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Home My WebLink AboutCO 231Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. C0 23 k Order File Identifier Organizing (done) RESCAN ❑ Color Items: ❑ Greyscale Items: ❑ Poor Quality Originals: ❑ Other: NOTES: BY: Angela Project Proofing DIGITAL DATA ❑ Diskettes, No. ❑ Other, No/Type: ✓ Date: s - S - 2.O l J�i) o R,scanN.,me IIIIIIIIIIIIIII�I OVERSIZED (Scannable) ❑ Maps: ❑ Other Items Scannable by a Large Scanner OVERSIZED (Non -Scannable) ❑ Logs of various kinds: ❑ Other: ti(Ac BY: Angela ✓ Date: S - S - 20 (S /s/ C. Scanning Preparation x 30 = + = TOTAL PAGES (2Z (Count does not include cover sheet) BY: Angela ✓ Date: $ - S - 'Lo (S /s/ Production Scanning III IIIII IIIII II III Stage 1 Page Count from Scanned File: 12- S (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: ✓ YES NO BY: Angela ✓ Date: '9 -S - 20(rj /s/ Qk— Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Angela Date: /s/ Scanning is complete at this point unless rescanning is required. II I II'I II I II II IIIII ReScanned IIIIIIIIIIIIII IIIII BY: Angela Date: /s/ Comments about this file: Quality Checked III IIIII III II'I III 2/27/2015 Orders File Cover Page INDEX CONSERVATION ORDER NO. 231 Cannery Loop Unit No. 13 Development Gas Well Cannery Loop Beluga Gas Pool Cannery Loop Upper Tyonek Gas Pool Cannery Loop Unit Kenai Peninsula Borough, Alaska 1. October 16, 1986 2. December 3, 1986 3. April 30, 1987 4. June 2, 1987 5. July 8, 1987 6. October 28, 2014 7. November 20, 2014 8. November 14, 2014 — January 16, 2015 Department of Natural Resources (DNR)'s letter re: Eighth Plan of Development and Operations Bureau of Land Management (BLM)'s letter re: Approval of the Eighth Plan of Development and Operations Unocal's letter re: Proposed Field and Pool Regulations and Classification Notice of Public Hearing, Affidavit of Publication Transcript, sign -in sheet Hilcorp Alaska, LLC (Hilcorp)'s application for spacing exception — CLU No. 13 (CO 231.001) Notice of Public Hearing, Affidavit of Publication, email distribution, mailings Emails between AOGCC and Hilcorp re: CLU 13 Spacing Exception Application INDEX CONSERVATION ORDER NO. 231 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re: THE APPLICATION OF UNION ) Conservation Order No. 231 OIL COMPANY OF CALIFORNIA ) requesting issuance of an ) Kenai Gas Field order establishing pool ) Beluga Gas Pool, rules to govern operation ) Upper Tyonek Gas Pool, and of the Cannery Loop Unit. ) Tyonek 'D" Gas Pool August 3, 1987 IT APPEARING THAT: 1. Union Oil Company of California as operator of the Cannery Loop Unit, requested the Alaska Oil and Gas Conservation Commission by letter dated April 30, 1987 to issue an order establishing pool rules to govern the operation of the Beluga Gas Pool, the Upper Tyonek Gas Pool, and the Tyonek "D" gas pool, all lying beneath the Cannery Loop Unit. 2. Notice of Public Hearing was published in the Anchorage Daily News on June 2, 1987. 3. A public hearing was held on July 8, 1987 in the conference room of the Commission at 3001 Porcupine Drive, Anchorage, Alaska. 4. Members of the staff of Union Oil Company of California presented testimony including exhibits. The hearing record was closed at the end of the public hearing. FINDINGS: 1. The Kenai Gas Field was extended to the north beneath the Cannery Loop Unit by the drilling of Cannery Loop Unit #1 (CLU #1) in 1979, and subsequently confirmed by the drilling of Cannery Loop Unit #3 (CLU #3) in 1981. 2. Wells CLU #1 and CLU #3 established the presence of dry gas bearing reservoir strata within three separate and distinct lithologic units. Conservation Order No. 231 August 3, 1987 Page 2 3. Structural interpretation based upon seismic and well control data indicates that the dry gas accumulation within the shallower lithologic unit, known as the Beluga Form- ation, results from the updip entrapment of gas against a transverse east -west trending normal fault (the Cannery Loop Fault) within the confines of a down -thrown fault block of the northerly plunging Kenai Gas Field anticline. 4. Structural configuration data are too sparse to determine with certainty whether the Cannery Loop Fault or a southerly plunge of the anticlinal axis into the fault is the feature limiting the southerly extent of the two deeper gas bearing lithologic units. 5. The vertical limits of the three separate and distinct lithologic units may be defined by wireline logs run in CLU #1 and may be designated as separate gas pools. 6. The shallower Beluga Pool is comprised of lenticular non - marine fluvial reservoir sands. The deeper Upper Tyonek and Tyonek "D" Pools are comprised of both blanket and lentic- ular reservoir sands. 7. Interpretation of fluid saturation and formation pressure data indicates that the three gas pools north of the Cannery Loop Fault exhibit pressures much higher than the pressures of equivalent gas pools within the developed portion of the Kenai Gas Field to the south of the Cannery Loop Fault. 8. An empirical relationship between well spacing and ultimate gas recovery cannot be established for these pools because of the lenticular nature of the reservoir sands. 9. Though not quantifiable, ultimate gas recovery from each of these pools should be enhanced as well density is increased. 10. Gas recovery efficiency and ultimate gas recovery may be jeopardized should high and low pressure sands be in communication within the same well bore. 11. The shallower gas pool is the larger in areal extent of the three. It is confined to those portions of the Cannery Loop Unit and of the Kenai Unit which lie north of the Cannery Loop Fault. 12. The Cannery Loop Fault Trace depicted by Exhibit "C" cuts across the northern portion of the affected area set forth by Conservation Order No. 82. Conservation Order No. 231 August 3, 1987 Page 3 CONCLUSIONS: 1. The area overlying the three gas pools north of the Cannery Loop Fault may be logically considered a northerly extension of the Kenai Gas Field, and may be appropriately defined as the Cannery Loop Extension of the Kenai Gas Field. 2. The Cannery Loop Fault is a sealing fault and establishes the southern boundary of at least the shallowest gas pool encountered. 3. Gas pools encountered north of the Cannery Loop Fault are not pressure connected with the developed gas pools south of the Cannery Loop Fault. 4. Rules set forth for the area affected by Conservation Order No. 82 do not appropriately apply for governing the drilling, development, and production of the three gas pools found north of the Cannery Loop Fault trace. NOW, THEREFORE, IT IS ORDERED THAT those portions of Sections 17, 19 and 20, TSN, R11W, SM, lying to the north of the Cannery Loop Fault trace as depicted on Exhibit "C" of the July 8, 1987 Public Hearing Record, Structure Contours Top Beluga Formation, are excluded from the area described by Conservation Order No. 82 as the affected area. IT IS FURTHER ORDERED THAT the rules hereinafter set forth apply to an affected area which is described as follows: T6N, R11W, SM Sections 32, 33 and 34. TSN, R11W, SM Sections 3, 4, 5, 6, 7, 8, 9, 10 and 18. TSN. R11W. SM Those portions of Sections 16, 17, 19 and 20 lying to the north of the Cannery Loop Fault trace as depicted on Exhibit "C" of the July 8, 1987 Public Hearing Record, Structure Contours Top Beluga Formation. Conservation Order No. 231 August 3, 1987 Page 4 Rule 1 Designation of Affected Area The area affected by this Order may be referred to as the Cannery Loop Extension of the Kenai Gas Field. Rule 2 Definition of Pools a) The Beluga Gas Pool is defined as the accumulation of gas occurring within the affected area in sands stratigraphic- ally equivalent to the interval between the measured depths of 6081' and 9171' in Cannery Loop Unit Well #1. b) The Upper Tyonek Gas Pool is defined as the accumulation of gas occurring within the affected area in sands strati - graphically equivalent to the interval between the measured depths of 9171' and 10,831' in Cannery Loop Unit Well #1. c) The Tyonek "D" Gas Pool is defined as the accumulation of gas occurring within the affected area in sands strati - graphically equivalent to the interval between the measured depths of 10,831' and 11,962' in Cannery Loop Unit Well #1. Rule 3 Well Spacing A Drilling Unit for the Beluga, Upper Tyonek, or Tyonek "D" Gas Pools is established as the quarter -quarter subdivision of a governmental section occurring within the affected area. Rule 4 Offset Limitations A well bore may not expose for the purposes of regular production any interval of a pool that is located closer than 1,500' to the boundary of the affected area, or closer than 500' to the boundary of the participating area established for that pool. Rule 5 Reservoir Pressure Surveillance Within six months of the start of regular production, the operator shall submit for approval an initial plan for monitoring reservoir pressure in each pool. The initial plan shall include but may not be limited to: 1) Establishing pool datums. 2) Initial reservoir pressure of each pool. 3) Method for determining average reservoir pressure at least once each year. Conservation Order No. 231 August 3, 1987 Page 5 Rule 6 Administrative Approval Upon request the Commission may administratively amend this Order so long as the operator demonstrates to the Commission's satis- faction that sound engineering practices are maintained and the amendment will not result in physical waste or the impairment of correlative rights. DONE at Anchorage, Alaska, and dated August 3, 1987. 4,y�A o r t 4 TrON Corti C. V. Chatterton,"C tnservation irban Alaska Oil and Gas Commission w Lonnle G. Smith, Gom-nissioner Alaska Oil and Gas Conservation Commission G W. W. Barnwell, Commissioner Alaska Oil and Gas Conservation Commission STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp, LLC for an exception to the spacing requirements of Rule 3, Conservation Order No. 231 to test, complete and produce development gas well Cannery Loop Unit No. 13 at spacing of less than a quarter -quarter subdivision of a governmental section within the Beluga and Upper Tyonek Gas Pools. IT APPEARING THAT: Docket Number: CO-14-031 Conservation Order No. 231.001 Cannery Loop Unit No. 13 Development Gas Well Cannery Loop Beluga Gas Pool Cannery Loop Upper Tyonek Gas Pool Cannery Loop Unit Kenai Peninsula Borough, Alaska March 6, 2015 Hilcorp, LLC (Hilcorp), by letter received October 31, 2014, requested an exception to the spacing requirements of Rule 3, Conservation Order No. 231 to test, complete, and produce secondary targets within development gas well Cannery Loop Unit No. 13 at spacing of less than a quarter -quarter subdivision of a governmental section within the Beluga and Upper Tyonek Gas Pools. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for January 13, 2015. On November 20, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and 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 of Public Hearing to all persons on the AOGCC's mailing distribution list. On November 21, 2014, the notice was published in the ALASKA DISPATCH NEWS. 3. Landowners within the Cannery Loop Unit include the State of Alaska, Hilcorp, ConocoPhillips, the U.S. Government, the City of Kenai, and many private individuals.' Hilcorp is 100% working interest owner and operator of the Cannery Loop Unit Beluga, Upper Tyonek, and Tyonek D Gas Pools (listed in descending stratigraphic order), which are subject to Conservation Order No. 231. Cook Inlet Natural Gas Storage Alaska, LLC (CINGSA) is owner and operator of the Cannery Loop Unit Sterling C Gas Storage Marathon Oil Company, 2012: letter from Paul A. Faust of Marathon Oil Company to Don Perrin of the Alaska Department of Natural Resources, Division of Oil and Gas, titled "Re: Cannery Loop Unit" and dated August 31, 2012. See attached exhibits - Cannery Loop Unit Exhibit "B", revised 11/2/2009, Cannery Loop Unit, Beluga Formation Undifferentiated Gas Sands Participating Area, revised 11/2/2009; and Cannery Loop Unit, Upper Tyonek Formation Undifferentiated Gas Sands Participating Area, revised 11/2/2009. Conservation Order 231.001 March 6, 2015 Page 2 of 4 Pool, which overlies the Cannery Loop Unit Beluga Gas Pool, which is subject to Storage Injection Order Nos. 9 and 9A. 4. No protest to the application or request for hearing was received. 5. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 6. The tentatively scheduled public hearing was vacated on December 19, 2014. FINDINGS: 1. Hilcorp owns and operates the Beluga, Upper Tyonek, and Tyonek D Gas Pools within the Cannery Loop Field and the Cannery Loop Unit No. 13 development gas well, which are located in Kenai Peninsula Borough, Alaska. 2. Cannery Loop Unit No. 13 will be an onshore well with a surface location 216' from the east line and 246' from the south line of Section 7, T5N, RI I W, Seward Meridian (S.M.). The top of the productive interval is expected to lie 2552' from the south line and 2101' from the east line of Section 8, T5N, R11 W, S.M. The bottom -hole is projected to be 1914' from the north line and 1452' from the east line of Section 8, T5N, RI 1 W, S.M. 3. The planned productive intervals within Cannery Loop Unit No. 13 will be located within State of Alaska lease ADL-324602. 4. Cannery Loop Unit No. 13 will be drilled to a structurally advantageous location to access discontinuous and unpredictable fluvial sandstone reservoirs that cannot be efficiently produced from existing wells. 5. Hilcorp proposes to drill, test, complete, and produce Cannery Loop Unit No. 13 as a development gas well in reservoir sandstone beds assigned to the Cannery Loop Unit Tyonek D Gas Pool. Potential reservoir sands within the overlying Beluga and Upper Tyonek Gas Pools do not conform to the spacing requirements of Rule 3 of Conservation Order No. 231. 6. Approximately 13 tracts —totaling about 15 acres —that lie within the boundaries of the Cannery Loop Unit are currently not committed to that Unit (uncommitted tracts) .2 The closest uncommitted tract will be approximately 4,230' from the current, planned productive interval of Cannery Loop Unit No. 13. All remaining uncommitted tracts will be more than 5,000' away from the well. 7. Within the Cannery Loop Unit, the Beluga, Upper Tyonek, and Tyonek D Gas Pools lie beneath the Sterling C Gas Storage Pool that is located within State of Alaska lease ADL- 391627. Lease ADL-391627 and the Sterling C Gas Storage Pool are owned and operated by CINGSA. The Sterling C Gas Storage Pool is defined in, and governed by, Storage Injection Order Nos. 9 and 9A. 2 Email correspondence from David Duffy, Hilcorp, to Steve Davies, AOGCC, dated November 14, 2014 and titled -RE- CLU 13 (PTD 214-171) Spacing Exception Application." Conservation Order 231.001 March 6, 2015 Page 3 of 4 8. The AOGCC received no comments, objections, or protests in response to the public notice regarding the proposed Cannery Loop Unit No. 13 well. CONCLUSIONS: 1. An exception to the well spacing provisions of Rule 3 of Conservation Order No. 231 is necessary to allow testing, completion, and production of the Beluga and Upper Tyonek Gas Pools within the Cannery Loop Unit No. 13 development gas well at a location that will maximize resource recovery. 2. Cannery Loop Unit No. 13 will recover reserves in the Beluga and Upper Tyonek Gas Pools that are not accessible to other existing wells. 3. Within the parameters set forth below, an exception to the well spacing provisions of Conservation Order No. 231 for Hilcorp's Cannery Loop Unit No. 13 well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. Specifically, the spacing exception for Cannery Loop Unit No. 13 is limited to the Beluga and Upper Tyonek Gas Pools at locations that are more than 1,500' from any property that is not committed to the Cannery Loop Unit, including a set -back of 1,500 true vertical feet from the base of CINGSA's overlying Sterling C Gas Storage Pool,3 which corresponds to the lower boundary for oil and gas storage lease ADL-391627. NOW THEREFORE IT IS ORDERED: Hilcorp's application for an order granting an exception to the well spacing provisions of Conservation Order No. 231 to allow testing, completion, and production of Hilcorp's Cannery Loop Unit No. 13 development gas well within the Cannery Loop Unit Beluga and Upper Tyonek Gas Pools is hereby approved provided the well is not opened to regular production closer than 1,500' to any property that is not committed to the Cannery Loop Unit; the well is not opened within 1,500 true vertical feet of the base of the Sterling C Gas Storage Pool and lease ADL-391627; and Hilcorp complies with the terms of all lease agreements, Alaska law, and all other legal requirements. DONE at Anchorage, Alaska and dated March 6, 2015. 010 0/ Cathy�-ommissioner Foerster Daniel T.-S6amount, Jr. Mike Gallagher �O1L`�'��. Chair, Commissioner Commissioner. s The Sterling C Gas Storage Pool is defined in Storage Injection Order No. 9A, issued June 4, 2014. The lega description for gas storage lease ADL-391627 is set forth in the Alaska Department of Natural Resources Land Administration Case File No. ADL-391627. Conservation Order 231.001 March 6, 2015 Page 4 of 4 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 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 in on the next day that does not fall on a weekend or state holiday Singh, Angela K (DOA) From: Carlisle, Samantha J (DOA) Sent: Friday, March 06, 201S 3:53 PM To: Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Gallagher, Mike (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Herrera, Matthew F (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (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); Singh, Angela K (DOA); Wallace, Chris D (DOA); AKDCWellIntegrityCoordinator, Alexander Bridge; Allen Huckabay; Andrew Vandedack, Anna Raff; Barbara F Fullmer; bbritch; bbohrer@ap.org; Bill Walker, Bob Shavelson; Brian Havelock, Burdick, John D (DNR); Carrie Wong; Cliff Posey; Colleen Miller; Crandall, Krissell; D Lawrence; Dave Harbour; David Boelens; David Duffy; David Goade; David House; David McCaleb; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallego; Delbridge, Rena E (LAS); Donna Ambruz; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Oskolkosf; George Pollock, ghammons; Gordon Pospisil; Greg Duggin; Gregg Nady; gspfoff; Jacki Rose; Jdarlington Oarlington@gmail.com); Jeanne McPherren; Williams, Jennifer L (LAW); Jerry Hodgden; Jerry McCutcheon; Solnick, Jessica D (LAW); Jim Watt; Jim White; Joe Lastufka; news@radiokenai.com; John Adams; Easton, John R (DNR); Jon Goltz; Juanita Lovett; Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty, Keith Wiles; Kelly Sperback; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker; Louisiana Cutler, Luke Keller; Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Kremer, Marguerite C (DNR); Mary Cocklan-Vendl; Michael Duncan; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nichole Saunders; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Moothart, Steve R (DNR); Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater; Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Caroline Bajsarowicz; Casey Sullivan; Diane Richmond; Dickenson, Hak K (DNR); Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr; Smith, Graham O (PCO); Greg Mattson; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jilt.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck, Josh Kindred; Kenneth Luckey; King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Peter Contreras; Richard Garrard; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, William Hutto; William Van Dyke Subject: CO 231.001 (Cannery Loop Unit) Attachments: co231-001.pdf Please see attached. Samantha Carlisle Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) CONFIDENTTALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. James Gibbs Jack Hakkila Bernie Karl P.O. Box 1597 P.O. Box 190083 K&K Recycling Inc. Soldotna, AK 99669 Anchorage, AK 99519 P.O. Box 58055 Fairbanks, AK 99711 Gordon Severson Penny Vadla George Vaught, Jr. 3201 Westmar Cir. 399 W. Riverview Ave. P.O. Box 13557 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 Denver, CO 80201-3557 David W. Duffy Richard Wagner Darwin Waldsmith Landman P.O. Box 60868 P.O. Box 39309 Hilcorp Alaska, LLC Fairbanks, AK 99706 Ninilchik, AK 99639 P.O. Box 244027 Anchorage, AK 99524-4027 L Angela K. Singh Davies, Stephen F (DOA) From: David Duffy <dduffy@hilcorp.com> Sent: Friday, January 16, 2015 4:18 PM To: Davies, Stephen F (DOA) Cc: Kevin Tabler Subject: RE: CLU 13 (PTD 214-171) Spacing Exception Application Steve, 1. For the purposes of my email dated November 14 (below), "unleased" and "uncommitted" have the same meaning. In total there are approximately 11 uncommitted tracts. This represents approximately 11 out of 2620 unit acres (or 0.4%) 2. The current exhibits do not detail the mineral owner of uncommitted tract. However, given the location and size of the respective tracts — I'm fairly certain most, if not all, are private. 3. Hilcorp is the sole operator and working interest owner of the Cannery Loop Unit. The 11 unleased tracts have not committed to the unit. 4. Ownership: Tracts 4, 5, 73 and 75: a. Tract 4: Hilcorp is the 100% mineral owner from the surface to 13,500'. Below 13,500', ConocoPhillips owns portions of the mineral estate. See Exhibit B, Pg. 1. b. Tract 5: Hilcorp is the mineral owner at all depths c. Tract 73: C.W. Fisheries, Inc. (Seattle, WA) leased their minerals to Union in 1978. This lease is held by unit production. The current payee is Wards Cove Company. See Exhibit p. 18. d. Tract 75: Joseph A. Cochran (Tomahawk, WI) leased their minerals to Union in 1978. The current payees of royalties are detailed on pg. 19 of the exhibit. The Cannery Loop Unit has been in existence since 1978. The unit underwent contraction in 2011 and has existed in its present form since. Hilcorp acquired these assets from Marathon in 2013. There's lots of history here — and if you have any additional questions we'd be glad to schedule a time to discuss in person. Regards, David Duffy, Landman Hilcorp Alaska, LLC Direct: 907-777-8414 Cell: 907-301-2629 dduffy@hilcorp.com This email may contain confidential and / or privileged information and is intended for the recipient(s) only. In the event you receive this message in error, please notify me and delete the message. From: Davies, Stephen F (DOA)[mailto:steve.davies@alaska.gov] Sent: Thursday, January 15, 2015 11:11 AM To: David Duffy Subject: RE: CLU 13 (PTD 214-171) Spacing Exception Application Hi David, Sorry I didn't get a chance to talk with you after the hearing. Thank you for exhibits, they will be very helpful. Could you please take a few minutes to a few questions about landownership within the Cannery Loop Unit? 1. Could you clarify the phrases "uncommitted acres" and "unleased tract" in your email below? 2. Are the mineral rights beneath these lands owned by private individuals? 3. Is Hilcorp the 100% working interest owner of all lands within the Cannery Loop Unit including these lands? 4. Could you please tell me who are the landowners for tracts 4, 5, 7A, 73, and 75? Steve Davies AOGCC CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.sov. From: David Duffy [mailto:dduffy hilcorp.com] Sent: Thursday, January 15, 2015 8:04 AM To: Davies, Stephen F (DOA) Subject: RE: CLU 13 (PTD 214-171) Spacing Exception Application Morning Steve, I'll be attending the Swanson River Gas Pool Rules hearing today. I'll bring a copy of the Cannery Loop exhibits with me. I'll glad to discuss your questions below. Thanks. E. . From: Davies, Stephen F (DOA)[maiIto: steve.davies@alaska.gov] Sent: Wednesday, January 14, 2015 9:47 AM To: David Duffy Subject: RE: CLU 13 (PTD 214-171) Spacing Exception Application Hi David, I hope 2015 is going well for you. Could you help me a bit further to understand landownership within the Cannery Loop Unit? Could you clarify the phrases "uncommitted acres" and "unleased tract" in your email below? Are the mineral rights beneath these lands owned by private individuals? Is Hilcorp the 100% working interest owner of all lands within the Cannery Loop Unit including these lands? Could you please tell me who are the landowners for tracts 4, 5, 7A, 73, and 75? 1 have a 1984 version of "Cannery Loop Unit Exhibit B" that was provided to the AOGCC by Unocal. This exhibit lists tract number, legal description, acreage and tract participation, lease number and expiration date, subsurface royalty and percentage, overriding royalty interest and ownership, and working interest owners and percentage. Could Hilcorp please provide a copy of the latest version of this Exhibit? Thanks for your help, Steve Davies AOGCC CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. From: David Duffy [mailto:dduffy hilcorp.com] Sent: Friday, November 14, 2014 1:30 PM To: Davies, Stephen F (DOA) Subject: RE: CLU 13 (PTD 214-171) Spacing Exception Application Hi Steve, There are approximately 15 uncommitted acres within Cannery Loop Unit's 2636 acre boundary. I did a quick GIS check and the closest unleased tract to the productive interval of the CLU 13 wellbore is approximately 4,230'. See clip below (measured from the TP "XI to Tract 174). All of the remaining unleased tracts (highlighted in blue) are more than 5000' away. CANNERY LOOP UNIT��eL�=1 David Duffy, Landman Hilcorp Alaska, LLC Direct: 907-777-8414 Cell: 907-301-2629 dduffy@hilcorp.com This email may contain confidential and / or privileged information and is intended for the recipient(s) only. In the event you receive this message in error, please notify me and delete the message. From: Davies, Stephen F (DOA)[mailto:steve.davies(dalaska.gov] Sent: Friday, November 14, 2014 10:15 AM To: David Duffy Subject: CLU 13 (PTD 214-171) Spacing Exception Application David, I'm reviewing the spacing exception request for CLU 13, and I have two questions: Are there any uncommitted tracts within the Cannery Loop Unit? If so, how far away are those tracts from the proposed CLU 13 well path? Thanks, Steve Davies Senior Petroleum Geologist Alaska Oil and Gas Conservation Commission (AOGCC) Phone: 907-793-1224 AOGCC: 907-279-1433 Fax: 907-276-7542 333 West 7'h Avenue, Suite 100 Anchorage, AK 99501 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.sov. KENAI LOOP I LU J_ ,` CA14NERY LOOP UNIT'CLv 31# B JCL U #13 TPH David Duffy, Landman Hilcorp Alaska, LLC Direct: 907-777-8414 Cell: 907-301-2629 dduffv@hilcorp.com This email may contain confidential and / or privileged information and is intended for the recipient(s) only. In the event you receive this message in error, please notify me and delete the message. 9 - 2 From: Davies, Stephen F (DOA) [maiIto:steve.davies@alaska.gov] Sent: Friday, November 14, 2014 10:15 AM To: David Duffy Subject: CLU 13 (F'TD 214-171) Spacing Exception Application David, 4 I'm reviewing the spacing exception request for CLU 13, and I have two questions: Are there any uncommitted tracts within the Cannery Loop Unit? If so, how far away are those tracts from the proposed CLU 13 well path? Thanks, Steve Davies Senior Petroleum Geologist Alaska Oil and Gas Conservation Commission (AOGCC) Phone: 907-793-1224 AOGCC: 907-279-1433 Fax: 907-276-7542 333 West 7ch Avenue, SLite 100 Anchorage, AK 99501 CONFIDENTIALITY NOTICE., This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.davies@alaska.gov. LAS Page 1 of 2 We are now accepting payments online for case agreements and mining claims bills' To make a payment by credit card or from your bank account, click here Results - Case File Abstract Summary File: ADL 60569 Customer: 000106946 CALL, LORNA PO BOX 1747 BELLEVUE WA 98009 Case Type: 784 OIL & GAS LEASE COMP DNR Unit: 780 OIL AND GAS File Location: DOG DIV OIL AND GAS Case Status: 91 TRANSFERRED Status Date: 01/14/1981 Total Acres: 183 430 Date Initiated: 04/12/1973 Office of Primary Responsibility: DOG DIV OIL AND GAS Last Transaction Date: 01/14/1981 Case Subtype: CI COOK INLET Last Transaction: CHGSTCD CASE STATUS CODE CHANGED Land Records Meridian: S Township: 005N Range: 011 W Section: 06 Section Acres: 87 Meridian: S Township: 005N Range. 011 W Section: 07 Section Acres: 97 Case Actions 04-12.1973 TRACT DEFINED SALE DATE 05-09-1973 STATUS (11) 11 TRACT DEFINED BID TYPE 1 FIXED ROYALTY RATE SALE NUMBER 27 TRACT NUMBER C27-060 FORM NUMBER 6 DL-1 APRIL 1971 CONDITIONAL Y/N N PRIMARY TERM 5 06-21-1973 LEASE ISSUED EFFECTIVE DATE 07-01-1973 EXPIRATN DATE 06-30-1978 STATUS (20) 20 ACTIVE r LEASE ISSUED TO LORNA CALL AND C BURGLIN I 07-21-1978 COMMENTS APLN FOR APPROVAL OF TERM EXTENSION DENIED FILE EXTENDED PER CANNERY LOOP UNIT AGRMNT DOCUMENTATION NOT IN FILE COMMITTED EFF 06-29-78 01-14-1981 CASE STATUS CODE CHANGED STATUS CODE 91 TRANSFERRED ALL LANDS REMAINING AFTER SEGREGATION CONVEYED TO COOK INLET REGION INC ACREAGEAMENDED 11-18-81 & B-10-82 DESCRIPTION AMENDED 4-27-1983 01-14.1981 SEGREGATED EFFECTIVE DATE 02-04-1980 NEW FILE TYPE ADL ALASKA DIV OF LANDS NEW FILE NUMBER 324604 NEW TOTAL ACRES 183 430000 OLD TOTAL ACRES 1023 610000 FILE SEGREGATED DUE TO PARTIAL TRANSFER TO C/RI 01.14-1981 LAND WITHIN SECTIONS CHANGED NEW TOTAL AC 183 430000 OLD TOTAL AC 1023 610000 SECTION ACREAGE CHANGED DUE TO SEGREGATION 01.14-1981 TRANSFERRED EFFECTIVE DATE 02-04-1980 STATUS (90) 90 TRANSFERRED ALL LANDS REMAINING AFTER SEGREGATION CONVEYED TO COOK INLET REGION INC ACREAGEAMENDED 11-18-81 & 8-10-82 DESCRIPTION AMENDED 4-27-1983 Legal Description 04-12-1973 "' SALE NOTICE LEGAL DESCRIPTION T5N, R11W, SM SECTIONIS TRACT 6,403 84 ACRES SECTION 7 TRACT 7, 619 77 ACRES CONTAINING 1,02361 ACRES, MORE OR LESS 01-14-1981 '•' SEGREGATI ON/TRAN SFER RED LEGAL DESCRIPTION "' T5N, R11W, SM SECTION 6 LOTS 14, 41-43, 60, 62-66, 83-90, 105-112, 124-126, 128, 133-135, 149-161, 164-174, CONTAINING 86 78 ACRES, http://dnr.alask:a.gov/projects/las/ 1 /13/2015 LAS Page 2 of 2 SECTION 7 E1/2E1/2SE1/4, CONTAINING 40 ACRES, SEt/4SE1/4NE1/4, CONTAINING 10 ACRES, LOTS 4 - 15, CONTAINING 46 65 ACRES, C ONTAINING 183 43 ACRES, MORE OR LESS NOTE LEGAL DESCRIPTION PER AMENDMENT 04-27-1983 http://dnr.alast,a.gov/projects/las/ 1/13/2015 LAS Page 1 of 2 We are now accepting payments online for case agreements and mining claims bills' To make a payment by credit card or from your bank account, click here. Results - Case File Abstract Summary File: ADL 60568 Customer: 000106901 UNION OIL COMPANY OF CALIFORNIA 3800 CENTERPOINT DR, STE 100 ATTN LAND MANAGER ANCHORAGE AK 99503 Case Type. 784 OIL & GAS LEASE COMP DNR Unit: 780 OIL AND GAS File Location: DOG DIV OIL AND GAS Case Status: 91 TRANSFERRED Status Date: 01/14/1981 Total Acres: 440 310 Date Initiated: 04/12/1973 Office of Primary Responsibility: DOG DIV OIL AND GAS Last Transaction Date: 10/09/2007 Case Subtype: CI COOK INLET Last Transaction: DR DOCUMENT RECORDED Land Records Meridian: S Township: 005N Range. 011W Section: 05 Section Acres: 32 Meridian: S Township: 005N Range: 011 W Section: 08 Section Acres: 409 Case Actions 04.12-1973 TRACT DEFINED SALE DATE 05-09-1973 STATUS (11) 11 TRACT DEFINED BID TYPE 1 FIXED ROYALTY RATE SALE NUMBER 27 TRACT NUMBER C27-059 FORM NUMBER 6 DL-1 APRIL 1971 CONDITIONAL YIN N PRIMARY TERM 5 05-09-1973 BID RECEIVED STATUS (12) 12 BID RECEIVED BID TYPE 1 FIXED ROYALTY RATE TOTAL BONUS BID 17571 300000 DEPOSIT AMOUNT 3514 260000 ROYALTY SHARE % 12 500000 MARATHON OIL COMPANY, 50%, UNION OIL COMPANY OF CALIFORNIA, 50% f 05-17.1973 LEASE AWARDED ` STATUS (13) 13 LEASE AWARDED 0645-1973 LEASE ISSUED EFFECTIVE DATE 07-01-1973 EXPIRATN DATE 06-30-1978 STATUS (20) 20 ACTIVE E 03-20-1979 COMMENTS REFORMATION OF JOINT FEDERAL -STATE UNIT AGREEMENT FOR DEVELOPMENT AND OPERATION OF CANNERY LOOP UNIT AREA 08-14.1979 WELL CERTIFIED CAPABLE OF PRODUCING EFFECTIVE DATE 08-14-1979 CANNERY LOOP #1 WELL CERTIFIED CAPABLE OF PRODUCING IN PAYING QUANTITIES MINIMUM ROYALTY DUE07-01-80 01-14-1981 CASE STATUS CODE CHANGED STATUS CODE 91 TRANSFERRED FILE TRANSFERRED TO COOK INLET REGION INC 01.14-1981 SEGREGATED EFFECTIVE DATE 02-04-1980 NEW FILE TYPE ADL ALASKA DIV OF LANDS NEW FILE NUMBER 324602 NEW TOTAL ACRES 440 310000 OLD TOTAL ACRES 867 290000 FILE SEGREGATED DUE TO PARTIAL TRANSFER TO CIRI 01-14-1981 LAND WITHIN SECTIONS CHANGED NEW TOTAL AC 440 310000 OLD TOTAL AC 867 290000 SECTION ACREAGE REDUCED DUE TO SEGREGATION 01-14-1981 TRANSFERRED EFFECTIVE DATE 02-04-1980 STATUS(90) 90 TRANSFERRED FILE TRANSFERRED TO COOK INLET REGION, INC 11-28-1986 COMMENTS LEASE APPARENTLY COMMITTED TO CANNERY LOOP UNIT NO DOCUMENTATION IN CASE FILE http://dnr.alaska.gov/projects/las/ 1 / 13/2015 LAS Page 2 of 2 TYPE OF DOCUMENT MI MINING DOCUMENT NUMBER 2007-023609-0 RECORDING DISTRICT R401 FAIRBANKS DOCUMENT DESC AFFID OF ANNUAL LABOR FOR MINING GENERATED BY RECORDING THE DOCUMENT IN THE OFFICIAL PUBLIC RECORD Legal Description 04-12-1973 "' SALE NOTICE LEGAL DESCRIPTION C27-059 T05N-R11 W- SM G GRANT 05 272 38 TRACT 5 08 594 91 TRACT 8 CONTAINING 867 29 ACRES, MORE OR LESS SEE ADL 324604 FOR SALE NOTICE C1-14-1981 "' SEGREGATIONlTRANSFERRED LEGAL DESCRIPTION 15N,R11W,SM SECTION 5 LOTS 9-11, 31 70 ACRES SECTION 8 LOTS 1-8, 10 286 61 ACRES NW1/4NE1/4 40 00 ACRES SW1/4NW1/4 4000ACRES SEI/4SE1/4 4000ACRES CONTAINING 440 31 ACRES, MORE OR LESS http://dnr.alast-la.gov/projects/las/ 1 / 13/2015 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-031. The application of Hilcorp Alaska, LLC. (Hilcorp) for an exception to the spacing requirements of Conservation Order No. 231, Rule 3 to drill, complete, test, and produce a development: gas well within a quarter -quarter governmental section containing wells that are, or may be capable of, producing from the same pool. Hilcorp, by letter received October 31, 2014, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order under Conservation Order No. 231, Rule 3 allowing testing, completion, and production of onshore development gas well Cannery Loop Unit No. 13 in the Cannery Loop Unit closer than the quarter -quarter governmental drilling unit established for the Beluga Gas Pool and the Upper Tyonek Gas Pool. Cannery Loop Unit No. 13 Surface Location: 216' from the east line and 246' from the south line of Section 7, T5N, RI W, Seward Meridian (S.M.) Top of Productive Interval Location: 2552' from the south line and 2101' from the east line of Section 8, T5N, RI I W, S.M. Bottom -hole Location: 1914' from the north line and 1452' from the east line of Section 8, T5N, RI 1 W, S.M. The AOGCC has tentatively scheduled a public hearing on this application for January 13, 2015, at 2:00 p.m. at 333 W. 71h Ave., Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on December 8, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To :learn if the AOGCC will hold the hearing, call 793-1221 after December 15, 2014. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 W. 7`h Ave., Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on December 22, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the January 13, 2015 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at 793-1221, no later than January 5, 2015. Cathy P. �oerster Commissioner STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER _ 7 AO -I-OO FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O. 11/20/14 AGENCY PHONE: 1(907) 793-1221 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: Publish 11/21/14. FAX NUMBER: (907)276-7542 TO PUBLISHER: Alaska Dispatch News SPECIAL INSTRUCTIONS: PO Box 149001 Anchorage, Alaska 99514 TYPE OF ADVERTISIEMENT: i.. LEGAL DISPLAY CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE CO-14-031 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT TO: Department of Administration Division of AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Page I of 1 Total of All Pages $ REF Type Number Amount Date Comments I PVN ADN84501 2 Ao AO-15-007 3 4 FIN AMOUNT SY CC PC 11 LGR ACCT FY DIS F I,IQ 1 15 02140100 73451 15 2 3 4 5 Purchasing Authority Name: Title: Purchasing Authority's Signature Telephone Number h cq1?1Y.T�rid12+L�f�fi��=,��gc Focuments relating to this purchase. 2. The state is registeren fart fr a coons undQChapter 32, IRS code. Registration number 92-73 0006 K. Items are for the exclusive use of the state and not for resale. I� DISTRIBUTION: Division Fiscal/Originat O Copies: Publisher (faxed), Division Fiscal, Receiving Form:02-901 Revised: 11 /20/2014 4 270227 0001354107 $ 268.94 NOV 2 6 2014 AFFIDAVIT OF PUBLICATION AOGcc STATE OF ALASKA THIRD JUDICIAL DISTRICT Kayla Lavea being first duly sworn on oath deposes and says that he/she is a representative of the Alaska Dispatch News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on November 21, 2014 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed �-n-— Subscribed and sword to before me this 21 st day of November, 2014 Notary Public in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIRES Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket # CO-14-031. The application of Hilcorp Alaska, LLC. (Hilcorp) for an exception to the spacing requirements of Conservation Order No. 231, Rule 3 to drill, complete, test, and produce a development gas well within a quarter -quarter of section containing wells that are, or may be capable of, producing from the same pool. Hilcorp, by letter received October 31, 2014, requests the Alaska oil and Gas Conservation Commission (AOGCC) issue an order under Conservation Order No. 231, Rule 3 allowing testing, completion, and production of onshore development gas well Cannery Loop Unit No. 13 in the Cannery Loop Unit closer than the quarter -quarter governmental drilling unit established for the Beluga Gas Pool and the Upper Tyonek Gas Pool. Cannery Loop Unit No. 13 Surface Location: 216' from the east line and 246' from the south line of Section 7, T5N, R11W, Seward Meridian (S.M.) Top of Productive Interval Location: 2552' from the south line and 2101' from the east line of Section 8, T5N, R11W, S.M. Bottom -hole Location: 1914' from the north line and 1452' from the east line of Section 8, T5N, R11W, S.M. The AOGCC has tentatively scheduled a public. hearing on this application for January 13, 2015, at 2:00 p.m. at 333 W. 7th Ave., Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on December 8, 2014. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call 793-1221 after December 15, 2014. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 W. 7th Ave., Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on December 22, 2014, except that, if a hearing is held, comments must be received no later than the conclusion of the January 13, 2015 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at 793-1221, no later than January 5, 2015. Cathy P. Foerster Chair, Commissioner AO-15-007 Published: November 21, 2014 Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, November 20, 2014 1:35 PM To: Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Herrera, Matthew F (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Konkler, Stacey L (DOA); Loepp, Victoria T (DOA); Mayberry, David J (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (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); Singh, Angela K (DOA); Skutca, Joseph E (DOA); Wallace, Chris D (DOA); AKDCWeIIIntegrityCoordinator, Alexander Bridge; Allen Huckabay; Andrew VanderJack, Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Carrie Wong; Cliff Posey; Colleen Miller, Corey Cruse; Crandall, Krissell; D Lawrence; Dave Harbour, David Boelens; David Duffy, David Goade; David House; David McCaleb; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Delbridge, Rena E (LAA); Donna Ambruz; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Oskolkosf, George Pollock, ghammons; Gordon Pospisil; Greg Duggin; Gregg Nady; gspfoff, Jdarlington Oarlington@gmail.com); Jeanne McPherren; Williams, Jennifer L (LAW); Jerry Hodgden; Jerry McCutcheon; Solnick, Jessica D (LAW); Jim Watt; Jim White; Joe Lastufka; news@radiokenai.com; John Adams; Easton, John R (DNR); John Garing; Jon Goltz; Jones, Jeffrey L (GOV); Juanita Lovett; Judy Stanek, Houle, Julie (DNR); Julie Little; Kari Moriarty; Keith Wiles; Kelly Sperback; Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker; Louisiana Cutler; Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Kremer, Marguerite C (DNR); Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nichole Saunders; Nick W. Glover; Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Renan Yanish; Robert Brelsford; Rose Jacki; Ryan Tunseth; Sara Leverette; Scott Griffith; Shannon Donnelly, Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater; Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Dickenson, Hak K (DNR); Hans Schlegel (hans.schlegel@ge.com); Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jill.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey; King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Peter Contreras; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Todd, Richard J To: (LAW); Tostevin, Breck C (LAW); Wayne Wooster; William Hutto; William Van Dyke Subject: Public Hearing Notices Attachments: Notice of Public Hearing, CO-14-031.pdf, Notice of Public Hearing, CO-14-030.pdf James Gibbs Jack Hakkila Bernie Karl P.O. Box 1597 P.O. Box 190083 K&K Recycling Inc. Soldotna, AK 99669 Anchorage, AK 99519 P.O. Box 58055 Fairbanks, AK 99711 Gordon Severson Penny Vadla George Vaught, Jr. 3201 Westmar Cir. 399 W. Riverview Ave. P.O. Box 13557 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 Denver, CO 80201-3557 David W. Duffy Richard Wagner Darwin Waldsmith Landman P.O. Box 60868 P.O. Box 39309 Hilcorp Alaska, LLC Fairbanks, AK 99706 Ninilchik, AK 99639 P.O. Box 244027 Anchorage, AK 99524-4027 rti2:�e Off- slz� Angela K. Singh Hilcorp Alaska, LLC October 28, 2014 Cathy Foerster, Chair R E C111 Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 OC1 3 1 2014 Anchorage, Alaska 99501 A0GCG Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8301 RE: Application for spacing exception to allow testing, completion and production of secondary targets from the CLU 13 well at Cannery Loop Unit Dear Commissioner Foerster, On October 15, 2014, Hilcorp Alaska, LLC ("Hilcorp") submitted a Permit to Drill the Cannery Loop Unit ("CLU") 13 well to the Alaska Oil and Gas Conservation Commission ("AOGCC"). The primary target for this grass roots development well is the Cannery Loop Unit Tyonek D Gas Pool, as defined by Conservation Order 231. Should this primary target prove non -productive, secondary targets include the Beluga Gas Pool and Upper Tyonek Gas Pool. Pursuant to Conservation Order 231, Rule 3, no spacing exception is required for the Tyonek D Gas Pool. See Exhibit A. However, if completions are necessary in either the Beluga Gas Pool or Upper Tyonek Gas Pool, then a spacing exception will be required per Rule 3 of Conservation Order 231. See Exhibit B (Beluga Gas Pool) and Exhibit C (Upper Tyonek Gas Pool). Rule 3. Well Spacing: A Drilling Unit for the Beluga, Upper Tyonek, or Tyonek "D" Gas Pool is established as the quarter -quarter subdivision of a governmental section occurring with the affected area. Therefore, Hilcorp requests AOGCC take action to allow testing, completion and production of CLU 13 closer than the quarter -quarter drilling unit currently established for the Beluga Gas Pool and Upper Tyonek Gas Pool. The location of CLU 13 and its relationship to adjoining properties and wells is depicted in Exhibit D. • Surface Location: 216' FEL, 246' FSL, Sec 7, T5N, Rl 1 W, SM, AK • Top of Productive Horizon: 2552' FSL, 2101' FEL, Sec 8, T5N, R11 W, SM, AK • Bottom Hole Location: 1914' FNL, 1452' FEL, Sec 8, T5N, R11 W, SM, AK Cannery Loop Unit CLU 13 Spacing Exception October 28, 2014 Page 2 of 6 Hilcorp owns a 100% working interest in the Cannery Loop Unit. The entire productive interval of the proposed CLU 13 wellbore falls within Section 8, T5N, RI W, S.M., AK. The only affected landowners within the applicable quarter -quarter sections of CLU 13's anticipated productive interval are the State of Alaska and Hilcorp. See Exhibit D. Notably, the correlative rights of all owners and landowners within the Beluga and Upper Tyonek Pools will be protected by the Cannery Loop Unit Agreement and its corresponding Participating Areas. Id. Based on confidential geological and engineering data available to Hilcorp, it is apparent that the Beluga and Tyonek sandstones are particularly discontinuous and unpredictable, that they drain relatively small areas, and the proposed development of secondary targets in CLU 13 will ultimately be necessary to maximize the recovery of gas from the Cannery Loop Unit. As demonstrated above, granting an exception to Rule 3 of Conservation Order No. 237 is proper as the proposed action will not impact the correlative rights of any third parties. If you have any questions regarding this request, or would like to schedule a technical briefing on this request, please contact me 777-8414 or dduffy@hilcorp.com. Sincerely, David W. Duffy, Landman Hilcorp Alaska, LLC Enclosures: Exhibits A (Tyonek D Plot); Exhibit B (Beluga Plot); Exhibit C (Upper Tyonek Plot); and Exhibit D (Unit/PA/Quarter-Quarter Plot). CC: Department of Natural Resources, Division of Oil and Gas (via email to kyle.smithgak gov) Cannery Loop Unit CLU 13 Spacing Exception October 28, 2014 Page 3 of 6 <1 Exhibit A CLU 13 Spacing Exception Plot Tyonek D Gas Pool a m C.L 1! A 1?. !ikorp Naska {tu I Ina w1d rill r, ++ %r ,ti f .c+ r. Poffm ELL oATA. *do Ww FUR" •Q1 DALtimm"POM 0 A7TIM "MAP f SAW" rra6mefton Cannery Loop Unit CLU 13 Spacing Exception October 28, 2014 Page 4 of 6 Exhibit B CLU 13 Spacing Exception Plot Upper Tyonek Gas Pool I Y CLU 1 � ` E CLU 12 i �I i 4f t. .. .... ... CLU Is � •r�ea I - e .. TM r f, •r a� i ao I -1�IrT . POSM WELL DATA *mum I ►r'Pnq • n aeiat�91r1 ICI f" o�..f ii riu A rasor.4 et -a •. I Cannery Loop Unit CLU 13 Spacing Exception October 28, 2014 Page 5 of 6 Exhibit C CLU 13 Spacing Exception Plot Beluga Gas Pool Jo HBDNP AAM&S an 131"Wal xulwd4b ba P�d FEET POSTIM WILL CATO, Pimps XffMKIrMWAP 0 Immerim"Wo VML SILMOLd A ftw dwom Aw Cannery Loop Unit CLU 13 Spacing Exception October 28, 2014 Page 6 of 6 Exhibit D CLU 13 Spacing Exception Plot Unit/PA/Quarter-Quarter Sections Stateo?Alaska n C€Rt L _ ,iDYr��O Wrfr latY L q�tl11M.JM.�� lNb6 11 A!( rAR— ��Yyata+w. {iw/�apnY�C 5r 4rda OM. !Mb 9r ia� OM k4",Trnat Party. �M�wYearr! Ma4an.Y ib. Cannery Loop Unit Fft" CLU 13 Spacing Exception AM"5ax FWm Zom LNA027 Hit p ♦ .A.. 1.1.1 Map CMM: 1QMS=4 Exhibit D 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 OIL AND GAS CONSERVATION COMMISSION OF ALASKA PUBLIC HEARING JULY 8th, 1987 " - n 4 1' L S.: i 1937 ; Alaska Oii � �TT;:_� Cons. ;.Vrrm ss...on j�nc ,orar,v R & R COURT REPORTERS 810 N STREET, SUITE 101 509 W.3RD AVENUE 1007 W. 3RD AVENUE 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 P 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TABLE OF CONTENTS A (Letter and attachments of maps and cross sections) 9 19 B (Cross section) 19 C (Structure map of Beluga 19 D (Type log) E (Structure map contoured on the top of the 102-5 sand) 20 F (Structure map contoured on the top 22 of the D-3a sand) 22 G (North -south cross section) H (Geologic and engineering reports) R & R COURT REPORTERS 610N STREET. SUITE 1W.3RDAVENUE 1007 272R3AS 01 509ENUE 277-0572-277-0573 277-9543 ANCHORAGE. ALASKA 99501 -3- 1 2 3 4 5 6 7 8 9 10 11 12 `. 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S MR. CHATTERTON: Okay. Very fine, thank you. Good morning ladies and gentlemen. Appreciate your attendance. The purpose of this public hearing is to provide the Oil and Gas Conservation Commission of Alaska with testimony and public input on an application by Union Oil Company of California -- if that's their present name. I don't know whether it is or not. MR. ANDERSON: That's correct. That's the legal name. MR. CHATTERTON: For pool rules governing the development, if you like, of the Cannery Loop Unit in the Kenai area. I would -- for the record, I would like to put in the date which is the -- July 8th, 1987 and the time is now 9:00 a.m. and the place is 3001 Porcupine Drive, Anchorage, Alaska. Again for the record, I am Chat Chatterton. I am chairing the Alaska Oil and Gas Conservation Commission. To my immediate right, to your left, is Commissioner Bill Barnwell and to my immediate left and your right is Commissioner Lonnie Smith. In the far corner is Suzan Kay Olson with R & R Court Reporters who will be recording these proceedings. At this time I would like to ask Lonnie to read into the record the notice of the public hearing which was issued some weeks ago. Lonnie. MR. SMITH: Thank you. Reference the application of the Union Oil Company of California for an order prescribing R & R COURT REPORTERS B ION STREET, SUITE 101 509W 3RDAVENUE 1007W.3RDAVENUE 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -4- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 rules for development of the hydrocarbon gas reservoirs underlying the Cannery Loop Unit area. By letter dated April 30th, 1987, Unocal, as operator of the Cannery Loop Unit and on behalf of the Working Interest Owners, has requested an order defining the hydrocarbon gas pools underlying the Cannery Loop Unit area, and prescribing rules for their development and production. As required by 20 AAC 25.520, FIELD AND POOL REGULATIONS AND CLASSIFICATION, a hearing on the matter will be held, in conformance with 20 AAC 25.540, at the office of the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska, 99501 at 9:00 a.m. on July the 8th, 1987. This notice was published in the Anchorage Daily News on June the 2nd, 1987. MR. CHATTERTON: Thank you, Lonnie. I will mention.that this hearing and the format for this hearing is governed by the Chapter 25, Section 540 of the Alaska Administrative Code and the highlights of that regulation are that the applicants shall testify first, any other wishing to present testimony shall follow the applicant. At our discretion, at the discretion of the Commission, or the Commissioners, we shall allow applicants, or effective owners to cross examine witnesses. You will go through the Chair to be permitted to do that. Oral statements are permitted upon the R & R COURT REPORTERS BION STREET. SUITE 101 509 W. 3RD AVENUE 1007 W. 3RD AVENUE 277-9343 272-7515 277-0572 - 277-0573 ANCHORAGE, ALASKA 99501 -5- 1 conclusion of all testimony and written statements shall be 2 accepted following all oral statements. There will be no direct 3 questioning of witness' by members of the audience and if there 4 is, why, it certainly will be ruled out of order. 5 Questions may be written and submitted to the 6 Commission and Diana Fleck (ph) who is the Executive Secretary 7 at the Commission, at the far back corner there, why, she will 8 be willing to receive those written questions and will transmit 9 them to us and we, in our discretion, will ask the appropriate 10 testifier if we think it's germane to our decision in the matter 11 before us, which again to repeat, is to -- at our discretion to 12 issue rules governing the drilling for production of and A 13 removal of hydrocarbons from what is know as the Cannery Loop 14 Unit. 15 Without further ado, why, we'll turn it over to 16 the applicant and -- just -- before we start it here, I will 17 mention that the applicant has indicated to me he'll have two 18 people testifying as experts and we would like to have him 19 qualify those experts and we'll swear them in. Lonnie, upon 20 their qual- -- we'll swear them both in at one time. 21 Mr. Anderson, will you proceed for the applicant, 22 please. 23 MR. ANDERSON: Thank you, Mr. Chatterton. My 24 name is Robert T. Anderson, Bob Anderson. I am the Alaska 25 district land manager and have been for the -- fortunately for R & R COURT REPORTERS 1 810N STREET. SUITE 101 509 W.3RD AVENUE 1007W. 22R SAVENUE 277-0572 - 277-0573 277-8543 ANCHORAGE. AI.ASKA 99501 min -6- 1 the 20 years here in Alaska and I thought first off you -- you 2 wondered about Unocal. Unocal, is a name under which we do 3 business as. Our official, legal name is Union Oil Company of 4 California, d/b/a, doing business as, Unocal, so after 30 years 5 with the company it's kind of difficult for me to come out with 6 the Unocal, but I guess I'll learn. 7 I thought maybe to frame where we are and how we 8 got there I would give you a little background on the Cannery 9 Loop Unit. The final approval for the Cannery Loop Unit was 10 received from the State and the U.S.G.S. on June 29th, 1987. 11 The effective date of the Unit was made May 1, 1978. On 12 December 29th, 1978 a permit to drill the Cannery Loop Unit 13 Number 1 was approved as permit number -- approved by your 14 committee as Permit Number 78-75. 15 The following year, March llth, 1979 the initial 16 test well was spud. It was Cannery Loop Unit Number 1 well. 17 That well was completed in June -- on June 25th, 1979 and the 18 State issued a determination that the Cannery Loop Unit Number 1 19 well is deemed a well capable of producing in paying quantities 20 on August 14th, 1979. 21 Subsequently on April 28th, 1981 a permit to 22 drill the Cannery Loop Number 3 well was approved as -- by your 23 committee as Permit Number 81-58. That well was spud on May 26th 24 1981. A conformation well as a Cannery Loop Unit 25 Number 3 well. R & R COURT REPORTERS 81 O N STREET. SUITE 101 509 W 3RD AVENUE 1007 W. 3RD AVENUE 1 277-0572 - 277-0573 277-8543 272-75 1 5 ANCHORAGE. ALASKA 99501 -7- 1 On September 13th, 1981 the Cannery Loop Unit 2 Number 3 well was completed and by an undated letter which we 3 received November 19th, 1981 the State determined the Cannery 4 Loop Unit Number 3 well as deemed to be a well capable of 5 producing in paying quantities. 6 Subsequent to those ..... 7 MR. CHATTERTON: I -- interrupted -- from where 8 did that letter ..... 9 MR. ANDERSON: That came from the Division of 10 Oil and Gas Department of Natural Resources. Both of the -- the 11 State determinations of producibility came from the Department of 12 Natural Resources. 13 MR. CHATTERTON: Thank you. 14 MR. ANDERSON: Subsequent to the discovery 15 effective October 15th, 1985 two participating areas were 16 established. They being the initial participating area the 17 Upper Tyonek and the Tyonek D formations, or participating areas. 18 On April 1, 1986 the participating area for the 19 Beluga formation was established and approved. All of the 20 participating areas were approved by the Division of Oil and Gas 21 Department of Natural Resources. 22 As indicated by the notice on April 30th, 1987 23 we sent a letter to the Alaska Oil and Gas Conservation Commission 24 here requesting that field rules be established for the Cannery 25 Loop -- what we call the Cannery Loop Field. R & R COURT REPORTERS 8 ION STREET. SUITE 101 509W.3ROAVENUE 1007W. 3RDAVENUE 1 277-0572- 277-057 3 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -8- 1 We designated in that request an area that we 2 felt the conservation order should be applicable to, requested 3 that the name of the field be the Cannery Loop Unit Field. We 4 requested that the pools be defined as the Beluga pool, the 5 Upper Tyonek gas pool -- excuse me, the Beluga gas pool, the 6 Upper Tyonek gas pool, the Tyonek D gas pool. We requested that 7 spacing would be 320 acres in a pattern. The spacing would be 8 the north half and the south half of each section lying within 9 the area of the conservation order. 10 We asked also that the -- no well bore in any 11 pool could be nearer than 1,500 feet from the participating area 12 boundary, nor nearer than 500 feet to any well drilled to and 13 opened to production from the same pool except to setforth in 14 the standoff from the spacing units. 15 We also designated a casing and cementing 16 requirements, bottom hole pressure surveys, amendment approvals 17 and to that was attached the geologic report and an engineering 18 report and certain maps. Copies of this complete application 19 were sent to all the committed Working Interest Owners, the Cook 20 Inlet Region, Incorporated, Marathon Oil Company, an individual 21 Lorena Call (ph) and an individual, Cliff Burglin simultaneously 22 with submitting it to the Commission. 23 I would like to ask that that full letter and 24 its enclosures be incorporated and made part of the record of 25 this hearing. t R & R COURT REPORTERS 1 B ION STREET, SUITE 101 509W.3RD AVENUE 1007W 3RDAVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -9- 1 MR. CHATTERTON: We shall make that letter and 2 the attachments which consisted of as I recall maps and cross 3 sections and a few things of that nature, we shall make that 4 package Exhibit A of this hearing. 5 (Commission Exhibit A marked) 6 MR. ANDERSON: Thank you, sir. At this time I 7 would like to qualify -- we have two witnesses this morning. We 8 have Robert C. Warthen, W-a-r-t-h-e-n and we have 9 Steven A. Lambert, L-a-m-b-e-r-t. 10 Mr. Warthen was certified as an expert witness 11 on November 5th, 1979 at a hearing dealing with the discovery 12 royalty application and reconsideration of Union Oil Company on 13 the Grayling 1-A well. 14 Mr. Warthen -- Mr. Robert C. Warthen graduated 15 from Southern Illinois University in 1960 with a Bachelor of Arts, 16 degree in Geology and in 1962 with a Master of Science degree in 17 Economic Geology. 18 Upon graduation, Mr. Warthen worked as a 19 petrologist for the North Dakota Geological Survey until June, 20 1963. From 1963 to April of 1967, he worked for Sinclair Oil and 21 Gas and Continental Oil Company in the capacity of Exploration 22 Geologist and Development Geologist in Arkansas, Kansas, 23 Louisiana, Nebraska, New Mexico, Mississippi, Oklahoma and 24 Texas. 25 His responsibilities included wellsite geology, i R & R COURT REPORTERS 1 81 O N STREET, SUITE 101 509 W. 3RD AVENUE 1007 W. 3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -10- 1 2 3 4 5 6 7 8 9 10 11 12 [GQcl 13 14 15 16 17 18 19 20 21 22 23 24 25 log evaluation, regional mapping and prospect generation. During that same time interval, three months were spent in geological training and three months were spent in Conoco's Research Laboratory working with carbonate sediments. In April of 1967, Mr. Warthen joined the Union Oil Company of California in Lafayette, Louisiana as a Development Geologist. He was transferred to Anchorage, Alaska in October of 1967 as a Development Geologist with assignments as wellsite geologist, formation evaluation and subsurface geological studies for the McArthur River Field. In June of 1969, he was assigned to Exploration Geology working Upper and Lower Cook Inlet, Western Alaska and the Alaska Peninsula. Primary responsibilities included surface and subsurface mapping, regional studies, log evaluation and prospect generation. He was promoted to District Development Geologist in August of 1974. His responsibilities are primarily concerned with the development of Union Oil's interest in oil and gas fields in Alaska. Mr. Warthen is a member of the AAPG, Society of Petroleum Engineers of the AIMS, AIPG, the Alaska Geological Society, Geophysical Society of Alaska and the Alaska Well Log Society. He is a certified professional geologist, Number 3504, and a licensed professional geologist for the State of Alaska, Number 006. MR. CHATTERTON: Thank you, Mr. Anderson. The R & R COURT REPORTERS 1 810NSTREET, SUITE 101 509W. 3RD AVENUE 1007W. 3RDAVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -11- 1 Commission reaccepts Mr. Warthen as an expert in testimony in th 2 matters before us today. 3 MR. ANDERSON: Thank you. Next I would like to 4 read the qualifications for Steven A. Lambert. 5 Mr. Steven A. Lambert graduated from the 6 Colorado School of Mines in 1975 with a Bachelor of Science 7 degree in Petroleum Engineering. He went to work for Union Oil 8 Company of California in the summer of 1975 in Anchorage. 9 Mr. Lambert worked as a petroleum engineer for 10 Union's various Cook Inlet properties from 1975 through 1981. 11 From 1982 to 1983, he worked as a petroleum engineer for Union 12 Oil's North Slope properties. In 1983 he became the Area 13 Petroleum engineer for the North Slope for Union Oil. 14 Mr. Lambert was transferred to Ventura, 15 California in 1984 as Area Petroleum Engineer, responsible for 16 Union's offshore fields in the Santa Barbara Channel and the 17 various onshore fields in the Ventura Basin area. He returned 18 to Alaska in March of 1987 as the District Petroleum Engineer 19 for Alaska. 20 MR. CHATTERTON: Thank you, Mr. Anderson. In 21 view of the -- where Mr. Lambert matriculated, why we think 22 he's highly overqualified for this. We will accept him as an 23 expert testimony on the matters before us. 24 MR. ANDERSON: Mr. Chairman, these are the two 25 expert witnesses that we will have testify. We do have a R & R COURT REPORTERS 810NSTREET, SUITE 101 509W 3RDAVENUE 1007W 3RDAVENUE 1 277-0572-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -12- 1 geophysicist in the audience if questions should arise. I have 2 not gotten his qualifications, but we can have -- ask him to 3 give them if he's called upon to testify. 4 MR. CHATTERTON: Thank you, very much. Perchance 5 do you have copies of Mr. Lambert's and Mr. Warthen's deal for 6 the -- for Suzie so she can follow ..... 7 MR. ANDERSON: Yeah, I do have. 8 MR. CHATTERTON: ..... along on that a little 9 easier? Thank you. All right. Why don't you proceed with your 10 direct ..... 11 MR. ANDERSON: Do you want to swear them in? 12 MR. SMITH: Swear the witnesses. 13 MR. CHATTERTON: Oh, yeah, we better swear them 14 in. Lonnie, will you so do, please. 15 MR. SMITH: Will the „izitnesses please rise. 16 (Mr. Lambert and Mr. Warthen comply) 17 MR. SMITH: Would you raise your right-hand. Do 18 you swear to tell the truth, the whole truth and nothing but the 19 truth? 20 MR. LAMBERT: I do. 21 MR. WARTHEN: I do. 22 MR. SMITH: Thank you. 23 MR. ANDERSON: Mr. Chairman, Bob Warthen will be 24 our first testifier. 25 MR. CHATTERSON: Thank you. Bob, go ahead. R & R COURT REPORTERS 81 O N STREET, SUITE 101 509 W. 3RD AVENUE 1007 W 3RD AVENUE 1 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -13- 1 MR. WARTHEN: Thank you, Mr. Chairman. I'd like 2 to introduce Mr. Kirk Kiloh, development geologist on my staff 3 in Anchorage here who will point out the various items that we'll 4 be discussing this morning. 5 MR. CHATTERTON: Okay, Kirk. 6 MR. WARTHEN: Thank you. The following geologic 7 data are presented to support field rules for Cannery Loop Gas 8 Field Beluga Formation (undifferentiated) gas pool, the Upper 9 Tyonek Formation (undifferentiated) gas pool and the Tyonek 10 D-Zone gas pool, within the Cannery Loop Unit area shown on 11 Exhibit 1. 12 Exhibit 1 is a current structure map on the Top (v;y 13 Beluga Formation, a principal objective in the field. The 14 Cannery Loop Field structure is to the north of, downdip, and on 15 trend with the Kenai Gas Field. 16 The gas productive Sterling Formation sands in 17 the Kenai Field are wet by tests and log analyses, in Cannery 18 Loop Field. Regional mapping and log analyses indicate different 19 gas/water contacts in the productive intervals in Kenai and 20 Cannery Loop, thus indicating the two fields are indeed separate. 21 The Cannery Loop trapping mechanism is an 22 asymmetrical anticline with a steep west flank. It is bounded on 23 the west by a down -to -the -west high angle reverse fault which is 24 off the map here, and is separated from the Kenai Gas Field by a 25 seismically mapped east -west trending steeply dipping R & R COURT REPORTERS 1 8ION STREET. SUITE 101 509 W. 3RD AVENUE 1007 W.3RO AVENUE 277-0372-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -14- 1 down -to -the -north normal fault. This fault has an approximate 2 displacement of 400 feet and cuts all producing horizons. It 3 extends upward into the Sterling Formation. 4 An additional east -west trending down -to -the -north 5 normal fault is penetrated by the Cannery Loop Unit 3 well as 6 seen on structural -- on deeper structural horizons and not seen 7 on this exhibit. This fault has approximately 50 feet of 8 displacement and is buried by the Beluga Formation sediments. 9 The interpretation of the Cannery Loop Field 10 structure and surrounding area is based on well data from Cannery 11 Loop Unit Number 1, the discovery well, Cannery Loop Unit Number 12 3 to the north and an older straight hole designated KU 13-8 and 13 based also on 65 miles of multifold digital seismic data shot 14 between 1974 and 1979. 15 The seismic data were tied to the well control 16 by a check shot survey in Cannery Loop Unit Number 1. All 17 horizons (Top Beluga, Top Tyonek and Top D-Zone) were mapped in 18 time and converted to depth for structural contouring. 19 Exhibit 2, an electric log of the Union Oil 20 Cannery _Loop Unit Number 1 well, the discovery well for the fie11 21 illustrates the productive Beluga, the Upper Tyonek and the 22 D-Zone gas pools. This well was completed in 1979. As defined 23 in the proposed field rules, the stratigraphic limits of the 24 Beluga gas pool correlates with the drilled depth interval of 25 6081 measured depth to 9171 measured depth in the directed well R & R COURT REPORTERS 8 ION STREET, SUITE 101 509W.3RDAVENUE 1007W. 3ROAVENUE 1 277-0572-277-0573 277-8543 272-7315 ANCHORAGE, ALASKA 99501 -15- 1 Cannery Loop Unit Number 1. The stratigraphic limits of the 2 Upper Tyonek gas pools correlate with the drilled depth interval 3 of 9171 measured depth to 10,831 feet measured depth. The 4 stratigraphic limits of the D-Zone gas pool correlates with the 5 drilled depth interval of 10,831 feet measured depth to 11,962 6 feet measured depth. 7 The Beluga undifferentiated gas pool is 8 coincident with the Beluga Formation in Cannery Loop Field. The 9 Beluga Formation, Upper Miocene in age, consists of 10 interstratified beds of nonmarine claystone, mudstone, sandstone, 11 siltstone and minor amounts of lignitic to subbituminous coal. 12 Sediments were derived from the erosion of metasedimentary rocks 13 of the Chugach Mountains to the east. These sediments were E 14 deposited in short, high gradient, shifting streams, that built 15 alluvial fans with shallow braided distributary channels, these 16 fans merging into an alluvial outwash plain. 17 The Beluga Formation is approximately 2650 feet 18 think in the Cannery Loop Field area. The productive sandstone 19 intervals are generally thin to medium bedded and at times 20 discontinuous over relatively short distances. 21 Exhibit 3 is a north -south cross section 22 extending across the field, including Cannery Loop 1 and Cannery 23 Loop 3. The section continues southward through the Kenai Field. 24 This exhibit displays the correlative mapped horizons, the gas 25 producing intervals both at Cannery Loop as well as at Kenai R & R COURT REPORTERS SIGN STREET. SUITE 101 509 W.3RD AVENUE 1007 W.3RDAVENUE 1 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -16- 1 Field and also displays the east -west fault separating the two 2 fields. 3 The cross section also demonstrates the 4 stratigraphic complexities of the Beluga Formation, as well as, 5 the distribution of gas entrapment. Additionally, the section 6 shows the fault limiting the Beluga gas accumulation to the south 7 in the Cannery Loop structure. To the south of the fault the 8 KDU 7 well which is in the north end of Kenai Field tested wet 9 in the Beluga Formation, thus separating the Beluga gas 10 accumulations in the Cannery Loop Field and the Kenai Field. 11 The Cannery Loop Unit Number 1 well was the first 12 well to establish gas production sand- -- gas productive sands Ek 13 within the Beluga Formation in the Cannery Loop Unit. In the 14 Upper Beluga Formation the overall producing zone in this well 15 is from 6083 feet measured depth to 6434 feet measured depth in 16 three sandstone intervals. These intervals are gas productive 17 as substantiated by drillstem tests 5 and 6. 18 Drillstem test 4 substantiated gas production 19 from the Middle Beluga in the interval 7662 measured depth. To 20 the north and east and structurally downdip the Cannery Loop Unit 21 Number 3 well established gas production from the Upper Beluga 22 Formation from 5788 feet measured depth to 5828 feet measured 23 depth. 24 The equivalent sandstone interval in the Cannery 25 Loop Unit Number 1 well was not tested but is considered R & R COURT REPORTERS 81 O N STREET, SUITE 101 509 W 3RD AVENUE 1007 W. 3RD AVENUE 1 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -17- productive by wireline log analysis. Additional Beluga sandstone 1 2 intervals in both wells have the same or similar log analysis parameters as the productive sands; consequently these sands 3 are considered productive also. Gas/water interfaces have not 4 5 been recognized in any of the productive Beluga sands in both 6 Cannery Loop Unit Number 1 and Cannery Loop Unit Number 3. 7 Kirk, do you want to remove those Beluga 8 exhibits. 9 MR. CHATTERTON: May I interrupt here and ask 10 a question? Should 'we start accepting these exhibits and 11 defining them as -- designate them as exhibits? 12 MR. ANDERSON: That would be fine. 13 MR. WARTHEN: This exhibits will be left with 14 the Commission ..... 15 MR. CHATTERTON: All right. 16 MR. WARTHEN: ..... as well as a copy of our 17 testimony. 18 MR. CHATTERTON: Well, before you taken any more 19 down let's -- well, let's see, -let's take the cross section that 20 you have just taken down which is basically a cross section 21 running the -- in a north/south direction through the Kenai gas 22 field as now defined and northerly through the -- what is known 23 as the Cannery Loop accumulation. We will designate that as 24 Exhibit B to these proceedings. While you have these other maps 25 i up here so that you may refer to them as you testify, why, let's R & R COURT REPORTERS 1 SIONSTREET, SUITE 101 509W.3RDAVENUE 1007W. 3RDAVENUE 277-0572 - 277-0573 277-9543 272.75 1 5 ANCHORAGE, ALASKA 99501 -18- 1 2 3 4 5 6 7 8 9 10 11 12 r:3 . 13 14 15 16 17 18 19 20 21 22 23 24 25 1 1 try and just work from the left to the right and call this one which you'll define Exhibit C, Exhibit D and Exhibit E. You've got one hidden then under there? MR. ANDERSON: Right. MR. CHATTERTON: That will be Exhibit F. MR. ANDERSON: Excuse me, Mr. Commission, I think that possibly the Beluga structure map should go with the Beluga cross section and should be designated as either B-1, or Exhibit C however you choose to designate them. MR. CHATTERTON: We have no objections to doing that as long as we have them well defined. Now may we have the - why don't you ..... MR. ANDERSON: Maybe we could make that. MR. CHATTERTON: ..... the applicant make a suggestion? MR. ANDERSON: Okay. I would suggest that the exhibits be labeled in order of presentation as with -- the presentation will go from horizon to horizon..... MR. CHATTERTON: All right. Very fine. MR. ANDERSON: ..... in as much as you chose to designate the cross section and appropriately so as Exhibit A I would purpose that -- excuse me, as Exhibit B I would propose that the structure map on the Beluga Formation be listed as Exhibit C and Kirk, could you put a C. MR. KILOH: Sure. R & R COURT REPORTERS 610N STREET. SUITE 101 309W.3RDAVENUE 1007W. 3ROAVENUE 277-0372-277-0373 277-6343 272-7315 ANCHORAGE. ALASKA 99501 -19- 1 COURT REPORTER: I have labels here. 2 MR. ANDERSON: Okay, super. 3 MR. CHATTERTON: Perfect. 4 MR. KILOH: Structure map of Beluga is Exhibit C. 5 MR. ANDERSON: Correct. 6 MR. CHATTERTON: So ordered. 7 MR. ANDERSON: And you might put Exhibit B on 8 your cross section that you just took down. 9 MR. CHATTERTON: So ordered. 10 MR. ANDERSON: Then it might be well, Mr. Chairman, 11 that as we discuss the exhibits that they be marked and accepted 12 at that time. 13 MR. CHATTERTON: We will appreciate that very 14 much. 15 MR. KILOH: Type log? 16 MR. ANDERSON: Oh, excuse me, type log, Exhibit D 17 MR. CHATTERTON: So ordered. Type log is 18 Exhibit D. Thank you. Proceed. 19 MR. WARTHEN: Thank you, Mr. Commissioner. 20 Referring to the Tyonek Formation, the Upper Tyonek 21 undifferentiated gas pool is coincident with the Upper Tyonek 22 Formation in Cannery Loop Field. The Tyonek Formation, Lower to 23 Middle Miocene in age, consists of massively bedded, fine to 24 conglomeratic sandstones, and thick coals with siltstone, 25 claystone and shale interbeds. The Tyonek depositional system R & R COURT REPORTERS 81 O N STREET, SUITE 1 O1 509 W. 3RD AVENUE 1007 W. 3RD AVENUE i 277-0572 - 277-0573 277-9543 272-7515 ANCHORAGE, ALASKA 99501 -20- is interpreted as a poorly drained alluvial lowland with 1 tectonically active highlands along the basin's margins, probably 2 3 related to movement along major fault systems, with periodic 4 heavy discharge and runoff. 5 During Tyonek time most of the sediment was 6 derived from the Alaska Range to the west with stream systems an 7 alluvial fans carrying sediment to the south and southeast. 8 During the Upper Tyonek, the Kenai -Chugach 9 Mountains to the east began contributing minor amounts of 10 sediment. Coarse grained alluvial fans developed along the 11 lateral margins of the basin due to rapid deposition related to 12 change in slope and intermittent discharge. The lobes gradually 13 merged with alluvial plain deposits in the central portion of the 14 alluvial basin. The marginal sag ponds and floodplain, which 15 were poorly drained were ideal settings for development of swamps 16 and marshes, which were sites for coal generation. 17 The Upper Tyonek is approximately 1400 feet 18 thick in the Cannery Loop Field area. The productive sand unit, 19 the 102-5 sand, is approximately 1100 feet below the top of the 20 Tyonek. - 21 The Upper Tyonek reservoir sands are typically 22 loose to firm, silty to pebbly sand and sandy conglomerate. 23 Exhibit 5 in my testimony which would be Exhibit E is a structure 24 map contoured on the top of the 102-5 sand. This exhibit shows 25 the structural configuration of the Cannery Loop structure in I R & R COURT REPORTERS 1 S ION STREET, SUITE 101 509W. 3RD AVENUE 1007W. 3RDAVENUE 277-0572- 277-057 3277-9543 272-7515 ANCHORAGE. ALASKA 99501 -21- 1 relation to the Kenai structure. The exhibit also shows the 2 normal fault that was intersected by the Cannery 3 wellbore as 3 well as the estimated accumulation limit for this sand. The 4 102-5 equivalent sand is not productive in the Kenai Field. 5 The Cannery Loop Unit Number 1 well was the first 6 well to establish gas production from the Upper Tyonek interval. 7 The producing zone, the 102-5 sand, is from 10,252 feet measured 8 depth to 10,272 feet measured depth. A gas/water interface was 9 not present in this sand in Cannery Loop Unit Number 1. The 10 estimated accumulation limit is based on a percentage of 11 structural fill calculation. 12 The Tyonek D-Zone gas pool occurs in the middle 13 part of the Tyonek Formation and is approximately 1000 feet thick 14 in the Cannery Loop Field area. The productive sands are 15 scattered throughout the interval. Although D-Zone sands are 16 continuous across the field area, coal beds within the productive 17 sequence furnish assistance in making correlations. 18 The Cannery Loop Unit Number 1 well was the first 19 well to establish gas production from the D-Zone interval. The 20 producing zone is from 11,391 feet measured depth to 11,412 feet 21 measured depth which is the D-3a sand and 11,822 feet measured 22 depth to 11,851 feet measured depth which is the D-6a sand. 23 Three additional sands, the D-2b, the D-5 and the 24 D-6b are considered productive by log analyses. Possible 25 gas/water interfaces may have been penetrated in the D-5 and the i R & R COURT REPORTERS 1 S ION STREET, SUITE 101 509W 3RDAVENUE 1007W.3RDAVENUE 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -22- 1 D-6b sands in the discovery well, Cannery Loop Unit Number 1. 2 Exhibit 6, and in this case Exhibit F -- and 3 we'll take a moment, Kirk, for you to get that up there. 4 MR. CHATTERTON: All right. 5 MR. WARTHEN: That's that one, just take those 6 on D-3a. 7 MR. KILOH: On D-3a? 8 MR. WARTHEN: Yeah. This exhibit, again Exhibit 9 F, is a structure map contoured on the top of the D-3a sand. As 10 was the case in the overlying 102-5 structure map, this map also 11 shows the structural configuration of the Cannery Loop Structure, 12 the intersection of the east -west fault with the Cannery 3 13 wellbore as well as the estimated accumulation limits. The 14 accumulation limit of 9837 feet subsea, in Cannery Loop Field is 15 based on a percentage of structural fill calculation. The 16 accumulation limit in Kenai Field at 9305 feet subsea of the 17 equivalent sand, or the equivalent D-3a sand, is based upon 18 production testing and log analysis. 19 The KDU 7 well in the north end of the Kenai 20 Field tested wet in the D-Zone sands; thus separating the 21 accumulations in Cannery Loop Field and Kenai Field. 22 Exhibit 4, in this case Exhibit G -- (making the 23 exhibit). Okay. Exhibit G is a north -south cross section 24 extending through Cannery Loop Field to the KDU 7 well in the 25 north end of the Kenai Field. This section shows the Upper R & R COURT REPORTERS S ION STREET, SUITE 101 509W.3ROAVENUE 1007W 3RDAVENUE 1 277-0572 - 277-0573 277-9543 272-7515 ANCHORAGE. ALASKA 99501 -23- 1 Tyonek 102-5 sand as well as the sequence of D-Zone sands. The 2 section also shows the stratigraphic and structural relationship 3 of the Cannery Loop Unit 1 and 3 wells -- wellbores to each 4 other as well as the nonproductive RDU 7 well to the south as 5 well as the bounding faults on the north and the south end of 6 the field. The north fault being the one that intersected the 7 Cannery 3 wellbore and the seismic fault on the south end of the g field. 9 The Beluga undifferentiated gas pool, the Upper 10 Tyonek undifferentiated gas pool and the Tyonek D-Zone gas pool 11 are three separate and distinct pools_ Stratigraphic separation, 12 variable lithology and accumulation limit differences, support 13 Union Oil Company's application request to establish separate 14 pools. Erratic and unpredictable sand deposition and aerial 15 lithology changes, typical of nonmarine deposition, support that 16 320 acre spacing should be applied to separate pools and confirm 17 the applicant's request for closer distance between completion 18 intervals in order to provide needed tolerance to reach the 19 optimum geologic target. 20 Mr. Commission, this concludes my testimony. 21 MR. CHATTERTON: Thank you, very much, 22 Mr. Warthen. 23 MR. ANDERSON: Mr. Chairman, would you like to 24 ask questions at this time, or shall we complete the entire 25 testimony and then -- and then have questions? R & R COURT REPORTERS 1 8 ION STREET, SUITE 101 509W 3ROAVENUE 1007W 3RDAVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -24- 1 2 3 4 5 6 7 8 9 10 14 15 16 17 18 19 20 21 22 23 24 25 1 MR. CHATTERTON: What's the pleasure of the Commissioners? MR. SMITH: I don't have any right now. MR. CHATTERTON: Why don't you proceed with the direct. MR. ANDERSON: Fine. Our next testifier will be Steve Lambert. MR. LAMBERT: Mr. Chairman, I'd like to present engineering data to support our application for field rules for the Cannery Loop Unit. MR. CHATTERTON: Thank you. MR. LAMBERT: In my testimony I'll refer to wells located both within the Kenai Unit and the Cannery Loop Unit. Mr. Kiloh will point those out on our Beluga -- top Beluga map which I believe is Exhibit C. MR. KILOH: Yes. MR. LAMBERT: Two wells have been drilled and tested to date in the Cannery Loop Unit. Well Cannery Loop Unit Number 1 was gas productive in all three of the proposed pools; the Beluga, Upper Tyonek and Tyonek D sands. Well Cannery Loop Unit Number 3 was gas productive in the Beluga sands only. These two wells are now suspended. The drillstem tests performed on these wells were designed to establish the presence of commercially productive gas. A stabilized production rate and bottom hole pressure were obtained where possible; no extended R & R COURT REPORTERS SIONSTREET, SUITE 101 509W.3RDAVENUE 1007W 3RDAVENUE 277-0572 - 277-057 3 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -25- 1 production tests of over two days in duration were completed. 2 The Tyonek D zone was tested in Cannery Loop 3 Unit Number 1 in June of 1979 during DST Number 1 in the interva: 4 11,824 to 11,838 measured depth. This zone has an absolute open 5 flow potential of 50 million standard cubic feet per day. The 6 reservoir pressure measured was 4652 psig, at a subsea depth of 7 10,027 feet resulting in a pressure gradient of .464 psi per foo- 8 The Upper Tyonek zone was tested in DST Number 3 9 in June of 1979 in the Cannery Loop Unit Number 1 well in the 10 interval 10,252 feet to 10,272 feet measured depth. The absolut, 11 open flow potential was calculated to be 37 million standard 12 cubic feet per day and the zone has a reservoir pressure of 5065 13 psig at a subsea depth of 8683 resulting in a gradient of .583 14 psi per foot. 15 The Beluga zone was tested in Cannery Loop Unit 16 Number 1 in June, 1979 during DSTs 4, 5 and 6. DST Number 4 17 tested the interval 7662 to 7682 measured depth. It had a final 18 rate of 5.29 million standard cubic feet per day at 1494 psi 19 surface pressure. The maximum bottom hole pressure measured was 20 2804 psig; no absolute open flow was calculated. 21 The pressure of 2804 psig was measured at a 22 subsea depth of 6513 feet resulting a a pressure gradient of 23 .431 psi per foot. 24 DST Number 5 tested the intervals 6408 to 6419 25 and 6422 to 6434. These intervals had an absolute open flow R & R COURT REPORTERS 8IO N STREET. SUITE 101 509 W. 3RDAVENUE 1007 W.3ROAVENUE 1 277-0572- 277-057 3 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -26- 1 potential of 12.5 million standard cubic feet per day and a 2 reservoir pressure of 2365 psig. 3 DST Number 6 tested the interval 6083 to 6092 4 feet measured depth in the Beluga Interval. The maximum rate 5 measured was 2.93 million standard cubic feet per day at a 6 surface pressure of 1240 psi. The maximum bottom hole pressure 7 measured was 2270 psig. No -absolute open flow rate was 8 calculated. 9 At the same time the Cannery Loop Unit Number 1 10 well was being tested reservoir pressures were being measured 11 in corresponding intervals in the Kenai Gas Field. 12 The Tyonek interval was accumulative production 13 of 138 billion standard cubic feet was tested in three wells. 14 Well KDU Number 1 was tested in May of 1979 and measured a 15 reservoir pressure of 1892 psig at a datum of 9000 feet subsea. 16 Well KDU-2L was tested in April and measured 17 1997 psig at the same datum. Well KDU-4L was also tested in 18 April and measured a pressure of 1924 psig at the 9000 foot 19 subsea datum. 20 The Upper Tyonek with accumulative production of 21 .7 BCF was tested in the Kenai Gas Field in well KDU-5Long. In 22 May of 1979 a reservoir pressure of 3323 psig was measured at a 23 subsea depth of 7300 feet. 24 The Upper Beluga interval with cumulative 25 production of 17 BCF was tested in three wells in May of 1979 in R & R COURT REPORTERS 1 8 ION STREET. SUITE 101 509W.3RDAVENUE 1007W. 3RDAVENUE 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 x -27- 1 the Kenai Gas Field which is approximately the same time period 2 in which the Beluga was tested in the Cannery Loop Unit Number 1 3 well. 4 Well Kenai Unit 13-8Short measured a Beluga 5 pressure of 1760 psig at a subsea depth of 4900 feet. Well 6 Kenai Unit 14-6Long measured a reservoir pressure of 1919 psig 7 at a subsea depth of 4900 feet. Well KDU-5Short measured a 8 reservoir pressure of 1851 psig at a subsea depth of 4900 feet. 9 The Beluga zone was also gas productive in well 10 Cannery Loop Unit Number 3 from the intervals 5818 to 5828 and 11 5788 to 5796. These zones were tested in September, 1981 and 12 produced at a maximum rate of 5.3 million standard cubic feet per 13 day at 1233 psi surface pressure. The absolute open flow was 14 calculated to be 9.65 million standard cubic feet per day. The 15 reservoir pressure was calculated to be 2378 psig. This pressure 16 was measured at a subsea datum of 5440. Additional intervals in 17 both wells within the Beluga formation are considered gas 18 productive from log analysis. 19 The Upper Beluga reservoir pressure was 20 measured in two wells in the Kenai Gas Field in the time frame 21 corresponding to the testing in the Cannery Loop Number 3 well. 22 In May of 1981 well Kenai Unit 14-6Long measured 23 a reservoir pressure of 1521 psig at a subsea depth of 4900 feet 24 and well Kenai Unit 43-6X measured a pressure of 1339 psig at the 25 subsea datum of 4900 feet. R & R COURT REPORTERS SIONSTREET, SUITE 101 509W.3ROAVENUE 1007W 3RDAVENUE 1 277-0572 - 277-0573 277-8543 272-751 5 ANCHORAGE. ALASKA 99501 -28- I In addition, in October, 1981 well Kenai Deep 2 Unit Number 7 was drilled to the north end of the field to test 3 the Beluga and Tyonek reservoirs. The logs indicated both 4 intervals were wet and the well was plugged back to the Sterling 5 reservoir. The comparative pressure data between wells in the 6 Kenai and the Cannery Loop Units in conjunction with the wet 7 test in Kenai Deep Unit Number 7 support the fact that the 8 productive reservoirs in the Cannery Loop Field are separate and 9 distinct from those reservoirs being produced in the Kenai Gas 10 Field. 11 Because of the wide range in reservoir pressures, 12 it is deemed prudent to segregate the production from each of the 13 three proposed pools until after it is measured at the surface. 14 This will permit individual pressure measurements of each pool 15 and increase the effectiveness of the reservoir management. .16 Where more than one zone is present within a wellbore, the well 17 will be completed with two tubing strings and each zone metered 18 separately. Pressure surveys will be run annually on selected 19 wells to monitor reservoir pressure. 20 It is proposed to develop the field on-320 acres 21 spacing to efficiently produce the gas. This spacing will 22 provide the flexibility needed to economically develop the field. 23 It is necessary to directionally drill wells from 24 a limited number of surface locations due to the lack of suitable 25 sites. In directional wells convergence of the wellbore back to R Be R COURT REPORTERS 1 8ION STREET, SUITE 101 509 W.3RD AVENUE 1007 W.3RDAVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -29- 1 the drill site results in less distance between completions in 2 the shallow sands than would otherwise occur. 3 A 500 foot standoff between completions within 4 the same pool will optimize development and provide the needed 5 flexibility to develop the field from the limited number of drill 6 sites. 7 Mr. Chairman, this concludes my testimony. 8 MR. CHATTERTON: Thank you, very much, Bob. 9 MR. ANDERSON: Mr. Chairman, may I give you a 10 summary of where we are now. As you are well aware we are 11 currently drilling an exploratory well Cannery Loop Unit Number 4 12 and that's been drilled from the -- what we call the Number 3 13 drill site which is the northern most drill site of the two. As 14 I say that's currently drilling an exploratory well. We hope to 15 find oil in the Hemlock formation. 16 Concurrently with that facilities and pipelines 17 are being constructed on both sites, the north site and the south 18 site. We refer to the southern side as the Number 1 site and 19 the northern side is the Number 3 site at -- for a tie-in to the 20 20 inch line that runs to the North Kenai industrial complex. 21 We anticipate once the Number 4 well is 22 completed, if it's completed as an oil well we will put 23 facilities, tank facilities on that site for handling the oil. 24 The rig then will be moved to the Number 3 well and it will be 25 completed as a gas well in the -- in the Beluga. R & R COURT REPORTERS 1 81 O N STREET, SUITE 101 509 W 3RD AVENUE 1007 W 3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -30- 1 A decision will have to be made at that time 2 whether another oil well should be drilled from the Number 3 site 3 If that's the case, of course, we will drill a confirmation well 4 probably from the Number 3 site. In the event it is dry in (ph) 5 the oil, we plan to complete the Number 4 well as a gas well to 6 be tied then with the production from the Number 3 well through 7 the facilities on that site. That rig in turn then will move to 8 the Number 1 pad. We will complete the Number 1 well and drill 9 a second well on that pad to be designated as the Number 5 well 10 and hopefully by the latter part of this year, October, first of 11 November we will have four gas wells on production producing into 12 the system. And if we're very, very fortunate we may have one 13 oil well producing. The oil then will be trucked to the 14 facilities on the North Kenai. That's where we stand today, 15 Mr. Commissioner. 16 MR. CHATTERTON: Thank you, very much. Do you 17 have any questions? 18 MR. SMITH: Not really. 19 MR. CHATTERTON: I think I have a question, or 20 two. This older straight hole that you were referring to in 21 your testimony, Mr. Warthen ..... 22 MR. WARTHEN: That well was drilled as a Kenai 23 Unit well as were many wells in the earlier stages of drilling in 24 Alaska on the Kenai Peninsula.' In this particular area even 25 though it's not in the Kenai Field area was designated Kenai Unit R & R COURT REPORTERS 8ION STREET. SUITE 101 509 W. 3RO AVENUE 1007 W.3RDAVENUE 1 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE. AIASKA 99501 -31- 1 13-8. It was subsequent to the discovery of the Kenai Gas Field 2 where the prolific Sterling sands were developed, or -- or 3 discovered and that well was drilled as a Sterling sand well. 4 It penetrated the Upper Beluga by about 250, 300 feet. It was 5 wet in the Sterling sands and the well was abandoned. It did, 6 however, have two gas sands in the Upper Beluga that at that 7 time were recognized as coals. The log analysis at that time 8 was rather difficult with the logs that were acquired in that 9 wellbore. 10 Myself and a few other people on our staff had 11 suspicions about the log analysis. We did have our research 12 people look at that well and they said that those coals there wa: 13 a 50/50 chance they could be coals, they could be gas. That was 14 the basis for drilling the Cannery Loop Unit Number 1 well. 15 MR. CHATTERTON: Thank you. In effect when 13-8 16 KDU 13-8 was -- or KU, I guess ..... 17 MR. WARTHEN: KU. 18 MR. CHATTERTON: 13-8 was drilled it was 19 considered to be part of the Kenai gas field? 20 MR. WARTHEN: It was a Kenai area well. There 21 were other wells to the east drilled. There was a KU well in 22 Sterling area drilled as the 41-3 well. I don't -- I was not 23 here at the time. I can't say if it was drilled as an extension 24 of the Kenai gas field. All I know if that there were several 25 wells drilled as Kenai Unit wells. It could, in fact, have been R & R COURT REPORTERS StON STREET. SUITE 10 i 509W.3RDAVENUE 1007W. 3RDAVENUE 1 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, AI.ASKA 99501 -32- 1 drilled as an extension of the Kenai Field. 2 MR. CHATTERTON: Thank you. Your KDU Number 7 3 I notice on all of your cross sections, why it is the kingpin to 4 give you the feeling that there is a wet saddle across there in 5 all three horizons. I do notice that KDU Number 7 is struct=ally 6 low and structurally lower than the limits of production in the 7 Kenai gas field, so you would expect it to be wet anyway, is that 8 correct? 9 MR. WARTHEN: That's correct, Mr. Commissioner. 10 The basis for drilling that well was that there were some 11 discrepancies in our volumetric mapping of the D Zone at Kenai 12 Field with the P over Z data where it looked the D Zone pool ..; 13 could, in fact, be larger. We had some older seismic data at 14 that point that led us to believe that perhaps there was a little 15 bit of a saddle to the north, or a little high in the saddle to 16 the north of the Kenai Field and that KDU 7 was drilled on it. 17 The dip meter data indicated that perhaps you could get a little 18 high to that well -- to the KDU 7 well as indicated by Exhibit C, 19 or -- excuse me, the Exhibit F I believe, the D Zone -- the D-3A 20 sand where we show a little high to the east of the KDU 7 well. 21 However, when the well was drilled the mud log indications were 22 that there was no gas in the Beluga, or the Upper Tyonek, or the 23 D Zone when the well was logged that confirmed that. The well 24 does, in fact, penetrate the Sterling productive sequence and 25 was plugged back to the Sterling sands, so it is a genuinely (ph) R & R COURT REPORTERS 1 8 ION STREET. SUITE 101 509W.3ROAVENUE 1007W 3RDAVENUE 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -33- 1 wet well below the Sterling sands through the D Zone interval. 2 MR. CHATTERTON: Thank you, very much. Well, 3 with that, why, other than structural interpretations from 4 seismograph and so forth, why the best evidence that there are 5 the accumulations beneath the Cannery Loop Unit and the Kenai 6 Unit are not pressure connected, I guess, is the pressure data 7 itself, is that correct? 8 MR. LAMBERT: That's right. 9 MR. CHATTERTON: And that is what we are basicall 10 hanging our hat on as to separate the pools? 11 MR. LAMBERT: Yes, we annually test all the wells 12 in the field in the Kenai Unit, obtain pressure measurements 13 from the various intervals and as I mentioned in my testimony 14 concurrent with the testing in Cannery Loop we were measuring 15 pressures in the Kenai Field which were vastly different from 16 those we measured in the Cannery Loop Number 1 and Number 3 wells 17 MR. CHATTERTON: Now the current pool rules for 18 the Kenai Unit, quote, unquote, ."the Kenai Field", what is their 19 most northerly boundary? 20 MR. ANDERSON: Mr. Chairman, the dotted line 21 which is designated as the Kenai Unit boundary on Exhibit -- well 22 I guess both Exhibit F and Exhibit C are the limits of the field 23 rules pertaining to the Kenai accumulation, the Kenai Unit 24 itself. The participated -- the area you see on that map is the 25 Sterling -- outline of the Sterling participating area. Other R & R COURT REPORTERS 1 8ION STREET, SUITE 101 509 W.3RDAVENUE 1007 W.3RDAVENUE 277-0572 - 277-057 3277-8543 272-7515 ANCHORAGE. ALASKA 99501 -34- 1 participating areas have been established for the deeper pools 2 in the more southerly part of those exhibits as you can see 3 dashed on that structure map. 4 I think the clarification to your earlier 5 question on the designations of the wells drilled in the earlier 6 days, the KU well, the KU 7 and the well that Mr. Warthen spoke 7 of at that time the Kenai Unit was a very, very large unit and g any well drilled within the unit would be designated as a Kenai 9 Unit well. After the statutory time frames had run their course 10 the Kenai Unit contracted to then the largest participating area 11 being the Sterling area that you see there outlined with the 12 dash line. 13 MR. CHATTERTON: Then as I see you're asking for 14 pool rules for these three -- governing these three new 15 not pressure connected pools beneath the Cannery Loop Unit. We 16 have a hiatus there because a portion of at least one of those 17 pools is already --as far as rules for the drilling, development, 18 production and marketing is already taken care of, is that 19 correct? Have we got a hiatus here? 20 MR. ANDERSON: Mr. Chairman, the portion of the 21 Beluga outlined accumulation limit, outlined in pink, does fall 22 into the Kenai Unit. At the time we made application for the 23 Beluga participating area in the Cannery Loop Unit we 24 simultaneously made application with the USGS/BLM for a 25 participating area in the Kenai Unit to encompass that R & R COURT REPORTERS B ION STREET. SUITE 101 509 W.3RD AVENUE 1007W. 3RDAVENUE 1 277-0572-277-0573 277-8543 272.7515 ANCHORAGE, ALASKA 99501 -35- 1 accumulation. Due to the regulations, the Federal regulations 2 governing the Kenai Unit unless a well is drilled in the Kenai 3 Unit into that accumulation, or a drainage situation is 4 established wherein a well offsetting the federally operated, 5 federally administrated unit, they were precluded from 6 establishing a participating area in the Kenai Unit for the 7 portion of the Beluga accumulation. 8 One of our wells probably that will be drilled 9 in 1988 and we plan two additional wells, two additional gas 10 wells in 188 for a total of six wells in the field will be 11 directed in a southerly direction toward the Kenai Unit boundary 12 in order to set up a drainage situation thereby satisfying their 13 regulations for establishing a participating area in the Kenai 14 Unit. 15 Concurrently with that we will entered into -- 16 the Working Interest Owners of the Kenai Unit and the Working 17 Interest Owners of the Cannery Loop Unit will enter into a 18 cooperative agreement for the joint production from the Beluga 19 participating area in the Cannery Loop Unit and the Beluga 20 participating area in the northern part of the Kenai Unit in 21 order that they may be drained without a loss of the resource, 22 cooperatively developed. 23 MR. CHATTERTON: All right. Will the Cannery 24 Loop extension, if you want to think of it in that -- and maybe 25 you don't, but if you do want to think of it in that way, why, R & R COURT REPORTERS 1 SION STREET. SUITE 1O1 509 W.3RD AVENUE 1007 W.3RD AVENUE 277-0572- 277-057 3 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -36- 1 the rules governing the development and production and removal 2 of hydrocarbons from the Beluga pool within -- beneath that 3 extension, why we do have a hiatus. We are going to have to -- 4 if the Commission so sees fit to issue pool rules for that 5 Beluga pool they're going to have to simultaneously shrink the 6 boundary of the pool rules for the Kenai gas field I guess to -- 7 to that transverse green fault that we see -- fault trace (ph) 8 we see there, is that correct? 9 MR. ANDERSON: As we see it if the pool rules 10 are dealing with the pools themselves, the Beluga, the Upper 11 Tyonek and the Tyonek D we feel that the pools themselves will 12 dictate that. Conceivably a modification of the Kenai field 13 rules to apply only to the Sterling might be in order, or an 14 expansion into the Cannery Loop. I think we would prefer maybe 15 a modification of the Kenai rules rather than an inclusion of 16 the Cannery Loop in the Kenai rules, but ..... 17 MR. CHATTERTON: Okay, thank you, very much. 18 Let's see, I guess it was Steve mentioned the -- something 19 about -- or -- I forget which, Steve, or Bob, about you wanted 20 320 acre spacing, that would be to set up a drilling unit for 21 the gas, but you wanted to not -- to be permitted to have a 500 22 foot proximity of wellbores, or open -- wellbores opened to 23 production, is that correct? 24 MR. LAMBERT: That's correct. 25 MR. CHATTERTON: What violence is accomplished R & R COURT REPORTERS 810NSTREET, SUITE 101 509W.3ROAVENUE 1007W. 3RDAVENUE 1 277-0572-277-0573 277.8543 272-7515 ANCHORAGE, ALASKA 99501 -37- !"I. 40 acre spacing, 660 acres, Lsically, what's wrong with -- )lish 40 acre spacing for get within 500 feet without Lo to yourselves? t reservoir standpoint there )uld give us even more reservoirs. We saw 320 as it to go as far as spacing. i may very well not want to :now. Do you feel that -- Is as to the ultimate function of well spacing? �tically spacing should have 70ir. One well should be able :king. It's a function of I in the case of the Beluga I the lenticular nature of Duld dictate that you would :ve, are you familiar with awe're ..... DX name. ... far afield here. iS 1007 W. 3RD AVENUE 272-75 1 5 TTERTON: You're not? BERT: Just by name. TTERTON: Are you familiar with any s Commission ..... BERT: Yes. CTERTON: ..... has had regarding that? 3ERT: Yes. CTERTON: Are you ..... 3ERT: I know they're trying to get 'TERTON: They have so done and on the L mention that it was done on the basis spacing to 320 acre spacing the Kansas that the ultimate recovery was ---based on irecovery was improved. I was wondering of any -- apparently you have no Melds where that has occurred? ERT: Not that I'm aware of. Obviously situation, or have some changes in logic picture then tighter spacing is but if you have a truly volumetric 3 would not be that critical in a gas PERTON: Thank you. Now I'll direct id you mention lenticularity in your -- COURT REPORTERS 09W 3RDAVENUE 1007W.3RDAVENUE 277-8543 272.7515 ORAGE. ALASKA 99501 Fs� btt -39- 1 when you were talking about the sedimentology of these horizons? 2 MR. WARTHEN: I don't know if I used that exact 3 work, Mr. Commissioner. The Beluga sands are definitely 4 lenticular in most cases. In some instances they carry 5 considerable distances. The depositional characteristics of 6 the sand bodies themselves are such that they are limited. The 7 one cross section that we had up there, Exhibit B, definitely 8 showed that these sands did not continue over long distances, 9 Ehe majority of them,that they are rather complex and complex 10 pods. This by nature like Steve said would dictate closer well 11 spacing to recover that resource. 12 MR. CHATTERTON: Thank you. While I have you, 13 the -- on all of the structure maps exhibits -- and I won't give 14 you the litany.of the exhibit alphabet there, but depicted as 15 transverse green line which is a trace of a normal fault dipping 16 to the north as you're testimony indicated, have you named that 17 fault? 18 MR. WARTHEN: No, sir, .we have not. This is a 19 fault that obviously we do not see by well control since there 20 are no wells nearby (ph) the fault. The fault was determined by 21 several cuts on seismic -- seismic lines. It definitely is a 22 large fault. Approximately 400 feet vertical displacement. It'! 23 very high angled dipping approximately on the cuts that we have 24 from 77 degrees to 79 degrees near vertical. The fault plain(ph) 25 was mapped and it does curve around a little bit as it intersect! R & R COURT REPORTERS SION STREET, SUITE 101 509 W. 3RD AVENUE 1007 W. 3RD AVENUE 1 277-0572 - 277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -40- 1 the various traces. It does not seem to be a fault that is a 2 straight line, or goes straight east/west, or straight 3 northeast/southwest and also we have taken a little bit of 4 geologic license in extending the fault to the east beyond the 5 seismic contol just by the nature of the -- the amount of 6 vertical displacement. 7 We would like to call it the Cannery Loop fault, 8 but we have not as yet named that fault. 9 MR. CHATTERTON: Would you object if we for 10 purposes of our dilberations define it as the Cannery Loop fault? 11 1 feel very creative today. 12 MR. WARTHEN: No, we -- we have no objections to 13 that whatsoever, Mr. Commissioner. 14 MR. CHATTERTON: We would like to so designate 15 that as the Cannery Loop fault then. 16 Off the record for a moment, please. 17 (Off Record) 18 (On Record) 19 MR. CHATTERTON: While we were off the record 20 there, why, a question has been defined -- submitted to me by a 21 Bill and I don't know what Bill? 22 MR. SMITH: This is VanAllan (ph). 23 MR. CHATTERTON: Oh, he's one of our staff 24 members. We'll take care of that within house and no problem. 25 It's not germane to what's before us right now as far as the R & R COURT REPORTERS 1 S ION STREET. SUITE 101 509W.3RDAVENUE 1007W 3RDAVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -41- 1 testimony is concerned. Go ahead, Mr. Commissioner. 2 MR. BARNWELL: The western bounding fault, the 3 one that's off the map that trends to the south, does that go 4 all the way down along -- into -- does it extend not only here 5 but just right on down? It sort of controls the overall 6 structural pattern here? 7 MR. WARTHEN: Yes, Mr. Commissioner. That is a g very large regional highangle reverse fault that parallels the 9 shoreline, extends basically north/south. As I recall it goes 10 up to the north which would be on. the east flank of middle ground 11 shoal. It extends to the south down into the Kasilof/Clam Gulch 12 area. We have seen that fault on numerous seismic lines. The ,j 13 fault has been penetrated by several wells to the south. One of 14 the wells that Union drilled into the Kasilof structure years 15 ago. It does place some limits on -- as to the structural 16 picture here creating a lot of rollover on both sides of that 17 fault. 18 MR. BARNWELL: There's no suggestion of any 19 lateral movement on that Kenai Loop fault that you're ..... 20 MR. WARTHEN: At this juncture we have no idea 21 whether there could be any lateral movement. I doubt that there 22 is on the -- now, we're talking on the Cannery Loop fault. 23 MR. BARNWELL: Um -hum. (Nods in the affirmative) 24 MR. WARTHEN: I doubt that there is any lateral 25 movement. On the large fault to the west,the highangle reverse R & R COURT REPORTERS 1 SION STREET, SUITE 101 509 W. 3RDAVENUE 1007 W.3RD AVENUE 277-0572 - 277-0573 277-8543 272-751 5 ANCHORAGE, ALASKA 99501 -42- 1 fault there could be some lateral movement on that fault. 2 MR. BARNWELL: Thank you. 3 MR. CHATTERTON: Mr. Lambert, you were present 4 and heard my questioning of Mr. Warthen here a while ago about 5 lenticularity and you heard his responses to that. He 6 indicated that there was conceivable a possibility of some 7 lenticularity and I think he also suggested then that maybe 8 closer spacing would improve ultimate recovery. Would you agree 9 with that. 10 MR. LAMBERT:. Yes, I would. I think our 11 experience in the Kenai gas field would back up what Bob has 12 said. We have a hard time correlating between the wells that are 13 completed in the Beluga and the pressure data we measured does 14 not correspond. 15 MR. CHATTERTON: Thank you very much. Any 16 further questions of .the ..... 17 MR. SMITH: Well, I meant to ask Mr. Lambert with 18 regard to that lenticularity and your analysis of the reservoir, 19 or your gas in place, and/or expected recoverable reserves were 20 they based on lenticularity, or continuous deposition? 21 MR. WARTHEN: Maybe I can answer that, 22 Mr. Commissioner. In part both. There were a few sands in the 23 Beluga that we have seen both at Kenai and at Cannery Loop that 24 do seem to carry from one well to another so on those 25 individual sands our reserve determinations were based on a littl R & R COURT REPORTERS SION STREET, SUITE 101 509 W.3RDAVENUE 1007 W.3ROAVENUE 1 277-0372-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -43- 1 larger aerial extent for those sands. The majority of the sands 2 were individual pods of sands where we did have some difficult 3 times in determining a reserve determination. We used a very 4 limited area for those individual sands. 5 MR. SMITH: Have you made any reference, or 6 quoted any reserve figures, or could you give us any ..... 7 MR. WARTHEN: To answer your question directly 8 we have not given any reserve numbers. I think at this point 9 with the two wells that we have there it is rather premature to 10 make an accurate reserve determination. 11 MR. CHATTERTON: Of anyone of -- of either of 12 you or Bob who wish to comment on this, you have asked for 320 13 acre drilling units oriented in specific fashion. Have you made 14 any indication as to where in relation to the edge, the boundary 15 of a 320 acre drilling unit how close to that boundary you would 16 plan to open a wellbore to production of gas? Is my question 17 clear? 18 MR. WARTHEN: Yes, Mr. Commissioner, it is clear. 19 When we laid out this here proposed 320 acre spacing with aligned 20 the north half and the south half of each 640 acre section, we 21 did that in mind with the measured (ph) direction that these 22 wells would be directed. Most of the wells would be directed in 23 an east/west fashion recognizing that the Beluga would be the -- 24 the penetration of the Beluga formation would be closer to the 25 surface as compared with the deeper horizons, the D Zone. With R & R COURT REPORTERS 1 SIONSTREET, SUITE01 509 ENUE 1007W.272-7515 UE 277.0572277-0573277-8543 ANCHORAGE. ALASKA 99501 -44- 1 that in mind the sections were laid out in an east/west manner -- 2 or the 320 acre sections in an east/west manner_ In some of the 3 320 acre parcels perhaps Cannery 4 would be an example, the 4 Beluga intersection point would be closer to the east end of the 5 section and the D Zone penetration point would be -- or the base 6 of the D Zone would be more appropriate, the base of the 7 production would be closer to the west end of the section. I 8 can't say right off the top of my head how many feet that would 9 be from that section line. I would think it would be at least 10 500 feet. 11 MR. CHATTERTON: Thank you, Bob, that's the point 12 I was driving at, was there going to be a consistency between •-• 13 that 500 feet stand back from the boundary of a drilling unit 14 with your request of a consistent -- or 500 feet or more between 15 open -- wellbore open -- opened to ..... 16 MR. WARTHEN: To each other. 17 MR. CHATTERTON: ..... the same producing horizon. 18 You're consistent there, is that correct? I mean, I think you 19 are consistent. 20 MR. ANDERSON: This is Bob Anderson. 21 Mr. Chairman, it's conceivable that you will have a completion 22 that would be nearer than 500 feet to the drilling unit, or the 23 spacing unit inside of the area in which the field rules (ph) 24 apply. As we requested the field rules would apply, or the 25 l standoff from the spacing units would apply also as a standoff t R & R COURT REPORTERS 1 81 O N STREET, SUITE 101 509 W. 3RD AVENUE 1007 W. 3RD AVENUE 277-0572 - 277-0573 277-8343 272-7515 ANCHORAGE. ALASKA 99501 -45- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to the participating area boundaries and I believe that we requested 1500 feet standoff from the participating area boundaries. Internal of that within the unit itself conceivably you would be closer than 500 feet. If you' -re going to have completions opened within 500 feet obviously one is going to hav to be closer, or both of them are going to have to be closer to the 500 feet from the spacing unit in the interior part of the field so that you can arrive at that eventuality, if you follow my convoluted logic. MR. CHATTERTON: Not convoluted at all. Then it would be your proposal that interior to the boundary of the designated participating area at this present time, interior as long as you're within that, you would be willing to -- or you would not take care, I guess, is a better way to put it, to say. more than 500 feet from the edge of a drilling unit? MR. ANDERSON: Mr. Chairman, I don't think in a gas field that's within a unit where all of the leases are operated as one lease the production is allocated on a formula basis, that there's a necessity to have stand off on interior spacing unit boundaries. I think the necessity comes from the exterior boundaries of a participating area, or unit and the unit itself, the Cannery Loop Unit, within a very few years will be the -- coexistent with the largest participating area at the time of contraction. MR. CHATTERTON: If I may postulate a situation R & R COURT REPORTERS SIONSTREET, SUITE 101 509W.3RO AVENUE 1007 W. 3RD AVENUE 1 277-0572 - 277-0573 277-9543 272-75 1 5 ANCHORAGE. ALASKA 99501 -46- 1 from -- if I heard you correctly, Mr. Anderson, why, you'd be 2 willing -- you feel that you should have the latitude, I guess, 3 to complete a well interior to the boundary of the participating 4 area within as close, let's say, 200 feet of that boundary, is 5 that correct? 6 MR. ANDERSON: Conceivable you could complete a 7 well across that boundary. 8 MR. CHATTERTON: Understood, but you would then 9 expand the participating area, that's right. 10 MR. ANDERSON: Oh, I -- I -- excuse me, are you 11 talking about the participating area boundary? 12 MR. CHATTERTON: Yes, yes ..... 13 MR. ANDERSON: Oh, oh. 14 MR. CHATTERTON: ..... yes. 15 MR. ANDERSON: What I am -- restate that question) 16 one more time, sir, please? 17 MR. CHATTERTON: All right. What I'm wondering 18 is are you looking for the freedom, I guess, to drill a well 19 within the participating area and complete it from a horizon in 20 as close ;gcaximity as, let's say, 200 feet of the boundary of 21 the participating area? 22 MR. ANDERSON: No, sir, our proposal was a 1500 23 foot standoff interior and exterior of that boundary. 24 MR. CHATTERTON: Interior and exterior? 25 MR. ANDERSON: That's correct. We don't feel l R & R COURT REPORTERS 1 8 ION STREET. SUITE 101 509W.3RDAVENUE 1007W. 3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 II -47- 1 that we'd protect the --.the (indiscernible) of rights of those 2 outside, or inside would be protected if one side could drill 3 within a 100 feet and the other side had to standoff__ 1500. I 4 think ..... 5 MR. CHATTERTON: I didn't think so, too, but I 6 thought that's what you'd say. I'm sorry. 7 MR. ANDERSON: No, sir. No, sir. No,sir. What 8 I'm talking about is interior to the spacing units themselves. 9 In other words, if you have a -- ..... 10 MR. CHATTERTON: Right. 11 MR. ANDERSON: ..... two spacing units that have 12 no relation to the participating area boundary that lie totally 13 within a participating area then standoff from that boundary, 14 line, that -- that spacing unit boundary line there should be no 15 requirements for standoff there. 16 MR. CHATTERTON: I see. Okay. Okay. I 17 understand what you're saying. Right. -So you want a well 18 completed no closer than 1500 feet to the participating area 19 boundary line whether it be drilled on a tract lease, or drilled 20 as a joint venture participating well, is that right? 21 MR. ANDERSON: Whether it be a unit well of any 22 participating area, or whether it be outside is correct. 23 MR. CHATTERTON: Right, right. Okay. 24 MR. ANDERSON: That's correct, sir. But you are 25 willing also -- but you also want the latitude that within the R & R COURT REPORTERS 8 ION STREET. SUITE I01 509W.3RD AVENUE 1007W. 3RDAVENUE 1 277-0372-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -48- 1 participating area within that area that's 1500 feet inside of 2 the participating area you want the latitude to be able to 3 complete wells within 500 feet of border (ph)? 4 MR. ANDERSON: That's correct. 5 MR. CHATTERTON: Okay. I understand what your 6 request is. Any further questions? We could take a break. 7 All right. May I ask a question here, are there any other people 8 that plan to put up, or offer testimony? Okay. Well, let's take 9 a break and reassemble by my watch about 10:35, 10:40. 10 (Off Record) 11 (On Record) 12 MR. CHATTERTON: Mr. Anderson, we're back on the 13 record after our intermission which was -purely for coffee an 14 other things and as I understand it, why, your direct-- your 15 testimony is complete at this point in time? 16 MR. ANDERSON: That's correct. Mr. Chairman, I 17 would like to offer as exhibit next in order and I think it's 18 H copies -- the written copies of the testimony given both by 19 Mr. Warthen and Mr. Lambert. 20 MR. CHATTERTON: Thank you. We will accept as 21 Exhibit H -- I know that Suzie Olson will be very pleased to have 22 a copy of that. 23 (Commission Exhibit H marked) 24 MR. CHATTERTON: Thank you very much. Again, are 25 there any others wishing to hand in any written statements, or R & R COURT REPORTERS 1 SIONSTREET. SUITE 101 509W. 3RD AVENUE 1007 W. 3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE, AI.ASKA 99501 -49- 1 provide any testimony, or make any oral statements? 2 MR. BURGLIN: I'd just like to (indiscernible - 3 away from microphone) ..... 4 MR. CHATTERTON: Yeah, Brian. Do you want to g come up here, please, for the mike and for Suzie, why, you better 6 designate yourself? 7 MR. BURGLIN: Okay. I'm Brian Burglin and g Working Interest Owner of the Cannery Loop Unit. I'd just like 9 to point out that not all parties within the unit have signed the 10 unit agreement -- unit operating agreement and therefore, have 11 not agreed to voluntarily pool and integrate their interests. 12 MR. CHATTERTON: Thank you, Brian. I understand 13 that and I know that it's fine to get it into the record and I 14 know that you know that unfor- -- I shouldn't say that -- 15 fortunately that is something that is not -- is beyond the 16 jurisdiction of the Commission, so we can't provide.-- it's out - 17 it's outside the spoke of our hearing here. 18 MR. BURGLIN: Well, what I'm talking about is the 19 pool and field rules on a drilling unit basis, or a spacing unit 20 basis there will be parties in there that have no voluntarily 21 agreed to pool and integrate their interests. 22 MR. CHATTERTON: Okay. I understand that. All 23 right. Does the -- Brian, does the unit operating agreement 24 provide language dealing with things of that nature? 25 MR. BURGLIN: Yes, it does for the ones that have R & R COURT REPORTERS BIONSTREET, SUITE 101 509W.3RDAVENUE 1007W. 3RO AVENUE 1 277-0572 - 277-0573 277-8543 272-751 5 ANCHORAGE. ALASKA 99501 -50- 1 signed the unit operating agreement. 2 MR. CHATTERTON: I see. I -- I appreciate your 3 comment. I think that governing the rules that we shall -- well, 4 we'll consider.promulgating that will say how wells may be 5 drilled for and the hydrocarbons may be produced and marketed 6 are going to -- are going to apply regardless of ownership plans, 7 or anything -- things of ..... - 8 MR. BURGLIN: Right. Right. 9 MR. CHATTERTON: ..... that nature and -- but 10 everyone if they were to drill within the boundary of that, why 11 they're going to be obligated to go along with those ..... 12 MR. BURGLIN: Right. �-' 13 MR. CHATTERTON: ..... pool rules. 14 _ _MR. BURGLIN: And I believe that would be covered 15 under 20 AAC 25.517, B..or C ..... 16 MR. CHATTERTON: Yup, I believe so. 17 MR. BURGLIN: ..... in there. 18 MR. CHATTERTON: Right. 19 MR. BURGLIN: Okay. And I just wanted to clarify 20 that and get it on the record. 21 MR. CHATTERTON: Okay. Thank you very much. Are 22 there others? 23 MS. COYLE: Yes, sir. 24 MR. CHATTERTON: Yes, Ruby, come up here ..... 25 MS. COYLE: I have -- my name is ..... i R & R COURT REPORTERS - 1 8 ION STREET, SUITE 101 509W.3RDAVENUE 1007W. 3RDAVENUE 277-0572 - 277-0573 277-8543 272-75 15 ANCHORAGE, ALASKA 99501 -51- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 MR. CHATTERTON: ..... for the record. MS. COYLE: ..... Ruby Coyle. My husband and I, Waldo E. Coyle and Ruby S. Coyle own 160 acres. Well, really we have 100 -- about 162 acres that is in the Cannery Loop Unit. From information we have received we will have 40 acres, are mos westerly 40 acres will be in the participating area. For the record I would like to state that we leased with Union Oil Company. A five year lease in 1973 for five years which would make it 1978. In 1978 Union Oil Company came to us and asked for a two year extension on our lease. We gave them the two year extension and also signed their unit agreement for drilling. And in 1984 Union Oil Company sent us an amended unit agreement changing the time of setting up participating acreage and how it would so be set up and we did not sign the amended unit agreement because it amended our contract. And that is the position in which we sit now. We say that Union Oil Company at this time has -forfeited their lease with us by not complying with the time of setting up the participating acreage as with -- as was originally in the unit agreement and therefore they do not have a lease, but so far we have not been able to get Union Oil Company to file any papers releasing us from the unit agreement. Now what I want to know is what do people do in a situation like this? Are we participating, or just might have a way down the road -- a 1,000 years fran now might get a little royalty? R & R COURT REPORTERS 810NSTREET. SUITE 101 509 W.3RD AVENUE 1007W. 3ROAVENUE 277-0572 -277-057 3 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -52- 1 MR. CHATTERTON: Ruby, thank you for your 2 comments and I do not know the answer to your question and I will 3 not even suggest to you an answer to your question, or anything. 4 I do -- I will say that it's beyond the scope of this agency. 5 We cannot -- it's way beyond our statutory authority to even 6 enter into those discussions, so we can't help you on this in 7 any way. We can't even give you a comment. I think that your -- 8 if you're looking for any further details I presume it would be 9 other state agencies that might be involved with ..... 10 MS. COYLE: What? Which agen. ..... 11 MR. CHATTERTON: ..... any state leases. 12 MS. COYLE: Which agencies, sir? �.�13 MR. CHATTERTON: I presume it would be State and 14 Federal, because the -- the land owners if you want to think of 15 it that way and I think they're probably State and Federal 16 landowners involved some place. That would be the BLM and the 17 Division of Oil and Gas. BLM for the Federals and Division of 18 Oil and Gas for the State. 19 MS. COYLE: Well, my question to you, 20 Mr. Chairman, is this are we just royalty participants, or --.in 21 this situation are we -- would he have to participate in the cost 22 of drilling? 23 MR. CHATTERTON: I would ..... 24 MS. COYLE: Good question, huh. 25 t MR. CHATTERTON: I have no knowledge. I have no R & R COURT REPORTERS 1 S ION STREET, SUITE 101 509W. 3RD AVENUE 1007W.3RDAVENUE " 277-0372-277-0573 277-8543 272-7515 ANCHORAGE, ALASKA 99501 -53- 1 knowledge of that. I do not know your situation and I say, it's 2 out of order as far as this hearing is concerned because it's 3 nothing within our -jurisdiction. 4 MS. COYLE: Thank you. 5 MR. CHATTERTON: Thank you. Any other offerings? 6 Any questions? Is there any interest on the part of anyone to 7 hold the record open of this hearing for any purpose? 8 MR. KIRCHNER: Mr. Chairman? 9 MR. CHATTERTON: Yes, sir. 10 MR. KIRCHNER: Clarification on the applica-.-- 11 the area of application for field rules within the Cannery Loop 12 Unit? =: 13 MR. CHATTERTON: Yes, sir, Mr. Kirchner, I am 14 sorry I overlooked the question that you'd put before the 15 Commission here and I apologize for not -- I think it is germane 16 and we will try to proceed to get answers for you. Mr. Kirchner 17 has two questions. The first one; will the spacing established 18 by the field rules apply only within the PA, or within the unit 19 boundary? 20 Mr. Kirchner, I'll answer that this way probably 21 neither. We'll probably take an area a little bit bigger than 22 the unit boundary limits. I don't know. We're sure going to do 23 it on governmental sections though. There will be no -- the 24 boundary will follow governmental sections. 25 Your question Number •2, how will spacing units R & R COURT REPORTERS 1 B ION STREET, SUITE 101 509W.3RDAVENUE 1007W. 3RD AVENUE 277-0572-277-0573 277-8543 272.7515 ANCHORAGE, ALASKA 99501 -54- 1 affect the establishment of a drilling unit within the unit 2 boundary? Is there still going to be a 640 acre drilling unit 3 requirement? That will be under deliberation. ..As you well know 4 that statewide regulations require 640 acre parcels with a 5 drilling of a gas well. The operator of the unit as requested 6 that that be reduced to 320 acre parcels. In our deliberations 7 we will consider the operator's request. We will also consider 8 what effect spacing may have on ultimate recovery and we may 9 come up with anything. I don't know the answer right now. 10 When we issue a spacing -- an order and call for 11 a spacing it will apply to all wells drilled for gas to these 12 three pools within the limits of the boundary of the field rules. r 13 Does that help you? 14 MR. KIRCHNER: Yes. Is there a distinction 15 between spacing unit for production development and drilling unit 16 for exploration? 17 MR. CHATTERTON: We're going to call it all the 18 same spac- -- to me in my stupidity, why a drilling unit, a 19 spacing unit, a production unit, heavens sakes there's a whole 20 litany of them and FERC, Federal Energy Regulatory Commission 21 uses some, they're all the same thing. They define an area that 22 you shall technically drain by a single well most effectively, 23 but they all mean the same thing in our informal Alaskan way. 24 MR. KIRCHNER: I understand. 25 MR. CHATTERTON: Anything else to come before us? R & R COURT REPORTERS 1 810 N STREET. SUITE 101 509 W. 3RDAVENUE 1007 W. 3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 -55- 1 All right. We shall adjourn and close the record on the Union 2 Oil Company of California's application for the establishment 3 of pool rules for the Cannery Loop extension of the Kenai Gas 4 Field and the time is nominally about 10:58 a.m. 5 Thank you all for coming, appreciate your 6 kindness and your courtesies. 7 (END OF PROCEEDINGS) 8 9 10 11 12 r� 13 14 15 16 17 18 19 20 21 22 23 24 25 R & R COURT REPORTERS 1 8ION STREET, SUITE TO 509 W. 3RD AVENUE 1007 W. 3RD AVENUE 277-0572-277-0573 277-8543 272.7515 0 ANCHORAGE, ALASKA 99501 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 C E R T I F I C A T E UNITED STATES OF AMERICA ) ) ss. STATE OF ALASKA ) I, Suzan Kay Olson, Notary Public in and for the State of Alaska, residing at Anchorage, Alaska, and Electronic Reporter for R & R Court Reporters, Inc., do hereby certify: THAT the annexed and foregoing minutes of the public hearing for the Oil and Gas Conservation Commission of Alaska was taken before me on the 8th day of July, 1987, at the offices of the Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska, pursuant to request. THAT the above -named witnesses, before examination, were duly sworn to tell the truth, the whole truth, and nothing but the truth; THAT these minutes are a true and correct transcription of.the testimony of said witnesses and public comments taken by me and thereafter transcribed by me. THAT the minutes have been lodged with the Oil and Gas Conservation Commission in Anchorage, Alaska. THAT I.am not a relative, employee, or attorney of any of the parties, nor am I financially interested in this action. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal this �7tii"'aay •of July, 1987. ,l NOTARY BL N D FOR AL SKA My Commission Ex res: 4/30/ 0 • ,l R & R COURT REPORTERS S ION STREET, SUITE 101 509 W. 3RDAVENUE 1007 W.3RD AVENUE 277-0572-277-0573 277-8543 272-7515 ANCHORAGE. ALASKA 99501 ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING - JULY 8, 1987 CANNERY LOOP UNIT AREA L V'UTDTmo A - Letter to AOGCC from Unocal dated April 30, 1987 re proposed Field & Pool Regulations and Classifica- tion, with the following enclosures: - Geologic Report & Engineering Report - Letter to Unocal from BLM dated December 3, 1986, and 3 attached papers re CLU 8th plan of development - CLU structure contours, Top Beluga i - DIL-SFL, CLU #1 - CLU structure x-sec. A -A', Beluga Fm - Kenai Gas Field & Cannery Loop Gas Field structure x-sec. B-B', Tyonek Fm 'B - CLU structure x-sec. A -A', Beluga Fm., Kenai Gas Field to Cannery Loop Ii IC _ Kenai & Cannery Loop structure contours, Top Beluga D - DIL-SFL Union Cannery Loop Unit #1 - Kenai & Cannery Loop, Tyonek structure contours , s, 102-5 sand F - Kenai & Cannery Loop, Tyonek structure contours, Top D-3A sand & equivalents G - Kenai & Cannery Loop, structure x-sec. N-S H - Geologic report, engineering report ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING - JULY 8, 1987 NAME AFFILIATION c /( 'p, a- c.( N a C-4 L G u G avv-.6 �. er1�� pG ma m 4 %-clSS Dc,'C<e7�'� 1141 3 t�� kec— Iry PLAN TO MAKE ORAL STATEMENT OR ASK QUESTION ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING - JULY 8, 1987 NAME role,-/ IV/ r 0 vet�v, AFFILIATION %/f/,--)<c1J I;lu i4> PLAN TO MAKE ORAL STATEMENT OR ASK QUESTION Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of UNION OIL COMPANY OF CALIFORNIA (Unocal) for an order prescribing rules for development of the hydrocarbon gas reservoirs underlying the Cannery Loop Unit area. By letter dated April 30, 1987, Unocal, as operator of the Cannery Loop Unit and on behalf of the Working Interest Owners, has requested an order defining the hydrocarbon gas pools under- lying the Cannery Loop Unit area, and prescribing rules for their development and production. As required by 20 AAC 25.520, FIELD AND POOL REGULATIONS AND CLASSIFICATION, a hearing on the matter will be held, in conformance with 20 AAC 25.540, at the office of the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501 at 9:00 a.m. on July 8, 1987. Lonnie C. Smith Commissioner Alaska Oil & Gas Conservation Commission Published June 2, 1987. STATE OF ALASKA ADVERTISING ORDER NO. ADVERTISING ORDERAO 08-559#1 AGENCY CONTACT DATE OF A.O. Anchorage Daily News Galyn Evans June 1, 1987 F R P. O. Box 149001 PHONE o Anchorage, Alaska. 99514-9001 (907) 279-1433 M DATES ADVERTISEMENT REQUIRED: T Alaska Oil & Gas Conservation Comission Jme 2, 1987 P 3001 Porcupine Drive B Anchorage, Alaska 99501 SPECIAL INSTRUCTIONS: L H E R 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 ATTACH PROOF OF PUBLICATION HERE. PERSONALLY APPEARED WHO, BEING FIRST DULY SWORN, ACCORDING TO LAW, SAYS THAT HE/SHE IS THE O F Notice of Public Hearing PUBLISHED AT IN SAID DIVISION STATE OF ALASKA Alaska oil and Gas J:��L Conservation commission Re: The application of UNION AND STATE OF AND THAT THE L ALIFOR. Nof IA COMPANY an r pre. scribing rules for development ADVERTISEMENT, OF WHICH THE ANNEXED IS A TRUE COPY, WAS Of the hydrocarbon gas reser- voirs underlying the cannery Loop Unit area. PUBLISHED IN SAID PUBLICATION ON THE DAY OF By letter dated April 3o, 19a7, unocal, as operator of hte can. nery Loop unit and on behalf of the working Interest owners, 19 AND THEREAFTER FOR has requested an order defining the hydrocarbon , gas pools un- derlying the Cannery Loop unit area, and prescribing rules for tion. development and produc- CONSECUTIVE DAYS, THE LAST PUBLICATION APPEARING ON THE 3aF As required by 20 AAC 25.520, FIELD AND POOL REGULA- DAY O_ 19 AND THAT THE TioNis0CLASSIFICA- TION, hearing on The rmatter will be held, in conformance RATE CHARGED THEREON IS NOT IN EXCESS OF THE RATE with 20 AAC 25.540, at the office of the Alaska oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 995ol at 9:00 a.m._on CHA D PRIVATE IN IVIDUALS, July e,l9ei. /s/Lonnie C. Smith �[Q Commissioner Alaska Oil and Gas conserva- tion Commission SUBSCRIBED AND SWORN TO BEFORE ME Pub: June 2,1997 Y - !r THISDAY OF 19 AO-08-5591 NOTARY PUBLIC FOR STATE OF MY COMMISSION EXPIRES MYEoenmi ! - l�Irninm?`ef � 989 02-901 (Rev. 6-85) PUBLISHER Unocal Oil & Gas Di Unocal Corporation P.O. Box 190247 Anchorage, Alaska 99519-0247 -' Telephone (907) 276-7600 UNOCALO April 30, 1987 Robert T. Anderson District Land Manager Alaska District Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501-3192 CANNERY LOOP AREA State of Alaska Proposed Field and Pool Regulations and Classification Gentlemen: In accordance with the provisions of 20 AAC 25.520 of the Alaska Administrative Code, Union Oil Company of California, as Operator of the Cannery Loop Unit, requests the Commission issue the following orders: The area for which this Conservation Order is applicable is described as follows: Township 5 North, Range 11 West, Seward Meridian Section 3: All Section 4 All Section 5 All Section 6 All Section 7 All Section 8 All Section 9 All Section 10 All Section 16 All Section 17 All Section 18 All Section 19 N-1/2 Section 20 N-1/2 Section 21 N-1/2 Township 6 North, Range 11 West, Seward Meridian Section 32 S-1/2 Section 33 S-1/2 RECEIVED Aiaska Oil & Gas Cons. Anchorage Rule 1. Name of Field The name of the field shall be the Cannery Loop Field Rule 2. Definition of Pools (a) Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Cannery Loop Unit #1 well between the depths of 6081' MD - 9171' MD. (b) Upper Tyonek Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Cannery Loop Unit #1 well between the depths of 9171' MD - 10,833' MD. (c) Tyonek "D" Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation found in the Cannery Loop Unit #1 well between the depths of 10,833' MD - 11,962' MD. Rule 3. Well Spacing The well spacing in each pool shall be 320 acres. The pattern of the the spacing for each pool shall be the N-1/2 and the S-1/2 of each Section lying within the area of this Conservation Order. No well bores in any pool may be opened nearer than 1500' to the participating area boundary line nor nearer than 500' to any well drilled to and open to production from the same pool. Except as set forth above there will be no stand off from the spacing unit boundaries within the participating areas. Rule 4. Casing and Cementing Requirements (a) Casing and cementing requirements are as specified in 20 AAC 25.030. CASING AND CEMENTING. Rule 5. Bottom Hole Pressure Surveys A key well bottom hole pressure survey shall be made in the Beluga Pool, the Upper Tyonek Pool and the Tyonek "D" Pool upon request; provided, however, such surveys shall not be required more often than once in any calendar year. The time and length of survey, number and locations of wells, datum and other details will be determined by the Commission upon consultation with the operator. Rule 6. Amendment Approval Upon request of the applicant and a showing that affected parties have been notified of such action the Commission may amend the conservation order or drilling of any well at any location or any operation reasonably designated to prevent waste and protect correlative rights. RECEIVED Alaska Oil & Gas Corns. Commission An&iorage In support of this Application we enclose Geological and Engineering Reports covering each Pool. Also enclosed is a Plan of Development for the Cannery Loop Unit Area. 32041 Very truly yours, Union Oil Company of California Operator By Robert T. nderson Attorney -in -Fact RECEIVED Alaska Oil & Gas CMIS. C ins es nFs At14;�ciagt3 GEOLOGIC REPORT CANNERY LOOP GAS FIELD CANNERY LOOP UNIT The following geologic data are presented to support field rules for Cannery Loop Gas Field Beluga Formation (undifferentiated) gas pool, Upper Tyonek Formation (undifferentiated) gas pool and Tyonek D-Zone gas pool, within the Cannery Loop Unit area shown on Exhibit I. Exhibit I is a current structure map on the Top Beluga Formation, a principal objective in the field. The Cannery Loop Field structure is to the north of, downdip, and on trend with the Kenai Gas Field. The gas productive Sterling Formation sands in Kenai Field are wet by tests and log analyses, in Cannery Loop Field. Regionaly mapping and log analyses indicate different gas/water contacts in the productive intervals in Kenai and Cannery Loop, thus indicating the two fields are indeed separate. The Cannery Loop trapping mechanism is an asymmetrical anticline with a steep west flank. It is bounded on the west by a down -to -the -west high angle reverse fault and is separated from the Kenai Gas Field by a seismically mapped east -west trending steeply dipping down -to -the -north normal fault. This fault has an approximate displacement of 400' and cuts all producing horizons. It extends upward into the Sterling Formation. An additional east -west trending down -to -the -north normal fault is penetrated by the CLU #3 well as seen on deeper structural horizons. This fault has approximately 50' of displacement and is buried by Beluga Formation sediments. The interpretation of the Cannery Loop Field structure and surrounding area is based on well data from CLU #1, CLU #3 and KU 13-8 and on 65 miles of multifold digital seismic data shot between 1974 and 1979. The seismic data were tied to the well control by a check shot survey in CLU #1. All horizons (Top Beluga, near Top Tyonek and Top D-Zone) were mapped in time and converted to depth for structural contouring. Exhibit II, an electric log of the Union Oil, Cannery Loop Unit #1 well, the discovery well for the field, illustrates the productive Beluga, Upper Tyonek and D-Zone gas pools. The well was completed in 1979. As defined in the proposed field rules, the stratigraphic limits of the Beluga gas pool correlates with the drilled depth interval of 6081' to 9171' in the directed well, CLU #1. The stratigraphic limits of the Upper Tyonek gas pools correlate with the drilled depth interval of 9171' to 10,8311. The stratigraphic limits of the D-Zone gas pool correlates with the drilled depth interval of 10,8311 to 11,9621. The Beluga undifferentiated gas pool is coincident with the Beluga Formation in Cannery Loop Field. The Beluga Formation, Upper Miocene in age, consists of interstratified beds of nonmarine claystone, mudstone, sandstone, siltstone and minor amounts of lignitic to subbituminous coal. Sediments were derived from the erosion of metasedimentary rocks of the Chugach Mountains to the east. These sediments were deposited in short, high gradient, shifting streams, that built alluvial fans with shallow braided distributary channels -- these fans merging into an alluvial outwash plain. The Beluga Formation is approximately 2650' thick in the Cannery Loop Field area. The productive sandstone intervals are generally thin to medium bedded and at times discontinuous over relatively short distances. Exhibit III is a north -south cross section extending across the field, including CLU #1 and CLU 0. The section continues southward through Kenai Field. This exhibit displays the correlative mapped horizons, the gas producing intervals, as well as the east -west fault separating the two 2. fields. The cross section also demonstrates the stratigraphic complexities of the Beluga Formation, as well as, the distribution of gas entrapment. Additionally, the section shows the fault limiting the Beluga gas accumulation to the south in the Cannery Loop structure. To the south of the fault, the KDU #7 well (in the north end of Kenai Field) tested wet in the Beluga Formation, thus separating the Beluga gas accumulations in the Cannery Loop Field and Kenai Field. The CLU #1 well was the first well to establish gas productive sands within the Beluga Formation in the Cannery Loop Unit. In the Upper Beluga Formation, the overall producing zone in this well is from 6083' MD, (5198' VD) to 6434' MD, (5464' VD) in three sandstone intervals. These intervals are gas productive as substantiated by drillstem tests #5 and #6. Drillstem test #4 substantiated gas production from the Middle Beluga in the interval 7662' MD. To the northeast and structurally downdip the CLU #3 well established gas production (drillstem test #7) from the Upper Beluga Formation from 5788' MD, (5480' VD) to 5828' MD, (5514' VD). The equivalent sandstone interval in the CLU #1 well was not tested but is considered productive by wireline log analysis. Additional Beluga sandstone intervals in both wells have the same or similar log analysis parameters as the productive sands; consequently, these zones are considered productive also. Gas/water interfaces have not been recognized in any of the productive Beluga sands in CLU #1 and CLU #3. 0 The Upper Tyonek undifferentiated gas pool is coincident with the Upper Tyonek Formation in Cannery Loop Field. The Tyonek Formation, Lower to Middle Miocene in age, consists of massively bedded, fine to conglomeratic sandstones, and thick coals with siltstone, claystone and shale interbeds. The Tyonek depositional system is interpreted as a poorly drained alluvial lowland with tectonically active highlands along the basin's margins, probably related to movement along major fault systems, with periodic heavy discharge and runoff. During Tyonek time most of the sediment was derived from the Alaska Range to the west with stream systems and alluvial fans carrying sediment to the south and southeast. During the Upper Tyonek, the Kenai -Chugach Mountains to the east began contributing minor amounts of sediment. Coarse grained alluvial fans developed along the lateral margins of the basin due to rapid deposition related to change in slope and intermittent discharge. The lobes gradually merged with alluvial plain deposits in the central portion of the alluvial basin. The marginal sag ponds and floodplain, which were poorly drained, were ideal settings for development of swamps and marshes, which were sites for coal generation. The Upper Tyonek is approximately 1400' thick in the Cannery Loop field area. The productive sand unit (102-5 sand) is 1100' below the top of the Tyonek. Upper Tyonek reservoir sands are typically loose to firm, silty to pebbly sand and sandy conglomerate. Exhibit V is a structure map contoured on the top of the 102-5 sand showing the structural configuration of the Cannery Loop structure in relation to the Kenai structure. The exhibit also shows the normal fault that was intersected by the CLU #3 wellbore, as well as the estimated accumulation limit for this sand. The 102-5 equivalent sand is not productive in the Kenai Field. 4. The CLU #1 was the first well to establish gas production from the Upper Tyonek interval. The producing zone is from 10,2521 to 10,2721 MD. A gas/water interface was not present in this sand in CLU #1. The estimated accumulation limit is based on a percentage of structural fill calculation. The Tyonek D-Zone gas pool occurs in the middle part of the Tyonek Formation and is approximately 1000' thick in the Cannery Loop Field area. The productive sands are scattered throughout the interval. Although D-Zone sands are continuous across the field area, coal beds within the productive sequence furnish assistance in making correlations. The CLU #1 was the first well to establish gas production from the D-Zone interval. The producing zone is from 11,3911 to 11,4121 MD (D-3a sand as seen in Exhibit VI) and 11,8221 to 11,8511 MD (D-6a sand). Three additional D-Zone sands, D-2b, D-5 and D-6b, are considered productive by log analyses. Possible gas/water interfaces may have been penetrated in the D-5 and the D-6B sands in CLU #1. Exhibit VI is a structure map contoured on the top of the D-3a sand. As seen on the 102-5 structure map, this map also shows the structural configuration of the Cannery Loop structure, the intersection of the east -west fault with the CLU #3 wellbore and the estimated accumulation limits. The accumulation limit of 9837' subsea, in Cannery Loop Field is based on a percentage of structural fill calculation. The accumulation limit in Kenai Field at 9305' subsea of the equivalent sand, is based upon production testing and log analysis. The KDU #7 well in the north end of the Kenai Field tested wet in the D-Zone sands; thus separating the accumulations in Cannery Loop Field and Kenai Field. 5. Exhibit IV is a north -south cross section extending through Cannery Loop Field to the KDU #7 well in the north end of Kenai Field. The section shows the Upper Tyonek 102-5 sand as well as the D-Zone sands. The section also shows the stratigraphic and structural relationship of the CLU #1 and CLU #3 wellbores, the productive sands, and the bounding faults on the north and south ends of the field. The Beluga undifferentiated gas pool, Upper Tyonek undifferentiated gas pool and Tyonek D-Zone gas pool are three separate and distinct pools. Stratigraphic separation, variable lithology and accumulation limit differences, support the applicant's request to establish separate pools. Erratic and unpredictable sand deposition and areal lithology changes, typical of nonmarine deposition, support that 320-acre spacing should be applied to separate pools and confirm applicant's request for closer distance between completion intervals in order to provide needed tolerance to reach the optimum geologic target. RCW/pg 07/07/87 2394D M ROBERT C. WARTHEN QUALIFICATIONS FOR EXPERT WITNESS - STATE OF ALASKA November 5, 1979 Mr. Robert C. Warthen graduated from Southern Illinois University in 1960 with a Bachelor of Arts degree in Geology and in 1962 with a Master of Science degree in Economic Geology. Upon graduation, Mr. Warthen worked as a petrologist for the North Dakota Geological Survey until June of 1963. From 1963 to April of 1967, he worked for Sinclair Oil and Gas and Continental Oil Company in the capacity of Exploration Geologist and Development Geologist in Arkansas, Kansas, Louisiana, Nebraska, New Mexico, Mississippi, Oklahoma and Texas. His responsibilities included wellsite geology, log evaluation, regional mapping and prospect generation. During that same time interval, three months were spent in geophysical training and three months spent in Conoco's Research Laboratory working with carbonate sediments. In April of 1967, Mr. Warthen joined Union Oil Company in Lafayette, Louisiana as a Development Geologist. He was transferred to Anchorage in October 1967 as a Development Geologist with assignments as wellsite geologist, formation evaluation and subsurface geological studies of McArthur River Field. In June of 1969, he was assigned to Exploration Geology working Upper and Lower Cook Inlet, Western Alaska and the Alaska Peninsula. Primary responsibilities included surface and subsurface mapping, regional studies, log evaluation and prospect generation. He was promoted to District Development Geologist in August of 1974. His responsibilities are primarily concerned with the development of Union interest oil and gas fields in Alaska. Mr. Warthen is a member of the AAPG, Society of Petroleum Engineers of AIME, AIPG, Alaska Geological Society, Geophysical Society of Alaska and Alaska Well Logging Society. He is a Certified Professional Geologist, number 3504, and licensed Professional Geologist -State of Alaska, number 006. RCW/pg 2395D ::) y 37 spa Cif & Cas ru rs. Cum=.;zissi€�� Ala Ia ENGINEERING REPORT CANNERY LOOP GAS FIELD CANNERY LOOP UNIT The following engineering data is presented to support field rules for Cannery Loop Unit. Two wells have been drilled and tested to date in the Cannery Loop Unit. Well Cannery Loop Unit #1 (CLU #1) was gas productive in all three of the proposed pools; the Beluga, Upper Tyonek and Tyonek "D" sands. Well Cannery Loop Unit #3 (CLU #3) was gas productive in the Beluga sands only. These two wells are now suspended. The drillstem tests performed on these wells were designea to establish the presence of commercially productive gas. A stabilized production rate and bottom hole pressure were obtained where possible; no extended (over two days) production tests were completed. Cannery Loop Unit #1 The Tyonek "D" zone was tested in CLU #1 in June 1979 during DST #1 in the interval 11,824'-11,838' MD. This zone has an absolute open hole flow potential of 50 MMSCF/D. The reservoir pressure measured was 4652 psig, at a subsea depth of 10,027' resulting in a gradient of .464 psi/ft. The Upper Tyonek zone was tested in DST #3 in June 1979 in CLU #1 in the interval 10,2521-10,272' MD. The absolute open flow potential was calculated to be 37 MMSCF/D and the zone has a reservoir pressure of 5065 psig at a subsea depth of 8b83' resulting in a gradient of .583 psi/ft. The Beluga zone was testea in CLU #1 in June 1979 during DST #4, V5 and #6. DST #4 tested the interval 7662'-7682' MD. It had a final rate of 5.29 MMSCF/D at 1494 psi surface pressure. The maximum bottom hole Engineering Report Cannery Loop Gas Field Page 2 pressure measured was 2804 psig; no absolute open flow was calculated. The pressure of 2804 psig was measured at a subsea depth of 6513' resulting in a pressure gradient of .431 psi/ft. DST #5 tested the intervals 6408'-6419' and 64221-64341; these intervals had an absolute open flow potential of 12.5 MMSCF/D and a reservoir pressure of 2365 psig. DST #6 tested the interval 6083'-6092' MD in the Beluga. The maximum rate measured was 2.93 MMSCF/D at a surface pressure of 1240 psi. The maximum bottom hole pressure measured was 2270 psig. No absolute open flow rate was calculated. At the same time Cannery Loop Unit #i was being tested, reservoir pressures were being measured in corresponding intervals in the Kenai Gas Field. The Tyonek interval (cumulative production 138 BCF) was tested in three wells. Well KDU-1 was tested in May 1979 and measured a reservoir pressure of 1892 psig at a datum of 9000' subsea. Well KDU-2L was tested in April and measured 1997 psig at the same datum. KDU-4L was also tested in April and measured a pressure of 1924 psig at the 9000' subsea datum. The Upper Tyonek with cumulative production of .7 BCF was tested in the Kenai Gas Field in well KDU-5L. In May of 1979 a reservoir pressure of 3323 psig was measured at a subsea depth of 73001. The Upper Beluga interval (cumulative production 17 BCF) was tested in three wells in May of 1979 in the Kenai Gas Field which is approximately the same time period in which the Beluga was tested in Cannery Loop #1. Well KU-13-6S measured a Beluga pressure of 1760 psig at a subsea depth of 49001. Well KU-14-6L measured a reservoir pressure Engineering Report Cannery Loop Gas Field Page 3 of 1919 psig at a subsea depth of 49001. Well KDU-5S measured a reservoir pressure of 1851 psig at a subsea depth of 49001. Cannery Loop Unit #3 The Beluga zone was also gas productive in well CLU #3 from the intervals 5818'-5828' and 57881-57961. These zones were tested in September 1981 and produced at a maximum rate of 5.3 MMSCF/D at 1233 psi surface pressure. The absolute open flow was calculated to be 9.65 MMSCF/D. The reservoir pressure was calculated to be 2378 psig. This pressure was measured at a subsea depth of 54401. Additional intervals in both wells witnin the Beluga formation are considered gas productive from log analysis. The Upper Beluga reservoir pressure was measured in two wells in the Kenai Gas Field in the time frame corresponding to the testing in CLU #3. In May of 1981 well KU14-6L measured a pressure of 1521 psig at a subsea depth of 4900' and well KU43-6X measured a pressure of 1339 psig at the suosea datum of 4900'. In addition, in October 1981 well KDU-7 was drilled to the north end of the field to test the Beluga and Tyonek reservoirs. The logs indicated that both intervals were wet and the well was plugged back to the Sterling reservoir. The comparative pressure data between wells in Kenai and Cannery Loop in conjunction with the wet test in KDU #7 support the fact that the productive reservoirs in the Cannery Loop Field are separate and distinct from those reservoirs being produced in the Kenai Gas Field. Engineering Report Cannery Loop Gas Field Page 4 Because of the wide range of reservoir pressures, it is deemed prudent to segregate the production from each of the three proposed pools until after it is measured at the surface. This will permit individual pressure measurements of each pool and increase the effectiveness of the reservoir management. Where more than one zone is present within a wellbore, the well will be completed with two tubing strings and each zone metered separately. Pressure surveys will be run annually on selected wells to monitor reservoir performance. Well Spacing It is proposed to develop the field on 320 acre spacing to efficiently produce the gas. This spacing will provide the flexibility needed to economically develop the field. It is necessary to directionally drill wells from a limited number of surface locations due to the lack of suitable sites. In directional wells, convergence of the wellbore back to the drill site results in less distance between completions in the shallow sands than would otherwise occur. A 500' standoff between completions within the same pool will optimize development and provide the needed flexibility to develop the field from the limited number of drill sites. SAL/nc/0396rl 7/6/87 STEVEN A. LAMBERT QUALIFICATIONS FOR EXPERT WITNESS - STATE OF ALASKA July 8, 1987 Mr. Steven A. Lambert graduated from the Colorado School of Mines in 1975 with a bachelor of science in Petroleum Engineering. He went to work with Unocal in the summer of 1975 in Anchorage. Mr. Lambert worked as a petroleum engineer on Unocal's various Cook Inlet properties from 1975 through 1981. From 1982 to 1983, he worked as a petroleum engineer for Unocal's North Slope properties. In 1983 he became the Area Petroleum Engineer for the North Slope. Mr. Lambert transferred to Ventura, California in 1984 as Area Petroleum Engineer, responsible for Unocal's offshore fields in the Santa Barbara Channel and the various onshore fields in the Ventura area. He returned to Alaska in March 1987 as District Petroleum Engineer for Alaska. SAL/nc/0395r t Unitea States Department of the interior BUREAU OF LAND MANAGEMENT KEVIN 4. T" rR Anchorage District Office DEC 0 4 1986 6881 Abbott Loop Road Anchorage, Alaska 99507 Mr. Robert T. Anderson UNOCAL Corporation P.O. Box 190247 Anchorage, Alaska 99519-0247 Dear Mr. Anderson: WTO� c.�j� p1 R�"T RI►RR To 3160 (984) December 3, 1986 Your application for the approval of the Eighth Plan of Development and Operations for the Cannery Loop Unit, Kenai Borough, Alaska, has been reviewed and is approved. A copy of the approved application is enclosed. In the future, please submit this application in triplicate. Sincerely, i TY�v Joseph A. Dygas Chief, Branch of Lease Operations Division of Mineral Resources Enclosure (1) cc: Mr. James E. Eason Division of Oil and Gas Department of Natural Resources P.O. Box 7034 Anchorage, Alaska 99510-7034 (with enclosure) �.-,vU ��,v►�:� �.e-,� to �v�.,` �a,n,ri;,,;ti Unocal ON a am Unoca. CorPorath P.O.. Box 190247 Anchorage, Alaska 99519-0247 Telephone (907) 276.76M UNOCAL® September 24, 1986 Mr. Jim Eason, Acting Director Division of Oil & Gas 555 Cordova Street Anchorage, Alaska 99501 Mr. Joe Dygas, Chief Branch of Solid & Fluid Minerals Bureau of Land Management District Office 4700 E. 72nd Avenue Anchorage, Alaska 99507 CANNERY LOOP UNIT State of Alaska Eighthan of Development and Operation Dear Mr. Eason and Mr. Dygas: In accordance with Article 10 of the Cannery Loop Unit Agreement Union Oil Company of California, as Unit Operator, submits the Eighth Plan of Develop- ment and Operations as follows: A. Duration This Plan shall be in force from December 269 1986 through December 25, 1987. B. Drilling Plans Two existing wells, Cannery Loop Unit #1 and Cannery Loop Unit #3, should be on production by the first half of this plan. In 1987 two additional wells will be drilled, Cannery Loop Unit #4 and Cannery Loop Unit #5. C. Production Markets are available wherein gas from the Cannery Loop Unit may be utilized. Gas production will begin following the comple- tions of Cannery Loop Unit #1 and Cannery Loop Unit #3 and the installation of surface treating facilities and pipeline tie-ins. This should be completed by the first half of 1987. Production from Cannery Loop Unit #4 and Cannery Loop Unit #5 should commence during the later part of 1987. Mr. Jim Eason -2- September 24, 1986 Mr. Joe Cygas Cannery Loop Unit Union, as Unit operator, reserves the right to propose modifications to this Plan should conditions so warrant; however, no modifications will be made without first obtaining permission from the appropriate governmental a— gencies. Very truly yours, UNION OIL COMPANY OF CALIFORNIA UNIT OPERATOR By Robert T. Anderson cc: Art McDorman, Pacific Lighting Development Company Doyle Jones, Marathon Oil Company Roy Huhndorf, Cook Inlet Production Company Lorna Call Clifford Burglin Aiaska Oil & Gas Cons. Commission Ancthorage 6156- ja/110P 6 UF N , J%L SHEFFIELD, GOVERNOR DEPARTMENT OF NATURAL RESOURCET 31986 P.O. BOX 7034 DIVISION OF OIL AND GAS ANCHORAGE, ALASKA 99510-M4 October 16, 1986 Unocal Oil and Gas Division P. 0. Box M247 Anchorage, AK 99519-0247 Attn: Mr. Robert T. Anderson District Land Manager 41, � L. G� -4 1 � RC?BFRT T. ""PT O N �� , Subject: Cannery Loop Unit Eighth Plan of Development and Operations Dear Mr. Anderson: i986 The Eighth Plan of Development and Operations for the Cannery Loop Unit is hereby approved for the period December 26, 1986 through December 25, 1987, subject to the concomitant approval of the U. S. Department of the Interior, Bureau of Land Management. Pursuant to 11 AAC 83.343 -- 11 AAC 83.346, a Ninth Plan of Development and Operations for this unit will be due in this office at least 90 days prior to the expiration of the Eighth Plan, that is on or before September 25, 1987. Sincerely, -Cox/James E. Eason Director cc: ADF&G Mr. Joseph A. Dygas, BLM 3152A