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0 • rPa e Image Project Well History File Cover g 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. 4;10 - 027 Well History File Identifier Organizing (done) ❑ Two - sided llIII1111111111 ❑ Rescan Needed 111 IIIII1111111111 g g RE AN DIGITAL DATA OVERSIZED (Scannable) olor 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: ( Mari Date: ca l )3 /s/ f P ! Project Proofing .. INIIIIIIIII 11111 BY: (Mari)a Date: jig..1/ /si toff Scanning Preparation U2 x 30 = Igo + 1 a = TOTAL PAGES / / r � (Count does not include cover sheet) BY: Maria Date: 9. d.' 1 3 ,s, y'y' Production Scanning H1E1111111 g Stage 1 Page Count from Scanned File: 1 q3 (Count does include cover et) Page Count Matches Number in Scanning Pre aration: YES NO BY: 1120 Date: L 4a 1 /s/ tijl 1 c g1 Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Maria Date: /s/ Scanning complete lete at this point unless rescanning is required. 1 P ReScanned IIIIIIIIIIIIIIIIIII BY: Maria Date: /s/ Comments about this file: Quality Checked III 1111111111111111 12/22/2011 Well History File Cover Page.doc DATA SUBMITTAL COMPLIANCE REPORT 2/12/2013 Permit to Drill 2080770 Well Name /No. WAINWRIGHT 09 Operator U S DEPT OF INTERIOR API No. 50- 301 - 20011 -00 -00 MD 1300 TVD 1300 Completion Date 6/21/2009 Completion Status P &A Current Status P &A UIC N REQUIRED INFORMATION Mud Log No Samples No Directional Survey No DATA INFORMATION Types Electric or Other Logs Run: GAMMA, CALIPER, RES, SONIC (data taken from Logs Portion of Master Well Data Maint Well Log Information: Log/ Electr Data Digital Dataset Log Log Run Interval 011 / • Type Me. Frmt Number Name Scale Media No Start Stop CH Received Comments ED / Las 19046 Induction /Resistivity 0 1300 Open 11/19/2009 Electronic Transfer ED 1C 19312 See Notes 0 0 Daily Recs, Mud Gas Log, Timeline, Combo, Sonic, Completion Diagram Logv Induction /Resistivity OTH Col 0 1280 oft Res, GR, POR, Sonic Log ✓ Induction /Resistivity OTH Col 0 1280 0 tom, Res, GR Well Cores /Samples Information: Sample Interval Set Name Start Stop Sent Received Number Comments Cores and /or Samples are required to be Alt k . s I b .'. submitted. This record automatically created V from Permit to Drill Module on: 6/9/2008. ADDITIONAL INFORMATION (� Well Cored? 66 / N Daily History Received? `�' / N • Chips Received? Y q „�t 1+41.1- Formation Tops N Analysis Y /6 t Received? Comments: Na vrd i CQ � ‘N � i [`�, ‘ e Compliance Reviewed By: Date: 12 Ce-1 13 • USGS - BLM Wells a Missing Required Information Well Name Permit to Drill Number Missing Information Prior Requests DOI -04 -1A (Ft. Yukon) 2040830 Core analysis Requested 11/5/2009 2040830 Core chips Requested 11/5/2009 2040830 Cuttings samples Requested 11/5/2009 2040830 Mud log Requested 11/5/2009 2040830 Open hole logs - Paper Print Requested 11/5/2009 2040830 Open hole logs - Reproducible Requested 11/5/2009 Franklin Bluffs 1 2051050 As built survey plat Requested 11/5/2009 2051050 Core description and analysis Requested 11/5/2009 2051050 Mud log Requested 11/5/2009 2051050 Open hole logs - Digital Requested 11/5/2009 2051050 Open hole logs - Paper Print Requested 11/5/2009 2051050 Open hole logs - Reproducible Requested 11/5/2009 Wainwright 01 2070650 Core analysis Requested 11/5/2009 2070650 Core chips Requested 11/5/2009 2070650 Location information (coordinates as metes & bounds, Required on Completion Report form coordinates in AK State Plane NAD 27) 2070650 Location information (lat /long datum) Wainwright 02 2071060 Cuttings samples Requested 11/5/2009 2071060 Inclination survey Requested 11/5/2009 2071060 Lithology log Requested 11/5/2009 2071060 Location information (coordinates as metes & bounds, Required on Completion Report form coordinates in AK State Plane NAD 27) 2071060 Location information (lat /long datum) Wainwright 09 2080770 Core chips Requested 11/5/2009 2080770 Core description and analysis Requested 11/5/2009 2080770 Lithology log - Paper Print Requested 11/5/2009 2080770 Location information (lat /long datum) Wainwright 10 2090350 Core chips Requested 11/5/2009 2090350 Core description and analysis Requested 11/5/2009 2090350 Cuttings samples Required on Completion Report form 2090350 Inclination survey Requested 11/5/2009 2090350 Location information (coordinates as metes & bounds, Required on Completion Report form coordinates in AK State Plane NAD 27) 2090350 Location information (lat /long datum) 2090350 Mud log (required by permit to drill; drilling history states "will Requested 11/5/2009 not collect mud -gas log at this site. ") Wainwright 03 2080710 In compliance Wainwright 04 2080720 In compliance Wainwright 05 2080730 In compliance Wainwright 06 2080740 In compliance Wainwright 07 2080750 Expired permit: never drilled Wainwright 08 2080760 In compliance Wainwright 11 2090360 Cancelled permti: never drilled AOGCC February 17, 2011 ! • in pet FflEE � . R''' ` . , ; SijhscrIptlorls tr'Jf311Cdirons http://vvww.petroleumnews.com/pnads/891782894.shtml Vol. 16, No. 13 Week of March 27, 2011 Providing coverage of Alaska and northern Canada's oil and gas industry BLM admits to drilling safety lapse Federal agency concedes diverter wasn't used on well drilled near Alaska village of Wainwright; AOGC auto, `oc, S continue probe 3 d\ _ ko c Wesley Loy ,.,-0-x. _ O, For Petroleum News The Bureau of Land Management has admitted responsibility for a failure to use a safety device called a diverter on a federal drilling project near the northwestern — VA L \ Alaska village of Wainwright. But the BLM also seemed to steer accountability for the lapse toward its designated operator on the project, the U.S. Geological Survey. — Q\ The BLM stated its position in a March 15 letter to the Alaska Oil and Gas DOS, — ®. S Conservation Commission, which had been pushing the agency for months to show proof it had used the required diverter on the seven wells at issue. "BLM understands it is responsible for the actions of its operator," said the letter signed by Julia Dougan, the BLM's associate state director for Alaska. `BLM has no immediate plans for additional drilling but can assure the Commission if future drilling should be permitted, operations will be carried out in full compliance with state regulations." How conflict unfolded • • The letter is the latest twist in a long - running conflict between the BLM and the AOGCC. The Wainwright project, which began in 2007, was a joint effort involving the BLM, the USGS, the North Slope Borough and Arctic Slope Regional Corp. The goal was to test a local coalbed as a potential source of natural gas to meet energy needs in the remote village of about 550 people on the Chukchi Sea coast. The AOGCC has authority to regulate drilling statewide, whether on federal, state or private land. On June 22, 2010, the AOGCC hit the BLM with a "notice of violation" for possibly drilling wells without the required safety equipment. A diverter, which sits atop the well, is designed to direct any unexpected release of dangerous hydrocarbons safely away from the rig work area. Like blowout preventers, diverters are a last line of defense for drillers. The two agencies swapped letters over several months, with the AOGCC contending it was not seeing the verification it wanted on whether a diverter was used on the exploratory wells. On Dec. 9, the AOGCC threatened the BLM with a public hearing to get answers. Ultimately, Pat Pourchot, the U.S. Interior secretary's special assistant for Alaska affairs, was brought into the discussion. In its March 15 letter, the BLM said it was the applicant for the state permit to drill one of the wells, Wainwright No. 2, but that it had designated the USGS as operator. "Our documentation confirms no diverter was used on the Wainwright well #2," the letter said. But the BLM said the USGS was both the applicant and operator for the other wells, Wainwright Nos. 3, 4, 5, 6, 9 and 10, and it directed the AOGCC to send any correspondence about those wells to a USGS official. Investigation to continue Cathy Foerster, one of the three AOGCC commissioners, told Petroleum News the Alaska Department of Law had advised the agency it probably doesn't have the power to fine the BLM for failure to use a diverter on Wainwright No. 2. But Foerster said the BLM letter is significant, an indication "that the federal • • government is perfectly capable of self - correcting." The AOGCC now plans to make inquiries to the USGS regarding whether the safety gear was used on the other Wainwright wells. Foerster said the state's objective is plain. "When the federal government comes into our state to operate, we want their assurance that they will abide by our laws like any other operator," she said. The Wainwright matter isn't the only source of friction between the AOGCC and the BLM. The commission has pointedly questioned the federal agency's attention to dozens of derelict "legacy wells" located chiefly in the National Petroleum Reserve - Alaska. • • Alaska regulators continue pressing BLM Lack of clarity on whether Wainwright gas wells had proper blowout prevention equipment could lead to public hearing, AOGCC warns Wesley Loy For Petroleum News For months now, Alaska drilling regulators have been asking federal officials to prove they used the required blowout prevention equipment on a series of test wells near the remote village of Wainwright. Thus far the issue remains unresolved — and it might be intensifying. The latest twist: Commissioners with the Alaska Oil and Gas Conservation Commission are threatening to hold a public inquiry in the conflict with the U.S. Bureau of Land Management. ^�� "In an effort to maintain a constructive relationship between Stake and Federal regulatory bodies, the AOGCC is extending the Bureau of Land Management one final opportunity to demonstrate that BLM's Wainwright wells number 2, 3, 4, 5, 6, 9 and 10 were drilled with appropriate blowout prevention equipment," said a Dec. 9 letter to BLM officials in Anchorage. "To date BLM has declined to provide the requested information. This correspondence marks AOGCC's final request prior to proceeding to convene a public hearing on the matter." The letter was copied to Alaska's congressional delegation, Gov. Sean Parnell and the U.S. Environmental Protection Agency. How it started Since the summer, the AOGCC has been trying to verify whether the BLM and its partners used a safety device known as a diverter on wells drilled to test for coalbed gas near the northwest Alaska village of Wainwright. The drilling project is a joint effort involving the BLM, the U.S. Geological Survey, the North Slope Borough and Arctic Slope Regional Corp. The Wainwright issue broke open on June 22 when the AOGCC hit the BLM with a "notice of violation," saying the federal agency appeared to be in violation of state regulations in drilling the wells without the required safety equipment, and improperly securing suspended wells. • • • In response to letters from the AOGCC, officials with the BLM have attempted to supply proof that the diverter was used on at least some wells. On Nov. 16, the BLM supplied the AOGCC with drill site photos as evidence of the use of the diverter during the Wainwright project's 2007 and 2008 drilling seasons. "I hope this information is helpful and provides the clarification you are seeking," wrote Julia Dougan, the BLM's acting state director. Unsatisfactory response Commission Chairman Dan Seamount, in the AOGCC's Dec. 9 letter back to Dougan, said the photos were insufficient, as they were taken at Wainwright wells 1 and 8. Seamount wrote: "Neither of these wells was included in the AOGCC's notice of violation; the wells for which AOGCC requested documentation of diverter usage were the Wainwright No. 2, 3, 4, 5, 6, 9 and 10 wells." Seamount set a deadline of Jan. 31 for the BLM to show its wells were drilled with the proper blowout prevention gear. The AOGCC has authority to regulate drilling statewide, whether on federal, state or private land. Its relations with the BLM have been tenuous for some time, with the commission questioning the federal agency's handling not only of the Wainwright wells but also dozens of old "legacy wells" on Alaska's North Slope. . 0 STATE OF ALASKA 0 _ ALASKA OIL AND GAS CONSERVATION COMMISSION WELL o ELL COMPLETION OR RECOMPLE 1a. Well Status: TION REPORT AND LOG ❑ III I El I e }Suspended ❑ 1b. Well Class: 1 . JC20AAC 25.105 20AAC25.110 Development ❑ Exploratory 1511 GINJ ❑ WINJ ❑ WAG ❑ WDSPL ❑ Other ❑ No. of Completions: Service ❑ Stratigraphic Test ❑ - 2. Operator Name: 5. Date Comp., Susp., or 12. Permit to Drill Number: USGS Aband.: 6/21/2009 ' 208 -077 e 3. Address: 6. Date Spudded: 13. AJ Number: PO Box 25046 MS 939 DFC Denver, CO 80225 6/15/2009 - ,)-301- 20011 -00 4a. Location of Well (Governmental Section): 7. Date TD Reached: 14. Well Name and Number: Surface: N70 39' 58.6" W159 58' 13.0" 6/19/2009 Wainwright 9 Top of Productive Horizon: 8. KB (ft above MSL): 15. Field /Pool(s): GL (ft above MSL): 20 ft Total Depth: 1300 ft ' 9. Plug Back Depth(MD +TVD): 1300 ft - land surface 4b. Location of Well (State Base Plane Coordinates, NAD 27): 10. Total Depth (MD + TVD): 16. Property Designation: Surface: x- y- Zone- 1300 ' 12a - ,C( „ f ; TPI: x- y- Zone- 11. SSSV Depth (MD + TVD): 17. Land Use Permit: Total Depth: x- y- Zone - 18. Directional Survey: Yes ❑ No Ei 19. Water Depth, if Offshore: 20. Thickness of Permafrost MD/TVD: (Submit electronic and printed information per 20 AAC 25.050) (ft MSL) -1000 ft . 21. Logs Obtained (List all logs here and submit electronic and printed information per 20AAC25.071): 22.Re- drill /Lateral Top Window MD/TVD: gamma, caliper, resistivity, sonic - 23. CASING, LINER AND CEMENTING RECORD WT. PER SETTING DEPTH MD SETTING DEPTH TVD AMOUNT CASING GRADE HOLE SIZE CEMENTING RECORD FT TOP BOTTOM TOP BOTTOM PULLED 6 5/8 18.99 sch 40 0 45 ft , 9.875 inch arctic cement 0-45 ft P &A 1300 -50 ft: bentontite grout 50 -land surface: Arctic cmnt , 24. Open to production or injection? Yes ❑ No gi If Yes, list each 25. TUBING RECORD interval open (MD +TVD of Top & Bottom; Perforation Size and Number): SIZE DEPTH SET (MD) PACKER SET (MD/TVD) 26. ACID, FRACTURE, CEMENT SQUEEZE, ETC. DEPTH INTERVAL (MD) AMOUNT AND KIND OF MATERIAL USED 27. PRODUCTION TEST Date First Production: Method of Operation (Flowing, gas lift, etc.): Date of Test: Hours Tested: Production for Oil -Bbl: Gas -MCF: Water -Bbl: Choke Size: Gas -Oil Ratio: Test Period ...= Flow Tubing Casing Press: Calculated Oil -Bbl: Gas -MCF: Water -Bbl: Oil Gravity - API (corr): Press. 24 -Hour Rate . 28. CORE DATA Conventional Core(s) Acquired? Yes El • No ❑ Sidewall Cores Acquired? Yes ❑ No ❑ • If Yes to either question, list formations and intervals cored (MD +TVD of top and bottom of each), and summarize lithology and presence of oil, gas or water (submit separate sheets with this form, if needed). Submit detailed descriptions, core chips, photographs and laboratory analytical results per 20 AAC 25.071. Nanushuk Fm: 1161 -1286 ft through sandstone, siltstone, mudstone, and coal. No oil shows; gas c I- feeds. M PLETIOi kilt RECEIVED NOV 2 3 'LUU Rsolt r 1 , . Alaska Oil & Gas Cons. Commission Form 10 107 Rcviocd 7/2000 � N REVC RCE SL tf o nal only - �/�4D 28. GEOLOGIC MARKERS (List all formations and markers encountered): 29. FORMATION TESTS NAME MD TVD Well tested? U Yes U No If yes, list intervals and formations tested, briefly summarizing test results. Attach separate sheets to this form, if needed, Permafrost - Top land surface and submit detailed test information per 20 AAC 25.071. Permafrost - Base —1000 ft Nanushuk from land surface to TD Formation at total depth: Nanushuk 30. List of Attachments: P & A diagram 31. I hereby certify that the foregoing is true and correct to the best of my knowledge. Contact: Printed Name: Arth lar Title: Supervisory Geologist Signature: Phone: 303 - 236 -5793 Date: 11/19/2009 INSTRUCTIONS General: This form is designed for submitting a complete and correct well completion report and log on all types of lands and leases in Alaska. Submit a well schematic diagram with each 10-407 well completion report and 10-404 well sundry report when the downhole well design is changed. Item la: Classification of Service wells: Gas Injection, Water Injection, Water - Alternating -Gas Injection, Salt Water Disposal, Water Supply for 1 njection, Observation, or Other. Multiple completion is defined as a well producing from more than one pool with production from each pool completely segregated. Each segregated pool is a completion. Item 4b: TPI (Top of Producing Interval). Item 8: The Kelly Bushing and Ground Level elevations in feet above mean sea level. Use same as reference for depth measurements given in other spaces on this form and in any attachments. Item 13: The API number reported to AOGCC must be 14 digits (ex: 50- 029 - 20123- 00 -00). Item 20: Report true vertical thickness of permafrost in Box 20. Provide MD and TVD for the top and base of permafrost in Box 28. Item 22: Attached supplemental records for this well should show the details of any multiple stage cementing and the location of the cementing tool. Item 23: If this well is completed for separate production from more than one interval (multiple completion), so state in item 1, and in item 23 show the producing intervals for only the interval reported in item 26. (Submit a separate form for each additional interval to be separately produced, showing the data pertinent to such interval). Item 26: Method of Operation: Flowing, Gas Lift, Rod Pump, Hydraulic Pump, Submersible, Water Injection, Gas Injection, Shut -in, or Other (explain). Item 27: Provide a listing of intervals cored and the corresponding formations, and a brief description in this box. Submit detailed description and analytical laboratory information required by 20 AAC 25.071. Item 29: Provide a listing of intervals tested and the corresponding formation, and a brief summary in this box. Submit detailed test and analytical laboratory information required by 20 AAC 25.071. Form 10 -407 Revised 7/2009 1 Wainwright -2009 Daily Record DATE ACTIVITY 06/05/09 Drill crew arrives in Wainwright 06/06/09 unpacking equipment Set up drill rig over production well (Wainwright -3). Repair cracked well enclosure on Wainwright -6 06/07/09 (hit by snow plow) and remove —10 ft of ice from well using portable NSB steam unit. 4/ 06/08/09 Reaming ice from production well. Drill to 360 ft. 06/09/09 Ream ice to 1260 ft, drill 6" hole to 1295 ft. Circulate well, mix water /propylene glycol mix and fill well. Trip pipe and prepare for production 06/10/09 testing. 06/11/09 Set pump on 2" drop pipe w /pressure transducers attached to 1265 ft. Program transducers for test. 06/12/09 Begin production test. Having icing issues. Severe icing issues. Pull pump, order heat trace and gas /water separator, begin moving equipment 06/13/09 to landfill site (Wainwright -9) Finish moving equipment to W -9. Coordinates N70 39' 58.6" W159 58' 13.0 ". Will collect mud -gas 06/14/09 logs at this site. Set 6" steel conductor casing to 45 ft. Drill 6" hole to 245 ft through Nanushuk silstone, sandstone, 06/15/09 coal etc. 06/16/09 Drill 6" hole to 760 ft thru Nanushuk sediments. e\ 06/17/09 Drill 6" to 1161 ft. Run gamma log through drill steel. Trip steel and prepare to core. 06/18/09 Core from 1161 - 1230 ft. Encounter "w" coal bed at 1170 ft. Begin coal desorption. 06/19/09 Core from 1230 - 1286 ft. Pull barrel, ream hole, and drill to 1300 ft. o' 06/20/09 Pull steel and run geophysical logs - gamma, resistivity, caliper, sonic. Plug and abandon W -9 with bentonite abandonment grout to 50 ft bls, Arctic cement to surface. Cut 06/21/09 casing at 3' bls. Move equipment back to production well. Set up and ream /flush to 1295 ft. Warm drill mud to 06/22/09 increase borehole temp. 06/23/09 Circulate fluid. Have 220V power dropped at site. Fill well with glycol from 1100 ft to surface. Set pump and drop pipe w /transducers, separator, and heat trace to 1255 ft. Turn on heat trace and 06/24/09 let borehole fluid warm. r 8 --027 1 • ck 06/25/09 Begin test. Having transducers problems (too much current in well). Continue test with limited transducers. Pump still cavitating and silting up. Terminate test and fill well o-0 06/26/09 w /glycol. Pull pump and order new transducers. Move equipment to delineation site Wainwright -10. Will not 06/27/09 collect mud -gas logs at this site. Finish moving equipment. Coordinates N70 38' 6.6" W 160 1' 45.3 ". Srill 10" hole and set 6" steel 06/28/09 casing to 95 ft. 06/29/09 Drill 6" hole to 600 ft thru Nanushuk sediments. 06/30/09 Drill 6" hole to 1000 ft thru Nanushuk. Drill to 1260 ft and run gamma thru drill steel. Drill to 1300 ft, core to 1317 ft. Hit w -coal at 1300 ft. 07/01/09 Begin desorption. Drill to 1360 ft, trip steel, and run logs - caliper, gamma, resistivity, induction, density, sonic. Set 07/02/09 packers in 1150 ft sandstone. Air develop sandstone between packers at 1140 -1180 ft. Install transducer and collect recovery data. 07/03/09 Collect water samples for QW. Pull packers, plug and abandon W -10 with abandonment grout and Arctic cement from 50 ft to 07/04/09 surface. Move equipment to production site. Set production pipe to 1200 ft. Plug in heat trace to warm well and one shorts out. Can't run test with 07/05/09 only one trace. iN - �' 07/06/09 Order new trace. 07/07/09 Trace arrives late. Install and let it run overnight to warm well. 07/08/09 Begin test but more transducers blow out. Running test w /reduced monitoring. 07/09/09 Continue test. 07/10/09 Pump cavitating and silting. End test, fill well w /glycol, pull pump and clean. 07/11/09 Reset pump and program transducers. Test pump and it's having problems. 07/12/09 Another heat trace shorts. Pull trace, rehead, and reinsert. Begin test. 07/13/09 pump testing pump testing. Lose communication in reservoir between production and monitor wells (gas 07/14/09 plugging ?) 07/15/09 fill production well w /glycol and slowly reestablish connection. Let reequilibrate overnight. 07/16/09 Begin test with slow drawdown rate. • 1 Wainwright -2009 Daily Record Wainwright #6, (208 -074) Wainwright #9, (208 -077) Wainwright #10, (209 -035) DATE ACTIVITY June 5, 2009 Drill crew arrives in Wainwright June 6, 2009 unpacking equipment Wainwright #6, (208 - 074) June 7, 2009 set up drill rig over production well. Repair monitor well Wainwright -6 (broken casing, frozen in at surface). ( June 8, 2009 Reaming ice from production well. Drill to 360 ft. June 9, 2009 Ream ice to 1260 ft, drill 6" hole to 1295 ft. June 10, 2009 Circulate well, mix water /propylene glycol mix and fill well. Trip pipe and prepare for production testing. June 11, 2009 Set pump on 2" drop pipe w /pressure transducers attached to 1265 ft. Program transducers for test. June 12, 2009 Begin production test. Having icing issues. June 13, 2009 Severe icing issues. Pull pump, order heat trace and gas/water separator, begin moving equipment to landfill site (Wainwright -9) June 14, 2009 Finish moving equipment to W -9. Coordinates N70 39' 58.6" W159 58' 13.0 ". Will collect mud -gas Togs at this site. Wainwright #9, (208 -077) Q r tt June 15, 2009 Set 6" steel conductor casing to 45 ft. Drill 6" hole to 245 ft through ' -fc Nanushuk silstone, sandstone, coal etc. June 16, 2009 Drill 6" hole to 760 ft thru Nanushuk sediments. June 17, 2009 Drill 6" to 1161 ft. Run gamma log through drill steel. Trip steel and prepare to core. June 18, 2009 Core from 1161 - 1230 ft. Encounter "w" coal bed at 1170 ft. Begin coal desorption. June 19, 2009 Core from 1230 - 1286 ft. Pull barrel, ream hole, and drill to 1300 ft. June 20, 2009 Pull steel and run geophysical Togs - gamma, resistivity, caliper, sonic. n W -9 with bentonite abandonment rout to 50 ft bis ��s3` June 21, 2009 Plug and abandon t g , cement to surface. Cut casing ce g at 3' bls. Daily Drilling Record June 5 — July 23, 2009. Wainwright #6, (208 -074), Wainwright #9, (208 -077), Wainwright #10, (209 -035). July 27, 2009. Page 1 of 3 • • Wainwright -2009 Daily Record DATE ACTIVITY 06/05/09 Drill crew arrives in Wainwright 06/06/09 unpacking equipment Set up drill rig over production well (Wainwright -3). Repair cracked well enclosure on Wainwright -6 06/07/09 (hit by snow plow) and remove —10 ft of ice from well using portable NSB steam unit. 06/08/09 Reaming ice from production well. Drill to 360 ft. 06/09/09 Ream ice to 1260 ft, drill 6" hole to 1295 ft. Circulate well, mix water /propylene glycol mix and fill well. Trip pipe and prepare for production 06/10/09 testing. 06/11/09 Set pump on 2" drop pipe w /pressure transducers attached to 1265 ft. Program transducers for test. -I SI fIR 06/12/09 Begin production test. Having icing issues. 9 Severe icing issues. Pull pump, order heat trace and gas /water separator, begin moving equipm nt 06/13/09 to landfill site (Wainwright -9) Finish moving equipment to W -9. Coordinates N70 39' 58.6" W159 58' 13.0 ". Will collect mud -gas 06/14/09 logs at this site. Set 6" steel conductor casing to 45 ft. Drill 6" hole to 245 ft through Nanushuk silstone, sandstone, 06/15/09 coal etc. 06/16/09 Drill 6" hole to 760 ft thru Nanushuk sediments. 06/17/09 Drill 6" to 1161 ft. Run gamma log through drill steel. Trip steel and prepare to core. 06/18/09 Core from 1161 - 1230 ft. Encounter "w" coal bed at 1170 ft. Begin coal desorption. 06/19/09 Core from 1230 - 1286 ft. Pull barrel, ream hole, and drill to 1300 ft. 06/20/09 Pull steel and run geophysical logs - gamma, resistivity, caliper, sonic. Plug and abandon W -9 with bentonite abandonment grout to 50 ft bls, Arctic cement to surface. Cut U ,©f 06/21/09 casing at 3' bls. 1 Move equipment back to production well. Set up and ream /flush to 1295 ft. Warm drill mud to 06/22/09 increase borehole temp. 06/23/09 Circulate fluid. Have 220V power dropped at site. Fill well with glycol from 1100 ft to surface. Set pump and drop pipe w /transducers, separator, and heat trace to 1255 ft. Turn on heat trace and 06/24/09 let borehole fluid warm. • 1 06/25/09 Begin test. Having transducers problems (too much current in well). Continue test with limited transducers. Pump still cavitating and silting up. Terminate test and fill well 06/26/09 w /glycol. Pull pump and order new transducers. Move equipment to delineation site Wainwright -10. Will not 06/27/09 collect mud -gas logs at this site. Finish moving equipment. Coordinates N70 38' 6.6" W 160 1' 45.3 ". SriII 10" hole and set 6" steel 06/28/09 casing to 95 ft. 06/29/09 Drill 6" hole to 600 ft thru Nanushuk sediments. 06/30/09 Drill 6" hole to 1000 ft thru Nanushuk. Drill to 1260 ft and run gamma thru drill steel. Drill to 1300 ft, core to 1317 ft. Hit w -coal at 1300 ft. 07/01/09 Begin desorption. Drill to 1360 ft, trip steel, and run Togs - caliper, gamma, resistivity, induction, density, sonic. Set 07/02/09 packers in 1150 ft sandstone. Air develop sandstone between packers at 1140 -1180 ft. Install transducer and collect recovery data. 07/03/09 Collect water samples for QW. Pull packers, plug and abandon W -10 with abandonment grout and Arctic cement from 50 ft to 07/04/09 surface. Move equipment to production site. Set production pipe to 1200 ft. Plug in heat trace to warm well and one shorts out. Can't run test with 07/05/09 only one trace. 07/06/09 Order new trace. 07/07/09 Trace arrives late. Install and let it run ovemight to warm well. 07/08/09 Begin test but more transducers blow out. Running test w /reduced monitoring. 07/09/09 Continue test. 07/10/09 Pump cavitating and silting. End test, fill well w /glycol, pull pump and clean. 07/11/09 Reset pump and program transducers. Test pump and it's having problems. 07/12/09 Another heat trace shorts. Pull trace, rehead, and reinsert. Begin test. 07/13/09 pump testing pump testing. Lose communication in reservoir between production and monitor wells (gas 07/14/09 plugging ?) 07/15/09 fill production well w /glycol and slowly reestablish connection. Let reequilibrate overnight. 07/16/09 Begin test with slow drawdown rate. • 07/17/09 testing 07/18/09 testing testing. Lose communication with deep transducer. Fill well w /glycol and order new high - pressure 07/19/09 transducer 07/20/09 standby for transducers to arrive 07/21/09 pull old transducers, install new. Begin test. 07/22/09 testing 07/23/09 testing 07/24/09 testing 07/25/09 testing 07/26/09 testing 07/27/09 testing 07/28/09 testing 07/29/09 testing 07/30/09 testing 07/31/09 testing 08/01/09 testing 08/02/09 testing 08/03/09 testing 08/04/09 testing 08/05/09 testing 08/06/09 testing 08/07/09 testing 4 0 1 08 /08 /09 testing 08/09/09 testing 08/10/09 testing 08/11/09 testing 08/12/09 testing 08/13/09 testing 08/14/09 testing 08/15/09 testing 08/16/09 testing 08/17/09 testing 08/18/09 testing 08/19/09 End test. Wells refilled with glycol /water mixture. 08/20/09 no project activities 08/21/09 no project activities 08/22/09 no project activities 08/23/09 no project activities 08/24/09 Drill crew arrives in Wainwright. Pull submersible pump and test equipment from production well 08/25/09 Move rig from well. Winterizing equipment. 08/26/09 Finish winterizing equipment and park in wareyard. Install well enclosures. 08/27/09 Crew leaves Wainwright. End of 2009 activities. ��I Well abandonment diagram Wainwright -9 Land surface 4 3 ft below land surface Arctic blend 9 7 /8 -in diameter borehole cement — 4— Depth of 6 5 /8 -in casing = 45 ft Top of Grout = 50 ft • <EEEEE> • Fi::::::El:[;[i[[:[f'f iE'ESEEE` i• [i i iy$i i isei'`i ` %i ?? • Yq;EfEEEEEEEEEEEEEEiEEESP [ sE[E[E �% �` ? Faxed to AOGCC (Tom Maunder) on 7/29/09 with sir signed originals sent in mail the same day 3 3 ji a ;3 L ?:.: • 0) :• • . � Emailed to AOGCC (Guy Schwartz) 6 - diameter borehole on 11/19/09 with P &A forms 10 -407 E for both wells. Signed originals to p be sent in mail. c R5 • ca Y � 1 411: ....F — Total Depth = 1300 ft • • zz zo UtX� O r m CO O m - O 2 -n m -G D 7� O z 0 a o x= r z m 4 a WELL rri Po �d� ° r ' - O z m z E ' dc) m c)= G� 4 v) z FLD L m - 71 < "< z O 2 m in D o CTY x z z 0 a 0 '� m .r STE m 4 < < O 4 m r - , K FILING No 0 0 ,- zi Z V p n n MI 4 o n , .n 0 ril rri O r r i O n �r� ,.. z v ,ma a V , lit v) G' cra co O - - m < ;p II i,, n K H m ,°p m z x o ` � m 4 n 7X < Z r 'n 0 t ,,, ni z r z c 0 r-, n m _ k z m b 0 r v) m -i a m -3 m 0 4 9-, 0 = 0 > 2 m a w 11 m o n m CA Depth GAM(NAT) DELTAT FGAIN(N) TIME(N) AMP(N) GAIN(F) II 1 ft:480ft 0 API -GR 150 -300 USEC /FT 700 -300 CPS 500 250 USEC 500 0 MV 3000 0 CPS 2 AMP(F) AMP(N) (MV) AMP(F) (MV) TIME(F) BHC -DELT GAIN(F)#1 I! - A 11=1111M_ I 0 MV 2000 0 1020 0 1020 300 USEC 800 -100 USEC /FT 300 0 CPS 2 AMP(F)#1 DELTAT #1 FGAIN(N)#1 POR(SON) AMP(N)#1 } I 0 MV 2000 -300 USEC /FT 700 -300 CPS 500 - 100 300 0 MV 3000 GAM(NAT)#1 AMP(N) (MV) #1 AMP(F) (MV) #1 TIME(N)#1 BHC - DELT #1 li 1111■L -;• 0 CPS 150 0 1020 0 1020 250 USEC 500 -100 USEC /FT 300 TIME(F)#1 I I 300 USEC 800 ^ ^^ / ^ ^„` .. Page 1 • • • • rvr%wlI)n 1 - 100 300 0.0 20.0 40.0 60.0 - 80.0 100.0 120.0 - 140 L `+ ti 160.0 , 180 . 200.0 FN Mi-�MII 220.0 _+ ', ` — ►�110� 240.0 ` . �k ��`` dm NIV94111M1-Mmme 1:r Si> 300.0y 4 1 11111 � Page 2 • • • „ 0 0 • �: 360 38 , 0 _ _ r O, 1�_ 4°0 . o 420.0 F M 440.0 . tt ! ` ti M 480.0 500.0 rittrmti 520.0 s FITM 9 M •. 111a 560.0 '1� 0 5 8 al a I I I 1 li ill I I I MN I r tillIN 6 40 . 0 �� 66n n Page 3 • • • mit am 680. �., �am aim �'' ' ENE7:41. 700-0 �� B kill.% 411 720.0 __ _ _ _ 740. 0 �_ ��� _wla I I 111 MkAle SR I FAMAI EVIIME 7 80.0 880.0 r - v, 4m7,-, as_ 820.0 taw 840 0 ystik emi- Lall OM I [-M MILM 880. 0 � � �1� ,�� /� _��� 900. F ______ � �_ i►`�� 920.0 mow= '�►6�r � p� = ` iii - 960.° ,--.F.-7inmEllm T • im Page 4 • • 41 • • • •.." f tit b , ' 1� 1020 .0 i t _ - MI Aillimir 111111111111. 1111 i V,■fillti Will 1080.0 EM't!m "EM i EN 151_ 1100.0' '44m �_ 112 0 . 0{ ; ��FF 11 z., _� 1140. ;A III w .„ opokiwalmwmm ,„.,„,,. .c../ 1160.0 f'�tl �_; �: WM_ 1180 . 0 _ter= :;r sm. 1200.0 'I'� ' t . V - � 1 All = X�I_ 1220. a { " , j i 1240. � Q =it a (, !s 3 == IMM 1260.0 'VIII —" _ � 11i i -miming 1280. f -= ` y �- L .k l 1 � r Page 5 • • � _ _ 0 0 0 _a 0 0 0 w Ill H . _ W = 4. U J Z Q U COMPANY USGS • I WELL ID Wainwright -9 -09 w I _ 1O 111111111 1 w p p w FIELD Wainwright Landfill � g w 0 COUNTRY USA STATE Alaska LOCATION OTHER SERVICES Wainwright t N - 7b e 39 S'.t' , z w I -' Sg' ► w A w a U • 3 w U w SEC TWP RGE PERMANENT DATUM ELEVATION K.B. o 0 0 LOG MEAS. FROM 1299.50' ABOVE PERM. DATUM D.F. o 0 N DRILLING MEAS. FROM GL G.L. DATE 6 -20 -2009 TYPE FLUID IN HOLE drill mud eHII RUN No 1 SALINITY LOG multifunction 8044 DENSITY - DRILLER 1300' LEVEL Q DEPTH - LOGGER 1299.50 MAX. REC. TEMP. 2 I BTM LOGGED INTERVAL 25 fpm 0 TOP LOGGED INTERVAL - � OPERATING RIG TIME j Q RECORDED BY BS Corland, A Clark Q WITNESSED BY Z RUN BOREHOLE RECORD CASING RECORD NO. BIT FROM TO SIZE WGT. FROM TO 0 L • coo • O O O o 0 N N di l0 oo o 120 140 ......____..........., 160 NKr It. 180 200 220 240 1111 t l 260 r 280 i 300 r 320 �.- 340 1P 360 380 i 400 s 41lia■ Wall 420 - � It IMIL 440 460 IDIVII1L- 1......- "- 480 500 r / 520 540 11 � 560 7► I 580 1� __--.IM I IIIIN 600 MINIM JI .111WA 620 640 — 660 IMMr/IMIMIIMIMMIE ------------- mom= 680 ��— si/ 700 M 720 --11111r1IIMIPMEM 740 W� 760 l 780 el 800 MIZ! 820 = 840 11K�f 860 - 880 �� 900 IM 920 IMIWI 940 �! 960 r .. ., 980 � 1000 1 l ir 1020 -,..m...- (--....--- 1040 1060 - 1080 - --s- 4st f,-- 1 1100 1120 1140 1160 - 1180 1 — 4' `111..._ `_____ 1200 ) 11 1220 1240 - x-- 1260 { 1280 .f CALIPER I 5 INCH 9 RES(16N) I I 0 OHM -M 100 LATERAL I 0 OHM -M 100 Depth NATURAL GAMMA RES(64N) 1 ft:480ft I I 0 API -GR 200 0 OHM -M 100 0 1 STATE OF ALASKA • . 4 ALASKA OIL AND GAS CONSERVATION COMMISSION WELL COMPLETION OR RECOMPLETION REPORT AND LOG la. Well Status: Oil ❑ Gas ❑ SPLUG ❑ Plugged 12 Abandoned 0 Suspended 1b. Well Class: 20AAC 25.105 20AAC 25.110 Development ❑ Exploratory El GINJ ❑ WINJ ❑ WAG ❑ WDSPL ❑ Other ❑ No. of Completions: Service ❑ Stratigraphic Test ❑ 2. Operator Name: 5. Date Comp., Susp., or 12. Permit to Drill Number: USGS Aband.: 6/21/2009 208 -077 3. Address: 6. Date Spudded: 13. API Number: PO Box 25046 MS 939 DFC Denver, CO 80225 6/15/2009 301- 20011 -00 4a. Location of Well (Governmental Section): 7. Date TD Reached: 14. Well Name and Number: Surface: N70 39' 58.6" W159 58' 13.0" 6/19/2009 Wainwright 9 Top of Productive Horizon: 8. KB (ft above MSL): 15. Field /Pool(s): GL (ft above MSL): 20 ft Total Depth: 1300 ft 9. Plug Back Depth(MD +TVD): 1300 ft - land surface 4b. Location of Well (State Base Plane Coordinates, NAD 27): 10. Total Depth (MD + TVD): 16. Property Designation: Surface: x- y- Zone- 1300 TPI: x- y- Zone- 11. SSSV Depth (MD + TVD): 17. Land Use Permit: Total Depth: x- y- Zone - 18. Directional Survey: Yes ❑ No isi 19. Water Depth, if Offshore: 20. Thickness of Permafrost MD/TVD: (Submit electronic and printed information per 20 AAC 25.050) (ft MSL) -1000 ft 21. Logs Obtained (List all logs here and submit electronic and printed information per 20AAC25.071): 22.Re -drill /Lateral Top Window MD/TVD: gamma, caliper, resistivity, sonic 23. CASING, LINER AND CEMENTING RECORD WT. PER SETTING DEPTH MD SETTING DEPTH TVD AMOUNT CASING FT GRADE TOP BOTTOM TOP BOTTOM HOLE SIZE CEMENTING RECORD PULLED 6 5/8 18.99 sch 40 0 45 ft _ 9.875 inch arctic cement 0-45 ft P &A 1300 -50 ft: bentontite grout 50 -land surface: Arctic cmnt 24. Open to production or injection? Yes El No p If Yes, list each 25. TUBING RECORD interval open (MD +TVD of Top & Bottom; Perforation Size and Number): SIZE DEPTH SET (MD) PACKER SET (MD/TVD) 26. ACID, FRACTURE, CEMENT SQUEEZE, ETC. DEPTH INTERVAL (MD) AMOUNT AND KIND OF MATERIAL USED 27. PRODUCTION TEST Date First Production: Method of Operation (Flowing, gas lift, etc.): Date of Test: Hours Tested: Production for Oil -Bbl: Gas -MCF: Water -Bbl: Choke Size: Gas -Oil Ratio: Test Period ---► Flow Tubing Casing Press: Calculated Oil -Bbl: Gas -MCF: Water -Bbl: Oil Gravity - API (corr): Press. 24 -Hour Rate .-■ 28. CORE DATA Conventional Core(s) Acquired? Yes o No ❑ Sidewall Cores Acquired? Yes ❑ No ❑ If Yes to either question, list formations and intervals cored (MD +TVD of top and bottom of each), and summarize lithology and presence of oil, gas or water (submit separate sheets with this form, if needed). Submit detailed descriptions, core chips, photographs and laboratory analytical results per 20 AAC 25.071. Nanushuk Fm: 1161 -1286 ft through sandstone, siltstone, mudstone, and coal. No oil shows; gas in coal beds. Form 10-407 Revised 7/2009 CONTINUED ON REVERSE Submit original only 0 • TIT (,,. 'L 'a �a �' q' A\ [ 1 r L� [ !A\ SEAN PARNELL, GOVERNOR ALASKA OIL AND GAS 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION y ANCHORAGE, ALASKA 99501 -3539 f PHONE (907) 279 -1433 1 FAX (907) 276 -7542 Mr. Art Clark Geologist US Geological Survey PO Box 25046 MS 911 DFC Denver, CO 80225 Re: Exploratory Field, Wainwright #9 Sundry Number: 309 -271 Dear Mr. Clark: Enclosed is the approved Application for Sundry Approval relating to the above referenced well. Please note the conditions of approval set out in the enclosed form. This work was completed prior to filing Form 403, in violation of 20 AAC 25.105(e). This is another instance of the Bureau of Land Management's untimely compliance with requirements of Alaska State Law. As provided in AS 31.05.080, within 20 days after written notice of this decision, or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for rehearing. A request for rehearing is considered timely if it is received by 4:30 PM on the 23rd day following the date of this letter, or the next working day if the 23rd day falls on a holiday or weekend. A person may not appeal a Commission decision to Superior Court unless rehearing has been requested. Sincerely, Or Daniel T. Seamount, Jr. Chair hj DATED this Zday of December, 2009 Encl. v RECEIVED • � STATE OF ALASKA AUG 0 3 2009 ALASKA OIL AND GAS CONSERVATION COMMISSION APPLICATION FOR SUNDRY APPROVALS Alaska Oil & Gas Cons. Commission 20 AAC 25.280 Anchorage 1. Type of Request: Abandon® - Suspend ❑ Operational shutdown❑ Perforate El Waiver❑ Other❑ Alter casing❑ Repair well ❑ Plug Perforations ❑ Stimulate ❑ Time Extension ❑ Change approved progran❑ Pull Tubing❑ Perforate New Pool❑ Re -enter Suspended Well ❑ 2. Operator Name: 4. Current Well Class: 5. Permit to Drill Number: US GEOL SURVEY Development ❑ Exploratory ® 208 3. Address: P.0 BOX 25046, MS 406 Stratigraphic ❑ Service ❑ 6. API Number: DENVER FED.CTR. DENVER, CO 80025 301 20011 - 00- 7. If perforating, closest approach in pool(s) opened by this operation to nearest 8. Well Name and Number: property line where ownership or landownership changes: Wainwright 9 - Spacing Exception Required? Yes ❑ No ❑ 9. Property Designation: 10. KB Elevation (ft): 11. Field / Pool(s): NORTH SLOPE BOROUGH • - 12. PRESENT WELL CONDITION SUMMARY Total Depth MD (ft): Total Depth TVD (ft): Effective Depth MD (ft): Effective Depth TVD (ft): Plugs easured): Junk (measured): 1300 1300 4J5V1te _ Casing Length Size MD TVD Burst Collapse Structural Conductor 45' I IK 0 Surface Intermediate Production Liner Perforation Depth MD (ft): Perforation Depth TVD (ft): Tubing Size: Tubing Grade: Tubing MD (ft): Packers and SSSV Type: Packers and SSSV MD (ft): 13. Attachments: Description Summary of Proposal ❑ 14. Well Class after proposed work: Detailed Operations Program ❑ BOP Sketch ❑ Exploratory ®' Development ❑ Service ❑ 15. Estimated Date for 16. Well Status after proposed work: �s. /o•lg. vi JUNE 15, 2009 Commencing Operations: Oil ❑ Gas ❑ Plugged Abandoned IZI 17. Verbal Approval: Date: WAG ❑ GINJ ❑ WINJ ❑ WDSPL ❑ Commission Representative: 18. I hereby certify t -t the foregoing is true and correct to the best of my knowledge. Contact Printed Name 4 Title SveV G �J t,) 7//A/61 Signature Phone Date / ----.. COMMISSION USE ONLY Conditions of approval: Notify Commission so that a representative may witness Sundry Number: ✓ 569-2 7/ Plug Integrity L _I BOP Test ❑ Mechanical Integrity Test ❑ Location Clearance ❑ Other: c //�� ®® / / /� w K / C".... ' e-J ht ..(mil ,,1 '' 4 . ( U •- e l 0 7 n / `7 work wa-s c r., - Y - lor/ h 1 IiAI Torte L1 3 /, ; tn„.6 �4. ti ( oh D Z 6 /MC. Z5. /D 5 (e). ! X, /"o/'- tic), W aK-1) Sw i!/ b kr C oX cc- 7'.-. ke,r- Subsequent Form Required: /0 — y 07 r e_ b? /40 4 1 c C APPROVED BY / /� Approved by: COMMISSIONER THE COMMISSION Date: 2 1 C ) Form 10 -403 Revised 06/ 06 ORIGINAL _. L E3 r .RA,A "'� Submit in Duplicate a Well abandonment diagram Wainwright-9 Land surface > 4-- ft below land surface r ^ / « !!« & 3 ,.> & // ) Depth of casing = 45 ft Top o Grout =5 a » » ) • • • • m \• • • • • \ • • • . _ : ! Total Depth = 130 0 ft • • Colombie, Jody J (DOA) From: Seamount, Dan T (DOA) Sent: Tuesday, November 10, 2009 10:21 AM To: Colombie, Jody J (DOA) Subject: FW: Wainwright Please put in files Original Message From: Greg_Noble @b1m.gov [mailto:Greg_Noble @blm.gov] Sent: Monday, November 09, 2009 10:01 AM To: Seamount, Dan T (DOA) Subject: Wainwright Dan, Called and left message for you with your staff assistant. I would like to speak with you. I am not pleased with your letter of support. Please call me. Greg J Noble Energy Section Chief (907) 267 -1429 "Seamount, Dan T (DOA)" <dan.seamount @ala To ska.gov> Greg NobleOak.blm.gov cc 11/06/2009 11:40 AM Subject FW: Greg, Here are your courtesy first to see copies. dan From: Colombie, Jody J (DOA) Sent: Friday, November 06, 2009 11:39 AM To: Seamount, Dan T (DOA) Subject: Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 (907)793 -1221 (phone) (907)276 -7542 (fax) [attachment "BLM Wainwright 11- 6- 09.pdf" deleted by Greg Noble /CTF /AK /BLM /DOI] [attachment "USGS Wainwright 11- 5- 09.pdf" deleted by Greg Noble /CTF /AK /BLM /DOI] 2 V•, ;.; r C r I 1 1 if 1.\\ /711 SEAN PARNELL, GOVERNOR L :n.‘ in6 C,4) I ALASKA. OIL Al D GAS 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 November 6, 2009 Greg Noble Section Chief — Energy Section Bureau of Land Management 4700 BLM Road Anchorage, Alaska 99507 Dear Mr. Noble: This letter responds to your November 9, 2009 email expressing displeasure with my November 5, 2009 letter. While the November 5 letter may not have been what you were expecting, the AOGCC is statutorily charged with assuring compliance with our drilling regulations. The AOGCC remains amenable to resolving this matter without the necessity of a public hearing. To that end, Guy Schwartz, an AOGCC petroleum engineer, will contact Art Clarke to discuss the situation with him. If you would care to participate in that dialogue, please contact Guy at 907-793-1226. Sincerely, 0, V. Daniel T. Seamount, Jr. Chair • • F it L-t' r F + k p µ — i t k� i I ' SEAN PARNELL, GOVERNOR I A L.4 ALASKA OIL AND GAS x 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMNIISSION A ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 FAX (907) 276 -7542 November 6, 2009 Greg Noble Section Chief — Energy Section Bureau of Land Management 4700 BLM Road Anchorage, Alaska 99507 Dear Mr. Noble: This letter is a follow -up to discussions regarding the USGS's ongoing violations of AOGCC regulations at the Wainwright, AK exploratory coal bed methane project. In those discussions you questioned the AOGCC's support for the coal bed methane project. AOGCC strongly supports the project. However, that support is predicated on compliance at Wainwright with AOGCC regulations. Wainwright well operations are continually conducted in violation of AOGCC regulations. Some of those violations, including well work undertaken without a permit, are very serious. The AOGCC's prior efforts to obtain regulatory compliance have essentially been ignored. The AOGCC remains amenable to resolving these issues informally. But as much as the AOGCC supports the project, we are rapidly approaching a point where other options need to be considered, including a public hearing regarding the violations. To the extent you may be able to obtain or encourage USGS compliance with AOGCC regulations, we welcome your support. In closing, let me again express the AOGCC's support for the program and the hope that once the compliance issues are resolved it is a resounding success. Sincerely, Daniel T. Seamount, Jr. Chair Enclosure • • Art Clark, Supervisory Physical Scientist USGS CR RM WRD Box 25046, Denver Federal Center Mail Stop 939 Denver, CO 80225 -0046 Gary Reimer, District Manager USGS, Anchorage District Office 4700 BLM Road Anchorage, AK 99507 Leslie Holland - Bartels, Regional Executive - Alaska Area USGS WR AA DO 4210 University Drive Anchorage, AK 99508 -4626 Anne Kinsinger, Western Regional Director USGS WR -- DO 909 1st Avenue, Suite 704, 7th Floor Seattle, WA 98104 -1055 Peter Lyttle, Acting Associate Director for Geology USGS HQ -- GD 12201 Sunrise Valley Drive, Mail Stop 911 Reston, VA 20192 -0002 Thomas P. Lonnie, State Director Bureau of Land Management Alaska State Office 222 W 7th Avenue #13 Anchorage, Alaska 99513 Bob Abbey, Director BLM Washington Office 1849 C Street NW, Rm. 5665 Washington DC 20240 • • , q ,/ SEAN PARNELL, GOVERNOR ALASKA OIL AND GAS a , 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 FAX (907) 276 -7542 November 5, 2009 Art Clark, Supervisory Physical Scientist Gary Reimer, District Manager USGS CR RM WRD USGS, Anchorage District Office Box 25046, Denver Federal Center Mail Stop 939 4700 BLM Road Denver, CO 80225 -0046 Anchorage, AK 99507 Dear Mr. Messrs: On September 9, 2009 the Alaska Oil and Gas Conservation Commission (AOGCC) wrote to request compliance with AOGCC regulations at the Wainwright, AK exploratory coal bed methane project. The USGS provided no response. Because Wainwright well operations are being conducted in violation of AOGCC regulations, and because some of those violations, including well work undertaken without a permit, are very serious, the AOGCC is making a final attempt to resolve these issues informally. The following actions are required in order for the USGS to bring its Wainwright operations into compliance with AOGCC regulations: Wainwright #6 (PTD 208 -074 ) - Submit AOGCC forml0 -407 documenting 2009 activities in detail. (as per 20 AAC 25.070 (3)) - Submit a current welibore drawing. (as per 20 AAC 25.300) - Submit hard and digital copies of all logs obtained drilling and completing the well. (as per 20 AAC 25.071 (6)) Wainwright #9 (PTD 208 -077) - Submit AOGCC form 10 -407 documenting all activities including the P & A. (as per 20 AAC 25.070 (3) ) - Submit a current welibore drawing. (as per 20 AAC 25.300) - - - Submit hard and digital copies of all logs obtained drilling and completing the well. (as per 20 AAC 25.071 (6)) - Submit Core sample chips. (as per 20 AAC 25.071 (4) ) - Submit Core description and analysis (as per 20 AAC 25.071 (3)) - Submit Lithology log (as per 20 AAC 25.071(3)) • • Wainwright #10 ( PTD 209 -035) - Submit AOGCC form 10 -407 documenting all activities including the P & A. (as per 20 AAC 25.070 (3) ) - Submit a current wellbore drawing. (as per 20 AAC 25.300) - - Submit hard and digital copies of all logs obtained drilling and completing the well. (as per 20 AAC 25.071 (6)) - Submit Core sample chips. (as per 20 AAC 25.071 (4) ) - Submit Core description and analysis (as per 20 AAC 25.071 (3)) - Submit Lithology log (as per 20 AAC 25.071(3)) - Submit inclination log (as per 20 AAC 25.050 (2)) Additional wells out of compliance as referenced in Attachment #1 - September 9, 2009 letter are: Wainwright # 1 (PTD 207 -065) - No hardcopies of open hole logs were submitted (as per 20 AAC 25.071 (6)) - No core chip samples submitted(as per 20 AAC 25.071 (4) ) - No core description submitted(as per 20 AAC 25.071 (3)) - No core analysis submitted(as per 20 AAC 25.071 (3)) - No header information on the .pdf digital graphics files submitted on dataset number T14024. (as per 20 AAC 25.071 (7)) Wainwright #2 (PTD 207 -106) - No washed and dried samples submitted (as per 20 AAC 25.071 (2)) - No lithology / sample log submitted (as per 20 AAC 25.071 (1)) - No core chips submitted(as per 20 AAC 25.071 (4) ) - No core description submitted(as per 20 AAC 25.071 (3)) - No core analysis submitted(as per 20 AAC 25.071 (3)) - No header information on the .pdf digital graphics files submitted on dataset number T14024 (as per 20 AAC 25.071 (7)) - No directional survey submitted. (as per 20 AAC 25.050 (2)) aoS - toS " Franklin Bluffs 1 (PTD-2.0-7-406t - No mud logs submitted. (as per 20 AAC 25.071 (1)) - No dry samples submitted (as per 20 AAC 25.071 (2)) - No as -built submitted (as per 20 AAC 25.070(2)) - No core analysis submitted(as per 20 AAC 25.071 (3)) - No core description submitted(as per 20 AAC 25.071 (3)) - No open hole logs submitted (hardcopy nor digital) (as per 20 AAC 25.071 (6)) DOI -04 1A (PTD 207-106) a2 Q q - a �3 - No mud logs submitted. (as per 20 AAC 25.071 (1)) - No dry samples submitted (as per 20 AAC 25.071 (2)) - No OH logs submitted (hardcopy nor digital data) (as per 20 AAC 25.071 (6)) - No core chip samples submitted(as per 20 AAC 25.071 (4) ) - No core analysis submitted(as per 20 AAC 25.071 (3)) • - No core description submitted(as per 20 AAC 25.071 (3)) - Density and porosity data missing from submitted digital data. (407 states that those types of logs were run.) (as per 20 AAC 25.071 (6)) Within 40 days of the date of this letter, the AOGCC requests USGS provide written verification that the violations listed above have been rectified and that all Wainwright operations are being conducted in compliance with AOGCC regulations. Upon receipt of such verification, the AOGCC will consider this matter closed. Should the USGS fail to submit the required information the AOGCC will notice a public hearing on the Wainwright violations to determine, among other things, the reasons for noncompliance and whether non - compliance poses any threat to human health or the environment. If you have any questions regarding this request for information, please contact Guy Schwartz at 907 - 793 -1226 or guy.schwartz @alaska.gov. Sincerely, Daniel T. Seamount, Jr. Chair Encl. cc: Greg Noble, BLM • r b g k 6 ' • K ( p = t kr ` i k ? SEAN PARNELL, GOVERNOR ALASKA OIL AND GAS F " 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION / ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 FAX (907) 276-7542 September 9, 2009 Art Clark, Supervisory Physical Scientist Gary Reimer, District Manager USGS CR RM WRD USGS, Anchorage District Office Box 25046, Denver Federal Center Mail Stop 939 4700 BLM Road Denver, CO 80225 -0046 Anchorage, AK 99507 Dear Mr. Messrs: The U.S. Geological Survey (USGS) has again failed to meet the Alaska Oil and Gas Conservation Commission's (Commission) regulatory requirements for exploratory coal bed methane wells drilled near Wainwright, Alaska. During the current drilling season, the USGS failed to file Sundry permit applications — required by 20 AAC 20.015, 20 AAC 25.280 and 20 AAC 25.110 — for the following operations: 1. repairing of monitor well Wainwright 6, 2. plugging and abandoning of well Wainwright 9, and 3. plugging and abandoning of well Wainwright 10. The USGS also failed to file, in a timely manner, weekly operations summaries for the current Wainwright exploratory drilling program. These summaries are authorized under 20 AAC 25.300. Alaska Statute 31.05.027 and Regulation 20 AAC 25.515 require Federal agencies to conform to the Commission's permitting and reporting requirements. Without permit applications in advance of well operations, it is not possible for the Commission to review proposed operations to ensure that they meet Alaska's statutory requirements to prevent waste, protect correlative rights, and improve ultimate recovery while protecting underground freshwater, health, safety and the environment. Without weekly operations summaries, the Commission cannot, in a timely manner, review actual well operations to ensure conformance with our requirements. The current failures reflect a continuing pattern of poor compliance by the USGS and the Bureau of Land Management (BLM) over the past five years. On May 23, 2008, the Commission issued Conservation Order No. 600 (CO 600), which found that the BLM had drilled the Wainwright No. 2 exploratory coal bed methane well before the Commission received or approved a Permit to Drill application for the well. This inaction drew the BLM and the USGS, the operator for the well, a rebuke from the Commission. CO 600 also concluded that the BLM and the USGS had not submitted all information required for the Wainwright No. 1 and No. 2 exploratory wells. CO 600 ordered BLM and the USGS to submit, by June 23, 2008, the reports and information required by 20 AAC 25.070 and 20 AAC 25.071. Attachment 1 presents the continued reporting deficiencies for Wainwright No. 1 and Wainwright No. 2 along with reporting deficiencies for the Franklin Bluffs No. 1 and DOI -04 No. IA exploratory wells that were drilled about five years ago. • U.S. Geological Survey September 9, 2009 Page 2 of 3 If the USGS and BLM continue to fail to meet Alaska's statutory and regulatory requirements, the Commission will issue notice and convene a public hearing to address these matters further. Daniel T. Seamount, Jr. Chair Leslie Holland - Bartels, Regional Executive - Alaska Area USGS WR AA DO 4210 University Drive Anchorage, AK 99508 -4626 Anne Kinsinger, Western Regional Director USGS WR -- DO 909 1st Avenue, Suite 704, 7th Floor Seattle, WA 98104 -1055 Peter Lyttle, Acting Associate Director for Geology USGS HQ -- GD 12201 Sunrise Valley Drive, Mail Stop 911 Reston, VA 20192 -0002 Thomas P. Lonnie, State Director Bureau of Land Management Alaska State Office 222 W 7th Avenue #13 Anchorage, Alaska 99513 Public Room: 907 - 271 -5960 Bob Abbey, Director BLM Washington Office 1849 C Street NW, Rm. 5665 Washington DC 20240 • • U.S. Geological Survey September 9, 2009 Page 3 of 3 Attachment 1 Continued Reporting Deficiencies for BLM and USGS Wells Wainwright 1 No hardcopies of open hole logs were submitted (PTD 207 -065) No core chip samples submitted No core description submitted No core analysis submitted No header information on the .pdf digital graphics files submitted on dataset number T14024. Wainwright 2 No washed and dried samples submitted (PTD 207 -106) No lithology / sample log submitted (hard copy nor digital) No core chips submitted No core description submitted No core analysis submitted No header information on the .pdf digital graphics files submitted on dataset number T14024 No directional survey submitted (hardcopy nor digital) Franklin Bluffs 1 No mud logs submitted (hardcopy nor digital data) (PTD 205 -105) No dry samples submitted No as -built submitted Core cut and was apparently directly sent to Alaska Geological Materials Center No core analysis submitted No core description submitted No open hole logs submitted (hardcopy nor digital) DOI -04 lA No mud logs submitted (hardcopy nor digital data) (PTD 204 -083) No dry samples submitted No open hole logs submitted (hardcopy nor digital data) No core chip samples submitted No core analysis submitted No core description submitted Density and porosity data missing from submitted digital data. (407 states that those types of logs were run.) • • A6i. 07 i ( "' k' t t a 1 \� I t a SEAN PARNELL, GOVERNOR AL[>•►7I1<A OIL AND GAS 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMDIISSION ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279 -1433 FAX (907) 276 -7542 September 9, 2009 Art Clark, Supervisory Physical Scientist Gary Reimer, District Manager USGS CR RM WRD USGS, Anchorage District Office Box 25046, Denver Federal Center Mail Stop 939 4700 BLM Road Denver, CO 80225 -0046 Anchorage, AK 99507 Dear Mr. Messrs: The U.S. Geological Survey (USGS) has again failed to meet the Alaska Oil and Gas Conservation Commission's (Commission) regulatory requirements for exploratory coal bed methane wells drilled near Wainwright, Alaska. During the current drilling season, the USGS failed to file Sundry permit applications — required by 20 AAC 20.015, 20 AAC 25.280 and 20 AAC 25.110 — for the following operations: 1. repairing of monitor well Wainwright 6, 2. plugging and abandoning of well Wainwright 9, and 3. plugging and abandoning of well Wainwright 10. The USGS also failed to file, in a timely manner, weekly operations summaries for the current Wainwright exploratory drilling program. These summaries are authorized under 20 AAC 25.300. Alaska Statute 31.05.027 and Regulation 20 AAC 25.515 require Federal agencies to conform to the Commission's permitting and reporting requirements. Without permit applications in advance of well operations, it is not possible for the Commission to review proposed operations to ensure that they meet Alaska's statutory requirements to prevent waste, protect correlative rights, and improve ultimate recovery while protecting underground freshwater, health, safety and the environment. Without weekly operations summaries, the Commission cannot, in a timely manner, review actual well operations to ensure conformance with our requirements. The current failures reflect a continuing pattern of poor compliance by the USGS and the Bureau of Land Management (BLM) over the past five years. On May 23, 2008, the Commission issued Conservation Order No. 600 (CO 600), which found that the BLM had drilled the Wainwright No. 2 exploratory coal bed methane well before the Commission received or approved a Permit to Drill application for the well. This inaction drew the BLM and the USGS, the operator for the well, a rebuke from the Commission. CO 600 also concluded that the BLM and the USGS had not submitted all information required for the Wainwright No. 1 and No. 2 exploratory wells. CO 600 ordered BLM and the USGS to submit, by June 23, 2008, the reports and information required by 20 AAC 25.070 and 20 AAC 25.071. Attachment 1 presents the continued reporting deficiencies for Wainwright No. 1 and Wainwright No. 2 along with reporting deficiencies for the Franklin Bluffs No. 1 and DOI -04 No. 1A exploratory wells that were drilled about five years ago. • • U.S. Geological Survey September 9, 2009 Page 2 of 3 If the USGS and BLM continue to fail to meet Alaska's statutory and regulatory requirements, the Commission will issue notice and convene a public hearing to address these matters further. Daniel T. Seamount, Jr. Chair Leslie Holland- Bartels, Regional Executive - Alaska Area USGS WR AA DO 4210 University Drive Anchorage, AK 99508 -4626 Anne Kinsinger, Western Regional Director USGS WR -- DO 909 1st Avenue, Suite 704, 7th Floor Seattle, WA 98104 -1055 Peter Lyttle, Acting Associate Director for Geology USGS HQ -- GD 12201 Sunrise Valley Drive, Mail Stop 911 Reston, VA 20192 -0002 Thomas P. Lonnie, State Director Bureau of Land Management Alaska State Office 222 W 7th Avenue #13 Anchorage, Alaska 99513 Public Room: 907 - 271 -5960 Bob Abbey, Director BLM Washington Office 1849 C Street NW, Rm. 5665 Washington DC 20240 . • U.S. Geological Survey September 9, 2009 Page 3 of 3 Attachment 1 Continued Reporting Deficiencies for BLM and USGS Wells Wainwright 1 No hardcopies of open hole logs were submitted (PTD 207 -065) No core chip samples submitted No core description submitted No core analysis submitted No header information on the .pdf digital graphics files submitted on dataset number T14024. Wainwright 2 No washed and dried samples submitted (PTD 207 -106) No lithology / sample log submitted (hard copy nor digital) No core chips submitted No core description submitted No core analysis submitted No header information on the .pdf digital graphics files submitted on dataset number T14024 No directional survey submitted (hardcopy nor digital) Franklin Bluffs 1 No mud logs submitted (hardcopy nor digital data) (PTD 205 -105) No dry samples submitted No as -built submitted Core cut and was apparently directly sent to Alaska Geological Materials Center No core analysis submitted No core description submitted No open hole logs submitted (hardcopy nor digital) DOI -04 lA No mud logs submitted (hardcopy nor digital data) (PTD 204 -083) No dry samples submitted No open hole logs submitted (hardcopy nor digital data) No core chip samples submitted No core analysis submitted No core description submitted Density and porosity data missing from submitted digital data. (407 states that those types of logs were run.) 1 Page 1 of 1 Maunder, Thomas E (DOA) From: Tom Mortensen [tom@mortensen.com] Sent: Monday, July 27, 2009 10:13 AM To: Maunder, Thomas E (DOA) Subject: USGS. Wainwright CBM Exploration. Daily Drilling Record, June 5 - July 23, 2009. Attachments: WA! Daily Drilling Record June 5 - July 23, 2009.pdf; ATT043231.txt Tom, Attached is the drilling record information that you requested for the USGS's CBM exploration project at Wainwright. Please contact me if you have any questions or require any additional information. Regards, Tom Mortensen 907- 345 -3400 tel 907- 345 -3575 fax S�J � 7/27/2009 0 m Well abandonment diagram Wainwright -9 0 Land surface 0 3 ft below land surface -T, a W 0 W N co m W — Depth of casing = 45 ft 0 Top of Grout = 50 ft CD n m 33 -4 0 Total Depth =1300 ft rg 0 0 a 0 0 w • • Wainwright -2009 Daily Record Wainwright #6, (208 -074) Wainwright #9, (208 -077) Wainwright #10, (209 -035) DATE ACTIVITY June 5, 2009 Drill crew arrives in Wainwright June 6, 2009 unpacking equipment Wainwright #6, (208 - 074) June 7, 2009 set up drill rig over production well. Repair monitor well Wainwright -6 i 0 % l l (broken casing, frozen in at surface). June 8, 2009 Reaming ice from production well. Drill to 360 ft. June 9, 2009 Ream ice to 1260 ft, drill 6" hole to 1295 ft. June 10, 2009 Circulate well, mix water /propylene glycol mix and fill well. Trip pipe and prepare for production testing. June 11, 2009 Set pump on 2" drop pipe w /pressure transducers attached to 1265 ft. Program transducers for test. June 12, 2009 Begin production test. Having icing issues. June 13, 2009 Severe icing issues. Pull pump, order heat trace and gas/water separator, begin moving equipment to landfill site (Wainwright -9) June 14, 2009 Finish moving equipment to W -9. Coordinates N70 39' 58.6" W159 58' 13.0 ". Will collect mud -gas logs at this site. Wainwright #9, (208 -077) co June 15, 2009 Set 6" steel conductor casing to 45 ft. Drill 6" hole to 245 ft through �EO r'ft Nanushuk silstone, sandstone, coal etc. June 16, 2009 Drill 6" hole to 760 ft thru Nanushuk sediments. June 17, 2009 Drill 6" to 1161 ft. Run gamma log through drill steel. Trip steel and prepare to core. June 18, 2009 Core from 1161 - 1230 ft. Encounter "w" coal bed at 1170 ft. Begin coal desorption. June 19, 2009 Core from 1230 - 1286 ft. Pull barrel, ream hole, and drill to 1300 ft. June 20, 2009 Pull steel and run geophysical logs - gamma, resistivity, caliper, sonic. June 21, 2009 Plug and abandon W -9 with bentonite abandonment grout to 50 ft bls, Arctic cement to surface. Cut casing at 3' bls. Daily Drilling Record June 5 — July 23, 2009. Wainwright #6, (208 -074), Wainwright #9, (208 -077), Wainwright #10, (209 -035). July 27, 2009. Page 1 of 3 • • Wainwright #6, (208 -074) ? 2 June 22, 2009 Move equipment back to production well. Set up and ream /flush to 1295 ft. Warm drill mud to increase borehole temp. June 23, 2009 Circulate fluid. Have 220V power dropped at site. Fill well with glycol from 1100 ft to surface. June 24, 2009 Set pump and drop pipe w /transducers, separator, and heat trace to 1255 ft. Turn on heat trace and let borehole fluid warm. June 25, 2009 Begin test. Having transducers problems (too much current in well). June 26, 2009 Continue test with limited transducers. Pump still cavitating and silting up. Terminate test and fill well w /glycol. June 27, 2009 Pull pump and order new transducers. Move equipment to delineation site Wainwright -10. Will not collect mud -gas logs at this site. Wainwright #10, (209 -035) June 28, 2009 Finish moving equipment. Coordinates N70 38' 6.6" W 160 1' 45.3 ". Drill 10" hole and set 6" steel casing to 95 ft. June 29, 2009 Drill 6" hole to 600 ft thru Nanushuk sediments. June 30, 2009 Drill 6" hole to 1000 ft thru Nanushuk. July 1, 2009 Drill to 1260 ft and run gamma thru drill steel. Drill to 1300 ft, core to 1317 ft. Hit w -coal at 1300 ft. Begin desorption. July 2, 2009 Drill to 1360 ft, trip steel, and run logs - caliper, gamma, resistivity, induction, density, sonic. Set packers in 1150 ft sandstone. July 3, 2009 Air develop sandstone between packers at 1140 -1180 ft. Install transducer and collect recovery data. Collect water samples for QW. July 4, 2009 Pull packers, plug and abandon W -10 with abandonment grout and Arctic 1•)eSk.1, z`� cement from 50 ft to surface. Move equipment to production site. (Wainwright #6) Wainwright #6, (208 -074) IJ 0 July 5, 2009 Set production pipe to 1200 ft. Plug in heat trace to warm well and one shorts out. Can't run test with only one trace. July 6, 2009 Order new trace. July 7, 2009 Trace arrives late. Install and let it run overnight to warm well. July 8, 2009 Begin test but more transducers blow out. Running test w /reduced monitoring. Daily Drilling Record June 5 — July 23, 2009. Wainwright #6, (208 -074), Wainwright #9, (208 -077), Wainwright #10, (209 -035). July 27, 2009. Page 2 of 3 • • July 9, 2009 Continue test. July 10, 2009 Pump cavitating and silting. End test, fill well w /glycol, pull pump and clean. July 11, 2009 Reset pump and program transducers. Test pump and it's having problems. July 12, 2009 Another heat trace shorts. Pull trace, rehead, and reinsert. Begin test. July 13, 2009 Pump testing July 14, 2009 Pump testing. Lose communication in reservoir between production and monitor wells (gas plugging ?) July 15, 2009 Fill production well w /glycol and slowly reestablish connection. Let reequilibrate overnight. July 16, 2009 Begin test with slow drawdown rate. July 17, 2009 Testing July 18, 2009 Testing July 19, 2009 Testing. Lose communication with deep transducer. Fill well w /glycol and order new high - pressure transducer July 20, 2009 Standby for transducers to arrive July 21, 2009 Pull old transducers, install new. Begin test. July 22, 2009 Testing July 23, 2009 Testing Daily Drilling Record June 5 — July 23, 2009. Wainwright #6, (208 -074), Wainwright #9, (208 -077), Wainwright #10, (209 -035). July 27, 2009. Page 3 of 3 S • Maunder, Thomas E (DOA) From: Greg_Noble ©ak.blm.gov Sent: Wednesday, July 15, 2009 10:34 AM To: Maunder, Thomas E (DOA) Subject: Wainwright Attachments: Wainwright update 07- 15- 09.doc Wainwright update 07- 15- 09.doc... Tom, Good talking with you. Here's what I know about Wainwright. Would like you to not consider this anything official as the USGS is officially the operator. Just wanted to keep you in the loop. (See attached file: Wainwright update 07- 15- 09.doc) Greg J. Noble Energy Section Chief BLM Alaska State Office (907) 267 -1429 work (907) 240 -5240 cell 1 • Coalbed Methane Exploration Activities Conducted by the U.S. Department of the Interior, Alaska Rural Energy Project in Wainwright, Alaska 2009 Progress Update The initial test during the week of June 8 was halted when the wellbore began freezing up. The submersible pump had been set below the coal this year because the indications from the 2008 test were that enough gas was coming through the pump to cause the pump to cavitate. This cavitation decreased the water flow and was believed to be the primary cause of freeze -up. After the freeze -up this summer the decision was made to run the pump with a down -hole separator and to place two heat -traces on the tubing string. While waiting for the heat -trace and down -hole separator, the crew drilled the delineation well 1.9 miles to the northeast near the Wainwright landfill (W10-09). The coal in this delineation well was cored and desorption analysis conducted. Early indications are that the coal has the same methane saturation as the original well drilled in the Olgoonik yard. Well W10-09 was plugged and abandoned. The well test was re- started on June 24 This test was interrupted by siltation in the pump and electronic problems with the downhole transducers. While waiting on new transducers, the crew drilled the second delineation well (W11 -09) about 3000' to the south of the test well. This well confirmed the presence of the same coal seam and was cored. The cores were de- sorbed, and the well was plugged and abandoned. After the equipment arrived, the pump was re -set (above the coal and in the cased hole) and testing began again during the week of July 6 This third test was, again, interrupted by siltation in the pump. The crew set a gravel pack, flushed the pump, and re- started the test on July 12 This test is currently underway and the well is producing about 10 cubic feet per minute and .8 gallons per minute (14 MCFD and 27 BWPD) with the water level being held at — 950 ft. The test is planned to continue until August 5 The remaining seven wells will then be permanently plugged and abandoned. The timing of the end of the test and the plugging of the wells is dictated by the barge schedule. All wells must be plugged and abandoned and the equipment must be on the barge by the first of September. S S The summary of the nine wells drilled in Wainwright by the AREP is as follows; Wainwright 1 — Original well drilled to 1,613 ft in 2007. Core barrel became stuck and well was plugged back to 940 ft. Completed as a temperature monitoring well. The well is cased with no open perfs or open hole. Wainwright 2 — Drilled to replace Wainwright 1 in 2007. Drilled to a depth of 1,300 ft. Completed as a temperature monitoring well with a TD of 1,259 ft. The well is cased with no open perfs or open hole. W- OCP -08 — The production well drilled in the Olgoonik Corporation yard in 2008. Drilled to a depth of 1,260 ft and completed as an open hole producer with casing set at 1,235 ft. WOC -1 -08 — Monitoring well drilled about 400 ft from the production well in 2008. Drilled to 2,450 ft. Completed with slotted liner open to the coal at 1,242 ft. WOC -2 -08 - Monitoring well drilled 130 ft from the production well in 2008. Drilled to 1,260 ft. Completed with slotted liner open to the coal at 1,242 ft. WOC -3-08 - Monitoring well drilled 100 ft from the production well in 2008. Drilled to 1,260 ft. Completed with slotted liner open to the coal at 1,242 ft. WOC -4 -08 - Monitoring well drilled 100 ft from the production well in 2008. Drilled to 1,260 ft. Completed with slotted liner open to the coal at 1,242 ft. W10-09 — Delineation well drilled 1.9 miles ne of the production well in 2009. Drilled to 1,260 ft. Plugged and abandoned. W11-09 - Delineation well drilled 3,000 ft south of the production well in 2009. Drilled to 1,260 ft. Plugged and abandoned. • 411 Page 1 of 1 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Wednesday, July 08, 2009 9:45 AM To: 'Tom Mortensen' Cc: Davies, Stephen F (DOA) Subject: Wainwright Activity ?? Tom, Hope you are still on the mend. A question ... are operations underway on the new Wainwright campaign? A weekly operations report requirement was included in the permit transmittal letters. Thanks in advance. Tom Maunder, PE AOGCC 7/29/2009 • 1f " - 1a3ka DC, and Gas Coniervation CO:rin133IOL? West 7 :1 Avenue, Suite 130 z Arl yho -.ge 99501 -3339 Pho -e (907) 2794433 4 t2 rr o , v Fax; (907) 276 -7342 Fax Transmission be The information contained in this fax is named below. If peade of f�ransrni�i intended i t a not reviewed initially by only the individual the intended recipient or a representative of tthe his intended fax o thel�rrfsrrnahoer carrtai�reda� tha �¢ any review, dissemination or copying of please immediately notify the sander by prohibited If you have received this fax in . telephone and return this fax to the sender at the above address. Thank you. 7 3 14 d/a-,--L. 3x 77 4 Go CC tom■ Hate: ?hone t //'' Pages (including / / ) �� �=aver sheet >: /- Gt/� - Subject: W�k[�"►'� Message Art, There are some uncertainties concerning the surface locations of the existing and proposed Wainwright wells. While you are in the field, could you please have someone use GPS equipment to obtain good X and Y coordinates for each of the wells? Could you please provide the Commission with a listing of those coordinates? Thanks for your help, Steve Davies AOGCC 907 - 793 -1224 i �- r r�� /0:1g A d�" yo. do ^Ot receive a!! the :ages o "'a f any p gErg � �V `f olaase �a!( Poi ass a: ( 90 7 ) 793 - 1223- . • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Tuesday, June 10, 2008 10:13 AM To: Saltmarsh, Arthur C (DOA) Cc: Davies, Stephen F (DOA) Subject: RE: Wainwright CBM. Art, Thought I'd let you know that I haven't received the fax of the Wainwright permit to drill. Tom Mortensen 907 - 345 -5789 tel 907 - 345 -3575 fax At 08:42 AM 6/9/2008 -0800, you wrote: >Gottcha' >Art Saltmarsh >Sr. Petroleum Geologist >Ak. Oil & Gas Conservation Commission >(907)793 -1230 > Original Message >From: Tom Mortensen [mailto:tom @mortensen.com] >Sent: Monday, June 09', 2008 8:37 AM >To: Saltmarsh, Arthur C (DOA) >Subject: RE: Wainwright CBM. >Art, >Good to hear that the first permit got signed and Art Clark got a copy. >I need a copy to distribute and for files too. >Please fax to 345 -3575. >Thanks Art. >Tom M. > >At 06:55 AM 6/9/2008 -0800, you wrote: > >Morning Tom, > >Yes everything worked well. I faxed it to Art in Wainwright and then > >talked with him to be sure he got it. I guess the fax to you didn't > >go and I had left the office. I'll check the machine. Do you still > >want a copy? > > > > > >Art Saltmarsh > >Sr. Petroleum Geologist > >Ak. Oil & Gas Conservation Commission (907)793 -1230 Original > > Message 1 6/10/2008 10:50 AM > >From: Tom Mortensen [mailt om@mortensen.com] • > >Sent: Sunday, June 08, 2008 9:41 PM > >To: Saltmarsh, Arthur C (DOA) > >Subject: Wainwright CBM. > > > > > >Art, > > > >Was the first Permit to Drill issued For Wainwright CBM? I didn't > >get >a > > > >fax, so I assume not. > > > >Tom M. »907-345-5789 2 6/10/2008 10:50 AM I h • SARAH PALIN, 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 f Arthur Clark Supervising Geologist U.S. Geological Survey - DOI P.O. Box 25046 MS 406 Denver Federal Center Denver, CO 80225 Re: Exploratory Well Wainwright No. 9 U.S. Geological Survey - DOI Permit No: 208 -077 Surface Location: 3720' FNL, 5040' FEL, SEC. 8, T15N, R31W, UM Bottomhole Location: 3720' FNL, 5040' FEL, SEC. 8, T15N, R31W, UM Dear Mr. Clark: Enclosed is the approved application for a permit to drill the above - referenced exploration well. This permit to drill does not exempt you from obtaining additional permits and approvals required by law from the Commission and other governmental agencies and does not authorize conducting drilling operations until all other required permits and approvals have been issued. In addition, the Commission reserves the right to withdraw the permit in the event it was erroneously issued. A weekly status report is required from the time the well is spudded until it is suspended or plugged and abandoned. The report should be a generalized synopsis of the week's activities and is exclusively for the Commission's internal use. Conservation Order No. 604 (attached) grants a spacing exception to allow the drilling of this well as well as equipment exemptions requested by the U.S. Geological Survey - DOI associated with the drilling of this well. Please note that production testing and hydraulic fracturing must be approved by separate Commission action. Permit No: 208 -077 June 6, 2008 Page 2 of 2 Except as provided in this permit, operations must be conducted in accordance with AS 31.05; Title 20, Chapter 25 of the Alaska Administrative Code (e.g., 20 AAC 25.055); and any applicable orders or permits of the Commission. Failure to so comply may result in the revocation or suspension of the permit, other enforcement actions, and penalties. When providing notice for a representative of the Commission to witness any required test, contact the Commission's petroleum field inspector at (907) 659- 3607 (pager) . Sincerely, Cathy P,! Foerster Commissioner DATED this (o day of June, 2008 Enclosure cc: Department of Fish 86 Game, Habitat Section w/o encl. Department of Environmental Conservation w/o encl. • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF THE U.S. DEPARTMENT ) Conservation Order No. 604 OF THE INTERIOR, U.S. GEOLOGICAL SURVEY ) Docket No. CO -08 -28 for waivers of the bonding requirements of 20 AAC 25.025, blowout prevention equipment requirements ) Department of the Interior Coalbed of 20 AAC 25.035, welibore survey requirements of ) Methane exploratory wells: 20 AAC 25.050(a)(2), well site seismic survey Wainwright wells No. 3, 4, 5, 6, 7, 8 requirements of 20 AAC 25.061(a), and gas detection ,) and 9. requirements of 20 AAC 25.066, and for exceptions to the spacing requirements of 20 AAC 25.055(a)(2) ) Wainwright, Alaska or 20 AAC 25.055(a)(4) or both to allow for drilling, ) completing, and testing the following proposed U.S. ) Department of the Interior Coalbed Methane ) June 6, 2008 exploratory wells: Wainwright Nos. 3, 4, 5, 6, 7, 8 ) and 9. IT APPEARING THAT: By letter dated and received on April 23, 2008, and as amended on April 25, 2008, and May 1, 2008, the U.S. Department of the Interior (USDO1), U.S. Geological Survey (USGS) applied to the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) for permits to drill the Wainwright No. 3, 4, 5, 6, 7, 8 and 9 coalbed methane exploratory wells. In conjunction with the permit to drill applications the USGS applied for waivers of the following requirements: the bonding requirements of 20 AAC 25.025, blowout prevention equipment requirements of 20 AAC 25.035, welibore survey requirements of 20 AAC 25.050(a)(2), well site seismic survey requirements of 20 AAC 25.061(a), and gas detection requirements of 20 AAC 25.066 as well as for exceptions to the spacing requirements of 20 AAC 25.055(a)(2) and 20 AAC 25.005(a)(4) for the proposed Wainwright wells No. 3, 4, 5, 6, 7 and 8 wells, and for an exception to the spacing requirement of 20 AAC 25.055(a)(2) for the proposed Wainwright No. 9 well. 1. The Commission published notice of opportunity to comment and request a public hearing in the ANCHORAGE DAILY NEWS on May 6, 2008, pursuant to 20 AAC 25.540. 2. One notice of objection was filed. No written comments or requests for a hearing were received. 3. The public hearing was vacated on June 3, 2008. FINDINGS: 1. The proposed Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will be onshore, vertical, coalbed methane exploration wells drilled in and near Wainwright, Alaska. The location of each proposed well is as follows: a. Wainwright No. 3: 1720' FEL, 640' FNL, Sec. 24, T15N, R32W, Umiat Meridian (UM) b. Wainwright No. 4: 1780' FEL, 540' FNL, Sec. 24, T15N, R32W, UM c. Wainwright No. 5: 1650' FEL, 630' FNL, Sec. 24, T15N, R32W, UM • • Conservation Order 604 June 6, 2008 Page 2 of 4 d. Wainwright No. 6: 1780' FEL, 660' FNL, Sec. 24, T15N, R32W, UM e. Wainwright No. 7: 1890' FEL, 760' FNL, Sec. 24, T15N, R32W, UM f. Wainwright No. 8: 2040' FEL, 970' FNL, Sec. 24, T15N, R32W, UM g. Wainwright No. 9: 5040' FEL, 3720' FNL, Sec. 8, T15N, R31 W, UM 2. The United States is the landowner, as that term is defined in AS 31.05.170(7), of Section 24, T15N, R32W, UM. The USDOI, Bureau of Land Management (BLM) administers Section 24. The Arctic Slope Regional Corporation (ASRC) is the landowner of Sec. 8, T15N, R31W, UM. The State of Alaska is the landowner of the offshore acreage adjacent to both sections. The USGS has been designated as the operator of the lands that Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 are located on. 3. Under AS 31.05.027, the Commission's authority extends to all land within the state, including federal land and native corporation land affected by the proposed activities, that are lawfully subject to the state's police powers. 4. Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will be within 1500' of a shoreline separating onshore federal lands from offshore State of Alaska lands. Wainwright wells No. 3, 4, 5, 6, 7 and 8 will be within the same governmental section as, and within 3000' of, one another and existing Wainwright wells No. 1 and 2. 5. Wainwright, Alaska, obtains drinking water from surface water sources according to the Alaska Department of Environmental Conservation, Division of Environmental Health, Drinking Water Program and the Alaska Department of Natural Resources, Land Administration System. These sources are in the northwest quarter of the southwest quarter of Section 9, T3lN, R31 W, UM: over 1 mile from the proposed wells. 6. The expected depth of the base of the permafrost in Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is about 1,000 feet. (Because the USGS has yet to file completion reports for Wainwright wells No. 1 and 2, the actual depth is unknown.) If this is the case, subsurface aquifers will not likely be utilized for drinking water. 7. USGS is an agency of the United States. The credit of the United States renders a bond unnecessary for Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9. 8. The proposed wells will be constructed by setting 6 -5/8" conductor in a 9 -7/8" hole drilled to approximately 80'. A 6" hole will be drilled below the conductor to a total depth between 2500' and 3000' for Wainwright No. 9 and about 1300' for the other wells. USGS plans to use a rotating drill head, which seals around the drill stem and directs the annular mudflow to the pits. If gas is encountered, the rotating drill head functions as a diverter. A similar rotating drill head was used successfully at the Franklin Bluffs No. 1, Wainwright No. 1, and Wainwright No. 2 exploratory gas wells (AOGCC Permits to Drill No. 205 -105, 207 -065, and 207 -106, respectively). 9. Seismic information obtained near Wainwright welts No. 3, 4, 5, 6, 7, 8 and 9 does not indicate shallow gas. In addition, drilling records and mud log information from the nearest exploration wells -i.e., Peard Test Well No. 1, which is 25 miles east; Kugrua No. 1, which is 30 miles east - southeast; and Tunalik No. 1, which is 37 miles southwest -do not indicate abnormal pressure. Because the USGS has not provided completion reports for Wainwright wells No. 1 and 2, drilling records and mud log information are not available to the AOGCC on these wells. Conservation Order 604 • June 6, 2008 Page 3 of 4 10. Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will be drilled with a truck- mounted drilling rig. This equipment has no enclosures where sufficient quantities of methane can accumulate to pose a risk of explosion or fire, or where a methane detector can be placed. 11. The proposed wells are designed to test the lateral extent, deliverability, and water chemistry of coalbeds underlying the Wainwright area. CONCLUSION& 1. Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9-- drilled near Wainwright, Alaska, to explore for coalbed methane -are subject to the Alaska Oil and Gas Conservation Act, 31.05, and the Commission's regulations, 20 AAC 25. 2. Exceptions to the well spacing requirements of 20 AAC 25.055 are necessary to allow for drilling, completing, and testing Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9. 3. A spacing exception to allow for drilling, completing, and testing Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will not result in waste or jeopardize correlative rights. 4. Exceptions to the gas detection requirements of 20 AAC 25.066 are necessary to allow for drilling, completing, and testing Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9. 5. Granting exceptions to the bonding requirements of 20 AAC 25.025, blowout prevention equipment requirements of 20 AAC 25.035, wellbore survey requirements of 20 AAC 25.050(a)(2), well site seismic survey requirements of 20 AAC 25.061(a), and gas detection requirements of 20 AAC 25.066 to allow for drilling, completing, and testing Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will not likely result in a waste of hydrocarbons, risk harm to human safety or the environment (e.g., from an explosion or fire), prevent the subject wells from being properly abandoned, or interfere with the correlative rights of persons owning interests in adjoining or nearby tracts of land. 6. The requirements of AS 31.05.030(j)(1)(A) do not apply because Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will not be used to produce gas from an aquifer that is a source of water for human consumption or agricultural purposes. 7. The requirements of AS 31.05.030(j)(2)(C) do not apply because Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 will not be used for regular production, only limited duration testing is proposed at this time, of coal bed methane nor are there any known water wells in the area. 8. Approval of the operator's requested exemptions conforms with AS 31.05.060(c)(1) -i.e., because granting the exemptions is more appropriate than compliance with the subject requirements to the operation of the proposed wells -and AS 31.05.060(c)(2)-i.e., because the subject requirements are not necessary or suited to the proposed wells taking into consideration the nature of the operation, the characteristics of the wells, and the reasonably anticipated risks (from granting the exemptions) to human safety and the environment. NOW, THEREFORE, IT IS ORDERED: 1. The USGS's application for an exception to the spacing requirements of 20 AAC 25.055 to allow for drilling, completing, and testing Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is granted. 2. USGS's application for waivers of the bonding requirements of 20 AAC 25.025 for Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is granted. III III Conservation Order 604 June 6, 2008 Page 4 of 4 • 3. USGS's application for waivers of the blowout prevention equipment requirements of 20 AAC 25.035 for Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is granted. 4. USGS's application for waivers of the wellbore survey requirements of 20 AAC 25.050(a)(2) for Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is granted. 5. USGS's application for waivers, of the well site seismic survey requirements of 20 AAC 25.061(a) for Wainwright wells No 3, 4, 5, 6, 7, 8 and 9 is granted. 6. USGS's application for waivers of the gas detection requirements of 20 AAC 25.066 for Wainwright wells No. 3, 4, 5, 6, 7, 8 and 9 is granted. 7. These wells may not be hydraulically fractured without the Commission's separate approval. ENTERED at Anchorage, Alaska, and dated June 6 200 oil AN) ,:' i ''' eq. gip Joj .: , Commtssio • _ . • Y : nd ' as Conservation Commission i i , 4 G Is o ", v CO • `c; .mow.. ALA', 4 -N t C at y P.:oerster, ommissioner Alaska ti it and Gas Conservation Commission RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The Commission shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the Commission denies reconsideration, upon denial, this order or decision and the denial of re- consideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the Com- mission mails, OR 30 days if the Commission otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by in- action, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the Commission grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on re- consideration will be the FINAL order or decision of the Commission, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the Commission mails, OR 30 days if the Commission otherwise distributes, the order or decision on re- consideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the Commission by the application for reconsideration." In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the pe- riod; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. it • • scan 114 U SARAH PALIN, GOVERNOR 555 Cordova Street DEPT. OF ENVIRONMENTAL CONSERVATION .. Anchorage, AK 99501 PHONE: (907) 269 -3094 FAX: (907) 269 -7687 DIVISION OF SPILL PREVENTION AND RESPONSE http: / /www.dec:state.ak.us INDUSTRY PREPAREDNESS PROGRAM Exploration Production & Refineries June 5, 2008 File No: 305.05 BLM Wainwright CBM Mr. Tom Mortensen Tom Mortensen Associates, LLC Environmental Permitting & Management P.O. Box 113192 Anchorage, AK 99511 -3192 Subject: Exemption from Oil Discharge Prevention and Contingency Plan and Financial Responsibility Requirements for Wainwright Nos. 3 - 9 Coal Bed Methane Exploratory Wells, Wainwright, Alaska Dear Mr. Mortensen: The Alaska Department of Environmental Conservation (ADEC) has received a determination from the Alaska Oil and Gas Conservation Commission (AOGCC) regarding a request from the U.S. Geological Survey (USGS) in cooperation with the U.S. Bureau of Land Management (BLM) and Arctic Slope Regional Corporation (ASRC) for an exemption from Oil Discharge Prevention and Contingency Plan (ODPCP) and Financial Responsibility (FR) requirements. The exemption request dated May 5, 2008 was submitted by Tom Mortensen Associates, LLC. The USGS intends to drill Wainwright Nos. 3 — 9 exploration wells to test for coal bed methane (CBM) near Wainwright, Alaska. AOGCC reviewed geologic information and confidential and public well records in making their June 2, 2008 determination (attached). AOGCC determined that there is a reasonable certainty that the wells will not penetrate a formation capable of flowing oil to the ground surface in accordance with AS 31.05.030(1). Based upon AOGCC's evaluation and determination, ADEC hereby fords that the Wainwright Nos. 3 - 9 wells meet the standards for exemption as a natural gas exploration facility under AS 46.04.050(c) and are exempt from ODPCP and FR requirements found in AS 46.040.030 and AS 46.040.040. d Printed on Recyckki Pa • • • Mr. Tom Mortensen 2 June 5, 2008 Tom Mortensen Associates, LLC Be advised that should the USGS penetrate a formation capable of flowing oil to the ground surface during the drilling of these Wells, operations must immediately be suspended and ADEC must be immediately notified. The USGS must obtain ODPCP and FR approval by ADEC prior to proceeding. This exemption does not relieve the USGS of the responsibility for securing other federal, state or local approvals or permits. The USGS is still required to comply with all other applicable laws. APPEAL: This is a final decision. Aggrieved persons with standing may appeal this decision to the Alaska Superior Court within 30 days as provided by the Alaska Rules of Appellate Procedure. If you have any questions, please contact me at 269 -7680. S cerel . 1► v,1s, G Gou Section Manager cc: Laurie Silfven, ADEC Chris Pace, ADEC, Juneau John Norman, AOGCC Nina Brudie, ADNR Johnny Aiken, NSB Arthur Clark, USGS Bob Fisk, BLM Teresa Imm, ASRC • • 1111 • ;I r-;- • SARAH PALIN, GOVERNOR .A.L.ALASKA OIL � AND GAS 333 W. 7th AVENUE, SUITE 100 CO SEiRi�ATIOl` commiSSIO ANCHORAGE, ALASKA 99501 -3539 PHONE (907) 279- 1 ECEIVED FAX (907) 276 -7 June 2, 2008 JUN. 0 4 2008 , DEPT. OF ENVIRONMENTAL CONSERVATION Greg Gould Environmental Program Manager Dept. of Environmental Conservation Division of Spill Prevention and Response Exploration, Production & Refineries 555 Cordova Street Anchorage, AK 99501 Re: Request for Determination Under AS 31.05.030(1) for Coal Bed Methane Exploratory Wells in and near Wainwright, Alaska Dear Mr. Gould: On May 5, 2008, Tom Mortensen Associates, LLC (Mortensen) sent you a letter requesting an exemption from the State of Alaska's oil discharge prevention and contingency plan requirements (AS 46.04.030) and financial responsibility requirements (AS 46.04.040) for coal bed methane the proposed Wainwright coal bed methane exploratory wells planned by the U.S. Geological Survey (USGS) in and near Wainwright, Alaska. Also on May 5, 2008, the Alaska Oil and Gas Conservation Commission (Commission) received this letter. AS 31.05.030(1) Under AS 31.05.0300, the Commission makes determinations that result in the exemption of wells at - a "natural gas exploration facility" from the requirements of AS 46.04.030 and AS 46.04.040. The Commission considers Mortensen's letter an application for such a _ determination. Documents Reviewed The Commission has reviewed the following documents: 1) confidential well records for the nearby Wainwright No. 1 and Wainwright No. 2 exploratory coal bed methane wells; 2) public well records and mud logs from the Tunalik No. 1, Peard Test No. 1 and Kugrua No. 1 exploratory wells; and 3) geologic information submitted by the USGS. Findings The information examined strongly indicates that the Wainwright Nos. 3 to 9 exploratory coal bed methane wells can be used solely for the exploration for natural gas. None of the information examined suggests the presence of movable oil within the geologic strata that will be drilled. • • Greg Gould June 2, 2008 Page 2 of 2 Determination Based on geologic information submitted by the USGS and well records in the Commission's files, the evidence demonstrates with reasonable certainty that the proposed Wainwright Nos. 3 to 9 coal bed methane exploratory wells will not penetrate a formation capable of flowing oil to the ground surface. Please call Mr. Steve Davies (at 793 -1224) if you have questions concerning this letter. Sincerely, Daniel T. Seamount, Jr. Chair cc: Laurie Silfven, DEC Tom Mortensen Associates, LLC Art Clark, USGS • Wainwright Coal Bed Methane Exploratory Drilling Program USGS Natural Gas Well Determination Geologic Evaluation - Notes to File May 29, 2008 Confidential Until Release of Wainwright No. 1 and No. 2 Re: Determination Associated with Potential Oil Spill Contingency Plan and Financial Responsibility Exemptions for the Wainwright No. 3 through 9 Coal Bed Methane Gas Exploration Wells, Community of Wainwright, Alaska Request On or about May 5, 2008, Tom Mortensen Associates, LLC (Mortensen) sent a letter to the Alaska Department of Environmental Conservation (ADEC) requesting exemption from the State of Alaska's Oil Discharge Prevention and Contingency Plan and Financial Responsibility Requirements for coal bed methane exploration drilling planned by the U.S. Geological Survey (USGS) in and near Wainwright, Alaska during summer 2008. A copy of that letter was received by the Alaska Oil and Gas Conservation Commission (Commission) on that same day. Under AS 31.05.030(/) and AS 46.04.050(c), the Commission makes determinations that result in the exemption of wells at a "natural gas exploration facility" from the requirements of AS 46.04.030 and AS 46.04.040. The Commission considers Mortensen's letter of May 5, 2008 to be an application for Commission determination under AS 31.05.030(1). This note to file presents information from the five exploratory wells that are closest to the proposed well locations for Wainwright No. 3 to No. 9, and it includes the Commission's determination in response to Mortensen's AS 31.05.030(1) application. This report is based on data for wells in the area including that supplied by the USGS to the Commission. Determination Based on geologic information submitted by the USGS and in the Commission's files, it can be said with reasonable certainly that the proposed Wainwright No. 3 to 9 exploratory wells will not encounter formations capable of flowing oil to the ground surface. Discussion Wainwright No. 3 to 9 wells will be located in governmental sections 8 and 24 of T15N, R32W, Umiat Meridian, within the community of Wainwright, Alaska. As planned, the wells will be less than 3,000 feet measured depth,' and they will help USGS scientists determine whether subsurface coal seams are present and, if so, how thick they are, how much gas they contain, reservoir deliverability, and produced water chemistry. Wainwright wells 3 to 9 will be offset by five existing exploratory wells: Wainwright No. 1 and Wainwright No. 2 (from 75' to 1.9 miles away), Tunalik No. 1 (about 37 miles southwest); Peard ' All depths are measured depths unless otherwise noted. III • Wainwright 3 to 9 Notes to File Confidential Until Release of Wainwright No. 1 and No. 2 May 29, 2008 Page 2 Test No. 1 (about 25 miles east); and Kugrua No. 1 (about 30 miles southeast). See Figure 1, below. Commission well records for each of these wells were examined for evidence of liquid hydrocarbons. Pt. Barrow h' Sea a A Ch a a v3}, 1 4 , 6 N 4 Wainwright No. 1 to ' .40.0 Peard Test No. 1 t e L 4or ._ Kugrua No. 1 8 14 10'4' etP a Tunalik No. 1 tii t U 0 41 20 miles 0 Figure 1. Index Map Wainwright No. 1 Wainwright No. 1 is a vertical exploratory well drilled and cored to a depth of 1,613' during June and July of 2007. At 1,613', the bit became stuck and the drill rods parted at 780'. Fishing attempts were partially successful, clearing the hole to a depth of about 957'. Attempts to drill further failed, so temperature monitoring equipment was installed to a depth of 940' and the well was suspended. Drilling records indicate that conventional core was obtained from 75' to 1,605'. The core has yet to be described in detail, but USGS's representative reports that there were no signs of liquid hydrocarbons observed in the core. Wainwright No. 2 After hole problems caused the loss of Wainwright No. 1, the rig was moved about 50' to the southwest, and Wainwright No. 2 was drilled. It should be noted that the USGS failed to obtain a permit to drill for Wainwright No. 2 from the Commission prior to drilling and completing the well. This vertical exploratory well drilled to a depth of 1,295' to investigate an 8 -foot thick coal seam from 1,242' to 1,250' that was discovered by Wainwright No. 1. A straddle - packer system was installed to isolate the coal seam, draw -down and recovery testing were conducted for about 1 -1/2 days, water samples were collected, temperature monitoring equipment was 2 Clark, A., 2008, Email Correspondence to Stephen Davies of the Commission dated May 11, 2008, in Commission Well History File No. 2070650. 3 USGS, 2007, Wainwright -1 and 2 Daily Drilling Logs, in Commission Well History File No. 2070650. 4 Clark, A., 2008, Testimony in support of Conservation Order No. 600, page 16. • Wainwright 3 to 9 Notes to File Confidential Until Release of Wainwright No. 1 and No. 2 May 29, 2008 Page 3 installed to a depth of 1,259', and the well was suspended. USGS's representative testified that free hydrocarbons were not encountered in Wainwright No. 2 during testing. Tunalik No. 1 Tunalik No. 1 is a nearly vertical exploratory well that, from November 1978 to January 1980, was drilled to 20,335 feet (20,211 feet true vertical depth) and plugged and abandoned. The mud log recorded during drilling begins at 85 feet and continues to total depth. The first indication of methane gas ("Cl") occurred in the drill cuttings at 360 feet, and the first significant C1 in the drilling mud was found at 1,070 feet. The shallowest occurrences of ethane ( "C2 "), propane ( "C3 "), butane ( "C4 ") and pentane ( "C5") were trace amounts that occurred at 4,110 feet. The shallowest significant amounts of C2, C3, C4 and C5 occurred at 6,010 feet, 6,070 feet, 7,940 feet and 7,945 feet, respectively. The shallowest oil indicators were a trace of sample fluorescence (identified under ultraviolet light) and a trace solvent cut associated with a crushed sample from 4,110 feet. Other trace occurrences of sample fluorescence were recorded for samples from 4,600 feet, 5,030 feet, 5,140 feet, 5,175 feet, 5,250 feet, 5,460 feet, and 5,670 feet, but the mud logger's brief sample descriptions do not mention any associated oil staining. None of these trace occurrences were marked as oil shows on the mud log. The only oil show indicated on the mud log is a trace of sample cut fluorescence from 11,510 feet to 11,520 feet, but the log does not mention oil staining in conjunction with this fluorescence. The well -site geologist's report describes two very poor residual oil shows from 4,108 feet to 4,126 feet and from 4,607 feet to 4,612 feet in sandstone and siltstone assigned to the Nanushuk Group. These "shows" consisted of trace to slight amounts of sample fluorescence, associated with very faint to slight solvent cuts. In addition, the report notes the presence of "numerous shows" in most sandstone beds within the interval from 5,030 feet to 5,935 feet; however, it also states: "Most or all of these shows are judged to be residual and of no economic importance .. . ." Finely disseminated, black tarry residue was described within the pore space from 12,549 to 12,557 feet, but "[n]o fluorescence or cut was observed from this residual oil." The well was not tested for hydrocarbons. Kugrua No. 1 Kugrua No. 1 is a vertical exploratory well that was drilled to 12,588 feet and plugged and abandoned from February to May of 1978. The mud log begins at 93 feet and continues to total depth. C 1 first occurs in mud and cuttings at a depth of 160 feet. C2, C3 and C4 were initially encountered in very small to trace amounts from 1,860 feet to 1,875 feet and continued to occur sporadically downward from that depth. Significant quantities were not recorded until 3,700 feet. C5 was not recorded in the drilling mud. Trace amounts of C5 were measured in drill cuttings at 7,670 feet, and C5 was abundant in the drill cuttings at 7,830 feet. Traces of hydrogen gas were reported at 10,430 feet, 10,485 feet and 12,275 feet. Hydrogen sulfide gas ( "H2S ") was reported from 11,550 feet to 11,700 feet and again at 12,375 feet. H2S reached a maximum concentration of 57.5 ppm at 11,680 feet. 5 USGS, 2007, Wainwright -1 and 2 Daily Drilling Logs, in Commission Well History File No. 2070650. 6 Clark, A., 2008, Testimony in support of Conservation Order No. 600, page 18. Wainwright 3 to 9 Notes to File • • Confidential Until Release of Wainwright No. 1 and No. 2 May 29, 2008 Page 4 Oil fluorescence was noted in samples from 220 feet to 250 feet, 2,080 feet to 2,150 feet, and 6,645 feet to 6,690 feet, but mostly in trace amounts. Oil stain was not reported in conjunction with any of these occurrences of fluorescence. Tar staining and tar were reported in sandstone samples from 6,170 feet and 6,200 feet, and possibly from 7,180 feet. Traces of "heavy oil tar" were recorded at 8,760 feet. No oil shows are marked on the mud log. The well completion report describes "some dead oil staining" associated with Torok sandstone between 3,320 feet and 6,890 feet. But the Geologic Summary from the final well report states: "No oil shows were encountered in drilling the well." The well was not tested for hydrocarbons. Peard Test Well No. 1 Peard Test Well No. 1 is a vertical exploratory well that was drilled to 10,225 feet and plugged and abandoned between January and April of 1979. The mud log begins at 88 feet and continues to total depth. C 1 first occurs in the drilling cuttings and mud at 215 feet and 275 feet, respectively. Trace amounts of helium were first encountered at 2,190 feet. C2 and C3 were initially recorded in trace amounts at 3,065 feet and continued to occur sporadically downward from that depth. C2 was not measured in significant amounts until 3,410 feet, and C3 was not measured in significant amounts until 4,230 feet. C4 and C5 were initially encountered at 4,460 feet and 6,165 feet, respectively. Helium was reported in abundant quantities at 4,910 feet. Oil fluorescence was noted in samples from 220 feet to 250 feet, 2,080 feet to 2,150 feet, and 6,645 feet to 6,690 feet, but mostly in trace amounts. No oil shows are recorded on the mud log. The well -site geologist's report indicates no oil shows were encountered. Oil is only mentioned once in the report: some partial oil staining of conventional core recovered from the Sag River Formation between 8,451 feet and 8,481 feet. The well was not tested for hydrocarbons. Structural Position Wainwright No. 3 to 9 will lay up-dip of the Tunalik No. 1 well, slightly down -dip of Peard Test Well No. 1 and Kugrua No. 1, and at approximately the same depth as Wainwright No. 1 and No. 2. None of these wells encountered mobile oil. Conclusions Nearby wells Wainwright No. 1 and No. 2 showed no indications of oil. Only trace amounts of residual oil were encountered in Tunalik No. 1, Peard Test No. 1, and Kugrua No. 1. There are no indications of mobile oil in any of the records for these three wells. Therefore, pursuant to AS 31.05.030(1), it can be said with reasonable certainly that the Wainwright No. 3 to 9 exploratory w&- is will not encounter formations capable of flowing oil to the ground surface. 5 z9•�$ Steve Davies Sr. Petroleum Geologist R I lk STATE OF ALASKA 2 3 2008 `�' z °`' ALASKA OIL AND GAS CONSERVATION COMMISSION AP PERMIT TO DRILL �%%a z.& Alaska Oil &Gas Cons. Commisslol 20 AAC 25.005 Anchorage 1 a. Type of Work: 1 b. Current Well Class: Exploratory ® Development Oil El lc. Specify if well is pro for: Drill ® Redrill ❑ Stratigraphic Test ❑ Service III Development Gas ❑ Coalbed Methane ® Gas Hydrates ❑ Re -entry ❑ Multiple Zone ❑ Single Zone ❑ Shale Gas ❑ 2. Operator Name: US Geological Survey - DOI 5. Bond: Blanket Xr Single Well ❑ 11. Well Name and Number: PO Box 25046, MS 406, Bond No. ➢v1 - ....cia-ht.,514g9A Wainwright 9 3. Address: Denver Federal Center 6. Proposed Depth: 12. Field /Pool(s): Denver, CO 80225 MD 3000' TVD 3000' 4a. Location of Well (Governmental Section): 7. Property Designation: Surface: MTRS: Umiat T15N R31W, Sec. 8. North Slope Borough Top of Productive FNL:3,720', FEL:5,040' 8. Land Use Permit: 13. Approximate Spud Date: June 1, 2008 Total Depth: L:� f 9 Acres in Pro 14. Distance to Nearest Vertical Well: .y3.9-b'' � z '' Property: 43Sa ■ 4b. Location of Well (State Base Plane Coor ` 10. KB Elevation 15. Distance to Nearest Well Surface: x.2G.1.038,Ni i y -6pv f 5; 271 t' one; v (Height above GL): 30' MSL feet Within Pool:/,) vmi 16. Deviated wells: Kickoff depth: feet 17. Maximum Anticipated Pressures in psig (see 20 MC 25.035) Maximum Hole Angle: degrees Downhole: b Z`3 3 Surface: .e- 18. Casing Program: Specifications Top - Setting Depth - Bottom Cement Quantity, c.f. or sacks Hole Casing Weight Grade Coupling Length MD TVD MD TVD (including stage data) 9 7/8 '6 5/8 18.97 20 0 80 30 cu. ft. ppf 19. PRESENT WELL CONDITION SUMMARY (To be completed for Redrill and Re -Entry Operations) Total Depth MD (ft): Total Depth TVD (ft): Plugs (measured): Effect. Depth MD (ft): Effect. Depth TVD (ft): Junk (measured): Casing Length Size Cement Volume MD TVD Conductor /Structural Surface Intermediate Production Liner Perforation Depth MD (ft): Perforation Depth TVD (ft): 20. Attachments: Filing Fee ❑ BOP Sketch ❑ Drilling Program © Time v. Depth Plot ® Shallow Hazard Analysis ka Property Plat M Diverter Sketch © Seabed Report ❑ Drilling Fluid Program ® 20 AAC 25.050 requirements 21. Verbal Approval: Commission Representative: Date 22. I hereby certify that the foregoing is true and correct. Contact -{-- ' Printed Name ci' 1 , V,r C_Ac.,,,..k. Title S V \/ ,. I---2 7y' 0 ( � - P Signature - Phone 3a ' -- Z3 L S-7 5 .3 Date 641 Commission Use Only Permit to Drill 4 - 6 , 77 50- API Number / 7� / / -( � Permit Approval See cover letter for other Number: :/-(,- 'l - ZZ c...�' /[ - Date: le p /b requirements. Conditions of approval : If box is checked, well may not be used to explore for, test, or produce coalbed methane, gas hydrates, or gas contained in shales: ❑ Other: Sa ales req'd: Yes' No ❑ Mud log req'd: Yes Noj o cti - x.03 SNX t.Z 'RA .'t NO CAIm r''�easures: Yes No Er Directional svy req'd: Yes❑ No❑v se) g APPROVED BY THE COMMISSION DATE: 6 - t>l 62/(47 f2-c'_- COMMISSIONER Form 10 -401 Revised 12/2005 Submit in Duplicate • RECEIVED MAY 0 2 2008 Application for Permit to Drill. State of Alaska, Alaska Oil & Gas Conservation Commission Alaska Oil & Gas Cons. Commission Anchorage Permit to Drill. Application Summary. Well Name and Number: Wainwright #9, (Exploration, Offset Well) Well Location Area: North Slope Borough, landfill for Wainwright. Well Location Legal: MTRS: Umiat T15N R31 W, Sec. 8. FNL:3,720' FEL:5,040' NAD83 Lat.: 70 °39'53.02 "N Long.: 159 °57'57.18 "W Purpose of Well: Coal Bed Methane, Exploration offset well. Waivers Requested: Bonding requirements of 20 AAC 25.025, • Blowout prevention equipment requirements of 20 AAC 25.035. • Well bore survey requirements of 20 AAC 25.050(a)(2). • Well site seismic survey requirements of 20 AAC 25.061(a). • Gas detection requirements of 20 AAC 25.066. Well Spacing Exemption Requested: • Requested exception for the well spacing requirements of 20 AAC 25.055(a) for proposed wells Wainwright #3 through #9. Proposed Depth: MD: 3,000' TVD: 3,000' Survey: Conduct geophysical logs (caliper, gamma, resistivity, density, sonic) Property Ownership: Surface: Olgoonik Corp. Sub - surface: ASRC Applicant / Operator: USGS. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 1 of 31 1 • v , f>t y Application lication for Permit to Drill. State of Alaska, Alaska Oil & Gas Conservation •mission , • Permit to Drill. Application Summary. a , Well Name and Number: Wainwri #9, (E /•Ioration, Offs -t Well) Well Location Area: North Slope Bor ugh, landfill for ainwright. Well Location Legal: MTRS: Umia / T15N R31 W, Sec.:. FNL:3,720' % FEL:5,040' ,/ NAD83 / Lat.: 70 ° "N Long.: 9 °57'57.18 "W i Purpose of Well: Coal :-'ed Methane, Exploration o .et well. 1 Waivers Requested: �' Bondino re. uirements of 2a AAC 25.025, i • Blowout preventio/ equipment requirements of 20 A I C 25.035. • Well bore survey equirements of 20 AAC 25.050(a(2). • Well site seismic ..urvey requirements of 20 AAC 2' .061 a). • Gas detection re uirements of 20 AAC 25.066. Proposed Depth: I MD: 3,000' / TVD: 3,000' Survey: Conduct geophysical Togs (caliper, •a ma, resistivity, density, sonic) Property Ownership: Surface: Olgoonik Corp. Sub - surface: ASRC Applicant / Operator: USGS. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 1 of 30 • • Application for Permit to Drill. Contents of Application Application Summary. Contents of Application. Project Description and Overview. Permit to Drill, Form 10 -401. Designation of Operator, Form 10 -411. Figure #1. Wainwright Townsite. Plat T15N R32W UM. Figure #2. Location of Proposed Production Test and Monitoring Wells. Wells #3 -8. Wainwright Townsite. Plat T15N R32W, Sec 24, UM. Figure #3. Location of Proposed Production Test and Monitoring Wells. Wells #3 -8. Wainwright, Aerial Photo. Figure #4. Location of Proposed Offset Well at the NSB Landfill. Well #9. Plat T15N R31W,UM Figure #5. Location of Proposed Offset Well at the NSB Landfill. Detail View. Well #9. Plat T15N R31W,UM Figure #6. Location of Proposed Offset Well at the NSB Landfill. Aerial Photo. Well #9. Explanation of land Ownership shown on Figures #1 and #2. Plat T15N R32W. Wells #3 -8. Explanation of land Ownership shown on Figures #4 and #5. Plat T15N R31 W. Well #9. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 2 of 30 • • RECEIVED MAY 0 2 Z008 Permission to Enter Lands and Drill from the Land Owners: • Surface Estate: Olgoonik Corp. Alaska Oil & Gas Cons. Commission • Subsurface Estate: Arctic Slope Regional Corp. Anchorage Requested Waivers and Drill Spacing Exemptions. Bonding requirements of 20 AAC 25.025, • Blowout prevention equipment requirements of 20 AAC 25.035. • Well bore survey requirements of 20 AAC 25.050(a)(2). • Well site seismic survey requirements of 20 AAC 25.061(a). • Gas detection requirements of 20 AAC 25.066. Well Spacing Exemption Requested: • Requested exception for the well spacing requirements of 20 AAC 25.055(a) for proposed wells Wainwright #3 through #9. Figure #7. Diverter Diagram. Figure #8. Well Spacing Exemption Checklist. Figure #9. Letter from the President of Olgoonik Corp. regarding the public involvement and knowledge of the drilling program in Wainwright. Drilling Plan • Landfill Offset Well. • Production Test Monitoring Wells. • Durability of Pressure Monitoring Downhole Components: • Production Test Well. • Production Test. • Decommission wells in 2008 • Decommission wells in 2009, alternative. Drilling Fluid Plan Figure #10. Depth v Time Graph, Offset Well at the NSB Landfill. Borehole Sampling. Well Closure Procedures. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 3 of 31 • • Permission to Enter Lands and Drill from the Land Owners: • Surface Estate: Olgoonik Corp. t c - 5 1/ • Subsurface Estate: Arctic Slope Regional Corp. Requested Waivers and Drill Spacing Exemptions. Bonding requirements of 20 AAC 25.025, • Blowout prevention equipment requirements of 20 AAC 25.035. • Well bore survey requirements of 20 AAC 25.050(a)(2). • Well site seismic survey requirements of 20 AAC 25 .61(a). • Gas detection requirements of 20 AAC 25.066. Well Spacing Exemption Requested: • Requested exception for the well spacing r- quirements of 20 AAC 25.055(a) for proposed wells Wa' wright #3 through #8. Figure #7. Diverter Diagram. Figure #8. Well Spacing Exemption ' hecklist. Figure #9. Letter from the Presid = nt of Olgoonik Corp. regarding the public involvement a' d knowledge of the drilling program in Wainwright. Drilling Plan • Landfill Offset Well. • Production Test Monitorin • ells. • Durability of Pressure Mo itoring Downhole Components: • Production Test Well. • Production Test. • Decommission wells in 008 • Decommission wells i 2009, alternative. Drilling Fluid Plan Figure #10. Dept v Time Graph, Offset Well at the NSB Landfill. Borehole Sampling. Well Closure Procedur: . AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 3 of 30 • 1 Other Permits • DNR Temporary Water Use Authorization for 4,000gpd, 150,000 gal total. ACMP B -List GCD -8, and No Review Required decision. • ADEC ODPCP Exemption. • ADEC Solid Waste Disposal for cuttings, Plan Review • ADEC Drill Fluids and Produced Water Disposal. • NSB Development Permit, Planning Department. • NSB Dept. of Civil Works, approval to use of landfill for cuttings disposal. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 4 of 30 41 Project Description and Overview Alaska Rural Energy Project Wainwright, Alaska, 2008 The Alaska Rural Energy Project will be conducting a multi -well production test in Wainwright at the same location (Olgoonik Wareyard) as where exploration and testing activities occurred in June -July 2007. All wells will be completed in an 8 ft coal seam encountered at a depth of -1242 to 1250 ft. The test array will consist of one central production well (10" hole with 6" steel casing cemented to -1240 ft, 6" open -hole completion through the coal zone) and 5 monitor wells (6" hole with 2.5" PVC casing, 10 ft of slotted PVC screen in the coal, sand packed around screen, annular area grouted (abandonment bentonite) to land surface). See Figures 2 and 3 for diagram of well placement and spacing of wells #3- #9. Additionally, a separate well will be drilled at the Wainwright landfill. 6 inch steel surface casing will be set and cemented to a depth of -50 ft and a 6 inch open 04_ -P hole drilled to a depth of -2500-3000 ft. Geophysical logs (caliper, resistivity, K gamma, density, sonic) will be run in the well which will then be plugged and abandoned with bentonite grout and cement. Q� � b - SO I The following information will be gathered from these wells: • Lateral extent and continuity of individual coal seams between original site and landfill site (- 2 miles) • Accurate determination of hydraulic conductivity and transmissivity • Hydraulic conditions bounding 1250' coal seam o Vertical and lateral leakage • Storage coefficient (amount of water to be produced) • Detailed produced water chemistry • Shape and orientation of permeability ellipse Drilling is scheduled to begin on or about June 1, 2008 and completed on or about August 10, 2008. The first well drilled will likely be the landfill well with the production test array to follow. Exact start and finish dates for each well cannot be accurately predicted at this time. It is anticipated that all drilling will be completed and wells installed by -July 15 -20 with the production test occurring the week of July 21. Upon completion of the test, all wells will be reentered in 2008 and abandoned using abandonment grout and cement. Alternative Well Abandonment, 2009. An alternative to well abandonment in the summer of 2008 would be to leave the 2" PVC pressure monitor wells open for pressure- monitoring purposes over the winter, rather than plugging /abandoning at the end of a one -week test. The wells AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 5 of 30 • would be completed /isolated in the coal bed and hydraulically connected via slotted pipe at the bottom of the well as described in the Drilling Plan. Well abandonment would be done in late- spring or early- summer of 2009 rather than the summer of 2008. This alternative would leave the production well in an operational manner rather than plugging- abandoning at the end of the 2008 work as described. The offset well would be abandoned in 2008. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 6 of 30 1 III ' STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERMIT TO DRILL 20 AAC 25.005 la. Type of Work: 1b. Current Well Class: Eaploratory it Development Oil ❑ lc. Specify if wail is proposed for. Drill ® Roden ❑ Stratigraphic Test ❑ Service ❑ Dev 1opment Gas 0 Coalbet Methane ® Gas Hydrates ❑ Re-entry ■ Multiple Zone • Single Zone 0 Shale Gas ❑ 2 Operator Name: 5- Bond; Blanket ❑ Single WeN ❑ 11. Wet Name nerd Number. . Bond No. Wainwright 9 3- Address; 6. Proposed Depth: 12. eleitepool(s}: MD: 3000' TvD: 3000' 4a. Location of Welt (Governmental Section): 7. Property D ,a6on: Surface: North Shope Borough Top of Productive Horizon 8. Land Use Pemtlr 13. Approximate Spud Data June 1, 2008 Total Depth: 9. Acres in Property: 14. Distance to Nearest Vertical Well: 1300' Property: 4b. Location of Well (State Base Plana Covdinetest 10. K6 Elevation 15. Distance in Nearest Well Surface: x- y- Zone- (Height above GL): 3 0 F MSL feet Within Pool: 1:. , feted wells: Kickoff depth. feet 17- Maximum Anticipated Lures in psi9 (see 20 AAC 25.035) - Maximum Hole Angie: degrees Dormhole: Surface: 16. Casing Program: Specifications Top - Seeing Depth - Bottom - rent Quantity. c.f. or sacks Hole Casing We ht Grade Coupling Length MD TVD MD TVD (including stage data) 20 u 8 30 cu. tt. 19- PRESENT WELL CONDITION SUMMARY (To be completed for Rednll and Re-Entry Operations) Total Depth MD (ft) Total Depth TVD (ft): Plugs (measured): Effect Depth MD (ftk Effect Depth TVD (ft): ,hmk (measured): Caein9 Length Six Cement Volume MD TVD ConductnrfStructural - Intermediate Production Liner Perforation Depth MO (ft): Perforation Depth TVD (ft): 20. Attachments: Filing Fee O BOP Sketch ❑ Drilling Program Time v. Depth Piot Shallow Hazard Analysis Property Prat ® Diverler Sketch ® Seabed Report 0 ® Drilling Fluid Program ® 20 AAC 25.050 requirements ] 21. Verbal Approve& Commission Representative: Dale 22. 1 hereby certify that the foregoing is rue and correct Contact Printed Name Y q Title S • ' , • { Ai Signature Phone 30 — 1.:5 L - Date • + r Commission Use Only Permit to Drill API Number Permit Approval See stover fetter for other Number: 50- Dale: requirements. Conditions of approval : If box Is checked, well may not be used to explore for, test, or produce coalbed methane, gas hydrates. or gas contained in shales: ❑ Other. Samples req'd: YesO No ❑ Mud log read: Veep No❑ H measures; Yes❑ No 0 Directional svy relit: Yes❑ No❑ • APPROVED BY THE COMMISSION DATE , COMMISSIONER Form 10-401 Revised 122005 Submit in Duplicate AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 7 of 30 • 1 • SURVEYED TOWNSHIP 15 NORTH,RANGE 32 WEST OF THE UMIAT MERIDIAN, ALASKA STATUS OF PUBLIC DOMAIN LAND AND MINERAL TITLES 2150 22214 ® 6a0. 24 MTP r-- w.a.enou *1 ..2 66 (2002) / SUPPL Sec 24. 25 e: aeua l ae io6 c.a� • . 1) 1-15 mnicorlM 6v11 INDEX TO SEGREGATED TRACTS / • ..2 e.ly (Total . 5 , 00116%. •.. (120.0 Cory. / HEM 680 6012 t � / p u : a, T( 1 `�m.g1 959 652583 FFFEC6 559660L1R16E.W. wr w 29 e n O .8 _LAR O .52*A9M FOR 31355F- .�. MVEL 1 PN272222 fi 8EFE8 ro 6F Ca J / 1G) PUBLIC BC PIMA 2ER122 22 / s 220 sea 2AM.12.127 aged "Rawls ./ .Po..1.d 2L 90159 95 ORR. sw M 6 E5 a :a aa¢ d , �c 3 1 .4 044 ; .v i d —' — 2411 / / aG .rE 1 -1u !. r / Wor9.Ny6 w,l ,/ 25 .F 1' fl w 1 L_ J 10 Jro Ef2..aa c.tAR TI.h. 2.41_5 I 292898 '�2' T iS N wows =ROM 2 1_24-1 Figure #1. Wainwright Townsite. Plat T15N R32W UM. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 8 of 30 • a i e T15N R32W UM Sec. 24 F Wainwright #1 and #2 (2007) 4' � Production Well < / a / / (Total = 1) 1 -85 // . • ( Monitoring Well (Total = 5) / • / BLM SSE Only Olgoonik Corp. SSE �/ BLM SSE Only iQ. /( USS 2401 t.80 � OCV J tram / D/C All Ain 1R PLO 5188 �� 6 „ WdI CI & � p � A Y Public Interest -�. -` !' IISS 4418, Tr A PL 96 -487 \ 5 t *l AI Morltka. NW \ \US$ 4416 Chmtdx Sea all 1/ 24 T r E V 1 81 / (Wainwright uss 44/e 6 G �J %/' Townsite) �1, 6 2.09 / 50-e5-0526 SSE Figure #2. Location of Proposed Production Test and Monitoring Wells. Wells #3 -8. Wainwright Townsite. Plat T15N R32W, Sec 24, UM. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 9 of 30 • o Wainwright #1 and #2 (2007) #4 (Monitor Well) 41116 _ *3 (Production Test Well) � #5 (Monitor Well) #6 (Monitor Well) Proposed 2000 PRODUCTION WELL #7 (Monitor Well) MONITOR WELL 115N P32W, Sc. e 24 UM #9 AP (Monitor We11) POI (Lac ation under 1as- olgocnik Corp. to olgoonik Corp_) 50 -91 -0562 SSE BLM SSE Only Uss 4419 city of Wainwright SSE BLM SSE Only 1,000' V Figure #3. Location of Proposed Production Test and Monitoring Wells. Wells #3 -8. Wainwright, Aerial Photo. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 10 of 30 • 0 SURVEYED TOWNSHIP 15 NORTH RANGE 31 WEST OF THE UMIAT MERIDIAN, ALASKA STATUS OF PUBLIC DOMAIN LAND AND MINERAL NILES F . , . . : PAP - .. . s'i-'' 6 'd'efen. -•• 5 .- '''''7,4 3 2 1 ... W.X...7 . Tr,g7 7 • W.com,41. 8 0 10 11 L 12 ,, . • 6 , . .. 7.:,.."1.15,7 '''''' / algoosik carp. 110IC MS 88Z only r --- • • 60 rc 11. (9 -50159 1..er ' 18 17 16 15 14 13 . . INLAFGE,EHT 111, . ',Mil loi 4 • 1 • .. 19 20 21 223 24 . * ,,,../. e ,,..• •••'''. Z. 7,17 ,,. 27 for. I* • .. r... I 30 29 29 A.:7.n 26 25 ■ ■ .., .., . -,....„ , • -...• , ,..,, . ne illijr "TZ . . . SVLE r cicrs ', , __.• , . 35 i 36 ... . 34 ... im w-s.-aar Tr:: it I .. Sit, I- n cfains CI fRE 7. U 41.ar R 31 Vi il Figure #4. Location of Proposed Offset Well at the NSB Landfill. Well #9. Plat T15N R31W,UM AOGCC Permit to Drill. Wainwright #9 April 22, 2008, Page 11 of 30 • • Gent NA - 9 �( \ 6 0 /C NA Cent v F92313 5 / ‘,..,50-98-0039 Cent . D E C 4 OCD to US F92297 G All Min Except Coo/ OG �� QCD to US SSE Only // All Min Except Coo! 00 IC 1456 ' SSE Only IC 1456 /� 1 -214 50-98 -0036 NA Cert � 11587 159.96 F92313 OCD to US 1 -510 All Min Except Cool 00 SSE Only 7 /C 1531 • s' 1 -607 7 7 Offset Well, T15N R31N UN 7 ,,i Wainwright #9. 8 4 ' ,k'''''''''' y ''t ' 1 -99 • 2 -130W PL 96 -487 4 Wdl Alaska Maritime NWR 1 (Chukchi Sea Unit) Olgoonik CO ASRC r j SSE SSE Only 4 50 -91 -0567 IC 1460 ' / 2- 296.73 1- 591.59 f ,7 PL 94 -258 WI/ NPR -A • -- 18 17 16 °°. SEE ENLARGEMENT N©. 1 USS 5252 3 -14.57 USS 5252 3 2 -22.83 46.52 . 184.36 ' l Figure #5. Location of Proposed Offset Well at the NSB Landfill. 1 Detail View. Well #9. Plat T15N R31 W, AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 12 of 30 • • Sec, 7 Sec, 8 T15N k31W UN O1cgtxnik Corp. SSE 50 - -91 -0562 t . 0, 4 4 h 1 • ASkC SSE Only Sy, �`' " IC 1456 3 2008 Offset Well at NSB Landfill 70 °39 "N 159°57 NAD8 1,000' Figure #6. Location of Proposed Offset Well at the NSB Landfill. Aerial Photo. Well #9. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 13 of 30 • Explanation of Land Ownership. Plat of T15N R32W. UM Section 24. Section 24, TI5N, R32W contains the boundaries of the village of Wainwright. Six of the proposed 2008 drill sites will be located near the northeast portion of Section 24. Patent Number 50 -91 -0562 conveyed surface estate to Olgoonik Corporation on the following parcels of land (refer to plat): The northern part of Section 24 Southwest comer of Section 24 Southeast comer of Section 24 The subsurface estate was reserved to the Federal Government. Patent Number 50-85 -0526 conveyed the surface estate to Olgoonik Corporation on the following parcels of land (refer to plat): Blk 22, Lot I, located in the northeastern part of Section 24. USS 4418, Tr E, located adjacted to Blk 22 in Section 24 USS 4418 Tr C, located southwest of Blk 22 in Section 24 USS 4418 Tr F, located southwest ofTr C in Section 24 USS 4418, Tr G, located southwest ofTr F in Section 24 The subsurface estate was reserved to the Federal Government. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 14 of 30 • • Explanation of Land Ownership. Plat of T15N R31W. UM Section 8. Section 8, TI5N, R31 W contains the eastern portion of the NSB landfill. The offset well will be drilled at the landfill within Section 8. Patent Number 50 -91 -0568 conveyed surface estate to Olgoonik Corporation to Section 8. Interim Conveyance (IC) 1460 conveyed the subsurface ownership, including coal, to the Arctic Slope Regional Corporation. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 15 of 30 • • Permission to Enter Lands and Drill from the Surface Land Owner. Surface Estate: Olgoonik Corp. June 7, 2007 Ms. Beth Maclean Bureau of Land Management 222 West Seventh Avenue, #13 Anchorage, AK 99513 Dear Ms. Maclean: Olgoonik Corporation (OC) is supportive of your efforts to evaluate coalbed natural gas potential of Wainwright as outlined in the town meetings you have held in Wainwright We appreciate the effort that you have put forth on this project on behalf of our community. OC has land entitlements within the city limits of Wainwright and also outside of these boundaries. OC recognizes the benefits that could occur from having a local, energy source available for the community. We recognize the cooperative work planned between Federal, State, and the private sector and are pleased to be a part of this effort in conjunction with Arctic Slope Regional Corporation. We appreciate the fact that the Bureau of Land Management and US Geological Survey are making a good faith effort to involve local communities in locating local sources of energy in rural Alaska. Sincerely, 401 alytai Lucille Mayer President, Olgoonik Corporation Cc: Teresa Imm, Arctic Slope Regional Corporation AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 16 of 30 • • RECEIVED MAY 0 2 e'ui Waivers and Drill Spacing Exceptions Alaska Rural Energy Project Alaska Oil & Gas Cons, Corrnissi: ; Wainwright, Alaska, 2008 Anchorage The Permit to Drill application includes requests for waivers for proposed wells Wainwright #3 through #9 for the following: • The bonding requirements of 20 AAC 25.025, • The blowout prevention equipment requirements of 20 AAC 25.035 • The well bore surveys requirements of 20 AAC 25.050(a)(2), • The well site seismic survey requirements of 20 AAC 25.061(a), • The gas detection requirements of 20 AAC 25.066. The Permit to Drill application includes a requested exception for the well spacing requirements of 20 AAC 25.055(a) for proposed wells Wainwright #3 through #9. Information in Support of Requested Waivers and Well Spacing Exemptions Bonding Waiver Request The operator is the US Department of the Interior, Bureau of Land Management. The Department is self- insured under the Federal Tort Claims Act, 28 USC Sec. 26.71. BOP Waiver Request. For the previous permit to drill at this location at the Village of Wainwright (207- 065, Wainwright #1) the operator (DOI) examined all well logs for the wells within the general vicinity of the Wainwright #1 well. They included Tunalik, Kugrua, and Peard Bay. In the upper 3,500 feet of each of these wells, measurable gas readings were associated with coal seams only. Mud weights were kept between 9 -10 pounds per gallon (ppg) above 3,500 feet in each well indicating that no overpressured conditions were expected or encountered. Seismic information shows no indication of the presence of shallow gas. In addition, drilling records and mud log information from the nearest exploration wells show no indication of abnormal pressure. Additionally, the Wainwright #1 and #2 wells that were drilled to a depth of 1,613' in 2007 encountered no gas kicks. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 18 of 31 • 1 ; Waivers and Drill Spacing Exceptions Alaska Rural Energy Project Wainwright, Alaska, 2008 The Permit to Drill application includes requests for w- vers for proposed wells Wainwright #3 through #9 for the following: • The bonding requirements of 20 AAC 25. ' 5, • The blowout prevention equipment req ements of 20 AAC 25.035 • The well bore surveys requirements o 20 AAC 25.050(a)(2), • The well site seismic survey require ents of 20 AAC 25.061(a), • The gas detection requirements of 0 AAC 25.066. The Permit to Drill application includ a requested exception for the well spacing requirements of 20 AAC 25.055(a) f r proposed wells Wainwright #3 through #8. Information in Su • • ort of Re • ue ted Waivers and Well S • acin • Exem • tions Bonding Waiver Request The operator is the US Dep rtment of the Interior, Bureau of Land Management. The Department is self -ins red under the Federal Tort Claims Act, 28 USC Sec. 26.71. BOP Waiver Request. / For the previous per - it to drill at this location at the Village of Wainwright (207- 065, Wainwright #1) / he operator (DOI) examined all well logs for the wells within the general vicinity fif the Wainwright #1 well. They included Tunalik, Kugrua, and Peard Bay. In , upper 3,500 feet of each of these wells, measurable gas readings were ass ciated with coal seams only. Mud weights were kept between 9 -10 pounds per •allon (ppg) above 3,500 feet in each well indicating that no overpressured •' ditions were expected or encountered. Seismic informa /on shows no indication of the presence of shallow gas. In addition, drilling/records and mud log information from the nearest exploration wells show no i dication of abnormal pressure. Additionally, th , ;I Wainwright #1 and #2 wells that were drilled to a depth of 1,613' in 2007 encou tered no gas kicks. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 17 of 30 D D ado C .,..0 1 cc 50 * `° 3 Drilling Rig DOI Drilling Operation Diverter Head CO 0 y Mfg. Washington Rotating Head ao f--- 3.5° core rod 0 a 0 o c • Valve m —'-1 � 100 psi rubber seal r Diverter ___► T- fitting r5 To holding pit al head . ■ , - ► x "i Threaded coupler --+ E s:, a ,. 1 6 5/8" OD m r Valve d Y,ith Conductor -! casing '5 Y • Fluid discharge to '7,.. � recirculation pit ' ,° . .4 w(. " i ~w 40' -80' bls --. Diverter photograph RLUL' F • MAY 0 2 2008 Alaska Oil & Gas Cons. Commission Anchorage The proposed 2008 drilling of Wainwright #' 3 through 9 will use a weighted mud system typically ranging from 9.0 ppg -9.8 ppg. If over - pressured gas is encountered, a 10.5+ ppg mud will be circulated down the well to stop the gas from venting. Optionally, a cement slurry weighing from 13 ppg -15 ppg could be mixed and pumped through the drill steel from the bottom to the surface to kill the well. In this situation, the well would be considered abandoned. If a gas kick were to be encountered, the amount of gas that can safely be vented during drilling is considerable. The operator is proposing to utilize a Washington stripping head sealing 3 drill pipe on 6 5/8" casing, and a 40 foot by 4" ID blooey line. Well Site Seismic Survey Waiver Request. DOI, the operator, has examined two seismic surveys in the Wainwright area. The first is an E -W line that runs from the S. Meade well to the Arctic coast approximately 5 -10 miles SW of Wainwright. The second is a NE -SW line that parallels the coastline from north of the Peard Bay well to north of the Tunalik well and runs directly through Wainwright. These surveys, while shot for deeper targets, do not show any shallow hazards in the vicinity of the proposed drill site. Gas Detection Requirements, H2S and Methane Waiver Request For the previous permit to drill at this location at the Village of Wainwright (207- 065, Wainwright #1) the operator (DOI) examined all well logs for the wells within the general vicinity of the Wainwright #1 well. They included Tunalik, Kugrua, and Peard Bay. In the upper 3,500 feet of each of these wells, measurable gas readings were associated with coal seams only. Mud weights were kept between 9 -10 pounds per gallon (ppg) above 3,500 feet in each well indicating that no overpressured conditions were expected or encountered. The drilling will be done with a portable truck - mounted drilling rig. This equipment has no enclosures where methane could accumulate sufficiently to pose a risk of explosion or fire, or where a methane detector could practicably be located. Additionally, the Wainwright #1 and #2 wells that were drilled in 2007 encountered no gas kicks. Requested exception for the well spacing requirements of 20 AAC 25.055(a) for proposed wells Wainwright #3 through #9. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 20 of 31 • • The proposed 2008 drilling of Wainwright #' 3 through 9 will -e a weighted mud system typically ranging from 9.0 ppg -9.8 ppg. If over -pres red gas is encountered, a 10.5+ ppg mud will be circulated down the ell to stop the gas from venting. Optionally, a cement slurry weighing from ppg -15 ppg could be mixed and pumped through the drill steel from the both to the surface to kill the well. In this situation, the well would be considered a • andoned. If a gas kick were to be encountered, the amount • gas that can safely be vented during drilling is considerable. The oper- or is proposing to utilize a Washington stripping head sealing 3 '/" drill pi. - on 6 5/8" casing, and - - u •ot by 4" ID blooey line. sikseir• 1,6 6 . Well Site Seismic Survey Waiver Request DOI, the operator, has examined two se' -mic surveys in the Wainwright area. The first is an E -W line that runs from t e S. Meade well to the Arctic coast approximately 5 -10 miles SW of Wain right. The second is a NE -SW line that parallels the coastline from north of t e Peard Bay well to north of the Tunalik well and runs directly through Wain right. These surveys, while shot for deeper targets, do not show any shallow h- ards in the vicinity of the proposed drill site. Gas Detection Requirements, H • and Methane Waiver Request For the previous permit to drill . t this location at the Village of Wainwright (207- 065, Wainwright #1) the opera or (DOI) examined all well logs for the wells within the general vicinity of the Wai wright #1 well. They included Tunalik, Kugrua, and Peard Bay. In the upper ,500 feet of each of these wells, measurable gas readings were associated wi h coal seams only. Mud weights were kept between 9 -10 pounds per gallon (pp!) above 3,500 feet in each well indicating that no overpressured conditions ere expected or encountered. The drilling will be done w h a portable truck - mounted drilling rig. This equipment has no enclosures where ethane could accumulate sufficiently to pose a risk of explosion or fire, or wher- a methane detector could practicably be located. Additionally, the Wainw ight #1 and #2 wells that were drilled in 2007 encountered no gas kic s. Requested exception or the well spacing requirements of 20 AAC 25.055(a) for proposed wells Wain right #3 through #8. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 19 of 30 i The pressure monitoring wells (#4- #8) will need to be located horizontally between 75' and 400'from the production test well ( #3). The proposed location of the production test well is about 100' from the exploration wells #1 and #2 drilled in Wainwright in 2007. The 2008 proposed wells must be drilled in this location, and in the proposed configuration and spacing, in order to assess the coal bed gas resource. An exception to the well spacing requirements in 20 AAC 25.055(a) is required in order to proceed with the purpose of the 2008 drilling program. Well #9 requires a spacing exception because it is closer that 3,000' to state submerged lands, Chukchi Sea. m \s 0?' c Com P\ ka pit PlAck‘tla ge AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 21 of 31 • • The pressure monitoring wells (#4- #8) will n= -d o be located horizontally between 75' and 4OO'from the production t ; •t wz I ( #3). The proposed location of the production test well is about 100' fro /`he e pioration wells #1 and #2 drilled in Wainwright in 2007. The 2008 propo - = d wel - must be drilled in this location, and in the proposed configuration an.„ ' pacin • in order to assess the coal bed gas resource. An exception to the w II spaci • requirements in 20 AAC 25.O55(a) is required in order to pr•ceed wit the purpose of the 2008 drilling program. i AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 20 of 30 4 1 RECEIVED MAY 0 2 t 003 CHECKLIST — SPACING EXCEPTION APPLICATI Oil Gas Cons. Commission Anchorage OPERATOR USGS PROPERTY ID! LEASE S: NrA - -- FIELD/POOL Wainwright, Coal Bed Methane PI /BH: WELL NAME Wainwright #3 - #9. VERTICAL X EXPLORATORY X GAS DEVIATED DELINEATION OIL DEVELOPMENT SURFACE LOCATION ' F L and ' F L, S. , T , R , M PRODUCTIVE INTERVALS ' F L and ' F L, S. , T , R , M (Top and Bottom) See BOTTOM HOLE ' F L and ' F L, S. , T , R , M Applications Check applicable reason(s) for spacing exception per 20 AAC 25.055(a): (1) to drill a well for oil within 500 feet of a property line where ownership or landownership changes, x (2) to drill a well for gas within 1500 feet of a property line where ownership or landownership changes, (3) to drill and complete more than one oil well in a governmental quarter section; or to drill and complete an oil well doser than 1000' to any well drilling to or capable of producing from the same pool, X (4) to drill and complete more than one gas well in a governmental section; or or to drill and complete a gas well closer than 3000' to any well drilling to or capable of producing from the same pool. Does the application contain: x A brief explanation for why the operator has chosen to drill the specified location. A plat drawn to a scale of one inch equaling 2,640 feet or larger, showing the location of the well or portion of the well for which the exception is sought, all other x completed and driling wells on the property, and all adjoining properties and wells within 1,000 feet of a well or portion of the well requiring the spacing exception that is drilling for oil or within 3,000 feet of a well or portion of the well requiring the spacing exception that is drilling for gas. The names of all owners, landowners, and operators of all properties within 1,000 feet of a well or portion of the well requiring the spacing exception that is drilling for X oil or within 3,000 feet of a well or portion of the well requiring the spacing exception that is drilling for gas. A copy of the notice sent by certified mail to the owners, landowners and operators X described above, the date of mailing, and the addresses to which the notice was sent. x An affidavit by a person acquainted with the facts verifying that all fads are true and that the plat correctly portrays pertinent and required data. ff the operator requests a variance from the notke requirements of x 20AAC25.055(d), sufficient information to demonstrate that it is not feasible to comply with the notice requirements because of the complexity of ownership within the notice area. Figure #8. Well Spacing Exemption Checklist. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 22 of 31 • 4 v c ,t 4L 9: CHECKLIST - SPACING CEPTI • APPLICATION / OPERATOR BLM / USGS ' ROPERTY ID LEASE S: N/A ,/ FIELD/POOL Wainwright, Coal Bed Methane PI/BH: WELL NAME Wainwright #3- - c . VERTICAL x E • LORATORY GAS x DEVIATED I, UNEATION OIL •EVELOPMENT SURFACE LOCATION ' F L and F L, S. , T , R , M PRODUCTIVE INTERVAL . ' F L and F L, S. , T , R , M (Top and Bottom) See BOTTOM HOLE ' F L and ' F L, S. , T , R , M Applications Check applicable rea: (s) for spacing exceptio per 20 AAC 25.055(a): (1) to drill a w II for oil within 500 feet of a p • . - rty line where ownership or landownersh changes, x (2) to drill a : ell for gas within 1500 feet of a • roperty line where ownership or landowners ip changes, (3) to drill a ' d complete more than one oil w: II in a governmental quarter section" or to drill .'nd complete an oil well closer I . 1000' to any weN driNing to or ca. ble of producing from the same • , ol, X (4) to dri and complete more than one gas ell in a govemmental section; or x or to • rill and complete a gas well close than 3000' to any well driNing to or «:'• . ble of producing from the same . • oI. Does the applic • on contain: X A brief xplanation for why the operator has hosen to drill the specked location. A plat . rawn to a scale of one inch equaling ,640 feet or larger, showing the locatio of the well or portion of the well for ich the exception is sought, all other x compl:ted and drilling wells on the property, and all adjoining properties and wells within ,000 feet of a well or portion of the "II requiring the spacing exception that is drill g for oil or within 3,000 feet of a well • portion of the well requiring the spaci 'g exception that is drilling for gas. The '': mes of all owners, landowners, and o ■ : rators of all properties within 1,000 feet •, a well or portion of the well requiring t e spacing exception that is drilling for X oil or Rhin 3,000 feet of a well or portion of t e well requiring the spacing exception that i drilling for gas. A co.' of the notice sent by certified mail to t - owners, landowners and operators des « bed above, the date of mailing, and the ddresses to which the notice was sent. x An a davit by a person acquainted with the fa • verifying that all facts are true and that t , - plat correctly portrays pertinent and ref, ired data. If th , operator requests a variance from the otice requirements of x 20 ' 25.055(d), sufficient information to demo strate that it is not feasible to comps with the notice requirements because of ■ e complexity of ownership within the n • lice area. Figure #8. AN)e II Spacing Exemption Checklist. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 21 of 30 • • June 7, 2007 Ms. Beth Maclean Bureau of Land Management 222 West Seventh Avenue, #13 Anchorage, AK 99513 Dear Ms. Maclean: Olgoonik Corporation (OC) is supportive of your efforts to evaluate scathed natural gas potential of Wainwright as outlined in the town meetings you have held in Wainwright. We appreciate the effort that you have put forth on this project on behalf of our community. OC has land entitlements within the city limits of Wainwright and also outside of these boundaries. OC recognizes the benefits that could occur from having a local, energy source available for the couununity. We recognize the cooperative work planned between Federal, State, and the private sector and are pleased to be a part of this effort in conjunction with Arctic Slope Regional Corporation. We appreciate the fact that the Bureau of Land Management and US Geological Survey are making a good faith effort to involve local communities in locating local sources of energy in rural Alaska Sincerely, vive)14 viik Lucille Mayer President, Olgoonik Corporation Cc: Teresa limn, Arctic Slope Regional Corporation Figure #9. Letter from the President of Olgoonik Corp. regarding the public involvement and knowledge of the drilling program in Wainwright. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 22 of 30 • Drilling Plan. Alaska Rural Energy Project Wainwright, Alaska, 2008 Landfill Offset Well 1. Transport rotary rig and other equipment from Deadhorse to Wainwright . 2. Move equipment to landfill site. Drill 9 7/8" hole through surficial deposits to depth of -50'. Set and cement 6 5/8" schedule 40 steel surface casing. 3. Mud rotary 6" open hole (no core) to between 2500 and 3000 ft. 4. Conduct geophysical Togs (caliper, gamma, resistivity, density, sonic) 5. Abandon well with abandonment bentonite grout and cement. Production Test Monitor Wells 1. Move equipment to Olgoonik wareyard to begin installing wells for production test. 2. Drill 9 7/8" hole through surficial deposits to depth of -50'. Set and cement 6 5/8" schedule 40 steel surface casing. 3. Mud rotary 6" open hole (no core) to 1260 ft. 4. Run geophysical Togs (density, gamma, resistivity) to confirm coal bed depth. 5. Install 2.5" schedule 80 PVC monitor well with 10' PVC 10 -slot screen at bottom. Sand -pack around screen, install bentonite pellet seal above sand, grout to surface using abandonment bentonite grout and cement. 6. Develop well using bailer and air lift methods. 7. Fill PVC well with 67/33% mixture of water /propylene glycol from -1100 ft to land surface. 8. Install pressure transducer. 9. Repeat steps 7 through 11 at four other locations (see attached diagram) Durability of Pressure Monitoring Downhole Components: The tensile strength of 2.5" schedule 80 PVC is 2,125 ft vertical suspension in a dry hole. In a fluid - filled hole, it is considerably higher. The operator (USGS) has used this exact pipe as monitor well casing to depths in excess of 2500 ft in New Mexico. The maximum external pressure differential is -340 psi, maximum internal pressure differential is -670 psi. Wall thickness is .276 ", weight is 1.46 Ibs/ft. The bentonite grout never sets up as a true solid. Rather, it sets up to a jelly -like consistency that retains its low -perm characteristics even when frozen. The cement used is Arctic cement blended in Fairbanks, AK for north slope conditions by Haliburton. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 23 of 30 0 • Production Test Well 1. Drill 14 3/4" hole through surficial deposits to depth of -50'. Set and cement 10 3/4" schedule 40 steel surface casing. 2. Mud rotary 9 7/8" open hole (no core) to 1240 ft. 3. Set and cement 6 5/8" schedule 40 steel surface casing to 1240 ft. 4. Mud rotary 6" hole to 1260 ft. 5. Develop well using bailer and air lift methods 6. Fill well with 75/25% mixture of water /propylene glycol from -1100 ft to land surface. 7. Install submersible pump, cable, pressure transducers etc. 8. Make surface connections, prepare equipment for pump test Production Test Conduct 7 -day production test. (see alternative testing and well abandonment described in the section: Decommission Wells in 2009, Alternative, below.) Decommission Wells 1. Remove pump and cable from production well. 2. Remove glycol from well. 3. Abandon well with abandonment bentonite grout and cement. 4. Reposition rig over observation well. 5. Remove glycol from well. 6. Abandon well with abandonment bentonite grout and cement. 7. Repeat steps 4 through 6 for remaining four monitor wells. Clean and Pack equipment. Transport equipment from Wainwright via barge. Decommission Wells in 2009, Altemative An alternative to well abandonment in the summer of 2008 would be to leave the 2" PVC pressure monitor wells open for pressure- monitoring purposes over the winter, rather than plugging /abandoning at the end of a one -week test. The wells would be completed /isolated in the coal bed and hydraulically connected via slotted pipe at the bottom of the well as described in the Drilling Plan. Well abandonment would be done in Tate- spring or early- summer of 2009 rather than the summer of 2008. This alternative would leave the production well in an operational manner rather than plugging- abandoning at the end of the 2008 work as described. The offset well would be abandoned in 2008. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 24 of 30 • Borehole Sampling. Alaska Rural Energy Project Wainwright, Alaska, 2008 Landfill Offset Well During the drilling of the landfill offset well, mud -gas will be continuously monitored to detect the presence of hydrocarbons in the drill mud. Borehole cuttings will be collected, described, washed, and bagged at 10 -ft intervals. Production Test Wells As continuous core was collected from the production test site during 2007 drilling operations, no samples will be taken during the drilling of the production test wells. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 25 of 30 • i Wainwright 2008 Offset Well: Depth vs Time Days 0 0 1 2 3 4 5 6 7 8 9 -500 — Set and cent surtace casing -1000 Wed abandonment -1500 sz ° -2000 -2500 -3000 Geophysical lagging -3500 - Figure #10. Depth v Time Graph, Offset Well at the Wainwright NSB Landfill. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 26 of 30 • • Drilling Fluid Plan Alaska Rural Energy Project Wainwright, Alaska, Summer 2008 The hole will be drilled using standard fresh water bentonite drilling fluids. Additives to be used include (all listed products are NL Baroid trade names): • Quick -Gel high yield bentonite (hole stability, circulation control, clay -shale control) • Aqua -Gel bentonite (hole stability, circulation control, mud - density control) • Pac -L and Pac -R powdered cellulose polymer (clay -shale control, water loss, viscosity control) • EZ mud liquid polymer (clay -shale control, water loss, viscosity control) • Pennetrol liquid detergent (bit cleaning, control clay build up around bit face and teeth) Drill fluids will be monitored for viscosity, weight, and temperature on a full -time basis. Drilling fluids will have cuttings removed and will be recirculated via a 1000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. Cuttings and used drill mud will be contained in above - ground tanks. At project's end, cuttings /mud will be disposed of at the Wainwright wastewater disposal pond. Rotary drilling and reaming operations will be conducted using a rig- mounted 5 'h" X 8" 350 gpm, duplex mudpump and a Gardner - Denver 5" x 6 ", 200 gpm, . duplex mudpump. P P P AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 27 of 30 • • Well Closure Procedures Alaska Rural Energy Project Wainwright, Alaska, Summer 2008, or 2009 During drilling and coring operations, aquifers will be protected by mixing bentonite and polymer additives in the drill mud specifically designed to seal and protect water - bearing strata. Encountering water bearing strata that could contain a useable aquifer is not expected since the drilling will be within the permafrost. Landfill offset well Upon completion of the landfill offset well, the well will be plugged from total depth to 100 ft below land surface (bls) with an abandonment bentonite grout mixture mixed at land surface with a grout plant and pumped from the bottom up. The top 100 ft of the well will be filled with Arctic -blend cement. Production test monitor wells After drilling is completed, 2.5" schedule 80 flush joint PVC casing and screen will be set in the well. The annular area between the well screen and the borehole wall will be filled with 8 -12 silica sand using tremie placement methods to 20 ft above the top of the screen. A 10 ft layer of %" bentonite pellets will then be placed on top of the sand using tremie methods. The annular area from the top of the pellets to 100 bls will be filled with abandonment bentonite grout, mixed at land surface with a grout plant and pumped through tremie pipe from the bottom up. The top 100 ft of the annular area will be filled with Arctic -blend cement. After well development, the PVC pipe will be filled with a 67/33% mixture of water and propylene glycol from a depth of 1100 ft to land surface to prevent freezing during testing procedures. Upon completion of testing procedures, the PVC well will be filled with abandonment bentonite grout, mixed at land surface with a grout plant and pumped through tremie pipe from the bottom up, to a depth of 100 ft bls. The top 100 ft of the well will be filled with Arctic -blend cement. Production test well After drilling is completed to 1240 ft, 6 5/8" schedule 40 steel casing will be welded and set. Arctic -blend cement will then be mixed in a grout plant and pumped through tremie pipe into the annular area from 1240 -1000 ft bls. Abandonment bentonite grout will then be mixed and pumped from 1000 to 100 ft bls, and Arctic -blend cement mixed and pumped from 100 ft to land surface. After drilling a 6" hole below the casing to a depth of 1260 ft, the well will be AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 28 of 30 i • developed, a submersible pump set, and the inside of the casing filled with a water /propylene glycol mixture to prevent freezing. After the pump test is completed, the pump will be pulled and the glycol removed from the well by pumping abandonment bentonite grout through 2" pipe from the bottom of the well to 100 bls. The top 100 ft of the well will be filled with Arctic -blend cement. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 29 of 30 • 1 Other Permits Alaska Rural Energy Project Wainwright, Alaska, Summer 2008 DNR Temporary Water Use Authorization for 4,000gpd, 150,000 gal total. ACMP B -List GCD -8, and No Review Required decision. ADEC ODPCP Exemption. ADEC Solid Waste Disposal for cuttings, Plan Review ADEC Drill Fluids and Produced Water Disposal. NSB Development Permit, Planning Department. NSB Dept. of Public Works, approval to use of landfill for cuttings disposal. AOGCC Permit to Drill. Wainwright # 9 April 22, 2008, Page 30 of 30 Page 1 of 1 • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Wednesday, June 04, 2008 1:40 PM To: Maunder, Thomas E (DOA) Cc: Saltmarsh, Arthur C (DOA); Bob_Fisk @ak.blm.gov; Arthur C Clark Subject: Re: Wainwright Permits Tom, Please send the originals to Bob Fisk at BLM. U.S. Department of the Interior Bureau of Land Management Division Of Resources 222 W. 7th Avenue, #13 Anchorage, AK 99513 -7504 Attn.: Bob Fisk, Branch Chief Energy and Solid Minerals (907) -271 -4407 At 10:21 AM 6/4/2008 -0800, you wrote: Gentlemen, I am working on the permits. I note that the address given on the 401 is the Denver Federal Center. Absent any other instruction that is where the permit will be mailed when approved. Please contact me at 907 - 793 -1250 or 907 - 529 -1645 to discuss this. n Tom Maunder, PE AOGCC 6/10/2008 Page 1 of 1 Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Thursday, May 29, 2008 11:23 AM To: Colombie, Jody J (DOA) Subject: RE: Public Notice Wainwright 3 -9 Wells Jody, The operator has given permission to release the following information to Mr. McCutcheon concerning Wainwright wells 3 -9: The operator expects up to 200,000 gallons of produced water, which will be disposed in the sewage lagoon. Please forward this information to Mr. McCutcheon. Thanks, Steve Davies From: Colombie, Jody J (DOA) Sent: Tuesday, May 06, 2008 9:58 AM To: Davies, Stephen F (DOA) Subject: FW: Public Notice Wainwright 3-9 Wells Steve, please respond. From: jerry mccutcheon [mailto:susitnahydronow @yahoo.com] Sent: Monday, May 05, 2008 12:50 PM To: Colombie, Jody J (DOA) Subject: Re: Public Notice Wainwright 3 -9 Wells This is a notice of objection and a request for information. What are they going to do with the produced water? --- On Mon, 5/5/08, Colombie, Jody J (DOA) yody. colombiepa aluska.gov> wrote: From: Colombie, Jody J (DOA) <jody.colombie@alaska.gov> Subject: Public Notice Wainwright 3 -9 Wells To: Date: Monday, May 5, 2008, 9:46 AM Special Staff Assistant to the Commission Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 907 -793 -1221 Direct Line - II 13e a better friend, newshound, and know -it -all with Yahoo! Mobile. Tryit now. 5/29/2008 • • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Thursday, May 29, 2008 10:53 AM To: 'Tom Mortensen' Subject: RE: Wainwright CBM. Tom, All of the applications are currently in review by our drilling engineer. I am reviewing the files and all correspondence today to make sure that nothing has been overlooked. Steve Davies AOGCC 793 -1224 Original Message From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Wednesday, May 28, 2008 11:51 AM To: Davies, Stephen F (DOA) Cc: Saltmarsh, Arthur C (DOA) Subject: Wainwright CBM. Steve, What's the status of the AOGCC permit to drill applications for the CBM exploration by the USGS at Wainwright? Tom Mortensen 907 - 345 -5789 it I I i 1 5/29/2008 10:53 AM • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Wednesday, May 28, 2008 11:51 AM To: Davies, Stephen F (DOA) Cc: Saltmarsh, Arthur C (DOA) Subject: Wainwright CBM. Steve, What's the status of the AOGCC permit to drill applications for the CBM exploration by the USGS at Wainwright? Tom Mortensen 907 - 345 -5789 1 5/29/2008 9:48 AM • Page 1 of 5 Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Friday, May 23, 2008 2:43 PM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk @ak.blm.gov; Teresa Imm; Saltmarsh, Arthur C (DOA) Subject: Fwd: RE: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. Steve, For your records, below is the conditional approval of ADEC for the disposal of drill fluids and produced water for the proposed CBM exploration drilling at Wainwright. Please contact me if you have any questions or require additional information. Regards, Tom Mortensen 907 - 345 -5789 Date: Fri, 23 May 2008 14:32:41 -0800 From: "Wingerter, Timothy J (DEC)" <tim.wingerter @alaska.gov> Subject: RE: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. To: Tom Mortensen <tom @mortensen.com> Cc: "Stambaugh, Sharmon M (DEC)" <sharmon.stambaugh @ alaska.gov>, "Kukla, Alan F (DEC)" <alan.kukla @alaska.gov >, "Stokes, Shawn A (DEC)" <shawn.stokes @alaska.gov >, "Klingman, Marie A (DEC)" <marie.klingman @alaska.gov> X- Forwarded -for: tom @mortensen.com by Tucows Delivered -to: tom @mortensen.com Thread- topic: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Tom, I have reviewed the information that you have submitted to this office. I believe that it would be acceptable to the department to dispose of the drilling fluids and produced water in the wastewater treatment lagoon at Wainwright under the following conditions: 1. Approval is obtained from the owners and operators of the lagoon facility. 2. The total amount does not exceed 350,000 gallons. 3. Disposal will not take place in the lagoon if the liquid level in the lagoon is greater than 80% of capacity. 4. No additional chemicals or products other than those listed below are to be disposed of: Quick -Gel high yield bentonite Aqua -Gel bentonite Pac -L and Pac -R powdered cellulose polymer Pennetrol liquid detergent 5. The water to be disposed of can not contain hydrocarbons in other than trace amounts. 5/29/2008 • Page 2 of 5 6. Solids will not be dispose•in the lagoon facility. 7. All solids will be disposed of in a Department approved manner. ' 8. A minimum of two representative samples must be collected from the drilling fluid and the produced water, (4 samples total). 9. The samples shall be analyzed by a reputable laboratory for the same parameters as the samples taken ' last year, with additional analysis for total aqueous and total aromatic hydrocarbons. 10. Analysis results of the samples must be submitted to the department and the owners /operators of the ' lagoon facility within two weeks after the laboratory analysis has been completed. 11. It must be understood that the department or the owners /operators of the facility can stop the disposal ` of the waste water at any time for good reason. 12. The wastewater disposal is to be completed during the 2008 construction season. ' hope these conditions meet with your approval. Please contact me if you wish to discuss this matter further. I wish you success with your project. Thanks for your patience Tim Wingerter From: Tom Mortensen [mailto :tom @mortensen.com] Sent: Thursday, May 22, 2008 11:17 AM To: Wingerter, Timothy 3 (DEC) Subject: RE: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. Tim, No problem with the delay, since the earliest that AOGCC can issue the permits to drill is on May 27th. My note was just a reminder. Regards, Tom Mortensen At 11:12 AM 5/22/2008 -0800, you wrote: Tom, Sorry for the delay. I will get something to you today or tomorrow for sure. Thanks for the reminder Tim From: Tom Mortensen [mailto :tom@mortensen.com] Sent: Thursday, May 22, 2008 10:41 AM To: Wingerter, Timothy J (DEC) Subject: RE: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. Tim, How goes the work on this little task? 5/29/2008 • • Page 3 of 5 Do you need any additional information from me? Regards, Tom Mortensen 907 - 345 -5789 Date: Wed, 16 Apr 2008 12:54:32 -0800 To: "Wingerter, Timothy J (DEC)" <tim.wingerter @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: RE: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. Cc: Arthur C Clark <aclark @usgs.gov >, Greg_Noble @b1m.gov, Teresa Imm <timm @asrc.com> Tim, Propylenecol. There will be five production test monitoring wells. For monitoring purposes each will have installed a 2.5" dia schedule 80 PVC pipe. Each will be filled with a 67/33% mixture of water /propylene glycol from —1100 ft to land surface. The propylene glycol will require disposal at the end of the monitoring. An MSDS sheet for propylene glycol _is attached. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill. The fluids and non - settleable solids will need disposal in the sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer - mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. An MSDS sheet for each of the following is attached. Quick -Gel high yield bentonite (use: hole stability, circulation control, clay -shale control). Aqua -Gel bentonite (use: hole stability, circulation control, mud - density control). 5/29/2008 Page 4 of 5 Pac -L and Pac- Rwdered cellulose polymer (use: clay -shit control, water loss, viscosity control). Pennetrol liquid detergent (use: bit cleaning, control clay build up around bit face and teeth). Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The water quality analysis done from the 2007 drilling operation indicates the likely quality of any produced water during the 2008 program. The produced water would need disposal in the sewage lagoon. Attached in pdf file "Wainwright QW_2007 "is the water quality analysis - from last year. Tim, thank you for your fast response to this request. Please let me know if you need more info. Regards, Tom Mortensen 907 - 345 -5789 At 11:07 AM 4/16/2008 -0800, you wrote: Tom, I did not see the referenced attachment for the water quality analysis from last year. Can you send it? Also, what is the solids concentration (the amount of solids that will be added to the lagoon; drill muds and cuttings)? The lagoon is a permitted facility and has discharged in the past. I am concerned about what we are putting in there, because it will likely need to be discharged in the future. I will need to know exactly what we are dealing with in terms of quantity and quality. Thanks Tim 5/29/2008 • Page 5 of 5 OriginaTlGlessage From: Tom Mortensen [mailto:tom *mortensen.cor] Sent: Friday, April 11, 2008 1:22 PM To: Wingerter, Timothy J (DEC) Cc: Kukla, Alan F (DEC) Subject: Wainwright. Coal Bed Methane Exploration Drilling. Drilling Fluids and Produced Water Disposal In Sewage Lagoon. 5/29/2008 • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Thursday, May 15, 2008 8:45 AM To: Davies, Stephen F (DOA) Subject: Wainwright CBM Steve, To let you know, I'll be in the office through Friday (tomorrow) then I'll be in the field next Monday and Tuesday. Tom M. 345 -5789 1 5/29/2008 9:49 AM • Davies, Stephen F (DOA) From: Bob_Fisk @ak.blm.gov Sent: Wednesday, May 14, 2008 8:58 AM To: Davies, Stephen F (DOA) Subject: RE: Wainwright CBM, "Designation of Operator" form. We do, I will bring it over. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907)- 271 -4407 "Davies, Stephen F (DOA)" <steve.davies @ala To ska.gov> BobFisk@ak.blm.gov cc 05/14/2008 08:35 AM Subject RE: Wainwright CBM, "Designation of Operator" form. Bob, The Commission requires evidence of authority for every person who signs a Designation of Operator form. Industry representatives typically provide a Secretary Certificate, a notarized certificate signed by the Secretary of the corporation that states the specific legal authority for each corporate officer (e.g. Vice President: authority to sign bonds, authority to sign lease agreements, etc). We also sometimes receive copies of the corporate by laws that contain similar statements of signatory authority for each officer. Does BLM have something similar such as a job description for the Branch Chief position? Thanks, Steve Davies AOGCC 907 - 793 -1224 Original Message From: Bob_Fisk @ak.blm.gov [mailto:Bob_Fisk @ak.blm.gov] Sent: Wednesday, May 14, 2008 8:18 AM To: Davies, Stephen F (DOA) 1 5/29/2008 9:50 AM Subject: Fw: Wainwright CBM,•esignation of Operator" form. • Steve. I am trying this again. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907) -271 -4407 Forwarded by Bob Fisk /AKSO /AK /BLM /DOI on 05/14/2008 08:16 AM Bob Fisk /AKSO /AK /BLM/ DOI To steve.davies @alaska.gov 05/09/2008 01:31 cc PM Subject Fw: Wainwright CBM, "Designation of Operator" form. Steve. What type of evidence would you like from me for my authority to sign the "Designation of Operator" form. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907)- 271 -4407 Forwarded by Bob Fisk /AKSO /AK /BLM /DOI on 05/09/2008 01:28 PM Tom Mortensen 2 5/29/2008 9 :50 AM • • <tom @mortensen.co m> To Bob_Fisk@ak.blm.gov 05/07/2008 11:12 cc PM Subject Wainwright CBM, "Designation of Operator" form. Bob, AOGCC needs additional information for the "Designation of Operator" form that you signed (I got it in the mail today, thanks) On the AOGCC form is the following line: "The Owner hereby certifies that the foregoing is true and correct (attach Power of Attorney or other evidence of authority of person signing)" AOGCC will need this information in their files before May 26th. Best, Tom M. 3 5/29/2008 9:50 AM • • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Wednesday, May 14, 2008 8:35 AM To: Bob_Fisk@ak.blm.gov Subject: RE: Wainwright CBM, "Designation of Operator" form. Bob, The Commission requires evidence of authority for every person who signs a Designation of Operator form. Industry representatives typically provide a Secretary Certificate, a notarized certificate signed by the Secretary of the corporation that states the specific legal authority for each corporate officer (e.g. Vice President: authority to sign bonds, authority to sign lease agreements, etc). We also sometimes receive copies of the corporate by laws that contain similar statements of signatory authority for each officer. Does BLM have something similar such as a job description for the Branch Chief position? Thanks, Steve Davies AOGCC 907 - 793 -1224 Original Message From: Bob_Fisk @ak.blm.gov [mailto:Bob_Fisk @ak.blm.gov] Sent: Wednesday, May 14, 2008 8:18 AM To: Davies, Stephen F (DOA) Subject: Fw: Wainwright CBM, "Designation of Operator" form. Steve. I am trying this again. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907) -271 -4407 Forwarded by Bob Fisk /AKSO /AK /BLM /DOI on 05/14/2008 08:16 AM Bob Fisk /AKSO /AK /BLM/ DOI To steve.davies @alaska.gov 05/09/2008 01:31 cc PM Subject Fw: Wainwright CBM, "Designation of Operator" form. 1 5/29/2008 10:02 AM • . Steve. What type of evidence would you like from me for my authority to sign the "Designation of Operator" form. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907)- 271 -4407 Forwarded by Bob Fisk /AKSO /AK /BLM /DOI on 05/09/2008 01:28 PM Tom Mortensen <tom @mortensen.co m To Bob_Fisk @ak.blm.gov 05/07/2008 11:12 cc PM Subject Wainwright CBM, "Designation of Operator" form. Bob, AOGCC needs additional information for the "Designation of Operator" form that you signed (I got it in the mail today, thanks) On the AOGCC form is the following line: "The Owner hereby certifies that the foregoing is true and correct (attach Power of Attorney or other evidence of authority of person signing)" AOGCC will need this information in their files before May 26th. Best, Tom M. 2 5/29/2008 10:02 AM • Page 1 of 4 • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Wednesday, May 14, 2008 8:05 AM To: Davies, Stephen F (DOA) Subject: RE: Information Request Steve, Apologies. I missed the point of your question. To clarify: Regarding the information in the email dated May 6th (below): Both the estimates of produced water volume and the proposed disposal of the produced water may be released. Tom Mortensen 907 - 345 -5789 At 07:58 AM 5/14/2008 -0800, you wrote: Tom, I need very specific permission before releasing information on an exploratory well, else I can be held liable. Your email gives specific permission to release the estimates given for the produced water, but not to say how it will be disposed. Thanks, Steve Davies From: Tom Mortensen [mailto:tom @mortensen.corr] Sent: Wednesday, May 14, 2008 7:46 AM To: Davies, Stephen F (DOA) Subject: RE: Information Request Steve, The answer to question #2 is in the May 6th email. Was more detail needed? Tom M. 5/29/2008 • • Page 2 of 4 Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. At 07:36 AM 5/14/2008 -0800, you wrote: Thanks Tom. That answers question 2, but what about question 1? Steve Davies From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Tuesday, May 13, 2008 11:56 AM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk©ak.blm.gov; Teresa Imm Subject: Re: Information Request Steve, AOGCC has permission to release the estimates given for the produced water that are in the email dated May 6 (below). Further information will need to be considered for release on a case by case basis. Regards, Tom Mortensen 907 - 345 -5789 At 03:36 PM 5/7/2008 -0800, you wrote: Tom, I had the following request from a member of the public concerning the Wainwright test: 1. What is USGS planning to do with the produced water from the test? 5/29/2008 Page 3 of 4 • And, I'm sure the immediate follow up question will be: 2. How much water will be produced during the test? Could you please ask the USGS for this information and obtain their written permission for the AOGCC to release the information to the public? Could you also ask the USGS if any of the information related to the proposed Wainwright 3 to 9 exploratory wells and the testing program is considered confidential? If not, could AOGCC get written permission to release any or all of it to the public? Thanks, Steve Davies AOGCC 907 -793 -1224 From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Tuesday, May 06, 2008 2:03 PM To: Davies, Stephen F (DOA) Subject: Fwd: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Resent: Produced water, volumes, etc. III Date: Tue, 06 May 2008 13:13:05 -0800 To: Steve Davies <steve.davies @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Cc: Arthur C Clark <aclark @usgs.gov >, Bob_Fisk @ak.blm.gov, Teresa Imm <timm @asrc.com >, Art Saltmarsh <art.saltmarsh @alaska.gov> Steve, This email is in response to your May 6th request for information regarding the following: The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker 5/29/2008 Page 4 of 4 screens and centrifugal de •ing cones. The cuttings and used•I mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, Tom Mortensen 907 - 345 -5789 5/29/2008 . . Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Wednesday, May 14, 2008 7:59 AM To: Tom Mortensen Subject: RE: Information Request Tom, 1 need very specific permission before releasing information on an exploratory well, else I can be held liable. Your email gives specific permission to release the estimates given for the produced water, but not to say how it will be disposed. Thanks, Steve Davies From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Wednesday, May 14, 2008 7:46 AM To: Davies, Stephen F (DOA) Subject: RE: Information Request Steve, The answer to question #2 is in the May 6th email. Was more detail needed? Tom M. Disposal Volumes. The estimated total amount 1 5/29/2008 11:12 AM 1111 • Page 1 of 3 Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Wednesday, May 14, 2008 7:46 AM To: Davies, Stephen F (DOA) Subject: RE: Information Request Steve, The answer to question #2 is in the May 6th email. Was more detail needed? Tom M. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. At 07:36 AM 5/14/2008 -0800, you wrote: Thanks Tom. That answers question 2, but what about question 1? Steve Davies From: Tom Mortensen [rnailto :tom @mortensen.com] Sent: Tuesday, May 13, 2008 11:56 AM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk @ak.blm.gov; Teresa Imm Subject: Re: Information Request Steve, AOGCC has permission to release the estimates given for the produced water that are in the email dated May 6 (below). Further information will need to be considered for release on a case by case basis. Regards, 5/29/2008 . • Page 2 of 3 Tom Mortensen 907 - 345 -5789 At 03:36 PM 5/7/2008 -0800, you wrote: Tom, I had the following request from a member of the public concerning the Wainwright test: 1. What is USGS planning to do with the produced water from the test? And, I'm sure the immediate follow up question will be: 2. How much water will be produced during the test? Could you please ask the USGS for this information and obtain their written permission for the AOGCC to release the information to the public? Could you also ask the USGS if any of the information related to the proposed Wainwright 3 to 9 exploratory wells and the testing program is considered confidential? If not, could AOGCC get written permission to release any or all of it to the public? Thanks, Steve Davies AOGCC 907 - 793 -1224 From: Tom Mortensen [mailto:tom ©mortensen.com] Sent: Tuesday, May 06, 2008 2:03 PM To: Davies, Stephen F (DOA) Subject: Fwd: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Resent: Produced water, volumes, etc. Date: Tue, 06 May 2008 13:13:05 -0800 To: Steve Davies <steve.davies @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Cc: Arthur C Clark <aclark @usgs.gov >, Bob_Fisk @ak.blm.gov, Teresa Imm <timm @asrc.com >, Art Saltmarsh <art.saltmarsh @alaska.gov> Steve, 5/29/2008 Page 3 of 3 • This email is in response to your May 6th request for information regarding the following: The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, Tom Mortensen 907 - 345 -5789 5/29/2008 • • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Wednesday, May 14, 2008 7:37 AM To: Tom Mortensen Subject: RE: Information Request Thanks Tom. That answers question 2, but what about question 1? Steve Davies From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Tuesday, May 13, 2008 11:56 AM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob Fisk @ak.blm.gov; Teresa Imm Subject: Re: Information Request Steve, AOGCC has permission to release the estimates given for the produced water that are in the email dated May 6 (below). Further information will need to be considered for release on a case by case basis. Regards, Tom Mortensen 907 - 345 -5789 At 03:36 PM 5/7/2008 -08 2 5/29/2008 11:12 AM Page 1 of 3 • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Tuesday, May 13, 2008 11:56 AM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk @ak.blm.gov; Teresa Imm Subject: Re: Information Request Steve, AOGCC has permission to release the estimates given for the produced water that are in the email dated May 6 (below). Further information will need to be considered for release on a case by case basis. Regards, Tom Mortensen 907 - 345 -5789 At 03:36 PM 5/7/2008 -0800, you wrote: Tom, I had the following request from a member of the public concerning the Wainwright test: 1. What is USGS planning to do with the produced water from the test? And, I'm sure the immediate follow up question will be: 2. How much water will be produced during the test? Could you please ask the USGS for this information and obtain their written permission for the AOGCC to release the information to the public? Could you also ask the USGS if any of the information related to the proposed Wainwright 3 to 9 exploratory wells and the testing program is considered confidential? If not, could AOGCC get written permission to release any or all of it to the public? Thanks, Steve Davies AOGCC 907 -793 -1224 From: Tom Mortensen [mailto:tom©mortensen.com] Sent: Tuesday, May 06, 2008 2:03 PM To: Davies, Stephen F (DOA) Subject: Fwd: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. 5/29/2008 • Page 2 of 3 • Resent: Produced water, volumes, etc. Date: Tue, 06 May 2008 13:13:05 -0800 To: Steve Davies <steve.davies @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Cc: Arthur C Clark <aclark @usgs.gov >, Bob_Fisk @ak.blm.gov, Teresa Imm <timm @asrc.com >, Art Saltmarsh <art.saltmarsh @alaska.gov> Steve, This email is in response to your May 6th request for information regarding the following: ' The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be 5/29/2008 Page 3 of 3 between 20,000 to 200,0.allons. The produced water wouldled disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, Tom Mortensen 907 - 345 -5789 5/29/2008 • . Page 1 of 2 Davies, Stephen F (DOA) From: Arthur C Clark [aclark @usgs.gov] Sent: Sunday, May 11, 2008 9:37 AM To: Davies, Stephen F (DOA) Subject: RE: Wainwright #1 strat column Hi Steve, The only description we have are the original —200 core log sheets which are pretty general in nature and have not been computerized. Our hope was /is that someone from DGGS or DOG would want to do detailed description at some point but that hasn't happened yet and we haven't had time /resources to do it ourselves. The core is currently stored in the USGS warehouse in Anchorage and will be moved to the Eagle River repository later this year. I did photograph the core in the warehouse last fall but the core was not split and the pics are definitely Tess than professional quality. There were no signs of liquid hydrocarbons in the core. Art "Davies, Stephen F (DOA)" <steve.davies@alaska.gov> wrote: To: Arthur C Clark <aclark @usgs.gov> From: "Davies, Stephen F (DOA)" <steve.davies @alaska.gov> Date: 05/09/2008 04:27PM Subject: RE: Wainwright #1 strat column Art, Do you have detailed lithologic descriptions from drill cuttings or samples? If so, could we get a copy? Did you see any oil staining, sample or cut fluorescence, solvent cut, or any other indicator of liquid hydrocarbons while drilling either Wainwright 1 or 2? Thanks, Steve Davies AOGCC 907 -793 -1224 From: Arthur C Clark [mailto:aclark @usgs.gov] Sent: Friday, May 09, 2008 11:32 AM To: Tom Mortensen Cc: Davies, Stephen F (DOA); Bob_Fisk @ak.blm.gov; Greg_Noble @ak.blm.gov; Teresa Imm 5/29/2008 Page 2 of 2 Subject: Re: Wainwright #1 strat An • Tom /Steve, Attached is the strat column of the 2007 Wainwright CBM well. Let me know if you need anything else. Art ArtClark Supervisory Geologist U.S. Geological Survey Denver , CO phone: 303 - 236 -5793 aclark @usgs.gov 5/29/2008 • Page 1 of 1 1 Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Friday, May 09, 2008 2:28 PM To: Arthur C Clark Subject: RE: Wainwright #1 strat column Art, Do you have detailed lithologic descriptions from drill cuttings or samples? If so, could we get a copy? Did you see any oil staining, sample or cut fluorescence, solvent cut, or any other indicator of liquid hydrocarbons while drilling either Wainwright 1 or 2? Thanks, Steve Davies AOGCC 907 - 793 -1224 From: Arthur C Clark [mailto:aclark @usgs.gov] Sent: Friday, May 09, 2008 11:32 AM To: Tom Mortensen Cc: Davies, Stephen F (DOA); Bob_Fisk @ak.blm.gov; Greg_Noble @ak.blm.gov; Teresa Imm Subject: Re: Wainwright #1 strat column Tom /Steve, Attached is the strat column of the 2007 Wainwright CBM well. Let me know if you need anything else. Art Art Clark Supervisory Geologist U.S. Geological Survey Denver, CO phone: 303-236-5793 aclark©usgs.gov 5/29/2008 • • Davies, Stephen F (DOA) From: Bob_Fisk @ak.blm.gov Sent: Friday, May 09, 2008 1:31 PM To: Davies, Stephen F (DOA) Subject: Fw: Wainwright CBM, "Designation of Operator" form. Steve. What type of evidence would you like from me for my authority to sign the "Designation of Operator" form. Bob Bob Fisk Branch Chief Energy and Solid Minerals Division Of Resources (907)- 271 -4407 Forwarded by Bob Fisk /AKSO /AK /BLM /DOI on 05/09/2008 01:28 PM Tom Mortensen <tom @mortensen.co m> To Bob_Fisk @ak.blm.gov 05/07/2008 11:12 cc PM Subject Wainwright CBM, "Designation of Operator" form. Bob, AOGCC needs additional information for the "Designation of Operator" form that you signed (I got it in the mail today, thanks) On the AOGCC form is the following line: "The Owner hereby certifies that the foregoing is true and correct (attach Power of Attorney or other evidence of authority of person signing)" AOGCC will need this information in their files before May 26th. Best, Tom M. 1 5/29/20089:51 AM • • Page 1 of 1 Davies, Stephen F (DOA) From: Arthur C Clark [aclark @usgs.govj Sent: Friday, May 09, 2008 11:32 AM To: Tom Mortensen Cc: Davies, Stephen F (DOA); Bob_Fisk @ak.blm.gov; Greg_Noble @ak.blm.gov; Teresa Imm Subject: Re: Wainwright #1 strat column Attachments: Wainwright stratigraphic column.pdf Tom /Steve, Attached is the strat column of the 2007 Wainwright CBM well. Let me know if you need anything else. - Art Art Clark Supervisory Geologist U.S. Geological Survey Denver, CO phone: 303 - 236 -5793 aclark@usgs.gov 5/29/2008 • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Friday, May 09, 2008 10:37 AM To: Tom Mortensen Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Tom, No, nothing was submitted for Wainwright 1 beyond what I described in my email yesterday (see below). I checked with our librarian, our geotech, our database of well information, and then looked through the well files and confidential vault myself, but did not find the required Well Completion or Recompletion Report (Form 10 -407), lithologic or sample log, or sample descriptions. Thanks for your help, Steve Davies AOGCC Original Message From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Thursday, May 08, 2008 6:13 PM To: Davies, Stephen F (DOA) Cc: Bob_Fisk@ak.blm.gov; Arthur C Clark; Teresa Imm Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Steve, I contacted both BLM and USGS about the missing well information in the AOGCC files. I've been told that Beth Maclean had all required information turned into AOGCC last year for Wainwright 1. Tom Mortensen At 12:27 PM 5/8/2008 -0800, you wrote: >Tom, >I cannot complete AOGCC's evaluation and determination concerning oil >discharge prevention and contingency planning (ODPCP) without geologic >information from the Wainwright 1 exploratory well. >I just checked AOGCC's Wainwright 1 well history file for this >information. The file contains only the permit to drill documents, an >operational summary for Wainwright 1 and 2, and general correspondence. >It does not contain the required Well Completion or Recompletion Report >(Form 10 -407), lithologic or sample log, or sample descriptions. Without >these, I am unable to complete the ODPCP evaluation for the additional >Wainwright exploratory wells. >Could you please contact BLM or USGS and have them provide the required >Wainwright 1 geologic information to AOGCC? >Thanks, >Steve Davies >AOGCC 1 5/29/2008 10:02 AM >907- 793 -1224 i • Original >Message >From: Tom Mortensen [mailto:tom @mortensen.com] >Sent: Monday, May 05, 2008 4:47 PM >To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) >Cc: Saltmarsh, Arthur C (DOA) >Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. >Letter Attached. > >Steve, Art: > Attached is your copy of the letter sent to ADEC requesting an exemption >to > exploration the ODPCP and FR requirements for the proposed CBM ex orat n wells at o q P P p >Wainright. >Regards, >Tom Mortensen >907- 345 -5789 2 5/29/2008 10:02 AM 11111 Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Friday, May 09, 2008 7:32 AM To: Davies, Stephen F (DOA) Cc: Saltmarsh, Arthur C (DOA) Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Steve, In case the needed info can't be located at AOGCC, a new Well Completion or Recompletion Report (Form 10 -407), and a lithologic column in PDF will be sent later today. Tom M. >Date: Thu, 08 May 2008 18:12:58 -0800 >To: "Davies, Stephen F (DOA)" <steve.davies @alaska.gov> >From: Tom Mortensen <tom @mortensen.com> >Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. >Letter Attached. >Cc: Bob_Fisk @ak.blm.gov, Arthur C Clark <aclark @usgs.gov >, Teresa Imm > <timm @asrc.com> >Steve, >I contacted both BLM and USGS about the missing well information in the >AOGCC files. >I've been told that Beth Maclean had all required information turned >into AOGCC last year for Wainwright 1. >Tom Mortensen >At 12:27 PM 5/8/2008 -0800, you wrote: »Tom, »I cannot complete AOGCC's evaluation and determination concerning oil »discharge prevention and contingency planning (ODPCP) without geologic »information from the Wainwright 1 exploratory well. »I just checked AOGCC's Wainwright 1 well history file for this »information. The file contains only the permit to drill documents, an »operational summary for Wainwright 1 and 2, and general correspondence. »It does not contain the required Well Completion or Recompletion »Report (Form 10 -407), lithologic or sample log, or sample »descriptions. Without these, I am unable to complete the ODPCP »evaluation for the additional Wainwright exploratory wells. »Could you please contact BLM or USGS and have them provide the »required Wainwright 1 geologic information to AOGCC? »Thanks, »Steve Davies » AOGCC »907-793-1224 1 5/29/2008 9:52 AM » • • » Original »Message »From: Tom Mortensen [mailto:tom @mortensen.com] »Sent: Monday, May 05, 2008 4:47 PM »To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) »Cc: Saltmarsh, Arthur C (DOA) »Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. »Letter Attached. »Steve, Art: »Attached is your copy of the letter sent to ADEC requesting an »exemption to the ODPCP and FR requirements for the proposed CBM »exploration wells at Wainright. »Regards, »Tom Mortensen »907- 345 -5789 2 5/29/2008 9:52 AM • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Thursday, May 08, 2008 6:13 PM To: Davies, Stephen F (DOA) Cc: Bob_Fisk©ak.blm.gov; Arthur C Clark; Teresa Imm Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Steve, I contacted both BLM and USGS about the missing well information in the AOGCC files. I've been told that Beth Maclean had all required information turned into AOGCC last year for Wainwright 1. Tom Mortensen At 12:27 PM 5/8/2008 -0800, you wrote: >Tom, >I cannot complete AOGCC's evaluation and determination concerning oil >discharge prevention and contingency planning (ODPCP) without geologic >information from the Wainwright 1 exploratory well. >I just checked AOGCC's Wainwright 1 well history file for this >information. The file contains only the permit to drill documents, an >operational summary for Wainwright 1 and 2, and general correspondence. >It does not contain the required Well Completion or Recompletion Report >(Form 10 -407), lithologic or sample log, or sample descriptions. >Without these, I am unable to complete the ODPCP evaluation for the >additional Wainwright exploratory wells. >Could you please contact BLM or USGS and have them provide the required >Wainwright 1 geologic information to AOGCC? >Thanks, >Steve Davies >AOGCC >907 -793 -1224 > Original >Message >From: Tom Mortensen [mailto:tom @mortensen.com] >Sent: Monday, May 05, 2008 4:47 PM >To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) >Cc: Saltmarsh, Arthur C (DOA) >Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. >Letter Attached. >Steve, Art: >Attached is your copy of the letter sent to ADEC requesting an >exemption to the ODPCP and FR requirements for the proposed CBM >exploration wells at Wainright. >Regards, 1 5/29/20089:52 AM > • • >Tom Mortensen >907- 345 -5789 2 5/29/2008 9:52 AM • • Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Thursday, May 08, 2008 12:28 PM To: Tom Mortensen Cc: Saltmarsh, Arthur C (DOA) Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Tom, I cannot complete AOGCC's evaluation and determination concerning oil discharge prevention and contingency planning (ODPCP) without geologic information from the Wainwright 1 exploratory well. I just checked AOGCC's Wainwright 1 well history file for this information. The file contains only the permit to drill documents, an operational summary for Wainwright 1 and 2, and general correspondence. It does not contain the required Well Completion or Recompletion Report (Form 10 -407), lithologic or sample log, or sample descriptions. Without these, I am unable to complete the ODPCP evaluation for the additional Wainwright exploratory wells. Could you please contact BLM or USGS and have them provide the required Wainwright 1 geologic information to AOGCC? Thanks, Steve Davies AOGCC 907 - 793 -1224 Original Message From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Monday, May 05, 2008 4:47 PM To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) Cc: Saltmarsh, Arthur C (DOA) Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Steve, Art: Attached is your copy of the letter sent to ADEC requesting an exemption to the ODPCP and FR requirements for the proposed CBM exploration wells at Wainright. Regards, Tom Mortensen 907 - 345 -5789 1 5/29/2008 10:03 AM • Page 1 of 1 Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Thursday, May 08, 2008 10:26 AM To: Colombie, Jody J (DOA) Subject: RE: Public Notice Wainwright 3 -9 Wells Jody, approval, By regulation, 1 cannot discuss anything related to a permit to drill until it has been approved. An d after I can only release information about the proposed surface and bottom hole locations. I have contacted the operator's representative and asked permission to answer Mr. McCutcheon's question prior to the public hearing scheduled for June 10, 2008. I await the operator's reply. Steve Davies From: Colombie, Jody 3 (DOA) Sent: Tuesday, May 06, 2008 9:58 AM To: Davies, Stephen F (DOA) Subject: FW: Public Notice Wainwright 3 -9 Wells Steve, please respond. From: jerry mccutcheon [mailto :susitnahydronow @yahoo.com] Sent: Monday, May 05, 2008 12:50 PM To: Colombie, Jody 3 (DOA) Subject: Re: Public Notice Wainwright 3 -9 Wells This is a notice of objection and a request for information. What are they going to do with the produced water? - -- On Mon, 5/5/08, Colombie, Jody J (DOA) <jody.colombie@alaska.gov> wrote: From: Colombie, Jody J (DOA) <jody.colombie @alaska.gov> Subject: Public Notice Wainwright 3 -9 Wells To: Date: Monday, May 5, 2008, 9:46 AM Special Staff Assistant to the Commission Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 907 - 793 -1221 Direct Line Be a better friend, newshound, and know -it -all with Yahoo! Mobile. Try it now 5/29/2008 Page 1 of 1 . • Davies, Stephen F (DOA) From: Arthur C Clark [aclark @usgs.gov] Sent: Friday, May 09, 2008 11:32 AM To: Tom Mortensen Cc: Davies, Stephen F (DOA); Bob Fiskc©ak.blm.gov; Greg_Noble©ak.blm.gov; Teresa Imm Subject: Re: Wainwright #1 strat column Attachments: Wainwright stratigraphic column.pdf Tom /Steve, Attached is the strat column of the 2007 Wainwright CBM well. Let me know if you need anything else. Art Art Clark Supervisory Geologist U.S. Geological Survey Denver, CO phone: 303 - 236 -5793 aclark @usqs.qov 5/29/2008 • Wainwright, AK Core description Depth O o 50- Gadded — an awdema tae lW ONO 150 Sa � _ -.IL NOR wy fy 360 ese ∎tm 900 450 _ HS= 500 NOR —•te ONR —■••••■ N0R J f M1 BOe 850- — ` \ — �elr leer (BWONte) 253 = 1 750 — eft OS 500 oeR NO: . SdI rm.*, zee • 950 — ,- -- • 1060 1100 - �� 1,150 - 1,200 tai ai aL 7,300- 031, ' bie — a 1 350v 1,400 1,450 1,500- R • 1,560 1,600 I pp xx TD 1,e13.5 3 g 1 EXPLANATION _] Sandstone Fonesel laminations _ J Sitetone, shale (mudNOne), day #one and Cross-laminations Imerlominated very fine-grained sandstone _ Np¢onral besting or Lamination Coal n Carbonaceous angle /coaly ireerbeds »\ Cross-bedding Contorted bedding Lost core intervals ?iv • • • sin or mud chips Y y Burrows or bioturbeted intervals Sd nd n B etio ne. or a 0000ne sdewc sanaatnne, sinatone, or or yatone • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Friday, May 09, 2008 11:23 AM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk @ak.blm.gov; Greg_Noble @ak.blm.gov; Teresa Imm Subject: Wainwright CBM. Wainwright #1, Completion Report. Attachments: Completion Report Wainwright 1.xls; ATT2789263.txt [7.] Completion Report ATT2789263.txt Wainwright 1... (252 B) Steve, Attached is a copy of the Well Completion Report obtained from BLM. The file is in Excel. I expect to get a lithologic column in PDF on Monday (this is a change from the earlier estimate of today's delivery of the log). Tom M. At 10:37 AM 5/9/2008 -0800, you wrote: >Tom, >No, nothing was submitted for Wainwright 1 beyond what I described in >my email yesterday (see below). >I checked with our librarian, our geotech, our database of well >information, and then looked through the well files and confidential >vault myself, but did not find the required Well Completion or >Recompletion Report (Form 10 -407), lithologic or sample log, or sample >descriptions. >Thanks for your help, >Steve Davies >AOGCC > Original Message >From: Tom Mortensen [mailto:tom @mortensen.com] >Sent: Thursday, May 08, 2008 6:13 PM >To: Davies, Stephen F (DOA) >Cc: Bob_Fisk @ak.blm.gov; Arthur C Clark; Teresa Imm >Subject: RE: Wainwright CBM. Request to ADEC for Exemption under ODPCP. >Letter Attached. >Steve, >I contacted both BLM and USGS about the missing well information in the >AOGCC files. >I've been told that Beth Maclean had all required information turned >into AOGCC last year for Wainwright 1. >Tom Mortensen 1 5/29/2008 9:51 AM • >At 12:27 PM 5/8/2008 -0800, you wrote: > >Tom, > > »I cannot complete AOGCC's evaluation and determination concerning oil > >discharge prevention and contingency planning (ODPCP) without > > geologic information from the Wainwright 1 exploratory well. > > »I just checked AOGCC's Wainwright 1 well history file for this > >information. The file contains only the permit to drill documents, > >an operational summary for Wainwright 1 and 2, and general correspondence. > >It does not contain the required Well Completion or Recompletion > >Report (Form 10 -407), lithologic or sample log, or sample descriptions. >Without > >these, I am unable to complete the ODPCP evaluation for the > >additional Wainwright exploratory wells. > > > >Could you please contact BLM or USGS and have them provide the > > required Wainwright 1 geologic information to AOGCC? > > > >Thanks, > > > >Steve Davies > > AOGCC »907-793-1224 > > > > > > > > Original > >Message > > > >From: Tom Mortensen [mailto:tom @mortensen.com] > >Sent: Monday, May 05, 2008 4:47 PM > >To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) > >Cc: Saltmarsh, Arthur C (DOA) > >Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. > >Letter Attached. > > > > > >Steve, Art: > > > > Attached is your copy of the letter sent to ADEC requesting an >exemption > >to > >the ODPCP and FR requirements for the proposed CBM exploration wells > >at Wainright. > > > >Regards, > > > >Tom Mortensen »907-345-5789 2 5/29/2008 9:51 AM STATE OF ALASKA ALAS41103IL AND GAS CONSERVATION COMMON WELL COMPLETION OR RECOMPLETION REPORT AND LOG 1 a. Well Status: Oil ❑ Gas El Plugged ❑ Abandoned Ell Suspended 1 b. Well Class: 20AAC 25 105 20AAC 25.110 Development ❑ Exploratory 0 GINJ ❑ WINJ ❑ WDSPL ❑ WAG ❑ Other ❑ No. of Completions: Service ❑ Stratigraphic Test ❑ 2. Operator Name: 5. Date Comp., Susp., or 12. Permit to Drill Number: Burearu of Land Management - Deparment of the Interior Aband.: 7/5/2007 207 -065 3. Address: 6. Date Spudded: 13. API Number: 222 West Seventh Ave., #13, Anchorage, AK 99513 6/11/2007 50- 301 - 20003 -00 4a. Location of Well (Governmental Section): 7. Date TD Reached: 14. Well Name and Number: Surface: 70 37;56.6: 160 01;28.2" 900' FNL, 2278' FEL 6/27/2007 Wainwright 1 Top of Productive Horizon: 8. KB (ft above MSL): 30 15. Field /Pool(s): Sec. 24, T15N, R32W, UM Ground (ft MSL): 25 N/A Total Depth: 9. Plug Back Depth(MD +TVD): Vertical Well - 1613 ft 950 4b. Location of Well (State Base Plane Coordinates, NAD 27): 10. Total Depth (MD + TVD): 16. Property Designation: Surface: x- y- Zone- 1613 ft City of Wainwright TPI: x- y- Zone- 11. SSSV Depth (MD + TVD): 17. Land Use Permit: Total Depth: x- y- Zone- 1613 Ft. 18. Directional Survey: Yes ❑ No 0 19. Water Depth, if Offshore: 20. Thickness of Permafrost (TVD): (Submit electronic and printed information per 20 AAC 25.050) N/A (ft MSL) - 900 ft 21. Logs Obtained (List all logs here and submit electronic and printed information per 20 AAC 25.071): gamma, resistivity, caliper, density, sonic 22. CASING, LINER AND CEMENTING RECORD WT. PER SETTING DEPTH MD SETTING DEPTH TVD AMOUNT CASING GRADE TOP BOTTOM TOP BOTTOM HOLE SIZE CEMENTING RECORD FT PULLED 6 5/8 .280 wall sch 40 0 75 0 75 8.75" cement from bottom -up 2.5" PVC 0 940 0 940 5.625" cement from 100' -up 3.5" 7.8 957 1613 957 1613 4.25" bentonite grout 23. Open to production or injection? Yes ❑ No Ei If Yes, list each 24. TUBING RECORD interval open (MD +TVD of Top & Bottom; Perforation Size and Number): SIZE DEPTH SET (MD) PACKER SET (MD) N/A 25. ACID, FRACTURE, CEMENT SQUEEZE, ETC. DEPTH INTERVAL (MD) AMOUNT AND KIND OF MATERIAL USED N/A 26. PRODUCTION TEST Date First Production: Method of Operation (Flowing, gas lift, etc.): N/A Date of Test: Hours Tested: Production for Oil -Bbl: Gas -MCF: Water -Bbl: Choke Size: Gas -Oil Ratio: Test Period - Flow Tubing Casing Press: Calculated Oil -Bbl: Gas -MCF: Water -Bbl: Oil Gravity - API (corr): Press. 24 -Hour Rate -► 27. CORE DATA Conventional Core(s) Acquired? Yes 111 No ❑ Sidewall Cores Acquired? Yes ❑ No ❑ If Yes to either question, list formations and intervals cored (MD +TVD of top and bottom of each), and summarize lithology and presence of oil, gas or water (submit separate sheets with this form, if needed). Submit detailed descriptions, core chips, photographs and laboratory analytical results per 20 AAC 25.071. Continuous core collected from 76 1605'. Core currently stored in USGS warehouse in Anchorage, eventually to be moved to state repository in Eagle River and will be public data. Form 10 -407 Revised 2/2007 CONTINUED ON REVERSE - 1 • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF The United States ) Conservation Order No. 582 Department of the Interior, Bureau of Land Management for an order granting waivers to ) the bonding requirements of 20 AAC 25.025, ) Wainwright No. 1 blowout prevention equipment requirements of ) Exploratory Well 20 AAC 25.035, wellbore survey requirements ) of 20 AAC 25.050(a)(2), well site seismic ) June 11, 2007 survey requirements of 20 AAC 25.061(a), and ) gas detection requirements of 20 AAC 25.066 ) to allow the drilling, testing, and plugging of ) the U.S. Department of the Interior ) Wainwright No. 1 exploratory gas well. ) IT APPEARING THAT: 1. The U.S. Department of the Interior ( "USDOI "), Bureau of Land Management ( "BLM ") by Permit to Drill Application No. 207 -065 dated February 27, 2007 and letter dated February 28, 2007, which were received by the Alaska Oil and Gas Conservation Commission ("Commission ") on April 12, 2007, requested an order waiving the bonding requirements of 20 AAC 25.025, blowout prevention equipment requirements of 20 AAC 25.035, wellbore survey requirements of 20 AAC 25.050(a)(2), well site seismic survey requirements of 20 AAC 25.061(a), and gas detection requirements of 20 AAC 25.066 to allow the drilling, testing, and plugging of the Wainwright No. 1 exploratory gas well. 2. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on May 11, 2007, pursuant to 20 AAC 25.540. 3. No protests to or comments on the application or requests for a hearing were received. FINDINGS: 1. Wainwright No. 1 will be a vertical coal -bed methane exploratory well located near the village of Wainwright, 900 feet from the north line and 2278 feet from the east line of Section 24, Township 15 North and Range 32 West, Umiat Meridian ( "UM "). 2. The only owners of the subsurface estate within 1500 feet of the well are USDOI and the Alaska Department of Natural Resources ( "AKDNR "). Conservation Order 582 • • • June 11. 2007 Page 2 of 3. The Village of Wainwright obtains its drinking k■ater from surface eater sources according to the Alaska Department of Environmental Conservation. Division of Environmental Health, Drinking Water Program and the Alaska Department of Natural Resources Land Administration System. The sources are located in the NW quarter of the SW quarter of Section 9, T31N, R31\V, UM, which is more than 2 -1/2 miles from the proposed well location. 4. The expected depth of the base of permafrost within Wainwright No.1 is about 1,000 feet; so, it is unlikely that any subsurface aquifers will be utilized for drinking water purposes. 5. On May 31, 2007, the Commission received a Letter from the Arctic Slope Regional Corporation ("ASRC") stating that the USDOI, U.S. Geological Survey ( "USGS ") could enter ASRC land to conduct the Wainwright Coal -bed Methane Project. 6. On June 8, 2007, BLM filed a Designation of Operator form, which names USGS as the operator for Section 24, Township 15 North and Range 32 West, UM. 7. USDOI is an agency of the United States. The credit of the United States renders a bond unnecessary for the Wainwright No. 1 exploratory well. 8. The well will be constructed by setting 80' of 6 -5/8" conductor in a 9 -7/8" hole. The planned 5 -1/4" hole will be continuously cored to its proposed total depth. If gas - bearing coal seams are identified, they may be tested. The well may be completed with PVC casing and screens to allow long-term monitoring or testing of selected coal seam(s). A rotating drill head will be used. A rotating head seals around the drill stem and directs the annular mudflow to the pits. If gas is encountered, the rotating head functions as a diverter. A similar rotating head was used successfully at the Franklin Bluffs No. 1 exploratory gas well (permit to drill 205 -105). 9. Seismic information near Wainwright No. 1 shows no indication of the presence of shallow gas. In addition, drilling records and mud log information from the nearest exploration wells (Peard Test Well No. 1 and Tunalik No. 1, located 25 miles to the east - northeast and 34 miles to the southwest, respectively) show no indication of abnormal pressure. 10. Wainwright No. 1 will be drilled with a portable truck - mounted drilling rig. This equipment has no enclosures where methane could accumulate sufficiently to pose a risk of explosion or fire, or where a methane detector could practicably be located. CONCLUSIONS: 1. Exceptions to the gas detection requirements of 20 AAC 25.066 are necessary to allow drilling, testing and plugging of the Wainwright No. I exploratory gas well. • Conservation Order 582 • June 11, 2007 Paae3of2 2. Granting exceptions to bonding requirements, blowout prevention equipment requirements, welibore survey requirements. and well site seismic survey requirements to allow the drilling, testing and plugging of the Wainwright No. 1 exploratory gas well is not likely to result in waste of hydrocarbons, risk harm to human safety or the environment (e.g., from an explosion or fire), risk properly abandoning the well, or jeopardize the correlative rights of persons owning interests in adjoining or nearby tracts of land potentially affected by the proposed well. 3. The requirements of AS 31.05.030(j)(1)(A) do not apply. 4. Commission approval of the operator's requested exemptions conforms with AS 31.05.060(c)(1) and AS 31.05.060(c)(2). NOW, THEREFORE, IT IS ORDERED: 1- BLM's application for exceptions to the bonding requirements of 20 AAC 25.025, blowout prevention equipment requirements of 20 AAC 25.035, wellbore survey requirements of 20 AAC 25.050(a)(2), well site seismic survey requirements of 20 AAC 25.061(a). and gas detection requirements of 20 AAC 25.066 for the purpose of drilling, testing and plugging the Wainwright No. 1 exploratory gas well is granted. 2. This well may not be hydraulically fractured or tested for production without separate approval from the Commission. DONE at Anchorage, Alaska, and dated June 11, 2007. • -ti:r A 0 AL. 6 T n 1 John C. Nor :i , •!airman Alaska Oil an. Ga onservation Commission 4 • Daniel T. Seamount, Jr., Commissioner ti is.;�' •' ; ,,�..•; ; ._,r �����;, � Alaska Oil and Gas Conservation Commission AS 31.05 080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23' day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days The Commission can refuse an application by not acting on it within the l0 -day period A affected person has 30 days from th dat the Co ref the application or ma (or other distributes) an order upon rehearing both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30 -day period for appeal to Superior Court runs from the date on which the request is deemed denied (Le., 10` day after the application for rehearing was fled). • Page 1 of 2 Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Wednesday, May 07, 2008 3:36 PM To: Tom Mortensen Subject: Information Request Tom, I had the following request from a member of the public concerning the Wainwright test: 1. What is USGS planning to do with the produced water from the test? And, I'm sure the immediate follow up question will be: 2. How much water will be produced during the test? Could you please ask the USGS for this information and obtain their written permission for the AOGCC to release the information to the public? Could you also ask the USGS if any of the information related to the proposed Wainwright 3 to 9 exploratory wells and the testing program is considered confidential? If not, could AOGCC get written permission to release any or all of it to the public? Thanks, Steve Davies AOGCC 907793 -1224 From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Tuesday, May 06, 2008 2:03 PM To: Davies, Stephen F (DOA) Subject: Fwd: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Resent: Produced water, volumes, etc. Date: Tue, 06 May 2008 13:13:05 -0800 To: Steve Davies <steve.davies @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Cc: Arthur C Clark <aclark @usgs.gov >, Bob_Fisk @ak.blm.gov, Teresa Imm <timm @asrc.com >, Art Saltmarsh <art.saltmarsh @alaska.gov> Steve, This email is in response to your May 6th request for information regarding the following: The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. 5/29/2008 • • Page 2 of 2 Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes._ The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, Tom Mortensen 907 - 345 -5789 5/29/2008 • • Page 1 of 2 Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Tuesday, May 06, 2008 2:03 PM To: Davies, Stephen F (DOA) Subject: Fwd: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Resent: Produced water, volumes, etc. Date: Tue, 06 May 2008 13:13:05 -0800 To: Steve Davies <steve.davies @alaska.gov> From: Tom Mortensen <tom @mortensen.com> Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Cc: Arthur C Clark <aclark @usgs.gov >, Bob_Fisk @ak.blm.gov, Teresa Imm <timm @asrc.com >, Art Saltmarsh <art.saltmarsh @alaska.gov> Steve, This email is in response to your May 6th request for information regarding the following: The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. 5/29/2008 Page 2 of 2 In addition to the drilling flu there may be water produced from the al bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, Tom Mortensen 907 - 345 -5789 5/29/2008 • Page 1 of 2 Davies, Stephen F (DOA) From: Davies, Stephen F (DOA) Sent: Tuesday, May 06, 2008 1:57 PM To: Colombie, Jody J (DOA) Subject: FW: Public Notice Wainwright 3 -9 Wells Jody, FYI.... From: Davies, Stephen F (DOA) Sent: Tuesday, May 06, 2008 1:33 PM To: Birnbaum, Alan J (LAW) Subject: FW: Public Notice Wainwright 3 -9 Wells Alan, Mr. McCutcheon is requesting information for a testing program that is part of a permit to drill application that has not yet been approved by the Commission. Can I legally provide this information to him? Thanks, Steve D. From: Colombie, Jody J (DOA) Sent: Tuesday, May 06, 2008 9:58 AM To: Davies, Stephen F (DOA) Subject: FW: Public Notice Wainwright 3 -9 Wells Steve, please respond. From: jerry mccutcheon [mailto:susitnahydronow @yahoo.com] Sent: Monday, May 05, 2008 12:50 PM To: Colombie, Jody 3 (DOA) Subject: Re: Public Notice Wainwright 3 -9 Wells This is a notice of objection and a request for information. What are they going to do with the produced water? - -- On Mon, 5/5/08, Colombie, Jody J (DOA) <jody.colombie@alaska.gov> wrote: From: Colombie, Jody J (DOA) <jody.colombie @alaska.gov> Subject: Public Notice Wainwright 3 -9 Wells To: Date: Monday, May 5, 2008, 9:46 AM Special Staff Assistant to the Commission Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 907 - 793 -1221 Direct Line 5/29/2008 Page 2 of 2 Be a better friend, newshound, and know -it -all with Yahoo! Mobile. Try it now. 5/29/2008 • • Page 1 of 2 Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Tuesday, May 06, 2008 1:13 PM To: Davies, Stephen F (DOA) Cc: Arthur C Clark; Bob_Fisk @ak.blm.gov; Teresa Imm; Saltmarsh, Arthur C (DOA) Subject: Disposal of: Drill Cuttings, Drilling Fluids, Produced Water. Steve, This email is in response to your May 6th request for information regarding the following: The disposal of drill fluids and cuttings from proposed wells Wainwright #3 -9. The disposal of drill fluids, cuttings, and produced water from proposed well Wainwright #3. Drill cuttings and fluids. The drill cuttings solids will need disposal in the NSB landfill at Wainwright. The fluids and non - settleable solids will need disposal in the Wainwright sewage lagoon. During the drilling operation the drilling fluids will have cuttings removed and will be recirculated via a 1,000 gallon trailer- mounted shaker system incorporating shaker screens and centrifugal desilting cones. The cuttings and used drill mud will be contained in above - ground tanks. The ADEC Plan Review for the temporary storage of drill cuttings was submitted to ADEC today, May 6th. The following is the list of the bentonite drilling mud and additives. These will be part of the used drilling fluids that will require disposal. Quick -Gel high yield bentonite. Aqua -Gel bentonite. Pac -L and Pac -R powdered cellulose polymer. Pennetrol liquid detergent. Disposal Volumes. The estimated total amount of material from the seven wells is about 150,000 gallons. In addition to the drilling fluids there may be water produced from the coal bed during the planned 2008 production test. Depending on the amount of water produced (estimated between 1 and 5 gpm) and the duration of the test (one week to several months), there could be between 20,000 to 200,000 gallons. The produced water would need disposal in the sewage lagoon. The application for fluid disposal was submitted to ADEC on April 16, 2008. Regards, 5/29/2008 • • Page 2 of 2 Tom Mortensen 907 - 345 -5789 5/29/2008 • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Tuesday, May 06, 2008 12:35 PM To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) Subject: Wainwright CBM. Request to ADEC for Plan Review, cuttings. Letter Attached. Attachments: ADEC Request for Plan Review for Temp Cuttings Storage May 6, 2008.pdf; ATT2494141.txt EA ADEC Request for ATT2494141.bct Plan Review f... (252 B) Steve, Art: Attached is your copy of the letter sent to ADEC requesting a Plan Review for temp cuttings storage for the proposed CBM exploration wells at Wainright. Regards, Tom Mortensen 907 - 345 -5789 1 5/29/2008 9:53 AM • . TOM MORTENSEN ASSOCIATES, LLC ENVIRONMENTAL PERMITTING & MANAGEMENT P.O. Box 113192 ANCHORAGE, ALASKA 99511-3192 • TEL (907) 345 -5789 • FAx (907) 345 -3575 May 6, 2008 State of Alaska Department of Environmental Conservation Division of Environmental Health 555 Cordova Street Anchorage, AK 99501 Attn.: Lori Aldrich Reserve Pit Coordinator Re: Plan Review for Temporary Cuttings Storage. For Coal Bed Methane Exploratory Well Drilling, Wainwright, Alaska This letter is a request for a Plan Review for Temporary Cuttings Storage under 18 AAC 60.403 for the coal bed methane exploration drilling to be done in and near Wainwright during the summer of 2008. The purpose of the drilling is to evaluate the coal bed methane resource of the area to determine the potential for Wainwright of an energy alternative to the existing use of diesel fuel. The US Geological Survey in cooperation with the BLM and the Arctic Slope Regional Corporation will do the proposed exploration drilling. Tom Mortensen Associates LLC is responsible for the preparation and submittal of the applications to AOGCC and other agencies. The USGS has applied to the AOGCC for the permits to drill seven exploration wells for coal bed methane. The Locations of all seven wells are within or adjacent to the village of Wainwright. The AOGCC public notice period began on May 5 A copy of the notice is attached. For ease of review, the cuttings plan is first presented as responses to the applicable parts of 18 AAC 60.403, followed by a narrative description of the drilling program. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 1 of 9 i i 18 AAC 60.403(ax1)(A): the name, address, phone number, and affiliation of each person responsible for conducting the drilling activity; Arthur C. Clark U. S. Geological Survey Denver Federal Center P.O. Box 25046, MS 406 Denver, CO 80225 303 - 445 -4608 18 AAC 60.403(ax1 XB): the location and type of storage container; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. 18 AAC 60.403(aX1)(C): plans and material specifications to be used in the construction of any lined containment structure to be used for temporary storage; N/A 18 AAC 60.403(aX1KD): methods to be used to prevent the discharge of drilling waste leachate to the land or water of the state; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. 18 AAC 60.403(a)(1KE): the name and location of each facility to which stored drilling waste will be transferred; the use of a lined existing drilling waste disposal facility as a transfer location is acceptable under this subparagraph; All thin mud and water from drilling operations will be transported in a vac -truck and deposited in the Wainwright sewage lagoon. All solid waste from drilling operations (mud, cuttings. gravel. etc.) will be disposed of at the North Slope Borough's landfill at Wainwright. 18 AAC 60.403(aX1XF): the anticipated dates of storage and waste removal, and the location of the ultimate disposal of the drilling waste; By September 30, 2008 for wastes generated by drilling during 2008. By September 30, 2009 for wastes generated in 2009. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 2 of 9 • • 18 AAC 60.403(ax1XG): certification that the waste will be removed from the property within one year after completing the drilling operation; By September 30, 2008 for wastes generated by drilling during 2008. By September 30, 2009 for wastes generated in 2009. 18 AAC 60.403(aX2XA): a containment structure must be sized to contain all the waste and any anticipated precipitation that may accumulate in the area with a minimum of two feet of freeboard; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. The two foot of freeboard requirement will be maintained as required. 18 AAC 60.403(a)(3XA): conduct a visual site inspection to verify that all drilling waste has been removed from the site; and A visual inspection will be conducted to verify that all drilling waste has been removed from the site. 18 AAC 60.403(aX3)(B): submit written notification to the department within seven days after the final site inspection and provide information regarding A written notification will be submitted to the department within 7 days after the final seasonal inspection, which will provide drilling waste volume, and the final disposition of the transferred drilling waste for that year. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 3 of 9 • • Proiect Description and Overview The Alaska Rural Energy Project will be conducting a multi -well production test in Wainwright at the same location (Olgoonik Wareyard) as where exploration and testing activities occurfed in June -July 2007. All wells will be completed in an 8 ft coal seam encountered at a depth of -1242 to 1250 ft. The test array will consist of one central production well (10" hole with 6" steel.casing cemented to -1240 ft, 6" open -hole completion through the coal zone) and 5 monitor wells (6 hole with 2.5" PVC casing, 101% of slotted PVC screen in the coal, sand packed around screen, annular area grouted (abandonment bentonite) to land surface). See Figures 2 and 3 for diagram of well placement and spacing of wells #3- #9. Additionally, a separate well will be drilled at the Wainwright landfill. 6 inch steel surface casing will be set and cemented to a depth of -50 ft and a 6 inch open hole drilled to a depth of -2500-3000 ft. Geophysical logs (caliper, resistivity, gamma, density, sonic) will be run in the well which will then be plugged and abandoned with bentonite grout and cement. The following information will be gathered from these wells: • Lateral extent and continuity of individual coal.seams between original site and landfill site (- 2 miles) • Accurate determination of hydraulic conductivity and transmissivity • Hydraulic conditions bounding 1250' coal seam o Vertical and lateral leakage • Storage coefficient (amount of water to be produced) • Detailed produced water chemistry • Shape and orientation of permeability ellipse Drilling is scheduled to begin on or about June 1, 2008 and completed on or about August 10, 2008. The first well drilled will likely be the landfill well with the production test array to follow. Exact start and finish dates for each well cannot be accurately predicted at this time. It is anticipated that all drilling will be completed and wells installed by -July 15-20 with the production test occurring the week of July 21. Upon completion of the test, all wells will be reentered in 2008 and abandoned using abandonment grout and cement. Alternative Well Abandonment, 2009. An altemative to well abandonment in the summer of 2008 would be to leave the 2" PVC pressure monitor wells open for pressure - monitoring purposes over the winter, rather than plugging/abandoning at the end of a one -week test. The wells would be completed/isolated in the coal bed and hydraulically connected via slotted pipe at the bottom of the well as described in the Drilling Plan. Well abandonment would be done in late- spring or early - summer of 2009 rather than the summer of 2008. ADEC Plan Review for cuttings Storage May 6, 2008 Wainwright CBM Page 4 of 9 . • This alternative would leave the production well in an operational manner rath er t han plugging- abandoning at the end of the 2008 work as described. The offset well would be abandoned in 2008. Drlllino Plan Landfill Offset Well 1. Transport rotary rig and other equipment from Deadhorse to Wainwright . 2. Move equipment to landfill site. Drill 9 7/8" hole through surficial deposits to depth of -50'. Set and cement 6 5/8" schedule 40 steel surface casing. 3. Mud rotary 6" open hole (no core) to between 2500 and 3000 ft. 4. Conduct geophysical logs (caliper, gamma, resistivity, density, sonic) 5. Abandon well with abandonment bentonite grout and cement. Production Test Monitor Wells 1. Move equipment to Olgoonik wareyard to begin installing wells for production test. 2. Drill 9 7/8" hole through surficial deposits to depth of -50'. Set and cement 6 5/8" schedule 40 steel surface casing. 3. Mud rotary 6" open hole (no core) to 1260 ft. 4. Run geophysical Togs (density, gamma, resistivity) to confirm coal bed depth. 5. Install 2.5" schedule 80 PVC monitor well with 10' PVC 10 -slot screen at bottom. Sand -pack around screen, install bentonite pellet seal above sand, grout to surface using abandonment bentonite grout and cement. 6. Develop well using bailer and air lift methods. 7. Fill PVC well with 67/33% mixture of water /propylene glycol from 1100 ft to land surface. 8. Install pressure transducer. 9. Repeat steps 7 through 11 at four other locations. Production Test Well 1. Drill 14 3/4" hole through surficial deposits to depth of -50'. Set and cement 10 3/4" schedule 40 steel surface casing. 2. Mud rotary 9 7/8" open hole (no core) to 1240 ft. 3. Set and cement 6 5/8" schedule 40 steel surface casing to 1240 ft. 4. Mud rotary 6" hole to 1260 ft. 5. Develop well using bailer and air lift methods 6. Fill well with 75/25% mixture of water /propylene glycol from -1100 ft to land surface. 7. Install submersible pump, cable, pressure transducers etc. 8. Make surface connections, prepare equipment for pump test ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 5 of 9 . • Production Test Conduct 7-day production test. (see alternative testing and well abandonment described in the section: Decommission Wells in 2009, Altemative, below.) Decommission Wells 1. Remove pump and cable from production well. 2. Remove glycol from well. 3. Abandon well with abandonment bentonite grout and cement. 4. Reposition rig over observation well. 5. Remove glycol from well. 6. Abandon well with abandonment bentonite grout and cement. 7. Repeat steps 4 through 6 for remaining four monitor wells. Clean and Pack equipment. Transport equipment from Wainwright via barge. Decommission Wells in 2009, Altemative An altemative to well abandonment in the summer of 2008 would be to leave the 2" PVC pressure monitor wells open for pressure - monitoring purposes over the winter, rather than plugging /abandoning at the end of a one week test. The wells would be completed/isolated in the coal bed and hydraulically connected via slotted pipe at the bottom of the well as described in the Drilling Plan. Well abandonment would be done in late- spring or early - summer of 2009 rather than the summer of 2008. This alternative would leave the production well in an operational manner rather than plugging- abandoning at the end of the 2008 work as described. The offset well would be abandoned in 2008. Borehole Sampling Plan Landfill Offset Well During the drilling of the landfill offset well, mud -gas will be continuously monitored to detect the presence of hydrocarbons in the drill mud. Borehole cuttings will be collected, described, washed, and bagged at 10-ft intervals. Production Test Wells As continuous core was collected from the production test site during 2007 drilling operations, no samples will be taken during the drilling of the production test wells. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 6 of 9 • • Drillina Fluid Plan The hole will be drilled using standard fresh water bentonite drilling fluids. Additives to be used include (all listed products are NL Baroid trade names): • Quick -Gel high yield bentonite (hole stability, circulation control, clay -shale control) • Aqua -Gel bentonite (hole stability, circulation control, mud - density control) • Pac-L and Pac-R powdered cellulose polymer (clay -shale control, water loss, viscosity control) • Pennetrol liquid detergent (bit cleaning, control clay build up around bit face and teeth) Drill fluids will be monitored for viscosity, weight, and temperature on a full -time basis. Drilling fluids will have cuttings removed and will be recirculated via a 1000 gallon trailer - 9 9 9 mounted shaker system incorporating shaker screens and centrifugal desilting cones. Cuttings and used drill mud will be contained in above - ground tanks. At project's end, cuttings will be disposed of at the Wainwright landfill. The mud will be disposed of at Wainwright sewage lagoon. Rotary drilling and reaming operations will be conducted using a rig - mounted 5 W X 8" 350 gpm, duplex mudpump and a Gardner - Denver 5" x 6", 200 gpm, duplex mudpump. Well Closure Procedures During drilling and coring operations, aquifers will be protected by mixing bentonite and polymer additives in the drill mud specifically designed to seat and protect water - bearing strata. Encountering water bearing strata that could contain a useable aquifer is not expected since the drilling will be within the permafrost. Landfill offset well Upon completion of the landfill offset well, the well will be plugged from total depth to 100 ft below land surface (Ns) with an abandonment bentonite grout mixture mixed at land surface with a grout plant and pumped from the bottom up. The top 100 ft of the well will be filled with Arctic -blend cement. Production test monitor wells After drilling is completed, 2.5" schedule 80 flush -joint PVC casing and screen will be set in the well. The annular area between the well screen and the borehole wall will be filled with 8-12 silica sand using tremie placement methods to 20 ft above the top of the screen. A 10 ft layer of Y4" bentonite pellets will then be placed on top of the sand using tremie methods. The annular area from the top of the pellets to 100 bls will be filled with abandonment bentonite grout, mixed at land surface with a grout plant and pumped through tremie pipe ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 7 of 9 • • from the bottom up. The top 100 ft of the annular area will be filled with Arctic -blend cement. After well development, the PVC pipe will be filled with a 67133% mixture of water and propylene glycol from a depth of 1100 ft to land surface to prevent freezing during testing procedures. Upon completion of testing procedures, the PVC well will be filled with abandonment bentonite grout, mixed at land surface with a grout plant and pumped through tremie pipe from the bottom up, to a depth of 100 ft bls. The top 100 ft of the well will be filled with Arctic -blend cement. Production test well After drilling is completed to 1240 ft, 6 5/8" schedule 40 steel casing will be welded and set. Arctic -blend cement will then be mixed in a grout plant and pumped through tremie pipe into the annular area from 1240 -1000 ft bls. Abandonment bentonite grout will then be mixed and pumped from 1000 to 100 ft bls, and Arctic -blend cement mixed and pumped from 100 ft to land surface. After drilling a 6 hole below the casing to a depth of 1260 ft, the well will be developed, a submersible pump set, and the inside of the casing filled with a water /propylene glycol mixture to prevent freezing. After the pump test is completed, the pump will be pulled and the glycol removed from the well by pumping abandonment bentonite grout through 2" pipe from the bottom of the well to 100 bls. The top 100 ft of the well will be filled with Arctic -blend cement. Please contact me at 907 - 345 -5789 or via email at tom@mortensen.com if you have any questions, or require any additional information. Sincerely, 14;114-01.-- Thomas W. Mortensen attachments: AOGCC public notice MSDS sheets for: Penetrol Quids -Gel Aqua -Gel Pac -L Pac -R Propylene Glycol ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 8 of 9 • • cc: Steve Davies, AOGCC Art Saltmarsh, AOGCC Arthur C. Clark, USGS, Denver. Bob Fisk, BLM, Anchorage. Teresa Imm, ASRC, Anchorage. ADEC Plan Review for Cuttings Storage May 8, 2008 Wainwright CBM Page 9 of 9 i 1 TOM MORTENSEN ASSOCIATES, LLC ENVIRONMENTAL PERMITTING & MANAGEMENT P.O. Box 113192 ANCHORAGE, ALASKA 99511-3192 • TEL (907) 345 -5789 • FAX (907) 345 -3575 May 6, 2008 State of Alaska Department of Environmental Conservation Division of Environmental Health 555 Cordova Street Anchorage, AK 99501 Attn.: Lori Aldrich Reserve Pit Coordinator Re: Plan Review for Temporary Cuttings Storage. For Coal Bed Methane Exploratory Well Drilling, Wainwright, Alaska This letter is a request for a Plan Review for Temporary Cuttings Storage under 18 AAC 60.403 for the coal bed methane exploration drilling to be done in and near Wainwright during the summer of 2008. The purpose of the drilling is to evaluate the coal bed methane resource of the area to determine the potential for Wainwright of an energy alternative to the existing use of diesel fuel. The US Geological Survey in cooperation with the BLM and the Arctic Slope Regional Corporation will do the proposed exploration drilling. Tom Mortensen Associates LLC is responsible for the preparation and submittal of the applications to AOGCC and other agencies. The USGS has applied to the AOGCC for the permits to drill seven exploration wells for coal bed methane. The locations of all seven wells are within or adjacent to the village of Wainwright. The AOGCC public notice period began on May 5 A copy of the notice is attached. For ease of review, the cuttings plan is first presented as responses to the applicable parts of 18 AAC 60.403, followed by a narrative description of the drilling program. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 1 of 9 • • 18 AAC 60.403(ax1 NA): the name, address, phone number, and affiliation of each person responsible for conducting the drilling activity; Arthur C. Clark U. S. Geological Survey Denver Federal Center P.O. Box 25046, MS 406 Denver, CO 80225 303 - 445 -4608 18 AAC 60.403(aX1XB): the location and type of storage container; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. 18 AAC 60.403(aX1)(C): plans and material specifications to be used in the construction of any lined containment structure to be used for temporary storage; N /A. 18 AAC 60.403(aX1XD): methods to be used to prevent the discharge of drilling waste leachate to the land or water of the state; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. 18 AAC 60.403(a)(1)(E): the name and location of each facility to which stored drilling waste will be transferred; the use of a lined existing drilling waste disposal facility as a transfer location is acceptable under this subparagraph; All thin mud and water from drilling operations will be transported in a vac -truck and deposited in the Wainwright sewage lagoon. All solid waste from drilling operations (mud, cuttings. gravel. etc.) will be disposed of at the North Slope Borough's landfill at Wainwright. 18 AAC 60.403(aX1)(F): the anticipated dates of storage and waste removal, and the location of the ultimate disposal of the drilling waste; By September 30, 2008 for wastes generated by drilling during 2008. By September 30, 2009 for wastes generated in 2009. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 2 of 9 • 18 AAC 60.40 3(NN G a 1 : certification that the waste will be removed from the property ) within one year after completing the drilling operation; By September 30, 2008 for wastes generated by drilling during 2008. By for wastes September 30, 2009 fo generated in 2009. g 18 AAC 60.403(aX2XA): a containment structure must be sized to contain all the waste and any anticipated precipitation that may accumulate in the area with a minimum of two feet of freeboard; The surplus mud and drill cuttings will be stored on site in a steel waterproof lined container. The capacity of the container will be 10 to 20 cubic yards. The container may hold as much as 2,000 -4,000 gallons of mud and cuttings. The two -foot of freeboard requirement will be maintained as required. 18 AAC 60.403(a)(3XA): conduct a visual site inspection to verify that all drilling waste has been removed from the site; and A visual inspection will be conducted to verify that all drilling waste has been removed from the site. 18 AAC 60.403(a)(3)(B): submit written notification to the department within seven days after the final site inspection and provide information regarding A written notification will be submitted to the department within 7 days after the final seasonal inspection, which will provide drilling waste volume, and the final disposition of the transferred drilling waste for that year. ADEC Plan Review for Cuttings Storage May 6, 2008 Wainwright CBM Page 3 of 9 • • Davies, Stephen F (DOA) From: Tom Mortensen [tom @mortensen.com] Sent: Monday, May 05, 2008 4:47 PM To: Davies, Stephen F (DOA); Saltmarsh, Arthur C (DOA) Cc: Saltmarsh, Arthur C (DOA) Subject: Wainwright CBM. Request to ADEC for Exemption under ODPCP. Letter Attached. Attachments: ADEC ODPCP Exemption Request for Wainwright CBM May 5, 2008.pdf; ATT2446693.txt ADEC ODPCP ATT2446693.txt xemption Request f. (252 B) Steve, Art: Attached is your copy of the letter sent to ADEC requesting an exemption to the ODPCP and FR requirements for the proposed CBM exploration wells at Wainright. Regards, Tom Mortensen 907 - 345 -5789 1 5/29/2008 9:54 AM TOM MORTENSEN ASSOCIATES LLC • ENVIRONMENTAL PERMITTING & MANAGEMENT P.O. Box 113192 ANCHORAGE, ALASKA 99511-3192 • TEL (907) 345 -5789 • FAx (907) 345 -3575 May 5, 2008 State of Alaska, ADEC Division of Spill Prevention And Response, Industry Preparedness Program, Exploration Production & Refineries. 555 Cordova Street Anchorage, AK 99501 Attn.: Greg Gould, Environmental Program Manager Re: Request for Exemption from Oil Discharge Prevention and Contingency Plan and Financial Responsibility Requirements for Coal Bed Methane Exploratory Wells, Wainwright, Alaska This letter is a request for an exemption under the state ODPCP requirements and FR (financial responsibility) requirements for coal bed methane exploration drilling to be done in and near Wainwright during the approaching summer of 2008. The purpose of the drilling is to evaluate the coal bed methane resource of the area to determine the potential for Wainwright of an energy alternative to the existing use of diesel fuel. The proposed exploration drilling will be done by the US Geological Survey in cooperation with the BLM and the Arctic Slope Regional Corporation. Tom Mortensen Associates LLC is responsible for the preparation and submittal of the applications to AOGCC and other agencies. The USGS has applied to the AOGCC for the permits to drill seven exploration wells for coal bed methane. The locations of all seven wells are within or adjacent to the village of Wainwright. In addition to these seven wells, this requested exemption is for all coal bed methane drilling within 4,000 feet of the surface that may occur within Sections 25 and 25, Ti 5N R32W UM, and Sections 7 and 8, T15N R31 W UM. The AOGCC public notice period began on May 5 A copy of the notice is attached. Request for Exemption from ADEC May 5, 2008 ODPCP and FR Requirements. Page 1 of 3 Wainwright CBM • Alaska Statute AS 46.04.030(b) requires that exploration facilities must have an ADEC approved oil discharge prevention and contingency plan (ODPCP). AS 46.04.040(b) requires that exploration facilities have proof of financial responsibility (FR) approved by ADEC. AS 46.04.050 states that the provisions of AS 46.04.030 and AS 46.04.040 do not apply to a natural gas exploration if the AOGCC determines that the wells will not penetrate a formation capable of flowing oil to the ground surface. The AOGCC determined last ear that the Wainwright No.1 CBM exploratory well Y 9 p rY was very unlikely to encounter formations capable of flowing oil to the ground surface. In fact, no oil was encountered during the 2007 CBM drilling at Wainwright. Based upon AOGCC's evaluation and determination in June 2007, ADEC found in a letter dated June 29, 2007 (copy attached) that the Wainwright No.1 exploratory well would not encounter liquid hydrocarbons and therefore met the standards for exemption as a natural gas exploration facility under AS 46.04.050(c) and was exempt from ODPCP and FR requirements found in AS 46.04.030 and AS 46.04.040. Also attached for your review are the following documents: 1) Letter dated June 25, 2007 from AOGCC to ADEC: Subject: Determination Associated with Potential Oil Spill Contingency Plan Exemption for the Wainwright No.1 Coal Bed Methane Gas Exploration Well, Community of Wainwright, Alaska. 2) Letter dated June 29, 2007 from ADEC Division Of Spill Prevention and Response Industry Preparedness Program, Exploration Production & Refineries to AOGCC. Subject: Exemption from Oil Discharge Prevention and Contingency Plan and Financial Responsibility Requirements for Wainwright No.1 Coal Bed Methane Exploratory Well, Wainwright, Alaska. 3) AOGCC Conservation Order No. 582, June 11, 2007. Request for Exemption from ADEC May 5, 2008 ODPCP and FR Requirements. Page 2 of 3 Wainwright CBM • • Please contact me at 907 -345 -5789 or via email at tom@mortensen.com if you have any questions, or require any additional information. Sincerely, 40t w s�-- Thomas W. Mortensen attachments: as stated. cc: Steve Davies, AOGCC Art Saltmarsh, AOGCC Arthur C. Clark, USGS, Denver. Bob Fisk, BLM, Anchorage. Teresa Imm, ASRC, Anchorage. Request for Exemption from ADEC May 5, 2008 ODPCP and FR Requirements. Page 3 of 3 Wainwright CBM S =TATE Augu SARAH PALIN, GOVERNOR ALASKA OIL AND GAS 333 W. 7th AVENUE, SUITE 100 CONSERVATION COMMISSION ANCHORAGE, ALASKA 99501 -3539 ►7ri • ii PHONE (907) 279 -1433 FAX (907) 276 -7542 June 25, 2007 LJ Ms. Lydia Miner I" Exploration, Production & Refineries Section Manager Alaska Department of Environmental Conservation 555 Cordova Street -� Anchorage, AK 99501 Re: Determination Associated with Potential Oil Spill Contingency Plan Exemption for the Wainwright No. 1 Coal Bed Methane Gas Exploration Well, Community of Wainwright, Alaska Dear Ms. Miner, On June 18, 2007, you requested (under AS 46.04.050(c)) that the Alaska Oil and Gas Conservation Commission ("Commission ") provide a determination regarding whether the U.S. Bureau of Land Management's ("BLM") Wainwright No. 1 coal bed methane gas exploration well ( "Wainwright No. 1"), which is located within the community of Wainwright, Alaska, is likely to encounter formations capable of flowing oil to the ground surface. This determination is needed so that the Alaska Department of Environmental Conservation can decide whether to exempt Wainwright No. 1 from the requirements of AS 46.04.030 and AS 46.04.040, pertaining to oil discharge prevention and contingency plans and proof of financial responsibility. Determination Based on geologic information submitted by BLM and the U.S. Geological Survey ( "USGS ") and in the Commission's files, the Commission concludes that Wainwright No. 1 is very unlikely to encounter formations capable of flowing oil to the ground surface. Discussion Wainwright No. 1 is located in governmental section 24 of T15N, R32W, Umiat Meridian, within the community of Wainwright, Alaska. As planned, Wainwright No. 1 will be less than 4,000 feet measured depth,' and it will help USGS scientists determine whether subsurface coal seams are present and, if so, how thick they are and how much gas they contain. All depths are measured depths unless otherwise noted. Wainwright 1 Determination June 25, 2007 • • Page 2 Wainwright 1 will be offset by three existing wells: Tunalik No. 1, which is 37 miles southwest; Peard Test No. 1, which is 25 miles east; and Kugrua No. 1, which is 30 miles southeast. See Figure 1, below. Commission well records for each of these wells were examined for evidence of liquid hydrocarbons. Pt. Barrow , /' ChU kchi Sea � U tri ! .cf Wainwright No. 1 6Peard ` Test No. 1 ' :'' 1,1 0 e Yr • 4j Kugrua No. 1 L ,g , Tu alik No. 1 0 $ 0 v � t ti mamas f iles r Figure 1. Index Map Tunalik No. 1 Tunalik No. 1 is a nearly vertical exploratory well that, from November 1978 to January 1980, was drilled to 20,335 feet (20,211 feet true vertical depth) and plugged and abandoned. The mud log recorded during drilling begins at 85 feet and continues to total depth. The first indication of methane gas ( "C 1") occurred in the drill cuttings at 360 feet, and the first significant Cl in the drilling mud was found at 1,070 feet. The shallowest occurrences of ethane ( "C2 "), propane ( "C3 "), butane ( "C4 ") and pentane ( "C5 ") were trace amounts that occurred at 4,110 feet. The shallowest significant amounts of C2, C3, C4 and C5 occurred at 6,010 feet, 6,070 feet, 7,940 feet and 7,945 feet, respectively. The shallowest oil indicators were a trace of sample fluorescence (identified under ultraviolet light) and a trace solvent cut associated with a crushed sample from 4,110 feet. Other trace occurrences of sample fluorescence were recorded for samples from 4,600 feet, 5,030 feet, 5,140 feet, 5,175 feet, 5,250 feet, 5,460 feet, and 5,670 feet, but the mud logger's brief sample descriptions do not mention any associated oil staining. None of these trace occurrences were marked as oil shows on the mud log. The only oil show indicated on the mud log is a trace of sample cut fluorescence from 11,510 feet to 11,520 feet, but the log does not mention oil staining in conjunction with this fluorescence. The well -site geologist's report describes two very poor residual oil shows from 4,108 feet to 4,126 feet and from 4,607 feet to 4,612 feet in sandstone and siltstone assigned to the Nanushuk Group. These "shows" consisted of trace to slight amounts of sample fluorescence, associated with very faint to slight solvent cuts. In addition, the report notes the presence of "numerous Wainwright 1 Determination June 25, 2007 • Page 3 shows" in most sandstone beds within the interval from 5,030 feet to 5,935 feet; however, it also states: "Most or all of these shows are judged to be residual and of no economic importance .. . ." Finely disseminated, black tarry residue was described within the pore space from 12,549 to 12,557 feet, but "[n]o fluorescence or cut was observed from this residual oil." The well was not tested for hydrocarbons. Kugrua No. 1 Kugrua No. 1 is a vertical exploratory well that was drilled to 12,588 feet and plugged and abandoned from February to May of 1978. The mud log begins at 93 feet and continues to total depth. C 1 first occurs in mud and cuttings at a depth of 160 feet. C2, C3 and C4 were initially encountered in very small to trace amounts from 1,860 feet to 1,875 feet and continued to occur sporadically downward from that depth. Significant quantities were not recorded until 3,700 feet. C5 was not recorded in the drilling mud. Trace amounts of C5 were measured in drill cuttings at 7,670 feet, and C5 was abundant in the drill cuttings at 7,830 feet. Traces of hydrogen gas were reported at 10,430 feet, 10,485 feet and 12,275 feet. Hydrogen sulfide gas ( "H2S ") was reported from 11,550 feet to 11,700 feet and again at 12,375 feet. H reached a maximum concentration of 57.5 ppm at 11,680 feet. Oil fluorescence was noted in samples from 220 feet to 250 feet, 2,080 feet to 2,150 feet, and 6,645 feet to 6,690 feet, but mostly in trace amounts. Oil stain was not reported in conjunction with any of these occurrences of fluorescence. Tar staining and tar were reported in sandstone samples from 6,170 feet and 6,200 feet, and possibly from 7,180 feet. Traces of "heavy oil tar" were recorded at 8,760 feet. No oil shows are marked on the mud log. The well completion report describes "some dead oil staining" associated with Torok sandstone between 3,320 feet and 6,890 feet. But the Geologic Summary from the final well report states: "No oil shows were encountered in drilling the well." The well was not tested for hydrocarbons. Peard Test Well No. 1 Peard Test Well No. 1 is a vertical exploratory well that was drilled to 10,225 feet and plugged and abandoned between January and April of 1979. The mud log begins at 88 feet and continues to total depth. C 1 first occurs in the drilling cuttings and mud at 215 feet and 275 feet, respectively. Trace amounts of helium were first encountered at 2,190 feet. C2 and C3 were initially recorded in trace amounts at 3,065 feet and continued to occur sporadically downward from that depth. C2 was not measured in significant amounts until 3,410 feet, and C3 was not measured in significant amounts until 4,230 feet. C4 and C5 were initially encountered at 4,460 feet and 6,165 feet, respectively. Helium was reported in abundant quantities at 4,910 feet. Oil fluorescence was noted in samples from 220 feet to 250 feet, 2,080 feet to 2,150 feet, and 6,645 feet to 6,690 feet, but mostly in trace amounts. No oil shows are recorded on the mud log. The well -site geologist's report indicates no oil shows were encountered. Oil is only mentioned once in the report: some partial oil staining of conventional core recovered from the Sag River Formation between 8,451 feet and 8,481 feet. The well was not tested for hydrocarbons. Wainwright 1 Determination June 25, 2007 • Page 4 Structural Position Wainwright No. 1 will lie up -dip of the Tunalik No. 1 well, and slightly down -dip of Peard Test Well No. 1 and Kugrua No. 1. None of these wells encountered mobile oil. Conclusions Only trace amounts of residual oil were encountered in the three exploratory wells that are nearest to the proposed Wainwright 1 location. There are no indications of mobile oil in any of the records for these wells. Therefore, pursuant to AS 31.05.030(1), the Commission has determined with reasonable certainly that the Wainwright No. 1 exploratory well will not encounter formations capable of flowing oil to the ground surface. Please call Steve Davies at (907) 793 -1224 if you have any questions or need additional information. 1, oi . o•. h. irman cc: Spill Response Planning Standards File Gary Evans, ADEC n ,� I hh �, r A ! 1 4 U J �`, i n i; G \ SARAH FAUN, GOVERNOR ; ; ► �rl 1s cJ a � r LI r I 555 Cordova Street Anchorage, AK 99501 DEPT. OF ENVIRONMENTAL CONSERVATION / PHONE: (907) 269 -3094 DIVISION OF SPILL PREVENTION AND RESPONSE 1 FAX: (907) 269 -7687 INDUSTRY PREPAREDNESS PROGRAM http: / /www.dec.state.ak.us Exploration Production & Refineries June 29, 2007 File No: 305.05 BLM Wainwright CBM Ms. Beth Maclean, Geologist US Department of Interior, Bureau of Land Management 222 West 7 Avenue, Suite 13 Anchorage, AK 99513 -7504 Subject: Exemption from Oil Discharge Prevention and Contingency Plan and Financial Responsibility Requirements for Wainwright No. 1 Coal Bed Methane Exploratory Well, Wainwright, Alaska Dear Ms. Maclean: It is my understanding that the U.S. Bureau of Land Management (BLM) intends to drill an exploration well to test for coal bed methane (CBM) near Wainwright, Alaska. I became aware of the plans to drill this well when I received a copy of the permit to drill issued by the Alaska Oil and Gas Conservation Commission (AOGCC) on June 16, 2007. When I phoned your office to discuss this, I spoke to your colleague, Bill Deal, who provided information regarding the and timing purpose g of the well. Please be aware that Alaska Statute AS 46.04.030(b) requires that exploration facilities in the state must have an Alaska Department of Environmental Conservation (ADEC) approved oil discharge prevention and contingency plan (ODPCP); AS 46.04.040(b) requires that exploration facilities have proof of financial responsibility (FR) approved by ADEC. AS 46.04.050 states that the provisions of AS 46.04.030 and AS 46.04.040 do not apply to a natural gas exploration facility if the AOGCC determines that the wells at natural gas exploration facility will not penetrate a formation capable of flowing oil to the ground surface. BLM should have made a request for an exemption from the ODPCP and FR requirements. • Once I learned that the drilling program was testing for CBM, I asked AOGCC if their staff could issue a determination regarding the likelihood that the wells would not penetrate a formation capable of flowing oil to the surface, even though ADEC had not received a request for exemption from BLM, in order to expedite the review and approval process. On June 28, 2007, ADEC received a determination from AOGCC that the Wainwright No. 1 CBM exploratory well is very unlikely to encounter formations capable of flowing oil to the ground surface. Rec,ricd t Ms. Beth Maclean, Geolo 2 June 29, 2007 US Department of Interior, Bureau of Land Management AOGCC made its determination based on geologic information submitted by BLM, USGS, and AOGCC well files. Wainwright No. 1 is located in Section 24, T15N, R32W, Umiat Meridian. The well will be less than 4000 feet measured depth and will help USGS scientists determine whether subsurface coal seams are present, and if so, their thickness and how much gas they contain. AOGCC well records from Tunalik No. 1, Peard Test No. 1, and Kugrua No. 1 were examined for evidence of liquid hydrocarbons. None of these wells encountered mobile oil. Only trace amounts of residual oil were encountered in these three wells. Based upon AOGCC's evaluation and determination, ADEC hereby finds that the Wainwright No. 1 exploratory well will not encounter liquid hydrocarbons and therefore meets the standards for exemption as a natural gas exploration facility under AS 46.04.050(c) and is exempt from ODPCP and FR requirements found in AS 46.04.030 and AS 46.04.040. Be advised that should BLM penetrate a formation capable of flowing oil to the ground surface during the drilling of this well, operations must immediately be suspended and ADEC must be immediately notified. You must obtain ODPCP and FR approval by ADEC prior to proceeding. This exemption does not relieve BLM of the responsibility for securing other federal, state or local approvals or permits. You are still required to comply with all other applicable laws. APPEAL: This is a final decision. Aggrieved persons with standing may appeal this decision to the Alaska Superior Court within 30 days as provided by the Alaska Rules of Appellate Procedure. I appreciate the cooperation and assistance provided by AOGCC staff in making their determination so quickly. If BLM plans other exploration projects, please be mindful of Alaska statutes described in this letter. I would happy to discuss this issue with you or others at BLM at any time. If you have any questions, please contact me at 269 -7680. Sincerely, Lydia Miner Section Manager cc: Betty Schorr, IPP Manager, ADEC Steve Davies, AOGCC Chris Pace, ADEC, Juneau Johnny Aiken, North Slope Borough Planning Director • • Page 1 of 2 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Monday, April 21, 2008 11:47 AM To: Tom Mortensen'; Davies, Stephen F (DOA) Subject: RE: Wainwright CBM Exploration BLM /USGS. Question regarding annular cement. Tom, There are several requirements in 20 AAC 25.030 regarding cement properties (non - freezing in permafrost) and volume (`cement° to surface) for surface casing. It is my opinion that successfully cementing and grouting the PVC string as you plan should meet the regulatory requirements. Tom Maunder, PE AOGCC From: Davies, Stephen F (DOA) Sent: Monday, April 21, 2008 11:34 AM To: Tom Mortensen Cc: Maunder, Thomas E (DOA) Subject: RE: Wainwright CBM Exploration BLM /USGS. Question regarding annular cement. Tom, Tom Maunder will respond to your questions conceming cementing and grouting. Thanks, Steve Davies AOGCC 793 -1224 Tom Mortensen mailto:tom mortensen.com From: To o [ @ l Sent: Monday, April 21, 2008 10:06 AM To: Davies, Stephen F (DOA) Cc: Maunder, Thomas E (DOA) Subject: Wainwright CBM Exploration BLM /USGS. Question regarding annular cement. Steve, The permit to drill applications will be submitted tomorrow. Only awaiting the arrival of signed applications via fedex. I wanted to be sure that the following technique was OK before the applications are submitted, and before final bentonite & cement orders are placed. Tom Mortensen 907 - 345 -5789 Project: 6/4/2008 • • Page 2 of 2 Wainwright. CBM Exploration. BLM -USGS. Tom Production Test Well. Description: When the 6 5/8" steel casing is set to 1,240 ft in the 10 inch production well borehole, the plan is to use Arctic -blend cement in the annular area outside the casing from 1,240'- 1,000', then high - solids abandonment bentonite grout from 1000' -100', then Arctic cement from 100' -land surface. Abandonment bentonite grout sets up as a pliable rather than as a rigid solid, and does a better job of sealing than cement. It's the understanding that AOGCC has approved this use it in the past for PVC wells. Question: Is this acceptable, that cement won't be used for the full annular thickness? Timing of response: The cement and bentonite purchases are being finalized today and tomorrow, and we and need to be sure of what's acceptable before doing so. 6/4/2008 • • Page 1 of 2 Maunder, Thomas E (DOA) From: Maunder, Thomas E (DOA) Sent: Friday, April 11, 2008 2:34 PM To: Tom Mortensen Cc: Davies, Stephen F (DOA) Subject: RE: Wainwright CBM Exploration BLM /USGS. Tom, Thanks for the information. It would appear that similar installations have been done elsewhere and to greater depths. I have added a few dimensional items in the procedure. As Steve Davies noted to you, a separate permit is required for each well. It should be submitted in duplicate using the 401 form available on our web site. These documents must be submitted hard -copy with appropriate signatures. If you are to sign the documents, then a letter from USGS should be included with that authorization. It is our practice to mail the document to the address provided on the 401. If delivery to another address or if they desire you to pick them up, that should also be specified. Tom Maunder, PE AOGCC From: Tom Mortensen [mailto:tom @mortensen.com] Sent: Friday, April 11, 2008 2:16 PM To: Maunder, Thomas E (DOA) Subject: Wainwright CBM Exploration BLM /USGS. Tom, This email is a follow up to my two phone calls to you this morning regarding the proposed CBM drilling and monitoring wells at Wainwright. The following is a description of the monitoring wells. After the description is additional information that I received this afternoon from the USGS in Denver regarding the pressure monitoring wells and the PVC pipe. Production Test Monitor Wells 1. Move equipment to Olgoonik wareyard to begin installing wells for production test. 2. Drill 9 7/8" hole through surficial deposits to depth of —50'. Set and cement 6 5/8" schedule 40 steel surface casing. 3. Mud rotary 6" open hole (no core) to 1260 ft. 4. Run geophysical logs (density, gamma, resistivity) to confirm coal bed depth. 5. Install 2.5" schedule 80 PVC monitor well with 10PVC 10 -slot screen at bottom. Sand - pack around screen, install bentonite pellet seal above sand, grout to surface using abandonment bentonite grout and cement. 6. Develop well using bailer and air lift methods. 7. Fill PVC well with 67/33% mixture of water /propylene glycol from 1100 ft to land surface. 8. Install pressure transducer. 9. Repeat steps 7 through 11 at four other locations. 6/4/200R 'NV PI • • Page 2 of 2 Additional Information, PVC ipe, cement. The tensile strength of 2.5" schedule 80 PVC is 2,125 ft vertical suspension in a dry hole. In a fluid - filled hole, it is considerably higher. USGS has used this exact pipe as monitor well casing to depths in excess of 2500 ft in New Mexico. Maximum external pressure differential is —340 psi, maximum internal pressure differential is —670 psi. Wall thickness is .276 ", weight is 1.46 lbs /ft. The bentonite grout never sets up as a true solid. Rather, it sets up to a jelly -like consistency that retains its low -perm characteristics even when frozen. The concrete used is Arctic cement blended in Fairbanks for NS conditions by Haliburton. Tom, thank you for your attention to this. Regards, Tom Mortensen 907 - 345 -5789 6/4/2008 i 0 TRANSMITTAL LETTER CHECKLIST WELL NAME UC./a <'(. (,(,)Y< G� PTD# L.C-DS r 0 77 Development Service Y Exploratory Stratigraphic Test Non-Conventional Well FIELD: . i 7 7 / 4 POOL: Circle Appropriate Letter / Paragraphs to be Included in Transmittal Letter CHECK ADD -ONS WHAT (OPTIONS) TEXT FOR APPROVAL LETTER APPLIES MULTI LATERAL The permit is for a new wellbore segment of existing well (If last two digits in Permit No. , API No. 50- - - API number are between 60 -69) Production should continue to be reported as a function of the original API number stated above. PILOT HOLE In accordance with 20 AAC 25.005(0, all records, data and logs acquired for the pilot hole must be clearly differentiated in both well name ( PH) and API number (50- - - ) from records, data and logs acquired for well . SPACING The permit is approved subject to ..._:...!. o fiance with 20 AAC EXCEPTION 25.055. Approval to perforate an . roduce in'ect is contingent upon issuance of a conservation or. er approving a spacing exception. ' 7 .4_ Z.4 `j ` �j assumes the liability of any protest to the sping exception that may occur. tZry DRY DITCH All dry ditch sample sets submitted to the Commission must be in SAMPLE no greater than 30' sample intervals from below the permafrost or from where samples are first caught and 10' sample intervals through target zones. Non - Conventional Please note the following special condition of this permit: j Well production or production testing of coal bed methane is not allowed ✓ for (name of well) until after (Company Name) has designed and implemented a water well testing program to provide baseline data on water quality and quantity. (Company Name) must contact the Commission to obtain advance approval of such water well testing program. 4�. \kyk - ve cleat 'n(rt h7 ,ly wS <A w9.9- Rev: 1/11/2008 ;_ - (Ct Le- Cl e-e-- C(.. 644. List Field & Pool - - WAINWRIGHT 9 — —_ - -- Program EXP Well bore seg [,�, Well Name: ' - PTD #: 2080770 Company U S DEPT OF INTERIOR Initial Class/Type EXP / PEND GeoArea 890 —__ -.. Unit On /Off Shore On Annular Disposal 1 Administration 1 Permit fee attached NA 2 Lease number appropriate No No lease involved: BLM land. SPACING EXCEPTION REQUIRED because of nearby coastline (state - federal bou 3 Unique well name and number Yes 4 Well located in a defined pool No Exploratory coalbed methane well. 5 Well located proper distance from drilling unit boundary _ Yes SPACING EXCEPTION REQURED due to coastline, which is -500' to NW. 6 Well located proper distance from other wells Yes Nearest wells are Wainwright 1 and 2, about 1.9 miles to the southwest. j l 7 Sufficient acreage available in drilling unit Yes 8 If deviated, is wellbore plat included NA Vertical well 1 9 Operator only affected party No Landowner is BLM; state acreage lies about -1400' away (coastline) '10 Operator has appropriate bond in force No WAIVER REQUESTED from bonding requirements. 0 111 Permit can be issued without conservation order No 12 Permit can be issued without administrative approval Yes Appr Date 1 13 Can permit be approved before 15 -day wait No SFD 6/5/2008 14 Well located within area and strata authorized by Injection Order # (put IO# in comments) (For NA 15 All wells within 1/4 mile area of review identified (For service well only) NA Exploratory well for CBM. Per CO.582, Wainwright. Village water supply is surface source, permafrost is _ • 1 I 16 Pre- produced injector: duration of pre - production less than 3 months (For service well only) NA -1000' thick, and this well is located within the sanitary land fill. No freshwater aquifers here will serve 17 Nonconven. gas conforms to AS31.05.030(j.1.A),(j.2.A -D) NA or will serve as sources of drinking water. 118 Conductor string provided Yes 6 -5/8" @ 80'. Engineering 119 Surface casing protects all known USDWs NA Well will be drilled and abandoned. Open hole to fully filled with abandonment grout/cement. :20 CMT vol adequate to circulate on conductor & surf csg Yes 21 CMT vol adequate to tie -in long string to surf csg NA 122 CMT will cover all known productive horizons Yes 23 Casing designs adequate for C, T, B & permafrost Yes 24 Adequate tankage or reserve pit Yes 25 If a re- drill, has a 10 -403 for abandonment been approved NA 26 Adequate wellbore separation proposed Yes 27 If diverter required, does it meet regulations Yes Will employ rotating head. Rotating head will protect driller's area and divert flow. 128 Drilling fluid program schematic & equip list adequate Yes Expected formation pressures 9.0 - 9.8 EMW. Provision to weight up to 10.5 ppg if needed. Appr Date 29 BOPEs, do they meet regulation NA BOP is not planned for this surface hole section. Exception_ requested. TEM 6/4/2008 30 BOPE press rating appropriate; test to (put psig in comments) _ NA �t l- 131 Choke manifold complies w /API RP -53 (May 84) _ NA 32 Work will occur without operation shutdown Yes 33 Is presence of H2S gas probable No 34 Mechanical condition of wells within AOR verified (For service well only) NA 35 Permit can be issued w/o hydrogen sulfide measures Yes None encountered in Wainwright 1 or 2, which were drilled thru same section about 2 miles away. Geology 36 Data presented on potential overpressure zones Yes None anticipated based on Wainwright 1 Wainwright 2, Tunalik 1, Kugrua 1, Peard Bay 1, and seismic data. 137 Seismic analysis of shallow gas zones Yes Wainwright 1 and 2 and offset seismic data do not indicate the presence of shallow gas. Appr Date 38 Seabed condition survey (if off- shore) NA SFD 4/30/2008 39 Contact name /phone for weekly progress reports [exploratory only] Yes Art Clark, USGS, 303 - 236 -5793 Geologic Engineering abb Date: Date Date Commissioner. Cos fission r: e� �•ner
