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Home My WebLink AboutAEO 015 • • Aquifer Exemption Order No. 15 Kenai Loop 1. March 13, 2012 Buccaneer Alaska Operations, LLC Application for Freshwater Aquifer Exemption 2. April 15, 2012 Notice of Hearing, Affidavit of publication, bulk mail list, email list 3. Emails 4. May 22, 2012 Hearing Sign -In Sheet 5. May 17, 2012 Transcript 6. October 12, 2012 EPA's concurrence with AOGCC findings regarding AEO 15 7. November 2, 2012 AOGCC corrected pp request for approval of AEO 15 to EPA q 8. November 27, 2012 EPA approval of AEO 15 Aquifer Exemption Order No. 15 • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Buccaneer Alaska ) Docket Number: AEO -11 -01 Operations LLC for an Aquifer Exemption ) Aquifer Exemption Order No. 15 Order for the Kenai Loop Field in Townships ) 5 and 6 North, Range 11 West, Seward ) Sterling and Beluga Formations Meridian, in conformance with 20 AAC ) Kenai Loop Field 25.440. ) Kenai Peninsula Borough, Alaska ) October 22, 2012 NOTICE CLOSING DOCKET BY THE COMMISSION: The Commission has the closed the Docket in the above captioned matter. ENTERED AND EFFECTIVE at Anchorage, Alaska and this 22nd day of October, 2012. BY DIRECTION OF THE COMMISSION _ 0 fl / Jol J. Col.' bie S ial Assytant to the Commission STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Buccaneer Alaska ) Docket Number: AEO -11 -01 Operations LLC for an Aquifer Exemption ) Aquifer Exemption Order No. 15 Order for the Kenai Loop Field in Townships ) CORRECTED 5 and 6 North, Range 11 West, Seward ) Meridian, in conformance with 20 AAC ) Sterling and Beluga Formations 25.440. ) Kenai Loop Field ) Kenai Peninsula Borough, Alaska ) November 28, 2012 IT APPEARING THAT: 1. By application received March 16, 2012, Buccaneer Alaska Operations LLC (Buccaneer), operator of the Kenai Loop Field, requested an order from the Alaska Oil and Gas Conservation Commission (AOGCC) exempting aquifers in the Sterling and Beluga Formations, within the Kenai Loop Field, Kenai Peninsula Borough, Alaska. 2. In accordance with 20 AAC 25.540, notice of opportunity for a public hearing was published in the Alaska Journal of Commerce on April 15, 2012. In addition, on April 10, 2012 the AOGCC published that notice of opportunity for public hearing on the State of Alaska Online Public Notices website, on the AOGCC' s website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC' s mailing distribution list. The tentatively scheduled hearing date was May 17, 2012, but the hearing was subsequently rescheduled to May 22, 2012. 3. The AOGCC has authority to issue an aquifer exemption. 20 AAC 25.440. 4. The AOGCC held the May 22, 2012 hearing despite not receiving any comments, protests or requests for a public hearing. Buccaneer provided testimony, and the hearing record was left open to allow Buccaneer to respond to questions from the AOGCC. 5. The AOGCC requested clarification of certain items on May 31, 2012. Buccaneer provided responses on June 5, 2012 and July 5, 2012. 6. The information submitted by Buccaneer and public well history records for the Kenai Loop #3 well are the basis for this order. FINDINGS: 1. Operator: Buccaneer operates the Kenai Loop Field, which is located within the limits of the City of Kenai, Kenai Peninsula Borough, Alaska. Aquifer Exemption Order 15 November 28, 2012 Page 2 of 5 2. Extent of Proposed Aquifer Exemption Area: The exemption area proposed in Buccaneer's Request for Freshwater Exemption lies within the Kenai Loop Field, and is described as: T5N, R11W, S4: NW1/4 NW1/4, NE1/4 NW1/4, NW1/4 NE1/4, Seward Meridian (SM); T5N, R11W, S5: NE1/4 NE1/4, SM; T6N, R11W, S28: SW1/4 SW1/4, SE1/4 SW1/4, SW1/4 SE1/4, SM; T6N, R11W, S29: SE' /4 SE1/4, SM; T6N, R11W, S32: NE1/4, SE 1/4, SM; and T6N, R11W, S33: All, SM. 3. Affected Strata: Buccaneer's request for freshwater aquifer exemption is for those portions of the Sterling and Beluga Formations that are stratigraphically equivalent to the interval from 3,980 to 7,539 feet measured depth (MD) in well Kenai Loop #3. These measured depths are equivalent to 3,961 and 7,191 feet true vertical depth (TVD). 4. Geology: The proposed exempted aquifers are Tertiary -aged, fluvial- derived reservoir and non - reservoir deposits assigned to the Kenai Group. This group is subdivided into (in descending order) the Sterling, Beluga, Tyonek, Hemlock, and West Foreland Formations. These formations account for most of the commercial oil and gas production in the Cook Inlet Basin. The proposed exempted aquifers lie in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3,980 feet (3,961 feet TVD) and 7,539 feet MD (7,191 feet TVD). Upper confinement for the proposed exempted interval consists of several laterally continuous, tuffaceous claystone and siltstone layers and thin coal seams that lie between 3,065 feet MD / TVD and 3,980 feet MD (3,961 feet TVD) and assigned to the lower Sterling Formation. Several laterally persistent, tuffaceous siltstone, claystone and thin coal layers that will arrest upward fracture growth and provide additional upper confinement for injected fluids lie between 5,453 feet (5,289 feet TVD) and 5,720 feet (5,530 feet TVD) that lie within the uppermost Beluga Formation. Buccaneer's planned injection interval lies in the Beluga Formation between 5,721 feet (5,531 feet TVD) and 7,025 feet (6,704 feet TVD). Such a large interval is planned because the Beluga Formation typically has a low net - sand -to- gross - thickness ratio. This formation generally consists of scattered fluvial sandstone layers encased in relatively impermeable siltstone, claystone and coal. Lower confinement and fracture - arrest will be provided by numerous, laterally continuous tuffaceous claystone, and siltstone layers and thin coal seams that are common between 7,026 feet (6,705 feet TVD) and 7,539 feet (7,191 feet TVD) and 1 All depth- and thickness- related footages presented herein for the proposed exempted interval and the associated confining intervals refer to the Kenai Loop #3 well. 2 See Levinson, R. A., 2011, Beluga River Gas Field, Cook Inlet, Alaska, in 2011 Western Region Meeting, SPE and Pacific Section AAPG, Anchorage, Alaska, Program with Abstracts, p.71 - 72 Aquifer Exemption Order 15 November 28, 2012 Page 3 of 5 assigned to the Beluga Formation. Additional lower confinement for injected fluids will g g be provided by tuffaceous siltstone, claystone and coal layers that lie between 7,540 feet (7,192 feet TVD) and 7,750 feet (7,395 feet TVD). 5. Groundwater Hydrology: The State of Alaska has records for 22 shallow water wells within the proposed exemption area. The deepest of these was drilled 360 feet below ground surface by the City of Kenai near the airport. The other wells range in depth from 12 to 140 feet below ground surface, with most (75 %) being shallower than 60 feet below ground surface. Alaska's Division of Mining, Land and Water has location information for 15 of these shallow water wells. One well lies 700 feet from Kenai Loop #3. The other 14 wells are situated at least 1,700 feet from the proposed exempted interval in Kenai Loop #3. 6. Formation Water Salinity: Based on well log calculations, Buccaneer concludes that the total dissolved solids (TDS) concentration of formation waters within the proposed exempted interval inside the proposed exemption area are greater than 3,000 mg/1. Using similar methods, the AOGCC calculated TDS concentrations ranging from 6,500 to 8,500 mg /1 for the proposed exempted interval and the associated confining intervals. These calculated TDS concentrations are supported by a formation water sample obtained during testing within the planned injection interval. Onsite analysis of that water sample yielded a measurement of 6,000 mg/1 chlorides. 7. Suitability of Sediments as Drinking Water Aquifers: Pursuant to 20 AAC 25.440 (a) (1), the aquifer exemption requested by Buccaneer is supported by the following: a. the Kenai Loop area encompasses plentiful surface and groundwater to a depth of at least 360 feet below ground surface; b. aquifers within the proposed exempted interval are sufficiently deep that recovery of drinking water is economically impractical; c. aquifers within the proposed exempted interval contain methane gas; and d. formation water TDS concentrations in the proposed exempted interval within the proposed exemption area are greater than 3,000 mg/1 as indicated by well log calculations supported by onsite analysis of one water sample. 8. Concurrence of the U.S. Environmental Protection Agency (EPA): Pursuant to 20 AAC 25.440 (d) (1), the EPA was provided the opportunity to review this order prior to issuance. The EPA concurs with the AOGCC's findings and conclusions to exempt 3 Sources: Mr. R. Ireland of the Division of Mining, Land and Water and the Alaska Department of Natural Resources' (DNR) Well Log Tracking System database, which is available on the Internet at http: / /dnratwmlwims02.dnr. state.ak.us /welts/ 4 Sources: Division of Mining, Land and Water website at http: / /www.navmaps .alaska.gov /AlaskaLandStatus/ and DNR Land Administration System Case File No. ADL 42528 5 Source: Division of Mining, Land and Water website cited above 6 AOGCC's calculation techniques are compatible with EPA Guidance Document "Survey of Methods to Determine Total Dissolved Solids Concentrations" (EPA LOE Contract No. 68 -03 -3416, Work Assignment No. 1 -0 -13, KEDA Project No. 30- 956, October 1988, Revised October 1989). Kenai Loop #3, Daily Drilling Report, October 25, 2011, in AOGCC Well History File No. 211 -097 (all information from this well are currently held confidential; the scheduled public release date is Nov. 25, 2013) 8 Kenai Loop #3, Formation Log (mud log), compiled by Canrig Drilling Technology, Ltd. during drilling of the well Aquifer Exemption Order 15 November 28, 2012 Page4of5 aquifers occurring in the Sterling and Beluga Formations that are stratigraphically equivalent to the interval between the measured depths of 3,980 and 7,539 feet in the Kenai Loop #3 wellbore, upon the condition that the areal extent of this exemption is limited to a radius of one -half mile from the Kenai Loop #3 wellbore where that wellbore 0 to 7 539 feet measured depth. 9 passes through the interval from 3 98 p g p CONCLUSIONS: 1. Those portions of freshwater aquifers occurring in the Sterling and Beluga Formations within the proposed exemption area do not currently serve as sources of drinking water. All known and foreseeable ground water consumption from the Kenai Loop vicinity is consistent with plentiful surface water and groundwater resources occurring above a depth of about 360 feet below ground surface. 2. Those portions of freshwater aquifers occurring in the proposed exempted interval within the proposed exemption area contain TDS concentrations greater than 3,000 mg/1, contain methane gas, and are situated at locations and depths that make recovery of formation waters for drinking water purposes economically impractical. 3. The aquifers occurring in the proposed exempted interval within the proposed exemption area cannot reasonably be expected to serve as underground sources of drinking water. 4. The aquifers occurring in the proposed exempted interval within the proposed exemption area qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440 (a)(1)(B), and 20 AAC 25.440(a)(2). NOW, THEREFORE, IT IS ORDERED THAT aquifers occurring in the Sterling and Beluga Formations that are stratigraphically equivalent to, and lie within a radius of one -half mile of, the interval from 3,980 to 7,539 feet measured depth in the Kenai Loop #3 well are exemp for t he purposes of Class II waste disposal operations as provided by 20 AAC 25.440. Note that this Order does not authorize the injection of any fluids or gas within the exemption area. Disposal Injection Order No. 38 governs injection operations within th exemption area. p $Kca ok DONE at Anchorage, Alaska, and dated November 28, 2012. ,t o o 1. f 4 / . Cathy '. Foerster Daniel T. . - amount, Jr. If orp7. Normnill Chair, Commissioner Comm sioner Commissioner 9 Kowalski, E.J., U.S. EPA, 2012, Letter to C. Foerster, AOGCC, November 27, 2012, regarding State of Alaska Aquifer Exemption Order No. 15 Sterling and Beluga Formations, Kenai Loop Field, Kenai Peninsula Borough, Alaska Aquifer Exemption Order 15 November 28, 2012 Page 5 of 5 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 AOGCC grants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC 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 period; 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. ' 1 Easy Peel® Labels i ® ® Bend along li ne to i AVERV® 5960TH ® ® ' Feed Paper " expose Pop -up Ed A la Use Avery Template 5160® �{ A Mary Jones David McCaleb XTO Energy, Inc. IHS Energy Group George Vaught, Jr. Cartography GEPS P.O. Box 13557 810 Houston St., Ste. 200 5333 Westheimer, Ste. 100 Denver, CO 80201 -3557 Ft. Worth, TX 76102 -6298 Houston, TX 77056 Jerry Hod den Richard Neahring ry g NRG Associates Mark Wedman 408 8t S nOil Company President Halliburton Golden, CO 80401 -2433 P.O. Box 1655 6900 Arctic Blvd. Golde Colorado Springs, CO 80901 Anchorage, AK 99502 Bernie Karl CIRI 1 K &K Recycling Inc. Land Department ls 795 Baker r Oil 11 To P.O. Box 58055 P.O. Box 93330 Anchorage, AK 99515 -4295 Fairbanks, AK 99711 Anchorage, AK 99503 North Slope Borough Richard Wagner Gordon Severson P.O. Box x o 69 P. Department P.O. Box 60868 3201 Westmar Or. Box Barrow, AK 99723 Fairbanks, AK 99706 Anchorage, AK 99508 -4336 Jack Hakkila Darwin Waldsmith James Gibbs P.O. Box 190083 P.O. Box 39309 P.O. Box 1597 Anchorage, AK 99519 Ninilchik, AK 99639 Soldotna, AK 99669 Penny Vadia 399 W. Riverview Ave. Soldotna, AK 99669 -7714 k .2�� C r%,, 1 tiquettes faciles a peter ' Repliez a la hachure en de ; 1-arm- www.avery.com ' Sens de me 1 a_Rnn_�:tl_nvFRv • _. ..__.. wsrrnvdi) rnt 1 Easy Peel® Labels 1 ♦ MM. Bend along line to [3 AVERY® 5960TM Use Avery® Template 5160® A Feed Paper 1010 expose Pop -up EdgeTM j Mark R. Landt Buccaneer Alaska, LLC 952 Echo Ln., Ste. 420 Houston, TX 77024 • q2_09_„ Etiquettes faciles peter 1 • Repliez a la hachure en del www.avery.com Sens de . .. . . . - Mr 1 1 -2nn_C.r . AVRRV Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, November 28, 2012 3:11 PM To: Singh, Angela K (DOA); Ballantine, Tab A (LAW); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Ferguson, Victoria L (DOA); Fisher, Samantha J (DOA); Foerster, Catherine P (DOA); Grimaldi, Louis R (DOA); Johnson, Elaine M ff B (DOA); Laasch, Linda K (DOA); Bender, Makana K (DOA); Jones, Jeffery ( ), ( ), (DOA); McIver, Bren ( (DOA); McMains, Stephen E (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Norman, John K (DOA); Okland, Howard D (DOA); Paladijczuk, Tracie L (DOA); Pasqua!, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Wallace, Chris D (DOA); Aaron Gluzman; Aaron Sorrell; Bruce Williams; Bruno, Jeff J (DNR); caunderwood @marathonoil.com; Casey Sullivan; Dale Hoffman; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Franger, James M (DNR); Gary Orr; Smith, Graham 0 (PCO); Greg Mattson; Heusser, Heather A (DNR); James Rodgers; Jason Bergerson; Jennifer Starck; jill.a.mcleod @conocophillips.com; Joe Longo; King, Kathleen J (DNR); Lara Coates; Lois Epstein; Marc Kuck; Steele, Marie C (DNR); Matt Gill; Melissa Okoola; Ostrovsky, Larry (DNR sponsored); Bettis, Patricia K (DOA); Perrin, Don J (DNR); Peter Contreras; Pexton, Scott R (DNR); Richard Garrard; Ryan Daniel; Sandra Lemke; Talib Syed; Terrace Dalton; Wayne Wooster; Woolf, Wendy C (DNR); William Hutto; William Van Dyke; ( michael .j.neison @conocophillips.com); AKDCWelllntegrityCoordinator; alaska @petrocalc.com; Alexander Bridge; Anna Raft Barbara F Fullmer; bbritch; bbohrer @ap.org; Bill Penrose; Bill Walker; Bowen Roberts; Bruce Webb; Claire Caldes; Cliff Posey; Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour; Dave Matthews; David Boelens; David Duffy; David House; Scott, David (LAA); David Steingreaber; Davide Simeone; ddonkel @cfl.rr.com; Elowe, Kristin; Francis S. Sommer; Gary Laughlin; schultz, gary (DNR sponsored); ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; Gregory Geddes; gspfoff; Jdarlington (jarlington @gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jill Womack; Jim White; Jim Winegarner; Joe Lastufka; news @radiokenai.com; Easton, John R (DNR); John Garing; John Spain; Jon Goltz; Jones, Jeffrey L (GOV); Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty; Kayneli Zeman; Keith Wiles; Kelly Sperback; Gregersen, Laura S (DNR); Luke Keller; Marc Kovak; Mark Dalton; Mark Hanley (mark.haniey @anadarko.com); Mark P. Worcester; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike @kbbi.org; Mike Morgan; Mike! Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; knelson @petroleumnews.com; Nick W. Glover; NSK Problem Well Supv; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Randall Kanady; Randy L. Skillern; Randy Redmond; Delbridge, Rena E (LAA); Renan Vanish; Robert Brelsford; Robert Campbell; Ryan Tunseth; Scott Cranswick; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Shelienbaum, Diane P (DNR); Slemons, Jonne D (DNR); Sondra Stewman; Stephanie Klemmer; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield @aoga.org; Taylor, Cammy 0 (DNR); Davidson, Temple (DNR); Teresa Imm; Thor Cutler; Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Walter Featherly; yjrosen @ak.net Subject: AEO 15 and DIO 38 (Kenai Loop Field) Attachments: aeo015.pdf; dio038.pdf Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (90 793 -1221 (phone) (907)276 -7542 (fax) 1 . 1 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Buccaneer Alaska ) Docket Number: AEO -11 -01 Operations LLC for an Aquifer Exemption ) Aquifer Exemption Order No. 15 Order for the Kenai Loop Field in Townships ) 5 and 6 North, Range 11 West, Seward ) Sterling and Beluga Formations Meridian, in conformance with 20 AAC ) Kenai Loop Field 25.440. ) Kenai Peninsula Borough, Alaska October 22, 2012 IT APPEARING THAT: 1. By application received March 16, 2012, Buccaneer Alaska Operations LLC (Buccaneer), operator of the Kenai Loop field, requested an order from the Alaska Oil and Gas Conservation Commission (AOGCC) exempting aquifers in the Sterling and Beluga Formations, within the Kenai Loop Field, Kenai Peninsula Borough, Alaska. 2. In accordance with 20 AAC 25.540, notice of opportunity for a public hearing was published in the Alaska Journal of Commerce on April 15, 2012. In addition, on April 10, 2012 the AOGCC published that notice of opportunity for public hearing on the State of Alaska Online Public Notices website, on the AOGCC' s website, electronically transmitted the notice to all persons on the AOGCC' s email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. The tentatively scheduled hearing date was May 17, 2012, but the hearing was subsequently rescheduled to May 22, 2012. 3. The AOGCC has authority to issue an aquifer exemption. 20 AAC 25.440. 4. The AOGCC held the May 22, 2012 hearing despite not receiving any comments, protests or requests for a public hearing. Buccaneer provided testimony, and the hearing record was left open to allow Buccaneer to respond to questions from the AOGCC. 5. The AOGCC requested clarification of certain items on May 31, 2012. Buccaneer provided responses on June 5, 2012 and July 5, 2012. 6. The information submitted by Buccaneer and public well history records for the Kenai Loop #3 well are the basis for this order. FINDINGS: 1. Operator: Buccaneer operates the Kenai Loop Field, which is located within the limits of the City of Kenai, Kenai Peninsula Borough, Alaska. 2. Extent of Proposed Aquifer Exemption area: The exemption area proposed in Buccaneer's Request for Freshwater Exemption lies within the Kenai Loop Field, and is described as: Aquifer Exemption Orde115 • October 22, 2012 Page 2 of 4 T5N, R11W, S4: NW1/4 NW1/4, NE1/4 NW1/4, NW1/4 NE1/4, Seward Meridian (SM); T5N, R11W, S5: NE1/4 NE1/4, SM; T6N, R11W, S28: SW1/4 SW1/4, SE1/4 SW1/4, SW1/4 SE1/4, SM; T6N, R11W, S29: SE1/4 SE1/4, SM; T6N, R11W, S32: NE1/4, SE1/4, SM; and T6N, R11W, S33: All, SM. 3. Affected Strata: Buccaneer's request for freshwater aquifer exemption is for those portions of the Sterling and Beluga Formations that are stratigraphically equivalent to the interval from 3980' to 7539' measured depth (MD) in well Kenai Loop #3. These measured depths are equivalent to 3961' and 7191' true vertical depth (TVD). 4. Geology: The proposed exempted aquifers are Tertiary -aged, fluvial- derived reservoir and non - reservoir deposits assigned to the Kenai Group. This group is subdivided into (in descending order) the Sterling, Beluga, Tyonek, Hemlock, and West Foreland Formations. These formations account for most of the commercial oil and gas production in the Cook Inlet Basin. The proposed exempted aquifers lie in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3980' (3961' TVD) and 7539' MD (7191' TVD). Upper confinement for this proposed exempted interval consists of several laterally continuous tuffaceous claystone and siltstone layers and thin coal seams that lie between 3065' MD / TVD and 3980' MD (3961' TVD). Lower confinement will be provided by numerous, laterally continuous tuffaceous claystone, siltstone and shale layers that are common between 7539' MD (7191' TVD) and 8554' MD (8193' TVD). 5. Groundwater Hydrology: The State of Alaska has records for 22 shallow water wells within the proposed exemption area. The deepest of these was drilled 360' below ground surface by the City of Kenai near the airport. The other wells range in depth from 12' to 140' below ground surface, with most (75 %) being shallower than 60' below ground surface. Alaska's Division of Mining, Land and Water has location information for 15 of these shallow water wells. One well lies 700' from the proposed exempted interval in Kenai Loop #3. The other 14 wells are situated at least 1700' from the proposed exempted interval in Kenai Loop #3. 6. Formation Water Salinity: Based on well log calculations, Buccaneer concludes that the total dissolved solids (TDS) concentration of formation waters within proposed exempted interval inside the proposed exemption area are greater than 3,000 mg/1. AOGCC verified 1 All depth - related footages presented herein for the proposed exempted interval and the associated confining intervals refer to the Kenai Loop #3 well. 2 Sources: Mr. R. Ireland of the Division of Mining, Land and Water and the Alaska Department of Natural Resources' (DNR) Well Log Tracking System database, which is available on the Internet at http ://dnratwmlwims02.dnr. state. ak.us /welts/ 3 Sources: Division of Mining, Land and Water website at http: / /www.navmaps .alaska.gov /AlaskaLandStatus/ and DNR Land Administration System Case File No. ADL 42528 4 Source: Division of Mining, Land and Water website cited above Aquifer Exemption Ord, • October 22, 2012 Page 3 of 4 Buccaneer's conclusion by calculating formation -water TDS concentrations within the proposed exempted interval using well log calculation techniques that are compatible with EPA Guidance Document "Survey of Methods to Determine Total Dissolved Solids Concentrations" (EPA LOE Contract No. 68 -03 -3416, Work Assignment No. 1 -0 -13, KEDA Project No. 30 -956, September 1988, Revised September 1989). A formation water sample obtained during testing of the Kenai Loop #3 well was analyzed onsite, and total chlorides in that sample measured about 6,000 mg/1. 7. Suitability of Sediments as Drinking Water Aquifers: Pursuant to 20 AAC 25.440 (a) (1), the subject aquifer exemption requested by Buccaneer is supported by the following: a. the Kenai Loop area encompasses plentiful surface and groundwater to a depth of about 360' below ground surface; b. aquifers within the proposed exempted interval are sufficiently deep that recovery of drinking water is economically impractical; and c. well log calculations supported by water sample analysis indicate that formation water TDS concentrations in the proposed exempted interval within the proposed exemption area are greater than 3,000 mg/l. CONCLUSIONS: 1. Those portions of freshwater aquifers occurring in the Sterling and Beluga Formations within the proposed exemption area do not currently serve as sources of drinking water. All known and foreseeable ground water consumption from the Kenai Loop vicinity is consistent with plentiful surface water and groundwater resources occurring above a depth of about 360' below ground surface. 2. Those portions of freshwater aquifers occurring in the proposed exempted interval within the proposed exemption area contain TDS concentrations greater than 3,000 mg/1, and they are situated at locations and depths that make recovery of these waters for drinking water purposes economically impractical. 3. The aquifers occurring in the proposed exempted interval within the proposed exemption area cannot reasonably be expected to serve as underground sources of drinking water. 4. The aquifers occurring in the proposed exempted interval within the proposed exemption area qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440 (a)(1)(B), and 20 AAC 25.440(a)(2). NOW, THEREFORE, IT IS ORDERED THAT aquifers occurring in the Sterling and Beluga Formations within the exemption area described below that are stratigraphically equivalent to the interval between the measured depths of 3980' to 7539' in well Kenai Loop #3 are exempt for the purposes of Class II waste disposal operations as provided by 20 AAC 25.440: T5N, Rl 1 W, S4: NW1/4 NW' /4, NE1/4 NW1/4, NW1/4 NE1/4, Seward Meridian (SM); T5N, R11 W, S5: NE1/4 NE' /4, SM; T6N, R11 W, S28: SW1/4 SW' /4, SE1/4 SW1/4, SW1/4 SE1/4, SM; Aquifer Exemption Ord, • October 22, 2012 Page 4 of 4 T6N, R11 W, S29: SE1/4 SE1/4, SM; t t R11W S32: NE /4 SE /4 SM; T6N, , S3 and , T6N, R11 W, S33: All, SM. Note that this Order does not authorize the injection of any fluids or gas within the exemption area. Disposal Injection Order No. 38 governs injection operations within the exemption area. DONE at Anchorage, Alaska, and dated October 22, 2012. d� j ___L I ' % _ athy P� oe ster Daniel T "eamount, Jr. e , orman Chair, ' ommissioner Commissioner ommissioner 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 AOGCC grants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC 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 period; 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. gyp, OIL Ak i,(1 ,:a�:1r S S .7 l ` w 4 ZION Co • • Mary Jones David McCaleb XTO Energy, Inc. IHS Energy Group George Vaught, Jr. Cartography GEPS P.O. Box 13557 810 Houston St., Ste. 200 5333 Westheimer, Ste. 100 Denver, CO 80201 -3557 Ft. Worth, TX 76102 -6298 Houston, TX 77056 Jerry Hodgden Richard Neahring Mark Wedman NRG Associates Hodgden Oil Company Halliburton 40818 St. President 6900 Arctic Blvd. Golden, CO 80401 -2433 P.O. Box 1655 Anchorage, AK 99502 Colorado Springs, CO 80901 Bernie Karl CIRI Baker Oil Tools K &K Recycling Inc. Land Department 795 E. 94`" Ct. P.O. Box 58055 P.O. Box 93330 Fairbanks, AK 99711 Anchorage, AK 99503 Anchorage, AK 99515-4295 North Slope Borough Richard Wagner Gordon Severson Planning Department P.O. Box 69 P.O. Box 60868 3201 Westmar Cir. Barrow, AK 99723 Fairbanks, AK 99706 Anchorage, AK 99508 -4336 Jack Hakkila Darwin Waldsmith James Gibbs P.O. Box 190083 P.O. Box 39309 P.O. Box 1597 Anchorage, AK 99519 Niniichik, AK 99639 Soldotna, AK 99669 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669 -7714 0/ \ • • Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) ' Sent: Monday, October 22, 2012 1:41 PM To: Singh, Angela K (DOA); Ballantine, Tab A (LAW); Brooks, Phoebe L (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Ferguson, Victoria L (DOA); Fisher, Samantha J (DOA); Foerster, Catherine P (DOA); Grimaldi, Louis R (DOA); Johnson, Elaine M (DOA); Jones, Jeffery B (DOA); Laasch, Linda K (DOA); Bender, Makana K (DOA); McIver, Bren (DOA); McMains, Stephen E (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Norman, John K (DOA); Okland, Howard D (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Wallace, Chris D (DOA); Aaron Gluzman; Aaron Sorrell; Bruce Williams; Bruno, Jeff J (DNR); caunderwood @marathonoil.com; Casey Sullivan; Dale Hoffman; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Franger, James M (DNR); Gary Orr; Smith, Graham 0 (PCO); Greg Mattson; Heusser, Heather A (DNR); James Rodgers; Jason Bergerson; Jennifer Starck; jill .a.mcleod @conocophillips.com; Joe Longo; King, Kathleen J (DNR); Lara Coates; Lois Epstein; Marc Kuck; Steele, Marie C (DNR); Matt Gill; Ostrovsky, Larry (DNR sponsored); Bettis, Patricia K (DNR); Perrin, Don J (DNR); Peter Contreras; Pexton, Scott R (DNR); Richard Garrard; Ryan Daniel; Sandra Lemke; Talib Syed; Wayne Wooster; Woolf, Wendy C (DNR); William Hutto; William Van Dyke; ( michael .j.nelson @conocophillips.com); AKDCWelllntegrityCoordinator; alaska @petrocalc.com; Anna Raft Barbara F Fullmer; bbritch; bbohrer @ap.org; Bill Penrose; Bill Walker; Bowen Roberts; Bruce Webb; Claire Caldes; Cliff Posey; Crandall, Krissell; D Lawrence; dapa; Daryl J. Kleppin; Dave Harbour; Dave Matthews; David Boe lens; David Duffy; David House; Scott, David (LAA); David Steingreaber; Davide Simeone; ddonkel @cfl.rr.com; Dennis Steffy; Elowe, Kristin; Francis S. Sommer; Gary Laughlin; schultz, gary (DNR sponsored); ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; Gregory Geddes; gspfoff; Jdarlington (jarlington @gmail.com); Jeanne McPherren; Jones, Jeffery B (DOA); Jerry McCutcheon; Jill Womack; Jim White; Jim Winegarner; Joe Lastufka; news @radiokenai.com; Easton, John R (DNR); John Garing; John Spain; Jon Goltz; Jones, Jeffrey L (GOV); Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty; Kaynell Zeman; Keith Wiles; Kelly Sperback; Gregersen, Laura S (DNR); Luke Keller; Marc Kovak; Mark Dalton; Mark Hanley (mark.hanley @anadarko.com); Mark P. Worcester; Kremer, Marguerite C (DNR); Michael Jacobs; Mike Bill; mike @kbbi.org; Mike Morgan; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; knelson @petroleumnews.com; Nick W. Glover; NSK Problem Well Supv; Patty Alfaro; Decker, Paul L (DNR); Paul Figel; Paul Mazzolini; Randall Kanady; Randy L. Skillern; Delbridge, Rena E (LAA); Renan Yanish; Robert Brelsford; Robert Campbell; Ryan Tunseth; Scott Cranswick; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Sondra Stewman; Stephanie Klemmer; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield @aoga.org; Taylor, Cammy 0 (DNR); Davidson, Temple (DNR); Teresa Imm; Thor Cutler; Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Walter Featherly; yjrosen @ak.net Subject: aeo15 Kenai Loop Field Attachments: aeo15.pdf Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907)793 -1221 (phone) (907)276 -7542 (far) 1 1 it 8 • • RECEIVED Ja E.DsrA7. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY NOV 3 O 201Z T REGION 10 W � la 1200 Sixth Avenue, Suite 900 ��^ i Q Seattle, Washington 98101 -3140 s ‘<, � 0,c,o PRO NOV 2 7 2012 OFFICE OF COMPLIANCE AND ENFORCEMENT Reply To: OCE -127 CERTIFIED MAIL - RETURN RECEIPT REQUESTED Ms. Cathy Foerster Chair, Commissioner Alaska Oil and Gas Commission 333 West Seventh Avenue Anchorage, Alaska 99501 -3572 Re: State of Alaska Revised Aquifer Exemption Order No. 15 Sterling and Beluga Formations, Kenai Loop Field, Kenai Peninsula Borough, Alaska. Dear Commissioner Foerster: The U.S. Environmental Protection Agency (EPA) has reviewed the revised aquifer exemption order (AEO) number 15 received from Alaska Oil and Gas Conservation Commission (AOGCC) on November 5, 2012, to exempt portions of aquifers in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation within l mile radius of the wellbore of the Kenai Loop #3 well between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD) ) in the Kenai Loop Field area for purposes of disposal in a Class II disposal well (well Kenai Loop number 3) located at latitude 60.569859 degrees North and longitude - 151.224999 degrees West. Based on the information submitted in the above referenced revised aquifer exemption order number 15, the above referenced portions of aquifers within 1 mile radius of the borehole of the well (well Kenai Loop number 3) meet the criteria for an underground source of drinking water in 40 Code of Federal Regulation (C.F.R.) § 146.3 and may be determined under 40 C.F.R. § 144.8 to be an exempted aquifer as it also meets the criteria for exempted aquifers in 40 C.F.R. § 146.4 (a); (b) (1), (2), (3); and (c). Based on the information submitted by AOGCC, there are twenty -two (22) shallow water wells identified at this time in the vicinity of the Kenai Loop Field. The deepest water well is drilled to 360 feet below ground surface (BGS) by the City of Kenai near the Kenai municipal airport. One well lies 700 feet from Kenai Loop number 3 well. There is plentiful surface water and groundwater to a depth of about 360 feet BGS, and the proposed portions of aquifers for exemption are significantly deeper and are economically impractical and cannot reasonably be expected to serve as an underground source of drinking water. • • Based on information submitted by AOGCC, it is noted that the total dissolved solids (TDS) concentration of the formation waters encountered by the subject well within the proposed exempted interval within l mile radius of the Kenai Loop number 3 well borehole are greater than 3,000 mg /1 and less than 10,000 mg /1. Specifically, the TDS concentrations from well log data between 3980' MD (3961' TVD) and 5720' (5530' TVD) are approximately 6500 mg /1. The TDS concentrations from well log data between 5721' (5531' TVD) and 7025' (6704' TVD) are approximately 8500 mg /1. The TDS concentrations from well log data between 7026' (6705' TVD) and 7750' (7395' TVD) are approximately 8200 mg/1. In addition, well log salinity data is supported by a field analysis of a water sample that measured 6,000 mg /1 chlorides. The proposed exempted aquifers of the Kenai Loop Field are hydrocarbon bearing, based on well log data. Based on information submitted by AOGCC, the proposed aquifer exemption area within the Kenai Loop Field includes portions of the Lower Sterling Formation and Upper Beluga Formation between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD) and includes a primary injection interval that lies between 5721' (5531' TVD) and 7025' (6704' TVD). The proposed aquifer exemption area is confined from above by an upper confining zone comprised of layers of the Sterling Formation consisting of laterally continuous tuffaceous claystone and siltstone layers and thin beds of coal seams that lie between 3065 feet MD/TVD and 3980 feet MD (3961 feet TVD). The proposed aquifer exemption area is confined from below by a lower confining zone comprised of layers of the Beluga Formation that include numerous laterally continuous tuffaceous claystone, siltstone and shale layers that are common between 7539 feet MD (7191feet TVD) and 8554 feet MD (8193 feet TVD). Therefore, based on the information submitted, EPA concurs with AOGCC findings regarding the revised AEO 15 to exempt the portions of aquifers within 1/2 mile radius of the borehole of Kenai Loop number 3 well located at latitude 60.569859 degrees North and longitude - 151.224999 degrees West in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD) within the Kenai Loop Field area for purposes of Class II waste disposal operations. If you have any questions about the EPA concurrence, please contact Thor Cutler of my staff at (206) 553 -1673, or email at cutler.thor @epa.gov. Sincerely /1_,PoW dward J. Kowalski Director cc: Marc Bentley Alaska Department of Environmental Conservation Aquifer ExempliOn AOGCC AEO 15: Keai Loop Field #3 y -I; i. ,. I is i I F. n P " l K tli . iii 1. Kenai F . . r River ! Itidg �+. flats r Ilk State Sta Re(reatia+i e4- Site // tfa- nr -. o Soldotna S cS" In AOGCC AEO 15 N Well ID Kenai Loop Field #3 A 0 AOGCC AEO 15 Aquifer Exemption Area 0 1 2 4 gEPA Miles _ Latitude, Longitude: 60.569859° N, - 151.224999° W u --..= Aquifer Exemption Delineation (areal extent): 1/2 mile radius in the Kenai Loop Field #3 Well for Class II injection 1 Aquifer Exemption Delineation (depth): between 3980' and 7539' i ,, y .`' MD (3961' -7191' True Vertical Depth) Cited Criteria: AOGCC AEO 15 "' i ''` ■ to ,i6 wrd tins ,- Rttilt 'fit Boy • ,,. r. S', .D 1 The U.S. Environmental Protection Agency (EPA) has compiled this computer rep ,,entation from data c or information sources that may not have been verified by the EPA. This data is offered here as a itig*** P <,tenard general representation only, and is not to be re -used without verification by an independent professional Bar qualified to verify such data or information. The EPA does not guarantee the accuracy, completeness, or timeliness of the information shown, and shall not be liable for any loss or injury resulting from reliance upon the information shown - *r 0 1 47 • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Buccaneer Alaska ) Docket Number: AEO -11 -01 Operations LLC for an Aquifer Exemption ) Aquifer Exemption Order No. 15 Order for the Kenai Loop Field in Townships ) CORRECTED 5 and 6 North, Range 11 West, Seward ) Meridian, in conformance with 20 AAC ) Sterling and Beluga Formations 25.440. ) Kenai Loop Field ) Kenai Peninsula Borough, Alaska ) November , 2012 IT APPEARING THAT: 1. By application received March 16, 2012, Buccaneer Alaska Operations LLC (Buccaneer), operator of the Kenai Loop Field, requested an order from the Alaska Oil and Gas Conservation Commission (AOGCC) exempting aquifers in the Sterling and Beluga Formations, within the Kenai Loop Field, Kenai Peninsula Borough, Alaska. 2. In accordance with 20 AAC 25.540, notice of opportunity for a public hearing was published in the Alaska Journal of Commerce on April 15, 2012. In addition, on April 10, 2012 the AOGCC published that notice of opportunity for public hearing on the State of Alaska Online Public Notices website, on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC' s email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. The tentatively scheduled hearing date was May 17, 2012, but the hearing was subsequently rescheduled to May 22, 2012. 3. The AOGCC has authority to issue an aquifer exemption. 20 AAC 25.440. 4. The AOGCC held the May 22, 2012 hearing despite not receiving any comments, protests or requests for a public hearing. Buccaneer provided testimony, and the hearing record was left open to allow Buccaneer to respond to questions from the AOGCC. 5. The AOGCC requested clarification of certain items on May 31, 2012. Buccaneer provided responses on June 5, 2012 and July 5, 2012. 6. The information submitted by Buccaneer and public well history records for the Kenai Loop #3 well are the basis for this order. FINDINGS: 1. Operator: Buccaneer operates the Kenai Loop Field, which is located within the limits of the City of Kenai, Kenai Peninsula Borough, Alaska. Aquifer Exemption Order ilto • November , 2012 Page2of5 2. Extent of Proposed Aquifer Exemption Area: The exemption area proposed in Buccaneer's Request for Freshwater Exemption lies within the Kenai Loop Field, and is described as: T5N, R11 W, S4: NW% NW1/4, NE% NW'/4, NW' NE%, Seward Meridian (SM); T5N, R11 W, S5: NE' /4 NE' /4, SM; T6N, R11 W, S28: SW'/ SW'/4, SE' /4 SW'/, SW' /4 SE'/4, SM; T6N, R11 W, S29: SE' /4 SEA, SM; T6N, R11 W, S32: NE' /4, SEA, SM; and T6N, RI 1W, S33: All, SM. 3. Affected Strata: Buccaneer's request for freshwater aquifer exemption is for those portions of the Sterling and Beluga Formations that are stratigraphically equivalent to the interval from 3,980 to 7,539 feet measured depth (MD) in well Kenai Loop #3. These measured depths are equivalent to 3,961 and 7,191 feet true vertical depth (TVD).' 4. Geology: The proposed exempted aquifers are Tertiary -aged, fluvial- derived reservoir and non - reservoir deposits assigned to the Kenai Group. This group is subdivided into (in descending order) the Sterling, Beluga, Tyonek, Hemlock, and West Foreland Formations. These formations account for most of the commercial oil and gas production in the Cook Inlet Basin. The proposed exempted aquifers lie in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3,980 feet (3,961 feet TVD) and 7,539 feet MD (7,191 feet TVD). Upper confinement for the proposed exempted interval consists of several laterally continuous, tuffaceous claystone and siltstone layers and thin coal seams that lie between 3,065 feet MD / TVD and 3,980 feet MD (3,961 feet TVD) and assigned to the lower Sterling Formation. Several laterally persistent, tuffaceous siltstone, claystone and thin coal layers that will arrest upward fracture growth and provide additional upper confinement for injected fluids lie between 5,453 feet (5,289 feet TVD) and 5,720 feet (5,530 feet TVD) that lie within the uppermost Beluga Formation. Buccaneer's planned injection interval lies in the Beluga Formation between 5,721 feet (5,531 feet TVD) and 7,025 feet (6,704 feet TVD). Such a large interval is planned because the Beluga Formation typically has a low net - sand -to- gross - thickness ratio. This formation generally consists of scattered fluvial sandstone layers encased in relatively impermeable siltstone, claystone and coal. Lower confinement and fracture - arrest will be provided by numerous, laterally continuous tuffaceous claystone, and siltstone layers and thin coal seams that are common between 7,026 feet (6,705 feet TVD) and 7,539 feet (7,191 feet TVD) and 1 All depth- and thickness- related footages presented herein for the proposed exempted interval and the associated confining intervals refer to the Kenai Loop #3 well. 2 See Levinson, R. A., 2011, Beluga River Gas Field, Cook Inlet, Alaska, in 2011 Western Region Meeting, SPE and Pacific Section AAPG, Anchorage, Alaska, Program with Abstracts, p.71 - 72 Aquifer p uifer Exem tion Order IP • November 2012 Page 3 of 5 assigned to the Beluga Formation. Additional lower confinement for injected fluids will be provided by tuffaceous siltstone, claystone and coal layers that lie between 7,540 feet (7,192 feet TVD) and 7,750 feet (7,395 feet TVD). 5. Groundwater Hydrology: The State of Alaska has records for 22 shallow water wells within the proposed exemption area. The deepest of these was drilled 360 feet below ground surface by the City of Kenai near the airport. The other wells range in depth from 12 to 140 feet below ground surface, with most (75 %) being shallower than 60 feet below ground surface. Alaska's Division of Mining, Land and Water has location information for 15 of these shallow water wells. One well lies 700 feet from Kenai Loop #3. The other 14 wells are situated at least 1,700 feet from the proposed exempted interval in Kenai Loop #3. 6. Formation Water Salinity: Based on well log calculations, Buccaneer concludes that the total dissolved solids (TDS) concentration of formation waters within the proposed exempted interval inside the proposed exemption area are greater than 3,000 mg /I. Using similar methods, the AOGCC calculated TDS concentrations ranging from 6,500 to 8,500 mg /1 for the proposed exempted interval and the associated confining intervals. These calculated TDS concentrations are supported by a formation water sample obtained during testing within the planned injection interval. Onsite analysis of that water sample yielded a measurement of 6,000 mg /1 chlorides. 7. Suitability of Sediments as Drinking Water Aquifers: Pursuant to 20 AAC 25.440 (a) (1), the aquifer exemption requested by Buccaneer is supported by the following: a. the Kenai Loop area encompasses plentiful surface and groundwater to a depth of at least 360 feet below ground surface; b. aquifers within the proposed exempted interval are sufficiently deep that recovery of drinking water is economically impractical; c. aquifers within the proposed exempted interval contain methane gas; and d. formation water TDS concentrations in the proposed exempted interval within the proposed exemption area are greater than 3,000 mg /1 as indicated by well log calculations supported by onsite analysis of one water sample. 8. Concurrence of the U.S. Environmental Protection Agency (EPA): Pursuant to 20 AAC 25.440 (d) (1), the EPA was provided the opportunity to review this order prior to issuance. The EPA concurs with the AOGCC's findings and conclusions to exempt 3 Sources: Mr. R. Ireland of the Division of Mining, Land and Water and the Alaska Department of Natural Resources' (DNR) Well Log Tracking System database, which is available on the Internet at http://dnratwrniwims02.dnr.state.ak.us/welts/ 4 Sources: Division of Mining, Land and Water website at http: / /www.navmaps .alaska.gov /AlaskaLandStatus/ and DNR Land Administration System Case File No. ADL 42528 5 Source: Division of Mining, Land and Water website cited above 6 AOGCC's calculation techniques are compatible with EPA Guidance Document "Survey of Methods to Determine Total Dissolved Solids Concentrations" (EPA LOE Contract No. 68 -03 -3416, Work Assignment No. 1 -0 -13, KEDA Project No. 30- 956, October 1988, Revised October 1989). 7 Kenai Loop #3, Daily Drilling Report, October 25, 2011, in AOGCC Well History File No. 211 -097 (all information from this well are currently held confidential; the scheduled public release date is Nov. 25, 2013) 8 Kenai Loop #3, Formation Log (mud log), compiled by Canrig Drilling Technology, Ltd. during drilling of the well Aquifer Exemption Order 1 • November _, 2012 Page 4 of 5 aquifers occurring in the Sterling and Beluga Formations that are stratigraphically equivalent to the interval between the measured depths of 3,980 and 7,539 feet in the Kenai Loop #3 wellbore, upon the condition that the areal extent of this exemption is limited to a radius of one -half mile from the Kenai Loop #3 wellbore where that wellbore passes through the interval from 3,980 to 7,539 feet measured depth. CONCLUSIONS: 1. Those portions of freshwater aquifers occurring in the Sterling and Beluga Formations within the proposed exemption area do not currently serve as sources of drinking water. All known and foreseeable ground water consumption from the Kenai Loop vicinity is consistent with plentiful surface water and groundwater resources occurring above a depth of about 360 feet below ground surface. 2. Those portions of freshwater aquifers occurring in the proposed exempted interval within the proposed exemption area contain TDS concentrations greater than 3,000 mg /1, contain methane gas, and are situated at locations and depths that make recovery of formation waters for drinking water purposes economically impractical. 3. The aquifers occurring in the proposed exempted interval within the proposed exemption area cannot reasonably be expected to serve as underground sources of drinking water. 4. The aquifers occurring in the proposed exempted interval within the proposed exemption area qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440 (a)(1)(B), and 20 AAC 25.440(a)(2). NOW, THEREFORE, IT IS ORDERED THAT aquifers occurring in the Sterling and Beluga Formations that are stratigraphically equivalent to, and lie within a radius of one -half mile of, the interval from 3,980 to 7,539 feet measured depth in the Kenai Loop #3 well are exempt for the purposes of Class II waste disposal operations as provided by 20 AAC 25.440. Note that this Order does not authorize the injection of any fluids or gas within the exemption area. Disposal Injection Order No. 38 governs injection operations within the exemption area. DONE at Anchorage, Alaska, and dated November _, 2012. Cathy P. Foerster Daniel T. Seamount, Jr. John K. Norman Chair, Commissioner Commissioner Commissioner 9 Kowalski, E.J., U.S. EPA, 2012, Letter to C. Foerster, AOGCC, October 5, 2012, regarding State of Alaska Aquifer Exemption Order No. 15 Sterling and Beluga Formations, Kenai Loop Field, Kenai Peninsula Borough, Alaska Aquifer Exemption Order IP November , 2012 Page 5 of 5 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 AOGCC grants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC 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 period; 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. w \ O \I jyj� 9 THE STATE Alaska Oil and Gas °f AL ASKA _ Conservation Commission r t " GO VERNOR SEAN PARNELL � , . 333 West Seventh Avenue (4 ' AL Si‘E* Anchorage, Alaska 99501 -3572 Main: 907.279.1433 Fax: 907.276.7542 November 2, 2012 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7009 2250 0004 3911 5051 Mr. Thor Cutler Ground Water Protection Unit US EPA Region 10 1200 Sixth A venue, OW -137 Seattle, WA 98101 Re: Revised Aquifer Exemption Order 15 Kenai Loop Field, Sterling and Beluga Formation Buccaneer Alaska Operations LLC Dear Mr. Cutler: Aquifer Exemption Order (AEO) No. 15 was provided to EPA for review and concurrence on September 24, 2012. EPA concurred by letter dated October 12, 2012. The Alaska Oil and Gas Conservation Commission (AOGCC) inadvertently published an earlier draft of AEO 15 as the approved aquifer exemption on October 22, 2012; the most significant difference was the areal extent of the exemption. We have corrected that error so the aquifer exemption now reflects a '/2 -mile radius around proposed disposal well Kenai Loop #3 as was concurred with by EPA. The geologic discussion in the findings and conclusions has also been revised. Attached please find AEO 15 (Corrected) for your review and concurrence. The AOGCC is requesting expedited consideration on this matter. Sincerely, 'vi e �'•dy �'. C lombie Special Assistant Enclosure U.S. Postal Service CERTIFIED MAIL., RECEIPT ' (Domestic Mail Only; No insurance Coverage Provided) D For delivery information visit our website at www.usps.comn. u'1 y! :: , kliCIAL USE cr m Postage $ ff.10 05;15 � ,��\ Certified Fee $2•95 G` Postmark D Retum Receipt Fee 1111ee D (Endorsement Required) $2.35 IE '4`2012 ). Restricted Delivery Fee (Endorsement Required) $0 • $0.00 /: ru Total Postage P e• $41480 11142/2(42:— ru Sent To D Mr. Thor Cutler D Ground Water Protection Unit C`- or PO Box No. US EPA Region 10 City, ate ZIP+4 1200 Sixth Ave., OW -137 Seattle, WA 98101 PS Form 3800. A - - SENDER: COMPLETE THIS SECTION COMPLETE THIS SE::TION ON DELIVERY • Complete items 1, 2, and 3. - 'Also complete A. Item 4 if Restricted Delivery is desired. ❑ Agent • Print your name and address on the reverse / ❑ Addressee so that we can retum the card to you. Received by (Printed Name) C. D of ivery • Attach this card to the back of the mailpiece, / i� L / 7 5 or on the front if space permits. D. Is delivery address different from item 1 ?" Yes 1. Article Addressed to: If YES, enter delivery address below: ❑ No Mr. Thor Cutler 3. Type Ground Water Protection Unit Certmed Mall ❑ Express Mall US EPA Region 10 ❑ Registered ❑ Retum Receipt for Merchandise 1200 Sixth Ave., OW -137 ❑ Insured Mail ❑ C.O.D. Seattle, WA 98101 4. Rimed DelNery? (Extra Fee) ❑ Yes 2. Article Number 7009 2250 0004 3911 5051 (Transfer from servloe label) PS Form 3811, February 2004 Domestic Retum Receipt 1o2595- o2- M-1540 46 • RECEIVED J �EOSr UNITED STATES ENVIRONMENTAL PROTECTION AGENCY e " � z REGION 10 0 1 i 2012 11122 1200 Sixth Avenue, Suite 900 i Seattle, Washington 981 01 -31 40 AOGCC �i qC � 6,0 PRO OCT 1 2 2012 OFFICE OF COMPLIANCE AND ENFORCEMENT Reply To: OCE -127 CERTIFIED MAIL - RETURN RECEIPT REQUESTED Ms. Cathy Foerster Chair, Commissioner Alaska Oil and Gas Commission 333 West Seventh Avenue Anchorage, Alaska 99501 -3572 Re: State of Alaska Aquifer Exemption Order No. 15 Sterling and Beluga Formations, Kenai Loop Field, Kenai Peninsula Borough, Alaska. Dear Commissioner Foerster: The U.S. Environmental Protection Agency (EPA) has reviewed the application materials for aquifer exemption order (AEO) number 15 received from Alaska Oil and Gas Conservation Commission (AOGCC) on September 28, 2012, to exempt portions of aquifers in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD) ) in the Kenai Loop Field area for purposes of disposal in a Class II disposal well (well Kenai Loop number 3) located at latitude 60.569859 degrees North and longitude - 151.224999 degrees West. It is noted that, based on the information submitted in the above referenced application, the above referenced portions of aquifers within 1 /s mile radius of the borehole of the well (well Kenai Loop number 3) meet the criteria for an underground source of drinking water in 40 Code of Federal Regulation (C.F.R.) § 146.3 and may be determined under 40 C.F.R. § 144.8 to be an exempted aquifer as it also meets the criteria for exempted aquifers in 40 C.F.R. § 146.4 (a); (b) (1), (2), (3); and (c). Based on the information submitted by AOGCC, there are twenty -two (22) shallow water wells identified at this time in the vicinity of the Kenai Loop Field. The deepest water well is drilled to 360 feet below ground surface (BGS) by the City of Kenai near the Kenai municipal airport. It is noted that, there is plentiful surface water and groundwater to a depth of about 360 feet BGS, and the proposed portions of aquifers for exemption are significantly deeper and are economically impractical and cannot reasonably be expected to serve as an underground source of drinking water. Printed on Recycled Paper • • Based on information submitted by AOGCC, it is noted that the total dissolved solids (TDS) concentration of the formation waters encountered by the subject well within the proposed exempted interval within 1 /2 mile radius of the Kenai Loop number 3 well borehole are greater than 3,000 mg /1 and less than 10,000 mg/l. Specifically, the TDS concentrations from well log data between 3980' MD (3961' TVD) and 5720' (5530' TVD) are approximately 6500 mg/1. The TDS concentrations from well log data between 5721' (5531' TVD) and 7025' (6704' TVD) are approximately 8500 mg/1. The TDS concentrations from well log data between 7026' (6705' TVD) and 7750' (7395' TVD) are approximately 8200 mg/1. In addition, well log salinity data is supported by a field analysis of a water sample that measured 6,000 mg/1 chlorides. The proposed exempted aquifers of the Kenai Loop Field are hydrocarbon bearing, based on well log data. Based on information submitted by AOGCC, the proposed aquifer exemption area within the Kenai Loop Field includes portions of the Lower Sterling Formation and Upper Beluga Formation between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD)) and includes a primary injection interval that lies between 5721' (5531' TVD) and 7025' (6704' TVD). The proposed aquifer exemption area is confined from above by an upper confining zone comprised of layers of the Sterling Formation consisting of laterally continuous tuffaceous claystone and siltstone layers and thin beds of coal seams that lie between 3065 feet MD/TVD and 3980 feet MD (3961 feet TVD). The proposed aquifer exemption area is confined from below by a lower confining zone comprised of layers of the Beluga Formation that include numerous laterally continuous tuffaceous claystone, siltstone and shale layers that are common between 7539 feet MD (7191feet TVD) and 8554 feet MD (8193 feet TVD). Therefore, based on the information submitted, EPA concurs with AOGCC findings regarding AEO 15 to exempt the portions of aquifers within 1 /2 mile radius of the borehole of well Kenai Loop number 3 located at latitude 60.569859 degrees North and longitude - 151.224999 degrees West in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3980 feet (3961 feet true vertical depth (TVD)) and 7539 feet measured depth (MD) (7191 feet TVD) ) within the Kenai Loop Field area for purposes of Class II waste disposal operations. If you have any questions about the EPA concurrence, please contact Thor Cutler of my staff at (206) 553 -1673, or email at cutler.thor @epa.gov. Sincere r Edward J. " o % alski Director cc: Marc Bentley Alaska Department of Environmental Conservation g -0", 1 //7, THE STATE Alaska Oil and Gas __ ALAS Conservation Commission F G OVERNOR SEAN PARNELL �„ 333 West Seventh Avenue °P L n;�• p. • Anchorage, Alaska 99501 -3572 ALA�� Main: 907.279.1433 Fax: 907.276.7542 September 24, 2012 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7009 22250 0004 3911 3880 Mr. Thor Cutler Ground Water Protection Unit US EPA Region 10 1200 Sixth Avenue, OW -137 Seattle, WA 98101 Re: Application for an Aquifer Exemption Order Kenai Loop Field, Sterling and Beluga Formation Buccaneer Alaska Operations LLC Dear Mr. Cutler: The Alaska Oil and Gas Conservation Commission (AOGCC) is providing the attached Aquifer Exemption Order for EPA's concurrence. The AOGCC is requesting expedited consideration on this matter. Sincerely, .. • coPe,,ti-- ". d Y . Combie Special Assistant Enclosure U.S. Postal ServiceT CERTIFIED MAIL,,, RECEIPT O (Domestic Mail Only; No Insurance Coverage Provided) For delivery information visit our website at www.usps.com .-9 5E 1 1 Yl Q - Postage $ 39.45 0535, �. Certified Fee 30.95 ©2' p Return Receipt Fee Here t►' p (Endorsement Required) $2..191 Restricted Delivery Fee '_ (Endorsement Required) $0. t U Total Postage & Fees $ 314.7 09/24/2012 ru r To 071.. � �l Street. Apt. No.; orPoBox-No. ,,,5 j City, State, ZIP +4 PS Form 3800. August 2006 Sc P Reverse .'or Instruc0ons SENDER: COMPLETE THIS SECTION COMPLETE THIS SECTION ON DELIVERY • Complete items 1, 2, and 3. Also complete A. Signature item 4 if Restricted Delivery is desired. � _, fAgent ■ Print your name and address on the reverse X ddressee so that we can return the card to you. • Attach this card to the back of the maiipiece, or on the front if space permits. 1 . Article Addressed to: D. Is delivery a d d s 1 d i f f e r e n t f r o m item .? ❑ 77or C/ 7 /e r If vEs, enter delivery address below: 4 • 6/5 .1°A _/3? /a OD 6 T~ five, Old - 3. Type ,O w Mail ❑ MCI Jet' f 7 /(� ❑ Registered iirPlestm Receipt for Merchandise 9‘5 7/41 ❑ Insured Mail ❑ C.O.D. 4. Restricted Delivery? (Extra Fee) p yqs' • 2. Article Number - (Transferfromservice/at 7009 2250 0004 3911 3880 PS Form 3811, February 2004 Domestic Return Receipt 102$98401M-1540'. • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Buccaneer Alaska ) Docket Number: AEO -11 -01 Operations LLC for an Aquifer Exemption ) Aquifer Exemption Order No. 15 Order for the Kenai Loop Field in Townships ) 5 and 6 North, Range 11 West, Seward ) Sterling and Beluga Formations Meridian, in conformance with 20 AAC ) Kenai Loop Field 25.440. ') Kenai Peninsula Borough, Alaska ) September 24, 2012 IT APPEARING THAT: 1. By application received March 16, 2012, Buccaneer Alaska Operations LLC (Buccaneer), operator of the Kenai Loop field, requested an order from the Alaska Oil and Gas Conservation Commission (AOGCC) exempting aquifers in the Sterling and Beluga Formations, within the Kenai Loop Field, Kenai Peninsula Borough, Alaska. 2. In accordance with 20 AAC 25.540, notice of opportunity for a public hearing was published in the Alaska Journal of Commerce on April 15, 2012. In addition, on April 10, 2012 the AOGCC published that notice of opportunity for public hearing on the State of Alaska Online Public Notices website, on the AOGCC' s website, electronically transmitted the notice to all persons on the AOGCC' s email distribution list, and mailed printed copies of the notice to all persons on the AOGCC' s mailing distribution list. The tentatively scheduled hearing date was May 17, 2012, but the hearing was subsequently rescheduled to May 22, 2012. 3. The AOGCC has authority to issue an aquifer exemption. 20 AAC 25.440. 4. The AOGCC held the May 22, 2012 hearing despite not receiving any comments, protests or requests for a public hearing. Buccaneer provided testimony, and the hearing record was left open to allow Buccaneer to respond to questions from the AOGCC. 5. The AOGCC requested clarification of certain items on May 31, 2012. Buccaneer provided responses on June 5, 2012 and July 5, 2012. 6. The information submitted by Buccaneer and public well history records for the Kenai Loop #3 well are the basis for this order. FINDINGS: 1. Operator: Buccaneer operates the Kenai Loop Field, which is located within the limits of the City of Kenai, Kenai Peninsula Borough, Alaska. 2. Extent of Proposed Aquifer Exemption area: The exemption area proposed in Buccaneer's Request for Freshwater Exemption lies within the Kenai Loop Field, and is described as: Aquifer Exemption Order • September 24, 2012 Page 2 of 4 T5N, R11W, S4: NW% NW' /4, NE' /4 NW' /4, NWl NE1/4, Seward Meridian (SM); T5N, R1 1 W, S5: NE% NE1/4, SM; T6N, R11W, S28: SW'/4 S W' /4, SE% S W' /4, SW'/4 SE1/4, SM; T6N, R11W, S29: SE'/4 SE' /4, SM; T6N, R11W, S32: NE1/4, SE1/4, SM; and T6N, R11W, S33: All, SM. 3. Affected Strata: Buccaneer's request for freshwater aquifer exemption is for those portions of the Sterling and Beluga Formations that are stratigraphically equivalent to the interval from 3980' to 7539' measured depth (MD) in well Kenai Loop #3. These measured depths are equivalent to 3961' and 7191' true vertical depth (TVD). 4. Geology: In the Kenai Loop Field area, shallow, Pleistocene -aged sand and gravel deposits extend to a depth of about 3275' MD (3274' TVD) and typically contain freshwater - bearing aquifers. Directly beneath these aquifers are Tertiary -aged, fluvial - derived reservoir and non - reservoir deposits assigned to the Kenai Group. This group is subdivided into (in descending order) the Sterling, Beluga, Tyonek Hemlock and West Foreland Formations, and these formations account for most of the commercial oil and gas production in the Cook Inlet Basin. The proposed exempted aquifers lie in the lower portion of the Sterling Formation and the upper portion of the Beluga Formation between 3980' (3961' TVD) and 7539' MD (7191' TVD). Upper confinement for this proposed exempted interval consists of several laterally continuous tuffaceous claystone and siltstone layers and thin coal seams that lie between 3065' MD / TVD and 3980' MD (3961' TVD). Lower confinement will be provided by numerous, laterally continuous tuffaceous claystone, siltstone and shale layers that are common between 7539' MD (7191' TVD) and 8554' MD (8193' TVD). 5. Groundwater Hydrology: The State of Alaska has records for 22 shallow water wells within the proposed exemption area. The deepest of these was drilled 360' below ground surface by the City of Kenai near the airport. The other wells range in depth from 12' to 140' below ground surface, with most (75 %) being shallower than 60' below ground surface. Alaska's Division of Mining, Land and Water has location information for 15 of these shallow water wells. One well lies 700' from the proposed exempted interval in Kenai Loop #3. The other 14 wells are situated at least 1700' from the proposed exempted interval in Kenai Loop #3. 1 All depth - related footages presented herein for the proposed exempted interval and the associated confining intervals refer to the Kenai Loop #3 well. 2 Sources: Mr. R. Ireland of the Division of Mining, Land and Water and the Alaska Department of Natural Resources' (DNR) Well Log Tracking System database, which is available on the Internet at http://dnratwmlwims02.dnr.state.ak.us/welts/ 3 Sources: Division of Mining, Land and Water website at http: / /www.navmaps .alaska.gov /AlaskaLandStatus/ and DNR Land Administration System Case File No. ADL 42528 4 Source: Division of Mining, Land and Water website cited above Aquifer Exemption Order. • September 24, 2012 Page 3 of 4 6. Formation Water Salinity: Based on well log calculations, Buccaneer concludes that the total dissolved solids (TDS) concentration of formation waters within proposed exempted interval inside the proposed exemption area are greater than 3,000 mg /1. AOGCC verified Buccaneer's conclusion by calculating formation -water TDS concentrations within the proposed exempted interval using well log calculation techniques that are compatible with EPA Guidance Document "Survey of Methods to Determine Total Dissolved Solids Concentrations" (EPA LOE Contract No. 68 -03 -3416, Work Assignment No. 1 -0 -13, KEDA Project No. 30 -956, September 1988, Revised September 1989). A formation water sample obtained during testing of the Kenai Loop #3 well was analyzed onsite, and total chlorides in that sample measured about 6,000 mg/1. 7. Suitability of Sediments as Drinking Water Aquifers: Pursuant to 20 AAC 25.440 (a) (1), the subject aquifer exemption requested by Buccaneer is supported by the following: a. the Kenai Loop area encompasses plentiful surface and groundwater to a depth of about 360' below ground surface; b. aquifers within the proposed exempted interval are sufficiently deep that recovery of drinking water is economically impractical; and c. well log calculations supported by water sample analysis indicate that formation water TDS concentrations in the proposed exempted interval within the proposed exemption area are greater than 3,000 mg /1. CONCLUSIONS: 1. Those portions of freshwater aquifers occurring in the Sterling and Beluga Formations within the proposed exemption area do not currently serve as sources of drinking water. All known and foreseeable ground water consumption from the Kenai Loop vicinity is consistent with p lentiful surface water and groundwater resources occurring above a depth of about 360' below ground surface. 2. Those portions of freshwater aquifers occurring in the proposed exempted interval within the proposed exemption area contain TDS concentrations greater than 3,000 mg/1, and they are situated at locations and depths that make recovery of these waters for drinking water purposes economically impractical. 3. The aquifers occurring in the proposed exempted interval within the proposed exemption area cannot reasonably be expected to serve as underground sources of drinking water. 4. The aquifers occurring in the proposed exempted interval within the proposed exemption area qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440 (a)(1)(B), and 20 AAC 25.440(a)(2). NOW, THEREFORE, IT IS ORDERED THAT aquifers occurring in the Sterling and Beluga Formations within the exemption area described below that are stratigraphically equivalent to the interval between the measured depths of 3980' to 7539' in well Kenai Loop #3 are exempt for the purposes of Class II waste disposal operations as provided by 20 AAC 25.440: T5N, RI 1 W, S4: NW1/4 NW1/4, NE1/4 NW1/4, NW1/4 NE1/4, Seward Meridian (SM); Aquifer Exemption Order • September 24, 2012 Page 4 of 4 T5N, R11W, S5: NE1/4 NE1/4, SM; T6N, R11W, S28: SW1/4 SW1/4, SE' /4 SW1/4, SW1/4 SE1/4, SM; T6N, R11W, S29: SE1/4 SE1/4, SM; T6N, R11W, S32: NE1/4, SE1/4, SM; and T6N, R11W, S33: All, SM. Note that this Order does not authorize the injection of any fluids or gas within the exemption area. Disposal Injection Order No. 38 governs injection operations within the exemption area. DONE at Anchorage, Alaska, and dated September 24, 2012. Cathy P. Foerster Daniel T. Seamount, Jr. John K. Norman Chair, Commissioner Commissioner Commissioner 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 AOGCC g rants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the AOGCC 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 period; 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. 45 I i i 1 ALASKA OIL AND GAS CONSERVATION COMMISSION 2 In the Matter of Buccaneer Alaska ) 3 Operations, LLC's Request for ) 4 the Exemption of Fresh Water ) 5 Aquifers in the Kenai Loop Field ) 6 and a Disposal Injection Order ) 7 for Kenai Loop No. 3. ) 8 ) 9 Docket No.: AEO -12 -001 10 DIO -12 -002 11 ALASKA OIL and GAS CONSERVATION COMMISSION 12 VOLUME I 13 PUBLIC HEARING 14 Anchorage, Alaska 15 May 17, 2012 16 9:00 o'clock a.m. 17 BEFORE: Cathy Foerster, Chair 18 Daniel T. Seamount, Commissioner 19 John K. Norman, Commissioner 20 Recorded and Transcribed by: 21 Computer Matrix Court Reporters 22 135 Christensen Drive, Suite 2 23 Anchorage, Alaska 99501 24 (907) 243 - 0668 /sahile @gci.net • 1 TABLE OF CONTENTS 2 Remarks by Chair Foerster 03 i t 2 • • 1 P R O C E E D I N G S 2 (On record - 9:00 a.m.) 3 CHAIR FOERSTER: All right. We're going to call 4 this hearing to order. Today is May 17th, 2012, it's a 5 little after 9:00 a.m. Were located at 333 West Seventh 6 Avenue, Suite 100, Anchorage, Alaska, the offices of the 7 Alaska Oil & Gas Conservation Commission. 8 I'm Commissioner Cathy Foerster, to my left is 9 Commissioner Dan Seamount and to my right is Commissioner 10 John Norman. 11 Computer Matrix Court Reporters will be recording 12 today's proceedings, you can get a copy of the transcript 13 from Computer Matrix Court Reporters. 14 The Commissioners look around the room and see 15 that the person requesting this hearing or the entity 16 requesting this hearing is not present. Mr. Regg is 17 sitting up front, Mr. Regg from the AOGCC. Can you tell 18 us what you know about -- were they notified, did they 19 know to be here? 20 MR. REGG: We exchanged electronic mail messages 21 on April 17. They asked what were -- where we were at in 22 terms of processing the application and we told them we 23 were doing a technical review. On May 3rd they again 24 requested some clarification that there was a hearing on 25 May 17th, they were aware of a hearing on May 17th based 3 • • 1 on our public notice and as to how they should proceed. 2 We returned an electronic mail message to them and told 3 them it is unlikely the hearing will be vacated so you 4 will need to be prepared to address the items listed in 5 AOGCC's public hearing guidelines which are posted online 6 at doa.alaska.gov /aogcc, the pubic hearing guidelines. 7 So they were aware that we were expecting them to testify 8 at this time. 9 CHAIR FOERSTER: Has anyone heard anything from 10 them to your knowledge? 11 MR. REGG: I have not anything from Buccaneer 12 since May 3rd. 13 CHAIR FOERSTER: Okay. Ms. Fisher or Ms. 14 Colombie, Mr. Davies, has anyone -- has any of you heard 15 anything from them? 16 IN UNISON: No. 17 CHAIR FORESTER: Okay. Probably the right thing 18 to do would be to continue this hearing and give them 19 another chance to come and present their case. Do you 20 guys have any problem with that? Dan. 21 COMMISSIONER SEAMOUNT: I've got something to say 22 before 23 CHAIR FOERSTER: Okay. 24 COMMISSIONER SEAMOUNT: I make a motion -- 25 what do I do, make a motion? 4 • • 1 CHAIR FOERSTER: Yeah. 2 3 COMMISSIONER SEAMOUNT: Okay. Mr. Davies, could 4 you ask Buccaneer to provide a better type log? 5 MR. DAVIES: Certainly. readable. 6 COMMISSIONER SEAMOUNT: One that's more r e 7 So, I mean, it could be expanded, not just eight and a 8 half by 11, they could make it big so we can see what's 9 going on in those confining and -- proposed confining and 10 injection zones. 11 CHAIR FOERSTER: Commissioner Norman, do you have 12 any problem with that? 13 COMMISSIONER NORMAN: No, I don't. I think we 14 ought to move -- it sounds to me like 9:30 on Tuesday the 15 22nd would be the appropriate time so I would move that 16 this hearing be continued until 9:30 a.m. on Tuesday the 17 22nd. 18 COMMISSIONER SEAMOUNT: I second. 19 CHAIR FOERSTER: All right. All opposed. 20 (No opposing votes) 21 CHAIR FOERSTER: All in favor. 22 IN UNISON: Aye. 23 CHAIR FOERSTER: All right. Well, this hearing 24 is therefore continued to 9:30 on May 22nd and let's make 25 sure that Buccaneer knows they're supposed to be here. 5 • ! 1 So I would ask, Mr. Regg, you contact your contact, Mr. 2 Davies, you contact yours, Ms. Colombie, you contact 3 yours. If they get three communications with the same 4 information in it then there should be less confusion for 5 them next time. 6 And if no one else has anything to add 7 COMMISSIONER NORMAN: Move to recess and 8 continue. 9 COMMISSIONER SEAMOUNT: I second. 10 CHAIR FOERSTER: All in favor. 11 IN UNISON: Aye. 12 CHAIR FOERSTER: Opposed. 13 (No opposing votes) 14 CHAIR FOERSTER: Okay. This hearing is recessed 15 to reconvene on May 22nd at 9:30. 16 (Recessed - 9:05 a.m.) 17 (END OF PROCEEDINGS) 6 • 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 02 through 07 are a true, 4 accurate, and complete transcript of proceedings in 5 Docket No.'s AEO -12 -001, DIO -12 -002, Volume I transcribed 6 under my direction from a copy of the electronic sound 7 recording to the best of our knowledge and ability. 8 9 10 Date Salena A. Hile, Transcriber 11 7 i I 1 ALASKA OIL AND GAS CONSERVATION COMMISSION 2 In the Matter of Buccaneer Alaska ) 3 Operations, LLC's Request for ) 4 the Exemption of Fresh Water ) 5 Aquifers in the Kenai Loop Field ) 6 and a Disposal Injection Order ) 7 for Kenai Loop No. 3. ) 8 ) 9 Docket No.: AEO -12 -001 10 DIO -12 -002 11 ALASKA OIL and GAS CONSERVATION COMMISSION 12 VOLUME II 13 PUBLIC HEARING 14 Anchorage, Alaska 15 May 22, 2012 16 9:30 o'clock a.m. 17 BEFORE: Cathy Foerster, Chair 18 Daniel T. Seamount, Commissioner 19 John K. Norman, Commissioner 20 Recorded and Transcribed by: 21 Computer Matrix Court Reporters 22 135 Christensen Drive, Suite 2 23 Anchorage, Alaska 99501 24 (907) 243 - 0668 /sahile @gci.net III III 1 TABLE OF CONTENTS 2 Opening remarks by Chair Foerster 10 3 Testimony by Mr. Hennigan 14 9 i 1 P R O C E E D I N G S 2 (On record - 9:30 a.m.) 3 CHAIR FOERSTER: I'd like to call this hearing 4 to order. Today is May 22nd, it's about 9:30 a.m. 5 Were located at 333 West Seventh Avenue, Suite 100, 6 Anchorage, Alaska, those are the offices of the Alaska 7 Oil & Gas Conservation Commission. 8 I'm Commissioner Cathy Foerster, to my left is 9 Commissioner Dan Seamount and to my right is 10 Commissioner John Norman. 11 Computer Matrix Court Reporters will be 12 recording today's proceedings, you can get a copy of 13 the transcript from Computer Matrix Court Reporters. 14 The Commissioners would like to remind those 15 who are testifying to speak into the microphones so 16 that persons in the back of the room can hear and so 17 that the court reporter can get a clear recording. 18 Today we're reviewing Docket Nos. AEO -12 -001 19 and DIO -12 -002. Buccaneer Alaska Operations, LLC has 20 applied for an order exempting fresh water aquifers in 21 the Kenai Loop Field, Kenai Peninsula Borough, in 22 conformance with 20 AAC 25.440 as well as a disposal 23 injection order authorizing the injection of used 24 drilling mud and other UIC program class two eligible 25 fluids into the Sterling and Beluga formations in the 10 . • 1 Kenai Loop Field. 2 Notice of this hearing was published on April 3 15th, 2012 in the Journal of Commerce as well as the 4 state of Alaska online notices and the AOGCC website on 5 April 10, 2012. This hearing is being held in 6 accordance with 20 AAC 25.540 of the Alaska 7 Administrative Code. The hearing will be recorded. 8 All right. Before we begin do you have any 9 words of wisdom, Commissioner Seamount? 10 COMMISSIONER SEAMOUNT: Not at this time, Madam 11 Chair. 12 CHAIR FOERSTER: Commissioner Norman. 13 COMMISSIONER NORMAN: Nothing. 14 CHAIR FOERSTER: Let the record reflect that 15 neither one of them chose to be wise. 16 Let's see, I think we have a representative 17 from Buccaneer here. 18 19 CHAIR FOERSTER: And you're Mr. Hennigan? 20 MR. HENNIGAN: Yes, ma'am. 21 CHAIR FOERSTER: And you'd like to testify? 22 MR. HENNIGAN: Yes, ma'am, I would. 23 CHAIR FOERSTER: Okay. Would you like to be 24 considered as an expert witness in an area of expertise 25 like petroleum engineering, geology, law, land? 11 • • 1 MR. HENNIGAN: My area of concentration is 2 engineering. 3 CHAIR FOERSTER: Okay. All right. So would 4 you like to be considered as an expert engineering 5 witness? 6 7 CHAIR FOERSTER: All right. Could you please 8 explain to us what your qualification -- your education 9 and qualifications and experience are to be so that we 10 can make a decision as to whether to consider you as an 11 expert witness. 12 MR. HENNIGAN: Yes, ma'am. I'd like to do 13 that, but first I'd like to apologize for last week, it 14 was my ignorance and my error and I take full 15 responsibility and I apologize because the monies and 16 the time it took away from the state of Alaska. 17 CHAIR FOERSTER: Well, thank you, Mr. Hennigan. 18 MR. HENNIGAN: Okay. My area of expertise is 19 that -- my initial degree is in mathematics, I did a 20 master's plus curriculum in mathematics, but never did 21 finish my thesis defense. 22 I went to work for 23 (Off record comments - microphone) 24 MR. HENNIGAN: I went to work for Bayroid 25 Drilling Fluids and was area manager for Bayroid in 12 • • 1 both drilling mud and completion fluids. And I worked 2 with the state of Louisiana in their 29B conversion 3 from their old records -- old methodology. I went to 4 work in a -- for Solids Control & Completion Filtration 5 Company and then Marathon. I worked and did my 6 master's in engineering management at night, worked 10 7 years at Marathon as both a drilling engineer and as a 8 specialist, then as a drilling foreman on the rigs, 9 both deepwater and onshore and all over the world. 10 Following that I went to work for Petroleum Engineers 11 International as a consultant and have worked for 12 Forest Oil, Kerr - McGee, 20 or 30 clients all over the 13 world. And when I was at Marathon I did consulting for 14 the group that was working on the Steelhead in Kenai, 15 did some of their work. 16 And that's my basic background. 17 CHAIR FOERSTER: Okay. Do you have any 18 questions? 19 COMMISSIONER SEAMOUNT: Mr. Hennigan, do you 20 have any experience in petroleum geology? 21 MR. HENNIGAN: Minimal. 22 COMMISSIONER SEAMOUNT: So you're mainly a 23 drilling engineer? 24 MR. HENNIGAN: Drilling and completion. 25 COMMISSIONER SEAMOUNT: Okay. All right. And 13 • • 1 what offices did you work out of for Marathon? 2 MR. HENNIGAN: I worked out of the Lafayette 3 and Houston offices and worked mostly on a 28 and 28 4 rotational basis. 5 COMMISSIONER SEAMOUNT: Okay. Thank you. I've 6 no further questions. 7 CHAIR FOERSTER: Commissioner Norman. 8 COMMISSIONER NORMAN: Did we swear Mr. 9 Hennigan? 10 CHAIR FOERSTER: No, we did not. Let's -- do 11 we do that 12 COMMISSIONER NORMAN: Yes. Mr. Hennigan, we're 13 about to swear you in which is a customary practice and 14 then would appreciate it if as part of that you would 15 acknowledge that all of your testimony that preceded 16 that is covered by the oath that you've given. 17 MR. HENNIGAN: I 18 COMMISSIONER NORMAN: Thank you so much. 19 CHAIR FOERSTER: All right. I'm kind of new to 20 this chair thing and I was going to swear you in after 21 we decided to accept you. All right. 22 (Oath administered) 23 MR. HENNIGAN: So help me god, I do. 24 STEPHEN F. HENNIGAN 25 called as a witness on behalf of Buccaneer Alaska 14 • 1 Operations, LLC, stated as follows on: 2 DIRECT EXAMINATION 3 CHAIR FOERSTER: Okay. And your name for the 4 record again? 5 MR. HENNIGAN: My name is Stephen F. Hennigan. 6 CHAIR FOERSTER: And you represent? 7 MR. HENNIGAN: Buccaneer Alaska Operations, 8 LLC. 9 CHAIR FOERSTER: Okay. All right. Did you 10 have any other questions? 11 COMMISSIONER NORMAN: Nothing further. 12 CHAIR FOERSTER: Okay. 13 COMMISSIONER SEAMOUNT: I have one more 14 question. 15 CHAIR FOERSTER: All right. 16 COMMISSIONER SEAMOUNT: Are you a regular 17 employee of Buccaneer or are you consulting for them? 18 MR. HENNIGAN: I'm a consultant for them. 19 COMMISSIONER SEAMOUNT: What's the name of your 20 consulting company? 21 MR. HENNIGAN: Petroleum Engineers, Inc., a 22 subsidiary of Hamilton Group. 23 COMMISSIONER SEAMOUNT: Okay. Thank you. 24 25 (No comments) 15 • 1 CHAIR FOERSTER: I have a question. Did you 2 say, and maybe I missed it, where you got your degrees? 3 MR. HENNIGAN: I did not say where I got my 4 degrees. My first degree was from McNeese State 5 University in Lake Charles, Louisiana, my master's in 6 engineering management was from -- it's now called 7 University of Lafayette -- University of Louisiana at 8 Lafayette. 9 CHAIR FOERSTER: Used to be USL? 10 MR. HENNIGAN: Used to be USL. 11 CHAIR FOERSTER: Okay. Commissioner Seamount, 12 13 expert witness in the 14 COMMISSIONER SEAMOUNT: I have none. 15 CHAIR FOERSTER: field of engineering? 16 COMMISSIONER NORMAN: No objection. I move 17 that we accept this witness as an expert witness in the 18 area of engineering as he described. 19 COMMISSIONER SEAMOUNT: I second. 20 CHAIR FOERSTER: Okay. All in favor. 21 IN UNISON: Aye. 22 CHAIR FOERSTER: All opposed. 23 (No opposing votes) 24 CHAIR FOERSTER: All right. You have been 25 accepted as an expert witness. Please proceed with 16 • 1 your testimony and if you have any written documents 2 that you're submitting we'd appreciate it if you'd give 3 a copy to the court reporter for her records as well. 4 MR. HENNIGAN: I have one that I'll leave with 5 the courtroom reporter. If you don't mind I'd like to 6 talk from that 7 CHAIR FOERSTER: Okay. 8 MR. HENNIGAN: is that okay? 9 CHAIR FOERSTER: Okay. It would be good if you 10 had -- if you could leave copies for us and for her, 11 but 12 MR. HENNIGAN: Ma'am, I'm really sorry, I had 13 no idea, I could have made copies -- a hundred copies, 14 I have -- I apologize. 15 CHAIR FOERSTER: Why don't we take just a three 16 minute recess and our Special Assistant, Jody Colombie, 17 will get some copies made. 18 MR. HENNIGAN: Sure. 19 CHAIR FOERSTER: Okay. We're recessed. 20 (Off record) 21 (On record) 22 CHAIR FOERSTER: Mr. Hennigan, you can proceed 23 with your testimony. 24 MR. HENNIGAN: Which would you like addressed 25 first, the disposal injection or the aquifer? 17 1 CHAIR FOERSTER: Let's do the aquifer 2 exemption, is that okay? 3 MR. HENNIGAN: That's fine. If you have the 4 aquifer exemption order in front of you, there are a 5 couple of attachments there at the back that illustrate 6 our analysis of the fresh water placement in the 7 potential zones that we're looking to -- that we're 8 applying for the exemption on. Typically it shows that 9 the fresh water kind of stops at about 3,300 feet and 10 then begins again at approximately 8,500 feet. This is 11 -- that illustrates to us that the area we're asking 12 for an exemption on is in the three to 10,000 area of 13 classification and it's typically the Sterling and 14 Beluga formations. Sterling starts at approximately 15 3,300, 3,400 foot and the base of the Beluga's about 16 8,400 foot. 17 And to give you a little bit of analysis there 18 is that with the studies that I've been able to find 19 throughout the Cook Inlet area that it appears that the 20 water contains a large amount of bicarbonates and other 21 total dissolved solids. So the reading on the 22 resistivity log is typically slightly in error and that 23 makes the interpretation much more difficult. But we 24 were fortunate -- oh, and most of the calculations and 25 taking the resistivity values back to equivalent part 18 • 1 per million of chloride used a -- the arches used a 2 certain standard for the constants where we're able to 3 get a sample of tested water from the Buccaneer Kenai 4 Loop Number 1 and it tested 6,000 chlorides. And we 5 went back and we happened to have -- and placed that at depth and did a recalculation ion of the equivalent perf de at 6 q p p 7 the salinities. So what we have shown on that graph is 8 the minimal total dissolved solids, so it should be 9 higher. And we feel that meets all the criteria and 10 we're asking for an exemption in those depths. 11 And that's the engineering idea. 12 CHAIR FOERSTER: Okay. Is that 13 MR. HENNIGAN: Oh, we did a complete survey of 14 the area, we called the Department of Hydrology, they 15 gave us all the listings of all the water wells and 16 there's nothing that is of impact anywhere close, far 17 outside 18 CHAIR FOERSTER: You mean that go to the depths 19 that you're 20 MR. HENNIGAN: The greatest depth was the city 21 of Kenai and I think it's 360 feet talking from the top 22 of my head, and that was the deepest water well and 23 it's close i 24 CHAIR FOERSTER: Okay. 25 MR. HENNIGAN: probably one of the closest 19 1 wells and it's by the airport. 2 CHAIR FOERSTER: Okay. Do you have any 3 questions, Commissioner Seamount? 4 COMMISSIONER SEAMOUNT: Three hundred -sixty 5 feet is the depth of my water well. 6 MR. HENNIGAN: Most of them -- going out 7 further most of them we checked were around 50 feet and 8 they're like half mile, mile away. 9 COMMISSIONER SEAMOUNT: Uh -huh. Okay. I do 10 have a question on this Figure 1 of the AEO 11 application. I see data points all over the place and 12 I realize you say that the minimum salinity or the -- 13 is it the minimum, yeah, minimum salinity is shown 14 right at the edge here, right? 15 MR. HENNIGAN: Yes, sir, that's the 3,000 part 16 per million. 17 COMMISSIONER SEAMOUNT: Okay. And what you did 18 19 saturation was 100 on this 20 MR. HENNIGAN: Uh -huh. 21 COMMISSIONER SEAMOUNT: is that correct? 22 MR. HENNIGAN: Yes, sir. 23 COMMISSIONER SEAMOUNT: Okay. And all these 24 that go way out here into the super high salinity, is 25 that just due to clay? 20 • • 1 MR. HENNIGAN: My guess is it is. 2 COMMISSIONER SEAMOUNT: Okay. Thank you. 3 MR. HENNIGAN: And some of the ones that go 4 real close to 3,000 are probably the coals. 5 CHAIR FOERSTER: Any other questions? 6 7 CHAIR FOERSTER: Commission Norman, do you have 8 any questions for this witness? 9 COMMISSIONER NORMAN: Just I understood that 10 the range of salinity of the water is between three and 11 10, that was what you said? 12 MR. HENNIGAN: We were looking at something 13 that was over three to be truthful about it and most of 14 them appeared in that interval to be between three and 15 10 even though there's a lot that's higher. 16 COMMISSIONER NORMAN: All right. Thank you. 17 CHAIR FOERSTER: Is this the -- all that you 18 have to offer on the 19 MR. HENNIGAN: (Inaudible response) 20 CHAIR FOERSTER: Okay. Is there any other 21 party that would like to testify on this, the aquifer 22 exemption. 23 (No comments) 24 CHAIR FOERSTER: All right. Mr. Hennigan, 25 you're not off the hook, let's hear your testimony for 21 • • 1 the disposal injection order. And you're still under 2 oath and you're still an expert witness. 3 MR. HENNIGAN: Ma'am? 4 CHAIR FOERSTER: You're still under oath and 5 you're still an expert witness. 6 MR. HENNIGAN: Yes, ma'am. We have provided a 7 complete packet on the disposal injection order showing 8 the areas under lease which Buccaneer has expanded 9 their leasehold in that area. I can provide a map if 10 that so interests the group. And I got with their 11 geologists who are -- and also in this I provided a map 12 from the hydrology department showing the major wells -- 13 water wells in the area because I think that is 14 critical. Just to give you -- and your protection of 15 the drinking of the water is very, very serious and 16 very admired. In Louisiana, in Texas, even going by 17 all the requirements there have been exceptions to the 18 salt water and other things being injected broaching to 19 the surface. Its very critical that we identify all 20 the potential areas that are close by and I think these 21 are so far away it would not be am impact, but they 22 still need to be a matter of record. And anything 23 that's done subsequent to this, Buccaneer needs to take 24 the responsibility to make sure that they're monitored 25 as well. 22 • • 1 COMMISSIONER NORMAN: Madam Chair. 2 CHAIR FOERSTER: Yes. 3 COMMISSIONER NORMAN: If I could just follow -up 4 on that point. It isn't just the existing wells as you 5 know too, it's a potential well that might be drilled a 6 year from now or two years from now that we would to be 7 sure. And so as you're talking can you address the 8 confining layer and what might prevent migration into 9 these zones where a well might in the future be 10 drilled. 11 MR. HENNIGAN: Yes, sir, I will. And -- but I 12 was just saying that anything as far as water wells, we 13 need to make sure -- Buccaneer needs to make sure that 14 they're of no potential impact should anything occur, 15 they need to make a mark, look, we know these wells are 16 here, you know, we've got to watch them. You know, and 17 that is a development area that the city of Kenai is 18 doing is that they want to develop that area so there's 19 a greater chance of water wells in the future than 20 there is now. 21 Just to give a little overview before we go 22 into the confining areas. You know, Buccaneer drilled 23 their first well, Kenai Loop No. 1, early last year and 24 drilled a straight hole and made a discovery, came back 25 later last year and drilled the Kenai Loop 3 which -- 23 • • 1 so 1 and 3, let's -- and they drilled that to the 2 south. And somewhere below 8,500 foot they crossed a 3 fault so everything that they were targeting was wet. 4 So this made this well basically an expendable well. 5 So it could have been either plugged or abandoned or 6 put to future utility. The sidetracking options at the 7 time and still are minimal to go to where their targets 8 are, so it would have -- the well would have been 9 plugged and abandoned. In this area here with the two 10 wells, seven or 800 foot apart where you could identify 11 the different zones and it -- according to the 12 geologist now, is that there is a confine -- a series 13 of shales and other things that are -- there's several 14 different confining zones, but the major ones, let's 15 talk about the aquifer exemption order, at about 34, 16 3,500 foot, there's another group around 5,500 foot and 17 then when you hit the Tyonek at about 8,500 feet that 18 is a confining area as well, a large, mass -- massive 19 shale for the area, large for the area. 20 COMMISSIONER NORMAN: Sir, could you -- who is 21 the geologist you're referring to, according to the 22 geologist, who 23 MR. HENNIGAN: David Doroty. 24 25 MR. HENNIGAN: And the geophysicist is Craig 24 • • 1 Moore. 2 COMMISSIONER SEAMOUNT: Where are they located? 3 MR. HENNIGAN: They're located in Houston, 4 Texas. 5 COMMISSIONER SEAMOUNT: And you say that 6 there's a fault separation between the number 3 and the 7 number 1 well? 8 MR. HENNIGAN: Yes, sir. 9 COMMISSIONER SEAMOUNT: And the number 3 was 10 wet, yet it's structurally higher than the number 1? 11 MR. HENNIGAN: As -- in the -- that's -- that's 12 13 COMMISSIONER SEAMOUNT: So you think you have a 14 fault trap? 15 MR. HENNIGAN: They think there's a fault trap 16 for the number 1, but the number 3, where I was told 17 they cross the fault was much deeper and that's why it 18 was wet. 19 COMMISSIONER SEAMOUNT: The number 3 was 20 deeper? 21 MR. HENNIGAN: Where they crossed the fault 22 was 23 COMMISSIONER SEAMOUNT: I'm looking at your 24 structure map, it's Exhibit 10 of the application, and 25 there's not a fault on the map and it shows the number 25 • • 1 3 being shallower than the number 1 well. 2 CHAIR FOERSTER: In the Beluga formation. 3 COMMISSIONER SEAMOUNT: IN the Beluga. 4 MR. HENNIGAN: Yes, sir, that's correct, but 5 from what I know of the geology, the fault that they 6 cross to get into the wet zones of the Tyonek was 7 deeper. 8 COMMISSIONER SEAMOUNT: Oh, okay. I gotcha. 9 CHAIR FOERSTER: Tyonek not Beluga. 10 MR HENNIGAN: It was around 85, 8,600 feet, 11 that's 12 COMMISSIONER SEAMOUNT: All right. 13 MR. HENNIGAN: what I understand. 14 COMMISSIONER SEAMOUNT: And if were getting 15 into areas of confidentiality regarding your discovery 16 let me know that we can't talk about it on the record. 17 CHAIR FOERSTER: Because anything you do say on 18 the record will be public. 19 MR. HENNIGAN: I understand. Truthfully I've 20 only been told not to talk to any of my other customers 21 about this -- about the well and I haven't. So 22 COMMISSIONER SEAMOUNT: Okay. 23 MR. HENNIGAN: I don't really know what's 24 on. 25 Mr. Norman, there's a pretty detailed 26 . • 1 discussion of the injection and confining zones. It -- 2 the primary injection zone is proposed in the upper 3 Beluga between 5,700 feet measured depth and 7,000 feet 4 measured depth. 5 CHAIR FOERSTER: Could you tell us what pages 6 in the 7 MR HENNIGAN: It's on Page 14. 8 COMMISSIONER SEAMOUNT: And that's -- is that 9 in the number 3 or the number 1 well? 10 MR. HENNIGAN: Number 3 well. 11 COMMISSIONER SEAMOUNT: Number 3. Okay. 12 MR. HENNIGAN: The -- as the geologist defined 13 it, the upper confining zone is between the top Beluga 14 at 5,721 feet and the base of the lowest massive and 15 overlying Sterling at 5,332 feet which is about a true 16 vertical thickness of approximately 350 feet. 17 COMMISSIONER NORMAN: I did look at this last 18 week, but I don't have it in mind. Could you give -- 19 what's the top again on that, just the depth, it's at 20 30 -- what did you say, you mentioned 21 MR. HENNIGAN: The top is 22 COMMISSIONER NORMAN: 5,300 feet, but the 23 other depth was what 30? 24 MR. HENNIGAN: Well 25 COMMISSIONER NORMAN: Say -- if you wouldn't 27 • • 1 mind if you could just start over and say -- and define 2 again the zone. 3 MR. HENNIGAN: Okay. Firstly is that the 4 target area that we're defining for this disposal 5 injection order, the upper confining zone is between 6 the top Beluga at 5,721 and the base of the lowest 7 massive sand in the overlying Sterling at 5,332 which 8 is about 350 feet true vertical thickness. 9 COMMISSIONER NORMAN: Good. Thank you. 10 MR. HENNIGAN: It's very shaley and has inter - 11 bedded siltstone, claystone and a few thin coal seams, 12 et cetera. The lower confining zone is -- occurs 13 between the measured depths of 7,052 feet and 7,250 14 [sic] feet or a thickness of approximately 650 feet. 15 It's similar confining characteristics with inter - 16 bedded mudstone, shale, siltstone, coal stringers and 17 very low permeability sandstones. 18 COMMISSIONER SEAMOUNT: What was the depth of 19 the base of that lower confining zone? 20 MR. HENNIGAN: Seventy -- hmmm, I think I have 21 a typo here, 7,750. I have in the -- I wrote 7,250. 22 CHAIR FOERSTER: Okay. In our application it 23 says 7,250, but that's incorrect? 24 MR. HENNIGAN: That's incorrect, 7,750. 25 CHAIR FOERSTER: Who complied this application? 28 i • 1 MR. HENNIGAN: Ma'am? 2 CHAIR FOERSTER: Was this an application that 3 came from Buccaneer's offices? 4 MR. HENNIGAN: Yes, ma'am, and I actually typed 5 it and had it reviewed and I apologize. 6 CHAIR FOERSTER: Okay. 7 MR. HENNIGAN: And the basic reservoir 8 properties in the Beluga where were proposing to 9 inject, you can see that we had several rotary cores 10 with average core porosity of 22.6 and -- but fairly 11 low permeabilities on the 128 millidarcies range. 12 The well in itself as it stands is very, very 13 good condition as far as structural integrity, 14 mechanical integrity. Cement bond logs show that we 15 have good cement bonding that fully covers the proposed 16 area of injection up to about 4,850 feet. So were 17 quite -- and we did have very good leak -off test below 18 19 issues down deep. So as far as giving barriers, I 20 think we have numerous barriers to prevent any upset to 21 allow breaching of any sort. 22 Related to the breaching of any sort, I've done 23 studies on this in other areas and other formations and 24 it's really the injection methodology has a lot to do 25 with the chances of breaching. If you inject at a very 29 • 1 high pressure and a very high rate, typically, and this 2 was done -- proved by a study at TerraTech in Nevada, 3 the fractures actually go up and then they go out and 4 then they begin to fall. They go up because of the 5 pressure, they go up and then they hit a barrier and 6 7 a little weaker, go up and then the pressure that 8 exists begins to be degraded because of velocities and 9 friction and all that, then the fractures tend to go 10 down. So most fractures go up, out and down at the 11 same time. Well, that's one of the reasons why you 12 don't want to start out with extremely high pressure so 13 Buccaneer's plan is to start out with a very stable 14 pressure and just do a slow frac injection where you 15 minimize the chances of it going up and you basically 16 are conducting a series of radial fractures. 17 In the shale studies many years ago is that 18 they felt like they could fracture across many 19 formations, but what we want to do is that we want to 20 direct the fracture where it goes out in a radial. And 21 if we do it at a low enough rate, but we sustain the 22 rate and pressure, as it begins to plug at the end 23 it'll begin to fracture. So most of the cuttings and 24 mud and cement and water will be basically near 25 wellbore. And it's controlling the pressure minimizes 30 s �► 1 the chances of it going higher. Everybody's heard 2 about all the stuff and issues that have occurred with 3 fracking for production in all the shales, well most of 4 the issues are number 1, either the offset wells 5 weren't abandoned properly or number 2, is that they 6 got such a high rate that it just kept going up into a 7 zone where it had connectivity with the other wells. 8 So monitoring the injection pressures is very key to 9 having this -- for everybody to sleep well at night. 10 COMMISSIONER NORMAN: Mr. Hennigan, when you -- 11 when you're talking about the fractures going up I was 12 thinking you are talking about the trajectory of a 13 fracture as opposed to the number of fractures going 14 up? 15 MR. HENNIGAN: That is correct. 16 COMMISSIONER NORMAN: Thank you. 17 MR. HENNIGAN: Submitted along with the 18 application was a frac study done by a company called 19 Drill Cuttings Injections Company which actually work 20 on -- off the platforms in the Cook Inlet many years 21 ago, 20, 25 years ago. I had other studies done by 22 Baker, B.J., and pulled in some data that I had which 23 are not even part of this and the technology as 24 presented by the fracking companies indicates that if 25 we -- steady and not erratic well be much better off 31 1 in the long run and that's what we've proposed here. 2 In the application we try to be very thorough 3 in defining all the physical properties of the zones of 4 interest, initial zones of interest that were looking 5 at so they're available for your review or I can get 6 other copies. But are there any questions on the 7 technical parts? 8 COMMISSIONER NORMAN: Just a question on the 9 pressure, the pressure that will be applied on 10 injection. What will that pressure be and how will 11 that be monitored in the future? 12 MR. HENNIGAN: That'll be monitored at the 13 surface and it'll be monitored on a chart basis. And 14 let me go back to my notes here, and what well do is 15 well establish -- well actually establish a fracture 16 of the grave -- of the well, well take the well to 17 leak -off. I don't remember the numbers in there, but 18 I'm guessing 3,000 pounds, 4,000 pounds. Once we take 19 it to leak -off then well establish a steady injection 20 and try not to exceed that. Occasionally what will 21 happen is even the perforations and all that will plug 22 up with cuttings or mud or whatever and you'll have to 23 exert more pressure, but it's -- can only be a 24 nanosecond and it should dissipate down to the end. 25 Overall the plans are to inject at less than 3,000 32 • • 1 pounds. 2 CHAIR FOERSTER: So you're going to stay below 3 frac pressure? 4 MR. HENNIGAN: Yes, ma'am. Once you get the 5 frac going, if you -- if you're looking -- actually 6 there's an example in here. 7 CHAIR FOERSTER: Tell us what page it's on. 8 MR. HENNIGAN: When we -- when we did the leak - 9 off test at the different zones what happens is that as 10 you inject your pressure with volume goes up and then 11 it breaks off. When it goes up and begins to -- begins 12 to curve over that's called the leak -off or the initial 13 fracture initiation. Go a little bit more and you have 14 your fracture. When you have your fracture the 15 pressure drops off and that would be the sustained 16 pressure that we'd like to target while we're injecting 17 the well. WE don't want to create a lot of new 18 fractures, we want one that we know where it's at. 19 COMMISSIONER SEAMOUNT: Did you -- Mr. 20 Hennigan, did you say you'd performed a baseline study 21 of the water wells in the area? 22 MR. HENNIGAN: Yes, sir. 23 COMMISSIONER SEAMOUNT: Did you -- what did you 24 25 MR. HENNIGAN: No, sir. 33 • • 1 COMMISSIONER SEAMOUNT: Okay. Because some of 2 the wells do contain gas, but farther to the south 3 MR. HENNIGAN: Yes, sir. 4 COMMISSIONER SEAMOUNT: up in the valley. 5 MR. HENNIGAN: Actually Mr Ireland in the 6 hydrology department helped me out quite a bit on this. 7 COMMISSIONER SEAMOUNT: Are you going to 8 continue to sample the water or just assume it's going 9 to be good until someone says it isn't? 10 MR. HENNIGAN: Let -- you know, as -- I'm a 11 representative of Buccaneer, but I can't commit to a 12 13 request. 14 COMMISSIONER SEAMOUNT: Well, it's probably 15 prudent I would think. 16 MR. HENNIGAN: I think it would be darn prudent 17 especially on the deeper well. 18 COMMISSIONER SEAMOUNT: Now your disposal 19 material is going to be only drilling material or do 20 you foresee using it for other types of disposal as 21 these wells produce, like produced water, that kind of 22 stuff? 23 MR. HENNIGAN: Yes, sir, we do anticipate 24 produced water. Actually as time goes on the bulk of 25 the injection will be produced water. 34 • • 1 CHAIR FOERSTER: Do you have any other 2 questions, Commissioner Norman? 3 COMMISSIONER NORMAN: I don't. 4 MR. HENNIGAN: I have something I'd like to add 5 which I've learned since this started and I want to 6 tell you I've actually been working on it since October 7 of last year and didn't submit anything until March. 8 And since March what I've found out in doing other work 9 for Buccaneer and others is that the place for disposal 10 of materials in the Kenai area is very critical. 11 There's not a lot of people taking it and even if it's 12 meeting all the criteria there's just a room issue. 13 For example, the disposal facility at Soldotna, at the 14 Kenai Peninsula Borough facility is limiting what you 15 can -- how much you can dispose there over a period of 16 time, other public -- not public, but commercial 17 facilities have pretty much run out of room so we're in 18 a critical issue in the Kenai area. And I've -- 19 frankly in doing work with -- I would rather have the 20 junk down hole than on the surface, I don't care what 21 form it's in. 22 And one other little issue here is that if you 23 would look at a full million barrels and, you know, you 24 think a million barrels and you say it's going to be a 25 lot, well, it is a lot, but when you look at the area 35 • 1 or space that it would take, assuming the maximum frac 2 wing, half frac of 500 and something feet, okay, you 3 take just that frac wing, 50 feet thick of the 4 injection interval, it's only 225 feet wide is a 5 million barrels. It's not a lot so if we take care of 6 it properly we'll keep it very close to the existing 7 wellbore. 8 CHAIR FOERSTER: Mr. Hennigan, is -- in your 9 application is there a maximum volume that you're 10 requesting? 11 MR. HENNIGAN: I think its 1,150,000 barrels. 12 COMMISSIONER SEAMOUNT: Did you include the 13 calculation for the area of endangerment in the 14 application, the formula that you used? 15 MR. HENNIGAN: Educate me. 16 COMMISSIONER SEAMOUNT: You say a 50 foot thick 17 zone taking a million barrels would only go out how 18 many feet? 19 MR. HENNIGAN: Five hundred feet 20 COMMISSIONER SEAMOUNT: Okay. 21 MR. HENNIGAN: and then 225 feet wide. 22 COMMISSIONER SEAMOUNT: So I'm interested in 23 knowing what the formula was to calculate that? 24 MR. HENNIGAN: I just used straight -- took a 25 million barrels, 5.61 cubic foot per barrel and then 36 • • 1 just made it a rectangle just to see for myself really. 2 COMMISSIONER SEAMOUNT: Did you assume a 3 certain porosity 4 MR. HENNIGAN: No, sir, I 5 COMMISSIONER SEAMOUNT: fracture 6 (indiscernible - simultaneous speech) 7 MR. HENNIGAN: assumed the frac -- frac 8 studies. 9 COMMISSIONER SEAMOUNT: Okay. 10 CHAIR FOERSTER: So you're saying the frac is 11 going to grow to 225 foot in width? 12 MR. HENNIGAN: No, ma'am, I was just -- the 13 point I was trying to make is that when you look at the 14 area -- at the actual area that a million barrels takes 15 up, it's -- you know, when we hear a million we say 16 man, that's huge, huge, but when you actually look at 17 the volume that it takes up it's not that big, you 18 know, by comparison standards. And we do -- you know, Y P Y 19 the maximum frac -- half frac is 500 and something feet 20 and lord, that's what we -- we darn sure want to stay 21 within that, you know, and that's a worst case 22 scenario. 23 CHAIR FOERSTER: So if you dispose of a million 24 barrels of disposal fluid you're frac's only going to 25 grow out 500 feet in each direction? 37 • • 1 MR. HENNIGAN: Yes, ma'am. 2 CHAIR FOERSTER: And what's the frac width? 3 MR. HENNIGAN: Frac width is about 50 feet if I 4 recall correctly. 5 CHAIR FOERSTER: Do we need to take a recess, I 6 don't think it would hurt? 7 COMMISSIONER NORMAN: I have one final question 8 and then we can take a recess. 9 CHAIR FOERSTER: Okay. Do that. 10 COMMISSIONER NORMAN: Thank you, Mr. Hennigan, 11 I think you've covered quite a bit. My question is 12 along the lines of -- and you're welcome to sit down if 13 you're more comfortable too. My question is along the 14 lines of in any trial or presentation there comes a 15 time then when you have a final closing argument or 16 summary of what you believe you've presented and 17 communicated. So I would appreciate it if you could 18 19 the most important points from the perspective that you 20 might be talking to a public meeting in Kenai of people 21 worried about their aquifer and potential contamination 22 as a result of this operation. What safeguards do you 23 think that you've identified for us, what's their 24 confine -- everything from confining layer all the way 25 to in the future on change out of personnel, how are 38 1 they going to know to monitor this, what are the 2 company's practices, things like that. And speak if 3 you would as much as you could in layman's terms so 4 that someone reading this would understand the 5 precautions being taken. 6 7 December the 13th I had to do this for a county or 8 parish in Louisiana, there was a lot of concerns on 9 fracking and disposal wells and water and all this. 10 So to the public. I'm very concerned about 11 disposal wells and salt water disposal wells of any 12 sort. I don't care if its state approved or EPA I 13 approved, it's a big concern to me as a citizen of the 14 country and a citizen of whatever local area I work in 15 is that before -- I have a personal obligation and I 16 have a legal engineering obligation to recommend what 17 is most right technically and for the people. And a 18 lot of people don't understand that, but I have a 19 master's in engineering and one of the things was -- 20 the courses I had to take was legal -- the legal parts 21 of it. So I have an obligation there and then also 22 working for the company. We're an engineering company, 23 we have legal obligations as well. So we have to 24 address everything from number 1, both the technical 25 aspect first and then I have to address it from a 39 • • 1 personal aspect. 2 Excuse me for speaking to the public. 3 CHAIR FOERSTER: That's what he asked you to 4 do. 5 MR. HENNIGAN: The first thing is that we have 6 designed this well based upon what we can determine 7 from well logs and well test to make sure that any 8 fluids or solids that we put back into the formation is 9 confined in a place for the future as we could ever 10 anticipate it to be. We have the wellbore integrity, 11 we have the cement isolation above the potential zones 12 of injection and the geologists have defined from what 13 they can see as an upper barrier and a lower barrier. 14 As a matter of fact they have defined several upper 15 barriers, one being at the top of the Sterling at about 16 3,500 feet and the other one being at about 5,500 foot 17 and, of course, the lower's at the base of the Beluga. 18 So we have two confining layers for this disposal as 19 the geologists have defined where its a restriction of 20 flow and the hardness of the shale and the porosity and 21 permeability which is ability to flow, if you will, is 22 very minimal at that point. Then mechanically we have 23 it isolated with casing and cement. So that is the 24 mechanical aspects of the barriers. 25 The other thing that of -- we don't -- we need 40 • . 1 to have control on is monitoring, is that every day 2 when we inject we monitor the pressure and we monitor 3 the volume and we keep records and we submit them to 4 the AOGCC for evaluation every so -- I think it's 5 monthly if I remember correctly. And also every year 6 we have to -- or one to two years depending on the 7 criteria, we have to do a mechanical integrity test. 8 Mechanical integrity test means that we test all of the 9 equipment, all of the casing and everything to make 10 sure it still falls within the criteria of which we are 11 asking for this injection order today. If it doesn't 12 fall within that criteria then we have to do something 13 to correct that issue and that will come back to the 14 AOGCC for approval. So they will look -- approve the 15 mechanical aspects of it. 16 The other thing is that -- you know, I'm 17 thanking god for the mechanical integrity test 18 requirement that the AOGCC has. Not all states, not 19 all parts of the country have these requirements. If 20 we are to protect our kids and grandkids for the future 21 we have to make sure that we monitor everything about 22 this well until its last day. And then subsequent to 23 that there should be occasional monitoring to make sure 24 there's no issues that we can't see. 25 Also related to this is that I've done many 41 • • 1 studies including, and this goes back many, many years, 2 on our environment. And when my daughter who's now 38 3 was 12 she did a study on how to get rid of crude oil. 4 Surprisingly enough there's a lot of things that you 5 can do in a warm climate, there's not a lot you can do 6 in a cold climate to take care of crude oil. So there 7 are a lot of natural things that can take care of crude 8 oil. Salt water's an issue that la ues everybody p g Y Y 9 wherever we go. The thing that we need to do is to 10 keep it where it cannot impact us in our daily lives 11 both now and the future which is down in the ground. 12 So my thoughts are if we bind it with sawdust and other 13 chemicals and put it in a public disposal, nobody has 14 done studies over the years to see what's going to 15 happen to that, you know, there have been no long -term 16 studies, maybe 25 years, but what's going to happen in 17 another 25 or another 25. We have no idea and anybody 18 that tells you they do, you need to look at their 19 background. But we know that subject to some unknown 20 major catastrophe is that if we put it down deep it 21 will dehydrate and it will solidify and it will become 22 pretty much like the natural formation. And what 23 Buccaneer has proposed is to put it deeper than any 24 25 grandfathered in disposal wells in Cannery Loop and a 42 • • 1 couple others, they're only at 13 or 1,400 feet. Those 2 are the ones that need to be worried about because 3 they're still in the quote, fresh 4 water range. My -- our proposal is to put it down much 5 deeper where it's not in the fresh water range. 6 Any questions from the public? 7 COMMISSIONER NORMAN: Commissioner Foerster, 8 three quick follow -up questions. Thank you for doing 9 that. I understood that your maximum injection 10 pressure and if it came out in an order this would be 11 accepted is 300 or 3,000 psi; is that right? 12 13 exception that is noted that says occasionally you may 14 see a pressure as high as 6,000 pounds, but that's only 15 to get the material moving near wellbore. 16 COMMISSIONER NORMAN: All right. And the 17 maximum amount of fluid to be injected I understood is 18 1.15 million barrels? 19 MR. HENNIGAN: Yes, sir, I just took an 20 assumption of X amount per day for 15 years, that's a 21 very approximated amount. I sus 22 COMMISSIONER NORMAN: And that's barrels? 23 MR. HENNIGAN: That's barrels, yes, sir. 24 COMMISSIONER NORMAN: And I'm sorry, did I 25 interrupt you or 43 • • 1 MR. HENNIGAN: No, sir. 2 COMMISSIONER NORMAN: And my last question, on 3 a part of your testimony you added a qualification 4 that, of course, I'm just a consultant and not 5 authorized to speak for the company. So I want to find 6 out does that qualification apply just to that one 7 little thing you said or are there any others of your -- 8 areas of your testimony that you're not authorized to 9 speak to? 10 MR. HENNIGAN: It's a good point. I thought I 11 said commit to a specific request, you know. As far as 12 the testimony I'm authorized in everything that I'm 13 testifying, but a special request would have to be 14 approved by the company. 15 COMMISSIONER NORMAN: Okay. Thank you, 16 Commissioner Foerster. 17 CHAIR FOERSTER: All right. Do you have any 18 questions? 19 (No questions) 20 CHAIR FOERSTER: All right. We're going to 21 take a 10 minute recess and we will reconvene at 10:33. 22 Recessed. 23 (Off record) 24 (On record) 25 CHAIR FOERSTER: We're back on the record at 44 • • 1 10:45. Mr. Hennigan, we have several questions 2 MR. HENNIGAN: Yes, ma'am. 3 CHAIR FOERSTER: left and there are some 4 inconsistencies in your testimony and the documents 5 that you provided to us and so what we would like to do 6 is leave the record open for -- well leave the record 7 open until June the 5th and we will get our questions 8 to you within the next day or so and we want you to get 9 them back to us by June the 5th. And then we will 10 either make a decision or if we have more need for 11 answers or testimony we will renotice for an additional 12 hearing. 13 MR. HENNIGAN: Yes, ma'am. 14 CHAIR FOERSTER: Okay. Any comments, 15 questions? 16 COMMISSIONER SEAMOUNT: No, I don't. 17 COMMISSIONER NORMAN: No questions. 18 CHAIR FOERSTER: All right. Do I have a motion 19 to adjourn. 20 COMMISSIONER NORMAN: Move to adjourn. 21 COMMISSIONER SEAMOUNT: I second. 22 CHAIR FOERSTER: All in favor. 23 IN UNISON: Aye. 24 CHAIR FOERSTER: Opposed. 25 (No opposing votes) } 45 • 1 CHAIR FOERSTER: We're adjourned. 2 (Adjourned - 10:48 a.m.) 3 (END OF PROCEEDINGS) 46 s +� 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 08 through 47 are a true, 4 accurate, and complete transcript of proceedings in 5 Docket No.'s AEO -12 -001, DIO -12 -002, Volume II 6 transcribed under my direction from a copy of the 7 electronic sound recording to the best of our knowledge 8 and ability. 9 10 11 Date Salena A. Hile, Transcriber 12 47 I. I • • STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION KENAI LOOP AQUIFER EXEMPTION AND DISPOSAL INJECTION APPLICATIONS May 22, 2012 at 9:30 am NAME AFFILIATION PHONE # TESTIFY (Yes or No) �` °/V/Ui/ -A) � r c 'C� . - -deer.' 33 /Be-05395 F' i b 0 I/ 16CC 1C(3- i 223 ')Ir3 \_i ODV ( 0 vvii3 1 c' ' ' - 70 , 1 (3-,) 7 /7() ,.57,c_. L ,-(_. nz: t„ 7 s /0 6 c___ 7 ','3 /zzy A/0 Lb. i/t F 4, V4 ti L/Q 2- 10 7 dry `I �") NO PAVE} koPY u 466 7g3_ 1232_ or..,, me_ k4._,,_ Ao G c c 3 L S- 34-i-3 N. c1�• 6C 1 `13 - - 1z3.6, ti 3 • Davies, Stephen F (DOA) From: Steve Ward [SWard @BuccaneerResources.com] Sent: Thursday, July 05, 2012 8:22 AM To: Regg, James B (DOA); Stephen F. Hennigan; David Doherty; Andy Rike Cc: Davies, Stephen F (DOA) Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Attachments: 1 AOGCC Responses Updated 7 05 2012.docx; 8 20 AAC 25.252 c 10 and 11 06 28 2012.docx; TDS Chart 2 Aquifer Exemption area.xlsx Mr. Regg Responses to your concerns of missing information are in red below but have been added to our original responses in BLUE (attached): 1. AEO interval and updates are as follows: "Based upon the confining zone in the discussion above addressing DIO, Page 14 -15, "Injection and Confining Zones ", AND the chart labeled "TDS Chart 2 Aquifer Exemption area ", Buccaneer proposes that the aquifer exemption be modified to include the area from 3980'MD/3963'TVD to 7539'MD/7190'TVD. This aquifer exemption will "bracket" the requested injection zone stated above. The entire footage requested in the aquifer exemption, calculates to have greater than 3000ppm NaCI which additionally implies >3000ppm TDS The depths noted have been inserted into the document "8 20 AAC 25.252 c 10 and 11 06 28 2012 ". The depths in the Aquifer Exemption request dated March 13, 2012 should be modified to match these depths. 2) The statement you referred to was mistakenly not corrected to say that the update graphic is in "4 Sec 4.4 Appendix B Graphic pressures etc ". The statement should have said ...The company which performed the fracture model and study has updated the plot as best they can to be readable per your request. It was included in the response packet and labeled "4 Sec 4.4 Appendix B Graphic pressures etc ". 3) The area addressed in Table 1 of the AEO is NOT anticipated to change (increase) as it was conservative initially. The decrease in the aquifer exemption interval requested will make this even more conservative. Unless you suggest otherwise, we propose leaving the POTENTIALLY impacted area as is. The 1,000,000 bbl injection case in the DIO request which in the model shows a half frac wing of ±1600' (worst case) gives a span of ±3300'. This too, will obviously be within that area. Your last comment regarding "clarifying the density" is confirmed that the model was done with a 10.5 ppg (1.26 sg) slurry. 1 Thanks and Regards, Stephen L. Ward Operations Manager— Production Buccaneer Resources,LLC 952 Echo Lane, STE 420 Houston, TX 77024 (o) 713 - 468 -1678 (f) 713 - 468 -3717 (c) 832 - 444 -6071 www.buccaneerresources.com From: Regg, James B (DOA) [mailto:jim.regg @alaska.gov] Sent: Tuesday, June 26, 2012 3:41 PM To: Steve Ward; Stephen F. Hennigan; David Doherty; Andy Rike Cc: Davies, Stephen F (DOA) Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Gentlemen — I am continuing to try to sort through your edits. There appears to still be some missing information as I write the injection order and aquifer exemption. From Buccaneer's response: 1) Inserted above paragraph header "DIO, Page 23- 25..." is the following statement — "AEO interval and updates are as follows:" - there is nothing related to the AEO that follows this statement 2) Paragraph titled "DIO, Page 35, "Injection Pressure ", you state: "The company which performed the fracture model and study is attempting to update the plot per your request" - when might this be received? 3) Paragraph titled "AEO, Cover Letter... ", you state: "Buccaneer proposes to revise its AEO request. However, the requested disposal interval is anticipated to be the same as adequate upper and lower barriers are proposed to be in place." - 2 graphics (Calculated TDS vs Depth) provided on 6/5 appear to narrow both the proposed injection interval and the aquifer exemption interval - What impact does this have on the affected area (Table 1 of the AEO application)? It is not clear what slurry density was used in the fracture propagation modeling runs (Exhibits 20a, 20b, 21) for Kenai Loop #3. It appears from page 11 of DCDC study that this is 10.5ppg (SG= 1.26). Please clarify. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 - 793 -1236 From: Steve Ward [ mailto :SWard@BuccaneerResources.com] Sent: Monday, June 04, 2012 2:43 PM 2 • To: Regg, James B (DOA) Cc: Andy Rike; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); David Doherty; Stephen F. Hennigan Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Regg— Please find attached Buccaneer's responses to the AOGCC's comments, questions and requests for clarification from the May 22, 2012 hearing (Kenai Loop DIO /AEO applications). Buccaneer appreciates your time and effort in working with us on the request. If there are additional questions or information required, please let us know and we will answer in a timely manner. Stephen L. Ward Operations Manager— Production Buccaneer Resources,LLC 952 Echo Lane, STE 420 Houston, TX 77024 (o) 713 - 468 -1678 (c) 832 - 444 -6071 From: Regg, James B (DOA) Jmailto:iim.re•g @alaska.govl Sent: Monday, June 04, 2012 3:55 PM To: Stephen F. Hennigan Cc: Andy Rike; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); Steve Ward Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Email is sufficient Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 - 793 -1236 From: Stephen F. Hennigan jmailto:shennigan©peiinc.coml Sent: Monday, June 04, 2012 5:36 AM To: Regg, James B (DOA) Cc: 'Andy Rike'; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); Steve Ward Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Regg, We have been diligently working on our responses throughout the weekend. What is the AOGCC and /or your preferred method of delivering our responses? 73a/(14f • 44, e rn/ f tte ej / Project Manager /Engineer 3 • • u: 500 Dover Boulevard, Suite 310 !Lafayette, LA 70503 ft: 337 - 984 -2603 a : 337 - 849 -5345 .�-: PETROLEUM • ENGINEERS, INC. Hamilton Confidentiality Notice: The information transmitted is intended only for the person(s) or entity to which it is addressed. It may contain confidential and /or privileged information or material. Any review, retransmission, dissemination to other use of, or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer. From: Regg, James B (DOA) [mailto:jim.regg©a>alaska.gov] Sent: Thursday, May 31, 2012 12:32 PM To: Stephen Hennigan Cc: Andy Rike; Fisher, Samantha J (DOA); Davies, Stephen F (DOA) Subject: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Hennigan: Attached is a document that includes AOGCC comments, questions and requests for clarification based on our review and testimony you provided at the May 22, 2012 hearing (Kenai Loop DIO /AEO applications). As you know the AOGCC left the record open until June 5, 2012 for Buccaneer to respond to AOGCC's questions. These is some confusion regarding what AOGCC intends to do on June 5, and I apologize if I have added to the confusion by stating in my 5/25 email that Buccaneer is expected to be present for the continuation of the May 22 hearing. June 5 was set as the due date for Buccaneer's responses to AOGCC questions. There is no need for Buccaneer to be present at AOGCC offices on June 5. Decision about closing the record will be made based on AOGCC's review of the responses provide by Buccaneer. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 - 793 -1236 4 • • Calculated TDS vs Depth (MD) TDS, mg /I 0 5000 10000 15000 20000 25000 0 ■3000 mg /I • Caculated TDS, mg/I 1000 I 2000 - I 3000 mg /I 3000 . . TDS rfr ti•: t :.. .:.. . .. I . -' 4000 — >..•..- ;::.•..• . _ 5 . 'I • • • • � I • C �. ,.��f•'wf /•441rd a0•'''•• • I .; - t ? Ii.: f :: •.•. •{ r }. �• .s;_' % • a • fARfka , I . • ■ 5000 — t ..J I I ■ :. Itf• : l: : .z�.. ` t s; r:. .X. .s: ,•»4 '''•#.! fir{•.•. .rwr4Mt# L0: 1• " zy� .�•.:1t z••�sM t • % •/' • :t.« c .: . .... ,r, az �~f•IIASr y '�tl•'� 'L��•«.:+ i.� •f e. ... . .,. ~ - a 6000 ' a • f a t ' r .i. •�: ,. " :� % y •:' ` . . •rr .. ftY, : ,, a a t M . I j ZONE �� ` 6•• a •, • i ...... • - 1- •• ... I • • r �. :.t " "i:. 1 tsr f • • f• • c -.. - 41•••.. kk JJJJ • 7000 - -_ .. 1-M- ::Y+ a •;•4 .. „t. ' • • .. a4 • ♦ ; . tt.• f - w.!• . . • ••`••r i. r •• • :Y • i 1', Yt 4.t. : .t..•••••• ` :;1 f t. :' :h 3 . :;''• • - a♦.n i744.•••;.••••%./.:....11.. i•• i... {{ ` f•• • • •• :;i•r.• •t •` t'� e h . P., . • .1'` S �'ti•. ~.i.: ji ^a a'••I �'��' t . . • {. ♦,• _. ' .i. ..I" .w ". ;7:i 4 % . :.:5 . 1 4 . .s ▪ ... :; • : err. : a, •... t. '1. .• . :.1 • l .... I. • • ? mot. ..Sn. / •S , 1F Y + ::: . .. . '! F •., • ' . s.•- . w :%.; ice.:: I ^'•.r ;:• ;, ^a:.° a • a {' +.>: 8000 . r j N 4 ` ,. • • , • , 1 .... J .. .i t � ;'i+:• ;.Y. • :qt y , i •i .:. . z.:' (( .. • i. 'I, f. I 9000 f l i l 1 i l E • • Calculated TDS vs Depth (MD) TDS, mg/I 0 5000 10000 15000 20000 25000 0 1. ■3000 mg /I • Caculated TDS, mg/I 1000 I I 1 2000 t 3000 mg /I 3000 TDS • - 4000 • « . z • • . • ..•i .'j, 1.. • i i 1` 1 r f • • c i y .r°�FZ` %%?ztrir4 .. > :4-: . • • . ••• .. •: �. it •A }l fk�'•'�L': •4 ' y ' '• • •� f o 5000 irLar.� :.: — - . Depths of I . Aquifer r :',....t.; r, ; S.•♦ i ;J.� '" � • 1 ,.. • • •'1. •• :• t •_, j • Exempt . ;it - ...s s•i . `M' ' t ; ' r. Request a � „ xd.+:,' ».w • •. : t .. : . i - • 6000 - - - s . .. •"" • B e e r : • • • ' F: • . j + •• — _ 4i rit r•./ivir:M'Y•!�f44,4.,':i• .r1^.ii» i i• • �/• C• ' .± .. ' r.. z 1: ;- f�.4, i a t! i r • .. :- •:, . ., • }A ... • . ` - Q,9• t .: •.j :..� . r I' .i. • t • ... . " s_ ''. •'"�,1 at V i +'r °' .vim • - , t f� ~. • •f• . . r I • „'r = ',4' f. � , L 1 =i ".• a • t' -. - . ..:Cwt' • ' :. f ;. • { • r • r 7; yr: } j { _ 7000 !— -- � � 4rt P'�' •» . J ':` � !: •i,.+�.'... + � � � '..;; •i •. . Y'sr' fI , «.,p.M•kf• -•. .: � i:: :**4:*. • •, "' 1 • - • . i.t r •1. b . i . •• •. li. • . • L s i• r: o A i .v� ' ?t _ •` • • w' + ;' , t .t.• :• • ' i • ” . r N ^ a : . • ILI ..: I .. - • :'.- u• `4 r . ,i: ��. `a •w�.t s -'.'.�''- «'�•F:•...1' `' • ' • • • ••••• ., • ••-. • t 8000 ..r t. - { j N • . u i r v k r ••j •4 • r •i.. ;` . . • '� •�1�. ••..yt• ...F .I. d ,: -. s•1 '� vT :I• •4 :''i ^••'1'. ."•' •••••0:-:,..: 'L . • :t- •% i r • • .r• • • .'•i• ',•%. . . �. • I I E I 9000 • • May 31, 2012 Information Needs requested by the AOGCC Responses Provided by Stephen F. (Steve) Hennigan and David Doherty Buccaneer General Request My degree is a Master's Degree in Engineering Management for which there is no known licensing process. The program has been offered by a few universities since 1908. It is defined as "specialized form of management and engineering that is concerned with the application of engineering principles to business practice ". During WWII, the Federal government used a number of processes including operations research that is frequently a part of the engineering management program. Operations research is "a discipline that deals with the application of advanced analytical methods to help make better decisions ". Project Management is the term usually used in many cases today. Definitions are from Wikipedia. Areas in which work has been performed related to down hole operations in the oil and gas industry over the last 35+ years include AK, LA, TX, Gulf of Mexico, Atlantic Ocean, MS, FL, AL, OH, NY, PA, WV, ND, CO, MI... Overseas involvement includes Irish North Sea, Russia, Syria, and Venezuela. Prior to the oil industry, I was a college assistant in Mathematics and then an OSHA engineer for PPG Industries. A summary resume is available which identifies with brevity, experience, education, professional organizations, etc. NOTE: The Buccaneer Central Injection Site Fracture Model & Study was performed independently based upon the reference logs and information included in the study. Specific Comments and Questions DIO, Page 1, Well Locations Verbiage changed DIO, Page 3, Exhibit 2. "Hydrologic Survey general Map" Notes added: Arrow indicates Kenai Loop #3 well 1" = 1 mile Circle indicates only 2 water wells nearby Radius of circle = .5 mile • • DIO, Page 3, Exhibit 3. "Hydrologic Survey Water Wells Map" Scale is in upper left hand corner but is approximately 1 "/1000'. It is an expanded view showing the certificates (permits) of the water wells indicated in Exhibit 2. DIO, Page 9, Exhibit 8. "Aerial Map" Aerial map is for reference only so the commission can see the general location of the well in the City of Kenai. DIO, Page 14 -15, "Injection and Confining Zones" Upper Confining Zone: 5332 — 5721 ft MD (5181 — 5531 ft TVD) Sterling Fm The upper confining zone includes shaley /siltstone and coals that would act as vertical barrier to fluid movement. A significant sequence that can be correlated over several miles is the coal seam from 5427- 5436' MD. This 9 ft thick coal seam would act as a vertical barrier to fluid movement. In addition within the upper confining interval is a shaley sequence that is from 5453 ft MD to 5720 ft MD that would also act as a barrier to the vertical movement of fluids. Injection Zone: 5721 -7025 ft MD (553 ] 6704 ft TVD) Beluga Fm The injection interval includes several sands in the Beluga formation in the Kenai Loop #3 well Injection Perforations: 6435 - 6450 ft MD (6170 - 6183 ft TVD) 6950 - 6960 ft MD (6634 - 6643 ft TVD) Lower Confining Zone: 7025 - 7750 ft MD (6704 - 7395 ft TVD) • • AEO interval and updates are as follows: "Based upon the confining zone in the discussion above addressing DIO, Page 14 -15, "Infection and Confining Zones ", AND the chart labeled "TDS Chart 2 Aquifer Exemption area ", Buccaneer proposes that the aquifer exemption be modified to include the area from 3980'MD/3963'TVD to 7539'MD17190'TVD. This aquifer exemption will "bracket" the requested injection zone stated above. The entire footage requested in the aquifer exemption, calculates to have greater than 3000ppm NaCL which additionally implies >3000ppm TDS. The depths noted have been inserted into the document "8 20 AAC 25.252 c 10 and 11 06 28 2012 ". The depths in the Aquifer Exemption request dated March 13, 2012 should be modified to match these depths." DIO, Page 23 -25, "General Conversion Procedure" Temperature survey has been added as per the suggestion of AOGCC DIO, Page 33, "Waste Sources, Types and Volumes" - DIO, Page 33: Total volume (20+ years) = 1,135,000 bbls is an estimate. - Disposal volumes reported differently in the Frac Model are still "referencing" TOTAL estimated injection volume (assumed to be 1,000,000) and assumed 15 years duration. The "radial" plume Buccaneer estimates is PURELY an estimate based upon volumetrics only and is for general reference only. The equation PI() *r ^2 *h where h is the height (ft.) and r is the radius (ft.). There was no consideration of any specific parameters other than distance. However, additional information would have been beneficial. That includes the assumption that the material travels UP 45' and down 45' near wellbore yielding 100' of total cylinder height. The original discussion includes the clarification "if not skewed by fracturing ". These notes were addressed. DIO, Page 34, "Compatibility of Fluids and Formation" The statement made relative to the "resident zone" refers to the lithology where injection is to occur, which, in my opinion, is similar (comparable) in the Buccaneer well to that in other wells reviewed in the area. Although all records are not readily available, no incidents during disposal in injection wells in the general area have been found. An incident is defined for our purposes as "breaching to the surface ", "contamination of drinking water wells ", etc. • • A clarification is in order here as it was mistakenly said "Cannery Loop" when it should have been said "Kenai Loop and other nearby fields ". And, the "grandfathered" exemptions referred to should have been clarified. The reference made to other disposal wells includes ALL disposal wells both active and inactive, that have injected in the general area of exempted zones. Over time, metal /cement barriers can breakdown, subsurface movements can occur, etc. and result in pathways for communication between zones. Those exemptions granted by 40 CFR 147.102 and deeper than (i) Swanson River Field -1700 feet. (ii) Beaver Creek Field -1650 feet. (iii) Kenai Gas Field -1300 feet. could allow disposal wells much closer to the fresh water than one would like in the long term. For example, BC2 (Dio4) is below 2261' and the top of the injection zone of BC3 (Dio8) is 5804'. The KU 24 -7 (Dio11 and Dio11.001) injects below 3720' TVD and is probably a replacement of the KU 11 -17 (Dio9) which injected below 3970' TVD. Areas around inactive disposal wells should be monitored as well as the active wells. Relative to Cannery Loop, the Buccaneer Kenai Loop wells are located in such a position that in all probability if Marathon had drilled the wells, they could be called a Cannery Loop Field extension. The surface locations of the KL #1 and #3 wells appear to be within 1 mile of Cannery Loop leases. Many of the features discussed in AEO13 for the south half of the Cannery Loop Field for CINGSA seem to be similar to those in the Kenai Loop area. There has not been any compatibility analysis done to evaluate the proposed injected materials interaction with the formation and in situ fluids. As the majority of the materials proposed to be injected are generated by drilling, completing, and producing oil and gas wells, any adverse interaction is expected to be minimal. There are presently no samples of either formation /in situ fluids and an array of proposed injection materials to perform any specific tests. However, the mud log description of the formation was reviewed for general formation characteristics. This is the description of solids which might be injected as well as those in the area where the frac during injection may occur. As an addendum, there was no CO2 or H2S indicated by the mud logging report. Although not anticipated, from previous experiences, when those gases are dissolved in water and injected into the formation, they may cause chemical reactions forming precipitates which have a tendency to plug porous media. Should those gases be present, as the operation is planned to be disposal in fractures, this would probably be a minimal occurrence. DIO, Page 35, "Injection Pressure" • • Buccaneer states that the "injection pressure is estimated to average between 1800 -3000 psi." And we stand by our statement in the hearing that the "average injection pressure could be up to 3000 psi with occasional excursions to 6000 psi when refracturing or unplugging perforations ... ". We apologize that the graphic in Section 4.4 of Appendix B was difficult to read in your copy. The discussion of the graphic says in the explanation that the estimate from Eaton data and experience is consistent with the model data which was shown in the graphic. The graphic confirms that following initial pump in the injection pressure stabilizes at approximately 2200psi. Bottom hole tubing injection pressure would be near "5300" psi and is considered normal. On page 10 of Appendix B, Sec 3.3 it states that the injection pressure with seawater at 6300' TVD would be 2280 psi. The hydrostatic of 8.3 at 6300' TVD is 2718psi. This totals 4999 psi, very close to the "5300" psi. The difference is assumed to be friction which is not included in the hand calculations. Also, all must distinguish BHTP and injection pressure at the perforations. The company which performed the fracture model and study has updated the plot as best they can to be readable per your request. It was included in the response packet and labeled "4 Sec 4.4 Appendix B Graphic pressures etc ". DIO, Page 38, Exhibit 19. "Mechanical Properties Output Graph" The original of the pore quality graphic can be found on page 21 of Appendix B Sec 4.3. The plot has been done to be more readable. DIO, Page 39, Exhibit 20, "Fracture Half Wing Model, 50,000 Bbls" The original of the pore quality graphic can be found on page 23 and 24 of Appendix B. This graphic and the other on the same page have been recopied and labeled exhibits 20 a and 20 b respectively. DIO, Page 40, Exhibit 21, "Fracture Half Wing, High Rate, One Time Infection" Graph itself was mislabeled. It is 155 BPD, 3 BPM, 5 year duration. The explanation from the frac design company DCDC "mistakenly did not change the title block information when I ran the 155 bpd model. The total barrels injected, 155 bpd for 5 years, is approximately 288,000 bbls. The horizontal half wing is approximately 890 feet. The 155 bpd total volume model predicts a half frac wing that is between the 50,000 bbl run(horizontal half frac wing 400 feet) and the 1,000,000 bbl run(horizontal frac half wing 1600 feet). Thus the 155 bpd model makes perfect sense, as the frac half wing is in between these two. As you know, these models are conservative, meaning the actual horizontal fracture half wings are less than what these models predict. In addition, once the fractures extend up and into the shallower large sandstone formations, the fracture length will not extend further horizontally, and the slurries will disperse thru the larger sandstone formations, which are massive as compared to the volumes injected in these scenarios. We use these models to predict worse case scenarios, but in reality, they are just that, very conservative. " Regarding "clarifying the density" it is confirmed that the model was done with a 10.5 ppg (1.26 sg) slurry. • • DIO, Page 41, Exhibit 21A, "Fracture Half Wing, High Rate, One time Injection" Injection pressure is 2200 psi per DCDC. DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 3, "Executive Summary" It is not expected that there will be a need for maintaining gel strength in the cuttings slurry as the cuttings and associated mud usually have adequate materials for imparting the needed gel strength. There are also many drilling mud and completion fluid /frac additives that would be considered first. All components of ANY "proprietary viscosfier blend" will be made available to the AOGCC if it is considered at any time. DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 21, Figure 4.3 "Mechanical Properties Output Graph" Previously addressed DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 26, "Geologic Discussion" The reference is made to a "large dirty sandy formation at 5000"' that provides another barrier utilizing that company's techniques as "the finely ground cuttings produced by DCDC would disperse into these sands and could not penetrate any higher ". Buccaneer cannot reasonably define that sand as a geologic harrier to movement of fluids utilizing the DCDC "explanation" DIO, Appendix B, "Buccaneer Central Infection Site Fracture Model & Study ", Page 27, "Summary and Conclusions" Appendix B was provided as a full reference for the use of the AOGCC. • • AEO, Cover Letter, and "Attachment A- Supporting Information" Buccaneer proposes to revise the disposal interval of the AEO request to match the depths stated earlier in "AEO interval and updates are as follows:" (3980'MD/3963'TVD to 7539'MD/7190'TVD.) The area addressed in Table 1 of the AEO is NOT anticipated to change (increase) as it was conservative initially. The decrease in the aquifer exemption interval requested will make this even more conservative. Unless you suggest otherwise, we propose leaving the POTENTIALLY impacted area as is. The 1,000,000 bbl injection case in the DIO request which in the model shows a half frac wing of ±1600' (worst case) gives a span of ±3300'. This too, will obviously be within that area. AEO, Figure 1, "Calculated TDS vs. Depth (MD)" Buccaneer was very specific to provide data on .25' intervals. The blue line consists of individual points. ALL data points were included in that graph. The graph has subsequently been refined removing coals, etc. in an attempt to provide a more representative graph. Included in the revision packet is a file titled "KL #3- Water Sample Analysis ". The brief data obtained is the only data that is available from water sands. It should be utilized for both the DIO and the AEO. 820!C25252c10 and 11062!2012 Formation Water Salinity and Aquifer Exemption On October 25, 2011, during the well testing phase for Kenai Loop #3, a sample of the water from the formation was analyzed on -site by MI-Swaco. Total chlorides were determined to be _6000ppm. The chart for all water tests done is attached. Buccaneer Alaska Operations, LLC is applying for an Aquifer Exemption Order for depths to include the proposed injection area requested by this DIO. These depths are anticipated to be 3980'MD/3963'ND to 7539'MD/71901VD. 0 • Calculated TDS vs Depth (MD) TDS, mg /I 0 5000 10000 15000 20000 25000 0 — ■3000 mg/1 Caculated TDS, mg /I 1000 i 2000 ' I 3000 mg /I i 3000 .. TDS ;.;.x`1.1 "A!.4- •e•:�.:r? .i.. . •� .. .■• ..4 t41T o+r • i ... '.. . , .. • • � • •. . 4000 . 000 - - -T, a .- ± r ++�p� `I. '.. I. ? t•2..__ . r' x',:41.ltl u..tf a +:... ;. I .,'. k.wt r.. • 1 1.; ., , j • • • d e .. • 1 ..w t...t', t•..r nt.tso•- ,ro,,Mwu' .•:- J f • ■ t ":..7.• „• .-' .k ^ . . 5000 i .. Depths of � j Aquifer ', °' .r.....* . ..i 1 + .,. 1 , .r..•..., •. • ` .r I .• • 1 . ii ' I • Exen•ption " : • • • /Y • ' t.i .1•• :ii` : : ..... i ... 14 +E: :t j : •• ,n , g: I { :: • •• : 14''' '•••••'• —• . {...'. . '.i• » t �+ • Request .. • • • •. s' ' `r +` :— ».« i • r .. .•r st , ,,C !. r ? , ;: 4. O h . if v• gip ' 6000 • , . .. . .u: a. 4{.i��•. y . a;-.. . A . / a f , } • - . s % r. .. •. 1 '' , •' w S '' is , :- �,•r�Jt : ,..:tx... ' , . 4zV it • , ..:}..'....• t iC f. ~,. - „ S7. , E.t i • r' . •••• . S r ' • � �t :r •$.1t • ' r.. ' :I. 1 •% I••. I • 7000 �. • • , .,, tv 4 ' i • . hL S ,.l x u r •• .•••. .. , • ..,, L • •• i s �•t'• : •.'''•y•'!:".!”. ire' , t � '. N .. ,.. t '� fi i::...;,• S . y , -• . -, a . r .t -. a•,q N'• -v 4.a `I' 1.•' 't • ' r t': :. . . • .. i N— � , :• ;;. /• \. -:,. 7 { -. :• r. s. �. �.,' ' ' � • 1•.. �: ..{, •y i • • . {I ` ` 4 : • t : : rt r.- .. %: :.a,,,y. 'l , 7 1-..",..,, r 1 ..0? .....: , • i .: . • `.. ,.. s. • II 1" I ( I • Regg, James B (DOA) From: Steve Ward [SWard @BuccaneerResources.com] Sent: Tuesday, June 05, 2012 4:16 AM To: Regg, James B (DOA) Cc: Andy Rike; Fisher, Samantha J (DOA); Davies, Stephen F (DOA); David Doherty; Stephen F. Hennigan Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Attachments: TDS Chart 2 Injection zone area.xlsx; TDS Chart 2 Aquifer Exemption area.xlsx Mr. Regg— Please find attached some additional information in regards to the questions on the AEO. Thanks and regards, Stephen L. Ward Operations Manager— Production Buccaneer Resources,LLC 952 Echo Lane, STE 420 Houston, TX 77024 (o) 713- 468 -1678 (c) 832 -444 -6071 From: Steve Ward Sent: Monday, June 04, 2012 5:43 PM To: 'Regg, James B (DOA)' Cc: Andy Rike; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); David Doherty; Stephen F. Hennigan Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Regg— Please find attached Buccaneer's responses to the AOGCC's comments, questions and requests for clarification from the May 22, 2012 hearing (Kenai Loop DIO /AEO applications). Buccaneer appreciates your time and effort in working with us on the request. If there are additional questions or information required, please let us know and we will answer in a timely manner. Stephen L. Ward Operations Manager — Production Buccaneer Resources,LLC 952 Echo Lane, STE 420 Houston, TX 77024 (o) 713 -468 -1678 (c) 832 - 444 -6071 From: Regg, James B (DOA) Jmailto:jim.regg ©alaska.govl Sent: Monday, June 04, 2012 3:55 PM To: Stephen F. Hennigan Cc: Andy Rike; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); Steve Ward Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Email is sufficient 1 • Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 -793 -1236 From: Stephen F. Hennigan fmailto:shennigan@Deiinc.coml Sent: Monday, June 04, 2012 5:36 AM To: Regg, James B (DOA) Cc: 'Andy Rike'; Fisher, Samantha 3 (DOA); Davies, Stephen F (DOA); Steve Ward Subject: RE: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Regg, We have been diligently working on our responses throughout the weekend. What is the AOGCC and /or your preferred method of delivering our responses? Tk Stephen F. (Steve) Hennigan Project Manager /Engineer 500 Dover Boulevard, Suite 310 1 Lafayette, LA 70503 : 337 -984 -2603 : 337- 849 -5345 PETROLEUM ENGINEERS, INC. Hamilton Confidentiality Notice: The information transmitted is intended only for the person(s) or entity to which it is addressed. It may contain confidential and /or privileged information or material. Any review, retransmission, dissemination to other use of, or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer. From: Regg, James B (DOA) [mailto jim.regg@alaska.gov] Sent: Thursday, May 31, 2012 12:32 PM To: Stephen Hennigan Cc: Andy Rike; Fisher, Samantha J (DOA); Davies, Stephen F (DOA) Subject: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Mr. Hennigan: Attached is a document that includes AOGCC comments, questions and requests for clarification based on our review and testimony you provided at the May 22, 2012 hearing (Kenai Loop DIO /AEO applications). 2 • As you know the AOGCC left the record open until June 5, 2012 for Buccaneer to respond to AOGCC's questions. These is some confusion regarding what AOGCC intends to do on June 5, and I apologize if I have added to the confusion by stating in my 5/25 email that Buccaneer is expected to be present for the continuation of the May 22 hearing. June 5 was set as the due date for Buccaneer's responses to AOGCC questions. There is no need for Buccaneer to be present at AOGCC offices on June 5. Decision about closing the record will be made based on AOGCC's review of the responses provide by Buccaneer. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 - 793 -1236 3 • Calculated TDS vs Depth (MD) TDS, mg/I 0 5000 10000 15000 20000 25000 0 1_ . •3000 mg /I Caculated TDS, mg/I 1000 2000 -- — _ . - -- 3000 mg/I 3000 TDS ., - . +.:, b A. ;.��. . _ . r a .. t . - • 4000 i -........: a ! t r : — • O I :" '�•:» . 't- }» ..t.... .......r,!='4xv.. • : • :.s. • , ' • •. , ... 4_ » ? 4,04.-. +�r• - 1"'•s :•�. . ? . ^ice• �+s• -'K , rF � :T, }.. .}_ w .,tea± r • • .f ............ . i = p . t .. t I .nrr'i'....;*'.: ksfM r : d • .,. . :. 1 a • 6000 . M's T»••L. s • u . . +c: . s.a .:�i , :. : ::. -...?`, :' -- .•, i, 1 t t• r. • •- 1, "+r_•ax: ....•.4••••• i:.• : 2.: rtih . st.:s • • ' . . . 1• ' • _ 1' ' • ZONE `�•r r-: ;: , • : •: ,:. 4....C.:::...: .:. ,F .. ' ... • • �. ' 4' -.• . • 7000 . .. s. ..• -ter- '-1— '=. t ,. . t • r� J .. •h•—. s •s :.. +ri•(.• •�• ..•• '•n .. ' *:;;;‘,^ • .4i. . • •.. - . • - au:3• «.'`. .•'; ; .:4!;..1.:...e.,4- A .:::4•..... • .1--: 1 a,. . .• s - • • • 8000 -- _. r i s � � y " ' .... i• • 4 : . ; ' •.t � ' ' : • • .4 � µ. y l : w . i ' » + .a a ` 1 •�i• •�M; tl a . s."-;:.•--.....„.': •; r. : ' • - i • ., • s • � .r ' r' ,' t` 1 9000 ' -- — — 0 Calculated TDS vs Depth (MD) TDS, mg/I 0 5000 10000 15000 20000 25000 0 1 _ I 1 •3000 mg /I • Caculated TDS, mg /I 1000 • ; I 1 I I I I 2000 I 1 1 i i 1 i I 3000 mg /I 3000 TDS , :ayp~v, i:..?.': »• . • «kft.441.wer•... •V - • i i • a 4000 .'...r.. �` ` < r ......,,,-t».- e•-•-•••- 7.--r. ^ • _ i i i $ ► -. , 5000 — rM . 1 1 Depths of � . . r • •_• 1 1 • ,. �. Exemption k, • Request tx , < *rqa <:: "1 • . ' - .• • ••• • *"• • •. '• : • • . .... ce • � .µ t /,. ryq .. : • 6000 i 1 ', a, r•w. • �" . , t t ht ..f ! ,ff y .1. . 7 .. ..'•.... . *at. taMw t• • • a . • t , : ,- : , f tP'•.+M,': . >t •. . • '» . ;•,. '•• • ,; :• ,:,` I p► '+ H fI r: 1 • .. • • F c .••" `.i %.�_ �• • .. t ... : `t • 7000 _____- -s-- '4p Jr:.ty.r �°• 4 2 : d; v� s. .v. r't .r• _ t r.t '• : :.'f°Yw i Y h•' . J :4 a '. V " : ..a.r r nl.^ .''k ot „7 . i' : if •:. r• . *•. : ,:.• 0 .. • i ,:•:..,.....• 1 'Y�., }7,• giti. � � *,.►. ,.... , • �.t ,: : • •:•-. A.:• . f `• : : • • r• t . ., ;:i!; . • v ••irw •. .,..t•- • ' . 1 : ••• !.•• • • . r,ir '!J • i{. • ; i : °� 1 '� . «. tr.:. . w . • . {; ••• e . •• w • •I • 8000 -- r ; : ' A , :7' { : ; , l' • • fir : � .fa � � • •t: +t.rl.: :. : , : �1 • 1. ;.:j • 1 - • . , • 1 I I I 1 1 1 I • 9000 ! l i i 1 1 I ! • Regg, James B (DOA) From: Regg, James B (DOA) it/ Sent: Thursday, May 31, 2012 9:32 AM 4C `1 To: 'Stephen Hennigan' Cc: 'Andy Rike'; Fisher, Samantha J (DOA); Davies, Stephen F (DOA) Subject: Questions /Clarification regarding Kenai Loop DIO /AEO Applications Attachments: KL3 DIO Questions for Buccaneer.pdf; RE: Continued Hearing for Buccaneer June 5 930am Mr. Hennigan: Attached is a document that includes AOGCC comments, questions and requests for clarification based on our review and testimony you provided at the May 22, 2012 hearing (Kenai Loop DIO /AEO applications). As you know the AOGCC left the record open until June 5, 2012 for Buccaneer to respond to AOGCC's questions. These is some confusion regarding what AOGCC intends to do on June 5, and I apologize if I have added to the confusion by stating in my 5/25 email that Buccaneer is expected to be present for the continuation of the May 22 hearing. June 5 was set as the due date for Buccaneer's responses to AOGCC questions. There is no need for Buccaneer to be present at AOGCC offices on June 5. Decision about closing the record will be made based on AOGCC's review of the responses provide by Buccaneer. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 - 793 -1236 1 • , s Questions for Buccaneer Kenai Loop #3 DIO and AEO Applications May 30, 2012 The following comments are provided to Buccaneer Alaska Operations LLC (Buccaneer) regarding its applications for disposal injection order and aquifer exemption order at Kenai Loop Field well #3. These questions follow reviews by AOGCC staff and the testimony provided by Mr. Steve Hennigan during the public hearing held May 22, 2012. Buccaneer's response to these questions and clarification, as needed, are required before the AOGCC can complete its action on the Kenai Loop orders. Comments DIO, Page 1, Well Locations Last sentence should read "...no other wells other than Buccaneer's Kenai Loop #1 that come into play" DIO, Page 3, Exhibit 2, "Hydrologic Survey general map" It is unclear what the red circle represents. Exhibit provides no scale, no legend, and is not labeled. DIO, Page 3, Exhibit 3, "Hydrologic Survey Water Wells Map" Exhibit is unclear. It appears these are the water wells located within some area of review. Is this a' /4 -mile or 1/2-mile area of review? Exhibit provides no scale. DIO, Page 9, Exhibit 8, "Aerial Map" Again, a poor quality exhibit. Unclear the intent of this graphic but does not seem to have any relevance to the injection order application. DIO, Page 14 - 15, "Injection and Confining Zones" Clarify the depths of the upper confining zone, lower confining zone, and injection zone. There appears to be inconsistent depths, overlap between the injection zone and lower confining zone, and perforations into the lower confining zone based on the depths reference in the DIO application. According to Buccaneer's application: Upper confining zone: 5332 — 5721 ft MD (5068 — 5418 ft TVD) Injection zone: 5721 — 7025 ft MD (5418 — 6591 ft TVD) Injection perforations: 6435 — 6450 ft MD (6170 — 6183 ft TVD) 6950 — 6960 ft MD (6634 — 6643 ft TVD) Lower confining zone: 7052 — 7250 ft MD (6152 — 6802 ft TVD). Testimony by Mr. Steve Hennigan on 5/22/12 indicated the lower confining zone measured depths should be 7052 ft and 7750 ft; he did not provide revised true vertical depths. The discussion on page 12 ( "Geologic Details ") describes different (additional ?) upper confinement ( "vertical barriers to movement of fluids occur at 3068' (3066' TVD...), and 3200 (3197' TVD...) to 3300' (3297'TVD...)). Kenai Loop #3 Disposal Inje. Order Questions and Clarification Required May 30, 2012 Page 2 of 4 On page 22 ( "Well Construction and Integrity "), Buccaneer indicates the top of the injection interval is 5030 ft. Please also verify depths of aquifer exemption being requested (page 42 and Aquifer Exemption Order application) to the extent they are impacted by any changes resulting from the review of confining and injection zone depths. DIO, Page 23 -25, "General Conversion Procedure" Work procedures should be consistent with approved Sundry 312 -100 (dated 5/14/12). DIO, Page 33, "Waste Sources, Types and Volumes" Disposal volume is reported differently: - DIO, Page 33: Total Volume (20+ years) = 1,135,000 bbl - Appendix B, Page 3: 67,000 bbls /year for 15 years - Appendix B, Page 8: 1,000,000 bbls each year for 15 years - Appendix B, Page 9: 2,500 bbls /day; 15 years - Appendix B, Page 16: 1,000,000 bbls over a 15 -year disposal injection period (identified as "worst case ") - Public Hearing testimony 5/22/12: 1,150,000 bbls total disposal injection volume, calculated by assuming a daily volume (barrels) for 15 years Buccaneer estimates a "radial plume would be generated in the injection zone of 180 ft if not skewed by fracturing." Please describe how you calculate this zone of influence, including values for porosity, thickness of the zone receiving injection; perforated interval considered in the determination, and any other relevant factors. Also provide the sources of the input parameters for the calculation. The relevance of a 180 -foot radial plume is unclear given the slurry injection fracture study that is included as Appendix B. That study provides modeled fracture propagation for a 1,000,000 barrel slurry injection case that extends laterally more than 400 feet from the wellbore, and 45 feet beyond both the upper and lowermost perforations. DIO, Page 34, "Compatibility of Fluids and Formation" According to the DIO application on page 34: "The resident zone is typical for injection wells within the area that have operated without incident over the last 15 years and is therefore comparable with the same wastes being injected in similar storage reservoirs." [emphasis added] During public hearing testimony by Mr. Hennigan on May 22, 2012, it was suggested Buccaneer's proposed disposal injection at Kenai Loop #3 is safer than other injection wells in the area because they have proposed to inject "deeper than any grandfathered in disposal wells in Cannery Loop and a couple others" that are injecting "at 13 or 1400 feet ". Mr. Hennigan continued by suggesting the other disposal wells in the area "are the ones that need to be worried about because they're still in the quote, fresh water range." AOGCC records indicate that there are no disposal injection wells in Cannery Loop. Of those disposal injection wells closest to the Kenai Loop #3 Disposal InjeS Order Questions and Clarification Required May 30, 2012 Page 3 of 4 Kenai Loop field, only one well is injecting at a depth shallower than 4000 feet TVD, and that well is limited to produced water disposal injection, with extensive performance monitoring and fracture propagation modeling in support of continued operation. Please clarify which wells are injecting at a depth of 1300 to 1400 feet which represent a concern based on Buccaneer's research. Has there been any compatibility analysis done to evaluate the proposed injected materials interaction with the formation and in situ fluids? DIO, Page 35, "Injection Pressure" Buccaner estimates an average injection pressure up to 3000 psi with "occasional" excursions to 6000 psi when refracturing of the formation occurs because existing fractures become plugged. While not referenced in the "Injection Pressure" write -up, Section 4.4 of Appendix B presents a conglomeration of pressures, rates and concentrations versus time. Too much information is presented on this single graphic, and the colors of the individual lines cannot be distinguished, making it confusing. It appears from the graph (Alaska SFI 1 Day Inj BHTP & Surf Press.) that bottomhole tubing injection pressure is modeled to exceed 6500 psi continuously for 14 hours while injecting, hardly an occasional occurance. DIO, Page 38, Exhibit 19, "Mechanical Properties Output Graph" Poor quality graphic; unreadable. DIO, Page 39, Exhibit 20, "Fracture Half Wing Model, 50,000 Bbls" Poor quality graphic; unreadable. DIO, Page 39, Exhibit 21, "Fracture Half Wing Model, 155 BPD, 3 BPM, 5 Year Duration" There are conflicting descriptions of the modeled parameters on this graphic. Heading indicates this is a batch injection model run (155 BPD @ rate of 3 barrels per minute, for 5 years) while the title above the graph indicates this is single event model (2500 barrels continuously injected at 6 barrels per minute). Which is it? DIO, Page 41, Exhibit 21A, "Fracture Half Wing, High Rate, One Time Injection" Poor quality graphic; unreadable. What is the injection pressure associated with this scenario? DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 3, "Executive Summary" Reference is made to the potential use of a "proprietary viscosifier blend" for maintaining gel strength in cutting slurry. Buccaneer must disclose to AOGCC the components of this proprietary viscosifier if it is to be used. DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 21, Figure 4.3, "Mechanical Properties Output Graph" Poor quality graphic; unreadable. r Kenai Loop #3 Disposal InjeS Order Questions and Clarification Required May 30, 2012 Page 4 of 4 DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 26, "Geologic Discussion" Reference is made to a "large dirty sandy formation at 5000 feet" as providing a "significant barrier to upward slurry growth ". Is this a third level of confinement? It is unclear why this is so non - specific given the details of the upper and lower confining zones in the DIO application. DIO, Appendix B, "Buccaneer Central Injection Site Fracture Model & Study ", Page 27, "Summary and Conclusions" The summary should include specifics about the modeling results, such as fracture growth, lateral extension, modeling parameters used and why they are representative (or exceed the expected slurry injection volumes, pressures, rates, etc.) Aquifer Exemption Order, Cover Letter; and "Attachment A — Supporting Information" Buccaneer indicates it is requesting an aquifer exemption for the Sterling and Beluga formations as the zones for injection of Class II wastes (depth interval 3300 feet TVD to 8050 feet TVD). Page 42 of Buccaneer's DIO application requests the aquifer exemption for depths that coincide with the planned disposal injection interval only: 5721 — 7025 ft MD (5418 — 6591 ft TVD). Please clarify. AEO, Figure 1, "Calculated TDS vs Depth (MD)" The labeled upper confining layers, disposal zone, and lower confining layers are inconsistent with those identified in the DIO. Depths shallower than approximately 5,000 ft MD and deeper than approximately 7,000 ft MD show calculated total dissolved solids (TDS) values less than 3,000 milligrams per liter, which would constitute a major exemption and likely require processing under Federal regulations at 40 CFR 145.32, at EPA's discretion. Buccaneer references a (single ?) water sample taken during the well testing phase for Kenai Loop #3 after drilling was completed (page 42). No depth was identified and no analysis has been provided with either the DIO or AEO applications, except to note (in the DIO) that the total chlorides was determined to be approximately 6000 parts per million. Provide the water sample depth and analysis. • • Colombie, Jody J (DOA) From: Davies, Stephen F (DOA) Sent: Thursday, May 17, 2012 9:43 AM To: Foerster, Catherine P (DOA); Seamount, Dan T (DOA); Norman, John K (DOA) Cc: Regg, James B (DOA); Colombie, Jody J (DOA); Ballantine, Tab A (LAW) Subject: Buccaneer AEO /DIO Hearing -- Follow -up Call Cathy, Dan and John: I spoke with Steve Hennigan of Petroleum Engineers, a contractor who provides engineering support to Buccaneer. We spoke about Buccaneer's lack of representation at the DIO /AEO hearing. His story morphed as the conversation went on. First he said that he wasn't aware of the hearing. Then he said he called AOGCC and was told that they didn't need to attend. 1 asked who he talked with at AOGCC, but he couldn't remember. I told him the hearing notice is published on AOGCC's website under the heading "Hearings and Meetings" and then the subheading "Public Meetings." He then said that he was aware there was a hearing but was told that Buccaneer didn't need to attend by Bob Britch (an Anchorage -based permitting agent). Steve wasn't sure where Bob got that information. I mentioned to Steve that the hearing has been continued to May 22 at 9:30 AM and asked him to confirm it with g Y h Jod Y I also j asked that Buccaneer provided enlarged, legible prints of the well log displays in advance of the hearing. He said that Buccaneer would take care of it this week. Steve D. 1 • 11 Colombie, Jody J (DOA) From: Regg, James B (DOA) Sent: Thursday, May 17, 2012 10:44 AM To: Stephen Hennigan; Bob Britch; Steve Ward; Andy Rike Cc: Schwartz, Guy L (DOA); Davies, Stephen F (DOA); Colombie, Jody J (DOA); Ballantine, Tab A (LAW) Subject: RE: Buccaneer AEO, DIO Applications Attachments: AEO 12 -001 (Kenai Loop Field).pdf; DIO 12 -002 (Kenai Loop Field).pdf Mr. Hennigan, Mr. Britch, Mr. Ward, and Mr. Rike: The AOGCC Commissioners have rescheduled the public hearing regarding Disposal Injection Order and Aquifer Exemption Order applications for Kenai Loop #3 since Buccaneer was a no -show today. The rescheduled hearing will be held May 22, 2012 at 9 :30 am. You are reminded that it is Buccaneer's responsibility to contact AOGCC prior to the planned date of a hearing to confirm the schedule. Copies of the notices (attached) were sent to Buccaneer, posted on AOGCC webpage, and sent to an email distribution on April 10, 2012. I advised on May 3, 2012 that Buccaneer would need to be prepared to address - at the May 17 hearing - the items listed in AOGCC's Public Hearing Guidelines (see hyperiink below). I understand you have spoken with Steve Davies (AOGCC Sr. Geologist) about this already and will address his request for a legible copy of the type log section covering the injection zone, and upper and lower confining layers that correspond to your discussion in the application. You should also be prepared to discuss the proposed fluids to be injected in a Class II well, specifically your interpretation that the broad category of RCRA exempt fluids are eligible for Class II disposal injection. Questions of a technical nature regarding the injection and aquifer exemption orders should be directed to me; questions related to the hearing schedule and needs for your presentations should be coordinated with Jody Colombie (907 -793- 1221). Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 ?07- 793 -1236 From: Regg, James B (DOA) Sent: Thursday, May 03, 2012 11:42 AM To: 'Stephen Hennigan' Cc: Schwartz, Guy L (DOA); Davies, Stephen F (DOA); Bob Britch; Andy Rike; Steve Ward Subject: RE: Buccaneer AEO, DIO Applications It is unlikely the hearing will be vacated, so you will need to be prepared to address the items listed in AOGCC's Public Hearing Guidelines, which are posted online at http: / /doa.alaska.gov /ogc /hear /PubHrgGuid.pdf. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 -793 -1236 From: Stephen Hennigan [mailto:shennigan@peiinc.com] Sent: Thursday, May 03, 2012 9:04 AM To: Regg, James B (DOA) 1 • Cc: Schwartz, Guy L (DOA); Davies, Stephen F (DOA); Bob Britch; Andy Rike; Steve VIP Subject: RE: Buccaneer AEO, DIO Applications lim As you stated below " hearing on May 17 ", how do you anticipate the timing in days to proceed from that point? Would it be beneficial if ! (and /or others) were present at the hearing? Is there anything we should be doing now? ' err « ✓r�z (337) 984 -2603 3:37) 849 -5345 (c) PETROLEUM ENGINEERS, INC. From: Regg, James B (DOA) [mailto:jim.regg ©alaska.gov] Sent: Tuesday, April 17, 2012 7:53 PM To: Stephen Hennigan Subject: RE: Buccaneer AEO, DIO Applications We are currently in the technical and public review which will be followed by a hearing (tentatively set for May 17, 2012). During this time AOGCC is evaluating info provided and may have questions; if so, we will forward them to you. Also during this time, AOGCC will begin drafting the text for each order (DIO and AEO). Attached is a general flow diagram of our injection order process (Area Injection Order shown but there is no procedural difference for other types of injection orders). We have learned that the flow diagram is not accurate regarding EPA review process associated with Aquifer Exemption Order; EPA will not initiate their review until the AOGCC has developed the AEO and can provide a complete application (defined to include your filing; draft AEO; transcript from public hearing, if held). EPA has up to 45 days after receiving complete application to concur or reject AOGCC findings /action (no action from EPA is presumed concurrence). Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907- 793 -1236 From: Stephen Hennigan f mailto:shenniganOpeiinc.coml Sent: Tuesday, April 17, 2012 2 :55 PM To: Regg, James B (DOA) Subject: RE: Buccaneer AEO, DIO Applications Jim 2 What is the step in the process for the Buccaneer AEO and DIO applications are we in. Jt 4r f, fl / #4rr rr (33 7) 984 -2603 '337) 849 -5345 (c) PETROLEUM ENGINEERS, INC. From: Regg, James B (DOA) [mailto:jim.regg @alaska.gov] Sent: Monday, April 09, 2012 5:08 PM To: Stephen Hennigan Subject: RE: Buccaneer AEO, DIO Applications Attached survey plat has inconsistent info: plat shows 1590 ft FSL but text to right indicates 1590 ft FNL; I'm guessing this is a typo and the real BHL is 1590 ft FSL and 1032 ft FWL. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 -793 -1236 From: Stephen Hennigan fmailto:shennigan @peiinc.com] Sent: Monday, April 09, 2012 3:40 AM To: Regg, James B (DOA) Subject: RE: Buccaneer AEO, DIO Applications From lease lines 3691'fnl 1590'fsl 1032'fwl 1606'fe1 t`Tlr.�rak4 4r F, Are/ (337) 984 -2603 (337) 849 -5345 (c) PETROLEUM ENGINEERS, INC. 3 410 From Regg, James B (DOA) [mailto:jim.regq@alaska.gov] Sent: Wednesday, April 04, 2012 7:28 PM To: Stephen Hennigan Subject: RE: Buccaneer AEO, DIO Applications I need the bottom hole location for KL #3 (Section, Township, Range; distance from lease lines). Thank you. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907- 793 -1236 From: Regg, James B (DOA) Sent: Wednesday, April 04, 2012 8:27 AM To: Davies, Stephen F (DOA); 'Stephen Hennigan' Cc: Schwartz, Guy L (DOA); Roby, David S (DOA) Subject: RE: Buccaneer AEO, DIO Applications Public notices for DIO and AEO applications are being prepared. Jim Regg AOGCC 333 W. 7th Ave, Suite 100 Anchorage, AK 99501 907 -793 -1236 From: Davies, Stephen F (DOA) Sent: Wednesday, April 04, 2012 7:44 AM To: Stephen Hennigan Cc: Schwartz, Guy L (DOA); Roby, David S (DOA); Regg, James B (DOA) Subject: RE: Buccaneer AEO, DIO Applications Stephen, Art retired earlier this week and two engineers have left the AOGCC within the past 6 months, Tom Maunder and Winton Aubert. 1 believe that these three were working on the Buccaneer AEO and DIO applications. From this point forward, these applications will be reviewed by me - geologist, Guy Schwartz - drilling engineer, Dave Roby - reservoir engineer, and Jim Regg - petroleum engineer. Picking up Art's work load as well as my own thrown me behind. I will pull these applications later today or tomorrow to see what has been done on them. I'll keep you informed, Regards, Steve Davies Sr. Petroleum Geologist Alaska Oil and Gas Conservation Commission ( AOGCC) 333 West 7 Avenue, Suite 100 Anchorage, Alaska 99501 Steve's phone: 907 - 793 -1224 AOGCC's receptionist: 907 - 793 -1223 AOGCC's fax: 907 - 276 -7542 4 1110 110 AOGCC`s website: http: / /doa.alaska.gov /ogc From: Stephen Hennigan [mailto:shenniganOpeiinc.com] Sent: Wednesday, April 04, 2012 7:11 AM To: Schwartz, Guy L (DOA); Saltmarsh, Arthur C (DOA); Davies, Stephen F (DOA) Subject: RE: Buccaneer AEO, DIO Applications Who do 1 contact about these? 4 r F, c el#urrr tar (337) 984 -2603 (337) 849 -5345 (c) PETROLEUM ENGINEERS, INC. From: Stephen Hennigan [mailto :shenniganOpeiinc.com] Sent: Monday, April 02, 2012 3:40 PM To: Guy Schwartz (guy.schwartzCa�alaska.gov); Art Saltmarsh (art.saltmarsh(aalaska.gov); Davies, Stephen F (DOA) (steve.daviesOalaska.gov) Subject: Buccaneer AEO, DIO Applications Who do we need to contact to see where in the system these are? .shard% r dAr f, �/f't�.vci�i`�rrr,p;z (337) 984 -2603 (337) 849 -5345 (c) PETROLEUM ENGINEERS, INC. 5 2 • STATE OF ALASKA • NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED A O_02214015 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF !1 ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR 'INVOICE ADDRESS F AOGCC AGENCY CONTACT DATE OF A.O. April 10, 2012 R 333 W 7th Ave, Ste 100 Jody Colombie ° Anchorage, AK 99501 PHONE PCN M (9071 793 —1221 DATES ADVERTISEMENT REQUIRED: o Alaska Journal of Commerce ASAP 301 Arctic Slope Avenue, Suite 350 Anchorage AK 99518 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Type of Advertisement SEE ATTACHED SEND INVOICE IN TRIPLICATE AOGCC, 333 W. 7th Ave., Suite 100 TOTAL OF PAGE 1 OF TO Anchorage, AK 99501 2 PAGES ALL PAGES$ REF TYPE NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARD 02910 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST LID 1 12 02140100 73451 2 REQUISITIONED BY: DIVISION APPROVAL: 02 - 902 (Rev. 3/94) Publisher /Original Copies: Department Fiscal, Department, Receiving AO.FRM • • Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Docket No. AEO -12 -001. Buccaneer Alaska Operations, LLC has applied for an order exempting fresh water aquifers in the Kenai Loop field, Kenai Peninsula Borough, in conformance with 20 AAC 25.440. The affected area is: Section 28, Township 6N, Range 11W, Segment SE 1 /4, SW 1 /4 Section 28, Township 6N, Range 11W, Segment SW 1 /4, SE 1 /4 Section 28, Township 6N, Range 11W, Segment SW 1 /4, SW 1 /4 Section 29, Township 6N, Range 11W, Segment SE 1 /4, SE 1 /4 Section 32, Township 6N, Range 11W, Segment NE 1 /4 Section 32, Township 6N, Range 11W, Segment SE 1 /4 Section 33, Township 6N, Range 11W (Entire Section) Section 4, Township 5N, Range 11W, Segment NE 1 /4, NW 1 /4 Section 4, Township 5N, Range 11W, Segment NW 1 /4, NE 1 /4 Section 4, Township 5N, Range 11W, Segment NW 1 /4, NW 1 /4 Section 5, Township 5N, Range 11W, Segment NE 1 /4, NE 1 /4 The Commission has tentatively scheduled a public hearing on this application for May 17, 2012 at 9:00 a.m. at the Alaska Oil and Gas Conservation Commission, at 333 West th 7Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the Commission no later than 4:30 p.m. on May 1, 2012. If a request for a hearing is not timely filed, the Commission may consider the issuance of an order without a hearing. To learn if the Commission will hold the hearing, call 793- 1221 after May 3, 2012. In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7 Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on May 16, 2012, except that, if a hearing is held, comments must be received no later than the conclusion of the May 17, 2012 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the Commission's Special Assistant, Jody Colombie, at 793 -1221, no later than May 14, 2012. I CP -6 41 4 Cathy P Foerster Chair, Commissioner ALASKA Journal0 Alaska Oil & Gas Conservation Commission Public Notices FILE NO: A0- 02214015 Ad #: 10161869 A0- 02214015 AEO AFFIDAVIT OF PUBLICATION UNITED STATES OF AMERICA, STATE OF ATTACH PROOF OF PUBLICATION HERE ALASKA, THIRD DISTRICT BEFORE ME, THE UNDERSIGNED, A NOTARY PUBLIC THIS Notice of Public Hearing DAY PERSONALLY APPEARED Lara Bickford STATE OF ALASKA WHO, BEING FIRST DULY SWORN, Alaska Oil and. Gas Conservation Commission ACCORDING TO THE LAW, SAYS THAT SHE Re: Docket No. AEO -12 -001. Buccaneer Alaska Operations, LLC has applied for IS THE Business Manager OF THE ALASKA an order exempting fresh water aquifers in the Kenai Loop field, Kenai Peninsula JOURNAL OF COMMERCE PUBLISHED AT 301 Borough, in conformance with 20 AAC 25.440. The affected area is: Section 28, Township 6N, Range 11W, Segment SE _, SW _ ARTIC SLOPE AVENUE, SUITE 350, IN SAID Section 28, Township 6N, Range 11W, Segment SW _, SE THIRD DISTRICT AND STATE OF ALASKA Section 28, Township 6N, Range 11W, Segment SW _, SW Section 29, Township 6N, Range 11W, Segment SE _, SE _ AND THAT ADVERTISEMENT, OF WHICH THE Section 32, Township 6N, Range 11W, Segment NE _ ANNEXED IS A TRUE COPY, WHICH WAS Section 32, Township 6N, Range 11W, Segment SE _ PUBLISHED IN SAID PUBLICATION Section 33, Township 6N, Range 11W (Entire Section) Section 4, Township 5N, Range 11W, Segment NE _, NW _ Section 4, Township 5N, Range 11W, Segment NW _, NE _ Se ction 4, Township 5N Range 11W, Segment NW NW P 9 9 _ 04/15/2012 Section 5, Township 5N, Range 11W, Segment NE , NE _ 15th DAY OF APRIL 2012 The Commission has tentatively scheduled a public hearing on this application for May 17, 2012 at 9:00 a.m. at the Alaska Oil and Gas Conservation Commis - AND THERE AFTER FOR 1 sion, at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. To request CONSECUTIVE WEEK(S) AND THE that the tentatively scheduled hearing be held, a written request must be filed with the Commission no later than 4:30 p.m. on May 1, 2012. LAST PUBLICATION APPEARING ON If a request for a hearing is not timely filed, the Commission may consider the 04/15/2012 issuance of an order without a hearing. To leam if the Commission will hold the hearing, call 793 -1221 after May 3, 2012. 15th DAY OF APRIL 2012 In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7th Avenue, ip Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on May 16, 2012, except that, if a hearing is held, comments must be received no later than the conclusion of the May 17, 2012 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the Commission's Special Assistant, Jody Colom- Lara Bickfor• bie, at 793 -1221, no later than May 14, 2012. Business Manager By: /s/Cathy P. Foerster, Chair, Commissioner Pub: 4/15/2012 Ad #10161869 SUBSCRIBED AND SWORN BEFORE ME THIS 16th DAY OF April 2012 NOTARY PUBLIC STATE OF ALAS MY COMMIS ION : I . ./ / NOTARY PUBLIC BEUNDA CUMMINGS STATE OF ALASKA MY COMMISSION EXPIRES June 14, 2012 STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED /f, O _02214015 ORDER AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF A ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE _.:SEE BOTTOM FOR INVOICE. ADDRESS • F AOGCC AGENCY CONTACT DATE OF A.O. R 333 West 7 Avenue. Suite 100 Jody Colomhie Anvil 10.2012 ° Anchorage_ AK 99501 PHONE PCN M (9071 793 -1221 DATES ADVERTISEMENT REQUIRED: T 0 Alaska Journal of Commerce ASAP 301 Arctic Slope Avenue, Suite 350 Anchorage AK 99518 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: AFFIDAVIT OF PUBLICATION United states of America REMINDER State of Alaska. SS INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE 3 � ■ .{ �_�� THE ADVERTISING ORDER NUMBER. Y>>� _►!l\ AriliviSion. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared Notice of Public Hearing Lam B rk t rd who, being first duly sworn, according to law, says that STATE OF ALASKA ( n Alaska Oil and Gas Conservation Commission he /she is the neSS /•/ anta[!erof Ak. k1 J� f f 1 !� / ' (NI'�Y11P Re: Docket No. AEO 12 001. Buccaneer Alaska Operations, LLC has applied for 3 I / . , I an order exempting fresh water aquifers in the Kenai Loop field, Kenai Peninsula Published at f-In � IMP . A in StA in said divisio r J �lryGrG and Borough, in conformance with 20 AAC 25.440. The affected area is: ,/� � Section 28, Township 6N, Range 11W, Segment SE _, SW _ state of i1 In Si and that the advertisement, of which the annexed Section 28, Township 6N, Range 11W, Segment SW _, SE _ Section 28, Township 6N, Range 11W, Segment SW", SW _ Section 29, Township 6N, Range 11W, Segment SE _, SE _ is a true copy, was published in said publication on the i .41 day of Section 32, Township 6N, Range 11W, Segment NE _ Section 32, Township 6N, Range 11W, Segment SE _ 1ot_ 2012, days, the last Section 33, Township 6N, Range 11 W (Entire Section) 012, and thereafter for consecutive da Y Section 4, Township 5N, Range 11W, Segment NE _, NW _ Section 4, Township 5N, Range 11W, Segment NW _, NE publication appearing on the . 5 day of AJpC't I , 2012, and that the section 4, Township 5N, Range 11W, Segment NW _, NW _ _ 1 Section 5, Township 5N, Range 11W, Segment NE _, NE _ The Commission has tentatively scheduled a public hearing on this application rate charged thereon is not . cess of the rate charged private individuals. for May 17, 2012 at 9:00 a.m. at the Alaska Oil and Gas Conservation Commis- 193?I sion, at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the Commission no later than 4:30 p.m. on May 1, 2012. If a request for a hearing is not timely filed, the Commission may consider the Subscribed and sworn to before me issuance of an order without a hearing. To learn if the Commission will hold the ii 4 �h hearing, call 793 -1221 after May 3, 2012. This "'l of A�c't ` 2012, In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7th Avenue, `; �� /� S 4:30 Anchorage, Alaska Comments must be received later than \`' . 4:30 p.m. .m. on May 16, 2012, except cept that, if a hearing is held, comments must be N OTARY PUBLIC received no later than the conclusion of the May 17, 2012 hearing. Notary public for state of If, because of a disability, special accommodations may be needed to comment My commission expires BELINDA CUMMINGS or attend the hearing, contact the Commission's Special Assistant, Jody Colom- STATE OF ALASKA By:/s/Cathy later May Foerster, Chair, Commissioner MY COMMISSION EXPIRES June 14. 2012 Pub: 4/15/2012 Ad #10161869 • STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED /� O_ 02214015 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF /`1 ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS > AOGCC AGENCY CONTACT DATE OF A.O. R 333 West 7 Avenue. Suite 100 Jody Col ombie Anril 10.2012 ° Anchorage. AK 99501 PHONE PCN M (9071 793 -1221 DATES ADVERTISEMENT REQUIRED: o Alaska Journal of Commerce ASAP 301 Arctic Slope Avenue, Suite 350 Anchorage AK 99518 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: AFFIDAVIT OF PUBLICATION United states of America REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HERE. who, being first duly sworn, according to law, says that he /she is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2012, and thereafter for consecutive days, the last publication appearing on the day of , 2012, and that the rate charged thereon is not in excess of the rate charged private individuals. Subscribed and sworn to before me This _ day of 2012, Notary public for state of My commission expires • • Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Tuesday, April 10, 2012 3:27 PM To: Aaron Gluzman; Ben Greene; Bruce Williams; Bruno, Jeff J (DNR); CA Underwood; Casey Sullivan; Dale Hoffman; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Franger, James M (DNR); Gary Orr; Graham Smith; Greg Mattson; Heusser, Heather A (DNR); Jason Bergerson; Jennifer Starck; Jill McLeod; Joe Longo; King, Kathleen J (DNR); Lara Coates; Lois Epstein; Marc Kuck; Marie Steele; Mary Aschoff; Matt Gill; Maurizio Grandi; Ostrovsky, Larry Z (DNR); Patricia Bettis; Perrin, Don J (DNR); Peter Contreras; Pexton, Scott R (DEC); Richard Garrard; Ryan Daniel; Sandra Lemke; Talib Syed; Ted Rockwell; Wayne Wooster; Wendy Wolff; William Hutto; William Van Dyke; (michael.j.nelson @conocophillips.com); ( Von. L.Hutchins @conocophillips.com); AKDCWelllntegrityCoordinator; Alan Dennis; alaska @petrocalc.com; Anna Raff; Barbara F Fullmer; bbritch; Becky Bohrer; Bill Penrose; Bill Walker; Bowen Roberts; Brandon Gagnon; Brandow, Cande (ASRC Energy Services); Brian Havelock; Bruce Webb; caunderwood; Chris Gay; Claire CaIdes; Cliff Posey; Crandall, Krissell; D Lawrence; dapa; Daryl J. Kleppin; Dave Harbour; Dave Matthews; David Boelens; David House; David Scott; David Steingreaber; ddonkel @cfl.rr.com; Dennis Steffy; Elowe, Kristin; Erika Denman; Francis S. Sommer; Fred Steece; Garland Robinson; Gary Laughlin; Gary Schultz (gary.schultz @alaska.gov); ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; Gregory Geddes; gspfoff; Jdarlington (jarlington @gmail.com); Jeanne McPherren; Jeff Jones; Jeffery B. Jones (jeff.jones @alaska.gov); Jerry McCutcheon; Jill Womack; Jim White; Jim Winegarner; Joe Nicks; John Easton; John Garing; John Katz (john.katz @alaska.gov); John S. Haworth; John Spain; Jon Goltz; Jones, Jeffrey L (GOV); Judy Stanek; Julie Houle; Kari Moriarty; Kaynell Zeman; Keith Wiles; Kelly Sperback; Kim Cunningham; Larry Ostrovsky; Laura Silliphant (laura.gregersen @alaska.gov); Luke Keller; Marc Kovak; Mark Dalton; Mark Hanley (mark.hanley @anadarko.com); Mark P. Worcester; Marguerite kremer (meg.kremer @alaska.gov); Michael Dammeyer; Michael Jacobs; Mike Bill; Mike Mason; Mike Morgan; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; nelson; Nick W. Glover; NSK Problem Well Su v; Patty Sup v; Alfaro; Paul Decker (paul.decker @alaska.gov); Paul Figel; Paul Mazzolini; Randall Kanady; Randy L. Skillern; Rena Delbridge; Renan Yanish; rob.g.dragnich @exxonmobil.com; Robert Brelsford; Robert Campbell; Ryan Tunseth; Scott Cranswick; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Sondra Stewman; Stephanie Klemmer; Steve Lambert; Steve Moothart (steve.moothart@alaska.gov); Steven R. Rossberg; Suzanne Gibson; tablerk; Tamera Sheffield; Taylor, Cammy 0 (DNR); Temple Davidson; Teresa Imm; Terrie Hubble; Thor Cutler; Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Walter Featherly; Will Chinn; Williamson, Mary J (DNR); Yereth Rosen; Ballantine, Tab A (LAW); Brooks, Phoebe; Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Fisher, Samantha J (DOA); Foerster, Catherine P (DOA); Grimaldi, Louis R (DOA); Herrera, Matt F (DOA); Johnson, Elaine M (DOA); Jones, Jeffery B (DOA); Laasch, Linda K (DOA); Makana Bender; Matt Herrera; Maunder, Thomas E (DOA sponsored); McIver, Bren (DOA); McMains, Stephen E (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Norman, John K (DOA); Okland, Howard D (DOA); Paladijczuk, Tracie L (DOA); Pasqua!, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Saltmarsh, Arthur C (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA) Subject: 2 Public Notice AEO and DIO Kenai Loop #3 Attachments: AEO 12 -001 (Kenai Loop Field).pdf; DIO 12 -002 (Kenai Loop Field).pdf Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907)793-i 221 (phone) (907)276 -7542 (fax) 1 Mary Jones David McCaleb XTO Energy, Inc. IHS Energy Group George Vaught, Jr. Cartography GEPS P.O. Box 13557 810 Houston Street, Ste 200 5333 Westheimer, Suite 100 Denver, CO 80201 -3557 Ft. Worth, TX 76102 -6298 Houston, TX 77056 Jerry Hodgden Richard Neahring Mark Wedman Hodgden Oil Company NRG Associates Halliburton President 408 18 Street 6900 Arctic Blvd. Golden, CO 80401 -2433 P.O. Box 1655 Anchorage, AK 99502 Colorado Springs, CO 80901 Bernie Karl CIRI K &K Recycling Inc. Land Department Baker Oil Tools P.O. Box 58055 P.O. Box 93330 795 E. 94 a. Anchorage, AK 99515 -4295 Fairbanks, AK 99711 Anchorage, AK 99503 North Slope Borough Richard Wagner Gordon Severson Planning Department P.O. Box 60868 3201 Westmar Circle P.O. Box 69 Fairbanks, AK 99706 Anchorage, AK 99508 -4336 Barrow, AK 99723 Jack Hakkila Darwin Waldsmith James Gibbs P.O. Box 190083 P.O. Box 39309 P.O. Box 1597 Anchorage, AK 99519 Ninilchick, AK 99639 Soldotna, AK 99669 Penny Vadla Cliff Burglin 399 West Riverview Avenue 319 Charles Street Soldotna, AK 99669 -7714 Fairbanks, AK 99701 \ � \AOti' 41 • • BUC CANEER A L A 5 K A March 13, 2012 RECEIVED Ms. Cathy Foerster, Chair MAR 1 6 2012 Alaska Oil and Gas Conservation Commission 333 West 7 Avenue, Suite 100 i Alaska Oil & Gas Cons. Commission Anchorage, AK 99501 Anchorage RE: Request for Freshwater Aquifer Exemption Buccaneer Alaska Operations, LLC Kenai Loop #3 (Drill Permit 211 097) Dear Ms. Foerster, Buccaneer Alaska Operations, LLC (Buccaneer) hereby Requests a Freshwater Aquifer Exemption to allow Buccaneer to inject used drilling mud and miscellaneous fluids in the Kenai Loop #3 Well. Our specific request is to use the Sterling and Beluga formations as the zones for injection of Class II wastes (depth interval from 3,300 feet TVD to 8,050 feet TVD). Supporting information, including the requirements of 20 AAC 25.440, is attached. If there are any questions and /or any additional information desired, please contact me at 713- 468 -1678 or Stephen Hennigan at 337 - 849 -5345. Sincerely, jt A E.A. Rike Executive Vice President of Operations cc: Allen Huckabay — Buccaneer Alaska Operations, LLC Stephen Hennigan — Petroleum Engineers for Buccaneer Alaska Operations, LLC Buccaneer Alaska Operations, LLC 952 Echo Lane, Suite 420; Houston, TX 77024 713 -468 -1678 • ATTACHMENT A- SUPPORTING INFORMATION 20 AAC 25.440. Freshwater Aquifer Exemption 20 AAC 25.440 (a) Upon receipt of a letter of application, and in accordance with (b) of this section, the commission will, in its discretion, issue an order designating a freshwater aquifer or portion of it as an exempt freshwater aquifer, if the freshwater aquifer meets the following criteria: 20 AAC 25.440 (a) (1) it does not currently serve as a source of drinking water, and it cannot now and will not in the future serve as a source of drinking water because 20 AAC 25.440 (a) (1) (A) it is hydrocarbon - producing or can be demonstrated by the applicant to contain hydrocarbons that, considering their quantity and location, are expected to be commercially producible; The Class II injection well is located within the Sterling and Beluga formations which commonly produced for oil and gas in the general area. Hydrocarbon resources were not however found within the specific zones in the proposed disposal well (Kenai Loop #3 Well). 20 AAC 25.440 (a) (1) (B) it is situated at a depth or location that makes recovery of water for drinking water purposes economically or technologically impractical; or Drinking water wells within 1/2 mile of the proposed disposal interval (at depths of 3,300 to 8,050 feet) were examined the deepest water well in the vicinity was drilled to a depth of 360 feet (most wells were only drilled to 50 feet or less). Water wells can certainly be drilled to deeper depth, however, there are no economic incentive to drill to deeper depths to obtain adequate water supplies. 20 AAC 25.440 (a) (1) (C) it is so contaminated that recovery of water for drinking water purposes is economically or technologically impractical; or It is technically impractical to drill to the disposal interval to obtain water that is currently unsuitable for use as potable water. (See response to 20 AAC 25.440 (a) (2) below. 20 AAC 25.440 (a) (2) the total dissolved solids content of the ground water is more than 3,000 and less than 10,000 mg/1, and it is not reasonably expected to supply a public water system. The proposed disposal zone is within the Sterling and Beluga Formations between 3,300 feet TVD and 8,050 feet TVD. Total Dissolved Solids (TDS) levels for this interval were calculated from the Well Logs for this interval and these data are summarized on Figure 1. Figure 1 demonstrates that the TDS values are generally above 3,000 mg/L • • Calculated TDS vs Depth (MD) TDS, mg/I 0 5000 10000 15000 20000 25000 0 — __- --- x-3000 mg/I Caculated TDS, mg/1 2000 E b •• • • • „ _ • • ON Upp.r Confining layers f Z ••S• SD . ■ _ • • • w • , rar 4 ••• •s• • •• •• •• - fry •'r •: • • ••••• • • •• • • • •. • ••• swum • r •t_A_ ._, • • • • ••w • • • w LA •'T't~'• • « • • •Cj • • •• •• • r • j M� Po r - r - - 1 ° 6000 _- �' • d •• • f - -- - ` - .. .1,. � Z' T - at '••' • . «r. r ; r r •• . — ' :t '�y. 7 a lt J • I • els • 411111 Ire : o -.... . . , . .. ip , i pp w . ' '. It, r f As :R • • • • �; ".•, • • r.• 'sr •fit •• ~i * i•�q• ��•Ne•% .....• •le• • j.: t •. •% • ♦• : • • . •• . .. .� r I • • •s •• • • • •s • • r � al� • ♦•• • . • •• •s • • y r • i � • • • • •• .4. '• ." •. of rq. t . •• • •• . • *N• • •, f ... se • . • l;•• • • :•':'� 'TrAi NI. • •• w asI +y.. I tea,•••. •. • •• • 7 s •u • • • • s 6.•• •010) 400 • � •i K • f • Y 10000 • s • • • • • • - • • • ZI f • • • NW �tr� � P • . L ••t• • • • ••M • S • •.• • • • I I • • A • • ' • S • u l— =ZSS � � .• • � • •• • r1 • •• • • N om• f� ArArgo" • �a'I ; ' • .i�"Z• ' •ye• r • • : � • A •5 ••• 30• • • • • • 1 12000 i Figure 1. • • The proposed injection zone includes the Sterling and Beluga Formations. The Sterling Formation consists of multiple thick sandstones and conglomeratic sandstones inter - bedded with thin slltstone sequences often with thin coal seams. The Beluga Formation consists of thinly inter - bedded siltstones, mudstones and sandstones, with abundant thin coal seams. There are upper and lower confining layers for the disposal zone. The upper confining area consists of bentonites and thin coal seams together with some clayey mudstones. These occur between depth of about 3,065 feet TVD ( -2,953 feet TVDss) to 3,297 feet TVD ( -3,184 feet TVDss). The lower confining layer is a shale located at the bottom of the Beluga Formation and extends roughly from 8,050 ft TVD to 8,193 feet TVD (in the Kenai Loop #3 Well). Figure 2 provides a map showing the approximate location of the injection location. An 1/2 mile buffer zone is provided to indicate the maximum extent of impact of the Class II wastes within the injection zone. Table 1 provides a list of portions of sections that are included in this buffer zone. Table 1. Geographic location of Injection Zones Township Range Section Segment 6N 11 W 28 SE %, SW% >' 6N 11 W 28 SW %, SE% 6N 11 W 28 SW %,SW% a� 6N 11 W 29 SE %,SE 6 N 11 W 32 NE'% x 6N 11W 32 SE% 6 N 11 W 33 ENTIRE SECTION ✓ 5N 11W 4 NE SN 11W 4 NW %,NE% 5 N 11 W 4 NW %, NW % x 5 N 11 W 5 NE %, NE'/ Note: all segments are in the Seward Meridian Based on ADNR well data, there are currently 15 wells located within this exclusion zone. All are located within Section 33 and the deepest well is 360 feet which provides at least 1/2 mile vertical separation between the injection location and the bottom of the wells Confining layers occur both on top and below the injection/disposal zone. L PROPOSED BUFFER ZONE e r • A, p MP9 -.+ .` s . f - ' .,.. l'N F PROPOSED INJECTION LOCATION MP($4800' to 8050' TVD O r _ , -- g",‘ • rr • MP 13 ' +, 1 } II r�- ' , j /_i ,l```!/ - Figure 2. Plan view of proposed injection location and requested buffer zone. V • 4IP 20 AAC 25.440 (b) To apply for exemption of a freshwater aquifer, an operator shall submit to the commission a letter of application that includes sufficient data to justify the proposal, including data to substantiate that the criteria in (a) of this section are met. The commission will provide 15 days legal notice and the opportunity for a public hearing on the matter in accordance with 20 AAC 25.540. Letter is provided at the front of this document 20 AAC 25.440 (c) Freshwater aquifers within the state that, as of June 19, 1986, are designated as exempt aquifers by the United States Environmental Protection Agency under 40 C.F.R. 147.102 are accepted as exempt aquifers by the commission. We understand that the aquifer in question is not designated as an exempt aquifer. 20 AAC 25.440 (d) A commission order designating a freshwater aquifer or a portion of it as an exempt freshwater aquifer is not effective with respect to underground disposal or storage operations subject to 20 AAC 25.252 or injection operations subject to 20 AAC 25.402 until the United States Environmental Protection Agency has been provided the opportunity to review the order under 40 C.F.R. 144.7(b)(3) and has 20 AAC 25.440 (d) (1) approved the order, if it was issued under (a)(1) of this section; or 20 AAC 25.440 (d) (2) has allowed the applicable time period within which to disapprove the order to expire without acting on it, if the order was issued under (a)(2) of this section. This requirement is noted