf items), to mill out 4" pipe that had been wrongfully concreted into the top of the 7" casing. Upon receipt of those tools, commencement of milling the 4" steel pipe that had been wrongfully concreted into the 7" casing began. It should be noted, while the manufacturing of the milling tools was ongoing, ACC performed hand drilling on the interior of the 4" pipe to attempt to determine the Iength of the depth of the concreted steel that had been wrongfully concreted into the top of the wellbore. This hand drilling was necessary to determine the texture of the concrete so that ACC could be sure their mill designs were capable of milling out the concrete and steel. Please see the pages 10 -11 of ACC's April 22, 2009 letter to the DNR, and to you, Matt Rader, describing the work performed. 6 of 10 May 27, 2009 tom" n9 Re: DNR, Matt Rader's May 18, 2009 Letter • 1 This is not drilling of a new well operation. This is the rework /reentry operation of an old well that was completed in the late 1970s.p The AOGCC's regulations for drilling permits do not address rework /reentry operations for old wells that have been improperly plugged and abandoned with 4" steel pipe improperly concreted into the 7" casing and possible filled with other iron /steel and cable debris. Prior to March 24, 2009 ACC performed drilling operations preparing Moose Pt. # 1 well. These drilling operations consisted of: 1. Prior to March 24, 2007, ACC cut the surface portion of the 4" steel abandonment marker pipe above the Moose Pt. #1 well's 7" casing. 2. Prior to March 24, 2007, ACC began the process of designing milling tools to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. 3. Prior to March 24, 2007, ACC began the process of accepting bids from, and hiring machine shops to fabricate and deliver the specially designed milling tools to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. 4. On or about June 2007, ACC, upon the receipt of the unique milling tools, began the process of milling out the 4" steel abandonment marker pipe wrongfully concreted into the 7" casing of ADL 389922's Moose Pt. # 1 well. Drilling operations have been continued with reasonable diligence. An AOGCC drilling permit is issued for two years. If drilling operations occurs before the two year time -limit and is continuing over the two year time date, the drilling permit automatically extends until all drilling operations cease. There is no explanation in State Regulation 20 AAC 05.005 Drilling Permits that describe the length of time a drilling extends beyond its two year time frame. Pursuant to 20 AAC 25.535, "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Because AOGCC did not send ACC written notification "by personal service or by certified mail, return receipt requested," or any other form of correspondence, informing ACC that ACC had "violated of failed to comply with a provision of AS 31.05," it is obvious that ACC was in full compliance of Drilling Permit #205 - 038 -0 therefore Drilling Permit #205 -038 never terminated. Had, at any time, ACC "violated or failed to comply with a provision of AS 31.05 ", particularly AS 31.05.090 Permits to Drill Wells, the AOGCC was mandated to send ACC written notification "by personal service or by certified mail, return receipt requested," pursuant to Alaska State Regulation 20 AAC 25.535. 7 of 10 May 27, 2009 I T OP 9-(4 Re: DNR, Matt Rader's May 18, 2009 Letter s 1 On April 22, 2009 ACC sent certified mail requested and submitted a drilling permit application to replace Drilling Permit #205 -038 -0 that had been retroactively terminated by the AOGCC's website, "Outstanding Drilling Permits" (lattp: / /www state. y ak. pis / Atlain o }c f ri(li.no j )utPerinits /200910Pu it t,;Ci') ()22h.pcti) February 5, 2009 back to March 24, 2007, two year earlier. Note: Regulation 20 AAC 25 provides that there is no cost for drilling permit. A new drilling permit is free. Note: If the AOGCC did not inform the DNR about ACC's March 24, 2007 retroactive termination of ACC's Drilling Permit #205- 038 -0, that would not be considered "as an act in good faith" on the part of the AOGCC. Note: The AOGCC did not inform ACC in any shape, form, or fashion that ACC's Drilling Permit #205 -038 -0 retroactively terminated March 24, 2007, and this likely cannot be considered "as an act in good faith" on the part of the AOGCC. Note: Prior to December 31, 2008, if the DNR was fully aware that the AOGCC terminated ACC's Drilling Permit # 205 -038 -0 March 24, 2007 while allowing ACC to spend enormous out -of- pocket capital developing ADL 389922's Moose Pt. #1 well without an active drilling permit in effect, that would not be considered "as an act in good faith" on the part of the DNR. ADL 389922 Is Still Active As of May 26, 2009 "As of: 05/11/2009" the Department of Natural Resources (DNR) "Lease Status" website (http: / /www.dog.dnr. state.ak.us/ oil / products / publications /leaseactivity /pdf /lease activit y quadrant.pdf) shows that ADL 389922 is still "Active ". However, this DNR "Lease Status" website shows an expiration date of April 27, 2009 for ADL 389922 yet being maintained in "Active" status as shown circled below in Image 1. Thirty -six (36) days to this date (May 28, 2009), the AOGCC has neither approved nor disapproved ACC's submitted (April 22, 2009) drilling permit replacement for of Drilling Permit #205 -038 -0 even though ADL 389922 is still in "Active" status. It should be noted that Drilling Permit 205 -038 -0 took only 20 days to be approved when first issued in 2005. In regards to your statement in "item 11" of your May 18, 2009 letter, ACC has no information as to what Moose Pt. # 1 well "condition" is acceptable to the AOGCC. When the AOGCC makes this information available to ACC, ACC will immediately forward this AOGCC information to you, Matt Rader or anyone else you designate. 8 of 10 May 27, 2009 8 a P q. _? Re: DNR, Matt Rader's May 18, 2009 Letter • • Image 1. DNR Lease Status Website Showing ADL 389922 Shown In Active Status Circled in Red , Lease Status .4s of: 61'12003 .4 rranged by JITR.S ADL MTR - : ract Acres Bid Sale Effective Expiration Status Unit Indefinite Associated Notification No. No. Acre Date Date Date Term File Lessee Indicator ADL MTR Sale Tract Acres Bid' Sale Effective Expiration Status Unit Indefinite Associated Notification No. No. Acre Date Date Date Term File Lessee Indicator 59355 S0091.4OC3W 26 2551 2.87 121111197 03101/1073 02/2811083 CLOSED DEFINITE SALE 26 TERM 59358 S000N009W 29 1280 9.87 12/11/197 03/01/1073 02/2871978 CLOSED DEFINITE SALE 28 TERM 50357 S009NOC3W 25 683 12.6600 121111197 03/01/1973 02/20.1078 CLOSED DEFINITE SALE 29 TERM 59358 5609N003W 25 960 12.69 12111/197 03/01/1973 02 29 CLOSED DEFINITE SALE 2C TERM 59359 3039NOC3W 26 1280 2.67 12!11/197 03/01/1973 32 :3 1078 CLOSED DEFINITE_ SALE 28 TERM 59390 SO09N003W 26 1276 1.22 12/111197 03/01/1973 02 : 1278 CLOSED DEFINITE SALE 2e TERM 59381 SOOON00 25 1280 10.82 12/11/197 03101/1973 3: :11478 CLOSED DEFINITE SALE26 TERM 59362 3009N003W 25 1280 4.55 12/111197 03/01/1973 02;28:1978 CLOSED DEFINITE SALE 2e TERM 59363 3009NOC3W 26 956 1.22000 12/11/197 03101/1973 0228:1978 CLOSED DEFINITE SALE 26 TERM 55623 S009N009W 24 1308 3.92 10/23/197 01 /0111975 12/31/1984 CLOSED DEFINITE SALE 20 TERM 32915' 3009N009W 33 2880 10 05113/198 07/01/1981 08130 /1988 CLOSED DEFINITE BP AMER CA TERM oROOLCTIOM COMFAN 395444 S009NOOOW 40A 3200 4.7 0226/198 05/0111988 34:33:1302 CLOSED DEFINITE ilNIO1 TEXAS TERM PETROLEUM ALASKA C 374018 S000NOC3W 97A 2880 42 01/29/199 34 /01/1391 331311199e TERMINATED DEEIN!TE JNION TEXAS TERM PETROLEUM ALASKA C 374019 S009NOC9'14' 97A 4450 15 01129/109 340111301 33311 TERMINATED DEFINITE UNION TEXAS TERM PETROLEUM ALASKA C 374020 3009NOC9W 67A 4792 27 01/29+109 34.0111401 3331.1398 TERMINATED DEFINITE UNION TEXAS TERM PETROLEUM ALASKA C 384335 5009 IN . • .. - - " • UNION TEXAS TERM - L ALASKA C : S009NOCQW 012001 4800 5.01 05009/200 0127/2009 34.272300 ACTIVE DEFINITE WHITE TERM 390389 S009N009W 012003 4792 5 i. • ni r r ,_ _, a; , DEFINITE BARR TERM 25883 S009N010E 13 2533 1.53 12108/196 03!0111236 02/2811975 TERMINATED DEFINITE SALE 1 3 TERM 18724 3009N010W 9 5009 50.9034 07/111196 39 381131,1987 CLOSED DEFINITE SALE 9 TERM 18767 5009N013W 9 5106 1.15 0711 10.0 1;1992 3930:1997 RELINQUISHED DEFINITE SALE9 TERM Lease.dcir+iry', arranged a' 1ITRS Page 12 of 9 of 10 May 27, 2009 0.P Re: DNR, Matt Rader's May 18, 2009 Letter 1 Please consider the fact that: 1. ACC has been damaged by State actions for the wrongful termination of ADL 389922 by the DNR, December 31, 2008; and 2. ACC has been damaged by the DNR Commissioner's Order reinstating ADL 389922 from January 27, 2009 to April 27, 2009. In conclusion, drilling operations have been continued with reasonable diligence. Kindest Regards, Alaskan Crude Corporation, Operator of Moose Pt. # 1 drilling operation James W. White, President Alaskan Crude Corporation lames W. White, Lessee Office: 4614 Bohill St San Antonio, TX 78217 Phone: 210 -651 -0777 (office) 907 - 394 -1829 (cell) CC: DNR Director, Kevin Banks ( ); DNR Commissioner, Thomas Irwin ( ); James. A. White ( ); AOGCC Commissioner, Daniel Seamount, Jr. ( ); Thomas Maunder ( ). 10 of 10 May 27, 2009 1 0 c 171J4- Re: DNR, Matt Rader's May 18, 2009 Letter MUM 01211111111112111111 t` 4N4 BIM it 1 In AL, IL 78217 Date: May 23, 2009 rcZke et /1? VOO p' Alaska On and Gas Conservation Commission ' k0( f1a � � � to 333 W. 7th Ave., Ste. 100 Anchorage, . Alaska 99501 Re: Based on the fact that the State of Alaska DNR records still reflect that Alaskan Crude Corporation's (ACC) State ADL 389922 Lease is still in Active status as of May 23, 2009, ACC is requesting a response to ACC's drilling application submitted to the AOGCC April 22, 2009 to replace the Drilling Permft # 205 - 038 -0 to rework ADL 389922 Moose Pt # 1 well retraacti announced terminated on the AOGCCs s'Outstandim Drilling Permits"' website (http : / /wwtv.stateakus /admin /ogc /drilling /OutPerrits /20139 /OPerrnits09 0228.pdf) by the AOGCC February 5, 2009. Subject The AOGCC posted a public Webpage thttp : / /www.state,ak.us /admin /ogc /drilling /autPermits /2009 /OPermits09 022 apdf) notice titled "Outstanding Drilling Permits: 1/1/2007 thou 2/28/2009" on February 05, 2009 retroactively terminating Alaskan Crude Corporation's Drilling Permit # 205 -038 -0 two years earlier, March 24, 2007. The new replacement ADL 389922's Moose Pt if 1 well drilling application was properly and duly submitted to the AOGCC for approval, April 22, 2009; but has not yet been approved or disapproved by the AOGCC. The new replacement Moose Pt. # 1 well drilling application has not been approved or disapproved to this date, May 23, 2009. The original Moose Pt it 1 well Drilling Permit #205- 038 -0 was submitted on or about March 04, 2005 and subsequently approved about 20 days after the Moose Pt. # 1 well drilling application's submittal, March 24, 2005. The (April 22, 2009) replacement Moose Pt. # 1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt it 1 well drilling permit # 205- 038-0. Dear Commissioners: Alaskan Crude Corporation's (ACC) new replacement Moose Pt. it 1 well drilling application to rework ADL 389922's Moose Pt it 1 well has been pending before the Alaskan Oil and Gas Conservation Commission ( AOGCC) for approval for more than 31 days since it was first subs to the AOGCC, April 22, 2009, for approval The new replacement drilling • application to rework ADL 389922's Moose Pt. # 1 well is almost a mirror image of the 1 of3 AUSAN 01111111111111111111111 4614 111M, 111111AL,11. 781217 original drilling application for Drilling Permit #205 - 038 -0 which was approved March 24, 2005, 20 days after drilling permit If 205- 038 -0's original submittal date. . As of 05/11/2009 (May 11, 2009) the Department of Natural Resources (DNR) "Lease Stags" Website (http: / /www.dog.ctnr. state, ak. us / oil / products /publications /leaseactivity /pdff lease activit y q u a dra nt. p d f) shows that ADL 389922 is still an Active lease in Active status. However, the DNR 'Lease Status" Website shows an expiration date of April 27, 2009 for ADL 389922 yet being maintained in Active status thru May 11, 2009 as shown circled below in Image 1. ADL 389922 lease is a current lease as aftested on the DNWs "Lease Simvs" Webpage, May 11, 2009. On April 22, 2009, ACC petitioned the AOGCC to approve or disapprove the replacement ADL 389922 Moose Pt. # 1 well drilling application submitte4 April 22, 2009. On April 22, 2009 Alaskan Crude Corporation submitted, by certified mail, a replacement drilling permit for AOGCCs approval to rework ADL 389922's Moose Pt # 1 well. On April 22, 2009, Alaskan Crude Coon submitted a letter appealing the Marla 24, 2007 retroactive termination ofA Drilling Permit # 205 -038 -0 posted on the AOGCCs "Outstanding Drilling Permits" Webslte . drilli r Ott ��ww.state.ak.us admin o_c dr.11i 1_ tiutFe, 2�DR t�Permlits09��28.° d . Image 1. DNR Lease Status Website (h 3: www.do state.ak.us oil ' roducts /' ubiicatiousf leaseactivity /pdf /lease activity cuacirant. Showing ADL 389922 Shown In Active Status Circled in Red Lease Status et c ,t AtrangegiLIMS Aix r,R Sob Vial Amen Me Sato OWN* Expiration Maim unit MAN* Aa..ola ed xowation No R.. Awe DSO Rao Dab Tone Pb loom bd rabt 1�cr arr ma c 396335 3008884* 18 12.2T 194 01911/935 1251111191 TERMNAT® OEF ROOM TEt3! PERMINALACAC Mat i! 591 zee 01/2172109 9402X0 ACNE OVICE MS CI 210 6792 5 9517000 1901/003 wet ACRE DE1 WE BARR 1T9�1 29383 901094011E 13 2533 133 1211498 031111 02391915 TERMINATED 0E910TE SALE 13 TEAM 33126 MOWN 9 5099 501104 01111/196 093111962 0919111th tion MIT SALE 19N 11113 SOWN 9 5101 1.15 011111196 0111962 1200090/ • 0983TE SALE 9 TERM LeffeAdhit, an yl bylflic 11,195(15" 2 MUM CISIMPINIMIll 4614119111111 fl. I MI n To this date, thirty -one (31) days later (May 23, 2009), the AOGCC has not acted to approve =disavows ACC's replacement Moose Pt.* 1 well Drilling Permit #205 -038-0 even though ADL 389922 is still in active status as attested to DNR's `Least Status" Website (htt : ` www.do,.dnr,state.ak.us'oil roducts •ublications leaseactivit •df'lease activit .yuadrant.pdf). It should be carefully noted that the original Moose Pt # 1 well Drilling Permit 205-038-0 took only 20 dos after its original submittal to be approved, March 24, 2005. Please advise ACC about AOGCCs decision regarding the status of ACCs replacement Moose Pt. #1 well drilling permit submitted April 22, 2009. Kind Regards, .. 444-- • .f MiTrInriT anager Alaskan de Corporation 4614 Bohill St San Antonio, TX 78217 CC. Alaska Oil and Gas Conservation Commission, Daniel T. Seamount, Jr. Alaska Oil and Gas Conservation Commission, Tom Maunder Department of Natural Resources, Commissioner, Thomas Irwin Department of Natural Resources, Director, Kevin Banks Department of Natural Resources, Spedalfst, Matt Rader 3 of 3 13 ©P • • F 1 1' i AK INY SARAH PA, GOVERNOR U DEPARTMENT OF NATURAL RESOURCES 550 WEST 7 AVENUE, SUITE 800 ANCHORAGE ALASKA 99501 - 3560 DIVISION OF OIL & GAS PHONE (907) 269-8800 FAX (907) 269-8938 May 18, 2009 Alaskan Crude Corporation Attn: James W. White 4614 Bohill Street San Antonio, Texas 78217 Re: Status of Operations at Moose Point # 1 Well Plan of Operations LO /CI 03-019 Dear Mr. White: This letter sets forth my best judgment as to the facts regarding your physical progress at Moose Point #1 Well. Information that would assist administration of the lease was requested in a letter from Jonne Slemons on February 18, 2009, and in my letter of April 7, 2009 that requested a written response. The purpose of these letters was to establish the facts of physical activity on the lease so that the lease and plan of operations can be administered with respect to the extension. Since you didn't respond, these are the facts of physical activity as they appear to me. Please take this opportunity to correct any errors I may make. I. Between December 2005 and February 2006 a drill rig and equipment was mobilized to the site 2. Between April and September 2006 the site was cleated and graded. 3. On June 13, 2007 boring commenced to reach the bottom hole by removing the concrete and steel pipe surface marker to 6 feet below grade. 4. On December 23, 2008 you informed me in a telephone call that you were resuming chilling and would continue drilling through the December 31, 2008 lease expiration date and that this would extend the lease. 5. On December 31,1 was present at the drill site and observed heat begin applied to a BOP in a box adjacent to the well head; snow had been recently plowed from the drill site; the drill rig was not running, the mast was not raised, the drill bit was not turning in the hole, and the drill rig and systems did not appear to have been operated for some time. 6. During the night of December 31, 2008 the BOP stack was being assembled on the wellhead using a truck mounted boom. 7_ In our telephone conversation on or about Janrwry 13 I understood that Aurora was testing the BOP equipment, and that you had other BOP equipment that could be manually operated, and that you would be working with Tom Maunder of the AGOCC to get it approved. 8. On January 21, 2009 Brian Havelock and Shaun Peterson of the DO&G visited the site and observed activity that could be associated with drilling, but did not observe the drill bit actually boring in the well or actual operation of the drill rig and systems in the act of drilling, "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." 1 oC • i Division of Oil & Gas 5/15/09 Page 2 of 2 nor did they appear to have been recently operated fur drilling. The BOP was attached to the wellhead. The required accumulator was not operationally configured. 9. In telephone conversations you conveyed that during the approximate period from January 13, 2009 to January 21, 2009 the access road could not be used due to warm weather. 10. On or about February 12, 2009 in a call from Houston, you informed me that equipment needed for the well was loaded and shipped out of Houston on an 18 wheeler and would be delivered in Alaska in about 10 days, that the drill rig was capable of running, and that an accumulator for the BOP was being shipped to the site. 11. In a telephone conversation on or about April 13, 2009, you informed me that the drill rig was no longer on the Moose Point #1 drill site and was in Kenai. You also stated that the well marker was not on the well, but that the well was being left in a condition acceptable to AOGCC. 12. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well occurred between the end of the drilling commenced in June 13, 2007, and the time the lease was set to expire on December 31, 2009. 13. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the hole occurred after December 31, 2009, or that AOGCC has approved your BOP equipment fnr nse_ 14. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well was occurring on December 31, 2008, or on January 21, 2009, or has commenced or continued since the lease extension decision of January 27.2009. 15. According to the AOGCC, your permit to drill (#205-038-0) expired on March 24, 2007. On or about April 22, 2009 you appealed that determination to the AOGCC. If I am wrong about these details at the Moose Point #1 Well, please provide some documentation about actual boring, testing, the status of the permits and approvals, and progress in the well. If boring did occur, this is information in your possession that you should be willing to provide since it is in our mutual interest that we reach the correct conclusions. If you do not provide additional written information by June 1, 2009 that is contrary to my understanding of the facts as presented above, then my understanding as presented above may be considered in future decisions affecting administration of the lease and plan of operations. If you have any questions please give me a call in Anchorage at 907- 269 -8776 or email matt.rader@alaska.gov. Sincerely, 9 Matt Rader Natural Resource Specialist Ec. Jenne Slemons jimwhite(a/acsalaska.net jimwhite @satx.rr.com i imwh ite(anplecapital.com 15 0prq. • • ALASKAN CRUDE CORPORATION 4614 ®ohs Street San Antonio, TX 78217 Phone/Fax; (210)651-0777 �unwhd e@sabc.rr.com Date: April 22, 2009 To: AOGCC 333 W 7 Ave., Anchorage, Alaska 99501 From: )im White, Alaskan Crude Corp. To: AOGCC Attention AOGCC, Please find attached my retest for approval to re -enter the Moose Point #1 to test for gas production potential. If you have any torestions pleased) not hesdale to Call. Thank you. Regards " 1 1r C Jim White President, Alaskan Crude Corp. • S To: AOGCC Di: April 22, 2009 From: Jim White Alaska Crude Corporation Subject: Moose Point #1 Re -entry API t15O- 133-263I244 Approval is requested to reenter the Wine Point #1 well to test fcx' cas production potential. We anticipate beginning pre oration work pending freezing weather conditions. Below please find a summary of the existing well and planed opt: Moose Point #1 is located 2512 feet from the nom line (FAIT,) and 2124 feet from the east line (FEL) of Section 14, T9N, R9 W, Sewmd Madigan. The well site is located on private property. The well's gmund elevation is 163 fret. R is ©inside of any Carps of Ems cksignated wetland area. Moose Point #1 was drilled as a straight bole to a TD of 10,058' pact in early 1978. Intervals were tested, the well was suspended for aperiodoftime and ultimately files fro abandonment in March 1982. Please refer to the attached weIRsore schematic.. In summary, the well has 333' of 20" conductor pipe, 2516' of 13-3/8" surface casing and 9032' of 7" co& Openhole from the 7" shoe to drilled TD of 10,058' is filled with cement. ent. Four plugs/retainers exist in the 7" and will be removed from the surface - 15'?, 55'440', 4907'- 4985' and 8283'4696' rod_ The surface p -15'7 is a concrete plug (sand and gravel). The 4" pipe abandonment marker was set in the mete =face to 15'7 concrete ply The metal portion of the 4" marker pipe conmeted in die surface ping to 15'? has been milled and bored out. There are perforations at 5045'-5075' that have been cement squeezed; and open perfs at 8666'- 8696', below the lower retainer. These lower set of open perforatibas will be the initial interval targeted for teeing_ We have acs rem that indicates the length of the depth of the concrete surface plug. The concrete surface plug in the caste could be more or less than 15' in the length of its depth. The well has about 55' of diesel above the upper oemes t plug in the 7" casing. This diesel will b e recovered and recycled as fuel for on-site heap equipment Expected Pressures: Per DST #1 uten this well was at mid pert depth of 8681' MD, 8659' TVD (22' RKB), =emir press= was reporksdta be 4065 psi or 0.47 psi/ft gradient 9.0ppg EMW. Using a O Ipsi gas grathent would residt in a maximinn anticipated surface pressure(MASP) of approximately 3 psi Proposed Rig Operation& 1. Mobilize equipment to welline, via the Kew Ala Borough unimproved road right-of- way access that begins at the end of Moab Kasai 1 Weather will dictate the timing of sufficiently frozen ground eaeardian to support aide wed. 1 OF 9-9 • • 2_ Rig up the location per Attachment 3_ ball a 13-5/8" 3000 psi x 7 -1116" 5000 psi tiding Lead with seals has been installed and pressure 4. Nipple up 7 -1116" 5000 psi WP BOPE =misting el pipe , blind inn, as annular preventer, a flow cross with 2" apipment and a 2" 5000 psi choke manifold (Exhibit A -1) install test plug_ Test BOPE to 3500 psi Test as to 2500 psi Pull test plug. 5. PU work string drill out surface plug —15 , RIH to top of second plug at —55'. Circulate out and recover diesel freeze protect for reuse_ 6. Mill out the first three cement plugs/retainers will a 6" lit, circulating a of 9.0 ppg NaCl/KCI brine and gel sweeps. Circulateheam well down to 8283', the top of the lower cement plug. Pressure test 7" to 500 psi to die competency of squeeze perfs at 5045'-5075' and 7. Mill out final cwt plug/. Gradate will clean down to 8800' md.. Recover and isolate the approximate 3-1/2 cubic yards of cuttings expected to be generated from removal of the cement plugs_ 8. Run 2-7/8" 6.411 L40 tubing and packer with the inter of testing the open perforations at 8666'- 8696'. Install tubing hanger and test Pump diesel down inner annulus for freeze protect. Set retrievable production pacer 9. Install two-way check. ND BOPE, NU free and passim test. Pull TWC. 10. RU testing equipment and test interval at 8666' -8696' by swabling liquids frail tubing. 11. If the 8695'- 8666' inter -val does not 'move up Sundry Applications will be submitted for approval to move the packer and test other intervals in the well bore for gas production. 12. If commercial production of hydrocarbons is established at this well site, additional plans for development and surface handling of pioduction will be submitted. Should the well be plugged and abandoned, pluggthg and abandonment of the well bore will be in accordance with regulations established by the State ofAlaska. 2 1e oF • • Ground Level 183' KB Elevation 185' Rout der of 1S' Concrete Plug Canent Plug Diesel 56' S4 -1AtY H T_f'14 -40Conductor 333' Cemented to stuface • 13 3-8" Casing Cemented to 2516' Surface Cement Plug 490T -498Y 49 I Cement Retainer Perforations (Selz —85 sx) 5045` -5075' Perforations Caned Pkg 828.1559' T Cement Retainer t 8865 —8096' { T (SG 79#x 37# N-80 1 . fr l t e4 �t 1 te n. Total Depth --I 10.058' 41, . ,A4 Wildcat WELL Moose Point #1 Permit No.. APT No. 50- 133 - 20312 -00 Sec 14. T9N.R9W 2124 FOE 251L5 FNL 1 C0 • • ALASKAN CRUDE CORPORA7TON 4614 Bohr Street San Antonio, TX 78217 PhonWF (210)651-0777 jinwAIReticatxmaxn Date: April 22, 2009 To: AOGCC 333 W ri Ave., Anchorage, Alaska 99501 From: Jim White, Alaskan Crude Corp. To: AOGCC Attention AOGCC, Alaskan Crude request a valance to use a 2' 5k choke matidd with the 7°, 5k BOP stack instead of a 3" 5k droke manllold for the re -entry of the Moose Pitt 81 well. Thank you. Regards , - >-`' - ' / By: Jim White President, Alaskan Crude Corp. 1 ao of q-q- III • STATE EV ALASKA ALASKA OE AM GAS CONSERVATION CONIASSION PERM` TO OWL 20 AAC 25.005 Is. T y p e o f W o r k Th. C a r e n W e i C l a w E x p l o r a t o r y E l D e v e l o p m e n t 06 0 lc. S p e d I V f well le poposed for DOH 0 Redd! 0 Shalgraphic Test 0 SeNce finelopment Gas 10 Coalfield Methane 0 Gas Hydrates 0 Re-entry 21 alletayAeZtete 0 eseste,Bette. 0 r 0 2. Operator Name: 6 .. Bonet Minket El Single Well 0 it Wel Name and Number Alaskan Crude Cora Bird No- Slate 1Mde moms Moose Point 81 (Lod Kenney) 3. Acairesw 6 Pagrovad Dealt 12. FseldliPooltak 4814 Bohai, San Antonio, TX 78217-1413 ilEt 10 Iva 10,058' Unknown 4a Location of Well (Govemmenba Secion) 7. PmpertyDesignatiort Surface: 25115 FM_ 2124 FEL, SEC 14. 1N R9VV„ SAIL ADL 1B9922 Top of Rada:tin Horizon: Ufa Use 'Vomit 13_ Approarnie Spud Date: Same WA WII2005 - Total Death: • .ftresinPrepeda 14 Disbnce to Nearest 4700asses PosPilltr sperm 135 4b. Location at Well (State Base Platte Coordinates -1401D nr 10. MI Elevahon ebove taSt.: feet 15. Distance to Nearest Well Open Surface: ic- 2124 FEL y- 2511.6 FP& Zone- KB Eievalion above GI: 183 feet to Same Pat N/A AO. Donated walk.: lastina Atonic lent - aismisese Amdcipsied Pommes is psis (see 20 AAC 25.03a) N/A Meets= Hole AVE WA dames i * - 4085 psig Swine 3200 prig 18. Caskig Program: J -v--� Top - Seem Depth - Th J Cement quart*, c.f. or sacks Hole Casing IWett Grade * .;..4, - Lamb li) 1111) ND 1 TWO J (includitg nage dela) 30" 196# 0 50 j Sstvdl Pia Other 26" 20" 94# 14-40 0 333 f7alsxclassG. 171/? 133 72.68 1.80 0 2516 1710 es Clem G. ft yr 7 32#291, IC-611, BOO 0 9062 1 emO DV TocieSINUr ,- 19_ moon WEILL COMMON StfillitARY (robe cerapktadia Redrthand lieradry °pennons) Told Depth SAD my Total Depth ND (fir Plans (memoir* Effect. DepthilD ety Effect Depth ND OW Junk (measured): Casing Length Sim Cement Volume NM ND ConductosSauctural 083200-97 RN AK Driven 0-33370-50 Surface 0-251 e 045'? 17105K 0-2516' Intermeckde 041032 55-14441107-4085 10ee= 0-9032 Produchon 820348118 Liner Perkration Depth MD (ft) Perinalon Depth ND py 8860.8695' (OPEN) 5045-5073 Plugged 20. Ansichmeinst Fano Fan BOP Obelsb El DdlionPreguse Ei Them th Ma eakPlet llow Hazard Analysis Property Plat E tYnerterSketcb Seabed Report Drifts Rad Program El 20 AAC 25.050 sequirements 21. Mabel App mer& Commksion RepresentaKer Dale 22. raereey certiy that the kingorg issue endows= Connor Printed Name James W...7 Me President I 1 _.---- - - - - Phone 210651-4877 Dots 22-Apr-09 Caramitshat Use Datir - , =t9r61 I 50: =liftman' coverkler fordher Conditions of approval : if box is checked, warm not ha used to meg= ter. teak or produce coated methane, gas bythates, or gas antalnett m seams: 0 Other Samples ref& Yes 0 HOD fad bg rapt Yes 0 No 0 IS _a. Yes0 1010 Diatcrosnal wey telt Yes 0 No 0 APPROVED BY THE COMMISSION DAM , COMMISSIONER ?ono 10401 4Rana' ad 02009) RIM psalm lavass tor TA aralhatrantiatadime or agpiewit pit SIM mimeo Sublet la Deoacate Q. I Of 9-r-4- 410 • 1640hhiFur Talc for Gesvet g Get Vet Ode WtxkREffam N ■ Ilk 5r — 1 I F � 1 I t i ! ) d I f I t 5, , f , "M''i M1. S r F , G �;•'�i4 .5:.' 6 fii#h'AP .'tl1.ivsk( .11.4'9*. 4 � ' M f i 44 1' 1 kt s fi w ° 1 To., �'�-`- t r RCS � k x, a r E xternal al e.rrra >,� �6t i n � r a t c � t• 1 P t ra, �,ti Fc anb ,.. yr . Ja •�,:, z ry , a.. �,.s, I Tank , t 3'' , , e ,„ ,...„ �., „„., 1 t, :_, ° From Ch oka , 4 �'3, Lino .ilo'$oa« '+"}%' 1 '0"'Ar k,i; r Vt ,.. ...wFU, ._. ,yrr. _ ,. .1' el .'",.. tit: 1 yy � �}t :i 11 • X' '••d4 CSA'd4 .,.a......rS k:: ,0 A• , :44t .. IMIIMOOMMOMIld Pits 1 C • • April 22, 2009 To Alaska nil and Gas Conservation Commission 333 W. 7th Avenue Suite 100 Anchorage, Alaska 99501 -3539 Attn: Thomas E. Irwin, Kevin Banks, Mr. Daniel T. Seamount, Jr. Faxed April 22, 2009 to Daniel T. Seamount, Jr at (907) 276 -7542 Faxed April 22, 2009 to Commissioner, Thomas E. Irwin at (907) 269 - 8918 Faxed April 22, 2009 to DNR -DOG Director, Kevin Banks at (907) 269 -8938 APPEAL OF AOGCC'S FEBRUARY 5.2009 WEBSITE ' ECI $JON TO RETROACTIVELY TER IINATE MOOSE PT. #1 WELL'S DRILLING P MJT zn_� -038 -0 MARCH 2_d_ 2007 This letter is appealing the Alaska Oil and Gas Conservation Commission's ( AOGCC) actions declaring on February 5, 2009 that Moose Pt #1 Well's Drilling Permit # 205 -038 -0 had terminated two years earlier on March 24, 2007. The AOGCC declared Moose Pt #1 Well's Drilling Permit # 205 -038 -0 had ceased to exist after March 24, 2007. The AOGCC only published an AOGCC website ()xttp : / /www. state. akus /admin /ogc/homeogc.shtml) February 5, 2009 for the very first and only time dedaring that Moose Pt #1 Well's Drilling Permit # 205 -038 -0 had expired March 24, 2007. The drilling operations milling out required to mill the 4" steel pipe concreted into Moose Pt #1 Well's 7" casing automatically extended the Drilling Permit # 205- 038 -0. Therefore, Drifting P # 205 -038 -0 a rmnatically extended beynnd March 2 4, Ls• uaiaa • ca aqua, � vv✓ v..ry v a,a w uaa+w. : J ..o.+. J .. 24 2007 , Please note: To rework Moose Pt # Well with a 4" steel pipe concreted into the 7" casing may not seem like much of a "drilling operation" to the inexprienct: however, to the experienced driller, reentering and reworking Moose Pt. #'! Well's casing with a concreted in 4" steel pipe sticking out the 7" casing is in fact a major `drilling operation." Often times the original operator who originally drilled, then plugged and abandoned the well deliberately leaves iron pipe and other metal debris (chain, etc.) in the casing to prevent the well from ever being reentered or reworked. That original operator generally is not interested in leaving his well in a condition where a new operator can come in and easily have a cheap well. 20 AAC 05 states the regulations required to obtain and maintain a drilling permit 20 AAC 05.005(g) states a drilling permit will expire if "drilling operations" are not commenced 24 l ot 20 02 o 19.r • • months after the approval of the drilling permit 20 AAC 25.990(23) defines "drilling operations" as having commenced when drilling below the conductor pipe. In reworking an existing well that has been drilled, cased from the surface down the TD depth and plugged and abandoned a conductor pipe does not exist inside the casing. The definition 20 AAC 25.990(23) of "drilling operations" has no specific mechanism to trip "drilling operations" when reworking the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned. However, dril,Ii'itg was underway at the Moose Pt. #1 Well prior to expiration of the drilling permit The definition "drilling operations" as defined in AAC (25.990(23) needs to be revised and re- promulgated to clearly trip 20 AAC 25.990(23) `drilling operations" into affect when reentering and reworking a well that has already been drilled, properly cased, plugged and abandoned and has no conductor pipe existing inside the casing In the mean time, the AOGCC needs to exercise its agency discretion and acknowledge that drilling by ACC did commence prior to expiration of the drilling permit AOGCC DID NOT NOTIFY JAMES W. WHITE IN WRITING ON OR BEFORE FEBRARY 5, 2009 PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205-038-0 MARCH 24, 2007 SOME TWO YEARS EARLIER 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." AOGCC did not send "a written notification by personal service or by certified mail, return receipt requested telling ACC Drilling Permit # 205 -038 -0 was in non - compliance of 20 AAC 25.005(g). AOGCC chose not to tell ACC that Drilling Permit # 205 -038 -0 may have terminated after the AOGCC had dedared February 5, 2009 that the drilling permit retroactively expired two years earlier. ACC could find no evidence that this information had been posted elsewhere previous to 2009. It clearly was not sent `certified mail" to ACC. In addition, there is no evidence that AOGCC considered the operations at Moose Pt #1 Well not to be drilling operations. In fact the record favors the premise that the AOGCC did consider the operations to be drilling operations. ACC has been diligently conducting operations at Mosse Pt # 1 well for the past two years and has kept the AOGCC informed of these operations. ACC kept the AOGCC informed of ACC's progress and lack of markets for Moose Pt #1 Well's gas. Had AOGCC informed ACC that AOGCC is terminating Drilling Permit # 205- 038-0, March 24, 2007 while ADL 389922 still had two years remaining in its primary term, ACC would 2 of 20 o r?-q- . . have had ample time to file and get a new drilling permit in view of the fact that it only took less than twenty (20) days to get the original drilling permit filed and approved in 2005. Image 1: AOGCC Website showing the "NEW" link "Outstanding Drilling Permits" circled in red, Hama l Databases 1 Orders I Staff i Calendar I Contact is ( AOGCC find \t.F ►. „ .1 t ii. 1ti.ttit li: t; w: tieitltli')if.iii0f1 f\ � � �t�� C - elk ' �i g 1 I I( t� ( f t I I t)1l : Mission Headlines Fr . �, a ,., Highlights Quick Links .,1.�` 4 P it Procosed Reg Changes -. ell in er - rattion Cata Lases ' Oil &: Gas Lin -s rrtcraticr: an y r Fts,i .'^'ent of iii fviulti;hase +etering fear ng & Meeting Calendar and aas resources S ste °s Useful Lasts = . - _ snsuring : A0000 50th Knni:ersar; Production Statistics . Di of Geoth sica; & ccrser. tics � Cri9ti .9 Statistics r ..� Geological -:cs cractices and Of / �'' increasing Usti ^ate ♦ =, tan Pig ctivit ' EP .s UIC Frogs - - re^ ^."Fr,f 'oil.: ; Mission Staff & Histor:, sill! :: :, e:s: ` Interstate Oil & Gas C: _,>t - - rfD sting !'>a tt'. •+.nnual l ecoits - �t'' '"i mitt s�tfat ;, the Contacts for Inor.idual Cil • Grounc :'eater Protection en yron—Le_nt aro Gas Pools Fcr ~s .,ouncil creeert:, ri :t'ts. ' tnfor:- ation ; aitacle • Release Dates & Extensions Minerals Mg t der. i ^a Regulations Functions & Processes State Calendars ' Per—its to Drill Bureau of Land Mg -g Cyst Field Ter — s ' Join Our Mailing List ' Industry Guidance Bulletins ...: _. :=1:-._ Co °-^eats% : Gas Position Pacers = DOE Fossil Enero • Retorts is. Studies 4 Orders & Decisions if , t r t': X.* a osse!'C a :ttE C .. 7•7":":^ : ' :' rg9E, pease =its- _: - a: ;71'; 1 c er s'. us s .: _ _ _ - The AOGCC Website (http: / /wwwstate.akus /admin /oge /driliing/OutPermits /2009 /OPermits090228.pdf ) (Image2), "Outstanding Drilling Permits,” is shown dated February 05, 2009 and circled in red at the bottom of the page. This publication advertises that ACC's Drilling Permit # 205- 038 -0 had arbitrarily been terminated two years earlier, March 24, 2007 by the AOGCC. AOGCC made no attempt to send ACC, pursuant to 20 AAC 25.535, "a written notification by personal service or by certified mail, return receipt requested" declaring February 05, 2009 the AOGCC retroactively terminated ACC's Drilling Permit # 205- 038 -0. This Website, "Outstanding Drilling Permits," did not provide or detail White of his rights to appeal the Website notice that Drilling Permit # 205 -038 -0 had been retroactively terminated two years earlier with this Website image (Image 2). 3 of 20 nn_ • • This action by the AOGCC occurred while ACC had operations actively underway at the wellsite. Image 2: Screen print of "Outstanding Permits: Expiration Dates 1/1/2007 Thru 2/28/2008" PDF Website showing date Thursday, February 2, 2009 circled in red. utstanding Drilling Permi Expiration Dates 1/112007 Hull 212812009 Date Petait Optrator {TeiNaae 1PINatter Perot App Evian ALASKAN CRUDE CO MOOSE PT LEI' 1 Re-tufty 50-133-20312-90-00 20543S-0 3'242005 3 _4 200. STORM CATERER _ t -s r= ;r_ at• i _ 1 25 2006 1'252008 BP EXPLORATION (A PRUDHOE BAY UNIT K -10C 50-029- 21762 -03-00 206-015-0 1'31'2006 1.31 2008 CONOCOPHILLIPS AL KUPARUK RIV UNIT 2D-05L1 50-029- 21157 -6000 206 -174 -0 12'20:2006 12 20.2008 CONOCOPHILLIPS AL KUPARUK RIV UNIT 2D- 0SL1 -01 50-0x- 21157 -61-00 206 -175-0 110'2007 110 2009 BP EXPLORATION (A PPLDHOE BAY UNIT 07-08B 50-029 -20296 -02-00 207419-0 2142007 2=14'2009 BP EXPLORATION (A PRUDHOE BAY UN ORIN V -201A 50-029- 23054 -01-00 207 -024 -0 2= 212007 2'21.-2009 Ttaasdae Febnaav05 2009 Page 1 of 1 Eking Pe.:.:n... 04.1Oms rod . ielnalFnad][sI}sir. MAIN Aim Below are the main issues concerning Drilling Permit # 205- 038 -0: 1. 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Clearly, the AOGCC dedared that ACC had not complied with the "drilling operation" regulations pursuant to 20 AAC 25.005(g) required to automatically extend the drilling permit beyond two years. Clearly, it is very important that ACC needs know if ACC may be in non - compliance. Clearly, it is very important that ACC know if ACC's drilling permit may have been terminated. The AOGCC's failure to inform ACC of any possible non - compliance or the possible termination of ACC's Drilling Permit # 205-038-0 was an arbitrary and capricious decision and a violation of 20 AAC 25.535 and their own mandated discretion of the law: a. 20 AAC 25.535 reads: (a) If the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to 4 of 20 ar+ 9f4- • • comply with a provision ofAS31.05, this chapter, or a commission order, permit or other approval the commission will in its discretion, take enforcement action under this section against the person. (b)If the commission proposes to take enforcement action under this section against a person, d cmmi sion wil send the p erson U!!! f- return receipt requested The commission's written notification to the person will (1) state the nature of the apparent violation or noncompliance; (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred, (3) state the action that the commission proposes to take under (e) of this sectiow and (4) inform fo rm the person tithe person's rights and liabilities under (c) - (e) of this section. 2. The AOGCC made no effort in phone conversations or written correspondence between 2007 and 2009 to inform ACC that Drilling Permit # 205 -038 -0 may have terminated on March 24, 2007. Correspondence between ACC and AOGCC includes volumes of emails, certified letters, and faxes concerning ADL 389922 and Moose Pt. #1 Well (see Exhibit I). The AOGCC sat on this arbitrary and capricious decision for two years, not advising ACC in any way, shape or form that Drilling Permit # 205- 038-0 may have terminated in 2007. 3. James W. White spent his own risk capitol, not investor money, to develop the Moose Pt #1 Well. Believing Drilling Permit # 205 -038 -0 was actively in place, ACC continued to spend $1,000,000 (1 million dollars) developing Moose Pt #1 Well and the lease property over the 2007 -2009 time period. Believing Drilling Permit # 205- 038-0 was actively in place, ACC kept ACC's drilling rig at the Moose Pt #1 Well through 2009 paying $52,000 in ADL Lease 389922 rental fees alone. Believing Drilling Permit # 205 - 038 -0 was in place ACC spent hundreds -of- thousands of dollars at Moose Pt #1 Well in the reentering process of reworking Moose Pt #1 Well. 4. Moose Pt #1 Well was not properly Plugged and abandoned when ACC acquired ADL 389922 and Drilling Permit # 205 -038-0 was approved. Reworking operations were continuing when ACC began the process of safely milling out the 4" steel abandonment marker pipe concreted into the 13 -3/8 3K wellhead. No agency regulation exists addressing the procedures for reenterin an impropg�y Fagged and abandoned well. Therefore, actual "drilling operations" had commenced when ACC cut the top of the 4" concreted abandonment marker pipe from the 13 -3/8 3K 5 of 20 • wellhead and began the process designing special milling tools for milling the remainder 4" concreted abandonment marker pipe out of the 13 -3/8 3K wellhead, and hiring machine shops to fabricate the milling tools. 5. Existing AOGCC records did not indicate that a 4" steel abandonment marker pipe was concreted into the 13 - 3/8 wellhead. Image 3: Photo showing Moose Pt #1 Well with 4' steel abandonment marker pipe concreted into the 13-3/8* 3K wellhead, taken summer of 2006. Photo 51.0..5 H" abe�ndAnment marker Image 3. Pipe co ncrLfiadlivro ►3 - 3 1s " 3K e»he4d '^ e A' 4 -.row _- +.N 'ice PhO±C. ' a1{en Summer , - r, a y - 401 2.006 -t . * ` „ 4., 6 of 20 • 0 Image 4: Photo showing Moose Pt #1 Wellhead with portion of 4" concreted abandonment marker pipe still sticking out of the 13 -3/8" 3K wellhead, taken March 19, 2007. Image 4. ko „,, ,Isitie 0- - " I '- - - ' -- i s i. 19, 2007 DRILLING OPERATIONS COMMENCED The regulation 20 AAC 25.005(g) refers to the actual drilling of a new grass - roots well Reentering and reworking Moose Pt #1 Well as permitted by Drilling Permit # 205 -038 -0 is in no way the same as drilling a new well from scratch. Reworking and reentering Moose Pt #1 Well required first step was to mill out the 4° steel abandonment marker pipe wrongfully concreted into the 13 -3/8 3K wellhead. This is a reworking operation of a well already drilled. It should be further noted, concrete (having a gravel mixture) is much more difficult to mill out than neat cement (pure cement) normally used in plugging and abandonment operations. 20 AAC 25.005(g), reads, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Drilling operations as defined by 20 AAC 25.990(23) reads, "drilling operations" means the penetration of ground below the setting depth of structural or conductor casing, using a drilling rig capable of performing the permitted well work, and for purposes other than setting structural or conductor casing: "drilling operations" Includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface." 20 AAC 25.990(23) does not apply to Moose Pt. #1 Well because the 333' twenty inch "structural conductor casing" does not exist inside the 7" casing. The 20" conductor pipe that is set 333' below the surface is set outside of the 7" casing extends from the surface to the 9,032TD (total depth of the 7" casing). The well has already been drilled and properly cased with 7" casing from the ground surface to its total depth 9032' (9,032 feet). 7 of 20 . • 20 AAC 25.990(23) defines no mechanism to trip the Moose Pt. #1 Well into an automatic extension because there is no conductor pipe inside the 7" casing to drill out from. The 7" casing simply exists from the surface to the TD depth 9032'. Agency discretion should be exercised and a ruling issued that drilling did commence prior to expiration of the drilling permit The oil and gas regulations do not have a drilling permit special y promulgated for reworking existing plugged and abandoned wells. The definition 20 AAC 25.990(23) of "drilling operations" does not fit the generic reworking operations to rework the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned having no conductor pipe inside the 7" casing. All of the "drilling operations" described in 20 AAC 25.990(23) does not define the reworking and reentering operations of the Moose Pt # 1 Well. The tripping mechanism of 20 AAC 25.990(23) requires that "drilling operations" commence below the conductor pipe to trip Moose Pt. #1 Well's Drilling Permit # 205 -038- 0 into place to automatically extend the permit The Moose Pt # Well has no conductor pipe inside of it to drill out below needed to trip 20 AAC 25.990(23) definition of "drilling operations" into place to automatically extend Moose Pt. #1 Well's Drilling Permit # 205- 038-0. ACC should not be held hostage or damaged because of a gap in the regulations. The necessity to mill out up to 25' or 30' (25 or 30 feet), or more of 4" steel abandonment marker pipe concreted in the 7" casing is an extraordinary situation and is NEM encountered when a well is properly plugged and abandoned (please note the 2" 3K valve shown in Image 3, still attached to the bottom half of the original 13 -3/8" 3K wellhead containing the slips supporting the 7" casing at the surface). 1. Existing AOGCC records DID NOT MENTION the depth of that surface plug, nor the length of the 4" steel abandonment marker pipe concreted in to Moose Pt. #1 Well in the original plugging and abandonment records filed with AOGCC. 2. The above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed the summer of 2006 leaving still a portion of the 4" steel abandonment marker pipe sticldng above ground. (cut off portion of 4" pipe is shown in Image 4) 8 of 20 31 of • 3. That portion of the 4" steel abandonment marker pipe concreted in to the 7" casing forced ACC to specially design milling tools and hire machine shops to fabricate the :pilling tools to safely attempt to mill out that portion of the 4" steel abandonment marker pipe concreted down into the 7' casing. 4. ACC did not know if that portion of the 4" concreted abandonment marker pipe went 5' or 30' down into the 7" casing. ACC had to plan for the worst and plan the milling operation for 30'. 5. These specially designed milling tools were not delivered to ACC until early summer of 2007. These unique milling tools that were required were not shelf items and had to be specially designed by ACC to remove the 4 ' concreted abandonment marker pipe. It took several months for the machine shops to fabricate and deliver the milling tools to ACC. Machine shops during that period of time were extremely busy. 6. Upon delivery of the milling tools, early summer 2007, ACC commenced the milling operation to mill out the then- unknown length of 4" steel abandonment marker pipe that had been concreted into the 7" casing at the surface (see Image 4). Any experienced driller will acknowledge that milling steel pipe concreted in a 7" casing is a very difficult and sensitive operation. It is much more difficult to drill a pipe at the surface than it is to mill out 4' pipe cemented thousands of feet deeper in a 7" casing, because at a deeper level you have the 7" drilling casing's ID (inside diameter) to stabilize mill rotation and drill pipe weight providing measured weight on the milling tool. At the surface your milling tool wants to jiggle and bounce around threatening to damage the surface of the wellhead and the 7" casing, thus ruining all hope of a successful reentry. Milling tools ware very rapidly and have to be replaced or rebuilt often when milling out iron cemented in a 7" casing. 7. Great drilling experience and skill is required to protect the wellhead and 7" casing when milling steel out of a 7" casing at its ground surface. You must not damage the gasket and ceiling surfaces of the 13' -3/8 3K wellhead when trying to m ill out the 4" steel abandonment marker pipe concreted into the 7" casing Firstly, the Moose Pt #1 Well had not been properly P&A'd in accord to state standards by the previous operator when ACC obtained Drllling Permit # 205 - 038 -0. Normally, the well casing is cut off 4' (4 feet) below the ground surface. A metal plate should be welded to the top of the casing thereby sealing the casing. A 4" steel abandonment marker pipe is then welded atop of the metal plate that is welded to the top of the cut off 7" casing This 4" well marker pipe is then welded to the plate that is welded to the 7" casing 4'+ below the ground surface that should be long enough to stick above the surface level to a height of 6 feet Dirt is then filled in around the marker pipe welded to the metal plate welded to the cut -off 7" casing 4-5 feet below the ground to the surface level. 9 of 20 oa oc • In this instance. the Moose Pt #1 Well's casing was never cut off below ground level as reO - The 4" (4 inch) steel abandonment marker pipe was improperly concreted into the 13 -3/8" 3K 7" casing wellhead. The 4' steel abandonment marker pipe was set and concreted into the 7" (7 inch) casing at the surface in the 7" casing therefo "drilling gyrations as defined by ACC 25.990 does not apply to the Moose Pt. #1 Well because Moose Pt #1 Well had already been drilled in 1978. "Drilling operations" speak only to drilling a new grass- roots well. ACC did commence drilling operations in the required tim frame. ��. • Ls! s L__ 1 y_ __ „II. Reworking Moose Pt. #1 Well required an extraordinary milling operations: 1. cutting of the top of the 4" steel abandonment marker pipe to assess the specific needs of a specially designed milling tool 2. designing the milling tools 3. having machine shops fabricate the milling tools 4. receiving delivery of the milling toot from the machine shops 5. removing, milling, and boring out the 4" concreted steel abandonment marker pipe These operations constitute the reworking, reentering, and "drilling operations" for Moose Pt #1 Well Drilling Permit # 205 - 038 -0. The first step necessary to reenter Moose Pt #1 Well was to first cut off the top of the 4" steel abandonment marker pipe to examine and determine the proper design for milling tools to milling out the unknown length of the pipe concreted into the 7" casing. Please note: 4" drill pipe generally comes in 30 foot lengths. Existing AOGCC records did not record the length of the marker pipe wrongfully concreted in the top of the 7" casing. The Length of the 4" steel abandonment marker pipe was unknown whether it was 5' long, or 30' long. ACC believes that the unique operation of first being required to design and get delivery of the milling tools to commence milling and drilling that portion of the 4" steel abandonment marker pipe that had been concreted into the surface plug constituted the actual first steps in complying with Drilling Permit # 205 -038-0. As stated above, these milling tools were not the type of milling tools that you can buy off the shelf from others. 10 of 20 3� oP`4 • • This 4" concrete abandonment marker pipe event was a total surprise. ACC did not anticipate this concreted in 4" steel abandonment marker pipe removal program when ACC bought ADL 389922 and filed ACC's Drilling Permit # 205 -038 -0 to reenter the Moose Pt. #1 Well. This 4" steel abandonment marker pipe's existence was not shown in existing AOGCC records at that time. Existing AOGCC records did not mention a 4" steel abandonment marker pipe concreted into the 13 -3/8 wellhead. Existing AOGCC records only indicated that the well surface plug was set at 58' (feet) below the surface of the ground. Existing AOGCC records indicated that the casing was filled with diesel fluid from the top of the 58' surface plug to the surface for freeze protection (see Drilling Permit # 205 - 038 -0 illustrations). Existing AOGCC records did not reflect the depth of the 4" steel abandonment marker pipe concreted from the surface that had been placed in the 7" casing. In the beginning ACC was not sure if ACC could safely mill out the 4" concreted steel abandonment marker pipe without damaging the Moose Pt #1 Well's 7" casing to a point where the 7" casing, as then currently permitted, could not be safely reentered in the process. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY James W. White had to spend hundreds -of- thousands of dollars during that period of time, 2005 -the end of the 2007, to perform site work, drill a water well, design and have machine shops fabricate and build expensive and uniquely special milling tools according to ACC's own and unique specifications that are not "shelf- items" in order to safely and accurately mill out the 4" concreted abandonment marker pipe from the 7" casing without damaging the 7" casing beyond any hope of reentry_ ACC performed these drilling operations and incurred these expenses because ACC believed that Drilling Permit # 205 - 038 -0 was still active and valid beyond December 31, 2008. Having met the requirements, Drilling Permit # 205 -038 -0 should stay in effect. Nobody ever indicated that Drilling Permit # 205 -038-0 was not automatically extended beyond December 31, 2008, until February 2, 2009. Then the drilling permit should stay in effect. Please note: It makes no sense to plan the reentering of a well if no drilling permit is in place. Not being notified otherwise, ACC believed that Drilling Permit # 205 -038 -0 was still active and in effect while performing the drill site work described in detail above. 11 of 20 3L/oe 9 i • Had AOGCC informed ACC that Drilling Permit # 205 -038 -0 may have been in violation or failed to comply with any AOGCC or DNR regulation and mandates, ACC would have taken the proper action to correct and address any such pressing issues. Because of Alaska's unique /short winter drilling seasons, one can only mobilize a drilling rig in or out of the property between the months of January, February-mid March. ACC left their drilling rig at Moose Pt #1 Well in anticipation that Drilling Permit # 205 -038 -0 was still in effect, and that ACC might be able to secure a suitable term Gas Sale Contract with Agrium Fertilizer Plant In 2007 there was considerable publicity concerning the Phillips- Marathon efforts to get the State of Alaska to agree to allow the export and sale of Alaska's gas to Japan Governor Patin well blici.� that i t h if th event were o t ke pi ce it wo uld reqire t Phillips— l-d111! Wetl �11i zeV11VE ctcnt u u as� event B ets. w a+aaa Ysa u .� asasa . Z •• •• •• Marathon purchase gas from an independent oil and gas producer such as Alaskan Crude Corporation (ACC). Everybody in the Alaska's oil industry. WOjggilmikiMUMULQUIBL11131M6211101 Division of OD and Gas believed that ACC had a drilling permit in place for Moose Pt. #1 Well from early 2005 forward through December 31, 2008. The AOGCC clearly did not advise the DNR's Division of Oil and Gas that Drilling Permit # 205- 038 -0 was not in place prior to January 27, 2009. On January 27, 2009 the DNR Commissioner advised White that he had reinstated ADL 389922 because the Commissioner had found that drilling activities were ongoing automatically requiring the primary term of ADL 389922 to automatically extend beyond its primary term. Nobody with whom ACC conferred such as the DNR or AOGCC ever advised ACC that they believed that the drilling permit was in violation and may have terminated on March 24, 2007. If AOGCC and DNR believed that the ACC Drilling Permit # 205 -038 -0 was terminated but failed to notify ACC in writing that Drilling Permit # 205 - 038 -0 was in violation or ACC failed to comply with any regulations then the permit cannot be expired. ACC Drilling Permit # 205- 038 -0 was approved on March 24, 2005 and unbeknownst to ACC "terminated" on March 24, 2007. ACC was not aware that Drilling Permit # 205 -038 -0 had terminated according to the AOGCC because the AOGCC failed to notify ACC pursuant to 20 AAC 25.535. Until April 14, 2009, two whole years later after the termination of Drilling Permit # 205- 038-0, when ACC witnessed the Website (`Outstanding Drilling Permits'J, ACC believed that ACC was in full compliance with all AOGCC regulations pursuant to 20 AAC 25.005, 12 of 20 35 Of 94. • • Permit to Drill, for maintaining and keeping current Drilling Permit # 205 -038 -0 in effective and operating status. TWO YEARS OF COMMUNICATION -YET NO MENTION OF TERMINATED DRILLING PERM/1' Neither ACC . James W. White. nor any party associated with Alaskan Crude Corporation jACCI EVER RECEIVED WRITTEN NOTIC,., pursuant to 20 AAC 25.535 that Drilling Permit # 205 - 038 -0 was in violation, failed to comply with any provision, or terminated. Examples or correspondence between ACC and AOGCC about Moose Pt. #1 Well: 1. April 3, 2008 ACC faxed a letter to AOGCC titled, "Amerex well reentry April 3, 2008 Progress Report," detailing the work being done at Moose Pt #1 Well. (see Exhibit II) 2. April 4, 2008 ACC and AOGCC corresponded numerous times about Moose Pt #1 Well (see Exhibit III) - Note Drilling Permit 205-038 -0 is references in the subject line all of these correspondences 3. On January 27, 2009, AOGCC sent a Certified Letter to ACC stating, "In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit #1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or complete." 4. On February 27, 2009 ACC responded to AOGCC in full with supporting pictures and evidence stating, "ACC drilled, milled and bored out the 4in. pip that been wrongfully concreted in the Moose Pt #1 Well's Tin. casing the summer of 2007.... AOGCC's emails AOGCC order transcriptions to the oil industry. From before 2007 to 2009, AOGCC has emailed countless AOGCC orders. The AOGCC's declaration that Drilling Permit # 205 -038 -0 terminated in 2007 would have been an AOGCC order. ACC never received, "R " from AOGCC mentioning any order terminating Drilling Permit # 205 -038 -0 in 2007. CONCLUSIONS /CONSIDERATIONS In conclusion ACC feels that (1) AOGCC was mandated by 20 AAC 25.535 to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, failed to comply with any regulations, or may be terminated; (2) AOGCC failed to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, or failed to comply with any regulations; 13 of 20 q • • (3) in 2007, had AOGCC informed ACC that Drilling Permit # 205 -038 -0 was to be terminated, ACC would have had ample time get a new drilling permit for Moose Pt #1 Well because the primary term ofADL 389922 still had 21 months to its primary term. The original Drilling Permit # 205 - 038-0 took 20 days to be approved. A new drilling permit is free; (4) this action by the AOGCC could likely be determined to be an abuse of discretion in implementing the mandates of 20 AAC 25.535 from AOGCC as result of AOGCC's failure to notify ACC of any issues concerning Drilling Permit # 205 - 038 -0. ACC asks the AOGCC to please reconsider their actions and reverse the decision terminating Drilling Permit # 205 -038 -0 because: (1) AOGCC, pursuant to 20 AAC 25.535 did not inform ACC in writing to: (a) state the nature of the apparent violation or noncompliance; (b) summarize the reasons why the commission considers a violation or noncompliance to have occurrett (c) state the action that the commission proposes to take under (e) of this section; and (d) inform the person of the person's rights and liabilities under (c) - (e) of this section; (2) The drilling operations conducted at Moose Pt 411 Well automatically extended the term of the Drilling Permit # 205 - 038 -0. Therefore, Drilling Permit # 205 -038 -0 automatically extended; (3) AOGCC did not mention the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt. #1 Well in their original file records; (4) James W. White and ACC met the requirement of Drilling Permit # 20 AAC 25.535 when they first removed the 4" abandonment marker pipe, designed and commissioned the unique milling tools from several machine shops, and milled, bored, out and drilled out the 4" steel abandonment marker pipe wrongfully concreted into the 13 -3/8" wellhead; (5) AOGCC did not consider the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt #1 Well and that actual drilling operations were required and undertaken to remove this pipe. (6) Drilling operations at Moose Pt #1 Well were under way when ACC transported all of the equipment to rework the well and commence reworking operations of the existing Moose Pt #1 Well the winter drilling seasons 2005 and 2006 forward. Thank you for your consideration. if AOGCC can not settle this manner, James W. White will take further actions to protect his interests. 14 of 20 3r1 cP • • Please advice ACC of the how the Commission will address the issues in this letter within 5 days. If ACC does not receive a response within 5 days, ACC will pursue further actions to protect our interests. Please advise if the Commission needs more time. Regards, James W. White, Alaskan Crude Corporation, President James W. White, Individual 4614 Bohill St. San Antonio, TX 78217 Office Ph. 210 - 651 -0777 Cell Ph. 907 - 394 -1829 Email iimwhitef satx.rr.com CC. Emailed to: Thomas E. Irwin; Kevin Banks; Daniel T. Seamount, Jr.; Matt Rader; Camille Recknagel; Bruce Webb; James A. White; Brian Stibitz; Rick Wagner; Office of Governor Sarah Palin 15 of 20 38 09(4 • • CONTENTS 1. AOGCC DID NOT NOTIFY WHITE IN WRITING PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205- 038-0 MARCH 24, 2007 SOME TWO YEARS AGO...Pg. 2 2. MAIN ISSUES...Pg. 4 3. DRILLING OPERATIONS COMMENCED...Pg. 7 4. REWORKING MOOSE PT. #1 WELL SPECIFIC OPERATIONS...Pg.10 S. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY...Pg.11 6. TWO YEARS OF ONGOING COMMUNICATIONS, YET NO MENTION BY AOGCC OF TERMINATED DRILLING PERMIT...Pg.13 7. CONCLUSIONS /CONSIDERATIONS...Pg.13 16 of 20 • • Exhibit I Example of Correspondences between ACC, DNR and ACC (non- exahstive) 1. March 31, 2009 - an entire 42 page document was faxed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 2. March 30, 2009 - an entire 42 page document (the same was faxed on March 31, 2009) was faxed emailed, and mailed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 3. March 30, 2009 to Thomas E. Irwin, AOGCC: Re: Your Letter Dated "January 27, 2009", Decision to Reinstate ADL Lease 389922 4. March 11, 2009 from McKenzie Transpiration - letter describing transport truck breaking through ice on ADL 389922 5. February 27, 2009 to AOGCC: Re: January 27, 2009 Letter from Daniel T. Seamount Jr, Chair' detailing work being done on ADL Lease 389922. 6. February 18, 2009 from Commissioner Thomas E. Irwin, AOGCC (received by regular mail February 25, 2009): Re Request for Reconsideration - ADL 389922 Notice of Expiration of Lease - this letters states the Commissioners decision to order a reconsideration of ADL Lease 389922 7. February 11, 2009 From ACC- Formal request for reconsidering of the terms and conditions of ADL 389922 emailed to AOGCC (faxed February 10, 2009 to 907-269 - 8918). 8. January 27, 2009 from AOGCC, Daniel T. Seamount Jr, Chair: Re: Moose Pt. Unit 1 PTD No. 205 -038 - letter states that AOGCC is not aware of any work being done at Moose Pt. Unit 1 PTD No. 205 -038. 9. January 27, 2009 from AOGCC, Commissioner Thomas E. Irwin: Re: ADL 389922 Notice of Expiration of Lease date January 2, 2009 - Letter details decision to "reinstate ADL 389922' (this letter was appealed on ... 10. January 26, 2009 to AOGCC Commissioner Irwin: Re: Potential Damaged Caused by Improper Termination of ADL 389922 11. January 22, 2008 to Mr. John Havelock, Division of Oil and Gas: Re: DNR's representatives' visit to the private property where Moose Point #1 Well is located on ground by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the Slate of Alaska 12. January 20, 2009 to AOGCC (faxed to 907- 269 - 0060): Re: Administrative Appeal— . ADL 389922 Notice of Expiration of Lease Term 13. January 15, 2009 to Kevin Banks, Department of Natural Resources (DNR): Re: Wrongful Termination of ADL 389922 14. January 2, 2009 from Jennifer Haines, AOGCC: Lease Expired - ADL 389922. 17 of 20 15. December 31, 2008 from ACC - Discussing the later than normal winter freeze up of the North Kenai Borough Road. 16. Thursday, December 06, 2007 1:05 PM, Colombie, Jody J (DOA) jodycolombieaalaska.gov, aio2b-023 CPA Kuparuk 17. Friday, December 07, 2007 12:34 PM (email), Colombie, Jody J (DOA) jody.colombie(alaska.gov, Public Hearing Notice North Alexander #1 18. Wednesday, December 05, 2007 2:32 PM (email), Colombie, Jody J (DOA) iody.colombie@alaskagov, A104C -015 corrected cancellation 19. Tuesday, December 04, 2007 3:17 PM (email), Colombie, Jody J (DOA) jody.colombiel)alaskagov, Other 52 Regulatory Cost Charge 2008. 20. Monday, December 03, 2007 7:09 PM (email), Colombie, Jody J (DOA) jody.colombieWialaska.gov, Public Meeting Notice. 21. Friday, November 30, 2007 8:20 PM (email), Colombie, Jody J (DOA) iody.colombieCaalaska.gov, AI04C -015 corrected cancellation 22. Wednesday, November 28, 2007 5:42 PM (email), Colombie, Jody J (DOA) jodycolpmbiefaalas ov, o 4578.003 and co341e.005 PBU 23. Wednesday, November 28, 2007 8:19 PM (email), Colombie, Jody J (DOA) iodv colombietealas r ; . v. Public Notice, Additional Information and Proposed Regulation 24. Friday, November 30, 2007 2:25 PM (email) Colombie, Jody J (DOA) iody.colombieC(alaska gov, Corrected Admin Approvals and ERIO 2 -005 25. Friday, November 30, 2007 12:47 PM (email), Colombie, Jody J (DOA) jody.colombiefflialaska.gpv, AI04C -015 cancellation and A1014A -002 PBU Admin Approvals 26. Wednesday, November 28, 2007 8:43 PM (email), Colombie, Jody J (DOA) jody.colombie(alaska.gov, Various PBU Admin Approvals and A104E.015 PBU X 18 of 20 I4! 129T 411 • Exhibit April 2, 2008, Letter to AOGCC, Subject: Amerex well reenty April 3, 2008 Progress Report e r r ALASKAN CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 78217 Ph210-651-0777 Date : April 3, 2008 To: AOOCC Attention: Mr. Tom Maunder Subject: Amer= well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This letter is to advise the Commission that a new 7' Sm double BOP and new 7 5m Annular were delivered to Amerce drill pad about March 10, 2008. One air pinup is being replaced on the accumulator. Accumulator nitrogen bottles me also being replaced. The 4" pipe has been milled cot of the 7" casing and well head has been installed and ready to except the installation ofthe new 7" Sm BOP stack.. ACC will reconnnence drilling reentry operations when the well pad dries out after break up. (mid May hopefully) Regards Tan j Whirn iamb ite;u1sa 19 of 20 1 4 a OP qr/. S EXHIBIT III April 4, 2008 ACC email correspondence with AOGCC showing Drilling Permit # 205 - 038in ,, �'� _h�,,►,, Pe Ed firt Ts* Eaetjt f Nog Mink ittrosE eaeteemial ; t ate 401..FIYPat k inttlietinlaggiencattats;attt ; M O Pkk!tme k•Edsj t I . ? I.'-� ° ..'!.�..t `t....t'. tl.t,L..w��. fie ce' ;07 Rettsetz 7.t Tr 0 Mr rattiefieMingkiptigfi Sot RaEp 411MOS i@tRI I lc PrilMterasElje# kola • Tar. Here istalcort **bra Inn*,PEAM mot T,= tc s« a,AAe4. 2aaLS 91#41E. RE kiniktitibEntriM Yep tuts :ets4nc:" £ veli2 ccerY. t'asetStav"'"''a vo.t FE. AMC Wks e (m setur..maj Tatt,Tfr5 f xv:cuF2 ivverrancrolakass, igtere4 i . ita+e rct; sa or • `f 20 of 20 2 13 a 9-q- n n - • a O SARAH PALIN, GOVERNOR DEPARTMENT OF NATURAL RESOURCE 550 WEST 7 AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501 -3560 DIVISION OF OIL & GA PHONE: (907) 269 -8800 FAX (907) 269 -8938 May 18, 2009 Alaskan Crude Corporation Attn: James W. White 4614 Bohill Street San Antonio, Texas 78217 Re: Status of Operations at Moose Point # 1 Well Plan of Operations LO /CI 03 -019 Dear Mr. White: This letter sets forth my best judgment as to the facts regarding your physical progress at Moose Point #1 Well. Information that would assist administration of the lease was requested in a letter from Jonne Slemons on February 18, 2009, and in my letter of April 7, 2009 that requested a written response. The purpose of these letters was to establish the facts of physical activity on the lease so that the lease and plan of operations can be administered with respect to the extension. Since you didn't respond, these are the facts of physical activity as they appear to me. Please take this opportunity to correct any errors I may make. 1. Between December 2005 and February 2006 a drill rig and equipment was mobilized to the site 2. Between April and September 2006 the site was cleared and graded. 3. On June 13, 2007 boring commenced to reach the bottom hole by removing the concrete and steel pipe surface marker to 6 feet below grade. 4. On December 23, 2008 you informed me in a telephone call that you were resuming drilling and would continue drilling through the December 31, 2008 lease expiration date and that this would extend the Iease. 5. On December 31, I was present at the drill site and observed heat begin applied to a BOP in a box adjacent to the well head; snow had been recently plowed from the drill site; the drill rig was not running, the mast was not raised, the drill bit was not turning in the hole, and the drill rig and systems did not appear to have been operated for some time. 6. During the night of December 31, 2008 the BOP stack was being assembled on the wellhead using a truck mounted boom. 7. In our telephone conversation on or about January 13 I understood that Aurora was testing the BOP equipment, and that you had other BOP equipment that could be manually operated, and that you would be working with Tom Maunder of the AGOCC to get it approved. 8. On January 21, 2009 Brian Havelock and Shaun Peterson of the DO &G visited t observed activity that could be associated with drilling, but did not observe the drill bit actually boring in the well or actual operation of the drill rig and systems in the act of drilling, qq OF "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." Division of Oil & Gas 5/18/09 Page 2 of 2 nor did they appear to have been recently operated for drilling. The BOP was attached to the wellhead. The required accumulator was not operationally configured. 9. In telephone conversations you conveyed that during the approximate period from January 13, 2009 to January 21, 2009 the access road could not be used due to warm weather. 10. On or about February 12, 2009 in a call from Houston, you informed me that equipment needed for the well was loaded and shipped out of Houston on an 18 wheeler and would be delivered in Alaska in about 10 days, that the drill rig was capable of running, and that an accumulator for the BOP was being shipped to the site. 11. In a telephone conversation on or about April 13, 2009, you informed me that the drill rig was no longer on the Moose Point #1 drill site and was in Kenai. You also stated that the well marker was not on the well, but that the well was being left in a condition acceptable to AOGCC. 12. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well occurred between the end of the drilling commenced in June 13, 2007, and the time the lease was set to expire on December 31, 2009. 13. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the hole occurred after December 31, 2009, or that AOGCC has approved your BOP equipment for use. 14. There is no verifiable evidence to believe, nor have you asserted, that actual boring in the well was occurring on December 31, 2008, or on January 21, 2009, or has commenced or continued since the lease extension decision of January 27. 2009. 15. According to the AOGCC, your permit to drill ( #205- 038 -0) expired on March 24, 2007. On or about April 22, 2009 you appealed that determination to the AOGCC. If I am wrong about these details at the Moose Point #1 Well, please provide some documentation about actual boring, testing, the status of the permits and approvals, and progress in the well. If boring did occur, this is information in your possession that you should be willing to provide since it is in our mutual interest that we reach the correct conclusions. If you do not provide additional written information by June 1, 2009 that is contrary to my understanding of the facts as presented above, then my understanding as presented above may be considered in future decisions affecting administration of the lease and plan of operations. If you have any questions please give me a call in Anchorage at 907 - 269 -8776 or email matt.rader @alaska.gov. Sincerely, �, Matt Rader Natural Resource Specialist Ec. Jonne Slemons �/ Wajimwhite@a acsalaska.net �7 T• umwfute@satx.rr.com satx.rr.com iimwhite@aonlecapital.com • March 30, 2009 Thomas E. Irwin, Commissioner Department of Natural Resources 550 West 7th Avenue, Suite 1400 Anchorage, AK 99501 -3650 Re: Your Letter Dated "January 27, 2009", Decision to Reinstate ADL Lease 389922 Dear Commissioner Irwin: This letter is in response to your letter agreeing to reconsider the conditional reinstatement of ADL Lease 389922 that you issued /granted. While I am pleased that you agree that ADL Lease 389922 was wrongfully terminated on January 2, 2008, I do not believe you can unilaterally "conditionally reinstate" a lease contract without bilateral agreement of the parties. The lease was automatically extended by drilling, so I must reject the unilateral changes you propose to my lease contract tor reasons illustrated below: 1. The Department of Natural Resources (DNR) wrongfully terminated my lease contract on January 2, 2009 and destroyed my ability to continue drilling with reasonable diligence during this past winter drilling season. The winter drilling season is now over. 2. Instead of reinstating my lease in full and compensating me for any time caused by the improper termination of my drilling operations, your letter dated January 27, 2009 attempted to modify my lease contract by adding terms that are unacceptable to me. Specifically, you stated that a. "ADL 389922 is hereby reinstated and extended in accordance with AS 38.05.180(m)..." The ADL389922 lease contract paragraph 4(C)(1) requires the primary term of the lease to automatically extend because drilling operations dearly defined by paragraph 4(C)(1) had been met by the lessee. THE GENERIC CONDITIONS CONTAINED IN THE ORIGINAL LEASE CONTRACT SIMPLY CONTINUE PURSUANT TO PARAGRAPH 4(C)(1), NO MORE, NO LESS. The ADL 389922 lease contract DOES NOT require the lease to automatically extend pursuant to AS.38.05.180. Our STATE DRAFTED ADL 389922 lease contract does not provide unilateral authority TO THE LESSOR OR THE LESSEE to add conditions OR AMEND THE LEASE IN ANY FASHION. b. "...the well must be completed within 90 days of this decision." This authority is not in the lease contract. Drilling win be completed when it is completed; not within a particular time frame. There is no provision in the lease contract specifying a time period to complete drilling operations. c. "...failure to complete the well will result in the automatic termination of this lease." This authority is not in the lease contract. Dniling is underway. d. "After 90 days from the date of the letter, April 27, 2009, we will review your progress to determine whether continued lease extension is warranted, including proof that all permits required are cwwrrt -° -x " 2 -1t0 CP 914 ,! • March 29, 2009 l 417 Page 2 of 3 I am required to pursue operations with reasonable diligence. I am doing just that. e. "...the continued extension of the lease is contingent upon: 1. "continued drilling of the well 2. "completion of the well by April 27, 2009 3. "valid permits for all operation 4. "sustained production within 90 days following the cessation of drilling ". THE GENERIC CONDITIONS CONTAINED IN THE ORIGINAL LEASE CONTRACT SIMPLY CONTINUE PURSUANT TO PARAGRAPH 4(0(1), NO MORE, NO LESS. f. "Failure to comply with any of these conditions will result in the automatic termination of this lease." If these terms are retained in your approval letter, I will have to appeal your decision to court. In addition, if you try to terminate my lease as a result of any of these conditions I will be forced to appeal that action also. I received the DNR letter dated January 2, 2008 wrongfully stating, in accordance with the lease agreement, ADL 389922 expired on December 31, 2008. The case file has been closed ", and on January 20, 2009 and January 26, 2009 this letter was appealed (see attached letters). On January 27, 2007 Commissioner Irwin's letter stated that the Commissioner "reinstated and extended" ADL 389922 lease "under the provisions of AS 38.05.180(m) and ADL Lease 389922: 4(c)(1r. This lease is automatically extended pursuant for paragraph 4(c)1, "If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days after cessation of that drilling and for so long as oil or gas is produced in paying quantities from the Pease a rea " AOGCC procedures require that production permits cannot be acquired until the north half of Section 14 where the Moose Pt. 1. well is located and south half of Section 14 are involuntarily unitized, or the two owners reach an interest agreement. As of this date, the owners of the south half of Section 14 have not agreed to participate in the development of this Moose Pt. 1 well, nor have they participated in the costs and efforts to reenter this Moose Pt. 1 well to date. Before the Moose Pt. 1 well can be produced, AOGCC requires that there be an agreement between the owners of the both halves of the Section 14 to produce the well pursuant to 20 AAC 25.055. Drilling units and well spacing (a)(2). There is no unitized interest between the party that owns the south half of Section 14, and myself who owns the top half of Section 14. Pursuant to AS 31.05.100(c) and reiterated by AS 31.05.110, the AOGCC states that a well cannot be produced until there is an agreement between both parties, or until the AOGCC has involuntarily integrated an agreement between all of the parties. Without a unitization of the north and south half of Section 14, no permits to produce can be obtained. 20 AAC 25.055. Drilling units and well spacing 4(b) clearly requires that production of the well cannot occur until all interest holders of a governmental section are unitized. Implementing these procedures and regulations will take longer than 90 days. Ai 9- oP 9q 0 1 March 29, 2009 Page 3 of 3 AS 31.05.100 (c) states, "When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights in it and the right to share in the production from it may agree to pool their interests and develop their Ian's as a drilling unit. If the persons do not agree to pool their interests, the commission may enter an order pooling and integrating their interests for the development of their lands as a drilling unit for the prevention of waste, for the protection of correlative rights, or to avoid the drilling of unnecessary wells." AOGCC procedures allowed the Moose Pt. 1 Well to be reentered and tested (ADL 389922). These AOGCC procedures did not allow Moose Pt. 1 to be produced until both the north half and south half of Section 14 (where the Moose Pt. 1 well is located), are integrated either voluntarily or involuntarily. Procedures to voluntarily or involuntarily integrate the interests in Section 14 normally take more time than 90 days. The Commissioner's January 27, 2009 letter should have acknowledged that the primary term of the lease automatically extended beyond its original primary term on December 31, 2008 pursuant to paragraph 4(c)1, not only until the arbitrary and capricious date of April 27, 2009 allotted. Commissioner Irwin's letter did not mention the 27 days of lost prime winter working days in this abnormally short 2008 - 2009 winter drilling season due to the wrongful termination of ADL Lease 389922. The drill site was only accessible with the proper drilling equipment during January, February, and the first ten days of March of 2009. Access to the Moose Pt. 1 well site is very limited and subject to weather conditions. The Moose Pt. 1 well is completely inaccessible during a majority of the year due to the lack of a road, swamps, creeks, soft tundra, and the presence of a high pressure gas pipeline below soft soils that must be crossed. The drill site was not accessible this winter season by an eighteen-wheeler truck until AFTER December 31, 2008. On March 11, 2009, while transporting a load of pipe from the Moose Pt. 1 well site, a McKenzie Transport trailer broke through the ice (see attached letter dated March 11, 2009). At this point the road could not be relied upon to safely support heavy trucks. Attached is documentation from www.weatherchannel.com (3/25/2009) which shows the March 11 temperatures for the Cook Inlet at a high of 34 degrees. The drill site is inaccessOle until the next drilling season's winter freeze. Please reconsider your letter reinstating this lease with added conditions. The lease should be reinstated without ANY added conditions or terms. 1 do not believe that an additional briefing or hearing is necessary in order for you decide this issue. Thank you for your considera • r forward any correspondence to: James W. , 1 - 'r' Street Antonio, TX 78217 Office: 210 -651 -0777 Cell: 907 - 394 -1829 Email: jimwhite @acsalasks.net; and jimwhite @satx.rr.com Li 0-c T 18 oc 9-4- zunes �� � rrio� valva 2b: 1� ��� ..", a weeps Qi =J!! nay 1110 Ps L idniviemo " P.O Baal 43% &faits, AK 99669 (907) 262-1328 (907) 398-7149 pgo p gi n J i w t-'s- -frow.r reterx 6. ff vht-O o N p9 K "'tun (44r-e2 GgEE ' 1 sefwe € £c P 0. ovc& - HE c -eAY G rrFs RoA. cue Tg ui. SRS F --r gews fie a ?,rte? odkoE sZDE . 7w t& JA •tic, D Arrt fiewe oo e, 2 5 ° " 6 I Y 5 v fr6-gST ` 7 r &' ' !. *r?'- 71rw•uS mer ffro y se was O woe rr t .z'•GC 6,7)P}f nice got.0 -x"-"/ 3 s piece ,/7 - coo- 7 a V TNC pos = L 4 z 7 11 - Agin - Th PPRi ' fft4 & Ffn "7 - "7 O ew v o r*') Est" r• riVOS , 'Xi710 4 C g CcE CZ r s�t� 7,5 5.tia pkE s. v r : c. ',t r•+ rir 5 04 oF r+R- • — � !. /' 7 /20 ©7 i no , ;(6 10 2.14 &nailed: February , 6 Hardcopy will be sent via mail State of Alaska AOGCC 333 W. 7 Avenue Suite 1000 Anchorage, Alaska 99501 -5339 Re: January 27, 2009 Letter from Daniel T. Seamount, Jr. Chair Dear Commissioners: In response to your letter, please see the following: ACC drilled, milled and bored out the 4in_ pipe that had been wrongfully concreted in the Moose Pt. #1 well's 7in_ casing the summer of 2007 (0ease see pheao titled, "Moose Point #1 Well shown as abandoned, 1982" attached). Agrium Fertilizer Facility made wive ohs to purchase gas from Alaskan Crude Corporate€ tt ( ACC), but the offered prices that they were willing to pay were too low to make it economically feasible to produce the gas profitably from the Moose Pt. #1 well Governor Sarah Patin negotiated with Phillips-Marathon early 2008 when Phillips-Marathon agreed to purchase around 30K (30, 000) MCF /day from an independent such as White/ACC. This is the first time in the seven year history of this ADL 389922 Lease that there was a tentative offer to purchase gas making it economical to reenta the Moose PI #1 well.; Imam ACC's efforts to re the well during the 2008-2009 winter drilling season. ACC was able only to access this site via pickup truck this winter December 20, 2008. Work commenced, and drilling activities (see: picture attachments) to attach the 'fin. 50001b. BOP stack on the well on December 31, 2008. Thus, work was ongoing pursuant to 4(cxl) of the ADL 389922 Lease contract automatically ally ADL 389922 Lease beyond its primary term. However, the-Departme nt ofNatural Resources (DNR) wrongly terminated this ADL 389922 Lease on January 2, 209 and all drilling work immediately stopped- On January 27, 2009 Commissioner Irwin issued an Order (wed) acknowledging that "the lease had been reinstated and end in accordance with AS38.05.180(m) and paragraph 4(cX1) of the ADL :389922 Leese." lowed the Commissioner's terms reinstating the ADL 389922 Lease were not in accord to the clear language of the ADL 389922 Lease contract. Therefore, James W. White, as lessee, duly appeals the Commissioner's January 27, 2009 decision and terms of reinstatement of ADL 389922 Lease. Commissioner Irwin has since stated 5 Q cr • III that he will reconsider his Jarmary 27, 2009 decision with his February IS, 2009 letter (attached), and the out of this reconsid is yet awn. ACC is in the process of mobilizing and removing the carrier - mounted drilling rig and related equipment from the Moose Pt #1 well site before this March breakup commences as spring breakup comes early on the Kenai P Currently, when the BOP stack is removed from the Tin. casing the well will still remain secure as the surface plug remains gently intact Your engineering department may require farther pwocedures to be implemented atop of the well- head when ACC completely demobilizes the well this spring_ Again, White remains unsure as to what Conunissioner Irwin's demon will be pursuant to his February 18, 2009 letter relating the status of ADL 389922 Lease. If he properly reinstates the ADL 389922 Lease, ACC will continue Moose Pt #1 drilling operations this next winter season of 2009-2010. if Commissioner Irwin doe not zvinstatc the ADL 389922 Lea e, White will continue to pursue the matter in court. Please check this link (http:I/ wwyouutube_comiwatch ?v= -ZS YAGPBeeyt ) to watch a video of drilling activities that were ongoing December 31, 2008. Other photos are also attached documenting activity performed at the Mom Pt #1 well sift for your files. Included is also a complete documentation of conespondcnce. I would appreciate an opportunity to discuss this matter and other issues that ACC has pending with the commission concerning the Bmgtiu 33-1 well at your earliest convenience. Regard," _ .i es . While, ' , ' I ) 1 i , 7 L. , ,^ ' T . , , ' - 'dent, Crude Corporation i ....,,,,,, ,,.. , 5/ OP 9-14 • milyE O A ` 1 SARAH FAUN, GOVERNOR ❑ w.o. sox 111000 JUNEAU, ALASKA 89811 -1000 PHONE: (907) 465 -2400 FAX (907) 465-3886 DEPARTMENT OF NATURAL RESOURCES ❑ 550 WEST 7 AVENUE, SUITE 1400 ANCHORAGE, ALASKA 995013650 OFFICE OF THE CONWSSIONER P (907) 269 -8431 FAX (907) 269 -8918. t air February 18, 2009 1)(A James James W. White �Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: Request for Reconsid on - ADL 389922 Notice of Expiration of Lease Dear Mr_ White: By a letter dated and received on February 11, 2009, you requested that I reconsider my decision on the expiration of your oil and gas lease (ADL 389922). You assert that I unreasonably conditioned the extension of your lease, and pressed 17 material facts that you believe are in dispute. Your request was received within the time allowed by law (11 AAC 02.040). I have decided to order reconsideration. You have until February 26, to submit additional written material or request a hearing with supporting factual issues to be considered. If you request a hearing, please identify the format and methodology you request, whether you will want to present the testimony of witnesses and their names and contact information, and any other preferences. If you do not request a hearing, I will make a decision on reconsideration based on the information provided in your February 11, 2009 letter and the facts available to me_ My January 27, 2009, decision remains in effect for you to pursue continued drilling operations. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas 5Q. cif "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." • S February 11, 2009 Commissioner Tom Irwin Faxed: 2/1(/2009 to (907) 269 -8918 Department of Natural Rem 550 West 7 Avenue, Suite 1400 Anchorage, AK 99501 - 3650 RE: Request for Reconsideration--ADL 389922 Notice of Exiiratkpn of Lease Terna(Conected Document) Dear Commissioner Irwin. First, I want to thank you for your decision dated Jmivary 27, 2009. 1 agree with you that the lease is automatically extended by drilling. However, I coot agree with the conditions that you attached to the "automatic" extension of my lease. This letter constitutes my request foz of your decision dated January 27, 2009 concerning my oil and gas lease ADL 389922. Your g oad my lease with anadifions. I am the owner of the oil and gas lease and eligible to ask for reconsideration ofd decision. The remedy I am seeking is simple reinstatement of the lease without conditions as ptnvided for in the lease contract between the state and myself. The lease contract does not provide for automatic extension of the primary term with conditions. The lease was automatically extended. Please remove any and all extra conditions inchxled in your decision dated January 27, 2009_ Please address all written correspondence concerning this Ito James W. White 4614 Bohill San Antonio, TX 78217 San Antonio, Texas, Phone Work: 210 -651 -0777 Cell 907-394-1829 Email address: • - _ - - : _ and jimwhit+e‘tacsaluska.tcet o_c-3 I 111 The affected .prop yllsnd_is.oi and 1Ps kase A I.. 389922. It is located in T 9N, R 9W, SAKI, Sections 1, 2, 3, 10, 11, 12, 14, and 15— containing 4800 acres maw or less. Under r paragraph 4 of the lease fact I am shined to a simple automatic matic extension of the lease if drilling is underway on the expiration date of the lease. There is no provision in the lease contract to allow the state to attach additional conditions to that automatic extension if drilling was underway. Under paragraph 4 of the lease I have the right to continue drilling operaticais with reasonable diligence to keep the lease in effect. Your decision imposed a limit of 90 days for me to complete the drilling operation. While I 1 ray be a bl e to me that deadline the lease does not give you the authority to impose it. If ding takes longer than 90 days, then I have the right to take longer than 90 days to complete the drilling operations. Contrary to your January 27, 2009 decision, as long as drilling =mins underway with reasonable diligence, the lease is automatically extended. I estimate that the drilling will take 30 days to complete, but I have no way to know at this time if it may take longer. I cannot risk further capital and resources if the lease will expire if I do not futistI the drilling operations before the arbitrary deadline you set The initial January 2, 2009 notice from the division clouded the title to my lease and I temporarily ceased operations until the cloud is lifted. The wells operator now has to prepare equipment and resources to resume drilling operations. In addition, the d site has only seasonal winter access fix heavy equipment. Your decision again clouds the tide to my lease in that it imposes an arbitrary time limit to complete drilling operations. I am hesitant to resume full drilling operations with this arbitrary deadline in place. What happens if I am not completed with drilling op by t he deadline you set, even if tame operations with reasonable diligence? I have rho guarantee that you will not by to arbitrarily terminate the lease at that point in time. I am asking for a simple straightforward decision that complies with the lease contract. I realize that you want me to continue drilling operations with reasonable diligence, but I will do just *bat only under the terms of the lease contract. But I cannot guarantee when drilling will be completed, and you do not have the authority under the lease to impose a deadline. Dulling serves to automatically extend the lease term. There is no provision in the lease to attach conditions to that =tornado mansion. The material facts in dispute and the basis for the request for z -1- - me as i, ws: I. The lease contract paragraph 30. SEVERABILTY plainly s "If it is finally determined in any judicial proceeding that any provision of this lease is invalid, the state and lessee may jointly agree by a written amendment - to the lease that, in considentimt of the proviska in that written mnendment, the invalid portion will be treated as severed from the lease and that the remainder of this lease as amended will remain in effect" 2. There has been no judicial proceeding invalidating any portion of ADL389922. 2 5J40c1Lq • • 3. White has never agreed to amend any p!mvtsran of the lease. 4. The ADL389922 lease remains in full force in same form as originally agreed to. 5. The lease automatically extended under Forage* 4 of the lease contact because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. There is no provision in the lease to attach conditions to that automatic extension. 6. On June 13, 2007, actual boring in the well commenced when the well was gilled out to remove the 4 inch diameter metal pipe that had been wrongfully contacted inside the well's 7 inch casing when it was originally plugged and abandoned back in 197& At his point the drilling rig was positioned over the wellbore. It has since been to nporanly moved aside to install the blow-out prevention equipment on the well Drilling as defined in the lease includes many acuities in addition to well milling or boring a hole, including activities incidental to the actual drilling of a hole. 7. Alaskan Crude Corporation is the operator on the tease. Aladran Crude's drilling operations meet the definition dean in Paragraph 34 of the lease anima. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from the depanment witnessed the continuation of drilling activities and also left with photos and written mentetandmn documenting the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig. 8. The DNIt sold us a state lease with the clear caw= right to automatically end the Ids by drilling on the_day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otberwke have raged. The mutual delay rental payment was timely paid thereby automatically extencling the lease _ its primary tam. 9. Significant risk capital has already been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an ink oil and gas operator, to sell AM. 389922 produced gas to the liquefied natural gas (LNG) plied as provided by the yeast Paiin/LNG agreement allowing export license gas deliveries - to Japan worth millions of dollar over the next two years. This opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the first time during this seven year primary tarn of the lease tint this lease has finally had opportunity to market its gas at an acceptithle ptice. Alaska gas market oppontaities for mall independent oil and gas operators are almost mon.existent. This lase is adjacent to the ConocoPhillips natural gas transmission pipeline that rods from the North Cook Inlet gas field to Nikiski aid the LNG plant. 10. ConocoPhilhips has committed to buy 30k MCF of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009 This is a potanial 50 million dollar Ow per year gas marks available for Alai:Ines indepenients that have gas deli lily readily available. 11. This lease has excellent potential to readily reply millions of cubic feet of export gas to ConocoPhillips. 12. Access to this lease area by heavy equipment is limited except for winter when the ground is solidly frozen. 3 55 0E' 94 • 13. The DNR's notice dated January 2, 2009 staff that the lease had expired immediately caused the title to this lease to be clouded. Your decision of Ja m ry 27, 2009 also clouded the title to the lease in that it stated that the lease would ally teminme on April Z7. 2009 if drying was not complete by that date. If the DNR continues to assert that this lease may expire on a t arbitrary date, I will be forced to take whatever legal actions are necessary to protect my interests. 14. I paid the annual delay rental in full prior to the due date. 15. 1 was drilling on the expiration date of the lease as drilling is defined in Paragraph 34 of the lease. 16. The lease is automatically extended tinder Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on that date. The lease should have been automatically extended without condidons. 17. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. Ile can attest as to my continued drilling opengion. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. This is not a matter of agency expertise or chscretion. The lease was automatically extended by drilling. The conditions included in your decision are a direct breach of my lease contract. As levee of ADL 389922, I relied terms that I bought contained in the 4 corners of the state drafted AFL389922 Lease contract the state widely publicly advertised and then sold at a public auction, and I have been and conlin ue to be damaged by your decision. If you have any questions concerning this request for reconsideration please contact n Sincerely, 'runes W. White Cc: Kevin Banks, Department of Natural Res fetes, Oil & (3as Division 4 i5 b-F3-/ C7 / SARAHPALU4 j s A+r tnRAG£ ALASKA 99501-3650 PHOPJE (907) 28.8431 FAX (907) 269-8918 DEPARTMENT OF NATURAL RESOURCES OFFICE OF TS: COININSSIOINER January 27, 2009 James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: ADL 389922 Notice of Expiration of Lease dated January 2, 2009 Dear Mr. White: I received your January 20, 2009 appeal of the steject expiration, which requests retraction of the lease expiration in accordance with paragraph 4(cxl) of the lease. I carefully reviewed the facts, your Plan of Opp for the Moose Pt. #1 well, and queried the first -hand observers of the activities at the well site. I also reviewed the definition of "drilling" in paragraph 34.(4) of the lease. I have concluded that the ac vities observed at the site on December 31, 2008, assembly of the blower pneverner (BOP), equipment for BOP placement, presence of a drill rig, and completica of the initial reentry of the existing well plug, can be deemed consistent with the portion of the definition that reads, "... other operation necessary and incidental to the actual boring of the hole...". Therefore, I hereby grant your appeal and retract the subject Notice of Expiration of Lease dated January 2, 2009. ADL 389922 is hereby reinstated and extended in accordance with AS 38.05.180(m) and paragraph 4(c)(1) of your lease for so long as drilling is continued with reasonable diligence and sustained production begins within 90 days after cessation of that drilling. In your Plan of Operations you estimated a 30-day work effort to complete drilling. Nonetheless, to ensure you have sufficient time to complete this well, the well must be completed within 90 days of this decision. The failure to con to the well will result in the magmatic termination of this lease. After 90 days from the date of this letter, April 27, 2009, we will review your progress to determine whether continued lease extension is warranted, including proof that all permits required are current. In summary, I am reinstating your lease because you were engaged in dril ling on the lease expiration date. However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operations; and (4) sustained production within 90 days following the cessation of drilling. The failure to comply with any of these conditions will result in the automatic termination of this lease. J (9 c 3 �7 "Develop, j ucesor Present andFutureAlaskans" ( ADL 389922 Notice of ExpiAll of Lease domed Jemmy 2, 2009 • Amory 27, 2009 Page 2 of 2 This is a final administrative order and decision of the department for purposes of an appeal to Superior Court. An appellant affected by this final order and decision may appeal to Superior Court within 30 days in accordance with the rules of the court, and to the extent permitted by applicable law. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas 17642 - 7 58 o • • SARAH PAULA, GOVERNOR a l�1 ALASKA. C O s I AND GAS s win, AVENUE., surrE loo CONSERVATION COMMISSION ANCHORAGE, ALASKA 99801.3535 PHONE (907) 279.1433 January 27. 2009 MX (907) 276 -7542 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7005 1160 0001 2499 6095 Jim White Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 Re: Moose Pt. Unit # 1 P1 D No. 205-038 Dear Mr. White: On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) issued Permit to Drill No. (PTT? #) 205 -038 to Alaskan Crude Corporation for re -entry into the plugged and abandoned Moose Pt. Unit # 1 well (which was first drilled under PTD # 179001). • Ina fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit # I well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or completed. Nor does the Commission know the status of any other work at the well. Accordingly, by February 28, 2009, please provide the following for the Moose Pt. Unit # I well: (I) a detailed report describing the history, present status, and plans for the well; (2) all records and reports referenced in 20 AAC 25.070; (3) all geologic data and logs referenced in 20 AAC 25.071; and (4) an explanation detailing why any required submissions were not previously made. Requesting and receiving this information in no way affects the Commission's right to take any action, including any enforcement action. Daniel T. Seamount, Jr. Chair 5CI n • • January 26, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7th Avenue, Suite 1400 Anchorage, AK 99501 -3650 Faxed to 907 -269 Finailed to Director Mr. Keven Banks, Mr Matt Rader RE: Potential Damages Caused by Improper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease. I have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. M operator cannot continue the drilling of the Moose Point #1 well this winter drilling season without immediate notice from you that the lease has been reinstated. The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter season. There is now little time left this winter drilling season on the Kenn Peninsula to drill the Moose Point # 1 well's remote site. Please note, it will take additional time to recommence Moose Point #1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me. Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged. I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to another drilling location in the event this lease is not soon timely reinstated this winter drilling season. I cannot afford to strand the drilling rig on the remote pad over the summer season. There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, which is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron in the top portion of the well. Furthermore, your office has received ample documentation of prior well t ip D of qr • boring activities, along with video, eye witness testimony and photos of our setting the blowout preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point #1 well. Other activities incidental to drilling are discussed in our appeal submitted to you. I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincere Address: 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907- 335 -1829 San Antonio 210- 651 -0777 Cell 907 - 394-1829 Email address: jimwhite@acsalaska.net ; jimwhite@asatx.rrcom W.) - C 3" Lo 1 a 2 • • January 26, 2009 ) Commissioner Tom Irwin Department of Natural Resources 550 West 7th Avenue, Suite 1400 Anchorage, AK 99501 -3650 Faxed to 907- 269 -8918 Faxed and emailed to Director Mr. Keven Banks, Mr Matt Rader RE: Potential Damages Caused by Improper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease. I have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. My operator cannot continue the drilling of the Moose Point #1 well this winter drilling season without immediate notice from you that the lease has been reinstated. The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter season. There is now little time left this winter drilling season on the Kai Peninsula to drill the Moose Point # 1 well's remote site. Please note, it will take additional time to recommence Moose Point #1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me. Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged. I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to anot drilling location in the event this lease is not soon timely reinstated this winter drilling season. I cannot afford to strand the drilling rig on the remote pad over the summer season. There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, which is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron in the top portion of the well. Furthermore, your office has received ample documentation of prior well - S 0 tpa of' 9-(4. • 1 boring activities, along with video, eye witness testimony and photos of our selling the blowout preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point #1 well. Other activities incidental to drilling are discussed in our appeal submitted to you. I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincere , 4-- Address: 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907 - 335 -1829 San Antonio 210- 651 -0777 Cell 907- 394 -1829 Email address: jimwhite @acsalaska..net ; jimwhite@satx.rr.com tP3 - 2 1 January 20, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7m Avenue, Suite 1400 Anchorage, AK 99501 -3650 faxed to 907- 269 -0060 RE: Administrative Appeal —ADL 389922 Notice of Expiration of Lease Tenn Dear Commissioner Irwin: This letter constitutes my appeal of the Division of Oil and Gas Notice dated January 2, 2009 and signed by Jennifer Haines. That decision purports to close my oil and gas lease numbered ADL 389922. I am the owner of the oil and gas lease and eligible to appeal the Division's decision. The remedy I am seeking is reinstatement of the lease term or alternatively acknowledgment from the division that the lease term did not expire as stated in the Notice. I am seeking corrective action from the Division to P my lace m lease in active status in the division's records systems and case files. Under the terms of the lease the lease was automatically extended beyond the primary term, yet the Division incorrectly terminated the lease term. Please address all written =respondence =teeming this anal to James W. White 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907 - 335 -1829 San Antonio 210 - 651 -0777 Cell 907- 394 -1829 Email address: jimwhite @acsalaska.net jimwhite@ satx.rr.com 1 D oP • • 1 The property/land under appeal is oil and gas lease ADL 389922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10,11,12, 14, and 15— containing 4800 acres more or less. Under 11 AAC 02.030 I request reconsideration of the Division's decision to terminate ADL 389922. I specifically request that ADL 389922 be reinstated completely and extended as provided for in paragraph 4 (c) (1) of the lease contract. If the commissioner does not reverse the termination of the lease and grant the extension, under 11 AAC 02.050 I request a hearing. The factual issues to be discussed are the grants to the lessee contained in paragraphs 4 and 34 in my lease and the specific nature of my past and current drilling operations on the lease that serve to automatically extend the lease term. Under 11 AAC 02.060 I request an immediate stay of the decision. The public interest requires a stay in this case. Without a stay, my title to the lease is clouded and I cannot negotiate gas sales contracts or market gas produced from the lease Even with a stay in place, the Division's Notice (and subsequent inaction since issuing the Notice) acts to cloud the title of the lease, causes me undue financial harm, and absolutely prevents sale of any gas from ADL389922. The issues in dispute include the division's incorrect termination of the lease, the specific nature or my past and current drilling operations on the lease, the meaning or paragraphs 4 and 34 in my lease and the division's remedy /action that is appropriate to re- instate the lease in the state's lease data base and records system. I request that the division withdraw its Notice and immediately declare the lease never expired as of 12:01 am January 1, 2009. `+ The material facts in dispute and the basis for the appeal are as follows: 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling commenced the winter of February, 2006, when eight miles of North Kenai road was repaired and ice bridges were constructed by ADL 389922's Operator, Alaskan Crude Corporation (ACC) across Leaf Creek and Cum Creek. Then the Ideco 11D35 BIR drilling rig was mobilized along with its related drilling equipment and transported out the North Kenai Road (ice road) and placed at the ADL 389922 lease's Moose Point # 1 well site. After breakup in 2006 early summer extensive access road repair and landscaping work was performed on the Moose Point# 1 well pad to get in shape to accommodate the reentry and testing of the Moose Point #1 well. The site's water well was redrilled and a new water pump was installed August, 2006. White's negotiations to sell ADL389922's gas to the Agrium Fertilizer were continued Agrium with reasonable diligence. 2. On June 13, 2007, actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe that had been wrongfully concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. At this point the drilling rig was positioned over the wellbore. It has since been temporarily moved aside to install the blow -out prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or . 1 boring a hole. The fall of 2007 Agrium announced that that the Agrium Fertilizer plant would be shut down the winter of 2007-2008 because dependable gas feed stock was not available to Agrium for a price that Agrium was willing to pay. The following spring of 2008 Agrium announced that their fertilizer was being permanently shut down due to no cheap gas feed stock. At that time White had no other potential market for and ADL 389922's gas until the Palin/LNG two year export license agreement was announced providing for the LNG plant to purchase up to 30 mmcf of gas per day from Independents such as White and Alaskan Crude Corporation. Late freeze-up caused ACC to postpone its re-commencement of the 2008 winter Moose Point#I drilling operations until December 20, 2W8 when to unimproved access North Kenai Road to the Moose Point drill site had frozen hard enough to support travel by light pick -up trucks. The North Kenai Road had not frozen hard enough to support needed travel by heavy trucks December 31.2008. 3. ACC is the operator on the lease. Alaskan Crude's drilling operations met the definition of drilling described in Paragraph 34 of the lease contract. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including site preparation, building the pad, drilling a water well with the rig and conducting drilling operations with the rig. Such drilling operations have been conducted with reasonable diligence. 4. The DNR advertised and sold a state- drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired. The annual delay rental payment was timely paid, thereby automatically extending the lease beyond its primary tenn. 5. Significant risk capital has aheady been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent Palin/LNG agreement allowing export license gas deliveries to Japan worth millions of dollars over the next two yeas. This gas - sate opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the first time during t e seven year unary tern of the lease that this lease has finally had the opportunity to masker its gas at an acceptable price. We will suffer huge losses if we are not able to deliver gas from this lease commencing this spring. Alaska gas marketing opportunities for small inert oil and gas operators are almost non- existent. Future gas marketing operations are at risk as long as the division's decision is not reversed or withdrawn. 6. This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nikiski and the LNG plant. 7. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009 and running for 24 months. This is a l.Y Lo o F r ~� - • 1 potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 8. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 9. Access to this lease area by heavy equipment is limited except for winter months when the ground is solidly frozen, which for this winter season did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup on December 20, 2008. 10. The DNR's notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this least to be clouded. If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded. I will be forced to take whatever legal actions are necessary to protect my interests. Selling gas from a lease with a clouded title is unheard of. It never happens. 11. I paid the annual delay rental in full prior to the due date. 12. I was drilling on the expiration date of the lease as drilling is defined in Paragaph 34 of the lease. 13. The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on the expiration date. The lease is automatically extended —it is not a discretionary decision. 14. Mr. Matt Rader is aware of the wrongful termination of my lease and the mistake made by your office, yet no action has been forthcoming from your office. 15. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr. Rader has voiced no opinion to me as to whether tlx lease would be extended then or now. 16. Director Banks was informed of this wrongful lease termination by fax copy on January 15, 2009. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. This is a direct breach of my lease contract As lessee and purchaser of ADL 389922, I relied on the patently clear contract provisions in the lease that was sold to me to extend the lease. I have been and continue to be damaged by the division's actions and misinterpretation of the lease provisions. Under 11AAC 02.030 this letter is also my notice of intent to file additional materials in support of this appeal within the allotted 20 day period. L o ( 4 . 1 If you have any questions concerning this appeal please contact me. Sincerely, J w. white see of Record Enclosures —sent by US mail service Email addressed to Kevin Banks Pictures of drilling operations Memo/Notes addressed to Matt Rader You Tube Video of Drilling Operations: http:// www. youtube.com/watch ?v= HOKcwuu5aXw - n oc �1) 198 5 1 January 15, 2009 Mr. Kevin Banks Department of Natural Resources State of Alaska 550 West 7"" Avenue, Suite 800 r � - , Anchorage, Alaska 99501 -3500 �b r Re: Wrongful Termination of ADL 389922 'o7-26 qb7-26?,& Dear Kevin, I received the attached termination letter from the DNR dated January 2, 2009 stating that ADL 389922 has expired and the case closed. If the termination letter was a clerical error, please correct it and advise me by email before 2:00 PM Friday, January 16th that the lease is still in effect. Otherwise I plan to timely appeal the DNR letter. This is not a matter of agency expertise or discretion. This is a direct breach of our lease contract. I, as lessee of ADL389922, am being damaged by this action. 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling has continued with reasonable diligence since. On June 13, 2007, actual well boring commenced when the well was drilled out to remove the 4 inch metal pipe that had been wrongfully concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. 2. Alaskan Crude's drilling operations met the de described in Paragraph 34 i . of the lease contract On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig.. 3. The DNR sold us a state drafted lease with the clear contract right to extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally occurring on the date that the lease would otherwise have expired. The annual delay rental payment was timely paid thereby extending the lease beyond its primacy term. 4. Significant risk capital has already been invested to drill and develop ADL389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent Palin/LNG agreement allowing; export license gas deliveries to Japan worth millions of dollars the next two years. This opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the 1st time during this seven year primary term of the lease that this lease has finally had opportunity to market its 01 o-t- • 1 gas at an acceptable price. We will suffer huge losses if we are not able to deliver gas from this lease this spring. Alaska gas market opportunities for small independent oil and gas operators are almost non- existent 5. This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nikiski and the LNG plant. 6. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009. This is a potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 7. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 8. Access to this lease by heavy equipment is limited except for winter months when the ground is solidly frozen which did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup December 20, 2008. 9. The DNR's letter dated January 2 stating that the lease had expired immediately caused the title to this lease to be clouded. If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded. I will be forced to take whatever legal actions are nay to protect my interests. Raising capital to use on development of a property with a clouded title is difficult or impossible to do. 10. I paid the annual delay rental in full prior to the dim date. 11. I was drilling on the expiration date of the lease as defined in Paragraph 34 of the lease. 12. 12 The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. 13. Mr. Matt Rader is aware if the situation on my lease and the mistake made by your office, yet no action has been forthcoming from your office. 3� n � 17 7.0 OP (4-(4 • 1 Again, I plan to appeal the Division's January 2, 2009 decision letter stating that my lease has expired unless I hear otherwise that the lease is still in effect. Mr. Matt Rader from your office was on location on my lease on the expiration date. He can attest as to my drilling operation. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. Regards, A• James W. White, Lessee of ADL 389922 4614 Bohill Street San Antonio, TX 78217 210.651.0777 San Antonio Office jimwhitesatx.rr.com 907.335.1829 Kenai jimwhitegacsalaska.com cc: 4 33 a IO'' • min 0 ALAKA i Svam PALIN, GOVERNOR DEPARTMENT OF NATURAL RESOURCES 550 WEST 7 AVENUE SUITE 800 ANCHORAGE, ALASKA 99501 -3560 DIVISION OF OIL AND GAS PHo? (907) 269 - 8800 FAX: (907) 2694938 January 2, 2009 NOTICE James W. White Oil and Gas Lease 4614 Bohill ADL 389922 San Antonio, TX 78217 LEASE EXPIRED Effective January 1, 2002, the State of Alaska issued oil and gas lease ADL 389922 in the Cook Inlet area for a primary term of 7 years. You are hereby notified that in accordance with the lease agreement, ADL 389922 expired on December 31, 2008. The case file has been closed in this office. Sincerely, - C /41-0 4A , viaz - nnifer Haines atural Resource Specialist "Develop, Conserve, and Enhance Arafura! Resources for Present and Future Alaskans." • Alaska Crudetorporalion, 4614 BohE, San Antonio, Texas 78217 MEMORANDUM SUBJECT: Discussing the later than normal winter freeze up of the North Kenai Borough Road. FROM: Alaska Crude Corporation DATE: December 31, 2008 June 13, 2007, actual well boring commenced to reach the bottom hole location of the Moose Point #1 well. The well was reentered to remove the 16 foot long 4 inch metal pipe and concrete that was cemented in 6 feet below the final grade when the well was plugged and abandoned in 1978. Drilling operations are being performed pursuant to Lease contract: Article 34 Definitions, Paragraph. (4) Article 34 DEFINITIONS (4) "Milling's means the act of boring a hole to reach a proposed bottom hole location through which oil or gas may be produced if encountered in paying quantities, and includes redriiling, sidetracking, deepening, or other means necessary to reach the proposed bottom hole location, testing, logging, plugging, and other operations necessary and incidental to the actual boring of the hole;" Other operations necessary and incidental to the actual boring of the hole to reach the bottom hole location ocanred when Alaska Crude Corporation ( ACC) redrilled and completed the !ease's 120 foot water well with a pump to provide water required to drill the Moose Point #1 well. Additionally, the workover rig, blow out preventer, mud tanks, drill pipe and other major equipment necessary and incidental to reach the proposed bottom hole location of this well are currently located at the lease well site. Drilling operations are now continuing on ADL389922 lease's Moose Point # 1 well whose bottom hole is located on this lease. The Moose Point # 1 well AOGCC API drilfstg permit number is 50- 133 - 20312 -9000. 35 �7 9-3 0p q-q- • Drilling has duly commenced on ADL 389922 and will continue with reasonable diligence on the day that this lease would otherwise expire, December 31,2008,and continue tteeby automatically extending this lease pursuant to lease paragraph 4(cX1) until 90 days after cessation of reasonable diligence. Article 4 (c)(1) of the lease provides: `If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days after cessafion of that drilling and for so long as oil or gas is produced in paying quantities from the used area.* Development of ADL 389922 is dependent upon having a road that is capable of carrying heavy equipment to remote well site and finding a market for gas that might possibly come from this well. The 8 mile North Kenai road beyond Captain Cook Park is a Kenai Borough unimproved road. It will only support truck travel in the winter when the ground is frozen deep enough to support a heavy trudc. It was not until December 20 2008 that the road became frozen enough to support limited liaht duty pick-up travel to and from ADL 389922 lease's Moose Point #1 well site. The road will not be frozen sufficiently to safely support large vehicle travel to the Moose Point #1 well until after December 31, 2008. If the weather remains cold, road conditions should improve so heavier equipment may be able to travel after December 31, 2008 to and from the well site as needed. Finding a market for the gas is important. Available markets justify the investment of wildcat risk capital in exploration and drilling oil and gas wens. The Birch Hill wail, locked only 2 miles from the Moose Point #1 well, has been capable of selling gas since 1967, but has not sold one cubic foot of gas the last 40 years. ACC had ongoing gas sale negotiations with Agrium until they shut their plant down in 2007. This meant there were no other possible markets to market gas from ADL 389922 until Governor Patin bargained to approve Phillip/Marathon's gas export license to ship Kenai gas to Japan. Govemor Palin forced PhilflIMar~at on to agree to purchase up to ' �' _ _ • 30,000,000 cubic feet of gas per day from new independents like ACC and include that purchased gap in the Japanese gas delivery. Because of her actions, ACC now believes that it may be profitable to take the risk to invest more risk capital to continue exploring the ADL389922 lease. ACC believes that ACC has a reasonable chance to market gas to the LNG plant partners if gas can be found timely during this very short two year new Phillips/Marathon export license to Japan. ACC now intends to invest more risk capital to explore the ADL 389922 for gas on the risky premises gas could be sold to the LNG plant. Phillips has a 20" pipeline to their liquefied natural gas plant that runs over ADL 389922 and is within 800 feet of the Moose Point #1 well_ If gas is found in the Moose Point #1 well, the physical act of connecting an 800 foot °wring line could be accomplished within a few days. ACC currently knows of no other market to sell gas in Alaska. ACC now believes it can get a reasonable rate of retum if it can get the Moose Point #1 proved up and flowiry before too much time goes by when Phillips/Marathon commences its new gas exports to Japan. Then royalties from this state levee can begin flowing to the state's coffers. j() 9-5 aP ;'( E! (; Mi ( I t \ I SlEVF COtt'!'1R, commit DEPARTMENT OF NATURAL RESOURCES P.O. BOX 7034 DIVISION OF OIL AND GAS ANCHORAGE. ALASKA 99510.7034 June 26, 1987 Geor Trefry, Esq. Trefry and Kasmar 3003 Minnesota Drive, Suite 301 Anchorage, Alaska 99503 Re: ADL 318612 and ADL 318613 Dear Mr. Trefry: This letter responds to your June 22, 1987 letter. It is sent in order to avoid any implication that the state agrees with all of the assertions made in your June 22, 1987 letter. The division of oil and gas (division) is fully aware that neither the division nor Alaskan Crude Corporation can unilaterally amend lease terms. This fact does not, however, reader it inappropriate for the division to state its understanding of !the rights and obligations under the leases. The division specifically disagrees with your contention th4t pendency of litigation (instituted, incidentally, by your cliFent) automatically removes any obligation from your client to do anItthing other than to pay rentals. The simple fact is that there is no judicial stay preventing your clients from drilling on the leases. You assert that your clients have been "effectively pr+cluded" from developing the leases on account of the litigation. Ho4ever, Alaskan Crude Corporation's subjective assessment of the prudence of expending time and money in drilling is irrelevant. In every lease contract there are constraints and risks. All lessees must_ weigh the geologic risk concerning whether or not oil and gas will be found in paying quantities against the cost of acquisition, exploration and development of the leases. All that is added by the pendency of the litigation is the legal risk that the Supreme Co4rt may agree with the state. There is no injunction against op rations by Alaskan Crude Corporation. Accordingly, if Alaskan Cr de Corporation is confident of its legal position, it should ha a no fear of proceeding with exploration. The legal risk is on y cumulative with the other risks and costs mentioned above, and does not amount to a bar against drilling activities. This is not to say that Alaskan Crude Corporation is precluded from asking the courts to rule that the period of the appeal should not be 9'62 CC ( 3 - 9 - 000596 All - 111 George Trefry, Esq. June 26, 1987 Trefry and Kasmar Page 2 "chargeable against the primary lease tem.!' � However, the division ' is equally entitled to contend otherwise. -Y • Finally, I take issue with your assertion '� on that the division is not acting in good faith. The division has every bit as much a right as Alaskan Crude Corporation to seek judicial relief. Alaskan Crude Corporation exercised its right by filing an administrative appeal to the Superior Court. It has no cause to complain when the state exercises its recip right. Nor do we see how the division has acted in bad faith by asserting its understanding of the impact of the pending bupreme Court appeal on ongoing lease obligations. Surely it is better for the division to put Alaskan Crude Corporation on notice as to the division's understanding in advance. The fact that you may disagree with the division's understanding of the interrelationship between the appeal and ongoing lease obligations provides a possible need for judicial resolution of a dispute, but provides no basis for a I) charge that the division is acting in bad faith. 2 Sincerely, t 1 mes 041- Eason i rector l JE:MPW:amh cc: Alaskan Crude Corporation Mark Worcester, Assistant Attorney General ADL 318612 and ADL 318613 lease files 2i c z I/ Significantly, the trial court, even in ruling generally favorably to Alaska Crude Corporation on ADL 318612 and ADL 318613 did not rule in favor of Alaskan Crude Corporation on the extension e,,_ of the primary term issue. 444::t. ' /, � - 63059'7 *i4 May 23 09 01:43p Intrepid Prod ion 006510777 p,1 • RECEIVED MAY 2 5 y. Alas 00 oo � Gas CorN C �R k. 1 li i& ;;' �►= ` ='`' - ALASKAN CRUDE CORPORATION 4614 BOHILL, SAN ANTONIO, TEXAS, 78217 ph (210) 651 -0777 FAX TRANSMITTAL SHEET DATE: May 23, 2009 TO: AOGCC ATTENTION: Mr. Tom Maunder, AOGCC; fax number, (907) -276 -7542 NUMBER OF PAGES: 4 including this cover page RE: ACC is requesting a response to ACC's drilling application submitted to the AOGCC April 22, 2009 to replace the Drilling Permit #205 -038 -0 to rework ADL 389922 Moose Pt. # 1 well retroactively announced terminated on the AOGCC's "Outstanding Drilling Permits" website (http://www.state.ak.usiadminiogc/drilling/OutPermits/2009/0P . ermits090228 ) by the AOGCC February 5, 2009. May 23 09 01:43p Intrepid Proon 6510777 p.2 MARIN CRUDE CORPORATION 1 4814 BIt1 ST. I SIN ANTONIO, TX. 78217 Date: May 23, 2009 r'a xe c;t M ;2 A DD 2 Alaska Oil and Gas Conservation Commissio `�' l t° - ° � � r i of F f a' D c j 333 W. 7th Ave., Ste. 100 Anchorage, Alaska 99501 Re: Based on the fact that the State of Alaska DNR records still reflect that Alaskan Crude Corporation's (ACC) State ADL 389922 Lease is still in Active status as of May 23, 2009, ACC is requesting a response to ACC's drilling application submitted to the AOGCC April 22, 2009 to replace the Drilling Permit #205 -038 -0 to rework ADL 389922 Moose Pt # 1 well retroactively announced terminated on the AOGCC's "Outstanding Drilling Permits" website C 22 `= ' 3 by the AOGCC February 5, 2009. Subject: The AOGCC posted a public Webpage .. ;s a`) notice titled "Outstanding Drilling Permits: 1/1/2007 thru 2/28/2009" on February O5, 2009 retroactively terminating Alaskan Crude Corporation's Drilling Permit # 205 - 038 -0 two years earlier, March 24, 2007. The new replacement ADL 389922's Moose Pt # 1 well drilling application was properly and duly submitted to the AOGCC for approval, April 22, 2009; but has not yet been approved or disapproved by the AOGCC. The new replacement Moose Pt # 1 well drilling application has not been approved or disapproved to this date, May 23, 2009. The original Moose Pt # 1 well Drilling Permit #205 -038 -0 was submitted on or about March 04, 2005 and subsequently approved about 20 days after the Moose Pt. # 1 well drilling application's submittal, March 24, 2005. The (April 22, 2009) replacement Moose Pt. # 1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt # 1 well drilling permit # 205 - 038-0. Dear Commissioners: Alaskan Crude Corporation's (ACC) new replacement Moose Pt # 1 well drilling application to rework ADL 38992 2's Moose Pt # 1 well has been pending before the Alaskan Oil and Gas Conservation Commission ( AOGCC) for approval for more than 31 days since it was first submitted to the AOGCC, April 22, 2009, for approval. The new replacement drilling application to rework ADL 389922's Moose Pt. # 1 well is almost a mirror image of the 1 of3 May 23 09 01:43p Intrepid Prodeon 006510777 p.3 • ALASKAN CRUDE CORPORATION 1 4114 BOUhIL ST. I SAN ANTONIO, TL 78217 original drilling application for Drilling Permit #205 -038 -0 which was approved March 24, 2005, 20 days after drilling permit# 205- 038 -0's original submittal date. Y Resources of OS / / � 11 2009 a 11, 2009) the Department of Natu ral e sources (DNR ) "Lease Status" Website . S f. "1: ra:-:_ =.,c`) shows that ADL 389922 is still an Active lease in Active status. However, "Lease expiration date of April 27 2009 for AD L 389922 the DNR Lease Status Website shows an exp p , yet being maintained in Active status thru May 11, 2009 as shown circled below in Image 1. ADL 389922 lease is a current lease as attested on the DNR's "Lease Status" Webpage, May 11, 2009. On April 22, 2009, ACC petitioned the AOGCC to approve or disapprove the replacement ADL 389922 Moose Pt. # 1 well drilling application submitted, April 22, 2009. On April 22, 2009 Alaskan Crude Corporation submitted, by certified mail, a replacement drilling permit for AOGCC's approval to rework ADL 389922's Moose Pt. # 1 well. On April 22, 2009, Alaskan Crude Corporation submitted a letter appealing the March 24, 2007 retroactive termination of ACC's Drilling Permit # 205 -038 -0 posted on the AOGCCs ""Outstanding Drilling Permits" Website l e r ,.'1'4iF *�x 1�1.�_.. _. �r ", �Ir:= J�r:.. - _�� •t .. �: c., /r �. 'i,� .022 Image 1. DNR Lease Status Website �I)c't ty "� ��•.. —�� '.I' ....' .<_'_..i5j!_�;•'(iSi..t•i'�. %.l !��.--- ioi5,' Showing ADL 389922 Shown In Active Status Circled in Red Lease Status .�s of cl,� ca .•lrran;eA S ADL MR Sale tract Acres Bid/ Sale Weave 5cp"irama Shea Ural M,Gknile Associated Notficarim Ile- No Acre Date Date Date Term Fie Lessee Indicator TERM "iRCLEUM ALASKA 3917 3104091605 T9 321X 1227101319&9 01A1/17S 12010111 13111 tATE1 DE9AIT= 1A110MTEXS TERM PEROLELMAIASKAC ` kMaZDIMON 10CC 5.01050'3200 0112771039 017272009 A.CTP:E DEnNMT 3K1i5 SCOW =3 47E12 5 MDF200 91111/1503 109 ACME DEFINITE 6ARR TEN 20993 500910E 13 'x1:3 153 1:05191 123llt19lu 02+203'1975 IMAM DEEP TE 941913 TERM 13T24 SCCRI0010t1 9 00990 C711Y1!5 09.Ei11190 C 131 CLC5) 1DEFIhI E SAIE TERM 1.3067 maw 9 51Cs 1.15 Winne 10911196` 03.311'1967 REL010J1hE 'FINITE 9419 ERM Least Attfriq',rrenlgedirMIES Prgti9 oflir 2 of 3 May 23 09 01:43p Intrepid Produ ion *6510777 p.4 ILISIAN CHIDE CONPONAIION 1 4614 BOLL ST. I SAN ANTONIO, TX. 78217 To this date, thirty -one (31) days later (May 23, 2009), the AOGCC has not acted to approve or disapprove ACC's replacement Moose Pt # 1 well Drilling Permit #205 -038 -0 even though ADL 389922 is still in active status as attested to DNR's "Least Status" Website :...,��. >/ ' .`.... 4G.5c. �.I It should be carefully noted that the original Moose Pt. # 1 well Drilling Permit 205 -038 -0 took only 20 days after its original submittal to be approved, March 24, 2005. Please advise ACC about AOGCCs decision regarding the status of ACC's replacement Moose Pt. #1 well drilling permit submitted April 22, 2009. Kind Regards, Y- ....... anager Alaskan C . ude Corporation 4614 Bohill St. San Antonio, TX 78217 CC. Alaska Oil and Gas Conservation Commission, Daniel T. Seamount, Jr. • Alaska Oil and Gas Conservation Commission, Tom Maunder Department of Natural Resources, Commissioner, Thomas Irwin Department of Natural Resources, Director, Kevin Banks Department of Natural Resources, Specialist, Matt Rader 3 of 3 r i 9 Q r( Page 1 of 2 • Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Friday, April 04, 2008 6:10 PM To: 'Jim White; Jim White Subject: RE: RE: Moose Point #1 Re -Entry (205 -038) Thanks. I did receive the fax and I can open the word document without problems. Regarding the removal of the DP marker cemented in the wellhead, how far "into" the well are you? If you have any photos of the well they would be appreciated. Thanks in advance, Tom Maunder, PE AOGCC From: Jim White [mailto:jim @applecapital.net] Sent: Friday, April 04, 2008 6:04 PM To: Maunder, Thomas E (DOA); Jim White Subject: Re: RE: Moose Point #1 Re -Entry (205 -038) Tom, Here is the document in a Word format. Jim White, PE (the younger) ---- Original Message -- From: M aunder, Thomas E(DOA) To: Jim White Cc: jim @applecapital.net Sent: Friday, April 04, 2008 9:49 AM Subject: RE: RE: Moose Point #1 Re -Entry (205 -038) Jim, You have the email address correct. I am unable to open the document. Could you resend as a .pdf or word document or fax to 907 - 276 -7542. When sending information on this operation, please use a similar subject line. Thanks, Tom Maunder, PE AOGCC From: Jim White [mailto:jimwhite @satx.rr.com] Sent: Friday, April 04, 2008 8:42 AM To: Maunder, Thomas E (DOA) Cc: jim @app_I_ecapita_I_.net Subject: Hello Tom. Not sure if I have your correct email address, but here is a try. Hope your day is a good one. Best Regards Jim white 4/5/2008 • Pucc Davies, Stephen F (DOA) „ „ _ „. From: Have|ock, Brian E (DNR) Sent: Friday, January 16, 2009 12:20 PM To: Davies, Stephen F (DOA) Subject: RE: requesting copy of Permit # 205-038 1 got what needed, thanks for your help on ths. Brian Havelock Natural ReSoUrce Specialist Division of Oil & Gas Alaska Deparirnent of Natural Resources nnow 7th Avenue, Suite 8on Anchorage, Alaska pv5n1 907'269-8807 Division of Oil and Gas Home Page From: Davies, Stephen F (DOA) Sent: Friday, January 16, 2009 9:03 AM To: Have|ooh, Brian E (DNR) Subjext: RE: requesting copy of Permit # 205-038 Brian, Did you find DNR's copy of the 205-038 well history file? Steve From: Havelock, Brian E (DNR) Sent: Thursday, .January 15, 2009 4:08 PM To: Davies, Stephen F (DOA) Subject: RE: requesting copy of Permit # 205'038 Thanks, |'|| see what we have before skating over there. Brian Havelock Natural Resource Specialist Division of Oil & Gas Aiaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska nn5o1 ou72uyoxo/ Division of{)iland Gas Home Page • From: Davies, Stephen F (DOA) Sent: Thursday, January 15, 2009 4:04 PM To: Havelock, Brian E (DNR); Saltmarsh, Arthur C (DOA) Cc: Rader, Matthew W (DNR) Subject: RE: requesting copy of Permit # 205'038 Brian, /~~^ �� This may save you some time. | looked through AOGCC's Confidential Data transmittal naoordo, and found that we provided a copy of the 205-038 well history file to Jack Hartz / Kristin Dirks on September 11, 2007 You might check with them first. Thanks, 1/16/2009 • Page 2 of 2 Steve Davies AOGCC From: Havelock, Brian E (DNR) Sent: Thursday, January 15, 2009 3:58 PM To: Saltmarsh, Arthur C (DOA); Davies, Stephen F (DOA) Cc: Rader, Matthew W (DNR) Subject: requesting copy of Permit # 205 -038 Art This is to request a copy of Permit -to -Drill # Permit # 205 -038 and API# 50- 133 - 20312- 90 -00. I will stop by tomorrow. Thanks Brian 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 1/16/2009 Page 1 of 1 Saltmarsh, Arthur C (DOA) From: Davies, Stephen F (DOA) Sent: Monday, December 29, 2008 10:00 AM • To: jim white Subject: RE: Copy of Confidential Drilling Permit Needed Mr. White, I received your phone calls this morning because I generally coordinate public information requests for the Commission. The Moose Point Unit 1 well lies within the geographic area of responsibility of Art Saltmarsh, the other Senior Petroleum Geologist. I forwarded your request to Art, and he will respond to it. if ou have any AOGCC database or website - related questions, please give me a call. Y Y q ,p 9 Thanks, Steve Davies AOGCC From: jim white [mailto:jimwhite @acsalaska.net] Sent: Monday, December 29, 2008 9:31 AM To: Davies, Stephen F (DOA) Subject: Copy of Confidential Drilling Permit Needed Hello Steve, We need to get a copy of our permit to drill, permit # 205 -038, for the Moose Point #1 well. We need this information for our records and well operations. If possible, could you please email a PDF version or similar format via email.. Jim White Alaskan ��dee4 ve Alaskan Crude Corporation Intrepid Production Company 907 - 392 -1829 /3 Areove•el4 l /JD,07,zo?s /sV 12/29/2008 Page1of1 • • Saltmarsh, Arthur C (DOA) From: Davies, Stephen F (DOA) Sent: Monday, December 29, 2008 9:50 AM To: Saltmarsh, Arthur C (DOA) Cc: Birnbaum, Alan J (LAW) Subject: FW: Copy of Confidential Drilling Permit Needed Art and Alan, Here is a request from Jim White for a copy of the permit to drill for his Moose Point Unit 1 Re -entry. Please note that the well is still in confidential status. Steve Davies From: jim white [mailto:jimwhite @acsalaska.net] Sent: Monday, December 29, 2008 9:31 AM To: Davies, Stephen F (DOA) Subject: Copy of Confidential Drilling Permit Needed Hello Steve, We need to get a copy of our permit to drill, permit # 205 -038, for the Moose Point #1 well. We need this information for our records and well operations. If possible, could you please email a PDF version or similar format via email.. Jim White Alaskan Crude Corporation Intrepid Production Company 907 - 392 -1829 12/29/2008 Blank Page 1 of 2 • • Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Friday, October 12, 2007 3:24 PM To: jim white Subject: RE: Milling out iron concreted in the top Moose Point #1 well 7" casing ‘)05 — 0 3� Jim, T' \t_S Email arrived just fine. Just took a while. Q \I■1 ‘' Best regards, Tom From: jim white [mailto:jimwhite @satx.rr.com] Sent: Friday, October 12, 2007 11:59 AM To: Maunder, Thomas E (DOA); brucewebb @gci.net; jim @applecapital.net Cc: jimwhite @satx.rr.com Subject: Milling out iron concreted in the top Moose Point #1 well 7" casing Alaskan Crude Corporation 4614 Bohill San Antonio, TX 78217 210 -651 -0777 Kenai, Ak. 907- 335 -1829 jimwhite @satx.a.com , jimwhite@acsalaska.net a_csalaska.net October 12, 2007 Alaska Oil & Gas Conversation Commission Attention: Mr. Tom Maunder Sent via email to tommaunder agalaska gov Re: Moose Point #1 Well operation to mill out 4" pipe concreted in the bottom half of the well head left on the 13 5 /8th" casing when the well was P & Aed in 1982. Dear Tom: Attached are pictures of the drilling rig and of the over shot mill we used to milled out the iron concreted in the top of the in the Moose Point #1 well's 7" casing We milled out about 3 1 /2 feet of 4" pipe concreted in the 7 in. casing with an over shot mill. I will send you a picture of the iron piece we milled out of the well's 7" casing when we get back out to the drill site in a couple of weeks. We repaired the ring grove of the existing 13 1 /2 "bottom half of the well head and polished off the 7" casing extending above the pack off. We nippled up the 3000# 13 1 /2 " by 5000# 7" well head. 10/23/2007 Blank • Page 1 of 2 • Maunder, Thomas E (DOA) From: jim white [jimwhite @satx.rr.com] Sent: Friday, October 12, 2007 11:59 AM To: Maunder, Thomas E (DOA); brucewebb©gci.net; jim @applecapital.net Cc: jimwhite @satx.rr.com Subject: Milling out iron concreted in the top Moose Point #1 well 7" casing Attachments: scan0006.jpg; scan0001.jpg; scan0002.jpg; scan0003.jpg; scan0004.jpg; scan0005.jpg Alaskan Crude Corporation 4614 Bohill San Antonio, TX 78217 210- 651 -0777 Kenai, Ak. 907- 335 -1829 jimwhitesatx.rr.com , jimwhite@acsalaska.net October 12, 2007 Alaska Oil & Gas Conversation Commission Attention: Mr. Tom Maunder Sent via email to tom.maunder@alaska.gov Re: Moose Point #1 Well operation to mill out 4" pipe concreted in the bottom half of the well head left on the 13 5 /8th" casing when the well was P & Aed in 1982. Dear Tom: Attached are pictures of the drilling rig and of the over shot mill we used to milled out the iron concreted in the top of the in the Moose Point #1 well's 7" casing We milled out about 3 '/2 feet of 4" pipe concreted in the 7 in. casing with an over shot mill. I will send you a picture of the iron piece we milled out of the well's 7" casing when we get back out to the drill site in a couple of weeks. We repaired the ring grove of the existing 13 /2 "bottom half of the well head and polished off the 7" casing extending above the pack off. We rippled up the 3000# 13 '/2" by 5000# 7" well head. We will nippled up 5000 pounds 7" BOP stack when it freezes up hard enough to get an 18 wheeler out there to deliver the BOP stack. 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',..A ''," ", , ‘ , "?'‘'4:44 , '4", , , , ,,'., : • ' '4z,i' '' - ' ''' '''',',,,',",,,' 4 .:'■ ' • '''''''''' ''''''" ^ `'', '' ' '""io."F'':'," • , ,, 0 S'—' ':, , ..,,,,..,. " ‘'` '■.'« '''',',' , ' i '' ''''''2' ' ' •••-,. ';.0.41 . , : . , .... ., . . ..., ..„ .,. ...... _ __ . • Page 1 of 1 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Thursday, August 30, 2007 12:08 PM To: Birnbaum, Alan J (LAW) ( W) Cc: Daniel T Seamount JR Subject: 205 -038_Moose Point #1_re- entry.pdf Attachments: 205 -038_Moose Point #1_re- entry.pdf Alan, Attached is a document Dan asked me to forward to you. This involves an authorization for Jim White /Alaska Crude to re -enter a well on the NW shore of the Kenai Peninsula. The well was originally drilled in 1978 and then P&Aed in 1979. This well is similar to the Pt. Thomson wells in that P &A was granted per the request of the operator leaving the wellhead in place. Re -entry of a P&Aed well has been done by other operators and is authorized by the Commission issuing a permit to drill. Mr. White originally applied for a permit in late 2003 /early 2004 to re -enter the well, but that was returned to him in April, 2004 not- approved since the application was incomplete and he did not respond with requested information. He reapplied and permit 205 -038 was issued March 24, 2005. According to the Commission regulations, the permit is valid for 2 years after it is issued. If you refer to page 3 and 4 of the attachment, Mr. White did provide a brief summary of the work he has accomplished since the permit was issued. The earliest work reported appears to have begun in June 2007. So far as I understand he has been working to remove the abandonment marker from the well. This marker, apparently a piece of 5" drill pipe was sealed with concrete into the open wellbore. According to Mr. White, it has been most difficult to remove the concrete although it appears that he may have had some success. Based on the report and a conversation with Mr. White, he intends to continue /resume the work late this fall/early winter. He apparently has successfully moved his rig to the site and has it erected over the well. I have no specific knowledge that the rig is in place and we have received no call for an Inspection. If he does get his BOP installed, an Inspector will likely be present for the test. Page 5 of the attachment is an exchange between "Randy" at DEC and Art and Steve. Apparently Randy called looking for information after some sort of spill was reported at the site. Based on the April 3 date on that page, it would appear that Mr. White was conducting some activities and they may have been on the site near the end of March this year. It is possible that earlier activities may have been conducted as well however we have no record to substantiate that. I have shown this information to Dan and he suggested !forward it to you for review. The basic issue that could be here is, has Mr. White conducted sufficient operations such that the permit is still valid? He does report that he has been working to remove the marker and concrete which is necessary to allow work to continue deeper (ie greater than arms length) in the wellbore. When Dan and t discussed the matter, his position was that he believes Mr. White has done work to keep the permit valid. I agree with Dan that work has been done, but thus far while the work was necessary to gain access to the well it work has not resulted in entry further than what appears to be arms length. If Mr. White is able to work as he plans in the coming months, he should be able to clean the wellbore out as originally planned. The appropriate response may be to wait and see what he is able to accomplish. However there is a risk that the attempt at re -entry could drag on and Mr. White maintain that the permit is valid so long as he is doing "work ". In the past, Mr. White has claimed that he could perform work on a well authorized by a sundry issued over 5 years previously. Your council will be appreciated. Tom 10/23/2007 Maunder, Thomas E (DOA) From: Bruce D. Webb [bwebb @aurorapower.comj Sent: Thursday, August 02, 2007 9:51 AM To: Maunder, Thomas E (DOA) Subject: RE: Moose Point Unit #1 Re -entry (205 -038) Tom, I had mentioned this to Jim as well. I do know that he has been overwhelmed with his DNR appeal on the Arctic Fortitude Decision. I have not been out there, but it is my understanding that he did remove the DP marker and was doing some site work in preparation for setting his rig up over the well. I believe he is in the process of acquiring a BOP stack as well. I haven't heard from him in a week or so - which is uncharacteristic of him. He may be back in Texas or in Calgary. I will try his cell phone and get back with you. -Bruce Original Message From: Maunder, Thomas E (DOA) [mailto:tom.maunder @alaska.gov] Sent: Thursday, August 02, 2007 12:03 PM To: Jim White Cc: Bruce Webb Subject: RE: Moose Point Unit #1 Re -entry (205 -038) Importance: High Jim or Bruce, I have not heard back regarding my request for information as to the activities conducted this summer on the Moose Point well. I'd appreciate if a summary of the operations could be provided. This should include the dates work was conducted. I'd appreciate your reply by August 15. Call or message with any questions. Tom Maunder, PE AOGCC Original Message From: Thomas Maunder [mailto:tom_maunder @admin.state.ak.us] Sent: Tuesday, June 12, 2007 12:34 PM To: Jim White Cc: Bruce Webb Subject: Moose Point Unit #1 Re -entry (205 -038) Jim, We talked a while back of the difficulties you were encountering "chipping the cement" around the DP marker on this well. I was wondering if you could provide a summary of the operations you have been able to conduct and what work you might have planned for the summer. Thanks in advance. Call or message with any questions. ` oo T Tom Maunder, PE AOGCC ,,yv lik7 (O:\ b Q \ v3 )! -o ALASKAN CRUD ORPORATION 1 4614 BOIIILL ST. I SAN AI IO, TX. 78217 Date: May 23, 2009 Alaska Oil and Gas Conservation Commission 333 W. 7th Ave., Ste. 100 Anchorage, Alaska 99501 Re: Based on the fact that the State of Alaska DNR records still reflect that Alaskan Crude Corporation's (ACC) State ADL 389922 Lease is still in Active status as of May 23, 2009, ACC is requesting a response to ACC's drilling application submitted to the AOGCC April 22, 2009 to replace the Drilling Permit #205 -038 -0 to rework ADL 389922 Moose Pt. # 1 well retroactively announced terminated on the AOGCC's "Outstanding Drilling Permits" website ( http : / /www.state.ak.us /admin /ogc/ drilling /OutPermits /2009 /OPermits09 0228.pdf) by the AOGCC February 5, 2009. Subject: The AOGCC posted a public Webpage (http: / /www. state. ak. us /admin /ogc/ drilling /OutPermits /2009 /OPermits09 0228.pdf) notice titled "Outstanding Drilling Permits: 1/1/2007 thru 2/28/2009" on February 05, 2009 retroactively terminating Alaskan Crude Corporation's Drilling Permit # 205 -038 -0 two years earlier, March 24, 2007. The new replacement ADL 389922's Moose Pt. # 1 well drilling application was properly and duly submitted to the AOGCC for approval, April 22, 2009; but has not yet been approved or disapproved by the AOGCC. The new replacement Moose Pt. # 1 well drilling application has not been approved or disapproved to this date, May 23, 2009. The original Moose Pt. # 1 well Drilling Permit #205 -038 -0 was submitted on or about March 04, 2005 and subsequently approved about 20 days after the Moose Pt. # 1 well drilling application's submittal, March 24, 2005. The (April 22, 2009) replacement Moose Pt. # 1 well drilling permit is a duplicate of the original (March 24, 2005) Moose Pt. # 1 well drilling permit # 205 - 038 -0. Dear Commissioners: Alaskan Crude Corporation's (ACC) new replacement Moose Pt. # 1 well drilling application to rework ADL 389922's Moose Pt. # 1 well has been pending before the Alaskan Oil and Gas Conservation Commission ( AOGCC) for approval for more than 31 days since it was first submitted to the AOGCC, April 22, 2009, for approval. The new replacement drilling application to rework ADL 389922's Moose Pt. # 1 well is almost a mirror image of the 1 of 3 ALASKAN CRUPORPORATION 1 4614 BOHILL ST. SAN ANIO TX. 78217 I , original drilling application for Drilling Permit #205 -038 -0 which was approved March 24, 2005, 20 days after drilling permit # 205 - 038 -0's original submittal date. As of 05/11/2009 (May 11, 2009) the Department of Natural Resources (DNR) "Lease Status" Website (http: / /www.dog.dnr. state. ak. us /oil/ products / publications /leaseactivity /pdf /lease activit y quadrant.pdf) shows that ADL 389922 is still an Active lease in Active status. However, the DNR "Lease Status" Website shows an expiration date of April 27, 2009 for ADL 389922 yet being maintained in Active status thru May 11, 2009 as shown circled below in Image 1. ADL 389922 lease is a current lease as attested on the DNR's "Lease Status" Webpage, May 11, 2009. On April 22, 2009, ACC petitioned the AOGCC to approve or disapprove the replacement ADL 389922 Moose Pt. # 1 well drilling application submitted, April 22, 2009. On April 22, 2009 Alaskan Crude Corporation submitted, by certified mail, a replacement drilling permit for AOGCC's approval to rework ADL 389922's Moose Pt. # 1 well. On April 22, 2009, Alaskan Crude Corporation submitted a letter appealing the March 24, 2007 retroactive termination of ACC's Drilling Permit # 205 -038 -0 posted on the AOGCC's "Outstanding Drilling Permits" Website (http: / /www. state. ak. us /admin /ogc /drilling/OutPermits /2009 /OPermits090228.pdf). Image 1. DNR Lease Status Website (http: / /www.dog.dnr. state. ak. us /oil/ products / publications /leaseactivity /pdf /lease activity quadrant.pdf) Showing ADL 389922 Shown In Active Status Circled in Red Lease Status .Is . 1 c;n .00a .drrmtger!br TR.S' ADL MTh Sale Tract Acres Sidi Sale Effective Expiration Status Und Indefinite Associated Notification No. No. Acre Date Date Date Term Fie Lessee Indicator TERM PETROLEUMALASKAC 384335 SO09N009W 78 3200 1227 10131/199 01/0111995 12/3112001 TERMINATED DEFINITE UNION TEXAS TERM PETROLEUM ALASKA C t er .4f' 009W Cl2001 4800 501 05/091200 01/2712009 04/2712009 ACTIVE DEFINITE sem,. TERM 390369 0009N009W Cl2003 4792 5 05107 /200 10/0112003 09130/2010 ACTIVE DEFINITE BARR TERM 25683 9009N010E 13 2533 153 12/081196 03/0111965 0212811975 TERMINATED DEFINITE SALE 13 TERM 18724 S009N010'W 9 5099 50.9904 071111196 09/0111962 08/3111967 CLOSED DEFINITE SALE 9 TERM 18767 S009N010W 9 5106 115 07/111196 10/0111962 09130/1967 RELINQUISHED DEFINITE SALE 9 TERM Lease. etirn , arranged br)1TR.S Page 105 of 45 2 of 3 • ALASKAN CRIJ ORPORATION 1 4614 BOHILL ST. I SAN AIL, TX. 78217 To this date, thirty -one (31) days later (May 23, 2009), the AOGCC has not acted to approve or disapprove ACC's replacement Moose Pt. # 1 well Drilling Permit #205 -038 -0 even though ADL 389922 is still in active status as attested to DNR's "Least Status" Website (http: / /www.dog.dnr. state. ak. us /oil/ products / publications /leaseactivity /pdf /lease activit y quadrant.pdf). It should be carefully noted that the original Moose Pt. # 1 well Drilling Permit 205 -038 -0 took only 20 days after its original submittal to be approved, March 24, 2005. Please advise ACC about AOGCC's decision regarding the status of ACC's replacement Moose Pt. #1 well drilling permit submitted April 22, 2009. Kind Regards, Daniel A. Baca, Land Manager Alaskan Crude Corporation 4614 Bohill St. San Antonio, TX 78217 CC. Alaska Oil and Gas Conservation Commission, Daniel T. Seamount, Jr. Alaska Oil and Gas Conservation Commission, Tom Maunder Department of Natural Resources, Commissioner, Thomas Irwin Department of Natural Resources, Director, Kevin Banks Department of Natural Resources, Specialist, Matt Rader 3 of 3 *$ Apr 22 09 07:50p Intrepid Produ ' n 6510777 p.1 HP Oft 8310 Lag for Personal Printer/Fax/Copier/Scanner Intrepid Production 2106510177 Apr 22 2009 5:06PM Last Tans:Um Date Time Type Station ID Duration Pages Result Apr 22 4:55PM Fax Sent 19072767542 10:57 21 OK e ` , 1 C1t‘.(1 C-C t ∎ ca 01 4.. 1 I N ot-1. fa 001 C e- 4 i e . 1)10,71 Eh' - 7' , 0 - 70./q7 t/I S HP Officejet 6310 • Log for • Personal Printer /Fax/Copier /Scanner Intrepid Production 2106510777 Apr 22 2009 5:06PM Last Transaction Date Time Type Station ID Duration Pages Result Apr 22 4:55PM Fax Sent 19072767542 10:57 21 OK RECEIVED APR 2 3 2005 Alaska Oil & Gas Cons. Commission, Anchorage M 0 p r ey -Lk, ,z,,,,,.... zl!. ��� RECEIVED s - . : 1 ' ; "`.;r APR 2 2 2009 ALASKAN CRUDE CORPORATION Alaska Oil & Gas Cons. Commission Anchorage 461.4 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651 -0777 Kenai, Alaska (907) 335 -1829 Mobile (907) 394 -1829 FAX TRANSMITTAL SHEET DATE: April 22, 2009 TO: AOGCC ATTENTION: Daniel T. Seamount, Jr. FAX NUMBER: (907) 276 -7542 NUMBER OF PAGES: 21 including cover page Subject: Moose Pt. # 1 Well Drilling Permit 205 -038 -0 Wrongful Termination - HP Off et 6310 O Log for S Persona! Printer/Fax/Copier/Scanner Intrepid Production 2106510777 Apr 22 2009 5:21PM Last Transaction Date Time Type Station ID Duration Pages Result Apr 22 5:08PM Fax Sent 19072698918 12:52 21 OK , Apr 22 09 04:56p Intrepid Producti 24510777 p. RFC E. ''. April 22, 2009 APR 2 2 2009 To: Alaska Oil and Gas Conservation Commission Alaska Oil & Gas Cons. Commission 333 W. 7th Avenue Suite 100 AnChoia9e Anchorage, Alaska 99501 - 3539 Attn: Thomas E. Irwin, Kevin Banks, Mr. Daniel T. Seamount, Jr. Faxed April 22, 2009 to Daniel T. Seamount, Jr at (907) 276 -7542 Faxed April 22, 2009 to Commissioner, Thomas E. Irwin at (907) 269 -8918 Faxed April 22, 2009 to DNR -DOG Director, Kevin Banks at (907) 269 -8938 APPEAL OF AOGCC'S FEBRUARY 5.2009 WEBSITE DECISION TO RETROACTIVELY TERMINATE MOOSE PT. #1 WELL'S DRILLING PERMIT 2Q5 -038 -0 MARCH 24, 2007 This letter is appealing the Alaska Oil and Gas Conservation Commission's (AOGCC) actions declaring on February 5, 2009 that Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had terminated two years earlier on March. 24, 2007. The AOGCC declared Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had ceased to exist after March 24, 2007. The AOGCC only published an AOGCC website (http: / /www. state .ak.us /adminJogc /homeogc.shtml) February 5, 2009 for the very first and only time declaring that Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had expired March 24, 2007. The drilling operations milling out required to mill the 4" steel pipe concreted into Moose Pt. #1 Well's 7" casing automatically extended the Drilling Permit # 205- 038 -0. Therefore, Drilling Permit # 205 -038 -0 automatically extended beyond March 24, 2007. Please note: To rework Moose Pt. # Well with a 4" steel pipe concreted into the 7" casing may not seem like much of a "drilling operation" to the inexperienced; however, to the experienced driller, reentering and reworking Moose Pt. #1 Well's casing with a concreted in 4" steel pipe sticking out the 7" casing is in fact a major "drilling operation? Often times the original operator who originally drilled, then plugged and abandoned the well deliberately leaves iron pipe and other metal debris (chain, etc.) in the casing to prevent the well from ever being reentered or reworked. That original operator generally is not interested in leaving his well in a condition where a new operator can come in and easily have a cheap well. 20 AAC 05 states the regulations required to obtain and maintain a drilling permit. 20 AAC 05.005(g) states a drilling permit will expire if "drilling operations" are not commenced 24 1 of 20 .Apr 22 09 04:56p Intrepid Produc i 2510777 p.3 • months after the approval of the drilling permit. 20 AAC 25.990(23) defines "drilling operations" as having commenced when drilling below the conductor pipe. In reworking an existing well that has been drilled, cased from the surface down the TD depth and plugged and abandoned a conductor pipe does not exist inside the casing. The definition 20 AAC 25.990(23) of "drilling operations" has no specific mechanism to trip "drilling operations" when reworking the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned. However, drilling was underway at the Moose Pt. #1 Well prior to expiration of the drilling permit. The definition "drilling operations" as defined in AAC 25.990(23) needs to be revised and re- promulgated to clearly trip 20 AAC 25.990(23) "drilling operations" into affect when reentering and reworking a well that has already been drilled, properly cased, plugged and abandoned and has no conductor pipe existing inside the casing. In the mean time, the AOGCC needs to exercise its agency discretion and acknowledge that drilling by ACC did commence prior to expiration of the drilling permit. AOGCC DID NOT NOTIFY JAMES W. WHITE IN WRITING ON OR BEFORE FEBRARY 5, 2009 PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205 -038 -0 MARCH 24, 2007 SOME TWO YEARS EARLIER 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." AOGCC did not send "a written notification by personal service or by certified mail, return receipt requested telling ACC Drilling Permit # 205 - 038 - 0 was in non compliance of 20 AAC 25.005(g). AOGCC chose not to tell ACC that Drilling Permit # 205 -038 -0 may have terminated after the AOGCC had declared February 5, 2009 that the drilling permit retroactively expired two years earlier. ACC could find no evidence that this information had been posted elsewhere previous to 2009. It clearly was not sent "certified mail" to ACC. In addition, there is no evidence that AOGCC considered the operations at Moose Pt. #1 Well not to be drilling operations. In fact the record favors the premise that the AOGCC did consider the operations to be drilling operations. ACC has been diligently conducting operations at Mosse Pt. # 1 well for the past two years and has kept the AOGCC informed of these operations. ACC kept the AOGCC informed of ACC's progress and lack of markets for Moose Pt. #1 Well's gas. Had AOGCC informed ACC that AOGCC is terminating Drilling Permit # 205 - 038 -0, March 24, 2007 while ADL 389922 still had two years remaining in its primary term, ACC would 2 of 20 -Apr 22 09 04:56p Intrepid Produc 2,510777 p.4 4 �rrf have had ample time to file and get a new drilling permit in view of the fact that it only took less than twenty (20) days to get the original drilling permit filed and approved in 2005. Image 1: AOGCC Website showing the "NEW" link, "Outstanding Drilling Permits" circled in red. Fee s' i ; at as p:. {, ordrer A Staff 1 Calendar I Contact Lis 1 AOGCC find ,.:'„ ' .: ttA i I � y AR � ,ter V i:�:.,v' 4 !' A •:: rv. x" l Y :�' � H):v .. .� ` < r e � Mission: lieaidline5 i * t. Quick Links r'r' tined :.eg r13a IT ell Iritoi.,.alion Daia:.3ses Cid :ticGas Lin , :s .... _ _..... _ ...;it chase .,, :te,rina Hearin & ;rje'3'In g Csieri in', ..:: -1';I ^U.1mi: :Si 8t{iti!l E, D''. „i ri G'Gatij ..nl & L I cs .. . (:}}g' Interest �- �' ,1'i "3SGn, ta;; C3 rtl s'lol -, ;,;,..,.:..L;„ _........._._.,_ —. 1 NH4!! Cc -..rnission Contacts for t1t, I I.I l " t !''.IL iUaI , ` ^''e:;C;,t_ �•., . -, a :. _. w . �r. _as Pods For —s lam. sU "I it . . ^,,ti :cfaC: ..,: info -1aaa, ..:a :acte release Dates .& Exienslc:,. _ _ r Mine :r le (''i rynt . _nice. Regulation_ .irlcilcnS & .rCc•. "_� y ',:' _..:8ien,:ar5 • ' -r Y I Bureau c; Land Mg:-.: 11 o L:rii _ CA Field Ter: ::•,s •_Icin Ou! :5 ?•Ip?c ;11.,u:. , G•uidenc- '_ „:.i1f .. i .. .sn:., Gas Position Pa,'.•N S !: .E I oss:I Erier: ,des.crts Studies The AOGCC Website (http : / /www.state.ak.us /admin /ogc/ drilling /OutPermits /2009 /OPermits090228.pdf ) (Image2), "Outstanding Drilling Permits," is shown dated February 05, 2009 and circled in red at the bottom of the page. This publication advertises that ACC's Drilling Permit # 205- 038-0 had arbitrarily been terminated two years earlier, March 24, 2007 by the AOGCC. AOGCC made no attempt to send ACC, pursuant to 20 AAC 25.535, "a written notification by personal service or by certified mail, return receipt requested" declaring February 05, 2009 the AOGCC retroactively terminated ACC's Drilling Permit # 205 - 038 -0. This Website, "Outstanding Drilling Permits," did not provide or detail White of his rights to appeal the Website notice that Drilling Permit # 205 -038 -0 had been retroactively terminated two years earlier with this Website image (image 2). 3 of 20 Apr 22 09 04:57p Intrepid Produce 2510777 p.5 This action by the AOGCC occurred while ACC had operations actively underway at the welisite. Image 2: Screen -print of "Outstanding Permits, Expiration Dates 1/1/2007 Thru 2/28/2008" PDF Website showing date Thursday, February Z 2009 circled in red. _2.222..._ ,........ ..... . .._._.__._..... utstanding IariIling Expiration Dates 1/1/2007 thru 2/28/2009 -- _— _ —__.. __ — °- - - - --- .—. Date Patent -- Operator Well Name .- iMlmnber Peinit Apinov L - ,3LASIti4V C U. )E CO MOOSE PT T \1T ? Re -et:ry 50 -133- '031' -(h 1 205.51.1 --0 z 4 2005 3 24 200 ". STOR M CAT E1 ERGY ...r tTRTrtY:'�PU: {�C'cR__ - _ . act7 1 .. _ — _ .—.—. _ - : 009-201.731:00= irm i =S 2516 1.5'_040 BP E \PLOP \TION (A PRL - DIOE BAY UNIT K -10C 50 -02P- 21 -03.00 206.015 -) 1 31 2006 1 31 204 C'ONCX'OPHILLIPS AL KL'P ARUK RIV L11T 2D -05L1 5 0 -0229- 2115 - - 60.00 2206- 174-0 12 20 2006 12 20 200S C ONOCOPHILLIPS AL. KUPARUK RSV UNIT 213-05L1-01 50 -0229- 2115' -61 -00 2;16- 1+5 -0 1 10 2007 1 10 2099 BP EXPLORATION (A PRUDHOE BAY UNIT 0 7 .+)SB 5 0- 029.202 -0 -00 20_019.0 2 14 2007 2 14 2005. BP EXPLORATION (A PRL - DHOE BAY UN ORIN 1 -201 ? 50_0,:P- 230; 4.01 -(K, 207- 024 -9 : 21 2O;)' 2 21 2 005 , Thtcadty. Febnmty05. 2009 _ Page 1 of 1 2222 _.. ��. .. -- DtiQis Pemi¢s.7C�lai UtvscrilingPeniths. Select Mia:laiMax Dates MAIN ISSUES Below are the main issues concerning Drilling Permit # 205 - 038 -0: 1. 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Clearly, the AOGCC declared that ACC had not complied with the "drilling operation" regulations pursuant to 20 AAC 25.005(g) required to automatically extend the drilling permit beyond two years. Clearly, it is very important that ACC needs know if ACC may be in non - compliance. Clearly, it is very important that ACC know if ACC's drilling permit may have been terminated. The AOGCC's failure to inform ACC of any possible non - compliance or the possible termination of ACC's Drilling Permit # 205 -038 -0 was an arbitrary and capricious decision and a violation of 20 AAC 25.535 and their own mandated discretion of the law: a. 20 AAC 25.535 reads: (a) If the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to 4 of 20 Apr 22 09 04:57p Intrepid Produ. 2.510777 p.6 comply with a provision of AS 31.05, this chapter, or a commission order, permit, or other approval, the commission will, in its discretion, take enforcement action under this section against the person. (b)If the commission proposes to take enforcement action under this section against a person, the commission will send the persgn a written notification by personal service or by certified mail, return receipt requested. The commission's written notification to the person will (1) state the nature of the apparent violation or noncompliance; (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (3) state the action that the commission proposes to take under (e) of this section; and (4) inform the person of the person's rights and liabilities under (c) - (e) of this section. 2. The AOGCC made no effort in phone conversations or written correspondence between 2007 and 2009 to inform ACC that Drilling Permit # 205 -038 -0 may have terminated on March 24, 2007. Correspondence between ACC and AOGCC includes volumes of emails, certified letters, and faxes concerning ADL 389922 and Moose Pt. #1 Well (see Exhibit I). The AOGCC sat on this arbitrary and capricious decision for two years, not advising ACC in any way, shape or form that Drilling Permit # 205- 038-0 may have terminated in 2007. 3. James W. White spent his own risk capitol, not investor money, to develop the Moose Pt. #1 Well. Believing Drilling Permit # 205 -038 -0 was actively in place, ACC continued to spend $1,000,000 (1 million dollars) developing Moose Pt. #1 Well and the lease property over the 2007 -2009 time period. Believing Drilling Permit # 205- 038-0 was actively in place, ACC kept ACC's drilling rig at the Moose Pt. #1 Well through 2009 paying $52,000 in ADL Lease 389922 rental fees alone. Believing Drilling Permit # 205 -038 -0 was in place ACC spent hundreds -of- thousands of dollars at Moose Pt. #1 WeII in the reentering process of reworking Moose Pt. #1 Well. 4. Moose Pt. #1 Well was not properly Plugged and abandoned when ACC acquired ADL 389922 and Drilling Permit # 205 -038 -0 was approved. Reworking operations were continuing when ACC began the process of safely milling out the 4" steel abandonment marker pipe concreted into the 13 -3/8 3K wellhead. No agency regulation exists addressing the procedures for reentering an improperly plugged and abandoned well. Therefore, actual "drilling operations" had commenced when ACC cut the top of the 4" concreted abandonment marker pipe from the 13 -3/8 3K 5 of 20 Apr 2 09 04: Intrepid Producti 2106510777 p 7 wellhead an began the process des igning spe cial milling tools for milling the r e mai nder 4" con creted abandon mar ker pipe out of t 13 -3/8 3K wellhead, and h i r ing ma chine s hops to f the m i l ling tools. 5. Existing AOGCC records did no indica that a 4" stee abandonm marker pipe was concr eted int the 13 -3 we llhead. Image 3: Pho show Moos P t. #1 Well w ith 4" steel abandon went marker papa concreted unto t he 13 -3/8" 3K w ellhea d , taken summ of 2406. �i�o"ro Show Y �,�,.,,e,,.r,, le.,- Image 3. Q i? . G *�+.cr kt, J� ". al 'O 13 - 3 18 » 31 \.n:fl X 11 e �� � . _ � Y I) fin' 3 ! ( r're N 1 '. �.. ∎∎ @ W f �,J. y J( r - j } s iy.; h 5i +mr� -»^..✓ s �� ��! R ��.F PJ�'.g'sS' �i ✓��. s'� / r 3/f• , T y 1Vl� � if r 4 f J. ' l ( f fl l , f 1 ., t r� I r , � r 14 1 ( ��n � Jt S : ,',,,t* J t';'. � K ? ��u s � � ' � � „s i,M , � � aJ''��ro ' z�k�a��� u jtpP �P li -hol"o �"aKl.rt „,„f- `� iL... � c f L � 1 M ° � r „ - :'::::,*".'.'L„'''''''1";',41,,,''''' h,J J ' J: trr �'h.z',T�� r / 1 .5” `t`A'nr sF d di r a< y , r h y r f t I rl sitJ ( t (� }� n ( . z 6 of 20 -Apr 22 09 04:59p Intrepid Product 2510777 p.8 Image 4: Photo showing Moose Pt. #1 Wellhead with portion of 4" concreted abandonment marker pipe still sticking out of the 13 -3/8" 3K wellhead, taken March 19, 2007. image 4. 191 DRILLING OPERATIONS COMKENCED The regulation 20 AAC 25.005(g) refers to the actual drilling of a new grass -roots well. Reentering and reworking Moose Pt. #1 Well as permitted by Drilling Permit # 205 -038 -0 is in no way the same as drilling a new well from scratch. Reworking and reentering Moose Pt. #1 Well required first step was to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 13 -3/8 3K wellhead. This is a reworking operation of a well already drilled. It should be further noted, concrete (having a gravel mixture) is much more difficult to mill out than neat cement (pure cement) normally used in plugging and abandonment operations. 20 AAC 25.005(g), reads, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Drilling operations as defined by 20 AAC 25.990(23) reads, "drilling operations" means the penetration of ground below the setting depth of structuraj or qgnductor casing, using a drilling rig capable of performing the permitted well work, and for purposes other than setting structural or conductor casing; "drilling operations" includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface." 20 AAC 25.990(23) does not apply to Moose Pt. #1 Well because the 333' twenty inch "structural conductor casing" does not exist inside the 7" casing. The 20" conductor pipe that is set 333' below the surface is set outside of the 7" casing extends from the surface to the 9,032TD (total depth of the 7" casing). The well has already been drilled and properly cased with 7" casing from the ground surface to its total depth 9032' (9,032 feet). 7 of 20 Apr 22 09 05:OOp Intrepid Produc' 24510777 p.9 • 1.• 20 AAC 25.990(23) defines no mechanism to trip the Moose Pt. #1 Well into an automatic extension because there is no conductor pipe inside the 7" casing to drill out from. The 7" casing simply exists from the surface to the TD depth 9032'. Agency discretion should be exercised and a ruling issued that drilling did commence prior to expiration of the drilling permit. The oil and gas regulations do not have a drilling permit specially promulgated for reworking existing plugged and abandoned wells. The definition 20 AAC 25.990(23) of "drilling operations" does not fit the generic reworking operations to rework the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned having no conductor pipe inside the 7" casing. All of the "drilling operations" described in 20 AAC 25.990(23) does not define the reworking and reentering operations of the Moose Pt. # 1 Well. The tripping mechanism of 20 AAC 25.990(23) requires that "drilling operations" commence below the conductor pipe to trip Moose Pt. #1 Well's Drifting Permit # 205 -038- 0 into place to automatically extend the permit. The Moose Pt. # WeIl has no conductor pipe inside of it to drill out below needed to trip 20 AAC 25.990(23) definition of "drilling operations" into place to automatically extend Moose Pt. #1 Well's Drilling Permit # 205- 038-0. ACC should not be held hostage or damaged because of a gap in the regulations. The necessity to mill out up to 25' or 30' (25 or 30 feet), or more of 4" steel abandonment marker pipe concreted in the 7" casing is an extraordinary situation and is NEVER encountered when a well is properly plugged and abandoned (please note the 2" 3K valve shown in Image 3, still attached to the bottom half of the original 13 -3/8" 3K wellhead containing the slips supporting the 7" casing at the surface). 1. Existing AOGCC records DID NOT MENTION the depth of that surface plug, nor the length of the 4" steel abandonment marker pipe concreted in to Moose Pt. #1 Well in the original plugging and abandonment records filed with AOGCC. 2. The above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed the summer of 2006 leaving still a portion of the 4" steel abandonment marker pipe sticking above ground. (cut off portion of 4" pipe is shown in Image 4) 8 of 20 Apr 22 09 05:OOp Intrepid Produce 26510777 p.10 3. That portion of the 4" steel abandonment marker pipe concreted in to the 7" casing forced ACC to specially design milling tools and hire machine shops to fabricate the milling tools to safely attempt to mill out that portion of the 4" steel abandonment marker pipe concreted down into the 7" casing. 4. ACC did not know if that portion of the 4" concreted abandonment marker pipe went 5' or 30' down into the 7" casing. ACC had to plan for the worst and plan the milling operation for 30'. 5. These specially designed milling tools were not delivered to ACC until early summer of 2007. These unique milling tools that were required were not shelf items and had to be specially designed by ACC to remove the 4" concreted abandonment marker pipe. It took several months for the machine shops to fabricate and deliver the milling tools to ACC. Machine shops during that period of time were extremely busy. 6. Upon delivery of the milling tools, early summer 2007, ACC commenced the milling operation to mill out the then - unknown length of 4" steel abandonment marker pipe that had been concreted into the 7" casing at the surface (see Image 4). Any experienced driller will acknowledge that milling steel pipe concreted in a 7" casing is a very difficult and sensitive operation. It is much more difficult to drill a pipe at the surface than it is to mill out 4" pipe cemented thousands of feet deeper in a 7" casing, because at a deeper level you have the 7" drilling casing's ID (inside diameter) to stabilize mill rotation and drill pipe weight providing measured weight on the milling tool. At the surface your milling tool wants to jiggle and bounce around threatening to damage the surface of the wellhead and the 7" casing, thus ruining all hope of a successful reentry. Milling tools ware very rapidly and have to be replaced or rebuilt often when milling out iron cemented in a 7" casing. 7. Great drilling experience and skill is required to protect the wellhead and 7" casing when milling steel out of a 7" casing at its ground surface. You must not damage the gasket and ceiling surfaces of the 13' -3/8 31( wellhead when trying to mill out the 4" steel abandonment marker pipe concreted into the 7" casing. Firstly, the Moose Pt. #1 Well had not been properly P&A'd in accord to state standards by the previous operator when ACC obtained Drilling Permit # 205 - 038 -0. Normally, the well casing is cut off 4' (4 feet) below the ground surface. A metal plate should be welded to the top of the casing thereby sealing the casing. A 4" steel abandonment marker pipe is then welded atop of the metal plate that is welded to the top of the cut off 7" casing. This 4" well marker pipe is then welded to the plate that is welded to the 7" casing 4'+ below the ground surface that should be long enough to stick above the surface level to a height of 6 feet. Dirt is then filled in around the marker pipe welded to the metal plate welded to the cut -off 7" casing 4 -5 feet below the ground to the surface level. 9 of 20 Apr 22 09 05:01p Intrepid Product *510777 p.11 In this instance, tie Moose Pt. #1 Well's casing was never cut off below ground level as required. The 4" (4 inch) steel abandonment marker pipe was improperly concreted into the 13 -3/8" 3K 7" casing wellhead. The 4" steel abandonment marker pipe was set and concreted into the 7" (7 inch) casing at the surface in the 7" casing; therefore, "drilling operations," as defined by ACC 25.990 does not apply to the Moose Pt. #1 Well because Moose Pt. #1 Well had already been drilled in 1978. "Drilling operations" speak only to drilling a new grass- roots well. ACC did commence drilling operations in the required time frame. • REWORKING MOOSE PT. #1 WELL SPECIFIC OPERATIONS Reworking Moose Pt. #1 Well required an extraordinary milling operations: 1. cutting of the top of the 4" steel abandonment marker pipe to assess the specific needs of a specially designed milling tool 2. designing the milling tools 3. having machine shops fabricate the milling tools 4. receiving delivery of the milling tool from the machine shops y g s P 5. removing, milling, and boring out the 4" concreted steel abandonment marker pipe These operations constitute the reworking, reentering, and "drilling operations" for Moose Pt. #1 Well Drilling Permit # 205 - 038 -0. The first step necessary to reenter Moose Pt. #1 Well was to first cut off the top of the 4" steel abandonment marker pipe to examine and determine the proper design for milling tools to milling out the unknown length of the pipe concreted into the 7" casing. Please note: 4" drill pipe generally comes in 30 foot lengths. Existing AOGCC records did not record the length of the marker pipe wrongfully concreted in the top of the 7" casing. The length of the 4" steel abandonment marker pipe was unknown whether it was 5' long, or 30' long. ACC believes that the unique operation of first being required to design and get delivery of the milling tools to commence milling and drilling that portion of the 4" steel abandonment marker pipe that had been concreted into the surface plug constituted the actual first steps in complying with Drilling Permit # 205 - 038 -0. As stated above, these milling tools were not the type of milling tools that you can buy off the shelf from others. 10 of 20 Apr 22 09 05:01p Intrepid Produc ' n 06510777 p.12 This 4" concrete abandonment marker pipe event was a total surprise. ACC did not anticipate this concreted in 4" steel abandonment marker pipe removal program when ACC bought ADL 389922 and filed ACC's Drilling Permit # 205 -038 -0 to reenter the Moose Pt. #1 Well. This 4" steel abandonment marker pipe's existence was not shown in existing AOGCC records at that time. Existing AOGCC records did not mention a 4" steel abandonment marker pipe concreted into the 13 -3/8 wellhead. Existing AOGCC records only indicated that the well surface plug was set at 58' (feet) below the surface of the ground. Existing AOGCC records indicated that the casing was filled with diesel fluid from the top of the 58' surface plug to the surface for freeze protection (see Drilling Permit # 205 -038 -0 illustrations). Existing AOGCC records did not reflect the depth of the 4" steel abandonment marker pipe concreted from the surface that had been placed in the 7" casing. In the beginning, ACC was not sure if ACC could safely mill out the 4" concreted steel abandonment marker pipe without damaging the Moose Pt. #1 Well's 7" casing to a point where the 7" casing, as then currently permitted, could not be safely reentered in the process. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY James W. White had to spend hundreds -of- thousands of dollars during that period of time, 2005 -the end of the 2007, to perform site work, drill a water well, design and have machine shops fabricate and build expensive and uniquely special milling tools according to ACC's own and unique specifications that are not "shelf- items" in order to safely and accurately mill out the 4" concreted abandonment marker pipe from the 7" casing without damaging the 7" casing beyond any hope of reentry. ACC performed these drilling operations and incurred these expenses because ACC believed that Drilling Permit # 205 -038 -0 was still active and valid beyond December 31, 2008. Having met the requirements, Drilling Permit # 205 -038 -0 should stay in effect. Nobody ever indicated that Drilling Permit # 205 -038 -0 was not automatically extended beyond December 31, 2008, until February 2, 2009. Then the drilling permit should stay in effect. Please note: It makes no sense to plan the reentering of a well if no drilling permit is in place. Not being notified otherwise, ACC believed that Drilling Permit # 205 -038 -0 was still active and in effect while performing the drill site work described in detail above. ii of 20 Apr 22 09 05:02p Intrepid Prod 'on 46510777 p.13 Had AOGCC informed ACC that Drilling Permit # 205 -038 -0 may have been in violation or failed to comply with any AOGCC or DNR regulation and mandates, ACC would have taken the proper action to correct and address any such pressing issues. Because of Alaska's unique /short winter drilling seasons, one can only mobilize a drilling rig in or out of the property between the months of January, February -mid March. ACC left their drilling rig at Moose Pt. #1 Well in anticipation that Drilling Permit # 205 -038 -0 was still in effect, and that ACC might be able to secure a suitable term Gas Sale Contract with Agrium Fertilizer Plant. In 2007 there was considerable publicity concerning the Phillips- Marathon efforts to get the State of Alaska to agree to allow the export and sale of Alaska's gas to Japan. Governor Patin well publicized that if this event were to take place, it would require that Phillips - Marathon purchase gas from an independent oil and gas producer such as Alaskan Crude Corporation (ACC). Everybody in the Alaska's oil industry, including the Department of Natural Resources, Division of Oil and Gas believed that ACC had a drilling permit in place for Moose Pt. #1 Well from early 2005 forward through December 31, 2008. The AOGCC clearly did not advise the DNR's Division of Oil and Gas that Drilling Permit # 205 -038 -0 was not in place prior to January 27, 2009. On January 27, 2009 the DNR Commissioner advised White that he had reinstated ADL 389922 because the Commissioner had found that drilling activities were ongoing automatically requiring the primary term of ADL 389922 to automatically extend beyond its primary term. Nobody with whom ACC conferred such as the DNR or AOGCC ever advised ACC that they believed that the drilling permit was in violation and may have terminated on March 24, 2007. If AOGCC and DNR believed that the ACC Drilling Permit # 205 -038 -0 was terminated but failed to notify ACC in writing that Drilling Permit # 205 -038 -0 was in violation or ACC failed to comply with any regulations then the permit cannot be expired. ACC Drilling Permit # 205 -038 -0 was approved on March 24, 2005 and unbeknownst to ACC "terminated" on March 24, 2007. ACC was not aware that Drilling Permit # 205 -038 -0 had terminated according to the AOGCC because the AOGCC failed to notify ACC pursuant to 20 AAC 25.535. Until April 14, 2009, two whole years later after the termination of Drilling Permit # 205- 038-0, when ACC witnessed the Website ( "Outstanding Drilling Permits "), ACC believed that ACC was in full compliance with all AOGCC regulations pursuant to 20 AAC 25.005, 12of20 Apr 22 09 05:02p Intrepid Produc ion 06510777 p.14 : x Permit to Drill, for maintaining and keeping current Drilling Permit # 205 -038 -0 in effective and operating status. TWQ YEARS OF COMMUNICATION -YET NO MENTION OF TERMINATED DRILLING PERMIT Neither ACC . James W. White. nor any party associated with Alaskan Crude Corporation (ACC) EVER RECEIVED WRITTEN NOTICE pursuant to 20 AAC 25.535 that Drilling Permit # 205 -038 -0 was in violation, failed to comply with any provision, or terminated. Examples or correspondence between ACC and AOGCC about Moose Pt. #1 Well: 1. April 3, 2008 ACC faxed a letter to AOGCC titled, "Amerex well reentry April 3, 2008 Progress Report," detailing the work being done at Moose Pt. #1 Well.. (see Exhibit II) 2. April 4, 2008 ACC and AOGCC corresponded numerous times about Moose Pt. #1 Well (see Exhibit III) - Note Drilling Permit 205 -038 -0 is references in the subject line all of these correspondences 3. On January 27, 2009, AOGCC sent a Certified Letter to ACC stating, "In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit #1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or complete." 4. On. February 27, 2009 ACC responded to AOGCC in full with supporting pictures and evidence stating, "ACC drilled, milled and bored out the 4in. pip that been wrongfully concreted in the Moose Pt #1 Well's Tin. casing the summer of 2007... ". AOGCC's emails AOGCC order transcriptions to the oil industry. From before 2007 to 2009, AOGCC has emailed countless AOGCC orders. The AOGCC's declaration that Drilling Permit # 205 -038 -0 terminated in 2007 would have been an AOGCC order. ACC never received, "A written notification by personal service or by certified mail, return receipt requested," from AOGCC mentioning any order terminating Drilling Permit # 205 -038 -0 in 2007. CONCLUSIONS/CONSIDERAT ONS In conclusion ACC feels that: (1) AOGCC was mandated by 20 AAC 25.535 to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, failed to comply with any regulations, or may be terminated; (2) AOGCC failed to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, or failed to comply with any regulations; 13 of 20 Apr 22 09 05:03p Intrepid Produ ion 46510777 p.15 . A'Y (3) in 2007, had AOGCC informed ACC that Drilling Permit # 205 -038 -0 was to be terminated, ACC would have had ample time get a new drilling permit for Moose Pt #1 Well because the primary term of ADL 389922 still had 21 months to its primary term. The original Drilling Permit # 205 -038 -0 took 20 days to be approved. A new drilling permit is free; (4) this action by the AOGCC could likely be determined to be an abuse of discretion in implementing the mandates of 20 AAC 25.535 from AOGCC as result of AOGCC's failure to notify ACC of any issues concerning Drilling Permit # 205- 038 -0. ACC asks the AOGCC to please reconsider their actions and reverse the decision terminating Drilling Permit # 205 -038 -0 because: (1) AOGCC, pursuant to 20 AAC 25.535 did not inform ACC in writing to: (a) state the nature of the apparent violation or noncompliance; (b) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (c) state the action that the commission proposes to take under (e) of this section; and (d) inform the person of the person's rights and liabilities under (c) - (e) of this section; (2) The drilling operations conducted at Moose Pt. #1 Well automatically extended the term of the Drilling Permit # 205 - 038 -0. Therefore, Drilling Permit # 205 -038 -0 automatically extended; (3) AOGCC did not mention the extraordinary circumstance �. steel ( c of the 4 ) ry abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt. #1 Well in their original file records; (4) James W. White and ACC met the requirement of Drilling Permit # 20 AAC 25.535 when they first removed the 4" abandonment marker pipe, designed and commissioned the unique milling tools from several machine shops, and milled, bored, out and drilled out the 4" steel abandonment marker pipe wrongfully concreted into the 13 -3/8" wellhead; (5) AOGCC did not consider the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt. #1 Well and that actual drilling operations were required and undertaken to remove this pipe. (6) Drilling operations at Moose Pt #1 Well were under way when ACC transported all of the equipment to rework the well and commence reworking operations of the existing Moose Pt. #1 Well the winter drilling seasons 2005 and 2006 forward. Thank you for your consideration. If AOGCC can not settle this manner, James W. White will take further actions to protect his interests. 14 of 20 Apr 22 09 05:04p Intrepid Prodeon •6510777 p.16 e - Please advice ACC of the how the Commission will address the issues in this letter within 5 days. If ACC does not receive a response within 5 days, ACC will pursue further actions to protect our interests. Please advise if the Commission needs more time. Regards, - janies W White, Alaskan Crude Corporation, President jarnes W. White, Individual 4614 Bohill St San Antonio, TX 78217 Office Ph. 210..651-0777 Cell Ph. 907-394-1829 Email jirnwhitePsabcrr.com CC. Emailed to: Thomas E. Irwin; Kevin Banks; Daniel T. Seamount, Jr.; Matt Rader; Camile Recknagel; Bruce Webb; James A. White; Brian Stibitz; Rick Wagner; Office of Governor Sarah Palin 15 of 20 Apr 22 09 05:04p Intrepid Production 46510777 p.17 CONTENTS 1. AOGCC DID NOT NOTIFY WHITE IN WRITING KIRWAN)" TO 20 M 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205- 038-0 MARCH,24. 2007 SOME TWO YEARS AGO...Pg. 2 2. MA; N ISSUES...Pg. 4 3. k E T-Z.A 0 iN S C rvi ENCE ...Pg. 7 • 4. R.&51N13 MOOSE PT1 E S7:).E C ;1 C 0 P TIONS ...Pg. 10 5. F. Xl`R, 00jNARYOUT F POCKET EXP MS SS -.NQ 7 k*JITEfil"OR fy10 N EY...Pg. 11 6. TINC.i RS ri 0 N G 0 G CO NI N 0 IN S, YET NO ME N31 N Y A 0 G CC 0 F TERMINATED DIRILLDJG PER Wr...Pg. 13 7. .c0 13 16 of 20 Apr 22 09 05:04p Intrepid Production 9 106510777 p.18 • e. Exhibit 1 Example of Correspondences between ACC, DNR and ACC (non- exahstive) 1. March 31, 2009 - an entire 42 page document was faxed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 2. March 30, 2009 - an entire 42 page document (the same was faxed on March 31, 2009) was faxed emailed, and mailed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 3. March 30, 2009 to Thomas E. Irwin, AOGCC: Re: Your Letter Dated "January 27, 2009 ", Decision to Reinstate ADL Lease 389922 4. March 11, 2009 from McKenzie Transpiration - letter describing transport truck breakin g through h ice on ADL 389922 5. February 27, 2009 to AOGCC: Re: January 27, 2009 Letter from Daniel T. Seamount Jr, Chair" detailing work being done on ADL Lease 389922. 6. February 18, 2009 from Commissioner Thomas E. Irwin, AOGCC (received by regular mail February 25, 2009): Re Request for Reconsideration - ADL 389922 Notice of Expiration of Lease - this letters states the Commissioners decision to order a reconsideration of ADL Lease 389922 7. February 11, 2009 From ACC- Formal request for reconsidering of the terms and conditions of ADL 389922 emailed to AOGCC (faxed February 10, 2009 to 907 -269- 8918). 8. January 27, 2009 from AOGCC, Daniel T. Seamount Jr, Chair: Re: Moose Pt. Unit 1 PTD No. 205 -038 - letter states that AOGCC is not aware of any work being done at Moose Pt. unit 1 PTD No. 205 -038. 9. January 27, 2009 from AOGCC, Commissioner Thomas E. Irwin: Re: ADL 389922 Notice of Expiration of Lease date January 2, 2009 - Letter details decision to "reinstate ADL 389922" (this letter was appealed on ... 10. January 26, 2009 to AOGCC Commissioner Irwin: Re: Potential Damaged Caused by Improper Termination of ADL 389922 11. January 22, 2008 to Mr. John Havelock, Division of Oil and Gas: Re: DNR's representatives' visit to the private property where Moose Point #1 Well is located on ground by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska 12. January 20, 2009 to AOGCC (faxed to 907- 269 - 0060): Re: Administrative Appeal— ADL 389922 Notice of Expiration of Lease Term 13. January 15, 2009 to Kevin Banks, Department of Natural Resources (DNR): Re: Wrongful Termination of ADL 389922 14. January 2, 2009 from Jennifer Haines, AOGCC: Lease Expired - ADL 389922. 17 of 20 Apr 22 09 05:05p Intrepid Production 41 06510777 p.19 15. December 31, 2008 from ACC Discussing the later than normal winter freeze up of g P the North Kenai Borough Road. 16. Thursday, December 06, 2007 1:05 PM, Colombie, Jody j (DOA) iody.colombie@ alaska.gov, aio2b -023 CPA Kuparuk. 17. Friday, December 07, 2007 12:34 PM (email), Colombie, Jody J (DOA) iody.colombie(alaska.goy, Public Hearing Notice North Alexander #1 18. Wednesday, December 05, 2007 2:32 PM (email), Colombie, Jody J (DOA) jody.colombie(aiaska.gov, AI04C -015 corrected cancellation 19. Tuesday, December 04, 2007 3:17 PM (email), Colombie, Jody J (DOA) jody.colombie @alaska.gov, Other 52 Regulatory Cost Charge 2008. 20. Monday, December 03, 2007 7:09 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov, Public Meeting Notice. 21. Friday, November 30, 2007 8:20 PM (email), Colombie, Jody J (DOA) jody.colombieCalaska.gov, AIO4C -015 corrected cancellation 22. Wednesday, November 28, 2007 5:42 PM (email), Colombie, Jody J (DOA) jody.colombie(alaska.gov, o 457B.003 and co341e.005 PBU 23. Wednesday, November 28, 2007 8:19 PM (email), Colombie, Jody J (DOA) jody.colombie(alaska.gov, Public Notice, Additional Information and Proposed Regulation 24. Friday, November 30, 2007 2:25 PM (email) Colombie, Jody J (DOA) jody.colombiePalaska,gov, Corrected Admin Approvals and BRIO 2 -005 25. Friday, November 30, 2007 12:47 PM (email), Colombie, Jody J (DOA) jody.co1ombie@alaska.aov. AI04C -015 cancellation and AIO14A -002 PBU Admin Approvals 26. Wednesday, November 28, 2007 8:43 PM (email), Colombie, Jody J (DOA) iody.colombie@alaska.gov, Various PBU Admin Approvals and AJO4E.015 PBU 18of20 Apr 22 09 05:05p Intrepid Prod: n :06510777 p.20 Exhibit II April 2, 2008, Letter to AOGCC, Subject. Amerex well reenty April 3, 2008 Progress Report • ALASKAN CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 782I7 Ph210 -651 -0777 Date : April 3, 2008 To: AOGCC Attention: Mr. Tom Maunder Subject: Amerex well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This Letter is to advise the Commission that a new 7' 5m double BOP and new 7" 5m Annular were delivered to Amerex drill pad about March 10, 2008. One air pump is being replaced on the accumulator. Accumulator nitrogen bottles are also being replaced.. The 4" pipe has been milled out of the 7" casing and well head has been installed and ready to except the installation of the new 7" 5m BOP stack.. i u ACC will recommence drilling reentry operations when the well pad dries out after break up. (mid May hopetully) Regards Jim White 19 of 20 Apr 22 09 05:05p Intrepid Production 2106510777 p.21 • • EXHIBIT III April 4, 2008 ACC email correspondence with AOGCC showing Drilling Permit # 205- 038 in s ubject simammommsmitmea headin Fit art eti Tads Mmje Fklp FI , MegOlenh - 041g,,i thzde, Them i a,Afrfr.coltuirAlviksh kw Frial. =FC4.1191h 1 0: %bin ;,EF.klArciehint:IPt-ial;p:I6a! ------------ :PE .,„ . rom: ;11142 :rtfitcp1.0* Sent FM, =r1 04. ifil5 6;04 To: fieur.Otr, Thom E p0;%:.; In :No : Subject fe: RE; !base Ent ke-Erty :,205-Eia) Eva 5 *. 6:5W 51 a T; im Mia PE #e Tag anoicarkase? — Sem Prk Y.18 MAU Subject PiE f rasa Por4 Pa-Erary :21: ; • km In 'Ate i,ret:rowatl.sarr.cam] Sent FrOor, DO, inn 4.1 To: 1.1mr,T:lc;am E;DOs.: Sul* c Ton No:Lre f I :rave ye,,r mom ma.; acd'es, Ivo :s a :r;. yo is a pot Cre. REFSCs A:1 r,e -ma-mrour..7amm,"7177,77t,Terr.7154-qpir#:7I Ti777'7, 7?4,r7,-IVyr, T; 1177.47÷74117.7""f "r VAZ 2.." '9 A.P 20 of 20 • N V' -`�- /A": I A / ALASKAN CRUDE CORPORATION 4614 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651 -0777 Kenai, Alaska (907) 335 -1829 Mobile (907) 394 -1829 FAX TRANSMITTAL SHEET DATE: April 22, 2009 TO: AOGCC ATTENTION: Thomas E. Irwin FAX NUMBER: (907) 269 -8918 NUMBER OF PAGES: 21 including cover page Subject: Moose Pt. # 1 Well Drilling Permit 205 -038 -0 Wrongful Termination HP Of 6310 • Log for • Personal Printer/Fax/CA:vier/Scorner Intrepid Production 2106510777 Apr 22 2009 5:36PM Last Transaction Date Time Type Station ID Duration Pages Result Apr 22 5:23PM Fax Sent 19072698938 13:24 21 OK II� • • RECEIVE APR G as 2 3 :ti9 k‘ir. Alaska Oil & iaoc► • Anchorage /A 7 Wit. ` pia -�: :74 ALASKAN CRUDE CORPORATION 4614 BOHILL SAN ANTONIO, TEXAS San Antonio, Texas (210) 651 -0777 Kenai, Alaska (907) 335 -1829 Mobile (907) 394 -1829 FAX TRANSMITTAL SHEET DATE: April 22, 2009 TO: DNR -DOG ATTENTION: Kevin Banks FAX NUMBER: (907) 269 -8938 NUMBER OF PAGES: 21 including cover page Subject: Moose Pt. # 1 Well Drilling Permit 205 -038 -0 Wrongful Termination • c4;-) E/1/40)076q77 us April 22, 2009 To: Alaska Oil and Gas Conservation Commission 333 W. 7th Avenue Suite 100 Anchorage, Alaska 99501 -3539 Attn: Thomas E. Irwin, Kevin Banks, Mr. Daniel T. Seamount, Jr. Faxed April 22, 2009 to Daniel T. Seamount, Jr at (907) 276 -7542 Faxed April 22, 2009 to Commissioner, Thomas E. Irwin at (907) 269 -8918 Faxed April 22, 2009 to DNR -DOG Director, Kevin Banks at (907) 269 -8938 APPEAL OF AOGCC'S FEBRUARY 5.2009 WEBSITE DECISION TO RETROACTIVELY TERMINATE MOOSE PT. #1 WELL'S DRILLING PERMIT 205 -038 -0 MARCH 24.2007 This letter is appealing the Alaska Oil and Gas Conservation Commission's (AOGCC) actions declaring on February 5, 2009 that Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had terminated two years earlier on March 24, 2007. The AOGCC declared Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had ceased to exist after March 24, 2007. The AOGCC only published an AOGCC website (http: / /www. state .ak,us /admin /ogc /homeogc.shtml) February 5, 2009 for the very first and only time declaring that Moose Pt. #1 Well's Drilling Permit # 205 -038 -0 had expired March 24, 2007. The drilling operations milling out required to mill the 4" steel pipe concreted into Moose Pt. #1 Well's 7" casing automatically extended the Drilling Permit # 205 - 038 -0. Therefore, Drilling Permit # 205 -038 -0 automatically extended beyond March 24, 2007. Please note: To rework Moose Pt. # Well with a 4" steel pipe concreted into the 7" casing may not seem like much of a "drilling operation" to the inexperienced; however, to the experienced driller, reentering and reworking Moose Pt. #1 Well's casing with a concreted in 4" steel pipe sticking out the 7" casing is in fact a major "drilling operation." Often times the original operator who originally drilled, then plugged and abandoned the well deliberately leaves iron pipe and other metal debris (chain, etc.) in the casing to prevent the well from ever being reentered or reworked. That original operator generally is not interested in leaving his well in a condition where a new operator can come in and easily have a cheap well. 20 AAC 05 states the regulations required to obtain and maintain a drilling permit. 20 AAC 05.005(g) states a drilling permit will expire if "drilling operations" are not commenced 24 1 of 20 • w • • months after the approval of the drilling permit. 20 AAC 25.990(23) defines "drilling operations" as having commenced when drilling below the conductor pipe. In reworking an existing well that has been drilled, cased from the surface down the TD depth and plugged and abandoned a conductor pipe does not exist inside the casing. The definition 20 AAC 25.990(23) of "drilling operations" has no specific mechanism to trip "drilling operations" when reworking the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned. However, drilling was underway at the Moose Pt. #1 Well prior to expiration of the drilling permit. The definition "drilling operations" as defined in AAC 25.990(23) needs to be revised and re- promulgated to clearly trip 20 AAC 25.990(23) "drilling operations" into affect when reentering and reworking a well that has already been drilled, properly cased, plugged and abandoned and has no conductor pipe existing inside the casing. In the mean time, the AOGCC needs to exercise its agency discretion and acknowledge that drilling by ACC did commence prior to expiration of the drilling permit. AOGCC DID NOT NOTIFY JAMES W. WHITE IN WRITING ON OR BEFORE FEBRARY 5, 2009 PURSUANT TO 20 AAC 25.535 THAT THE AOGCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205 -038 -0 MARCH 24, 2007 SOME TWO YEARS EARLIER 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." AOGCC did not send "a written notification by personal service or by certified mail, return receipt requested telling ACC Drilling Permit # 205 -038 -0 was in non - compliance of 20 AAC 25.005(g). AOGCC chose not to tell ACC that Drilling Permit # 205 -038 -0 may have terminated after the AOGCC had declared February 5, 2009 that the drilling permit retroactively expired two years earlier. ACC could find no evidence that this information had been posted elsewhere previous to 2009. It clearly was not sent "certified mail" to ACC. In addition, there is no evidence that AOGCC considered the operations at Moose Pt. #1 Well not to be drilling operations. In fact the record favors the premise that the AOGCC did consider the operations to be drilling operations. ACC has been diligently conducting operations at Mosse Pt. # 1 well for the past two years and has kept the AOGCC informed of these operations. ACC kept the AOGCC informed of ACC's progress and lack of markets for Moose Pt. #1 Well's gas. Had AOGCC informed ACC that AOGCC is terminating Drilling Permit # 205 - 038 -0, March 24, 2007 while ADL 389922 still had two years remaining in its primary term, ACC would 2 of 20 • 1 0_1 - -6 have had ample time to file and get a new drilling permit in view of the fact that it only took less than twenty (20) days to get the original drilling permit filed and approved in 2005. Image 1: AOGCC Website showing the "NEW" link, "Outstanding Drilling Permits" circled in red. Home 1 Databases 1 Orders 1 Staff 1 Calendar 1 Contact Us 1 AOGCC find A �`- pa rtm� p ;. aminfstratit�I� AVM CC) i l l : :� I + , , 11 Its I State of Alaska > Administration Oil & Gas Conserratt : ::o rr,■Ths son Mission: Headlines \r= Highlights Quick Links ...,~ protect the public .._._ interest in Proposed Reg Changes ' Well Information Databases Oil & Gas Links exploration and development of oil ' Multiphase Metering • Hearing & Meeting Calendar ' Dept of Natural Resources and gas resources Systems + Useful Lists ' Div of Oil & Gas ensuring AOGCC 50th Anniversary + Production Statistics ' Div of Geophysical & conservation )$ Drilling Statistics Geological Svcs practices. and Of Interest .. _ . - _ EPAs UIC Program increasing ultimate recovery while Mission Staff & History litwt Outstanding Drilling Permits ' Interstate Oil & Gas Compact protecting health • nn . Repur Commission safety the Contacts for Individual Oil & Ground Water Protection environment and Gas Pools Forms Council property rights Information Available Release Dates & Extensions Minerals Mgmt Service Regulations ' Functions & Processes Bureau of Land Mgmt State Calendars ' Permits to Drill Oil Field Terms Join Our Mailing List ' Industry Guidance Bulletins ccurtesy of Schiumberger; Comments? • Gas Position Papers DOE Fossil Energy Reports & Studies Orders & Decisions e +r.: „tie accessing any of the information ^^ th;s page. please contact us at 9C7 27S.14?? or email us at aogcc.customer.svonalaska . gc The AOGCC Website (http: / /www. state. ak. us /admin /ogc/ drilling /OutPermits /2009 /OPermits090228.pdf ) (Image2), "Outstanding Drilling Permits,” is shown dated February 05, 2009 and circled in red at the bottom of the page. This publication advertises that ACC's Drilling Permit # 205- 038-0 had arbitrarily been terminated two years earlier, March 24, 2007 by the AOGCC. AOGCC made no attempt to send ACC, pursuant to 20 AAC 25.535, "a written notification by personal service or by certified mail, return receipt requested" declaring February 05, 2009 the AOGCC retroactively terminated ACC's Drilling Permit # 205 - 038 -0. This Website, "Outstanding Drilling Permits," did not provide or detail White of his rights to appeal the Website notice that Drilling Permit # 205 -038 -0 had been retroactively terminated two years earlier with this Website image (Image 2). 3 of 20 • ft-1/ This action by the AOGCC occurred while ACC had operations actively underway at the wellsite. Image 2: Screen -print of "Outstanding Permits: Expiration Dates 1/1/2007 Thru 2/28/2008" PDF Website showing date Thursday, February 2, 2009 circled in red. utstanding Drilling Perini Expiration Dates 1/1/2007 thru 2/28/2009 Date Permit Operator Well Name API Number Pernit Approved Expires ALASKAN CRUDE C0 MOOSE PT UNIT 1 Re -entry 50- 133 - 20312-90 -00 205 -038 -0 3'242005 3 - 24 2007 STORM CAT ENERGT _ • • - r • t,_ _ -. •. _ -.I- ', _r .rep t 1 25 2006 1 25 2008 BP EXPLORATION (A PRUDHOE BAY UNIT K -10C 50- 029 - 21762 -03 -00 206 -015.0 1'31`2006 1. 31:2008 C' ONOCOPHILLIPS AL KUPARUK RIV (NIT 2D -05L1 50-029-21157-60.00 206 -174 -0 12''202006 1220 2008 CONOC OPHILLIPS AL KUPARUK RD/ UNIT 2D- 05L1 -01 50- 029 - 21157 -61 -00 206 -175 -0 1'102007 1 102009 BP EXPLORATION (A PRUDHOE BAY UNIT 07 -08B 50- 029 - 20296 -02 -00 207 -019 -0 2'142007 2/142009 BP EXPLORATION (A PRUDHOE BAY UN ORLN V -201A 50- 029 - 23054 -01 -00 207.024 -0 2/212007 2 21 2009 Tlursdm Fe btvarc O5. 2009 Page l of l Dams Permits... 04a) Ocrstmxing Pemms. Select Mu and Max Dates MAIN ISSUES Below are the main issues concerning Drilling Permit # 205 - 038 -0: 1. 20 AAC 25.535 requires: "If the commission considers that a person may have violated or failed to comply with a provision of AS 31.05...the commission will send the person a written notification by personal service or by certified mail, return receipt requested." Clearly, the AOGCC declared that ACC had not complied with the "drilling operation" regulations pursuant to 20 AAC 25.005(g) required to automatically extend the drilling permit beyond two years. Clearly, it is very important that ACC needs know if ACC may be in non - compliance. Clearly, it is very important that ACC know if ACC's drilling permit may have been terminated. The AOGCC's failure to inform ACC of any possible non - compliance or the possible termination of ACC's Drilling Permit # 205 - 038 - was an arbitrary and capricious decision and a violation of 20 AAC 25.535 and their own mandated discretion of the law: a. 20 AAC 25.535 reads: (a) If the commission, as the result of an investigation or otherwise, considers that a person may have violated or failed to 4 of 20 1 1, comply with a provision of AS 31.05, this chapter, or a commission order, permit, or other approval, the commission will, in its discretion, take enforcement action under this section against the person. (b)lf the commission proposes to take enforcement action under this section against a person, the commission will send the person a written notification by personal service or by certified mail. return receipt requested. The commission's written notification to the person will (1) state the nature of the apparent violation or noncompliance; (2) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (3) state the action that the commission proposes to take under (e) of this section; and (4) inform the person of the person's rights and liabilities under (c) - (e) of this section. 2. The AOGCC made no effort in phone conversations or written correspondence between 2007 and 2009 to inform ACC that Drilling Permit # 205 -038 -0 may have terminated on March 24, 2007. Correspondence between ACC and AOGCC includes volumes of emails, certified letters, and faxes concerning ADL 389922 and Moose Pt. #1 Well (see Exhibit I). The AOGCC sat on this arbitrary and capricious decision for two years, not advising ACC in any way, shape or form that Drilling Permit # 205- 038-0 may have terminated in 2007. 3. James W. White spent his own risk capitol, not investor money, to develop the Moose Pt. #1 Well. Believing Drilling Permit # 205 -038 -0 was actively in place, ACC continued to spend $1,000,000 (1 million dollars) developing Moose Pt. #1 Well and the lease property over the 2007 -2009 time period. Believing Drilling Permit # 205 - 038 -0 was actively in place, ACC kept ACC's drilling rig at the Moose Pt. #1 Well through 2009 paying $52,000 in ADL Lease 389922 rental fees alone. Believing Drilling Permit # 205 -038 -0 was in place ACC spent hundreds -of- thousands of dollars at Moose Pt. #1 Well in the reentering process of reworking Moose Pt. #1 Well. 4. Moose Pt. #1 Well was not properly Plugged and abandoned when ACC acquired ADL 389922 and Drilling Permit # 205 -038 -0 was approved. Reworking operations were continuing when ACC began the process of safely milling out the 4" steel abandonment marker pipe concreted into the 13 -3/8 3K wellhead. No agency regulation exists addressing the procedures for reentering an improperly plugged and abandoned well. Therefore, actual "drilling operations" had commenced when ACC cut the top of the 4" concreted abandonment marker pipe from the 13 -3/8 3K 5 of 20 / wellhead and began the process designing special milling tools for milling the remainder 4" concreted abandonment marker pipe out of the 13 -3/8 3K wellhead, and hiring machine shops to fabricate the milling tools. 5. Existing AOGCC records did not indicate that a 4" steel abandonment marker pipe was concreted into the 13 -3/8 wellhead. Image 3: Photo showing Moose Pt. #1 Well with 4" steel abandonment marker pipe concreted into the 13 -3/8" 3K wellhead, taken summer of 2006. P60-to Shows '1 o.b.,Ad,onmer t marker Image 3. pipe concrete..;Ato 13- 3 13 31t ,welt head P hoto - f'aKen Sv.mmer 2-oo6 - Rloo -.* 6 of 20 • Image 4: Photo showing Moose Pt. #1 Wellhead with portion of 4" concreted abandonment marker pipe still sticking out of the 13 -3/8" 3K wellhead, taken March 19, 2007. Image 4. 4111! March 19, 2007 DRILLING OPERATIONS COMMENCED The regulation 20 AAC 25.005(g) refers to the actual drilling of a new grass -roots well. Reentering and reworking Moose Pt. #1 Well as permitted by Drilling Permit # 205 -038 -0 is in no way the same as drilling a new well from scratch. Reworking and reentering Moose Pt. #1 Well required first step was to mill out the 4" steel abandonment marker pipe wrongfully concreted into the 13 -3/8 3K wellhead. This is a reworking operation of a well already drilled. It should be further noted, concrete (having a gravel mixture) is much more difficult to mill out than neat cement (pure cement) normally used in plugging and abandonment operations. 20 AAC 25.005(g), reads, "If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires." Drilling operations as defined by 20 AAC 25.990(23) reads, "drilling operations" means the penetration of ground below the setting depth of structural or conductor casing, using a drilling rig capable of performing the permitted well work, and for purposes other than setting structural or conductor casing; "drilling operations" includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface." 20 AAC 25.990(23) does not apply to Moose Pt. #1 Well because the 333' twenty inch "structural conductor casing" does not exist inside the 7" casing. The 20" conductor pipe that is set 333' below the surface is set outside of the 7" casing extends from the surface to the 9,032TD (total depth of the 7" casing). The well has already been drilled and properly cased with 7" casing from the ground surface to its total depth 9032' (9,032 feet). 7 of 20 • • ' 7 / v' 20 AAC 25.990(23) defines no mechanism to trip the Moose Pt. #1 Well into an automatic extension because there is no conductor pipe inside the 7" casing to drill out from. The 7" casing simply exists from the surface to the TD depth 9032'. Agency discretion should be exercised and a ruling issued that drilling did commence prior to expiration of the drilling permit. The oil and gas regulations do not have a drilling permit specially promulgated for reworking existing plugged and abandoned wells. The definition 20 AAC 25.990(23) of "drilling operations" does not fit the generic reworking operations to rework the Moose Pt. #1 Well that has already been drilled, properly cased, plugged and abandoned having no conductor pipe inside the 7" casing. All of the "drilling operations" described in 20 AAC 25.990(23) does not define the reworking and reentering operations of the Moose Pt. # 1 Well. The tripping mechanism of 20 AAC 25.990(23) requires that "drilling operations" commence below the conductor pipe to trip Moose Pt. #1 Well's Drilling Permit # 205 -038- 0 into place to automatically extend the permit. The Moose Pt. # Well has no conductor pipe inside of it to drill out below needed to trip 20 AAC 25.990(23) definition of "drilling operations" into place to automatically extend Moose Pt. #1 Well's Drilling Permit # 205- 038-0. ACC sh • uld not be held hostage or damaged because of a gap in the regulations. The necessity to mill out up to 25' or 30' (25 or 30 feet), or more of 4" steel abandonment marker pipe concreted in the 7" casing is an extraordinary situation and is NEVER encountered when a well is properly plugged and abandoned (please note the 2" 3K valve shown in Image 3, still attached to the bottom half of the original 13 -3/8" 3K wellhead containing the slips supporting the 7" casing at the surface). 1. Existing AOGCC records DID NOT MENTION the depth of that surface plug, nor the length of the 4" steel abandonment marker pipe concreted in to Moose Pt. #1 Well in the original plugging and abandonment records filed with AOGCC. 2. The above ground portion of the 4" steel abandonment marker pipe above the surface casing was removed the summer of 2006 leaving still a portion of the 4" steel abandonment marker pipe sticking above ground. (cut off portion of 4" pipe is shown in Image 4) 8 of 20 • • 3. That portion of the 4" steel abandonment marker pipe concreted in to the 7" casing forced ACC to specially design milling tools and hire machine shops to fabricate the P Y g g P milling tools to safely attempt to mill out that portion of the 4" steel abandonment marker pipe concreted down into the 7" casing. 4. ACC did not know if that portion of the 4" concreted abandonment marker pipe went 5' or 30' down into the 7" casing. ACC had to plan for the worst and plan the milling operation for 30'. 5. These specially designed milling tools were not delivered to ACC until early summer of 2007. These unique milling tools that were required were not shelf items and had to be specially designed by ACC to remove the 4" concreted abandonment marker pipe. It took several months for the machine shops to fabricate and deliver the milling tools to ACC. Machine shops during that period of time were extremely busy. 6. Upon delivery of the milling tools, early summer 2007, ACC commenced the milling operation to mill out the then- unknown length of 4" steel abandonment marker pipe that had been concreted into the 7" casing at the surface (see Image 4). Any experienced driller will acknowledge that milling steel pipe concreted in a 7" casing is a very difficult and sensitive operation. It is much more difficult to drill a pipe at the surface than it is to mill out 4" pipe cemented thousands of feet deeper in a 7" casing, because at a deeper level you have the 7" drilling casing's ID (inside diameter) to stabilize mill rotation and drill pipe weight providing measured weight on the milling tool. At the surface your milling tool wants to jiggle and bounce around threatening to damage the surface of the wellhead and the 7" casing, thus ruining all hope of a successful reentry. Milling tools ware very rapidly and have to be replaced or rebuilt often when milling out iron cemented in a 7" casing. 7. Great drilling experience and skill is required to protect the wellhead and 7" casing when milling steel out of a 7" casing at its ground surface. You must not damage the gasket and ceiling surfaces of the 13' -3/8 3K wellhead when trying to mill out the 4" steel abandonment marker pipe concreted into the 7" casing. Firstly, the Moose Pt. #1 Well had not been properly P&A'd in accord to state standards by the previous operator when ACC obtained Drilling Permit # 205 - 038 -0. Normally, the well casing is cut off 4' (4 feet) below the ground surface. A metal plate should be welded to the top of the casing thereby sealing the casing. A 4" steel abandonment marker pipe is then welded atop of the metal plate that is welded to the top of the cut off 7" casing. This 4" well marker pipe is then welded to the plate that is welded to the 7" casing 4'+ below the ground surface that should be long enough to stick above the surface level to a height of 6 feet. Dirt is then filled in around the marker pipe welded to the metal plate welded to the cut -off 7" casing 4 -5 feet below the ground to the surface level. 9 of 20 • i In this instance. the Moose Pt. #1 Well's casing was never cut off below ground level as required. The 4" (4 inch) steel abandonment marker pipe was improperly concreted into the 13 -3/8" 3K 7" casing wellhead. The 4" steel abandonment marker pipe was set and concreted into the 7" (7 inch) casing at the surface in the 7" casing; therefore. "drilling operations." as defined by ACC 25.990 does not apply to the Moose Pt. #1 Well because Moose Pt #1 Well had already been drilled in 1978. "Drilling operations" speak only to drilling a new grass- roots well. ACC did commence drilling operations in the required time frame. RE ORKING MOOSE PT. #1 WELL SPECIFIC OPERATIONS Reworking Moose Pt #1 Well required an extraordinary milling operations: 1. cutting of the top of the 4" steel abandonment marker pipe to assess the specific needs of a specially designed milling tool 2. designing the milling tools 3. having machine shops fabricate the milling tools 4. receiving delivery of the milling tool from the machine shops 5. removing, milling, and boring out the 4" concreted steel abandonment marker pipe These operations constitute the reworking, reentering, and "drilling operations" for Moose Pt. #1 Well Drilling Permit # 205 - 038 -0. The first step necessary to reenter Moose Pt #1 Well was to first cut off the top of the 4" steel abandonment marker pipe to examine and determine the proper design for milling tools to milling out the unknown length of the pipe concreted into the 7" casing. Please note: 4" drill pipe generally comes in 30 foot lengths. Existing AOGCC records did not record the length of the marker pipe wrongfully concreted in the top of the 7" casing. The length of the 4" steel abandonment marker pipe was unknown whether it was 5' long, or 30' long. ACC believes that the unique operation of first being required to design and get delivery of the milling tools to commence milling and drilling that portion of the 4" steel abandonment marker pipe that had been concreted into the surface plug constituted the actual first steps in complying with Drilling Permit # 205 - 038 -0. As stated above, these milling tools were not the type of milling tools that you can buy off the shelf from others. 10 of 20 • •� This 4" concrete abandonment marker pipe event was a total surprise. ACC did not anticipate this concreted in 4" steel abandonment marker pipe removal program when ACC bought ADL 389922 and filed ACC's Drilling Permit # 205 -038 -0 to reenter the Moose Pt. #1 Well. This 4" steel abandonment marker pipe's existence was not shown in existing AOGCC records at that time. Existing AOGCC records did not mention a 4" steel abandonment marker pipe concreted into the 13 -3/8 wellhead. Existing AOGCC records only indicated that the well surface plug was set at 58' (feet) below the surface of the ground. Existing AOGCC records indicated that the casing was filled with diesel fluid from the top of the 58' surface plug to the surface for freeze protection (see Drilling Permit # 205 -038 -0 illustrations). Existing AOGCC records did not reflect the depth of the 4" steel abandonment marker pipe concreted from the surface that had been placed in the 7" casing. In the beginning, ACC was not sure if ACC could safely mill out the 4" concreted steel abandonment marker pipe without damaging the Moose Pt. #1 Well's 7" casing to a point where the 7" casing, as then currently permitted, could not be safely reentered in the process. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY James W. White had to spend hundreds -of- thousands of dollars during that period of time, 2005 -the end of the 2007, to perform site work, drill a water well, design and have machine shops fabricate and build expensive and uniquely special milling tools according to ACC's own and unique specifications that are not "shelf- items" in order to safely and accurately mill out the 4" concreted abandonment marker pipe from the 7" casing without damaging the 7" casing beyond any hope of reentry. ACC performed these drilling operations and incurred these expenses because ACC believed that Drilling Permit # 205 -038 -0 was still active and valid beyond December 31, 2008. Having met the requirements, Drilling Permit # 205 -038 -0 should stay in effect. Nobody ever indicated that Drilling Permit # 205 -038 -0 was not automatically extended beyond December 31, 2008, until February 2, 2009. Then the drilling permit should stay in effect. Please note: It makes no sense to plan the reentering of a well if no drilling permit is in place. Not being notified otherwise, ACC believed that Drilling Permit # 205 -038 -0 was still active and in effect while performing the drill site work described in detail above. 11 of 20 • • .� Had AOGCC informed ACC that Drilling Permit # 205 -038 -0 may have been in violation or failed to comply with any AOGCC or DNR regulation and mandates, ACC would have taken the proper action to correct and address any such pressing issues. Because of Alaska's unique /short winter drilling seasons, one can only mobilize a drilling rig in or out of the property between the months of January, February -mid March. ACC left their drilling rig at Moose Pt. #1 Well in anticipation that Drilling Permit # 205 -038 -0 was still in effect, and that ACC might be able to secure a suitable term Gas Sale Contract with Agrium Fertilizer Plant. In 2007 there was considerable publicity concerning the Phillips- Marathon efforts to get the State of Alaska to agree to allow the export and sale of Alaska's gas to Japan. Governor Palin well publicized that if this event were to take place, it would require that Phillips - Marathon purchase gas from an independent oil and gas producer such as Alaskan Crude Corporation (ACC). Everybody in the Alaska's oil industry, including the Department of Natural Resources, Division of Oil and Gas believed that ACC had a drilling permit in place for Moose Pt. #1 Well from early 2005 forward through December 31, 2008. The AOGCC clearly did not advise the DNR's Division of Oil and Gas that Drilling Permit # 205 -038 -0 was not in place prior to January 27, 2009. On January 27, 2009 the DNR Commissioner advised White that he had reinstated ADL 389922 because the Commissioner had found that drilling activities were ongoing automatically requiring the primary term of ADL 389922 to automatically extend beyond its primary term. Nobody with whom ACC conferred such as the DNR or AOGCC ever advised ACC that they believed that the drilling permit was in violation and may have terminated on March 24, 2007. If AOGCC and DNR believed that the ACC Drilling Permit # 205 -038 -0 was terminated but failed to notify ACC in writing that Drilling Permit # 205 -038 -0 was in violation or ACC failed to comply with any regulations then the permit cannot be expired. ACC Drilling Permit # 205 -038 -0 was approved on March 24, 2005 and unbeknownst to ACC "terminated" on March 24, 2007. ACC was not aware that Drilling Permit # 205 -038 -0 had terminated according to the AOGCC because the AOGCC failed to notify ACC pursuant to 20 AAC 25.535. Until April 14, 2009, two whole years later after the termination of Drilling Permit # 205- 038-0, when ACC witnessed the Website ( "Outstanding Drilling Permits "), ACC believed that ACC was in full compliance with all AOGCC regulations pursuant to 20 AAC 25.005, 12 of 20 Permit to Drill, for maintaining and keeping current Drilling Permit # 205 -038 -0 in effective and operating status. TWO YEARS OF COMMUNICATION -YET NO MINTION OF TERMINATED DRILLING FERMI Neither ACC . James W. White. nor any party associated with Alaskan Crude Corporation (,ACC) EVER RECEIVED WRITTEN NOTICE pursuant to 20 AAC 25.535 that Drilling Permit # 205 -038 -0 was in violation, failed to comply with any provision, or terminated. Examples or correspondence between ACC and AOGCC about Moose Pt. #1 Well: 1. April 3, 2008 ACC faxed a letter to AOGCC titled, "Amerex well reentry April 3, 2008 Progress Report," detailing the work being done at Moose Pt. #1 Well. (see Exhibit II) 2. April 4, 2008 ACC and AOGCC corresponded numerous times about Moose Pt. #1 Well (see Exhibit III) - Note Drilling Permit 205 -038 -0 is references in the subject line all of these correspondences 3. On January 27, 2009, AOGCC sent a Certified Letter to ACC stating, "In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit #1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or complete." 4. On February 27, 2009 ACC responded to AOGCC in full with supporting pictures and evidence stating, "ACC drilled, milled and bored out the 4in. pip that been wrongfully concreted in the Moose Pt #1 Well's Tin. casing the summer of 2007...". AOGCC's emails AOGCC order transcriptions to the oil industry. From before 2007 to 2009, AOGCC has emailed countless AOGCC orders. The AOGCC's declaration that Drilling Permit # 205 -038 -0 terminated in 2007 would have been an AOGCC order. ACC never received, "a written notification by personal service or by certified mail. return receipt requested," from AOGCC mentioning any order terminating Drilling Permit # 205 -038 -0 in 2007. CONCLUSIONS /CONSIDERATIONS In conclusion ACC feels that: (1) AOGCC was mandated by 20 AAC 25.535 to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, failed to comply with any regulations, or may be terminated; (2) AOGCC failed to notify ACC in writing that Drilling Permit # 205 -038 -0 may have been in violation, or failed to comply with any regulations; 13 of 20 • • t3 (3) in 2007, had AOGCC informed ACC that Drilling Permit # 205 -038 -0 was to be terminated, ACC would have had ample time get a new drilling permit for Moose Pt. #1 Well because the primary term of ADL 389922 still had 21 months to its primary term. The original Drilling Permit # 205 -038 -0 took 20 days to be approved. A new drilling permit is free; (4) this action by the AOGCC could likely be determined to be an abuse of discretion in implementing the mandates of 20 AAC 25.535 from AOGCC as result of AOGCC's failure to notify ACC of any issues concerning Drilling Permit # 205 - 038 -0. ACC asks the AOGCC to please reconsider their actions and reverse the decision terminating Drilling Permit # 205 -038 -0 because: (1) AOGCC, pursuant to 20 AAC 25.535 did not inform ACC in writing to: (a) state the nature of the apparent violation or noncompliance; (b) summarize the reasons why the commission considers a violation or noncompliance to have occurred; (c) state the action that the commission proposes to take under (e) of this section; and (d) inform the person of the person's rights and liabilities under (c) - (e) of this section; (2) The drilling operations conducted at Moose Pt. #1 Well automatically extended the term of the Drilling Permit # 205 - 038 -0. Therefore, Drilling Permit # 205 -038 -0 automatically extended; (3) AOGCC did not mention the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt. #1 Well in their original file records; (4) James W. White and ACC met the requirement of Drilling Permit # 20 AAC 25.535 when they first removed the 4" abandonment marker pipe, designed and commissioned the unique milling tools from several machine shops, and milled, bored, out and drilled out the 4" steel abandonment marker pipe wrongfully concreted into the 13 -3/8" wellhead; (5) AOGCC did not consider the extraordinary circumstance of the 4" steel abandonment marker pipe that was wrongfully concreted into 13 -3/8 wellhead at Moose Pt. #1 Well and that actual drilling operations were required and undertaken to remove this pipe. (6) Drilling operations at Moose Pt. #1 Well were under way when ACC transported all of the equipment to rework the well and commence reworking operations of the existing Moose Pt. #1 Well the winter drilling seasons 2005 and 2006 forward. Thank you for your consideration. If AOGCC can not settle this manner, James W. White will take further actions to protect his interests. 14 of 20 Please advice ACC of the how the Commission will address the issues in this letter within 5 days. If ACC does not receive a response within 5 days, ACC will pursue further actions to protect our interests. Please advise if the Commission needs more time. Regards, James , White, Alaskan Crude Corporation, President jaixtes W. White, Individual 4614 Bohill St. San Antonio, TX 78217 Office Ph. 210 - 651 -0777 Cell Ph. 907- 394 -1829 Email jimwhite@ satx.rr.com CC. Emailed to: Thomas E. Irwin; Kevin Banks; Daniel T. Seamount, Jr.; Matt Rader; Camile Recknagel; Bruce Webb; James A. White; Brian Stibitz; Rick Wagner; Office of Governor Sarah Palin 15 of 20 • •r -.�` CONTENTS 1. AOGCC DID NOT NOTIFY WHITE IN WRITING PURSUANT TO 20 AAC 25.535 THAT THE A • GCC RETROACTIVELY TERMINATED DRILLING PERMIT # 205- 038-0 MARCH 24.2007 SOME TWO YEARS AGO...Pg. 2 2. MAIN ISSUES...Pg. 4 3. DRILLING OPERATIONS COMMENCED...Pg. 7 4. REWORKING MOOSE PT. #1 WELL SPECIFIC OPERATIONS...Pg. 10 5. EXTRODINARY OUT OF POCKET EXPENSES - NOT INVESTOR MONEY...Pg. 11 6. TWO YEARS OF ONGOING COMMUNICATIONS, YET NO MENTION BY AOGCC OF TERMINATED DRILLING PERMIT...Pg. 13 7. CONCLUSIONS/CONSIDERATIONS...Pg. 13 16 of 20 • 4 G Exhibit I Example of Correspondences between ACC, DNR and ACC (non - exahstive) 1. March 31, 2009 - an entire 42 page document was faxed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 2. March 30, 2009 - an entire 42 page document (the same was faxed on March 31, 2009) was faxed emailed, and mailed to AOGCC Commission Thomas E. Irwin and Kevin Banks, C.C. AOGCC Appeals 3. March 30, 2009 to Thomas E. Irwin, AOGCC: Re: Your Letter Dated "January 27, 2009 ", Decision to Reinstate ADL Lease 389922 4. March 11, 2009 from McKenzie Transpiration - letter describing transport truck breaking through ice on ADL 389922 5. February 27, 2009 to AOGCC: Re: January 27, 2009 Letter from Daniel T. Seamount Jr, Chair" detailing work being done on ADL Lease 389922. 6. February 18, 2009 from Commissioner Thomas E. Irwin, AOGCC (received by regular mail February 25, 2009): Re Request for Reconsideration - ADL 389922 Notice of Expiration of Lease - this letters states the Commissioners decision to order a reconsideration of ADL Lease 389922 7. February 11, 2009 From ACC- Formal request for reconsidering of the terms and conditions of ADL 389922 emailed to AOGCC (faxed February 10, 2009 to 907 -269- 8918). 8. January 27, 2009 from AOGCC, Daniel T. Seamount Jr, Chair: Re: Moose Pt. Unit 1 PTD No. 205 -038 - letter states that AOGCC is not aware of any work being done at Moose Pt. Unit 1 PTD No. 205 -038. 9. January 27, 2009 from AOGCC, Commissioner Thomas E. Irwin: Re: ADL 389922 Notice of Expiration of Lease date January 2, 2009 - Letter details decision to "reinstate ADL 389922" (this letter was appealed on ... 10. January 26, 2009 to AOGCC Commissioner Irwin: Re: Potential Damaged Caused by Improper Termination of ADL 389922 11. January 22, 2008 to Mr. John Havelock, Division of Oil and Gas: Re: DNR's representatives' visit to the private property where Moose Point #1 Well is located on ground by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska 12. January 20, 2009 to AOGCC (faxed to 907 - 269 - 0060): Re: Administrative Appeal — ADL 389922 Notice of Expiration of Lease Term 13. January 15, 2009 to Kevin Banks, Department of Natural Resources (DNR): Re: Wrongful Termination of ADL 389922 14. January 2, 2009 from Jennifer Haines, AOGCC: Lease Expired - ADL 389922. 17 of 20 • • 15. December 31, 2008 from ACC - Discussing the later than normal winter freeze up of the North Kenai Borough Road. 16. Thursday, December 06, 2007 1:05 PM, Colombie, Jody J (DOA) jody.colombie@alaska.gov, aio2b -023 CPA Kuparuk. 17. Friday, December 07, 2007 12:34 PM (email), Colombie, Jody J (DOA) jody.colombie()alaska.gov, Public Hearing Notice North Alexander #1 18. Wednesday, December 05, 2007 2:32 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov. AI04C -015 corrected cancellation 19. Tuesday, December 04, 2007 3:17 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov, Other 52 Regulatory Cost Charge 2008. 20. Monday, December 03, 2007 7:09 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov, Public Meeting Notice. 21. Friday, November 30, 2007 8:20 PM (email), Colombie, Jody J (DOA) jody.colombie@)alaska.g•v, AI04C -015 corrected cancellation 22. Wednesday, November 28, 2007 5:42 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov, o 457B.003 and co341e.005 PBU 23. Wednesday, November 28, 2007 8:19 PM (email), Colombie, Jody J (DOA) jody.colombie@ alaska.gov, Public Notice, Additional Information and Proposed Regulation 24. Friday, November 30, 2007 2:25 PM (email) Colombie, Jody J (DOA) jody.colombie0alaska.gov, Corrected Admin Approvals and ERIO 2 -005 25. Friday, November 30, 2007 12:47 PM (email), Colombie, Jody J (DOA) jody.colombie@alaska.gov. AI04C -015 cancellation and AI014A -002 PBU Admin Approvals 26. Wednesday, November 28, 2007 8:43 PM (email), Colombie, Jody J (DOA) jody.colombje(alaska.gov, Various PBU Admin Approvals and AIO4E.015 PBU 18 of 20 410 • Zefr Exhibit II April 2, 2008, Letter to AOGCC, Subject: Amerex well reenty April 3, 2008 Progress Report ALASKAN CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 78217 Ph210 -651 -0777 Date : April 3, 2008 To: AOGCC Attention: Mr. Tom Maunder Subject: Amerex well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This letter is to advise the Commission that a new 7' 5m double BOP and new 7" 5m Annular were delivered to Amerex drill pad about March 10, 2008. One air pump is being replaced on the accumulator. Accumulator nitrogen bottles are also being replaced. The 4" pipe has been milled out of the 7" casing and well head has been installed and ready to except the installation of the new 7" 5m BOP stack.. ACC will recommence chilling reentry operations when the well pad dries out after break up. (mid May hopefully) Regards Jim White 19 of 20 • EXHIBIT III April 4, 2008 ACC email correspondence with AOGCC showing Drilling Permit # 205- 038 in sub'ect headin: RE: RE Moose Pont aeRe' y(2tri-0iil fit Ed" ,a. Help frare Moulder, Thorns E (DOA) c uneundaf ePA; Date: Friday, Apri01, lo: Jun MiAe< IiulapdeaPialMt.;Am WWI <rrnakielsahncano; Subject FE FE Moose Pint a1Re-EntyOgg) Thanks I and recetoe the fax and I can gent the wad document *tout pmdens Replay Ole rented of the DP marker cemented s the wehad hosfa ado the wet! are you9 R you Owe any photos of the oaf they would beappseci ed Thanks in advance. Ton Wander. PE AOGCC FreJanWIAe[rrehl: pleekart] Seat Frfdr',AgriOE, 2000801 R1 Tr keel% Trees E (DOA)/ Am Wee Sleet Re: RE: Meer Rid 11 Re ty(21et Toss Hos the Ormene Weal irre JmMita, PE Phi yowSa) Fiat Wander, Naas ENDAj To im White Cc AkfigOlLet Sat Fiky, Ape 01,20N 9.19 AEA Soiled RE: RE HouePoidti Rt66y(2D ) Am. • You Isere the emal address coned. • Ian retie to ape the rarer Codd you reseed asa PS or waddowmadofalo901- 2167502. Mks wing Worm o descpaation pkase use a wrier sfdj¢Uihe. Pair, Tan Meader, PE AOGCC Fran: Jim Mb [mdtorthee@sebr.ram] Pat Ffiday, Apd D9, 20008:42 PM Ta Meuder, Thomas E (DOA) Cc pri;an cc.vtal.ret sibiect Hello RIM Not sure if I have yourcomectentad address, buthere isatry. Hope your dry is a good one. Rest Regards iimwhke jrmwhitepsabr.rr.com ice a 20 of 20 �7 • • To: Brian Stibitz, Reeves Amodio LLC Fax number: 907-222-7199 • From: lames W. White, Alaskan Crude Corp James W. White Fax number: 210-651-0777 4614 Bohill Street San Antonio, TX 78217-1413 Date- 2/20/2009 Phone Number: 210-651-0777 Cell Number: 907-394-1829 Email: jimwhite@satx.mcom Regarding: Request for Reconsider to Tom Irwin Phone number for follow-up: 210-651-0777 Comments: # of pages including cover page: 15 • Brian, Please find attached the request for reconsideration which was e-mailed to Commissioner Tom Irwin on 2/11/2009. •. Sincerely, James W. White, President Alaskan Crude Corporation • • • HP Officejot 8310 Log for Personal Printer /Fax/Copier /Scanner Intrepid Production 2106510777 Feb 23 2009 3:39PM Last Transaction Date Time Type Station ID Duration Pages Result Feb 23 3 :37PM Fax Sent 9072227199 2 :21 4 OK i • Jim White From: Jim White [imwhite@satx.rr.comJ Sent: Wednesday, February 11, 2009 12:41 PM To: 'tom.irw n@alaska.gov' Cc: 'kevin.banks@alaska.gov'; 'matt.rader©alaska.gov' Subject: Request for Reconsideration of Conditions of ADL 389522 Lease Extension Attachments: Request for Reconsideration AD1389922 Tom Irwin Dear Mr. Irwin, Please find my formal request for reconsideration of the teens and conditions of my lease AD1.389922 attached. Sincerely, James W. White Alaskan Crude Corporation Cell: 907 - 394 -1829 Office: 210 -651 -0777 1 C>.K C • February I I, 2009 Commissioner Tom Irwin Faxed: 2/10/2009 to (907) 269 -8918 Department of Natural Resources 550 West 7 Avenue, Suite 1400 Anchorage, AK 99501 -3650 RE: Request for Reconsideration—ADL 389922 Notice of Expiration of Lease Term(Correeted Document) Dear Commissioner Irwin: First, 1 want to thank you for your decision dated January 27, 2009. 1 agree with you that the lease is automatically extended by drilling. However, 1 cannot agree with the conditions that you attached to the "automatic" extension of my lease. This letter constitutes my request for reconsideration of your decision dated January 27, 2009 concerning my oil and gas lease ADL 389922. Your decision reinstated my lease with conditions. 1 am the owner of the oil and gas lease and eligible to ask for reconsideration of your decision. The remedy I am seeking is simple reinstatement of the lease without conditions as provided fvr in the lease contract between the state and myself. The lease contract does not provide for automatic extensions of the primary term with. conditions. The lease was automatically extended. Please remove any and all extra conditions eluded in your decision dated January 27, 2009. Please address all written correspondence concerning this request to James W. White 4614 Bohill San Antonio, TX 78217 San Antonio, Texas, Phone Work: 210 -651 -0777 Cell 907- 394 -1829 Email address: andjimwhite@acsalaslca.net 1 • • The affected property /land is oil and gas lease A.DL 389922. It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, and 15— containing 4800 acres more or less. Under paragraph 4 of the lease contract I am entitled to a simple automatic extension of the lease if drilling is underway on the expiration date of the lease. There is no provision in the lease contract to allow the state to attach additional conditions to that automatic extension if drilling was underway. Under paragraph 4 of the lease I have the right to continue drilling operations with reasonable diligence to keep the lease in effect. Your decision imposed a limit of 90 days for me to complete the drilling operation. While I may be able to meet that deadline, the lease does not give you the authority to impose it If drilling takes longer than 90 days, then I have the right to take longer than 90 days to complete the drilling operations. Contrary to your January 27, 2009 decision, as long as drilling remains underway with reasonable diligence, the lease is automatically extended. I estimate that the drilling will take 30 days to complete, but I have no way to know at this time if it may take longer. I cannot risk further capital and resources lithe Tease will fre if I do not finish the trilling operations before the arbitrary deadline you set. The initial January 2, 2009 notice from the divi;iiou clouded the title to my lease and I temporarily ceased operations until the cloud is lifted. - The wells operator now has to prepare equipment and resources to resume drilling operations. In addition, the drill site has only seasonal winter access for heavy equipment. Your decision again clouds the title to my lease in that it imposes an arbitrary time limit to complete drilling operations. I am hesitant to resume full drilling operations with this arbitrary deadline in place. What happens if I am not completed with drilling operations by the da isle you set, even if I am continuing drilling operations with reasonable diligence? I have no guarantee that you will not try to arbitrarily terminate the lease at that point in time. I am asking for a simple straightforward decision that complies with the lease contract. I realize that you want me to continue drilling operations with reasonable diligence, but I will do just that only under the terms of the lease contract But I cannot guarantee when dulling will be completed, and you do not have the authority under the lease to impose a deadline. Drilling serves to automatically extend the lease term. There is no provision in the lease to attach conditions to that automatic extension. The material facts in dispute and the basis for the request for reconsideration are as follows: 1. The lease contract paragraph 30. SEVERABILTY plainly states: "Nit is finally determined in any judicial proceeding that any provision of this lease is invalid, the state and lessee may jointly agree by a written amendment to the lease that, in consideration of the provision in that written amendment, the invalid portion will be treated as severed from the lease and that the remainder of this lease as amended will remain in effect" 2. There has been no judicial proceeding invalidating any portion of ADL389922. 2 Li .# • • • 3. White bas never agreed to amend any provision of the lease. 4. The ADL389922 lease remains in full force in same form as originally agreed to. 5. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. There is no provision in the lease to attach conditions to that automatic extension. 6. On June 13, 2007, actual boring in the well commenced when the well was drilled out to remove the 4 inch diameter mnetal pe f that bad been wrongfully concreted inside the well's 7 inch casing when it was P a a f and abandoned 1....,1_ 1A ?@ At t.'.. point F F�.n. (Li"' ..a. rig was Moatir�P nr� over the originally p a n d abandoned hac=k in 1978_ AL his point he ail G rig was poi ioncd over ire well bb_ re. plugged has since been temporarily moved aside to install the blow -out prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or boring a hole, including activities incidental to the actual drilling of a hole. 7_ Alaskan Crude Corporation is the operator on the lease_ Alaskan Crude's drilling operations meet the definition described in Paragraph 34 of the lease contract. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from the department witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including building the pad, drilling a water well with the rig and conducting drilling operations with the rig. 8. The DNR sold us a state- drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired_ The annual delay rental payment was timely paid thereby antomatiesdly extending the lease beyond its primary term. 9. Significant risk capital has almady been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 produced gas to the liquefied natural gas (LNG) plant as provided by the recent PalinfLNG agreement allowing export license gas deliveries -to Japan worth millions of dollars over the next two years. This opportunity must be timely met or this two year apporwuity to sell this gas to the LNG plant will be lost. Please note, this is the frst time during this seven year primary tenn of the lease that this lease has finally had opportunity to market its gas at an acceptable price. Alaska gas market opportunities for small independent oil and gas operators are almost non - existents This lease is adjacent to the ConocoPhillips natural gas transmission pipeline that runs from the North Cook Inlet gas field to Nlciski and the LNG plant. 10. ConocoPhillips has committed to buy 30k MCP of gas fiom third parties to fulfill a portion of its LNG export volumes beginning in April 2009. This is a potential 50 million dollar plus per year gas market available for Alaska's independents that have gas delivetabitity readily available. 11. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 12. Access to this lease area by heavy equipment is limited except for winter months when the ground is solidly from_ 3 I • 13. The DNR's notice dated January 2, 2009 stating that the lease had expired immediately e w ed the title to this lease to be clouded. Your decision of January 27, 2009 also clouded the title to the lease in that it stated that the lease would automatically terminate on April 27, 2009 if drilling was not complete by that date. If the DNR continues to assert that this lease may expire on an arbitrary date, 1 will be forced to take whatever legal actions are necessary to protect my interests. 14_ I paid the annual delay rental in full prior to the due date. 15. I was drilling on the expiration date of the lease as drilling is defined in Paragraph 34 of the lease. 16_ The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on that date. The lease should have been automatically extended without conditions. 17. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. The conditions included in your decision are a direct breach of my lease contract. As lessee of ADL 389922, I relied terms that I bought contained. in the 4 corns of the state (hafted AFL389922 Lease contract the state widely publicly advertized and then sold at a public auction, and I hive been and continue to be damaged by your decision, If you have any questions concerning this request for reconsideration please contact me. Sincerely, " - James W. White Cc: Kevin Banks, Department of Natural Resources, Oil & Gas Division 4 1; / ! :: LJC-3 LAK SARAH 1400 ANCHORAGE, ALASKA 99501 -3650 PHONE (907) 269-8431 CAXX. tfA9f 282 CA1 r#iA. lava, eoa-oa s v DEPARTMENT OF NATURAL RESOURCES OFFICE OF THE COMMISSIONER January 27, 2009 James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: ADL 389922 Notice of Expiration of Lease dated January 2, 2009 Dear Mr. White: 1 received your January 20, 2009 appeal of the subject expiration, which requests retraction of the lease expiration in accordance with paragraph 4(cX1) of the lease. 1 carefully reviewed the facts, your Plan of Operations for the Moose Pt. #1 well, and queried the first -hand observers of the activities at the well site. 1 also reviewed the definition of "drilling" in paragraph 34.(4) of the lease. 1 have concluded that the activities observed at the site on December 31, 2008, assembly of the blowout preventer (BOP), equipment staging for BOP placement, presence of a drill rig, and completion of the initial reentry of the existing well plug, can be deemed consistent with the nortion of the definition that reads. "... other operations necessary and incidental to the actual boring of the hole... ". Therefore, 1 hereby grant your appeal and retract the subject Notice of Expiration of Lease dated January 2, 2009. ADL 389922 is hereby reinstated and extended in accordance with AS 38.05.180(m) and paragraph 4(c)(l) of your lease for so long as drilling is continued with reasonable diligence and sustained production begins within 90 days after cessation of that drilling. In your Plan of Operations you estimated a 30-day work effort to complete drilling. Nonetheless, to ensure you have sufficient time to complete this well, the well must be completed within 90 days of this decision. The failure to complete the well will result in the automatic termination of this lease. After 90 days from the date of this letter, April 27, 2009, we will review your progress to determine whether continued lease extension is warranted, including proof that all permits required are current. In summary, 1 am reinstating your lease because you were engaged in drilling on the lease expiration date. However, the continued extension of the lease is contingent upon (1) continued drilling of the well; (2) completion of the well by April 27, 2009; (3) valid permits for all operations; and (4) sustained production within 90 days following tlw cessation of drilling. The failure to comply with any of these conditions will result in the automatic termination of this lease. "Develop, Conserve, and Enhance Natural Resources for Present and FntroeAlaskans" • AM 389922 Notice of Expiration of Lease dated January 2, 2009 January 27, 2009 Page 2 of 2 This is a final administrative order and decision of the went for purposes of an appeal to Superior Court. An appellant affected by this final order and decision may appeal to Superior Court within 30 days in accordance with the rules of the court, and to the extent permitted by applicable law_ Sincerely, Thomas E. Irwin Commis' ommissioner cc: Kevin Banks, Acting Director, DNR Division of Oil and Gas January 26, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7 Avenue, Suite 1400 Anchorage, AK 99501 -3650 Faxed to 907- 269 -8918 Faxed and emailed to Director Mx. Kevin Banks, Mr. Matt Rader RE: Potential Damages Caused by Jinproper Termination of ADL 389922 Dear Commissioner Irwin: The opportunity to drill the Moose Point #1 well this winter season is ending quickly. The risk is spring -break up on the Kenai can begin in early March, 2009. That is about 35 days from today. It has now been twenty six days since the Division of Oil and Gas on January 1, 2009 wrongfully terminated ADL 389922 oil and gas lease_ 1 have received absolutely no indication that the DNR intends to timely reinstate my ADL 389922 lease. My operator cannot continue the drilling of the Moose Point #1 well this winter drilling season without immediate notice from you that the lease has been reinstated. The Division's wrongful ADL 389922 lease termination has likely prevented this lease from being drilled this winter season. There is now little time Ieft this winter drilling season on the Kenai Peninsula to drill the Moose Point # I well's remote site. Please note, it will take additional time to recommence Moose Point #1 drilling operations to make up for time and efforts that has already been lost this season as a result of the Division's Notice to me. Routine drilling has been delayed for nearly one month during this abnormally short 60+ day winter drilling season. I am being damaged. I cannot market gas from the wrongfully terminated ADL 389922 lease. Nobody will consider buying gas from the ADL 389922 lease until this lease has been properly reinstated. Your representatives, Mr. Havelock and Mr. Peterson, January 22, 2009, inspection visit to Moose Point well site clearly demonstrated to your agency that preparations were underway to mobilize the drilling equipment and transport this rig to another drilling location in the event this lease is not soon timely reinstated this winter drilling season.. I cannot afford to strand the drilling rig on the remote pad over the summer season. There is no reason to delay reinstating this lease because the contract is quite clear on this issue. Unequivocal drilling had timely and duly commenced when our drilling rig, which is capable of reaching the bottom of the well, bored out the wrongfully placed concrete and iron in the top portion of the well. Furthermore, your office has received ample documentation of prior well boring activities, along with video, eye witness testimony and photos of our setting the blowout 1 t�; • • preventer on December 31, 2008 which is necessary and incidental to boring deeper into the Moose Point #1 well. Other activities incidental to drilling are discussed in our appeal submitted to you. I again ask you to reinstate this lease as quickly as possible or my entire investment in this lease to date will be lost. My costs are escalating. Drilling without owning the oil and gas lease would result in either a free gas well for the State of Alaska or a huge liability for me to the State of Alaska for destroying the speculative value of this lease if the well came up dry. My contact information is provided below Sincerely, James W. White Address: 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907 -335 -1829 San Antonio 210 -651 -0777 Cell 907 -394 -1829 Email address: _jimwhite@acsalaska.net ; jimwhite @satx.rr.com 2 (o f‘-;. • • January 20, 2009 Commissioner Tom Irwin Department of Natural Resources 550 West 7 Avenue, Suite 1400 Anchorage, AK 99501 -3650 faxed to 907 - 269 -0060 RE: Administrative Appeal —ADL 389922 Notice of Expiration of Lease Term Dear Commissioner Irwin: This letter constitutes my appeal of the Division of Oil and Gas Notice dated January 2, 2009 and signed by Jennifer Haines. That decision purports to close my on and gas lease numbered ADL 389922. 1 am the owner of the oil and gas lease and eligible to appeal the Division's decision. The remedy I am seeking is reinstatement of the lease term or alternatively acknowledgment from the division that the lease term did not expire as stated in the Notice. I am seeking corrective action from the Division to place my lease in active status in the division's records systems and case files. Under the terms of the lease the lease was automatically extended beyond the primary term, yet the Division incorrectly terminated the lease term. Please address all written correspondence concerning this appeal to James W. White 4614 Bohill San Antonio, TX 78217 Phone: Kenai 907- 335 -1829 San Antonio 210 - 651 -0777 Cell 907- 394 -1829 Email address:jimwhite @acsalaska.net jimwhite@satx.rr.com 1 tic i `� • • The property/land under appeal is oil and gas lease ADL 389922_ It is located in T 9N, R 9W, SM; Sections 1, 2, 3, 10, 11, 12, 14, and 15— containing 4800 acres more or less. Under 11 AAC 02_030 I request reconsideration of the Division's decision to terminate ADL 389922. I specifically request that ADL 389922 be reinstated completely and extended as provided for in paragraph 4 (c) (1) of the lease contract. If the commissioner does not reverse the termination of the lease and grant the extension, under 11 AAC 02.050 I request a hearing. The factual issues to be discussed are the grants to the lessee contained in paragraphs 4 and 34 in my lease and the specific nature of my past and current drilling operations on the lease that serve to automatically extend the lease term. Under 11 AAC 02.060 I request an immediate stay of the decision. The public interest requires a stay in this case. Without a stay, my title to the lease is clouded and I cannot negotiate gas sales contracts or market gas produced from the lease. Even with a stay in place, the Division's Notice (and subsequent inaction since issuing the Notice) acts to cloud the title of the lease, causes me undue financial harm, and absolutely prevents sale of any gas from ADL389922. The issues in dispute include the division's incorrect termination of the lease, the specific nature of my past and current drilling operations on the lease, the meaning of paragraphs 4 and 34 in my lease and the division's remedy /action that is appropriate to re the lease in the state's lease data base and records system. I request that the division withdraw its Notice and immediately declare the lease never expired as of 12 :01 am January 1, 2009. The material facts in dispute and the basis for the appeal are as follows: 1. The lease automatically extended under Paragraph 4 of the lease contract because drilling on this lease had commenced prior to, and continued on December 31, 2008, the date on which the lease otherwise would have expired. Drilling commenced the winter of February, 2006 when i l.t 'le.. of Nort0. Kenai road was repaired bridges were a i bridg i'GUiildry, 2006, WaaGat eight laauW of xfLiau 11Ya,ry, road was ta.�ca�..is and iv.. va.u constructed by ADL 389922's Operator, Alaskan Crude Corporation (ACC) across Leaf Creek and Cum Creek. Then the Ideco 111335 BIR drilling rig was mobilized along with its related drilling equipment and transported out the North Kenai Road (ice road) and placed at the ADL 389922 lease's Moose Point # ,1 well site. After breakup in 2006 early summer extensive access road repair and landscaping work was performed on the Moose Point# 1 well pad to get in shape to accommodate the reentry and testing of the Moose Point #1 well. The site's water well was redrilled and a new water pump was installed August, 2006. White's negotiations to sell ADL389922's gas to the Agrium Fertilizer were continued Agrium with reasonable diligence. 2. On June 13, 2007, actual boring in the well commenced when the upper portion of the well was drilled out to remove a 4 inch diameter metal pipe that had been wrongfully concreted inside the well's 7 inch casing when it was originally plugged and abandoned back in 1978. At this point the drilling rig was positioned over the wellbore. It has since been temporarily moved aside to install the blow -out prevention equipment on the well. Drilling as defined in the lease includes many activities in addition to well milling or 2 • 411 • boring a hole. The fall of 2007 Agrium announced that that the Agrium Fertilizer plant would be shut down the winter of 2007 -2008 because dependable gas feed stock was not available to Agrium for a price that Agrium was willing to pay. The following spring of 2008 Agrium announced that their fertilizer was being permanently shut down due to no cheap gas feed stock. At that time White had no other potential market for and ADL 389922's gas until the Palin/LNG two year export license agreement was announced providing for the LNG plant to purchase up to 30 mmcf of gas per day from Independents such as White and Alaskan Crude Corporation. Late freeze -up caused ACC to postpone its re- commencement of its 2008 winter Moose Point#1 drilling operations until December 20, 2008 when the unimproved access North Kenai Road to the Moose Point drill site had frozen hard enough to support travel by light pick -up trucks. The North Kenai Road had not frozen hard enough to support needed travel by heavy trucks December 31.2008. 3. ACC is the operator on the lease. Alaskan Crude's drilling operations met the definition of drilling described in Paragraph 34 of the lease contract. On December 31, 2008, the expiration date of lease ADL 389922, Mr. Matt Rader, from your office witnessed the continuation of drilling activities and also left with photos and written memorandum documenting the prior drilling activities conducted on ADL 389922, including site preparation, building the pad, drilling a water well with the rig and conducting drilling operations with the rig. Such drilling operations have been conducted with reasonable diligence. 4. The DNR advertised and sold a state - drafted lease with the clear contract right to automatically extend the lease by drilling on the day that the lease would otherwise expire. Drilling activities had commenced prior to that date and were unequivocally continuing on the date that the lease would otherwise have expired. The annual delay rental payment was timely paid, thereby automatically extending the lease beyond its primary term. 5. Significant risk capital has already been invested to drill and develop ADL 389922. We have a limited gas marketing opportunity, as an independent oil and gas operator, to sell ADL 389922 ptnduced gas to the liquefied natural gas (LNG) plant as provided by the recent Palin/LNG agreement allowing export license gas deliveries to Japan worth millions of dollars over the next two years. This gas -sale opportunity must be timely met or this two year opportunity to sell this gas to the LNG plant will be lost. Please note, this is the first time during the seven year primary term of the lease that this lease has finally had the opportunity to market its gas at an acceptable price. We will suffer huge losses if we are not able to deliver gas from this lease commencing this spring. Alaska gas marketing opportunities for small independent oil and gas operators are almost non- existent. Future gas marketing operations are at risk as long as the division's decision is not reversed or withdrawn. 6. This lease is adjacent to the ConocoPhillips � natural gas transmission pipeline that runs from the North C ok T gas field to Nildsti and the LNG plan. 7. ConocoPhillips has committed to buy 30kmcf of gas from third parties to fulfill a portion of its LNG export volumes beginning in April 2009 and running for 24 months. This is a 3 • potential 50 million dollar plus per year gas market available for Alaska's independents that have gas deliverability readily available. 8. This lease has excellent potential to readily supply millions of cubic feet of export gas to ConocoPhillips. 9. Access to this lease area by heavy e^ is limited except for winter months when the ground is solidly frozen, which for this winter season did not occur by December 31, 2008. However, the access road became suitably frozen to safely support a light duty pickup on December 20, 2008_ 10. The DNR's notice dated January 2, 2009 stating that the lease had expired immediately caused the title to this lease to be clouded.. If the DNR continues to assert that this lease is expired, then title to the lease continues to be clouded. I will be forced to take whatever legal actions are necessary to protect my interests. Selling gas from a lease with a clouded title is unheard of. It never happens. 11. I paid the annual delay rental in full prior to the due date. 12. 1 was darling on the expiration date of the lease as drilling is defined in Paragraph 34 of the lease. 13. The lease is automatically extended under Paragraph 4 of the lease if drilling is underway on the expiration date of the lease. Drilling was underway both prior to and on the expiration date. The lease is automatically extended —it is not a discretionary decision. 14. Mr. Matt Rader is aware of the wrongful termination of my lease and the mistake made by your office, yet no action has been forthcoming from your office. 15. Mr. Matt Rader from your office was on location on my lease on December 31, 2008, the expiration date. He can attest as to my continued drilling operation. Mr. Rader has voiced no opinion to me as to whether the lease would be extended then or now. 16. Director Banks was informed of this wrongful lease termination by fax copy on January 15, 2009. This is not a matter of agency expertise or discretion. The lease was automatically extended by drilling. This is a direct breach of my lease contract. As lessee and purchaser of ADL 389922, I relied on the patently clear contract provisions in the lease that was sold to me to extend the lease. I have been and continue to be damaged by the division's actions and misinterpretation of the lease provisions. Under I l AAC 02.030 this letter is also my notice of intent to file additional materials in support of this appeal within the allotted 20 day period. 4 �` 4,t 411 • If you have any questions concerning this appeal please contact me. Sincerely, ( -James W. White Lessee of Record Enclosures —sent by US mail service Email addressed to Kevin Banks Pictures of drilling operations Memo/Notes addressed to Matt Rader You Tube Video of Drilling Operations: http://www.youtube_corn/watch?v=HOKewuu5aXw 5 It • To: Brian Stibitz, Reeves Amodio LLC Fax number: 907-222-7199 From: James W. White, Alaskan Crude Corp 3ames W. White Fax number: 210-651-0777 4614 Bohill Street San Antonio, TX 78217-1413 Phone Number: 210-651-0777 Date: 2/20/2009 Cell Number: 907 Email: jimwhite@sabc.moom Regarding: Correspondence to Havelock Phone number for follow-up: 210-651-0777 Comments: # of pages including cover page: 6 Brian, Please find attached the e-mail correspondence to John Havelock dated 1/22/2009, :! and also the memorandum regarding the later than normal winter freeze up of the North Kenai Borough Road. Sincerely, James W. White, President Alaskan Crude Corporation . - • • Page 1 of 2 James From: "jim white" <jimwhite@acsafaska.net> To: <brian.havelock @alaska.gov >; <matt.rader @afaskagov >; <jim@appleca pita I. n et> Sent: Thursday, January 22, 2009 10:16 AM Subject: Brian Havelock, Amerex termination Date: January 22, 2008 To: Mr. John Havelock, Division of Oil and Gas Re: DNR's representatives' visit to the private property where Moose Point# 1 well is located on ground owned by a private land owner in a plated Kenai Borough subdivision where the subsurface oil and gas rights are owned by the State of Alaska Hello John. I believe your ride out over the unimproved North Kenai Road to the Moose Point#1 well site was as precarious as my ride was to meet you yesterday at the well site. This road was a virtual slick mud quagmire in many places 2 days earlier due to nearly two weeks of above freezing temperatures and warm rains. If the present cold temperatures continue this North Kenai Road should soon support a loaded 18 wheeler to either bring supplies in are take the drilling rig out as the case may be. As we discussed yesterday, by letter January 2, 2009, the Division terminated and gas lease with the declaration "ADL 389922 expired on December 31, 2008. The case has been closed in this office." I as lessee of ADL389922 have seen my lease be wrongfully terminated. Therefore it follows, absent the Division reinstating this lease in writing this lease title remains clouded in a duly appeal pending status because this issue has been duly timely appealed January 20, 2009, be me to the DNR Commissioner. As of January 1, 2009 by virtue of the Division terminating the subsurface ADL 389922 oil and gas lease and "the case file been closed in this office" land surface activity on the drill site, from that precise time forward, became a private matter between White and the private land owner only, at least as far as the DNR is concerned. From January 1, 2009, on White's relationship with the lands owner to store the rig on this private property or not store rig on this property is absolutely no concern of the DIN. This is strictly private enterprise between private parties. We discussed the water well on this privately owned property. Alaskan Crude Corporation (ACC) reworked and completed this water well in 2006. This well is owned by the land owner. The land owner owns the water beneath its land. ACC has the right to use water from this water well to rework the Moose Point #1 well. I hope we have cleared up any DNR concerns about ACC's use of the small amount of water that has been used from this water well to rework the Moose Point # I well. Actual drill rig dwell time over the Moose Point#1 well needed to rework and initially test this well is expected to take about 5 days or less. Should the well prove up, well completion of course would take more time depending on what we found testing the well. It is important that this rig be removed from this location by the end of February, 2009, before spring breakup. It is hoped that we will have timely lease activation feedback from the Division, yea or nea, to minimize the economic impact on me addressing this current ADL389922 appeal process. 1 / 9 / ?Afo • Page 2 of 2 However I did appreciate seeing you again and meeting Mr. Peterson. Please feel free to discuss this issue with me at any time. Kindly Regards Jim White email - jimwhite0,satx.rr•.com Ph 907 - 335 -1829 cell ph 907- 394 -1829 1/22/2009 • Alaska Crude Corporation, 4614 Bonin, San Antonio, Texas 78217 MEMORANDUM SUBJECT: Discussing the later than normal winter freeze up of the North Kenai Borough Road. FROM: Alaska Crude Corporation DATE: December 31, 2008 June 13, 2007, actual well boring commenced to reach the bottom hole location of the Moose Point #1 well. The well was reentered to remove the 16 foot long 4 inch metal pipe and concrete that was cemented in 6 feet below the final grade when the well was plugged and abandoned in 1978. Drilling operations are being performed pursuant to Lease contract: Article 34 Definitions, Paragraph (4) Article 34 DEFINITIONS (4) "Drilling" means the act of boring a hole to reach a proposed bottom hole location through which oil or gas may be produced if encountered in paying quantities, and includes redrilling, sidetracking, deepening, or other means necessary to reach the proposed bottom hole location, testing, logging, plugging, and other operations necessary and incidental to the actual boring of the hole;" Other operations necessary and incidental to the actual boring of the hole to reach the bottom hole location occurred when Alaska Crude Corporation (ACC) redrilled and completed the lease's 120 foot water well with a pump to provide water required to drill the Moose Point #1 well. Additionally, the workover rig, blow out preventer, mud tanks, drill pipe and other major equipment necessary and incidental to reach the proposed bottom hole location of this well are currently located at the lease well site. Drilling operations are now continuing on ADL389922 lease's Moose Point # 1 well whose bottom hole is located on this lease. The Moose Point # 1 well AOGCC API drilling permit number is 50- 133 -20312 -9000. • • Drilling has duly commenced on ADL 389922 and will continue with reasonable diligence on the day that this lease would otherwise expire, December 31,2008,and continue thereby automatically extending this lease pursuant to lease paragraph 4(c)(1) until 90 days after cessation of reasonable diligence. Article 4 (c)(1) of the lease provides: "If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the lease otherwise would expire and is continued with reasonable diligence, this lease will continue in effect until 90 days after cessation of that drilling and for so long as oil or gas is produced in paying quantities from the leased area." Development of ADL 389922 is dependent upon having a road that is capable of carrying heavy equipment to remote well site and finding a market for gas that might possibly come from this well. The 8 mile North Kenai road beyond Captain Cook Park is a Kenai Borough unimproved road. It will only support truck travel in the winter when the ground is frozen deep enough to support a heavy truck. It was not until December 20 2008 that the road became frozen enough to support limited light duty pick - up travel to and from ADL 389922 lease's Moose Point #1 well site. The road will not be frozen sufficiently to safely support large vehicle travel to the Moose Point #1 well until after December 31, 2008. If the weather remains cold, road conditions should improve so heavier equipment may be able to travel after December 31, 2008 to and from the well site as needed. Finding a market for the gas is important. Available markets justify the investment of wildcat risk capital in exploration and drilling oil and gas wells. The Birch Hill well, located only 2 miles from the Moose Point #1 well, has been capable of selling gas since 1967, but has not sold one cubic foot of gas the last 40 years. ACC had ongoing gas sale negotiations with Agrium until they shut their plant down in 2007. This meant there were no other possible markets to market gas from ADL 389922 until Govemor Palin bargained to approve Phillip /Marathon's gas export license to ship Kenai gas to Japan. Governor Palin forced Phillip /Marathon to agree to purchase up to • • 30,000 cubic feet of gas per day from new independents like ACC and include that purchased gas in the Japanese gas delivery. Because of her actions, ACC now believes that it may be profitable to take the risk to invest more risk capital to continue exploring the ADL389922 lease. ACC believes that ACC has a reasonable chance to market gas to the LNG plant partners if gas can be found timely during this very short two year new Phillips/Marathon export license to Japan. ACC now intends to invest more risk capital to explore the ADL 389922 for gas on the risky premises gas could be sold to the LNG plant. Phillips has a 20" pipeline to their liquefied natural gas plant that runs over ADL 389922 and is within 800 feet of the Moose Point #1 well. If gas is found in the Moose Point #1 well, the physical act of connecting an 800 foot gathering line could be accomplished within a few days. ACC currently knows of no other market to sell gas in Alaska. ACC now believes it can get a reasonable rate of return if it can get the Moose Point #1 proved up and flowing before too much time goes by when Phillips/Marathon commences its new gas exports to Japan. Then royalties from this state lease can begin flowing to the state's coffers. • • HP (M:slet 6310 Log for Personal Printer/Fax/Copier /Scanner Intrepid Production 2106510777 Feb 20 2009 2:17PM Last Transaction Date Time Type Station ID Duration Pages Result Feb 20 2 :14PM Fax Sent 9072227199 2 :47 6 OK Et E3 r\ • 1 0 SARAH PALM, GOVERNOR �/ ❑ P.O. BOX 111000 JUNEAU, AL 99811 -1000 PHONE: (907) 465 -2400 FAX: (907) 465 -3886 DEPARTMENT OF NATURAL RESOURCES [] 550 WEST 7 AVENUE, SUITE 1400 ANCHORAGE, ALASKA 99501 -3650 OFFICE OF THE COJMMISSIONER PHONE: (907) 269 -8431 FAX: (907) 269 -8918 February 18, 2009 by Ye James W. White l) Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 I Re: Request for Reconside on - ADL 389922 Notice of Expiration of Lease Dear Mr. White: By a letter dated and received on February I I, 2009, you requested that I reconsider my decision on the expiration of your oil and gas lease (ADL 389922). You assert that I unreasonably conditioned the extension of your lease, and presented 17 material facts that you believe are in dispute. Your request was received within the time allowed by law (11 AAC 02.040). I have decided to order reconsideration. You have until February 26, to submit additional written material or request a hearing with supporting factual issues to be considered. If you request a hearing, please identify the format and methodology you request, whether you will want to present the testimony of witnesses and their names and contact information, and any other preferences. If you do not request a hearing, I will make a decision on reconsideration based on the information provided in your February 11, 2009 letter and the facts available to me. My January 27, 2009, decision remains in effect for you to pursue continued drilling operations. Sincerely, Thomas E. Irwin Commissioner cc: Kevin Banks, Acting Director, DIN Division of Oil and Gas "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." • • -4 ; VS %4 • •- • * , t;ir.„ —4■111111 VVVV .1141.1”014r ^41 0.."TIP -8 Wihrv* . ' 41111 • 1 r. 17'4 - • • • • . - • = elLtairiA. d‘cN ) - *S . • "'•■ - • , ' • , ,*•• • 2007 Stt.ntrn r +j me e AIartk Kena. :i fz, ac. M ,, Ai ' 6 . -0. . 44- , _ L • f R it 1 i . x I, a 00 ,10 0.." ‘ _,..7. :.:44;:ef•ti‘°'' X t yi 4 IVO". -4 , r ! • .f k Yn Zr < • t Y. r +R d . 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"k . , 1 . ... ... v " . 21110 . , . ... . • - ..,..- , . . . . asiallw ........•°'"°".I. 1 ' % VP ' * - • ',- e • .. - 1r- , •• 111111 ' t -41 . i --. 9 f r . . , 1. 4000° o ii A c _di. _.- i al , ....._ .. _ 1)n A SARAH PALIN, GOVERNOR _ _ u P.O. BOX 111000 JUNEAU, ALASKA 99811 -1000 PHONE: (907) 465 -2400 FAX: (907) 465 -3886 DEPARTMENT OF NATURAL RESOURCES ❑ 550 WEST 7 AVENUE, SUITE 1400 ANCHORAGE, ALASKA 99501 -3650 OFFICE OF THE COMMISSIONER PHONE: (907) 269 -8431 FAX: (907) 269 -8918 Februa ry 18, 2009 James W. White Alaskan Crude, Inc. 4614 Bohill San Antonio, TX 78217 Re: Moose Pt. #1 drilling activities and bonding requirements Dear Mr. White, This letter requests information relative to ongoing drilling activities at Moose Pt. #1 well, on lease ADL 389922, and further requests establishment of a bond for those activities. A. Ongoing Drilling Activities: 9 9 9 In accordance with AS 38.05.180(m) and paragraph 4 of our lease and as ( ) c 4(c)(1) Y referenced in the Commissioner's letter to you of January 27, 2009, your lease is extended for so long as drilling is continued with reasonable diligence. Please provide the following to inform our understanding of the ongoing activities: a. A description of all ongoing drilling activities at Moose Pt. #1 well since December 31, 2008; b. A copy of all written communication relative to the drilling - related regulatory requirements of the Alaska Oil and Gas Conservation Commission, such as permits, inspections, or authorizations. B. Establishment of a Bond: Matt Rader's letter to you dated January 29, 2009 (enclosed) requests that you properly establish a bond for the subject activities. In an effort to simplify the effort required, Mr. Rader further attached a draft letter (enclosed) that you may choose to use to meet the State's bonding requirement. "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." • J. White 2/18/09 Page 2 of 2 To date, we have received no communication from you regarding establishment of a bond. You are reminded that a properly executed bond is immediately required. Sincerely, Jonne Slemons Petroleum Land Manager Cc: Kevin Banks Mr. J. White at: jimwhite@satx.IT.com Mr. J. White at: jimwhite@acsalaska.net Matt Rader Bruce Buzby • • L SARAH PALIN, GOVERNOR � C b DEPARTMENT OF NATURAL RESOURCE 550 WEST 7 AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501 -3560 DIVISION OF OIL & GA PHONE: (907) 269 -8800 FAX: (907) 269 -8938 J anuary 29, 2009 James W. White Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas 78217 Re: Single Lease Oil and Gas Performance Guarantee LO /CI 03 -019 Dear Mr. White: Please submit as soon as possible a signed and correctly dated original of the attached draft letter necessary to perfect the bonding requirements for the Moose Point Unit No.1 Gas Well Re -Entry plan of operations LO /CI 03 -019. If you have any questions, contact Brian Havelock at 269 -8807. Sincerely, - X L Matt Rader Natural Resource Specialist ec. Jonne Slemons jimwhite @acsalaska.net jimwhite @satx. rr.com "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans." • Division of Oil & Gas Alaska Department of Natural Resources Page Two Crude for the work plan. Should you need any further information in this regard, please contact the undersigned. Sincerely, Intrepid Production Company By: James W. White, President Alaskan Crude Corporation By: James W. White, President • • Intrepid Production Company 4614 Bohill San Antonio, Texas 78217 (210) 651 - 0777 Instruction: ENTER CORRECT DATE HERE Division of Oil & Gas Attn. Matt Rader Alaska Department of Natural Resources 550 W 7th Avenue, Suite 800 Anchorage, Alaska 99501 -3560 Re: Performance Bond Requirements Alaskan Crude Corporation Gentlemen: Currently the State of Alaska has a $100,000 Certificate of Deposit issued by First Interstate Bank of Alaska (now Northrim Bank, CD No. 1290303500) on record with the Department of Natural Resources ( "DNR ") Financial Services office made payable to State of Alaska ITF Intrepid Production Company ( "Intrepid CD "). The purpose of this letter is to confirm to DNR that the Intrepid CD is intended to serve as the performance guarantee of Alaskan Crude Corporation ( "Alaskan Crude ") in connection with Alaskan Crude's work activities described in Plan of Operations LO /CI 03 -019, Alaskan Crude Corporation, Moose Creek Unit No.1 Re- Entry, approved by the Division of Oil and Gas on January 22, 2004 ( "Work Plan "). The undersigned James W. White is the President of both Intrepid Production and Alaskan Crude and is in all matters authorized to sign this letter on behalf of both parties. As such, the undersigned attests and certifies as follows: 1. Intrepid Production, at the request of Alaskan Crude has agreed to allow the Intrepid CD to serve as the performance guarantee of Alaskan Crude with respect to the Work Plan. 2. Intrepid Production grants to the State of Alaska, acting through the DNR or otherwise, the right to exercise the Intrepid CD as the performance guaranty of Alaskan Crude with respect to all obligations under the Work Plan, and leases. We trust that this letter, along with the completed bond form submitted by Alaskan Crude satisfies DNR's requirements with respect to the required performance guaranty of Alaskan CO33059 146 • • • Emailed: February 27, 2009 Hardcopy will be sent via mail State of Alaska A AOGCC 333 W. 7 Avenue Suite 1000 � `' - -k Anchorage, Alaska 99501 -5339 MAR 9 2 2009 Re: Jan, 2009 Letter from Daniel T. Seamount, Jr. Chair 0il nth� °` ;`�r►ssioe =. r g La Dear Commissioners: t^ In response to your letter, please see the following: ACC drilled, milled and bored out the 4in. pipe that had been wrongfully concreted in the Moose Pt. #1 well's 7in. casing the summer of 2007 (please see photo titled, "Moose Point #1 Well shown as abandoned, 1982" attached). Agrium Fertilizer tentative offers to purchase gas from Alaskan Crude Corporation g erhl zer Facility made to tat e p g rpo (ACC), but the offered prices that they were willing to pay were too low to make it economically feasible to produce the gas profitably from the Moose Pt. #1 well. Governor Sarah Palin negotiated with Phillips - Marathon early 2008 when Phillips - Marathon agreed to purchase around 30K (30,000) MCF /day from an independent such as White /ACC. This is the first time in the seven year history of this ADL 389922 Lease that there was a tentative offer to purchase gas making it economical to reenter the Moose Pt. #1 well.; hence, ACC's efforts to re -enter the well during the 2008 -2009 winter drilling season. ACC was able only to access this site via pickup truck this winter December 20, 2008. Work commenced, and drilling activities (see: picture attachments) to attach the 7in. 50001b. BOP stack on the well -head on December 31, 2008. Thus, work was ongoing pursuant to 4(c)(1) of the ADL 389922 Lease contract automatically extending ADL 389922 Lease beyond its primary term. However, the Department of Natural Resources (DNR) wrongly terminated this ADL 389922 Lease on January 2, 209 and all drilling work immediately stopped. On January 27, 2009 Commissioner Irwin issued an Order (enclosed) acknowledging that "the lease had been reinstated and extended in accordance with AS38.05.180(m) and paragraph 4(c)(1) of the ADL 389922 Lease." However, the Commissioner's terms reinstating the ADL 389922 Lease were not in accord to the clear language of the ADL 389922 Lease contract. Therefore, James W. White, as lessee, duly appeals the Commissioner's January 27, 2009 decision and terms of reinstatement of ADL 389922 Lease. Commissioner Irwin has since stated • III that he will reconsider his January 27, 2009 decision with his February 18, 2009 letter (attached), and the outcome of this reconsideration is yet unknown. ACC is in the process of mobilizing and removing the carrier - mounted drilling rig and related equipment from the Moose Pt. #1 well site before this March breakup commences as spring breakup comes early on the Kenai Peninsula. Currently, when the BOP stack is removed from the Tin. casing the well will still remain secure as the surface plug remains sufficiently intact. Your engineering department may require further procedures to be implemented atop of the well- head when ACC completely demobilizes the well this spring. Again, White remains unsure as to what Commissioner Irwin's decision will be pursuant to his February 18, 2009 letter relating the status of ADL 389922 Lease. If he properly reinstates the ADL 389922 Lease, ACC will continue Moose Pt. #1 drilling operations this next winter season of 2009 -2010. If Commissioner Irwin does not reinstate the ADL 389922 Lease, White will continue to pursue the matter in court. Please check this link (htt} / /www\ outube.com /v,-atch?1r= 2 SY; GPIBvc °v NI) to watch a video of drilling activities that were ongoing December 31, 2008. Other photos are also attached documenting activity performed at the Moose Pt. #1 well site for your files. Included is also a complete documentation of correspondence. I would appreciate an opportunity to discuss this matter and other issues that ACC has pending with the commission concerning the Burglin 33 -1 well at your earliest convenience. Regards ' ~ gy p .tai4es i White ti • ua1 J,.. 'es 0 . ite, President, laskan Crude Corporation 7 • 45 4111 • SARAH PALIN, GOVERNOR ALASKA OIL AND GAS 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501 -3539 1. •�►71sI PHONE (907) 279 -1433 January 27, 2009 FAx (907) 276-7542 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7005 1160 0001 2499 6095 Jim White Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 Re: Moose Pt. Unit # 1 PTD No. 205 -038 Dear Mr. White: On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) issued Permit to Drill No. (PTD #) 205 -038 to Alaskan Crude Corporation for re -entry into the plugged and abandoned Moose Pt. Unit # 1 well (which was first drilled under PTD # 179 -001). In a fax dated August 14, 2007 you listed the work that had been done at the Moose Pt. Unit # 1 well during June and July of 2007. The Commission does not know when this work was started, and whether it was suspended or shutdown, restarted (if it was suspended or shutdown), or completed. Nor does the Commission know the status of any other work at the well. Accordingly, by February 28, 2009, please provide the following for the Moose Pt. Unit # 1 well: (1) a detailed report describing the history, present status, and plans for the well; (2) all records and reports referenced in 20 AAC 25.070; (3) all geologic data and logs referenced in 20 AAC 25.071; and (4) an explanation detailing why any required submissions were not previously made. Requesting and receiving this information in no way affects the Commission's right to take any action, including any enforcement action. Sincerely, Daniel T. Seamount, Jr. Chair 44 • • Page 1 of 1 Maunder, Thomas E (DOA) From: Grimaldi, Louis R (DOA) Sent: Thursday, December 04, 2008 10:20 PM To: Maunder, Thomas E (DOA); DOA AOGCC Prudhoe Bay Subject: RE: Moose Point #1(2.Q.3-4-79 0S Q S, Just some thoughts on this upcoming work (if it ever comes up), 1. This should be considered a "Remote" location in that you will not be able to drive to the rig. Transportation will be by some type of tracked vehicle leaving from Captain Cook park. Depending on the conditions and type vehicle they use it could be a few hours ride. 2. Parking your vehicle at the park is risky this time of year. Nikiski still has a fair amount of damage done to vehicles left unattended. I offer my driveway to anyone who wants to park there and get a lift or taxi to the park. I am about twenty minutes drive from the park. 3. Any help I can give please let me know. Lou From: Maunder, Thomas E (DOA) Sent: Wed 11/26/2008 3:15 PM To: DOA AOGCC Prudhoe Bay Subject: Moose Point #1 OS - © -c S All, I just got a call from Jim White that he was intending to move his "rebuilt" accumulator out to the Moose Point #1 well out the Phillips' pipeline road from Nikiski. This permit was issued some time ago. He did move his rig (a pulling unit) in prior to the 2 year anniversary of the permit issuance and I believe eventually got the 5" DP that was cemented into the wellhead removed, but not without a lot of difficulty. I think Lou may have been out there once upon a time, however I don't believe there has been another Inspection performed. He left some numbers, San Antonio - 210 - 651 -0777 and Kenai cell - 907 - 394 -1829. I did speak with him on the cell number, he is still in San Antonio but is planning to travel to Alaska on Friday. There is some work to do getting the accumulator piped in and he would expect a BOP test "sometime" next week. Tom 1/5/2009 • • Page 1 of l Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Thursday, July 17, 2008 3:06 PM To: 'Jim White' Subject: Your call Jim, Sorry, but I can't give you a call right now. If you would, reply to this message and relate what you mentioned with regard to the Moose Point well. Thanks in advance, Tom Maunder, PE AOGCC 1/5/2009 • • Page 1 of 1 Maunder, Thomas E (DOA) From: Jim White [jim @applecapital.net] Sent: Friday, April 04, 2008 6:04 PM To: Maunder, Thomas E (DOA); Jim White Subject: Re: RE: Moose Point #1 Re -Entry (205 -038) Attachments: April 3, 2008 Amerex Progress Report to AOGCC.doc Tom, Here is the document in a Word format. Jim White, PE (the younger) Original Message - - -- From: Maunder, Thomas E (DOA) To: Jim White Cc: jim. @applecapitatnet Sent: Friday, April 04, 2008 9:49 AM Subject: RE: RE: Moose Point #1 Re -Entry (205 -038) Jim, You have the email address correct. I am unable to open the document. Could you resend as a .pdf or word document or fax to 907 - 276 -7542. When sending information on this operation, please use a similar subject line. Thanks, Tom Maunder, PE AOGCC From: Jim White [mailto:jimwhite @satx.rr.com] Sent: Friday, April 04, 2008 8:42 AM To: Maunder, Thomas E (DOA) Cc: jim @applecapital.net Subject: Hello Tom. Not sure if I have your correct email address, but here is a try. Hope your day is a good one. Best Regards Jim white jimwhite @satx.rr.com 1/5/2009 1 III 1 ALASKAN CRUDE CORPORATION 4614 Bohill, San Antonio, Texas, 78217 Ph.210- 651 -0777 Date : April 3, 2008 To: AOGCC Attention: Mr. Tom Maunder Subject: Amerex well reentry April 3, 2008 Progress Report Re: AMEREX well reentry operations This letter is to advise the Commission that a new 7' 5m double BOP and new 7" 5m Annular were delivered to Amerex drill pad about March 10, 2008. One air pump is being replaced on the accumulator. Accumulator nitrogen bottles are also being replaced. The 4" pipe has been milled out of the 7" casing and well head has been installed and ready to except the installation of the new 7" 5m BOP stack.. ACC will recommence drilling reentry operations when the well pad dries out after break up. (mid May hopefully) Regards Jim White Page 1 of 1 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Tuesday, November 06, 2007 4:20 PM To: jim white Subject: RE: Emailing: scan0002.jpg, scan0001.jpg, scan0006.pdf, scan0006.jpg, scan0005.jpg, scan0004.jpg, scan0003.jpg Jim, I received your email with the attachment. I believe you had sent me the attachments previously. Regards, Tom Maunder, PE AOGCC From: jim white [mailto:jimwhite @satx.rr.com] Sent: Tuesday, November 06, 2007 11:13 AM To: Maunder, Thomas E (DOA) Subject: Emailing: scan0002.jpg, scan0001.jpg, scan0006.pdf, scan0006.jpg, scan0005.jpg, scan0004.jpg, scan0003.jpg Hi Tom Hope this is what you want. let me know is more is needed jimwh ite @satx. rr. com The message is ready to be sent with the following file or link attachments: scan0002.jpg scan0001.jpg scan0006.pdf scan0006.jpg scan0005.jpg scan0004.jpg scan0003.jpg Note: To protect against computer viruses, e -mail programs may prevent sending or receiving certain types of file attachments. Check your e -mail security settings to determine how attachments are handled. 1/5/2009 0 0 Page 1 o 1 Y t L s s - file: / /C:\ temp\ Temporary% 20Internet %20Files \OLKF \scan0001.jpg 1/5/2009 • • Page 1 of 1 . . . . §. .. . . ƒ ?} . .... .« ....� � \\ ' «�3 \: 0141 . « . �� " O . . w «� : � :..».. < m � ' 'A', � } file : C :\temp Tempo ary° 2mn erne° 20F)c6OEKFkcan00 2]pg 1/5/2009 • Page 1 of 1 110 g 1 /5/2009 file: / /C:\ temp\ Temporary% 20lnternet %20Files \OLKF \scan0003.jpg • • Page 1 of 1 '^t 3 l I ,.,.'S ice& s file: / /C:\ temp\ Temporary% 20Internet %20Files \OLKF \scan0004 jpg 1/5/2009 • 0 Page 1 of 1 t i . i , : }} 4, ..,./1"/.4''/'''''' - a v4 i ._..:.; ,'"'" - I P r i. 4 file: / /C:\ temp\ Temporary% 20lnternet %20Files \OLKF \scan0005.jpg 1/5/2009 • Page 1 of 1 .t . file: / /C:\ temp\ Temporary% 20Internet %20Files \OLKF \scan0006.jpg 1/5/2009 Blank S Page 1 of 2 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Friday, October 12, 2007 3:24 PM To: jim white Subject: RE: Milling out iron concreted in the top Moose Point #1 well 7" casing Jim, Email arrived just fine. Just took a while. Best regards, Tom From: jim white [mailto:jimwhite @satx.rr.comj Sent: Friday, October 12, 2007 11:59 AM To: Maunder, Thomas E (DOA); brucewebb @gci.net; jim @applecapital.net Cc: jimwhite @satx.rr.com Subject: Milling out iron concreted in the top Moose Point #1 well 7" casing Alaskan Crude Corporation 4614 Bohill San Antonio, TX 78217 210 -651 -0777 Kenai, Ak. 907- 335 -1829 jitnwhiite @satx .ir.co n , jirwhite @acsalaska.net October 12, 2007 Alaska Oil & Gas Conversation Commission Attention: Mr. Tom Maunder Sent via email to toni.maunder @alaska.gov Re: Moose Point #1 Well operation to mill out 4" pipe concreted in the bottom half of the well head left on the 13 518th" casing when the well was P & Aed in 1982. Dear Tom: Attached are pictures of the drilling rig and of the over shot mill we used to milled out the iron concreted in the top of the in the Moose Point #1 well's 7" casing We milled out about 3 Y2 feet of 4" pipe concreted in the 7 in. casing with an over shot mill. I will send you a picture of the iron piece we milled out of the well's 7" casing when we get back out to the drill site in a couple of weeks. We repaired the ring grove of the existing 13 V2 "bottom half of the well head and polished off the 7" casing extending above the pack off. We nippled up the 3000# 13 i /2" by 5000# 7" well head. 1/5/2009 Blank 4110 • Page 2 of 2 We will nippled up 5000 pounds 7" BOP stack when it freezes up hard enough to get an 18 wheeler out there to deliver the BOP stack. Regards, Jim White jimwhite@satx.rr.com 1/5/2009 Page 1 of 1 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Thursday, August 30, 2007 12:08 PM To: Birnbaum, Alan J (LAW) Cc: Daniel T Seamount JR Subject: 205- 038_Moose Point #1_re- entry.pdf Attachments: 205- 038_Moose Point #1_re- entry.pdf Alan, Attached is a document Dan asked me to forward to you. This involves an authorization for Jim White /Alaska Crude to re -enter a well on the NW shore of the Kenai Peninsula. The well was originally drilled in 1978 and then P &Aed in 1979. This well is similar to the Pt. Thomson wells in that P &A was granted per the request of the operator leaving the wellhead in place. Re -entry of a P &Aed well has been done by other operators and is authorized by the Commission issuing a permit to drill. Mr. White originally applied for a permit in late 2003 /early 2004 to re -enter the well, but that was returned to him in April, 2004 not - approved since the application was incomplete and he did not respond with requested information. He reapplied and permit 205 -038 was issued March 24, 2005. According to the Commission regulations, the permit is valid for 2 years after it is issued. If you refer to page 3 and 4 of the attachment, Mr. White did provide a brief summary of the work he has accomplished since the permit was issued. The earliest work reported appears to have begun in June 2007. So far as I understand he has been working to remove the abandonment marker from the well. This marker, apparently a piece of 5" drill pipe was sealed with concrete into the open wellbore. According to Mr. White, it has been most difficult to remove the concrete although it appears that he may have had some success. Based on the report and a conversation with Mr. White, he intends to continue /resume the work late this fall /early winter. He apparently has successfully moved his rig to the site and has it erected over the well. I have no specific knowledge that the rig is in place and we have received no call for an Inspection. If he does get his BOP installed, an Inspector will likely be present for the test. Page 5 of the attachment is an exchange between "Randy" at DEC and Art and Steve. Apparently Randy called looking for information after some sort of spill was reported at the site. Based on the April 3 date on that page, it would appear that Mr. White was conducting some activities and they may have been on the site near the end of March this year. It is possible that earlier activities may have been conducted as well however we have no record to substantiate that. I have shown this information to Dan and he suggested I forward it to you for review. The basic issue that could be here is, has Mr. White conducted sufficient operations such that the permit is still valid? He does report that he has been working to remove the marker and concrete which is necessary to allow work to continue deeper (ie greater than arms length) in the wellbore. When Dan and I discussed the matter, his position was that he believes Mr. White has done work to keep the permit valid. I agree with Dan that work has been done, but thus far while the work was necessary to gain access to the well it work has not resulted in entry further than what appears to be arms length. If Mr. White is able to work as he plans in the coming months, he should be able to clean the wellbore out as originally planned. The appropriate response may be to wait and see what he is able to accomplish. However there is a risk that the attempt at re -entry could drag on and Mr. White maintain that the permit is valid so long as he is doing "work ". In the past, Mr. White has claimed that he could perform work on a well authorized by a sundry issued over 5 years previously. Your council will be appreciated. Tom 1/5/2009 • 1 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Thursday, August 02, 2007 9:03 AM To: 'Jim White' Cc: 'Bruce Webb' Subject: RE: Moose Point Unit #1 Re -entry (205 -038) Importance: High Jim or Bruce, I have not heard back regarding my request for information as to the activities conducted this summer on the Moose Point well. I'd appreciate if a summary of the operations could be provided. This should include the dates work was conducted. I'd appreciate your reply by August 15. Call or message with any questions. Tom Maunder, PE AOGCC Original Message From: Thomas Maunder [ mailto :tom_maunder@admin.state.ak.us] Sent: Tuesday, June 12, 2007 12:34 PM To: Jim White Cc: Bruce Webb Subject: Moose Point Unit #1 Re -entry (205 -038) Jim, We talked a while back of the difficulties you were encountering "chipping the cement" around the DP marker on this well. I was wondering if you could provide a summary of the operations you have been able to conduct and what work you might have planned for the summer. Thanks in advance. Call or message with any questions. Tom Maunder, PE AOGCC 1 . • Maunder, Thomas E (DOA) From: Art Saltmarsh [art_saltmarsh @admin.state.ak.us] Sent: Tuesday, April 03, 2007 12:09 PM To: Randall S Dowd Cc: Stephen F Davies; Mary J Williamson; Thomas E Maunder; James B Regg; Dan T Seamount; John K Norman; Catherine P Foerster Subject: Moose Point Unit #1 requested information Attachments: art_saltmarsh.vcf art_saltmarsh.vcf (437 B) Dear Randy, We have reviewed our files and determined the following for this well: On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) approved and issued a Permit to re -enter and test the Moose Point #1 well, located in Section 14, T9N, R9W Seward Meridian. The Permit (2050380) was issued to Alaskan Crude Corp. Mr. James White is listed as President of Alaskan Crude Corp. The Commissions approval letter states that 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. The issuance of the permit does not exempt the Operator 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 Moose Point #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing to offset any advantage Alaskan Crude Corporation may have over other owners by reason of re- entering Moose Point #1 well to the exception location and to allow affected owners to produce their just equitable share of hydrocarbons. This Permit was issued on March 24, 2005. Therefore, operations conducted under that permit must have begun on or before March 23, 2007. Permits are valid for 24 months from the date of issuance (20 AAC 25.005(14)(g)). The Commission has a staff of field inspectors who are available to assist you if needed. Please contact Jim Regg at 793 -1236. Please advise us of ongoing events related to this operation. Please let us know if we can be of any additional assistance. I can be reached at 793 -1230 or Steve Davies can be reached at 793 -1224. Regards, Art Saltmarsh and Steve Davies cc: file 1 • 1 Maunder, Thomas E (DOA) From: Thomas Maunder [tom_maunder @admin.state.ak.us] Sent: Thursday, December 07, 2006 2:40 PM To: Winton G Aubert Cc: Jim Regg Subject: Moose Pt. Re -entry Attachments: Moose_Pt_photol .J PG Moose_Pt_photol.3 PG (2 KB) Winton and Jim, FYI. While we were gone this morning, Bruce Webb representing Jim White stopped by. He just called. His question was with regard to getting and extension on PTD 205 -038 issued March 24, 2005. I advised him that there was no mechanism for extending a PTD. I told him that the permit was valid until March 24, 2007 and that unless they got their operations underway prior to that date a new PTD would be necessary. Bruce then mentioned that White was presently working at the location attempting to remove the abandonment marker. See the attached photo. It is one of a series of photos that White sent me in early November 2003. Bruce said that White "...has 2 rigs on the location, but removing the abandonment marker is proving difficult ". Apparently, the marker is a joint of 5" HWDP that is cemented into the top of the 7" casing. He evidently has shortened the marker and used a concrete hand drill to clean out the cement to about 2' below the flange. It is proving to be hard work. Webb did not ask if the work they were presently doing was sufficient to "activate" the permit. If I receive and other calls or messages, I will refer them to Winton. Tom 1 • 0 Page 1 of 1 ` - €mot .. "" �- . , : rte, t a { w .� a . 1/5/2009 file: / /C:\ temp\ Temporary% 20lnternet %20Files \OLKF \Moose_Pt�hotol .JPG • • Maunder, Thomas E (DOA) From: Thomas Maunder [tom_maunder @admin.state.ak.us] Sent: Wednesday, November 24, 2004 12:19 PM To: Winton G Aubert; Bob Crandall Subject: Jim White Contact FYI, Jim White left a message a while ago. He indicated that he would be in contact after the Thanksgiving holidays regarding his plan to re -enter the Amarex well near the northern tip of the Kenai Peninsula. Last year he did make an application, however never addressed the deficiencies that were identified and the application was returned to him. PTD for the application was 203 -179. Tom 1 IP Page 1 of 3 Maunder, Thomas E (DOA) From: Thomas Maunder [tom_maunder @admin.state.ak.us] Sent: Thursday, April 08, 2004 1:28 PM To: Thomas Maunder Cc: Jim White; jim white; Winton G Aubert; Bob Crandall Subject: Re: Request for AOGCC variance Moose Point#1 well Attachments: Jim_White_attachments.doc Jim, Here is the last message I have with regard to discussions on the Moose Point re- entry. The date I have on this message is February 12, 2004. I do not have any more recent messages from you although I do believe we have had a couple of conversations since then. Would you please answer the questions I have posed and provide the drawings ?? I am also enclosing the attachment from the Commissions letter of November 6, 2003 which listed the information that would be needed. In my message file, I do show that you sent an image copy of the signed application, but as I believe I informed you at this time we are not able to accept applications in that form. As I indicated in our conversation on receipt of a completed application, we will process it. In the document you send, please include drawings of the stack, choke manifold and general equipment placement. With regard to the procedure, we did discuss how you might test your casing as you re -enter the well and clean it out. Assuring that the casing is competent is very important. When the new application is received, it is likely that Winton and Bob Crandall will be responsible for managing the AOGCC review. On shore Kenai is their area, my earlier involvement was due to other pressing matters at the time the applications were originally received. Tom Maunder, PE AOGCC Thomas Maunder wrote: Jim, I am looking at your proposal for relief on some of the BOP requirements for your Moose Point re- entry. Could you please respond to this message and provide answers /documents to points 1 through 4 from my original message ?? Providing choke manifold drawings may answer this question, but are either of choke you would plan to employ hydraulic ?? If you need to fax any drawings, the number is 907 - 276 -7542. Thanks. Tom Maunder, PE AOGCC Thomas Maunder wrote: 1/5/2009 • Page 2 of 3 Jim, I am back in Anchorage and starting to look at your request regarding the BOP exceptions. I have a couple of questions. 1. When are you anticipating starting your operations ?? 2. What are the choke/kill connections on the bop ?? 3. How will the choke and kill lines be constructed ?? Are they flanged ?? 4. Please provide drawings of the BOP and choke manifold. 5. We sent you a letter outlining several items with regard to your original application, would you please have a look at that letter and respond to the requests. Also, I understand that the acreage around your proposed Blocker well may now be in a Unocal operated unit. Is this correct ?? If the acreage has been unitized, will there be any activity on the work plan you submitted ?? I look forward to your reply. Tom Maunder, PE AOGCC Jim White wrote: Date:1 /28/04 To: AOGCC Attention: Tom Maunder, Engr.Manager From: Alaskan Crude Corp., Jim White- jimwhite@.satx.rr.com Subject: Request for variance to 20 AAC25.035 Drilling Regulations for the re -entry of the Moose Point #1 well. Per DST #1 when this well was initially drilled, at mid perf depth of 8681' MD, 8659' TVD (assuming a straight hole and 22' RKB), reservoir pressure was reported to be 4065 psi or 0.47psi /ft gradient 9.0 ppg EMW. Using a 0.1 psi /ft gas gradient would result in a maximum anticipated surface pressure (MASP) of approximately 3200 psi. > Drilling Regulation 20 AAC 25.035(e) defines the requirements for BOP equipment and in general, divides equipment between 'less than API 5K' and 'equal to or greater than API 5K'. Given that MASP exceeds 3000 psi, we intend on using API 5K working pressure equipment. However, per 20 AAC 25.035 (h) (1), we would like to apply for variance to permit the use of equipment for the 'less than 5000 psi' category as opposed to 'equal to or greater than API 5K'. All BOPE will be API 5K working pressure. 1/5/2009 • Page 3 of 3 More specifically, we seek variance for; - 20 AAC 25.035(e)(1) the use of three preventers as opposed to four - 20 AAC 25.035(e)(4)(F)(i) 2" choke outlets as opposed to 3 ". - 20 AAC 25.035(e)(4)(H)(i) eliminate the requirement for a remotely controlled, hydraulic adjustable choke near the drillers station - 20 AAC 25.035(e)(4)(H)(iii) upstream of each choke, use one full- opening valve as opposed to two - 20 AAC 25.035(e)(4)(H)(iv) bypass line with one full- opening valve as opposed to two We request these variances on the basis that MASP marginally exceeds the 3000 psi WPcategory. We have access to a 7- 1/16" double gate BOP stack that has 2" outlets between the rams, not 3 ". In addition, no open hole drilling will be conducted during this operation. This is a cased hole operation. Again, all BOPE will be rated to API 5K. Regards. jimwhite @satx.rr.com 1/5/7009 • • Moose Point #1 Re -Entry 1) A C -Plan exemption from DEC or an approved C -Plan is required. 2) The present application is not signed. 3) Your plan does not presently present any information on the present condition of the well. You have provided photographs of the current location condition and these images do provide valuable information with regard to the location condition and what "well assembly" is present. 4) The limited operation plan given states that it is only intended to re- establish the 7" casing. Based on the photos and your conversations with Tom Maunder, it would appears that you may be able to propose some more specific operations or steps than previously submitted. 5) A drawing of the BOP stack, choke and kill lines and choke manifold should be provided. In conversations with Tom Maunder, you have indicated you would wish to employ a manually controlled stack as well as a 2" choke line. If the calculated surface pressure is such that a 5000 -psi rated stack is required, a 3" choke line is required. You must make an application to the Commission requesting a variance if you wish to employ the manual stack and 2" choke line. 6) A drawing of the re- established wellhead/tree should be included. 7) No information is provided regarding the disposal of drilling wastes. The abandonment drawing notes that there is diesel in the well above the top plug. Any wastes (solid or liquid) must be disposed of according to state laws. 8) This wellbore and the location have been abandoned according to AOGCC regulations. The Kenai Peninsula Borough has also accepted the "graded ", abandoned location. The photos indicate that the site has "grown over ". All prior activities on this site have been closed out. The proposed activities are essentially the start of a new project and other approvals besides the AOGCC's permit to drill are likely necessary. In conversations, you have indicated that you has been in contact with Matt Rader at DNR and Lydia Minor at DEC. It would appear that since the well is within the coastal zone that you should also be in contact with Pat Galvin at the Department of Natural Resources so that any additional permits can be determined and coordinated. Pat may be contacted at (907) 269 -8775 or p atrick_galvin @dnr. state. ak.us. Page 1 of 2 Maunder, Thomas E (DOA) From: Thomas Maunder [tom_maunder @admin.state.ak.us] Sent: Thursday, February 12, 2004 1:03 PM To: Jim White Cc: jim white Subject: Re: Request for AOGCC variance Moose Point#1 well Jim, I am looking at your proposal for relief on some of the BOP requirements for your Moose Point re- entry. Could you please respond to this message and provide answers /documents to points 1 through 4 from my original message ?? Providing choke manifold drawings may answer this question, but are either of choke you would plan to employ hydraulic ?? If you need to fax any drawings, the number is 907 - 276 -7542. Thanks. Tom Maunder, PE AOGCC Thomas Maunder wrote: Jim, I am back in Anchorage and starting to look at your request regarding the BOP exceptions. I have a couple of questions. 1. When are you anticipating starting your operations ?? 2. What are the choke /kill connections on the bop ?? 3. How will the choke and kill lines be constructed ?? Are they flanged ?? 4. Please provide drawings of the BOP and choke manifold. 5. We sent you a letter outlining several items with regard to your original application, would you please have a look at that letter and respond to the requests. Also, I understand that the acreage around your proposed Blocker well may now be in a Unocal operated unit. Is this correct ?? If the acreage has been unitized, will there be any activity on the work plan you submitted ?? I look forward to your reply. Tom Maunder, PE AOGCC Jim White wrote: Date:1 /28/04 To: AOGCC Attention: Tom Maunder, Engr.Manager 1/5/2009 • • Page 2 of 2 From: Alaskan Crude Corp., Jim White- jimwhite = : satx.rr.com Subject: Request for variance to 20 AAC25.035 Drilling Regulations for the re -entry of the Moose Point #1 well. Per DST #1 when this well was initially drilled, at mid perf depth of 8681' MD, 8659' TVD (assuming a straight hole and 22' RKB), reservoir pressure was reported to be 4065 psi or 0.47psi /ft gradient 9.0 ppg EMW. Using a 0.1 psi /ft gas gradient would result in a maximum anticipated surface pressure (MASP) of approximately 3200 psi. > Drilling Regulation 20 AAC 25.035(e) defines the requirements for BOP equipment and in general, divides equipment between 'less than API 5K' and 'equal to or greater than API 5K'. Given that MASP exceeds 3000 psi, we intend on using API 5K working pressure equipment. However, per 20 AAC 25.035 (h)(1), we would like to apply for variance to permit the use of equipment for the 'less than 5000 psi' category as opposed to 'equal to or greater than API 5K'. All BOPE will be API 5K working pressure. More specifically, we seek variance for; - 20 AAC 25.035(e) (1) the use of three preventers as opposed to four - 20 AAC 25.035(e)(4)(F)(i) 2" choke outlets as opposed to 3 ". - 20 AAC 25.035(e)(4)(H)(i) eliminate the requirement for a remotely controlled, hydraulic adjustable choke near the drillers station - 20 AAC 25.035(e)(4)(H)(iii) upstream of each choke, use one full - opening valve as opposed to two - 20 AAC 25.035(e)(4)(H) (iv) bypass line with one full- opening valve as opposed to two We request these variances on the basis that MASP marginally exceeds the 3000 psi WPcategory. We have access to a 7- 1/16" double gate BOP stack that has 2" outlets between the rams, not 3 ". In addition, no open hole drilling will be conducted during this operation. This is a cased hole operation. Again, all BOPE will be rated to API 5K. Regards. j i rr. com 1/5/2009 • • Maunder, Thomas E (DOA) From: Thomas Maunder [tom_maunder @admin.state.ak.us] Sent: Wednesday, January 14, 2004 9:55 AM To: Bob Crandall; Winton G Aubert Subject: [Fwd: RE: Moose Point #1 "Amerex Well" Re -entry and well test] Guys, FYI. I will be out of pocket for the next 2 weeks. To my knowledge, we have not received any updated information with regard to the permit application for the Moose Point well. One item Mr. White did call on a while back was an exception to use 2" choke and kill lines. The MASP as I remember is slightly over 3000 psi, so I do not see there being a problem with that exception. Based on statements in the information he submitted to DNR he is planning to test to 3500 psi. 3500 should be sufficient provided he accomplishes his initial BOP test to working pressure. This could come up in the next few weeks. Tom Original Message Subject: RE: Moose Point #1 "Amerex Well" Re -entry and well test Date: Tue, 13 Jan 2004 17:45:20 -0900 From: Bruce Webb < bruce webb @dnr.state.ak.us> Reply -To: bruce_webb @dnr.state.ak.us To: Thomas Maunder <tom maunder @admin.state.ak.us> Well, he has indicated that he wants to start "ASAP ", and that he plans on taking his rig out there soon because he doesn't need a permit. CONFIDENTIALLY, Tom.... We think he only wants to get a permit from us so he can waive it in front of ConocoPhillips, threaten to re -enter that well, produce gas, and force it down their pipeline.... That way, ConocoPhillips is more likely to buy his lease and give him an over - riding royalty off any future production. BUT, you never know, he a cantankerous old character, and has been known to drill wells and prove them up - so it's really anyone's guess as to his actual plans. This could all be an academic exercise, or he might apply for a permit to drill next week and make a decent discovery. I really like the guy and hope he drills the well and finds something worth reporting to the press! Original Message From: Thomas Maunder [ mailto :tom_maunder @admin.state.ak.us] Sent: Tuesday, January 13, 2004 4:44 PM To: bruce_webb @dnr.state.ak.us Cc: bob crandall Subject: Re: Moose Point #1 "Amerex Well" Re -entry and well test Got them this time. Has Mr. White indicated when he might wish to get going ?? He has not sent in any new information to correct the information previously filed. I thought that the original documents he sent into to you for review were not bad at all. They were much more complete than what he originally sent us. Thanks. Tom Bruce Webb wrote: >Try this.. > >My computer must not like yours, again, you are the only recipient that >didn't get the attachments " " Original Message >From: Thomas Maunder [ mailto :tom_maunder @admin.state.ak.us] >Sent: Tuesday, January 13, 2004 1:12 PM >To: bruce_webb@dnr.state.ak.us 1 • • >Subject: Re: Moose Point #1 "Amerex Well" Re -entry and well test > >Hi Bruce, >I think we had a problem with an attachment before. I did not get any >word document. >Tom > >Bruce Webb wrote: > > > »Attached is the Proposed Consistency Determination for the Moose Point »#1 Re -entry . » » » » 2 • • Page 1 of 3 III Maunder, Thomas E (DOA) From: Steve Davies [ steve_davies @admin.state.ak.us] Sent: Tuesday, April 22, 2003 9:04 AM To: Peter McKay Cc: Robert P Crandall; Tom Maunder Subject: Re: Moose Point Unit #1 Location Information Dear Mr. McKay: AOGCC regulates well operations associated with re- entering and re- completing Moose Point Unit #1 for testing purposes, but we do not regulate when those activities occur. Because this proposed operation is a re -entry of an abandoned, existing well, AOGCC regulations require the operator submit and obtain the Commission's approval of an application for a permit to drill. Once filed, the review and approval time for the application should be about 2 weeks, if the application is complete. To date, AOGCC records do not indicate that a permit to drill application has been filed for this operation. ACC (the operator proposing the re -entry and testing) is aware of ground conditions in the area, and apparently was in contact with crews that were working near Moose Point Unit #1 this winter and spring. ACC is also aware that the permit to drill is only one of possibly many permits that must be obtained as this well lies in Alaska's coastal zone. Other agencies that may be involved in permitting the operations associated with this project are the Division of Governmental Coordination, the Departments of Environmental Conservation, Fish and Game, and Natural Resources, and the Kenai Peninsula Borough. If you are interested in the permitting process, the starting point is the Alaska Coastal Management Program (ACMP), which requires projects in Alaska's coastal zones be reviewed and found consistent with statewide standards. This ACMP review process directs operators to the permits that are needed from state agencies. If an ACMP review is deemed necessary, the review period is typically 50 calendar days. You can find a complete description of the process on the web at http://www.alaskacoast.state.ak.us/ . I searched the state public notice site (http: / /notes 1. state. ak. us/ pnl pubnotic. nsf7($ A1lPublicNoti _ces) /$SearchForm ?SearchView ) using the key words "Moose Point," and the only notices filed concerning this project were those associated with the application for spacing exception (Conservation Order 488). To date, there has not been any notice published for an ACMP consistency review for this project. Please let me know if I can help further. Steve Davies Peter McKay wrote: Steve, Thanks for the reply. I see that the well is located in what is now the KPB Grey Cliff Subdivision. Not far from my land in Moose Pt. I cross Otter Creek on my way out. This area is rough (soft, muddy and marshy). It's tough to imagine a drilling rig /coil unit /wireline unit with tanks and support equipment getting out there except on ice roads in the winter. Is the timing of when and how the well will be worked something that the 1/5/2009 • • Page 2 of 3 Commision will be involved in? I'd like to hear more about this if you please. Thanks Pete steve_davies @admin.state.ak.us wrote: >Dear Mr. McKay: >The Moose Point Unit #1 well is located near the northern coastline of >the Kenai Peninsula about half way between Nikiski and Point Possession >(which lies at the mouth of the Turnagain Arm). The well is set back >from the coastline about 5000 feet, and it is located about 300 feet >from the southern bank of Otter Creek. The legal description for the >surface location of the well is 2512 feet from the north line and 2124 >feet from the east line of section 14, Township 9 North, Range 9 West, >Seward Meridian. This description will allow you to plot the well >location on a USGS topographic map. >This well was drilled by a company called AMAREX in 1978, and it was >plugged and abandoned in 1979. Conservation Order 488 grants Alaska >Crude Corporation's application for exception to the well spacing >provision of 20 AAC 25.055(a)(2) for the purpose of re- entering and >testing the well. >If you would like to find out more about the Oil and Gas Conservation >Commission, review our regulations, or review any of our decisions, >please check our website at: >http://www.state.ak.us/locallakpageslADMIN/ogcitiomeogc.htm. >If you have any questions, please call me. >Sincerely, >Steve Davies >Petroleum Geologist >Alaska Oil and Gas Conservation Commission >Telephone: (907) 793 -1224 >Fax: (907) 276 -7542 >steve_davies@admin.state.ak.us >Subject: [Fwd: Conservation Order 488] Date: Fri, 18 Apr 2003 12:48:18 -0800 From: Jody Colombie < jody _colombie @admin.state.ak.us> Organization: Alaska Oil and Gas Conservation Commission To: Stephen F Davies <steve_davies @admin.state.ak.us> Steve, can you please answer this e-mail. 1/5/2009 ill • Page 3 of 3 Jody Subject: Conservation Order 488 Date: Fri, 18 Apr 2003 12:41:04 -0800 From: Peter McKay < mckaype @netscape.net> To: jody_colombie @admin.state.ak.us People, Im writing in regard to Conservation Order No. 488. Can you please tell me where the Moose Point Unit #1 well is physically located? I own property in the Moose Point Subdivision (Kenai Peninsula Borough) and wonder if the two Moose Point's are the same. Thanks Pete mckaype @netscape.net Peter McKay 55441 Chinook Rd Kenai, AK 99611 1/5/2009 *3 AUG.14.2007 4 :45PM COPY CATS 9072835313 NO.081 P.3 FAX COPY CATS PRINTING & DESIGN 507 Frontage Road • Kenai, Alaska 99611 • 907 283 3494 • fax 907 283 5313 From: Date: _ F r ' Phone: Fax: To: Fax To: Pages Incl. Cover: Message /RE: Zli s211,52 MD6 >er pl VNtT-Li I . whole was o e rcrvt-tiuk 2 . — a c d live_ ape t 6 A.o 3 w k cL--- S iv 5 QP� -� a.v. L. 3 i 2oc 7 AUG. 14.2007 4 :45PM COPY CATS 9072835313 NO. 081 P.3 FAX COPY CATS PRINTING & DESIGN 507 Frontage Road • Kenai, Alaska 99611 •907 283 3494 • fax 907 283 5313 From: — r bb Date: ,,: - •- C3 Phone: Fax: . 222,-- To: Pages Incl. Cover: Message /RE: 0 AUG. 14.2007 4:44PM COP 9072835313 0 76 P. €/ ALASKAN CRUDE CORPORATION 4614 uobill, San Antonio, Th. 907- 335 - 1829, email- iimwhite(acsalaska.net Date: August 14, 2007 Prom: Alaskan Crude Corporation (ACC) Please keep this confidential RECEIVED To: Alaska Oil & Gas Conservation Commission AUG 1 4 2007 Attention: Mr. Toni Maunder e-mail toxn.xrmaunder @alaska.gov Alaska Oil & Gas Cons. Commission Anchorage Re: Moose Point#1 Well reentry The Moose Point #1 well's 7" casing was plugged and abandoned at the surface with an abandonment marker concreted in place in the casing with concrete. (Neat cement was not used) The well was abandoned at the surface. DNR records indicate that this (concrete) surface plug extends 12 feet below the surface. Unsure whether more iron is in or below this concrete plug. AOGCC's records show that the well's original balance surface plug was set at 140' to 55' below the surface and filled with diesel to the surface for freeze protection. The well should be open from the top of the 55' plug to the bottom of the reported 12 foot surface plug. (as per DNR records) The month of June, 2007, ACC rigged up the drilling rig and milled on that bottom portion of the abandonment marker that remained concreted in the 7" casing. Milled out 40" of iron and concrete. Have set mud tank and mud pump in place. July 2007, properly landscaped and ditched drill site. 7" casing is hung off existing 13 -5/8" 3000# casing flange at the surface. As of August 2007, repairing badly corroded ring grove in the existing 13 -5/8" 3000# flange so can set 7" 5000# well head and BOP. The month of June, 2006, ACC found the well site's existing water well's 7" casing plugged at 65' feet depth. (water well's original drilled depth -110 feet)The drilling rig was rigged up and the concrete plug at 65 feet was drilled out to 120 feet. - 7'>?.' / / et ery -t ¢ 77 r-77 A water well pump was installed and produced good quantities of water. (The well pump could not pump the well dry) AUG.14.2007 4 :45PM COPYSTS 9072835313 III NO.081 P.2 Rained excessively the month of July, 2006. Road turned to mush as a practical mater till freeze up. Not much more work was done at the well site, Emailed by Jim White, �' about: blank Dear Randy, We have reviewed our files and determined the following for this well: On March 24, 2005, the Alaska Oil and Gas Conservation Commission (Commission) approved and issued a Permit to re -enter and test the Moose Point #1 well, located in Section 14, T9N, R9W Seward Meridian. The Permit (2050380) was issued to Alaskan Crude Corp. Mr. James White is listed as President of Alaskan Crude Corp. The Commissions approval letter states that 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. The issuance of the permit does not exempt the Operator 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 Moose Point #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing to offset any advantage Alaskan Crude Corporation may have over other owners by reason of re- entering Moose Point #1 well to the exception location and to allow affected owners to produce their just equitable share of hydrocarbons. This Permit was issued on March 24, 2005. Therefore, operations conducted under that permit must have begun on or before March 23, 2007. Permits are valid for 24 months from the date of issuance (20 AAC 25.005(14)(g)). The Commission has a staff of field inspectors who are available to assist you if needed. Please contact Jim Regg at 793 -1236. Please advise us of ongoing events related to this operation. Please let us know if we can be of any additional assistance. I can be reached at 793 -1230 or Steve Davies can be reached at 793 -1224. Regards, Art Saltmarsh and Steve Davies cc: file A#2 1 i • • Alaskan Crude Corp. PTD considerations 1- 20 AAC 25.005. Permit to Drill. (a) Before drilling or re- drilling a well or re- entering an abandoned well.....submit and obtain commission's approval of an application for a permit to drill (10 -401). 20 AAC 25.005(a) - White, et al did obtain a permit to drill issued 3!24/05. This well was classified as exploration; however the weekly operations report was not included in the approval letter. 2- 20 AAC 25.005(g). If drilling operations are not commenced with 24 months after the commission approves an application for a Permit to Drill, the Permit to Drill expires. 20 AAC 25.005(g) - There is an email from me to Winton and Jim dated December 7, 2006 regarding a call from Bruce Webb. He specifically asked about extending the permit. This would indicate that they possibly believed that they had not conducted sufficient work to "activate" the permit. (A) Based on the scant information available, it is difficult to determine what operations were conducted prior to 3/24/07. We have the communication with DEC regarding the diesel spill from April 3, 2007, so it appears that some activity was underway and Webb indicated in the December call that some work had been done attempting to remove the DP marker from the wellhead. (B) It is uncertain if the rig was moved to location prior to 3/24/07. It is likely that the rig was moved proximate to 3/24/07 however it does not appear that the rig was able to conduct any work since it is stated in the fax White sent on August 14, 2007 that "The month of June, 2007, ACC rigged up the drilling rig and commenced milling fon the remainder of the abandonment marked." (C) There is the email I sent to Alan on August 30, 2007. At that time, Dan believed that sufficient work had been done to keep the permit valid and had operations continued to ultimate completion then there would not be an issue here. But, it appears that minimal additional work has been accomplished since then despite multiple representations from White that he is moving forward. 3- 20 AAC 25.990. Definitions. (23) "drilling operations" means the penetration of ground below the setting depth of structural or conductor casing, using a drilling rig capable of performing the permitted well work, and for purposes other than setting structural or conductor casing; "drilling operations" includes the running of casing, cementing, and other downhole work performed ancillary to formation evaluation, and operations necessary to complete and equip the well so that formation fluids can be safely brought to the surface. 20 AAC 25.990 (23) - In a broad sense, White has conducted SOME of the operations "necessary ... so that fluids can be safely brought to surface" but the operations have been accomplished in piecemeal fashion and have not resulted in substantial penetration (so far as we know) into the production casing. 4- 20 AAC 25.070. Records and reports. The operator of a well shall (1) keep a detailed accurate daily record of the actual drilling, completion, workover, repair, and plugging operations, and of the tests required by this chapter; the • daily recordmust be available for inspection at reasonable times by the commission (A) at the well; and (B) in the state for five years after the date of well abandonment; 20 AAC 25.070 — White has provided brief summaries of the work beginning August 14, 2007. He has included photos as well. It would doubt that an "accurate daily record of ... operations" exists. 5- 20 AAC 25.072. Temporary shutdown of drilling or completion operations. (a) If circumstances prevent the continuation of the program approved on a Permit to Drill, or if an operator wishes to change drill rigs, the operator shall apply to the commission for approval to shut down drilling or completion operations temporarily. Based on the information received under this subsection, the commission will decide whether to approve the temporary shutdown of drilling or completion operations. The request for operation shutdown must be submitted on an Application for Sundry Approvals (10 -403), providing a full justification for the shutdown, a description of the proposed condition of the welibore upon shutdown of drilling or completion operations, the approximate date when drilling or completion operations will resume, and a proposed program for securing the well during the period of shutdown. An Application for Sundry Approvals is not required for planned shutdowns of well operations, if those shutdowns are described in the approved Permit to Drill. 20 AAC 25.072 — White has not applied for any sundries to alter or halt/suspend operations on the well. it is possible that he could have applied for a temporary SD as allowed in .072, but in order to halt drilling or completion operations one must have started them. . v S V l 0 l am- "; a SLe.70:1--) 41 • JOB STATUS REPORT TIME : 04/15/2009 14:20 NAME : AOGCC FAX# : 9072767542 TEL# : SER.# : BRO2J2502370 DATE,TIME 04/15 14:18 FAX NO. /NAME 912106510777 DURATION 00:01:53 PAGE(S) 12 RESULT OK MODE STANDARD ECM • • 1 0OILAkt, ' , I � , ,, Alaska Oil and Gas Conservation Commission = 1' 333 West 7t Avenue, Suite 100 °0 o may" Anchorage AK 99501 -3539 vi - r 4 Phone: (907) 279 -1433 ik`p 44 ° - : Fax: (907) 276 -7542 `inoN CO FAX TRANSMISSION The information contained in this fax is confidential and /or privileged. This fax is intended to be reviewed initially by only the individual named below. If the reader of this transmittal page is not the intended recipient or a representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this fax or the information contained herein is prohibited. If you have received this fax in error, please immediately notify the sender by telephone and return this fax to the sender at the above address. Thank you TO -3 \N.) �'‘ \--c, Fax a\® Q5 \ Q -on Date N)v t S ( -� From \ 0 r-...k -v q c Pages (including cover sheet) Phone tO`Z Z.S" --‘ - - 0 Subject Pq.. .\- \-' c=; \.\ D,OS—OW Message: S \ q_c > c_c \v -- �`` c c- \-- \-->" 1 ,c C)..C-- V ---- ( J . -CAL— ".\- VC\ C_C \&_. i \ 'k ---- . If you do not receive all the pages or have any problem with this fax please call for assistance at (907) 793 -1223. S _ _ • " ' > r a :' ; FRANK H. MURKOWSKI, GOVERNOR ALASKA OIL AND GAS ' 333 W. 7 H AVENUE, SUITE 100 CONSERVATION COMMISSION fl ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 Jim White FAX (907) 276 -7542 President Alaskan Crude Corporation 4614 Bohill San Antonio, Texas 78217 -1413 Re: Moose Point #1 Alaska Crude Corporation Permit No: 205 -038 Surface Location: 2511.5' FNL, 2124' FEL, SEC. 14, T9N, R9W, SM Bottomhole Location: 2511.5' FNL, 2124' FEL, SEC. 14, T9N, R9W, SM Dear Mr. White: Enclosed is the approved application for permit to re -enter and test the Moose Point #1 exploration well. In accordance with conservation Order 488, which grants an exception to the spacing requirements of 20 AAC 25.055(a)(2) for these operations, the Moose Point #1 well may not be placed on regular production until the Commission takes additional action, upon petition, and after notice and hearing to offset any advantage Alaska Crude Corporation may have over other owners by reason of re- entering Moose Point #1 well to the exception location and to allow affected owners to produce their just and equitable share of hydrocarbons. 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. 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. Please provide at least twenty -four (24) hours notice for a representative of the Commission to witness any required test. Contact the Commission's petroleum field inspector at (907) 659- .0' (pager). ippr• i K. ■ • rman Chairman DATED thi day of month, 2005 cc: Department of Fish & Game, Habitat Section w/o encl. Department of Environmental Conservation w/o encl. • • KE EIVED STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION MAR 1 0 2005 PERMIT TO DRILL 20 MC 25.005 ( Celdeocm t Typo ype of Work' Drill Redrifl . urr Well Ieaa: E xploratory Development Oil if • T - .I; one ■ Re -entry IXI / Stratigrephic Test , Service El Development Oaa n Single Zone 2. tsperatpr Name: ✓ 5. Bond: x Blanket Li Single Well 0 ti. Well Name end Number: Alaskan Crude Corp. Bond NQ. , .. to s III us. - Point # Lori Kenna; 3. rte '' 4614 B h 9111 8. ` reposed Depth: 12, Fl.l . • • I): san Antonio, Tx 78217 -1413 MD; 10,058' Tvo:10,058' Unknown 4a. Location of Well (Govemmen ( C 7. Pro erty Desatl l hon: Surface' o Q l4 orlo c �, ` 14 S FEL, A 389922 Top of Pr uct ve n: ° 8. Land Use Permit: 13, Approximate Spud Date: Same N/A 6 -1 -05 Total Depth: 9. Acres In Property: 14. Distance to Nearest 4,700 Acres Property: APROX 135V 4b. Location of Welt (State Base Plane Coordinates); 10, KB Elevation 15. Diatanpe to Nearest Well surfece:x•2124' FEL y2511.5' FNL Zone- (Height above GL): 163 feet Within Pool: N/A 16. Deviated wells: Kickoff depth: het 17. Maximum Anticipated Pressures In pelg (see 2' * 25.035) N/A Maximum Hole Angle: N/A degr Downhole: 4065 psig surface: 20► psig 18, Casing Program' Setting Depth quantity of Cement Size Specifications Top Bottom c.f. or sacks Hole Casing Weight Grade Coupling Length D TVD MD TVp (including stage data) wilivintill IIIIIIIIII2111 e w • e I r = r • __2Q... _ _ 94# H -40 • : sx a . -:1 0 M 10 sx Class G. _b" 7' ‘2 #29# -55,N I 1 'I_ • " '' Too c ' 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 (fl): Effect. Depth TVO (ft): Junk (measured) Cestng Length Size Cement Volume MD TVD Structural 4 = "�� ""i" -50' Conductor 0 3 t "��' 81 S X Surface _ 0 -2blb' 1710sx , . 0- „516' Intermediate Q -9032' 55140,4907 - 4951000 sx 0 -9Q32' Production 8283-8696 ,� Liner Perforation Depth MD (ft): Perforation Depth TVD (8): 5660_8695' (OPEN) 5045- 5073' pl uged 20, Attachments: Filing Pee L SOlseketch I Drilling Program (kJ Time v: Depth Plot Lf Shallow Hazard Analysis L Property Plat ® Diverter Sketch ❑ Seabed Report 0 Drilling Fluid Program a 20 AAC 25.060 requirements 21. Verbal Approval: Commission Representative: Date 22. I hereby certify that the foregoing Is true and correct to the best of my knowledge. Contact Printed Name J mes W. White ” Title President T Signature ___ ai r - -•— ` Phone 210 - 651 -0777 Date 03, 10/2005 _ Commission Use Only Permit to Drill API Number PermUpprovai _ See cover letter for other mbar' �S � 50. '33 — '2.03 a� / � ' 6 Date: 5 /;1y� requirements. Conditions of approval : `--- : ig0 p E . 3 So S r • Sa , •les re lied Yee II No Mud log required Yes 0 No •r ..1 H •rope tilde me s r s Yee No Directional survey required Yea No 2 Othe % /� , 3 s LI') )), &1 + -- . 13o k e N1/ APPROVED BY c Approve • .amt�l 4 THE COMMISSION Oate(3 tN Win.-- .� Fo - , -401 - ev . -; 06/2004 Submit lnDuplicate OR\G \NAL �d £0ZZ £8Z L06 S3AS D133ti t1 I N3d Wd 9 T : ' Se —e t —ddW • ALASKAN CRUDE CORP. 4614 Bohill, San Antonio, Texas, 78217 210- 651 -0777, e -mail jlmwhite@satx.rrr.com To: AOGCC 333 W 7th Ave. Anchorage, Alaska Attention Mr. Winton Aubert. Please discard the Moose Point #1 Sundry Application filed with your --' office 3 -8 -05. Thank You. Regards. J"''" By: im White. President Alaskan Crude Corp. 20'd £0ZZ £8Z L06 SOAS 0103d d I N3d Wd 91:31 S0 -0 T -NNW I ALASKAN CRUDE CORP 4614 Bohill, San Antonio, Texas, 78217 21 0- 561 -0777, e-mail jimwhiteCsatx.rr,com Date: 3 -9 -05 To: AOGCC 333 W 7rh Ave., Anchorage, Alaska 99501 From :Jim White, Alaskan Crude Corp. To Commissioners. Attention, Mr, Winton Aubert Alaskan Crude request a variance to use a 2" 5k choke manifold with the 7 ", 5k BOP stack instead a 3" 5k choke manifold for the re - entry of the Moose Point#1 well. Thank you. Regards /Jr B Jim White President, Alaskan Crude Corp, ip0'd £0ZZ £8Z L06 SOAS D133ti 01f1SNIN3d Wd LT:ZT S0- 0T -2lt1W • • To: Winton Aubert - AOGCC Date: March 2, 2005 From: Jim White Alaska Crude Corporation Subject: Moose Point #1 Re -entry API #50- 133 - 20312 -00 ry approval is requested to reenter the Moose Point #1 well to test for gas production 7 potential. We anticipate beginning preparation work the last of March, pending freezing weather conditions. Below please find a summary of the existing well and planned operations: Moose Point #1 is located 2512 feet from the north line (FNL) and 2124 feet from the east line (FEL) of Section 14, T9N, R9W, Seward Meridian. The well site is located on private property. The well's ground elevation is 163 feet. It is outside of any Corps of Engineers designated wetland area. Moose Point #1 was drilled as a straight hole to a TD of 10,058' and in early 1978. Intervals were tested, the well was suspended for a period of time and ultimately files for abandonment in March 1 4.43 D. Please refer to the attached wellbore schematic. In summary the well has 333' of 20" conductor pipe, 2516' of 13 -3/8" surface casing and 9032' of 7" casing. Openhole from the 7" shoe to drilled TD of 10,058' is filled with cement. / , Three cement plugs /retainers exists in the 7" and will be removed; 55' -140', 4907' -4985' and 8283' -8696' md. There are perforations at 5045' -5075' that have been cement squeezed; and open perfs at 8666'- 8696', below the lower retainer. These lower set of open perforations will be .- the initial interval targeted for testing. The well has about 55' of diesel above the upper cement plug in the 7" casing. This diesel will „-` recovered and recycled as fuel for on -site heating equipment. Expected Pressures: Per DST #1 when this well was initially drilled, at mid perf depth of 8681' 659' TVD (22' RKB), reservoir pressure was reported to be 4065 psi or 0.47 psi /ft gradient ` .0ppg EMW. Using a 0.Ipsi/ft gas gradient would result in a maximum anticipated surface pressure(MASP) of approximately 3200 psi. Proposed Rig Operations: 1. Mobilize equipment to wellsite, via the Kenai Peninsula Borough unimproved road right -of- way access that begins at the end of North Kenai Road. Weather will dictate the timing of sufficiently frozen ground conditions to support axle weights. 2. Rig up the location per Attachment. 3. Install a 13 -5/8" 5000 psi x 7 -1/16" 5000 psi tubing head with seals. Pressure test. 4. Nipple up 7- 1/16" 5000 psi WP BOPE consisting of pipe ram, blind ram, an annular preventer, a flow cross with 2" equipment and a 2" 5000 psi choke manifold (Exhibit A -1) Install test plug. Test BOPE to 3500 psi. Test annular to 2500 psi. Pull test plug. —' I 5. PU work string, RIH to top of first plug at —55'. Circulate out and recover diesel freeze 4,— protect for reuse. . 6. Mill out the first two cement plugs /retainers with a 6" bit, circulating a minimum of 9.0 ppg NaCl/KC1 brine and gel sweeps. Circulate /ream well down to 8283', the top of the lower cement plug. Pressure test 7" casing to 500 psi to determine competency of squeeze perfs at 5045'- 5075' md. 7. Mill out final cement plug/retainer. Circulate well clean down to 8800' md. Recover and isolate the approximate 3 -1/2 cubic yards of cuttings expected to be generated from removal of the cement plugs. 8. Run 2 -7/8" 6.4# L -80 tubing and packer with the intent of testing the open perforations at 8666'- 8696'. Install tubing hanger and test. Pump diesel down inner annulus for freeze protect. Set retrievable production packer. 9. Install two -way check. ND BOPE, NU tree and pressure test. Pull TWC. 10. RU testing equipment and test interval at 8666' -8696' by swabbing liquids from tubing. 11. If the 8695'- 8666' interval j not prove up Sundry Applications will be submitted for approval to move the packer a te st other intervals in the well bore for gas production. 12. If commercial production of hydrocarbons is establish at this well site, additional plans for development and surface handling of production will be submitted. Should the well be plugged and abandoned, plugging and abandonment of the well bore will be in accordance with regulations established by the State of Alaska. Ground Leval 163' Elevoton 185' Desel 55 2 OH dated to 6700' md Wt7474.414 6,4•4+4++.4* Consent Plug 9-1/2" 61 to WOW md *4101444 W0 4 4 . 4 .•40 .4 55' -140' ■1•404.44+1 4• 44444$••••4.111440 •110 333' H20° 904.1440 Co:doctor] Cemented to surfacq 93.3f CSO 71 N-80/68, K.-54- cementoo ti surface Class 0 4 ■•;•04V+V•: WM% Cernent Pug t.meseso. nor .4985. 1.0*••44.4.10 0.4410.40.14 4985' —ICarnent Rtinme! 9046V Perforation (Solt 85 sx) 5076 Weor00',44" :o Comm Plug isM4.44,4 8283' -8558" 0 1.1711-1111 111 I 8558' 1-1 8656% Peds 4 JSPF I I 7' CSG 29it x 3244 N430 H 9032' 1044:44N :; N 1.4641.11+Wt 1..4,10,444 f."40;■ tt•f+iffils. 1•4444••4041( 6.•0.0•04•4 •+#1.4“.•■ 00 1.4 TO 1 10,059' 1:+ Wfldcot ■•••••••• 1,4,tem+440, WELL Moose Point 01 PERMIT No API No 50.133-20312-0D SEC 14. T9N,R9W 2124 FEL 2511 5 FNL. g 1 i 0 _ 4--- ? E e 1 Mud Pump - a p g / I g I )__ _ dd Driller 10000 01 Accumulator • 1 J - A 4 NI To External Tank .. 1 44 From Choke Line • Gas • Buster ,Mud Pits 7-1116" Annular Preventor 7-1/16" 5K BOPE cz cI Blind Ram HCR Valve I Oil. ell 7 2" 5K Choke Line 2" 5K Kill Line 1=E1 Pipe Ram 7" Casing Head • S 7 -1/16" Annular Preventor � J 7- 1116" 5K BOPE cC _= Pipe Ram O / c[ ri= Blind Ram 0 HCR Valve (i5K Choke Line= Mud Cross 1 1110 2" 5K Kill Line 7" Casing It Head ,/ • Page 1 of 1 Maunder, Thomas E (DOA) From: Jim White [jimwhite @satx.rr.com] Sent: Wednesday, April 15, 2009 12:20 PM To: Maunder, Thomas E (DOA) Subject: FW: Moose Point 1 Drill Permit Copy Request to Tom Maunder 20090415 email Attachments: Moose Point 1 Drill Permit Copy Request to Tom Maunder 20090415 email.doc From: Jim White [mailto:jimwhite @ satx.rr.com] Sent: Wednesday, April 15, 2009 3:14 PM To: 'tom.maunder @alaska.gov' Subject: Moose Point 1 Drill Permit Copy Request to Tom Maunder 20090415 email Please see the following request followed by Fax. Thanks, Regards, Jim White p t C.)`‘- 1 4/15/2009 • To: Tom Maunder, AOGCC F A Fax number: 907 - 276 -7542 From: James W. White, Alaskan Crude Corp Alaskan Crude Corporation Fax number: 210 - 651 - 0777 4614 Bohill Street San Antonio, TX 78217 -1413 Date: 4/15/2009 Phone Number: 210 - 651 -0777 CeII Number: 907 - 394 -1829 Email: jimwhite @satx.rr.com Regarding: Request Copy of Drilling Permit #203038 for Moose Point #1 Well, API 50133203129000 Phone number for follow -up: 210 - 651 -0777 Comments: # of pages including cover page: 2 Tom, Please find attached the request for Copy of Drilling Permit #203038 for Moose Point #1 Well, API 50133203129000. Sincerely, James W. White, President Alaskan Crude Corporation • • Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas, 78217 Phone /Fax: (210) 651 -0777 E -mail: imwhite @satx.rr.com To: Alaskan k n Oil & Gas Conservation Commission Attn: Tom Maunder, Chief Engineer From: James W. White, President, Alaskan Crude Corporation Date: April 15, 2009 Re: Moose Point Unit #1 Well, API 50133203129000, Drill Permit #203038 Dear Tom, Please forward or send me a copy of the drilling permit for the Moose Point #1 Well. I am currently in San Antonio recouping in a rehab program for a heart problem I encountered around the first of March 2009. I won't be able to fly on an airplane for another month or so. All my files to this well are in Alaska. Please e-mail or fax me a copy of this drilling permit file at your earliest convenience. I would appreciate this very much. My e-mail address is jimwhite@satx.rr.com. My fax number is (210) 651 -0777. You need to call me if you are going to fax me a copy of this drilling permit so that I can turn the fax machine on. Thanks, Regards, James W. White, President Alaskan Crude Corporation 4614 Bohill Street PHONE /FAX 210.651.0777 SAN ANTONIO OFFICE San Antonio, TX PHONE /FAX 907.335.1829 KENAI OFFICE 78217 E -MAIL jimwhitena satx.rr.com ;,.. E -MAIL jimwhite @acsalaska.net • Page 1 of 1 Maunder, Thomas E (DOA) From: Jim White [jimwhite @satx.rr.com] Sent: Wednesday, April 15, 2009 12:14 PM To: Maunder, Thomas E (DOA) Subject: Moose Point 1 Drill Permit Copy Request to Tom Maunder 20090415 email Attachments: Moose Point 1 Drill Permit Copy Request to Tom Maunder 20090415 email.doc Please see the following request followed by Fax. Thanks, Regards, Jim White s 4/15/2009 • • To: Tom Maunder, AOGCC F Fax number: 907 - 276 -7542 From: James W. White, Alaskan Crude Corp Alaskan Crude Corporation Fax number: 210- 651 -0777 4614 Bohill Street San Antonio, TX 78217 -1413 Date: 4/15/2009 Phone Number: 210 - 651 -0777 Cell Number: 907 - 394 -1829 Email: jimwhite @satx.rr.com Regarding: Request Copy of Drilling Permit #203038 for Moose Point #1 Well, API 50133203129000 Phone number for follow -up: 210 - 651 -0777 Comments: # of pages including cover page: 2 Tom, Please find attached the request for Copy of Drilling Permit #203038 for Moose Point #1 Well, API 50133203129000. Sincerely, James W. White, President Alaskan Crude Corporation • • Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas, 78217 Phone /Fax: (210) 651 -0777 E -mail: imwhite @satx.rr.com To: Alaskan Oil & Gas Conservation Commission Attn: Tom Maunder, Chief Engineer From: James W. White, President, Alaskan Crude Corporation Date: April 15, 2009 Re: Moose Point Unit #1 Well, API 50133203129000, Drill Permit #203038 Dear Tom, Please forward or send me a copy of the drilling permit for the Moose Point #1 Well. I am currently in San Antonio recouping in a rehab program for a heart problem I encountered around the first of March 2009. I won't be able to fly on an airplane for another month or so. All my files to this well are in Alaska. Please e-mail or fax me a copy of this drilling permit file at your earliest convenience. I would appreciate this very much. My e-mail address is iimwhite(asatx.rr.com. My fax number is (210) 651 -0777. You need to call me if you are going to fax me a copy of this drilling permit so that I can turn the fax machine on. Thanks, Regards, James W. White, President Alaskan Crude Corporation 4614 Bohill Street PHONE /FAX 210.651.0777 SAN ANTONIO OFFICE San Antonio, TX PHONE /FAX 907.335.1829 KENAI OFFICE 78217 E - MAIL iimwhite(&satx.rr.com E -MAIL jimwhite @acsalaska.net Apr 15 09 03:03p Intrepid Production 21060777 p. s ° To: Tom Maunder, AOGCC Fax number: 907 -276 -7542 , From: James W. White, Alaskan Crude Corp II 1 i' Alaskan Crude Corporation Fax Fax number: 210 - 651 -0777 a 4614 BohiII Street f }.__ --,... _...— ____.— .__-'-- ,- v_r- •.._.. �_- arc— .v-- -r...- m+..a -.. _ ..... _.:.tee Fx. ci ! €i San Antonio, TX 78217 -1413 Date: 4 {15/2009 Phone Number: 210- 651 -0777 Cell Number: 907 - 394 -1829 :=—a= - _,::,.T, -- :. - ,_,,..�_ -- s.s_.r..- -- _ aT- ......__�... ,.�•• pi s? i Regarding: Email: jimwhlteCsatx.rr.com i It y Request Copy of Drilling Permit #203038 for i `: Moose Point #1 Well, API 50133203129000 ii Phone number for follow -up: i 210 -651 -0777 l , �f i; Comments: it {t c # of pages including cover page: 2 P. I. ? Tom, Please find attached the request for Copy of Drilling Permit #203038 for Moose !# Point #1 Well, API 50133203129000. ii :I Sincerely, I i ;, James W. White, President ,q�_ +�% Alaskan Crude Corporation � 4A 0 _ ji ✓ �. „ '-ll, 4 4..v 1 li k, 1 3 it is 11 ii e. ti t E 1 I it L _.....� Apr 15 09 03:03p Intrepid Productiol 210.777 p.2 i '46144 Botiill Street •tan Ant ill°, Texas, 73217 :Phone /Fax: (210) 651-0777 E -mail: jimwhite@sat i.rr.com To: Alaskan Oil & Gas Conservation Commission Attn: Tom Maunder, Chief Engineer From: James W. White, President, Alaskan Crude Corporation Date: April 15, 2009 Re: moose Point Unit #1 Well, APT 50133203129000, i ill Porm t #203038 Dear Tom, Please forward or send me a copy of the driltina permit for the Moose Point #1. wen. i am currently in San Antonio recouping in a rehab program for a heart probfertt I encountered around the first of March 2009. I won't be aloe to fly on an airplane for another month or so. All my files to this well are in Alaska. Please e-mail or fax me a copy of this drilling permit fie at your earliest convenience. I would appreciate tt is very much. My e-mail address is iimwh era satx.rr.corn. My fax number is (210) 651 -0777_ You need to call me if you are going to-fax rno a copy of this drilling permit so that 1 ran turn the fax machine on_ Thanks, Regards, s r °l.- fr a ,'James W. W lite President Alaskan Cruse Corporation ;,:,, :: -.4; :7 461,4 Bot li 5 t ee 0.2 :, Fi ∎X 21 6 L 7' sAN ANTONIO O FCC _: : . : _ ' y. San Arair �, TX 782I7 i't'fNI.IFA : 9r13 -3,.1i 9<n: ISAI pi=ElCt, - - 1 Y � - - P- iTwu'W.r9`• 534fs'iCd' :3tEt
