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Home My WebLink AboutO 103Image 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. O \ 43 Order File Identifier Organizing (done) ❑ Two-sided III 11 �l n ►� n l n ni RESCAN DIGITAL DATA ❑ Color Items: ❑ Diskettes, No. ❑ Greyscale Items: ❑ Other, No/Type: ❑ Poor Quality Originals: ❑ Other: NOTES: BY: Angela ✓ Project Proofing Date: `6 - 2\ - 2 cam\ S ❑ Rescan Needed III IIIIIIIIII IIIII) OVERSIZED (Scannable) ❑ Maps: ❑ Other Items Scannable by a Large Scanner OVERSIZED (Non -Scannable) ❑ Logs of various kinds: ❑ Other: u� IIIIIIIIIIII�IIIII BY Angela ✓ Date: V - 2\ - 2 0 \ S /s/ C§2-1— Scanning Preparation x 30 = + = TOTAL PAGES LkCe_ (Count does not include cover sheet) BY Angela ✓ Date: '=6 - 2\ - 2 \S /s/ IIIIIIIIIIIIIIIIIII Production Scanning Stage 1 Page Count from Scanned File: L(-T _ (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: '� YES �,ANOO BY: Angela ✓ Date: 16- *'Lk - 2 o \ S `�'6 /s/ Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Angela Date: /s/ point unless rescannin II I II'I II I II II I I III Scanning is complete at this po 9 is required. Re Scanned IIIIIIIIIIIIII IIIII BY: Angela Date: Comments about this file: /s/ QualityChecked IIIIIIIIIIIIIIIIIII 2/27/2015 Orders File Cover Page INDEX OTHER ORDER NO. 103 Docket No. OTH-15-014 1.-------------------- Background information re: Pilgrim Springs 13-1 2. March 26, 2015 Emails between Gwen Holdmann, ACEP and AOGCC re: deficiencies found during compliance review by AOGCC. 3. April 10, 2015 Notice of proposed enforcement action for failure to provide inclination survey for PS 13-1 to AOGCC 4. April 16, 2015 Letter from ACEP requesting informal review of proposed enforcement action 5. April 17, 2015 AOGCC letter granting informal review 6. April 23, 2015 Email between ACEP and AOGCC requesting informal review schedule change, granted by AOGCC 7. May 1, 2015 Letter from ACEP with information re: informal review 8. June 9, 2015 Letter from ACEP re: civil penalty (Other 103) 9. July 13, 2015 ACEP civil penalty payment of $10,000 INDEX OTHER ORDER NO. 103 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage, Alaska 99501 Re: Failure to Provide Required Well Data ) Other Order No. 103 Pilgrim Springs Geothermal Well PS 13-1 ) Docket No. OTH-15-014 Permit No. 213-102 ) May 26, 2015 DECISION AND ORDER On April 10, 2015 the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to the University of Alaska Fairbanks, Alaska Center for Energy and Power (ACEP) regarding the Pilgrim Springs (PS) 13-1 geothermal well. The Notice was based upon ACEP's failure to conduct a well inclination survey for the PS 13-1 well and proposed a $10,000 civil penalty under AS 31.05.150(a). ACEP requested an informal review. That review was held on May 12, 2015. Summary of Proposed Enforcement Action The Notice cited ACEP's violation of 20 AAC 25.050(d), which required ACEP to conduct a wellbore inclination survey for the PS 13-1 well. This failure was also a violation of the requirements of ACEP's Permit to Drill (PTD). For the violation, the AOGCC proposed to impose a civil penalty of $10,000. Well Survey and Reporting Requirements Unless the AOGCC grants a written waiver, every well is required to have a wellbore inclination survey. On August 9, 2013, ACEP was issued PTD 213-102 for the PS 13-1 geothermal well. As a condition of issuance of the permit, an inclination survey was specifically required for the wellbore. Findings 1. There is no dispute that an inclination survey was required. The regulations, the PTD issued to ACEP and the letter which accompanied it explicitly required an inclination survey. The letter further specified that an inclination survey was to be completed at 500 feet and 1,000 feet MD. "Inclination survey required" was added to the Permit to Drill. Other Order No. 103 May 26, 2015 Page 2 of 3 2. On March 26, 2015, the AOGCC requested both paper and digital copies of the inclination survey. ACEP responded that no inclination survey had been performed in the PS 13-1 well. 3. In September, 2013, the PS 13-1 well was drilled to 1,036.5 feet MD. The well reached its total depth on September 24, 2013. ACEP did not perform an inclination survey at either 500 or 1000 feet MD. 4. In October, 2013, ACEP obtained AOGCC approval to complete the well at a depth of 243 feet MD and perform a flow test (water). Mitigating Circumstances In its May 1, 2015 letter and again during the May 12 informal review ACEP offered a number of reasons for its failure to perform the inclination survey: 1) an inclination survey was not part of the standard protocol for its experienced geothermal consultant or driller, on whose guidance ACEP was relying, and the survey was overlooked, 2) the survey was not performed because of financial / logistical challenges, and 3) the AOGCC's approval of ACEP's subsequent request to complete PS 13-1 at 243 feet, an approval sought and given without disclosure that the required inclination survey had not been completed, cured the failure to perform the inclination survey. Conclusions 1. As the operator of the PS 13-1 well, ACEP bears sole responsibility to understand and comply fully with all AOGCC regulations. ACEP failed to perform the inclination survey required by regulation. 2. As the operator of the PS 13-1 well, ACEP also bears sole responsibility to comply with all requirements imposed as a condition of issuance of a Permit to Drill. 3. Because ACEP obtained approval for the change in well completion depth without disclosing that it had not complied with the inclination survey requirement, the AOGCC's approval did not constitute a waiver of the requirement to acquire an inclination survey of the wellbore. 4. Financial challenges do not relieve ACEP of its obligation to comply with the regulations and conditions upon which the Permit to Drill was approved. Recommendation ACEP violated both the regulations and the conditions upon which its Permit to Drill was approved. Other Order No. 103 May 26, 2015 Page 3 of 3 Now Therefore It Is Ordered That: A civil penalty in the amount of $10,000 is imposed for failure to conduct an inclination survey within PS 13-1 and provide that survey to the AOGCC in accordance with both AOGCC regulations and the conditions upon which the AOGCC issued the Permit to Drill. As an Operator involved in an enforcement action, you are required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and dated May 26, 2015. P �--- Cathy . Foerster Daniel T. Seamount, Jr. Chair, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC 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.m. on the next day that does not fall on aweekend or state holiday. Singh, Angela K (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, May 27, 2015 1:10 PM To: Christopher Pike (cpike6@alaska.edu); gwen.holdmann@alaska.edu; Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Hunt, Jennifer L (DOA); Kair, Michael N (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Wallace, Chris D (DOA); AKDCWeIIIntegrityCoordinator, Alex Demarban; Alexander Bridge; Allen Huckabay; Andrew Vandedack, Anna Raff, Barbara F Fullmer, bbritch; bbohrer@ap.org; Bob Shavelson; Brian Havelock; Bruce Webb; Burdick, John D (DNR); Carrie Wong; Cliff Posey; Colleen Miller, Crandall, Krissell; D Lawrence; Dave Harbour, David Boelens; David Duffy, David House; David McCaleb; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Dean Gallegos; Delbridge, Rena E (LAS); Donna Ambruz; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Frank Molli; Gary Oskolkosf, George Pollock, ghammons; Gordon Pospisil; Greg Duggin; Gregg Nady; gspfoff, Hulme, Rebecca E (DNR); Jacki Rose; Jdarlington Garlington@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; Kazeem Adegbola; 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 Calkins; Michael Duncan; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; MJ Loveland; mkm7200; Morones, Mark P (DNR); Munisteri, Islin W M (DNR); knelson@petroleumnews.com; Nichole Saunders; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; 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; Sternicki, Oliver R, Moothart, Steve R (DNR); Suzanne Gibson; Sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Terry Templeman; Thor Cutler, Tim Mayers; Todd Durkee; trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bajsarowicz, Caroline J; Brian Gross; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Dickenson, Hak K (DNR); Heusser, Heather A (DNR); Holly Pearen; Hyun, James J (DNR); Jason Bergerson; 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; Pete Dickinson; Peter Contreras; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster, William Hutto; William Van Dyke Subject: AOGCC Orders Attachments: co76-033.pdf, other103.pdf CO 76-033 Hilcorp Alaska, LLC Granite Point State 18742-17 Other Order No. 103, University of Fairbanks, ACEP Decision and Order James Gibbs Jack Hakkila Bernie Karl P.O. Box 1597 P.O. Box 190083 M 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 Gwen Holdmann Richard Wagner Darwin Waldsmith Director P.O. Box 60868 P.O. Box 39309 ACEP/UAF Fairbanks, AK 99706 Ninilchik, AK 99639 P.O. Box 755280 Fairbanks, AK 99775-5280 p4,a ,�_q , Angela K. Singh EIN 92-6000147 UNIVERSITY OF ALASKA - FAIRBANKS NO. H2639896 H2639896 INVOICE NUMBER INVOICE DATE INVOICE AMOUNT ADDITIONS DISCOUNT NET INVOICE AMOUNT FINE 06/29/15 10,000.00 0.00 0.00 10,000.00 E ,JUL 13 2015 kOGCC TOTAL 10,000.0 NET PAYMENT WARNING: Original document has a colored background and an artificial watermark on reverse side. •i :r � TO THE ORDER OF Ten Thousand STATE OF ALASKA �� STATE OF ALASKA 333 W 7TH AVE ANCHORAGE AK 99501 3 9891 111 263989611* 1: L 25 2000601: 2680 0 L 5 LIP Page 1 S CHAEL CHURCH FOR CHRIS PIKE INSTITUTE NORTHERN ENGINEERING ' UNIVERSITY OF ALASKA FAIRBANKS DUCKERING 525 PROCUREMENT & CONTRACT SVCS PO BOX 755910 i PO BOX 757940 FAIRBANKS AK 99775-5910 FAIRBANKS AK 99775-7940 I Tele: (907) 474-7315 Fax: (907) 474-7720 PURCHASE ORDER SEND ORIGINAL AND ONE (1) COPY OF INVOICE UNIVERSITY OF ALASKA FAIRBANKS NO. P0491743 DATE: 06/29/15 ACCOUNTS PAYABLE PO BOX 757920 FAIRBANKS AK 99775-7920 THIS NUMBER MUST BE SHOWN ON ALL INVOICES, PACKAGES, Tele: (907) 474-7031 Fax: { 907) 474-7046 CORRESPONDENCE, ETC, Vendor ID NO: S002957 j TO: STATE OF ALASKA j J STATE OF ALASKA AOGCC JUL,[+ L13 2015 333 W 7TH AVE ANCHORAGE AK 99501 Qcu nt r Date AOGCOPURCHASE AUTHORIZED ONLY WHEN SIGNED ABOVE BY THE AUTHORIZED AGENT "Unless otherwise superseded, vendor shall comply with University of Alaska Terms and Conditions of Purchase Order, located at www.alaska.edu/swproc/downloads/terms.pdf" SHIP VIA Not Applicable DELIVERY DATE 06/30/15 F.O.B. TERMS Not A bitable BUYER EliSe Stredny TERMS Cash TIN #92-6000147- Tax Exempt NoA-125217 ITEM DESCRIPTION QUANTITY UNIT UNIT PRICE EXTENDED PRICE NO, CASH PAYMENT - CHECK ENCLOSED IN THE AMOUNT OF $10,000.00 PER THE ATTACHED DECISION AND ORDER DATED: MAY 26, 2015. 1 INCLINATION SURVEY ENFORCEMENT ACTION FINE FEE 10,000.00 FOR THE TRANSFER OF OWNERSHIP FORM REQUIRED BY THE ALASKAN OIL AND GAS CONSERVATION COMMISION TO TO TRANSFER PILGRIM HOT SPRINGS WELL RESPONSIBILITY FROM UNIVERSITY OF ALASKA FAIRBANKS TO THE LANDOWNER, MATT GANLEY OF BERING STRAITS NATIVE CORPORATION. A CIVIL PENALTY PAYMENT IN THE AMOUNT OF $10,000 FOR FAILURE TO CONDUCT AN INCLINATION SURVEY WITHIN PS 13-1 AND PROVIDE THAT SURVEY TO THE AOGCC IN ACCORDANCE WITH BOTH AOGCC REGULATIONS AND THE CONDITIONS UPON WHICH THE AOGCC ISSUED THE PERMIT TO DRILL. TOTAL T 10,000.00 eotpapord 1 5 rU Uooe; DECEIVED ACEP JUN 12 2015 Alaska Center for Energy and Power AOGCC June 9, 2015 Ms. Cathy Foerster and Mr. Daniel Seamount Jr. Commissioners, Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Dear Commissioner Foerster and Commissioner Seamount, On May 27th, the Alaska Center for Energy and Power was informed of your decision impose a civil penalty in the amount of $10,000 for the failure to conduct an inclination survey. While we disagree with this decision for reasons which have already been articulated to the AOGCC, we will not contest the enforcement action. Payment for the fine will be forthcoming soon. During the informal review meeting that was attended by myself and Chris Pike of ACEP as well as Guy Schwartz and Patricia Bettis of the AOGCC, we had an initial discussion on revisiting the existing geothermal regulations in Alaska. We believe that there are areas in the regulation, especially related to shallow medium and low temperature geothermal that could be streamlined and clarified. Mr. Schwartz seemed receptive to reexamining the regulations. It has been several years since the AOGCC asserted jurisdiction over geothermal drilling and now is likely an appropriate time to revisit the regulations based on the lessons learned. We'd like to meet with you, the commissioners, at your earliest convenience to discuss this topic and determine the best path forward which could include collaboration between ACEP and the AOGCC. As always, please do not hesitate to contact me with any questions. I look forward to speaking soon. Sincerely, Gwen Holdmann Director, Alaska Center for Energy and Power CC: Dr. William Schnabel, Interim Director, Institute of Northern Engineering Alaska Center for Energy and Power • University of Alaska Fairbanks • 814 Alumni Drive • P.O. Box 755910 • Fairbanks, Alaska 99775-5910 • Tel: (907) 474-5402 • Fax: (907) 474-5475 FACEPMAY 01 201'.j Alaska Center for Energy and Power AOGCC May 1, 2015 Cathy Foerster Commissioner, Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Dear Commissioner Foerster, We appreciate the opportunity to participate in the informal review process and look forward to meeting with AOGCC at L OAM on Tuesday May 12th. During the informal review, ACEP plans to engage with the AOGCC and explain the series of events surrounding the drilling of the PS 13-1 well and the failure to obtain an inclination survey. All documents that we will reference have been submitted to the AOGCC as part of past submissions. An outline of our presentation is below: • Permit to Drill 213-102 was issued on August 9, 2013 and the drilling of PS 13-1 occurred between September 7, 2013 and October 24, 2013. • E-logs were collected on September 27, 2013 • On September 28, 2013, a 900 feet section of 2" pipe that had been placed in the hole to facilitate equilibrated temperature logging stripped and fell into the well bore. o This situation created financial and logistical challenges o Verbal approval from Guy Schwartz was given over email on October 16, 2013 to modify the hole completion plan and change the final completion depth to approximately 250 feet. • The hole was completed on October 24, 2013 to a depth of 243 feet. • Because the hole was completed at a depth of less than 500 feet, no inclination survey was performed. An inclination survey was not part of the standard protocol for our experienced geothermal consultant or driller, on whose guidance we were relying, and it was overlooked. Given the advantage of hindsight, we would have verified this with AOGCC staff, but this did not happen. ACEP sees opportunities to collaborate with AOGCC to explore the regulations related to geothermal exploration in Alaska and compare them to the regulations with other jurisdictions around the country. We believe there is opportunity to address inconsistencies that would streamline small scale geothermal exploration permitting for all parties. Sincerely, Gwen Holdmann Director, Alaska Center for Energy and Power Alaska Center for Energy and Power • University of Alaska Fairbanks • 814 Alumni Drive • P.O. Box 755910 • Fairbanks, Alaska 99775-5910 • Tel: (907) 474-5402 • Fax: (907) 474-5475 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, April 23, 2015 9:51 AM To: 'Christopher Pike' Cc: Foerster, Catherine P (DOA); Seamount, Dan T (DOA); Bettis, Patricia K (DOA); Schwartz, Guy L (DOA) (guy.schwartz@alaska.gov) (guy.schwartz@alaska.gov); Ballantine, Tab A (LAW) Subject: RE: Docket No OTH-15-014 Informal Review Chris, Your request to reschedule the Informal Review is GRANTED. The review is now scheduled for May 12, 2015 at 10:00 a.m. Jody J. Colombie Special Staff Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, Alaska 99501 JodU. Colombie(a-,alaska.gov Office: (907) 793-1221 Fax: (907) 276-7542 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 Jody Colombie at 907.793.1221 or iody.colombieCaalaska.gov From: Christopher Pike (mailto:cpike6@alaska.edu] Sent: Thursday, April 23, 2015 9:46 AM To: Colombie, Jody J (DOA) Subject: Docket No OTH-15-014 Informal Review Hello Jody, We recently received the letter from AOGCC scheduling an informal review for May 7th. Unfortunately Gwen Holdmann will be out of town on this date. Can we reschedule the review for either May 1 I th or May 12th. Thanks, Chris Pike Chris Pike Research Professional Alaska Center for Energy and Power _/' tel: 907-272-1522 c: (907) 888-3850 www.ua£edu/acep THE STATE o1A LASKA i-I --- GOVERNOR BILL WALKLR April 17, 2015 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7012 3050 0001 4812 6884 Gwen Holdmann Director Alaska Center for Energy and Power University of Alaska, Fairbanks PO Box 755910 Fairbanks, Alaska 99775 Alaska Oil and Gas Conservation Commission Re: Docket No OTH-15-014 Request for Informal Review Failure to provide an inclination survey for Pilgrim Springs 13-1 Dear Ms. Holdmann: 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alaska.gov As part of the informal review process, the Alaska Oil and Gas Conservation Commission (AOGCC) is providing Alaska Center for Energy and Power (ACEP) an opportunity to submit documentary material and make written and oral statements regarding its failure to provide an inclination survey for Pilgrim Springs 13-1. The informal review meeting is scheduled for May 7, 2015 at 10:00 a.m. in the AOGCC's Anchorage office at 333 West 71h Avenue. Copies of all written submissions and a summary of any oral statements planned by CPAI should be provided to the AOGCC no later than May 1, 2015 so we can make best use of the informal review. Sincerely, Cathy P oerster Chair, Commissioner ro(Domestic CID 1 ..n For delivery Information visit our website at www.usps.comi ru co .7 Postage $ Certified Fee C3 Return Receipt Fee Postmark Here (Endorsement Required) Restricted Delivery Fee E3 (Endorsement Required) LrI C3 rr1 Total Postage & Fees ,$ Gwen Holdmann ru Sent To Director rq E:3 � _______A__ __ ________________________ Street, Alaska Center for Energy and Power C` pt. IVo.; or Po sox No. University of Alaska Fairbanks Ciry state, ziP+�------------------ P.O. Box 755910 Fairbanks, Alaska 99775 ■ Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Gwen Holdmann Director Alaska Center for Energy and Power University of Alaska Fairbanks P.O. Box 755910 Fairbanks, Alaska 99775 A. Signatu e X ❑ Agent � ❑ Addressee B. eceived by (Printed Name) C. Date of Delivery trot � F t e. 4a 11 S D. Is delivery address different from item 1? ❑ Yes -If YES, enter delivery address below: ❑ No 3. Service Type ❑ Certified Mail® ❑ Priority Mail Express'' ❑ Registered ❑ Return Receipt for Merchandise ❑ Insured Mail ❑ Collect on Delivery 4. Restricted Delivery? (Extra Fee) ❑ Yes 2. Article Number 7012 3050 0001 4812 6884 (Transfer from service labeq PS Form 3811, July 2013 Domestic Return Receipt DECEIVED APR 16 2015 ACEP 4� Alaska Center for Energy and Power AOGCC April 16, 2015 Daniel T. Seamount. Jr. Commissioner, Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Dear Commissioner Seamount, In Regards to your letter describing docket number OTH-15-014, failure to provide inclination survey for Pilgrim Springs 13-1, the Alaska Center for Energy and Power (ACEP) requests an informal review to reassess the imposed civil penalty. An email from ACEP to the commission in regards to an inclination survey request on March 30, 2015, stated that "since the well was completed at a depth shallower than 500 feet, and the statute states that a well must be `surveyed to determine the inclination from vertical with surveys starting at 500 feet and no more than 500 feet apart to total depth' no inclination survey was performed." Your letter was the first indication that we received indicating this was an incorrect interpretation. We hope the account of the drilling activities offered in the following paragraphs helps to explain the rational for our actions. Permit to Drill 213-102 was issued on August 9, 2013 and the drilling of PS 13-1 occurred between September 7, 2013 and October 24, 2013. The initial drilling plan called for a vertical well to be completed to a total depth of approximately 1000 feet, to the top of bedrock. The well was drilled to 1036 feet and electronic logs were collected, as required under AOGCC regulations. A caliper log was completed during this exercise which showed a good straight hole with consistent diameter. These logs have been submitted to the AOGCC. Unfortunately, on September 28, 2013, a 900 feet section of 2" pipe that had been placed in the hole to facilitate equilibrated temperature logging stripped and fell into the well bore. Significant time, effort and expense were spent trying to fish out the pipe, however eventually the decision was made that this well was not directly over the main area of geothermal upwelling, and abandoning the bottom of the hole made the most sense. I submitted the sundry paperwork on October 16, 2013 requesting a change to the drilling program and indicated that the final completion depth would be approximately 250 feet. Below this depth, the hole would be backfilled and abandoned. This action was given "verbal approval" over email from Guy Schwartz on October 16, 2013. The hole was completed on October 24, 2013 to a depth of 243 feet. Details of this activity have been submitted along with previous paperwork. Alaska Center for Energy and Power • University of Alaska Fairbanks • 814 Alumni Drive • P.O. Box 755910 • Fairbanks, Alaska 99775-5910 • Tel: (907) 474-5402 • Fax: (907) 474-5475 Permit to Drill 213-102 stated that "An inclination survey must be completed at 500' and 1000' measured depth to insure well is being drilled vertically per 20 AAC 25.050(a)(2)," and ACEP understood that a single shot inclination survey was required at 500 and 1000 feet to ensure a vertical wellbore if the well was deeper than 500 feet. It is now obvious, that this was a misunderstanding, and a more in-depth discussion about the survey at the time was warranted. ACEP had intended to perform the inclination surveys when the well was completed to its original planned depth by utilizing the sandline on the drill rig, as the drilling operator indicated he had done in the past, however as described above, this never occurred. ACEP hopes that it is clear to the commission that no intention was made to sidestep AOGCC requirements or be out of compliance. We respectfully request that you reconsider the proposed civil penalty. As part of our request for an informal review we request to meet with you to discuss this matter further. Sincerely, Gwen Holdmann Director, Alaska Center for Energy and Power Alaska Center for Energy and Power • University of Alaska Fairbanks • 814 Alumni Drive • P.O. Box 755910 • Fairbanks, Alaska 99775-5910 • Tel: (907) 474-5402 • Fax: (907) 474-5475 THE STATE GOVERNOR BILL WALKER April 10, 2015 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7012 3050 0001 4812 7072 Ms. Gwen Holdmann Director, ACEP University of Alaska Fairbanks P.O. Box 755910 Fairbanks, Alaska 99775-5910 Re: Docket Number OTH-15-014 Notice of Proposed Enforcement Action Failure to provide Inclination Survey for Pilgrim Springs 13-1 Dear Ms. Holdmann: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alaska.gov The Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies the University of Alaska Fairbanks, Alaska Center for Energy and Power (ACEP) of a proposed enforcement action. Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)). ACEP violated 20 AAC 25.050(d) by failing to conduct a well inclination survey for the Pilgrim Springs (PS) 13-1 geothermal well. Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). ACEP holds Permit to Drill (PTD) 213-102 for well PS 13-1, issued August 9, 2013. As a result, ACEP was required to conduct and submit to the AOGCC an inclination survey of the wellbore, as required by 20 AAC 25.050(d) and as a condition of the approval of the permit to drill application. This information was to have been submitted within ninety (90) days after the completion, suspension or abandonment of a well, as required by 20 AAC 25.071. The well was drilled to a depth of 1,036 feet measured depth. PS 13-1 was completed on October 24, 2013 with a plug back depth of 243 feet measured depth. ACEP has not provided the required information. By email to Gwen Holdmann on March 26, 2015, the AOGCC requested both paper and digital copies of the inclination survey. ACEP by email dated March 30, 2015 informed the AOGCC that no inclination survey was performed in the PS 13-1 well. Notice of Proposed Enforcement Action ACEP Docket OTH-15-014 April 10, 2015 Page 2 Proposed Action (20 AAC 25.535(b)(3). For this violation, and in accordance with AS 31.05.150, the AOGCC intends to impose civil penalties on ACEP as follows: -$10,000 for the failure to perform an inclination survey in the PS 13-1 geothermal well in violation of 20 AAC 25.050(d) and condition five (5) of the AOGCC's approval of the PS 13-1 permit to drill application. The total proposed civil penalty is S10,000. Rights and Liabilities (20 AAC 25.535(b)(4)). Within 15 days after receipt of this notification — unless the AOGCC, in its discretion, grants an extension for good cause shown — ACEP may file with the AOGCC a written response that concurs in whole or in part with the proposed action described herein, requests informal review, or requests a hearing under 20 AAC 25.540. If a timely response is not filed, the proposed action will be deemed accepted by default. If informal review is requested, the AOGCC will provide ACEP an opportunity to submit documentary material and make a written or oral statement. If ACEP disagrees with the AOGCC's proposed decision or order after that review, it may file a written request for a hearing within 10 days after the proposed decision or order is issued. If such a request is not filed within that 10-day period, the proposed decision or order will become final of the 11`h day after it was issued. If such a request is timely filed, the AOGCC will hold its decision in abeyance and schedule a hearing. If ACEP does not concur in the proposed action described herein, and the AOGCC finds that ACEP has violated a provision of AS 31.05, 20 AAC 25, or an AOGCC order, permit or other approval, then the AOGCC may take any action authorized by the applicable law including ordering one or more of the following: (i) corrective action or remedial work; (ii) suspension or revocation of a permit or other approval; (iii) payment under the bond required by 20 AAC 25.025; and (iv) imposition of penalties under AS 31.05.150. In taking action after an informal review or hearing, the AOGCC is not limited to ordering the proposed action described herein, as long as ACEP received reasonable notice and opportunity to be heard with respect to the AOGCC's action. Any action described hereto or taken after an informal review or hearing does not limit the action the AOGCC may take under AS 31.05.160. Sincerely, 1-10� Daniel T. Seamount. Jr. Commissioner ru r- I (Domestic Mail Only; No Insurance Coverage Provided) C3 ru CO Postage $ Certified Fee C3 C-3 Return Receipt Fee (EndorsementRe Required) Postmark Here C3 Restricted Deliver, Fee 1-3 (Endorsement Required) Ln F C3 M Total Postage & Fees $ Ms. Gwen Holdrnann ru Sent To Director, ACEP r-q r-3 -----stre- ef -ApDNF, ------------------ University of Alaska Fairbanks r%- or PO Box No. P.O. Box 755910 City, State, ziP+a Fairbanks, Alaska 99775-5910 law". aj • Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. • Print your name and address on the reverse so that we can return the card to you. • Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Ms. Gwen Holdmann Director, ACEP University of Alaska Fairbanks P.O. Box 755910 Fairbanks, Alaska 99775-5910 A. Signature X I" --k - ;�� B . Rec�lv'ed by (Printed Name) 0 Agent 0 Addressee C. Date of Delivery D. Is delivery address different from item 1? 13 Yes If YES, enter delivery address below: 0,No 3. P3Wice Type 123 Certified Mail® 13 Priority Mail Express- 0 Registered E3 Return Receipt for Merchandise 13 Insured Mail 13 Collect on Delivery 4. Restricted Delivery? (Extra Fee) 13 Yes 2. Article Number (Transfer from serviceWmq 7012 3050 0001 4812 7072 PS Form 3811, July 2013 Domestic Return Receipt Bettis, Patricia K (DOA) From: Christopher Pike <cpike6@alaska.edu> Sent: Monday, March 30, 2015 3:15 PM To: Guhl, Meredith D (DOA) Cc: Gwen Holdmann; Bettis, Patricia K (DOA) Subject: PS 13-1, PTD 213-102 Information request Attachments: PS13-1 daily drilling reports.xlsx; WELL TESTING of PS 13-l.pdf; PS13-1 ELOGs.pdf; PS-13-1 Caliper Log.las; PS-13-1 E-Log.las; PS-13-1 Temp Log 2.1as; PS-13-1 Temp Log 2DifTemp.las; PS13-1 Geologic Markers.docx; PS13-1 mudLogs.pdf Hello Meredith - Gwen Holdmann asked me to reply to your March 26, 2015 email requesting additional information for PTD 213-102. Attached to this email please find the following forms: 1. PS 13-1 Daily drilling reports 2. The well testing report "WELL TESTING OF PS 13-1" which details the flow testing of the well and the intervals that were tested. 3. The elogs of PS13-1 in PDF format which graphically show all clogs 4. LAS format digital elogs 5. A listing of the geologic markers encountered 6. A PDF formatted mud log (unfortunately we do not have the mud log in an LAS format). In regards to the inclination survey, the well was completed to a TD of 243 feet as approved in a sundry application that was given verbal approval on 10/16/2013. Since the well was completed at a depth shallower than 500 feet, and the statute states that a well must be "surveyed to determine the inclination from vertical with surveys starting at 500 feet and no more than 500 feet apart to total depth" no inclination survey was performed. We will provide well cutting samples. Is 333 West Seventh Ave the best address to send these samples to? Please let me know if you need any other items and don't hesitate to contact me with additional questions. Regards, Chris Pike Chris Pike Research Professional Alaska Center for Energy and Power tel: 907-272-1522 c: (907) 888-3850 www.uaf.edu/acep ---------- Forwarded message ---------- From: Guhl, Meredith D (DOA) <meredith.guhl cr,alaska.gov> Date: Thu, Mar 26, 2015 at 1:46 PM Subject: PS 13-1, PTD 213-102, Data Required To: "gwen.holdmann(abalaska.edu" <zwen.holdmanngalaska.edu> Cc: "Bettis, Patricia K (DOA)" <patricia.bettis(a�alaska.gov> Gwen, During the compliance review of the 10-407 form submitted for PS 13-1, PTD 213-102, completed 10/24/2013, the following deficiencies were noted: 1. Daily drilling reports were not supplied with the form. These reports are required per 20 AAC 25.070. 2. An inclination survey was not supplied and was required per the approval letter, item 5. 3. Well test information was not supplied. As noted in box 30, if the well is tested, intervals and formations must be listed and test results should be briefly summarized. Detailed test information should be submitted per 20 AAC 25.071. 4. The paper copies of the attached logs are unreadable, no curves are shown on the majority of the logs. 5. Digital copies of the logs, as required per 20 AAC 25.071 have not been supplied. Both a image file and a LAS file format is required for each log run. 6. A mudlog is required and has not been supplied, either digitally or paper. A digital image file and a LAS file format is required. 7. Samples were required and have not been provided. 8. Box 29. Geologic Markers was not sufficiently filled out. "See cuttings description" does not meet the requirements of the form. Provide a list of the geologic markers and formations encountered. Please provide the daily drilling reports, the inclination survey, the well test information, legible copies of the paper logs, digital data for all logs run, paper and digital copies of the mudlog, samples, and a complete list of geologic markers and formations encountered. Please provide these items by April 9, 2015. If you have any questions, please contact me. Thank you, Meredith Meredith Guhl Petroleum Geology Assistant Alaska Oil and Gas Conservation Commission 333 W. 7th Ave, Suite 100, Anchorage, AK 99501 meredith. guhlgalaska.gov Direct: (907) 793-1235 CONFIDENTWITYNOTICE: 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 Meredith Guhl at 907-793-1235 or meredith.guhl(_&alaska.gov. Bettis, Patricia K (DOA) From: Guhl, Meredith D (DOA) Sent: Thursday, March 26, 2015 1:47 PM To: gwen.holdmann@alaska.edu Cc: Bettis, Patricia K (DOA) Subject: PS 13-1, PTD 213-102, Data Required Gwen, During the compliance review of the 10-407 form submitted for PS 13-1, PTD 213-102, completed 10/24/2013, the following deficiencies were noted: 1. Daily drilling reports were not supplied with the form. These reports are required per 20 AAC 25.070. 2. An inclination survey was not supplied and was required per the approval letter, item 5. 3. Well test information was not supplied. As noted in box 30, if the well is tested, intervals and formations must be listed and test results should be briefly summarized. Detailed test information should be submitted per 20 AAC 25.071. 4. The paper copies of the attached logs are unreadable, no curves are shown on the majority of the logs. 5. Digital copies of the logs, as required per 20 AAC 25.071 have not been supplied. Both a image file and a LAS file format is required for each log run. 6. A mudlog is required and has not been supplied, either digitally or paper. A digital image file and a LAS file format is required. 7. Samples were required and have not been provided. 8. Box 29. Geologic Markers was not sufficiently filled out. "See cuttings description" does not meet the requirements of the form. Provide a list of the geologic markers and formations encountered. Please provide the daily drilling reports, the inclination survey, the well test information, legible copies of the paper logs, digital data for all logs run, paper and digital copies of the mudlog, samples, and a complete list of geologic markers and formations encountered. Please provide these items by April 9, 2015. If you have any questions, please contact me. Thank you, Meredith Meredith Guhl Petroleum Geology Assistant Alaska Oil and Gas Conservation Commission 333 W. 7th Ave, Suite 100, Anchorage, AK 99501 meredith.guhl@alaska.gov Direct: (907) 793-1235 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 Meredith Guhl at 907-793-1235 or meredith.guhl@alaska.gov. Pilgrim Hot Springs Project Request to Change Approved Program and Suspend Operations Pilgrim Hot Springs, PS-13-1 (ref: Permit 213-102) Date Submitted: 10-16-13 Application for: Request to change approved program and suspend PS- 13-1 Submitted to: Cathy Foerster Alaska Oil & Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Submitted by: Gwen Holdmann Alaska Center for Energy and Power (ACEP) (907) 590-4577, gwen.holdmannL&alaska.edu 1. Background The purpose of this program has been to determine whether the geothermal recourse at Pilgrim Hot Springs could be developed for local use (power and other beneficial purposes), or exported to serve the community of Nome. During the summer of 2012 ACEP drilled three small diameter temperature -gradient holes at Pilgrim Hot Springs to a maximum depth of 1281 ft. The original goal for the program was to encounter temperatures significantly above 200 °F below a depth of 1000 ft, however the team was only able to document a maximum downhole temperature of 195°F in PS-12-3 at a depth of approximately 140 ft. The maximum measured bottom hole temperature at or near bedrock was 193°F (in PS-12-2). It now appears that any significantly higher temperatures would have to be at depths significantly below 1000 ft, and not necessarily directly below the hot springs. Based on the 2012 results, it was decided to drill a larger diameter straight and vertical 14-in well which could be capable of producing on the order of 2000 gpm of —200 °F water, followed by flow testing of this well. An application to permit this well, named PS-13-1, was submitted to AOGCC on June 5th, 2013 and permitted August 91h, 2013. Drilling commenced on September 26th, 2013 in accordance with the plan of operations submitted with the Permit to Drill application. 2. Request to Change Approved Program Recent difficulties at Pilgrim Hot Springs have stemmed from a failed 2 inch coupling which caused a long string of 2 inch pipe to fall into the hole. A full description of the events around this incident and attempts to retrieve the pipe over the course of 10 days have been provided to AOGCC staff, and is included in Attachment A. This pipe has proven extremely difficult to remove despite the onsite expertise Page 1 of 12 of one of the most experienced water well drillers in the State of Alaska as well as consultation with a number of fishing experts. Moreover, based on the condition of the couplings removed from the hole that the 11 joints remaining in the hole may no longer be connected and may need to be fished up in sections. We have included a diagram of the hole as it currently sits in Attachment B. The well has a 24" conductor set at 20 ft, and 18" surface casing set at 140 ft. Below 140 ft, the hole is an open hole to TD at 1036 ft. /$« Fortunately, we were able to run a full suite of flowing and static temperature logs and geophysical logs before experiencing issues related to completing the hole. After reviewing the available data for PS-13-1, it is clear that its temperature profile is most similar to PS-12-1, which is the furthest away from PS-13-1 of all the slim holes drilled last year. This has allowed us to limit the potential location of the upflow zone to a very narrow area, but it is also clear from the logs and data collected that PS-13-1 is still located at the margins of the thermal upwelling (similar to PS-12-1, PS-12-2, and PS-12-3). While this new hole has proven capable of producing several hundred gallons of fluid at temperatures slightly greater than 70°C and measured bottomhole temperatures near 80°C, this is disappointing given that temperatures close to 90°C are clearly present at the site, and the goal for the program was to produce fluid at or near this temperature. See Attachment C for additional detail and temperature logs from PS-13-1. Given the large uncertainties and limited chances of success in fishing what remains of the 2 inch pipe out of PS-13-1, we wish to complete the upper portion of the well above —250 ft, and abandon the lower section in accordance with our originally submitted P&A plan. A diagram and completion plan are included as Attachment D. 3. Request to Suspend Operations We wish to suspend operations rather than P&A the well for the following reasons: We intend to return for a 2014 field season, and PS-1 3-1 would be an integral part of any testing program we would wish to complete. It is capable of producing more fluid than any other well that has been drilled at Pilgrim Hot Springs, and when completed as proposed we believe the hole will be capable of at least 900 GPM of production. 2. The land owners, Unaatuq, LLC are interested in converting this hole to a production well to support on -site development. Based on our estimates, this hole should be capable of supporting power generation, space heating, and cooling on a similar scale as has been previously accomplished at Pilgrim Hot Springs. Thank you for your attention to this application. Sincerely, L,,� Gwen Holdmann Director, ACEP Attachment A — Description of Events Sept 25`h through October 11 `h Attachment B — Diagram showing current status of PS-13-1 Attachment C — Description of PS-1 3-1 temperature profiles Attachment C — Proposed completion plan for PS-13-1 Page 2 of 12 Attachment A: Description of Events Sept 25th through Oct. 11th 9/25/13- TD was reached however, clogging equipment was not able to proceed deeper than 333 feet, necessitating a wiper run. 9/27/13 (Friday)- A wiper run of PS 13-1 was completed in the early morning hours (06:30) of Friday, September 27"'. Immediately the open mud filled hole was e logged after which a string of 2 inch galvanized pipe was tripped into the hole by driller Wade Westberg and helper/ owner Wayne Westberg. A check valve was at the down hole end of the pipe and when the tripping in was completed at approximately 7PM, the pipe was tilled with water. When the pipe was filled with water, it slid through the clamp so that it was resting on the lifting bail. The pipe was secured with a pipe clamp as well as a lifting bail that was attached to the main line on the rig. The purpose of the pipe was to provide a reliable water filled conduit in which to get static temperature logs over a several day period. Previous logging through mud had been problematic and it was difficult to get data logging equipment all the way to the bottom of the hole. When logging equipment had reached the bottom of the hole, it was difficult to get accurate temperature measurements due to heavy mud and clay getting caked around the temperature sensor. After the elogging, most of the drill crew was sent home to rest after up to 5 weeks in the field. The only people remaining on site were Chris Pike of UAF, and Wayne Westberg, Owner of MW Drilling and driller Wade Westberg. 9/28/13 (Saturday)- M the morning hours of Saturday September 28"', driller Wade Westberg and MW Drilling Owner Wayne Westberg who was serving as Wade's helper, went out to the drill pad. Wade raised the pipe assembly with the lifting bail attached to the main line on the rig in order to remove the elbow that was nippled into the top 2" merchant coupling, and used to fill the 2" pipe with water. As he slowly hoisted the pipe using the lifting bail so that it could be reclamped, the coupling that supported the lifting bail stripped out and the 2" pipe dropped into the hole. A total of 987 feet of pipe was in the hole which was logged at a depth of 1036.5 feet. Accordingly, the top of the 2" pipe was expected to be 49.5 feet below the top of the casing. 9/29/13 (Sunday)- A down hole camera was shipped into the site and mud was evacuated (using airlifting) from the top of the hole in an attempt to make the top of the 2" pipe visible. After mud was removed from the surface of the hole, water began to flow artisan at a rate of about 300 gpm at a temperature of 158 degrees F. The artisan flow was diverted into a hose towards a swamp area behind the drill pad. 9/30/13 (Monday)- The down hole camera was lowered into the hole and the pipe was spotted at the expected level of about 49 feet below the top of the casing. A wall hook was constructed and lowered into the hole and secured around the pipe below the first coupling and the pipe was able to be raised to the surface where it was secured. In order to kill the artisan flow, mud was pumped into the hole, bottom up, through the 2" pipe. The pipe was left in the hole to facilitate data collection. Because the top of the pipe was at the expected depth when recovered, it was believed that the 2 inch pipe was intact, and the ability to circulate mud through the pipe seemed to corroborate this. Page 3 of 12 The fishing tool snaggs the 2 inch pipe below a coupling and lifts it out of the hole (left) The Hall sweep assembly (right) 10/5/13 (Saturday)- Crew arrived back on site after a break in Anchorage and began wet tripping the 2" pipe out of the hole. They were pulling a wet string for the first 28 sticks of pipe after which mud started draining from the pipe. It is suspected that this is when bottom 11 sticks disconnected from the rest of the string. In total 35 joints of 2 inch pipe were tripped out in addition to 3 joints of 3 inch pipe which were attached to the top of the 2 inch pipe to aid in mud circulation. The drillers began noticing as they advanced down the string that the joints were loose. Upon further examination, it appeared as though the bottom couplings of the 35 joint string had been smashed onto the threads with a vertical load, as would be the case when a long string of pipe is falling down in a hole and suddenly comes into contact with the bottom of the hole. Several joints after the crew began noticing these deformed couplings there was no more 2" pipe attached to the string and 1 l pieces remained in the hole. Page 4 of 12 10/6/13 (Sunday)- A cut lipped wall sweep guide was built onto the Bowen model 150 overshot that contained a 2 3/8" grapple sized and ordered for the OD of the 2" pipe. Drillers thought that they had the fish several times but later believed that they were catching the wall of the hole. The fish was first encountered at 127 feet, but each time they tried to rotate onto it, it dropped deeper into the hole. At the enct of the snitt the tisn tiao Qronnecl to 19 / teet. Photos show the overshot assembly Page 5 of 12 10/7/13 (Monday)- A wall sweep assembly attached to "B rod" was used to try and catch the fish. At one point they thought they had it at 245' because they were unable to rotate the wall sweep any more. They were not attached to the fish when they tripped out of the hole. Later in the day, drill pipe and a button bit assembly were run down the hole. They hit something hard at 333 feet. After about 8 foot, the fish slipped. It was encountered again at 390 feet, and then again at 425 feet. 10/8/13 (Tuesday) Drillers continued to force the 2" pipe string into the hole using the button bit assembly. They encountered the fish at 700 feet. From 705-720 feet, drillers worked to drive down the fish. When they reach 725 feet, the rotational torque became too much and the decision was made to pull out of the hole and use a wash over overshot tool. 10/9/13 (Wednesday) Construction of 8 inch wash over assembly took place. At approximately 7PM it was deployed into the hole to a depth of 219 feet at which point, the assembly hung up. It appeared it was encountering differential sticking due to heaving of the clay formation. The tool was pulled out, shortened, and modified to improve mud circulation. In addition, a cut lipped guide was added per the suggestion of an oil field drilling acquaintance. The washover tool (left) is shown along with a drawing of the assembly (right). 10/10/13 (Thursday) Night crew finished tripping out tool and made modifications to improve penetration and mud circulation of wash over tool. Night crew begins tripping tool back into the hole. Day crew continued tripping tool in hole. They encountered sticky spot at 230'. They were able to circulate hole and rotate their way down. Day crew tagged fish at about 23:30 at 738 feet right before crew change out. They attempted to rotate onto the fish and stalled out rotation. Page 6of12 10/11/13 (Friday) Fish feels solid, the night crew begins rotating the wash over and milling against the fish. After a brief period. the wash over descended without resistance. It was lowered without rotating. Drill strinu, is able to descend on its own weight. Due to the tight space between the hole diameter and the OD of the wash over, it was decided after discussion that this mean that the 2" was inside the wash over assembly. The wash over was allowed to descend as far as it would go. Drillers with their hands on the drill pipe said they could feel the wash over descending down over the couplings. At 840' it wouldn't descend any further and they be( -,an tripping out of the hole. The tool came out of hole 16:30 with no sign of 2 inch pipe. Fishing activities suspended pending further discussion and consultation. Wayne has contacted a number of individuals for suggestion regarding how best to extract the 2 inch pipe. He has left messages for JD at Weatherford and spoken with Pete Dickenson of American Oil Field Services. Pete and other contacts recommended Jim Bowen of Olgoonik Services. Jim was on vacation and when Wayne reached him and explained the situation, the suspected condition of the pipe as well as what he had tried so far, Jim said that he would probably try the same things. He encouraged a cut lip wall sweep tool to the ID of the hole which had already been done. Jim said that if he were going to trip back down the oil for another try he would go back in with the Bowen 150 overshot and apply significant pressure. He did acknowledge however that this method would likely result in retrieving one stick of the 2 inch at a time, and even in the best scenarios would take several trips in and out of the hole. Jim was willing to try to come out. He charges $2560/day + tool rental however he reiterated that given what had been tried already, he probably wouldn't be able to do a lot that was new. Page 7 of 12 Attachment B: Diagram of current status of PS-13-1 Pilgrim PS-13-1 As Is Well Sketch,10/14/2013 BD4'! Page 8 of 12 Pilgrim PS-1 3-1 As Is Well Sketch, 10/14/2013 18" 9 7/8" No Casing 805' MD 24" Conductor Casing 18" Surface Casing Class C Neat Cement 140' MD 231'of 2"Galvanized Pipe 1036.5' M D THE STATE Conservation Commission GOVERNOR SEAN PARNELL Gwen Holdmann Director ACEP/UAF P.O .Box 755280 Fairbanks, AK 99775-5280 Re: Pilgrim Hot Springs Field, Undefined Geothermal Pool, PS 13-1 University of Alaska Permit No: 213-102 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 Surface Location: 100' FSL, 830' FEL, T4S, R31 W, Section 36, K.R.M. Bottomhole Location: 100' FSL, 830' FEL, T4S, R31 W, Section 36, K.R.M. Dear Ms. Holdmann: Enclosed is the approved application for permit to drill the above referenced development well. Variance and Waiver Requests: The request for variance to a standard BOP system during drilling is APPROVED per 20 AAC 25.035(h)(1). The request for use of differential GPS coordinates for surface location is APPROVED. The request for waiver of a shallow gas hazard survey is APPROVED per 20 AAC 25.061(c). The request for waiver of inclination surveys as required by 20 AAC 25.050(a) is DENIED. Conditions of Approval: 1. Casing tests as follows: a. 18" schedule 10 = 250 psi (burst rating = 1410 psi) b. 14" schedule 10 = 450 psi (burst rating = 1710 psi) 2. Mud -logging equipment to be rigged up and operational from the base of the 24" conductor casing to TD. 3. A full suite of open -hole electric logs including Gamma Ray must be acquired from base of conductor casing to TD. 4. Bi-weekly drilling reports (due Monday and Friday) to be submitted by email to the AOGCC (Attention: Guy.Schwartz(a�alaska.gov). 5. An inclination survey must be completed at 500' and 1000' measured depth to insure well is being drilled vertically per 20 AAC 25.050(a)(2). 6. Separate sundry approval required for P&A or suspension activities. 7. All dry ditch sample sets submitted to the AOGCC must be in no greater than 30' sample intervals from below the permafrost or from where samples are first caught and 10' sample intervals through target zones. This permit to drill does not exempt you from obtaining additional permits or an approval required by law from other governmental agencies and does not authorize conducting drilling operations until all other required permits and approvals have been issued. In addition, the AOGCC reserves the right to withdraw the permit in the event it was erroneously issued. Operations must be conducted in accordance with AS 31.05 and Title 20, Chapter 25 of the Alaska Administrative Code unless the AOGCC specifically authorizes a variance. Failure to comply with an applicable provision of AS 31.05, Title 20, Chapter 25 of the Alaska Administrative Code, or an AOGCC order, or the terms and conditions of this permit may result in the revocation or suspension of the permit. DATED this day of 2013. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage, Alaska 99501 Re: The motion of the Alaska Oil and) Conservation Order No. 159 and Gas Conservation Commission ) to require a drilling permit for) Pilgrim Hot Springs Area all wells drilled in the Pilgrim) Hot Springs area. ) September 12, 1979 IT APPEARING THAT: 1. The Alaska Oil and Gas Conservation Commission, upon its own motion, considered the issuance of an order requiring that all wells drilled for any purpose in Sections 29, 30, 31 and 32, T4S, R30W, KRM, Sections 35 and 36, T4S, R31W, KRM and Sections 2, 3 and 4, T5S, R31W, KRM must have an approved Permit to Drill or Deepen (Form 10-401), as provided for in the Alaska Statutes Title 31, Sec. 31.05.030. 2. The Pilgrim Hot Springs area has springs that have tempera- tures of 81°C (1780F). 3. Subsurface temperature measurements have been made and a temperature of 96°C (205°F) was recorded at a depth of 5.5 meters (18 feet). Based on chemical geothermometers, the maximum system temperature at depth may be 150°C (302°F). 4. Any drilling activity in the area is likely to encounter hazardous substances such as very hot saline water or steam at very shallow depths. 5. Drilling in the area to make use of the geothermal resources is contemplated in the very near future. 6. Notice of the motion of the Alaska Oil and -Gat; Conservation Commission was published in the Anchorage Daily News and the Nome Nugget on August 31, 1979. 7. There were no protests to the motion. FINDING: The drilling of a well, or any boring into the soil, for any purpose in the referenced area is likely to encounter hazardous substances such as flowing hot water or steam at very shallow depths and, unless adequate precautions are taken, could result in bodily injury. CONCLUSION: The Alaska Oil and Gas Conservation Commission would be derelict in its duties if it did not require adequate safety measures in the drilling of wells in the area and the Commission can accomplish this by requiring a Permit to Drill or Deepen. NOW, THEREFORE, IT IS ORDERED THAT: All wells to be drilled, or borings into the soil, for any purpose and to any depth in Sections 29, 30, 31 and 32, T4S, R30W, KRM, Sections 35 and 36, VS, R31W, KRM and Sections 2, 3 and 4, TSS, R31W, KRM must have a Permit to Drill or Deepen approved by the Alaska Oil and Gas Conservation Commission before drilling can commence. DONE at Anchorage, Alaska and dated September 12, 1979. oyl . Hamilto , ChairmanlCommissioner, Alaska Oil & Gas Conservation Commission Harry W.-'Kugler, Commissioner, Alaska Oil & Gas Conservation Commission zi -, �- 9--, � W L nie C. Smft , Commissioner, Alaska Oil & Gas Conservation Commission -2-