Department of Commerce, Community, and Economic Development
Alaska Oil and Gas Conservation Commission
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1. November 7, 2014
CPA request for annular disposal of drilling waste at CD5
2. November 20, 2014
Notice of public hearing; affidavits of publication, email
distribution, and mailings
3. December 8, 2014
CPA clarifying that their intent to seek authorization for
annual disposal of drilling waste after drilling of CD5
4. December 10, 2014
AOGCC's response to CPA ltr of 12/10/14
5. January 4, 2015
Public hearing transcript, exhibits and sign -in sheet
6. January 16, 2015
AOGCC Itr to CPA that we will not be taking any further
action
M
THE STATE
°fALASKA
GOVERNOR BILI. WALKER
Ms. Misty J Alexa
WNS Development Manager
ConocoPhillips Alaska, Inc.
P.O. Box 100360
Anchorage, AK 99510-0360
January 16, 2015
CERTIFIED MAIL —
Alaska Oil and Gas
Conservation Commission
RETURN RECEIPT REQUESTED
7012 3050 0001 4812 7058
Re: Docket OTH 14-026
Annular Disposal of Drilling Waste at CD5
Dear Ms. Alexa:
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax: 907 276.7542
www.00gcc.alaska.gov
Based upon the evidence presented by Conoco Philips Alaska Inc. (CPAI), at the January 5, 2015
hearing, until such time as CPAI seeks authorization for annular disposal the Alaska Oil and Gas
Conservation Commission (AOGCC) will take no further action on the matters raised in CPAI's
November 7, 2014 letter to AOGCC.
DONE at Anchorage, Alaska and dated January, 16, 2015.
Cathy . Foerster
Chair, Commissioner
43 Postage $
Certified Fee
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C3 Return Receipt Fee Here
C3 (Endorsement Required)
O
Restricted Delivery Fee
(Endorsement Required)
Ln
M Total Postage & Fees
Ms. Misty J. Alexa
ru FSew WNS Development Manager
oAFCNdi-------------- ConocoPhillipsAlaska,Inc.
ox No. post Office Box 100360
ete, ZIP+d
-------
Anchorage, AK 99510-0360
:r r.
I – —
■ 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. J. Alexa
bVR1', elopment Manager
Corhillips Alaska, Inc.
Post Office Box 100360
Anchorage, AK 99510-0360
A. Signatur
Agent
X D Addressee
B. Receiveedby (P 9iqd me) C. Date of Delivery
D, Is delivery address different from item 1? D Yes
If YES, enter delivery address below: D No
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U.S.
Postal
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CERTIFIED
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MAIL.,
RECES
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Only; No Insurance
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Provided)
Information
visit our
website at
www.uspscom®
For delivery
43 Postage $
Certified Fee
rq Postmark
C3 Return Receipt Fee Here
C3 (Endorsement Required)
O
Restricted Delivery Fee
(Endorsement Required)
Ln
M Total Postage & Fees
Ms. Misty J. Alexa
ru FSew WNS Development Manager
oAFCNdi-------------- ConocoPhillipsAlaska,Inc.
ox No. post Office Box 100360
ete, ZIP+d
-------
Anchorage, AK 99510-0360
:r r.
I – —
■ 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. J. Alexa
bVR1', elopment Manager
Corhillips Alaska, Inc.
Post Office Box 100360
Anchorage, AK 99510-0360
A. Signatur
Agent
X D Addressee
B. Receiveedby (P 9iqd me) C. Date of Delivery
D, Is delivery address different from item 1? D Yes
If YES, enter delivery address below: D No
3. Service Type
D Certified Mail®
D Priority Mail Express -
0 Registered
D Return Receipt for Merohel lse
D Insured Mail
D Collect on Delivery
4. Restricted Delivery? (Extra Fee) D Yes
2. Article Number 7012 3�5� 0001 4812 7058
(rransfer from service laben _
PS Form 3811, July 2013 Domestic Return Receipt
5
1 ALASKA OIL AND GAS CONSERVATION COMMISSION
2
3 Before Commissioners: Cathy Foerster, Chair
4 Daniel T. Seamount
5 David Mayberry
7 In the Matter of ConocoPhillips Alaska's )
8 Request for Annular Disposal of Drilling )
9 Waste, Colville River Unit CD5. )
10 )
11 Docket No.: OTH 14-26
12
13 ALASKA OIL and GAS CONSERVATION COMMISSION
14 Anchorage, Alaska
15
16 January 5, 2015
17 9:00 o'clock a.m.
18
19 PUBLIC HEARING
21 BEFORE: Cathy Foerster, Chair
22 Daniel T. Seamount, Commissioner
23 David Mayberry, Commissioner
I
TABLE OF CONTENTS
2 Remarks
by
Chair Foerster
03
3 Remarks
by
Mr. Goltz
05
4 Remarks
by
Mr. Noel
14
5 Remarks
by
Mr. Johnstone
19
6 Remarks
by
Mr. Knock
34
2
1 P R O C E E D I N G S
2 (On record - 9:00 a.m.)
3 CHAIR FOERSTER: All right. I'd like to call
4 this hearing to order. Today is January 5, 2015, it's
5 9:00 a.m. And we are at the offices of the Alaska Oil
6 & Gas Conservation Commission at 333 West Seventh
7 Avenue, Anchorage, Alaska. To my left is Commissioner
8 Dan Seamount, to my right is Commissioner David
9 Mayberry and I'm Cathy Foerster.
10 We're here today in regard to docket number OTH
11 14-026, the application of ConocoPhillips for annular
12 disposal of drilling waste at the Colville River unit
13 CDS.
14 A brief summary although everyone in the room
15 knows why we're here for the record. ConocoPhillips
16 Alaska by application dated January 30th, 2014, has
17 requested that conservation order number 406B and area
18 injection order number 2B, which established rules
19 governing development of the West Sak oil pool, Kuparuk
20 River field, be amended to expand the pool and
21 authorize expansion of the viscosity reducing water
22 alternating gas project from a pilot to full field
23 development.
24 Computer Matrix will be recording the
25 proceedings today, you can get a copy of the transcript
3
I from them.
2 And just a reminder to those of you that are
3 testifying speak into the microphones and there are
4 two, make sure they're both turned on and speak into
5 both of them because one feeds the court reporter and
6 the other one feeds the audience.
7 I see that we have several representatives from
8 ConocoPhillips here to testify. All right. So I see
9 we got four people teed up. I recognize some of you,
10 but not all of you so those are you that are new we
11 keep a record of this proceeding and 10 years from now
12 someone's not going to know what to refer to when you
13 say and this slide shows. So as you go through your
14 slides be sure to say now we're looking at slide number
15 blah or the slide titled blah so that when somebody
16 wades through this 10 years from now it makes sense to
17 them without a whole lot of difficulty. So does that
18 make sense to you guys?
19 (No comments)
20 CHAIR FOERSTER: Okay. Good. Nodding heads.
21 And when you start to testify what I'd like for you to
22 do is introduce yourself, who you represent and whether
23 or not you want to be recognized as an expert in a
24 particular area and what that area is then we will ask
25 you to justify your expertise and we will decide
n
1 whether or not we're going to accept you as an expert
2 in that area.
3 All right. So you may begin.
4 MR. GOLTZ: Good morning. My name is Jon
5 Goltz. I am a lawyer, I'm
6 CHAIR FOERSTER: Okay. Let me just swear all
7 four of you in at the same time, that'll be easier. Is
8 there anybody else going to testify or are the four of
9 you it?
10 MR. GOLTZ: Just these four.
it CHAIR FOERSTER: Okay. Raise your right hand.
12 (Oath administered)
13 IN UNISON: I do.
14 CHAIR FOERSTER: Okay. So I got four I do's.
15 All right. Sorry for interrupting you.
16 JON GOLTZ
17 called as a witness on behalf of ConocoPhillips Alaska,
18 stated as follows on:
19 DIRECT
20 MR. GOLTZ: My name is Jon Goltz, I'm a lawyer,
21 I'm on staff in-house with ConocoPhillips in Alaska. I
22 am here today primarily to address some procedural
23 issues and make some introductory remarks. I do not
24 plan to be recognized as an expert by the Commission.
25 CHAIR FOERSTER: Okay.
5
1 MR. GOLTZ: I'm with my colleagues, Brian Noel,
2 who is here to speak to you on some drilling issues;
3 Sam Johnstone will speak to particular issues about CD5
4 project development;
5 and Douglas Knock who will speak to some geological
6 issues.
7 We have about 11 slides that we're prepared to
8 present this morning after a few introductory remarks
9 from me. It's important to ConocoPhillips that the
10 record reflect that we have not yet requested approval
11 for annular disposal at CD5. We won't have all of the
12 data that will be necessary to meet the regulatory
13 requirements for annular disposal in any particular
14 well until we have drilled the first well into which we
15 propose to dispose of drilling waste. So we are not
16 here seeking any particular action or any particular
17 order from the Commission today, but we recognize that
18 this hearing does result from a letter that we wrote to
19 the Commission dated November 7th, we expect that that
20 record will be included as part of -- that letter will
21 be included as part of the record in this matter. And
22 although we haven't specifically requested a hearing
23 and we're a little bit unclear about the particular
24 purpose of this hearing we're pleased to work with the
25 Commission both informally with the staff and more
J
1 formally in today's hearing to try to address concerns
2 that may have arisen with respect to annular disposal
3 and in particular our plans to use annular disposal at
4 CD5 in the future.
5 A real brief overview of the kinds of
6 information that we're prepared to present to you
7 today. We do have an outline of our agenda reflected
8 on the screen right now. Annular disposal is nothing
9 particularly new. It is governed as you know by a
10 relatively detailed regulation that's set forth in the
11 Commission's regulations at 20 AAC 05.080. In our view
12 that's been consistently interpreted and applied by the
13 Commission since that regulation went into effect in
14 1996. Other correspondence reflects that annular
15 disposal is understood by both the AOGCC and the EPA as
16 an incident of a drilling operation. It is not
17 something that's within the scope of the UIC or
18 Underground Injection Control Program that is overseen
19 by the EPA. It has a proven track record of being a
20 safe and efficient way of sensibly disposing of
21 drilling waste in many fields, it's been used at
22 Prudhoe Bay at the Kuparuk River unit and it's been
23 used on each of the Colville River unit drill sites
24 that is -- that has been drilled out at this point and
25 has drilling waste to dispose of. Annular disposal is
7
I addressed favorably in conservation order 443 which
2 sets the pool rules for the Alpine oil pool and it has
3 been addressed going at least as far back as the 2004
4 environmental impact statement prepared by the BLM for
5 all of the Alpine satellites where annular disposal was
6 identified as the anticipated method of disposing of
7 drilling waste at the satellites around the original
8 Alpine development. And for those and other reasons
9 ConocoPhillips has long been planning to use annular
10 disposal as the method of disposing of drilling waste
11 at CD5. We believe annular disposal is an especially
12 good option for drilling -- disposing of drilling waste
13 in the Colville River unit which is a remote
14 development and does not have year round road access to
15 facilities such as the grand interject facility at
16 Prudhoe Bay which otherwise could potentially be
17 another option for disposing of drilling waste.
18 With that very high level overview that's all I
19 plan to do today and unless we have any other direction
20 from the Commissioners I will turn the mic over to
21 Brian Noel to give sort of an introduction to annular
22 disposal for the record and address how it's a part of
23 drilling operations.
24 CHAIR FOERSTER: Okay. Thank you very much,
25 Mr. Goltz. Before you proceed you expressed some
H
1 quandary about why we're even having a hearing and I
2 just -- let me just explain to you a bit of the basics
3 of why we feel a hearing's necessary and if you're not
4 prepared to address those things then we're wasting our
5 time and we can reschedule. Just because it's been
6 done in the past doesn't mean that it gets to be done
7 in the future and just because Conoco's been planning
8 for it doesn't mean that it's the right thing to do.
9 We cannot allow annular disposal to circumvent class II
10 disposal when class II disposal is doable. Annular
11 disposal is not expected to be the norm for oil field
12 waste disposal and it's supposed -- it is intended to
13 be used or a remote drilling operation, exploratory
14 well, when the hazards of trucking long distances to
15 get to something is -- you know, make it a better
16 solution, it's not intended to be cheaper, easier,
17 better, therefore okay. And so what we're looking for
18 from Conoco is an explanation for why annular disposal
19 is the appropriate disposal, not because you've been
20 planning for it, not because you've done it in the
21 past, not because it has succeeded in the past and not
22 because that's what you want to do and that's what's
23 cheapest, but why it is the appropriate thing to do
24 here given the intent of annular disposal. So if you
25 guys are prepared to talk about that then we got a
9
1 hearing going on and if you're not then we should.
2 probably just adjourn.
3 MR. GOLTZ: Okay. Well, I do appreciate those
4 comments. I think we are prepared to address some of
5 those issues here today.
6 CHAIR FOERSTER: Okay.
7 MR. GOLTZ: In our perspective it isn't
8 relevant that annular disposal has been used quite
9 extensively for hundreds of wells across the North
10 Slope in the past and it has been a standard part of
11 the drilling program at the Colville River unit
12 historically. I -- we may benefit from having some
13 discussion about the reference to whether it was
14 intended for exploratory wells or not. I think there
15 are some fairly clear references both in the AOGCC's
16 governing statutes as well as the 1991 memorandum that
17 you may be familiar with going back to 1991 between the
18 AOGCC and the EPA, both of which make specific express
19 references to annular disposal in the context of
20 production wells and not just exploratory wells.
21 Obviously the annular disposal that's been approved at
22 the Colville River unit historically including
23 recently, I think the most recent approval that we
24 looked at when we prepared for the hearing was just in
25 September of this year, had not been limited to
10
I exploratory wells. And I think that would reflect a
2 different understanding of annular disposal if that is
3 an understanding of it than what we have understood the
4 program to apply to historically.
5 CHAIR FOERSTER: Right. I think we -- the
6 AOGCC has allowed a broader use of annular disposal at
7 Alpine for -- initially it started out as being
8 perceived to be the best option for all of those things
9 that I discussed, but one of the reasons we're here
10 today is that just because something is good for this
11 and it's good for this and then you get away with it
12 for this, you know, we're here to make sure that it's
13 not creep, that annular disposal is the best option for
14 dealing with these wastes in a development mode.
15 MR. GOLTZ: Sure.
16 CHAIR FOERSTER: SO.....
17 MR. GOLTZ: Well, and I think we can speak to a
18 lot of reasons why we have been planning on it because
19 we think it is the best option.....
20 CHAIR FOERSTER: Okay. Well, that's good.
21 MR. GOLTZ: .....for CD5, but it's also
22 important from my perspective that there isn't a
23 regulatory criteria that requires us to show that other
24 options are not available, that the regulatory criteria
25 and the past practice has been to approve annular
11
1 disposal when the operator can demonstrate that the
2 regulatory criteria governing it have been met.
3 CHAIR FOERSTER: Right. The regulatory
4 requirement is that you cannot use annular disposal to
5 circumvent class II, that's the regulatory requirement
6 and that's what we need to make sure that isn't
7 happening.
8 MR. GOLTZ: Well, I suggest maybe the best way
9 to proceed would be to get to our prepared remarks and
10 then maybe have further discussion afterwards about how
11 best to move forward.
12 CHAIR FOERSTER: Sounds good.
13 MR. GOLTZ: I do -- we do have slides and I
14 have some paper handouts if that's useful to the
15 Commissioners to give those to you. I will relinquish
16 the microphone then to Brian Noel as I deliver these.
17 COMMISSIONER SEAMOUNT: Could I add
18 something.....
19 CHAIR FOERSTER: Oh.....
20 COMMISSIONER SEAMOUNT: .....Madam Chair?
21 CHAIR FOERSTER: .....please do.
22 COMMISSIONER SEAMOUNT: I've been here for 15
23 years and I don't think that it should come as a
24 surprise to you guys that we're asking you to verify
25 that annular disposal is the best option. The -- I --
12
I from the start we were concerned about CD1 and CD2 and
2 how come you don't have a class II well out there and I
3 was led to believe that you had -- you didn't have any
4 good disposal zones that you could, you know, use as a
5 class II well. All right. Geology changes, okay, over
6 the area and we just want to make sure that you don't
7 have good class II disposal zones, like you don't have
8 any good, thick porous sands to inject into. Actually
9 I perused some logs at CD1 and CD2 and it looks like
10 there might actually be some disposal zones that you
11 could use as class II so I would like to see that
12 addressed today too, but there have been ongoing
13 concerns over the last 15 years.
14 Thank you.
15 CHAIR FOERSTER: David, do you have a speech to
16 make, I did, Dan did, don't want to leave you out?
17 COMMISSIONER MAYBERRY: No, not at this time.
18 CHAIR FOERSTER: Okay.
19 COMMISSIONER SEAMOUNT: Mine was shorter than
20 yours.
21 CHAIR FOERSTER: Well, good. All right. Mr.
22 Noel, do you want to introduce yourself and.....
23 BRIAN NOEL
24 previously sworn, called as a witness on behalf of
25 ConocoPhillips Alaska, stated as follows on:
13
1 DIRECT EXAMINATION
2 MR. NOEL: Good morning. My name is Brian
3 Noel, I'm a drilling engineer with ConocoPhillips.
4 Current responsibilities are well design and planning
5 of our new developments on the North Slope.
6 CHAIR FOERSTER: Would you like to be
7 recognized as an expert in drilling engineering?
8 MR. NOEL: Yes, I would.
9 CHAIR FOERSTER: All right. Then give us your
10 credentials, please.
11 MR. NOEL: Okay. I've been in the oil and gas
12 industry for 34 years. I have bachelor degrees in
13 geology and petroleum engineering. I've worked various
14 assignments in the Rocky Mountains, but have been in
15 Alaska since 1991. Assignments in production,
16 reservoir operations, drilling completions
17 predominantly since 1998 and registered petroleum
18 engineer in the state since 2001.
19 CHAIR FOERSTER: So do you have any questions
20 for Mr. Noel, Dan?
21 COMMISSIONER SEAMOUNT: I have none.
22 CHAIR FOERSTER: Well, I do, I have one. Since
23 most drilling engineers hate geologists do you find
24 yourself conflicted?
25 MR. NOEL: Depends which day of the week.
14
1 CHAIR FOERSTER: Just kidding.
2 MR. NOEL: No.
3 CHAIR FOERSTER: Do you have any concerns with
4 accepting Mr. Noel as an expert?
5 COMMISSIONER SEAMOUNT: Well, I'm a geologist
6 and even so I don't have any concerns.
7 COMMISSIONER MAYBERRY: No, no concerns here.
8 CHAIR FOERSTER: Nor do I. So we recognize you
9 as an expert in drilling engineering.
10 MR. NOEL: Okay. Thank you very much.
11 CHAIR FOERSTER: Can we ask you some geology
12 questions later?
13 MR. NOEL: Yes, but I might defer because
14 that's a prior life.
15 Okay. So we're looking at the first slide for
16 the presentation. It's just a graphic representation
17 of the two types of disposal methods for drilling
18 wastes. The schematic on the left is a typical
19 production or injection well drilled on the North Slope
20 and you can see that we drill surface hole and then run
21 surface casing which is fully cemented back to surface.
22 Then the well is drilled down to the hydrocarbon
23 bearing reservoir where production casing is run and
24 cemented. Top of cement needs to cover any hydrocarbon
25 bearing zones in that interval at least 500 feet above
15
1 the top of it. Then the reservoir section's drilled,
2 predominantly horizontal wells for the Colville River
3 unit. We run packer and production tubing and then the
4 green arrow you can see is where the fluid flow is,
5 whether it's a producer or an injector.
6 Once the well is completed and we have all the
7 data then we have applied for annular disposal which
8 Jon mentioned has a specific regulation. And you can
9 see the annular disposal path is between the surface
10 casing and the production casing there between the blue
11 and the green lines. So annular disposal goes into a
12 shallow horizon in the Colville River unit called the
13 C30. Annular disposal was really a method to get rid
14 of drilling waste, predominantly mud and cuttings.
15 It's a limited volume and limited durations and it's
16 limited to the waste that's generated from the oil and
17 gas wells drilled on that pad. And it happens early in
18 the well's life, after these wells are drilled they're
19 usually permitted for annular disposal within a few
20 months as adjacent wells are drilled on the pad. So
21 the well has good integrity, it's brand new steel,
22 we've pressure tested the intervals and the annular
23 disposal operation has very specific pressure
24 limitations that allows us to pump the mud and cuttings
25 into that shallow zone.
16
1 The other alternative is a class II disposal
2 well or it could be class I, it would allow us to also
3 utilize it for mud and cuttings. It has a separate set
4 of regulations. The well is permitted up front as a
5 disposal well, it can accept class II wastes, it's a
6 long-term operation, there are no really volume
7 limitations or time restrictions to the use of that
8 well as long as it has mechanical integrity. we're
9 required to prove that every four years with an MIT,
10 mechanical integrity test. And it's long-term for the
11 life of the field, it can accept not only drilling well
12 waste, but other oil field waste from that pad, other
13 pads within the field or from other operators on the
14 Slope. So it's two distinct programs with very
15 different goals.
16 And just wanted to comment the class II well,
17 that's real -- not to scale, it's not implied that
18 we're using the Alpine reservoirs, we kept it large so
19 you could see the geometry and mechanical setup.
20 So for slide number three as Jon mentioned and
21 you're well aware, annular disposal's been widely used
22 across the Slope since the mid eighties. It was really
23 a way to eliminate reserve pits which was the original
24 method on the Slope where mud and cuttings were stored
25 drilling. And the second bullet -- I'll go back to the
17
1 first one, I mean, it's been supported by industry, the
2 regulatory agency and used by a wide number of
3 operators Slope wide through the years. The second
4 bullet just comes from the website which -- the
5 Commission's website which states what the purpose of
6 annual disposal was. And the key points really were
7 it's an onsite and safe disposal of waste just from the
8 drilling activity, we're able to take the waste from
9 the rig, the rigs were built in the nineties with ball
10 mills so the mud and cuttings go straight from the rig,
11 hard piped into the ball mill, hard piped to a well and
12 then pumped down the annulus. So it minimizes the
13 chances of spills when you have to truck and haul the
14 fluids to a class II well on some other location. And
15 you can see as best we can determine, this is a number
16 of wells utilized for annular disposal across the
17 Slope, it's been utilized in all the fields through the
18 years so over a thousand wells that we could come up
19 with that have received drilling waste through annular
20 disposal.
21 CHAIR FOERSTER: A thousand wells who -- that
22 have provided waste to annular disposal or received
23 waste?
24 MR. NOEL: Received annular.....
25 CHAIR FOERSTER: Okay.
It.]
1 MR. NOEL: .....received waste for annular
2 disposal.
3 CHAIR FOERSTER: Okay.
4 MR. NOEL: So that was just a quick
5 introductory there from the way the well's constructed
6 and then Sam is going to speak to the CD5.
7 SAM JOHNSTONE
8 previously sworn, called as a witness on behalf of
9 ConocoPhillips, stated as follows on:
10 DIRECT EXAMINATION
11 MR. JOHNSTONE: My name is Sam Johnstone and
12 I'm the project integration manager for CD5 and for
13 NPRA for ConocoPhillips. And I wish to be sworn in as
14 an expert witness.
15 CHAIR FOERSTER: In what area?
16 MR. JOHNSTONE: In petroleum engineering.
17 CHAIR FOERSTER: Okay. All right. Give us
18 your credentials.
19 MR. JOHNSTONE: Okay. I've got 15 years
20 experience, 10 of those here in Alaska. I worked at
21 the (indiscernible) base in -- prior to coming here and
22 my experience is in production and reservoir
23 engineering. I received bachelor and master's degree
24 from Montana Tech University in petroleum engineering.
25 And for the last year and a half I've worked the CD5
19
1 project and other growth projects in NPRA.
2 CHAIR FOERSTER: Do you have any questions?
3 COMMISSIONER SEAMOUNT: No questions.
4 CHAIR FOERSTER: David.
5 COMMISSIONER MAYBERRY: No questions.
6 CHAIR FOERSTER: Are you related to Jim
7 Johnstone?
8 MR. JOHNSTONE: Probably a different one, my
9 great grandfather.
10 CHAIR FOERSTER: No, not that -- I'm not that
11 old. Okay. I don't have any -- do you have any
12 problems with accepting Mr. Johnstone as an expert
13 witness?
14 COMMISSIONER SEAMOUNT: No, I don't.
15 COMMISSIONER MAYBERRY: I have no problem.
16 CHAIR FOERSTER: Nor do I. We recognize you as
17 an expert in petroleum engineering. Please proceed.
18 MR. JOHNSTONE: So I want to provide an
19 overview of the CD5 development and the status of where
20 we're at right now. In -- I point you to the upper map
21 on.....
22 CHAIR FOERSTER: We're looking at a slide
23 titled CD development overview.
24 MR. JOHNSTONE: Yeah, slide four.
25 CHAIR FOERSTER: Are the slides numbered?
20
1 MR. JOHNSTONE: Yes.
2 CHAIR FOERSTER: Oh, there they are. Yes, they
3 are. Okay.
4 MR. JOHNSTONE: So first of all there's -- if
5 we look at the legend we've got existing infrastructure
6 and new infrastructure. And the existing
7 infrastructure is highlighted in green and I know it's
8 hard to see on this screen, but your slides it may be
9 easier on the handouts. So this existing
10 infrastructure has CD1 and where Alpine central
11 facilities are. Over to the east you have CD2 and to
12 the south CD4 and we have a gravel road that connects
13 those. We also have CD3 which is six miles north off
14 the map that is not connected by gravel road. The CD5
15 infrastructure or project connects back to the existing
16 Alpine infrastructure via Six Mile Road. There are
17 four bridges included in that -- in the project, three
18 of those are completed and this largest bridge, about
19 1,400 foot bridge over the Nigliq Channel is nearly
20 completed and we anticipate probably first quarter 2015
21 we'll have that bridge done. In 2014 we laid the
22 gravel from this intersection back at CD4 North, we
23 call this area CD4 North all the way to CD5 and the pad
24 -- laid the pad gravel which is about 11.8 acres of pad
25 gravel. We've talked about -- Brian mentioned one of
21
1 the benefits of annular disposal is not having to
2 transport and handle the fluids and I know that's one
3 concern as we went through the permitting process was
4 the environmental risk of transporting across these
5 different channels, water bodies and the wetlands. If
6 I point -- if we go down to the lower figure this is a
7 figure that shows the Alpine oil pool and that's
8 highlighted in this yellow hash marks. And it also
9 shows the location of CD1, CD2, CD4 and the location of
10 the CD5 pad. You can see a -- we call it a spider map
11 and that's the well paths from all the wells at CD1,
12 CD2 and CD4. And the yellow wells indicate the wells
13 that are drilled into the Alpine zone where the blue
14 are in the Kuparuk zone. And it's important to note
15 that both the Kuparuk and the Alpine are part of the
16 Alpine oil pool.
17 So if we look at the CD5 -- the planned CD5
18 development, it's originally planned initial
19 development is 15 wells and 13 of those are Alpine
20 wells and they're shown in the -- by these brown lines
21 drawn on the map and they're roughly -- they're similar
22 to other Alpine drilling along the same (indiscernible)
23 about the same varying levels of horizontal length.
24 Down here to the south you see two more lines that
25 indicate wells that will be Kuparuk wells. And they
22
1 extend the Kuparuk development that's been ongoing as
2 CD4. So it -- you can see from the location of the CD5
3 wells that it's really an extension of the Alpine
4 development from CD2 and then an extension of the
5 Kuparuk development from CD4. We intend to start
6 drilling in April of this year and hope for first
7 production by December of 2015.
8 A couple of other points. The -- I wanted to
9 point out this last bridge of the four bridges that
10 crosses the Nigliagvik Channel and that's the border of
11 the NPRA. So the -- this channel and then as this
12 channel comes back into the Nigliq. So everything west
13 of that location is NPRA and this -- and the land
14 ownership of the surface is the Kuukpik Corporation.
15 And in respect to annular disposal and the rest of our
16 development plan we have notified them of our intent to
17 use annular disposal or apply for annular disposal
18 permits at CD5.
19 COMMISSIONER SEAMOUNT: Who did you notify?
20 MR. JOHNSTONE: Kuukpik Corporation.
21 COMMISSIONER SEAMOUNT: Okay. Have you
22 notified the BLM?
23 MR. JOHNSTONE: Yes.
24 COMMISSIONER SEAMOUNT: And they -- have they
25 bought in?
23
1 MR. JOHNSTONE: We've notified the BLM and I'll
2 go into that on the next.
3 COMMISSIONER SEAMOUNT: Okay.
4 MR. JOHNSTONE: On their permitting --
5 throughout the permitting process we've.....
6 CHAIR FOERSTER: I was writing something down
7 and didn't catch -- there it is, your dates. All
8 right.
9 MR. JOHNSTONE: What's that, oh, the dates?
10 CHAIR FOERSTER: You've got them written down,
11 your dates.
12 MR. JOHNSTONE: Okay. Yeah, I made those
13 figures larger and then the dates slid down. So --
14 okay.
15 Okay. Let's go to the next slide, Jon, slide
16 five. Okay. So this -- the title says annular
17 disposal and CRU expansion plans and really what this
18 slide shows is kind of the history of our development
19 model for Alpine and CD5 and then going farther into
20 NPRA. And at the bottom picture is a photo of CD4 when
21 we were drilling this last -- early this last winter or
22 this last summer I believe. And you can see the rig
23 located here, the camp on this side, all of the well
24 modules, so this is where the well row is and then
25 you've got your drill site facility modules here with
24
I your pipeline coming off this way and road coming in
2 this direction. And the reason I point that out is CD4
3 is the mod -- has been the model for CD5 and future
4 growth as far as footprint, gravel footprint goes. And
5 we've had to design and engineer all of our modules on
6 pad to fit these small gravel footprints. So one of
7 the -- CD5 pad as I mentioned on the earlier slide I
8 think is 11.7 acres. CD4 I believe is slightly larger
9 than that, but we are incorporating the same design on
10 CD5. And that gravel footprint really goes back to our
11 -- all the way back to 2004 EIS, not necessarily the
12 same acreage as CD5, but that's where we were in those
13 -- in that 2004 Alpine satellite development program --
14 plan EIS, we're really driven for expansion at Alpine
15 to maintain and minimize gravel footprint. So we've
16 been really pressed by all of the agencies to have that
17 as one of our top design concerns or design strategies
18 is keeping that gravel footprint low to minimize
19 environmental impacts. So in 2011, in December of
20 2011, we received the Clean Water Act. The Clean Water
21 Act section 404 permit which is a wetlands build permit
22 from the Corps of Engineers. And that's where the
23 final size was dictated so we're stuck with that gravel
24 footprint for CD5. We did not include a dedicated
25 disposal well in any of our permitting activities or
25
1 applications because as we've noted we intend to use
2 the -- intend to apply for annular disposal for the CD5
3 wells.
4 The last bullet is really -- and I know you're
5 well aware of this, is our planning cycles in this area
6 are really long. If we look at CD5 along with the 2004
7 EIS and the permitting hurdles that we went through
8 it'll be before first oil almost 11 years since the
9 2004 EIS. We pointed out a five year plan and that's
10 really a minimum plan from going through the permitting
11 process or pre -permitting. So having the projects go
12 to a point where we can permit and land on those -- on
13 the gravel footprint, engaging with the agencies the
14 permitting -- once we've submitted for those permits
15 we're looking at roughly 18 months to two years for the
16 environmental impact studies. And then there's the
17 execution and as I showed on the earlier slide
18 execution -- the project execution is just from the
19 surface -- on the surface side the construction occurs
20 over two years because we have to utilize the ice
21 infrastructure to -- we use that winter ice season to
22 do the surface construction.
23 And that's all I had for the overview of CD5
24 and kind of that history of how permitting kind of --
25 the permitting concerns and environmental concerns
26
I impact our plans at Alpine.
2 I'll hand it back over to Brian if there's no
3 other questions.
4 COMMISSIONER SEAMOUNT: I have a question.
5 What's the maximum number of wells you might drill out
6 there off that pad?
7 MR. JOHNSTONE: So the pad's sized for -- can
8 we go back to the previous slide, to slide four. The
9 pad is sized for 33 wells. We've -- this is where --
10 these 15 wells were those that were sanctioned with the
11 project. We've identified -- we have identified
12 candidates up to 33 wells for CD5 although those will
13 be contingent on success as we go further to the west.
14 And we have -- I don't show it here, but a 33 well CD5
15 development plan still stays within that Alpine oil
16 pool and within the current Colville River unit which
17 is this red line.
18 COMMISSIONER SEAMOUNT: And I suppose if you
19 were to drill a shallow disposal well you have to use
20 one of those 33 slots?
21 MR. JOHNSTONE: That's an option and that would
22 -- that's probably the first option. It makes more
23 sense from a lack of -- you wouldn't have to handle --
24 you'd have less fluid handling on the pad so you would
25 like have to use one of those slots. Another concern
27
1 is when we go back to gravel footprint, we just
2 installed a disposal facility upgrade or rebuilt -- or
3 built one at Alpine. And the footprint -- the gravel
4 footprint for that is approximately -- would add about
5 an acre to CD5 if we had to replicate that on the CD5.
6 So we're kind of locked in with that acreage on the --
7 with the 404 permit so our -- we -- that would mean
8 additional pad space that's currently set apart for
9 wells would likely have to be replaced by that
10 facility.
11 CHAIR FOERSTER: What does that facility
12 entail?
13 MR. JOHNSTONE: I might have to shift over to
14 Brian to give you the details of that.
15 CHAIR FOERSTER: He's already sworn in.
16 MR. JOHNSTONE: Yep.
17 MR. NOEL: The upgrade on CD1 pad.....
18 CHAIR FOERSTER: This is Brian Noel speaking
19 again.
20 MR. NOEL: Yes. On CDl pad is a tank farm for
21 the waste hauled from adjacent pads stored in the
22 tanks, it's also a skid with the injection pumps and
23 controls. It has a truck loading/unloading station.
24 And then from there that facility is hard piped to the
25 class I disposal well, CD1-01A.
M
I CHAIR FOERSTER: If you didn't take things from
2 other pads and bring them to CD5 what from that
3 configuration could you eliminate, the holding tanks?
4 Anything else or could you.....
5 MR. NOEL: Well, we need the tanks because
6 you're bringing the fluids on trucks and we need to
7 transfer to the tank to feed the injection pumps.
8 CHAIR FOERSTER: Okay. You couldn't feed the
9 pumps directly from the vac trucks?
10 MR. NOEL: Well, the problem with that is you'd
11 be utilizing the well almost continuously. It allows
12 -- the tankage allows us to store the volumes, do
13 planned injections.....
14 CHAIR FOERSTER: Okay.
15 MR. NOEL: .....periodically instead of running
16 the disposal well continuously.
17 CHAIR FOERSTER: Okay.
18 MR. NOEL: And you're correct if we did drill a
19 disposal well on CD5 it would take one of the slots
20 that we plan to use given that the pad configuration,
21 the well row and the footprint of the rigs there's no
22 where else we could put a well on that pad with the
23 existing gravel footprint.
24 CHAIR FOERSTER: Okay. Keep in mind that just
25 because you didn't plan for class II disposal doesn't
W,
1 mean that class II disposal isn't the right thing. I
2 didn't plan to turn old, but, you know, it's happening.
3 You be quiet. Okay.
4 MR. JOHNSTONE: Any other questions before we
5 hand it back over to Brian?
6 COMMISSIONER SEAMOUNT: Nothing.
7 CHAIR FOERSTER: David.
6 COMMISSIONER MAYBERRY: Just so I understand,
9 technically it's feasible for you to take one of the
10 slots that are planned for CD5 and use that potentially
11 as a UIC injection well and have those same operations
12 occurring at the same location without -- in other
13 words to have a UIC injection well you don't have to
14 have a separate pad or separate location, it would be
15 feasible at that location?
16 MR. NOEL: Yes, and that comes down to geology
17 which Doug is going to address here.
18 COMMISSIONER MAYBERRY: Yeah, subject to
19 finding a suitable.....
20 MR. NOEL: Right. Finding a suitable horizon
21 for the fluids.
22 CHAIR FOERSTER: Okay. Okay. I don't have any
23 other question. Thank you, Mr. Johnstone. And stick
24 around because the questions tend to bounce back and
25 forth and you're all under oath until the hearing is
01
1 stopped -- is ceased.
2 MR. NOEL: Okay. This is Brian Noel again.
3 We're looking at slide number 6 which was a disposal
4 plan for mud and cuttings generated from drilling the
5 wells on CDS. The plan is very similar to what we
6 utilized on the four other drill sites in the Colville
7 River unit. We have the class I disposal well that --
8 on CD1 pad which we utilize for liquids and then
9 annular disposal was the main method for getting rid of
10 the drilling waste which is predominantly the cuttings
11 generated from drilling the wells on that pad. And the
12 key benefits by utilizing annular disposal as Sam has
13 already mentioned, it's been a struggle to permit any
14 of these drill sites as we move west, gravel footprint
15 has been a very big issue so we've had to battle for
16 every acre we could get. And as you can see from
17 Colville River unit every pad we've built we've filled
18 it up with oil and gas wells. As I already mentioned
19 too with the rig we're utilizing and the ball mill
20 everything is hard pipe so we're not transferring
21 fluids from the rig to trucks and driving to some other
22 pad, off loading into tanks and then pumping it down a
23 well. It minimizes really the chances of spills by
24 taking it directly from the rig right down an annulus.
25 And the other concern we have with the class I
31
1 disposal well that we're utilizing and Doug will show
2 the geology in a minute is we'd like to limit the
3 amount of solids we put down that well and risk
4 jeopardizing injectivity of that zone over time. By
5 utilizing the disposal well on CD1 pad and annular
6 disposal on CD5 it allows us to utilize the
7 infrastructure we have out there already in place and
s it really gives us two options for getting rid of our
9 drilling waste. We are a remote operation, we're not
10 connected by road as Jon mentioned to the other big
11 fields that have other class II wells except for three
12 months of the year when we have ice. So annular
13 disposal and our class I disposal well are our only
14 methods to get rid of drilling waste.
15 CHAIR FOERSTER: What do you do with your class
16 II waste that is produced during production?
17 MR. NOEL: It goes down the same.....
is CHAIR FOERSTER: You use it for annular
19 disposal, I mean, you put it down annular disposal
20 wells?
21 MR. NOEL: No, it goes down the class I well.
22 CHAIR FOERSTER: It goes down the class -- so
23 and that's the plan for CD5 is any class II wastes that
24 are produced during production will be sent over to
25 CD1?
32
1 MR. NOEL: That's correct.
2 COMMISSIONER SEAMOUNT: Do you anticipate using
3 oil based mud at anytime?
4 MR. NOEL: Potentially.
5 COMMISSIONER SEAMOUNT: So far you've used salt
6 based mud, right, is that correct?
7 MR. NOEL: It's freshwater.
8 COMMISSIONER SEAMOUNT: Freshwater. Oh.
9 MR. NOEL: Freshwater based mud.
10 COMMISSIONER SEAMOUNT: Okay.
11 MR. NOEL: For the wells that Sam showed, the
12 Alpine reservoir, we plan multi stage fracks and
13 there's no benefit using oil mud for that reservoir or
14 for the Kuparuk reservoir. And in addition to trying
15 to preserve the slots that we have on the footprint
16 currently permitted for hydrocarbon operations it
17 really improves economics to these smaller developments
18 if you're not having to drill a class II well on each
19 drill site as we move west. And you've asked some
20 questions about the geology and that's what we'll move
21 to now that Doug will talk about. As we head west
22 there are concerns about the sand that we're using for
23 the class I disposal at CD1 and then also we're very
24 limited in other sand bearing horizons for class II
25 wells. CHAIR FOERSTER: Any questions at this time,
33
1 David?
2 COMMISSIONER MAYBERRY: No.
3 CHAIR FOERSTER: Dan?
4 COMMISSIONER SEAMOUNT: None.
5 CHAIR FOERSTER: Okay. Well, we'll probably --
6 after Mr. Knock testifies do you have any other
7 testimony?
8 (No comments)
9 CHAIR FOERSTER: We'll probably after Mr. Knock
10 testifies we'll take a short recess and our technical
11 people will tell us the questions that we're too stupid
12 to think of and we'll come back and ask them.
13 DOUG KNOCK
14 previously sworn, called as a witness on behalf of
15 ConocoPhillips, stated as follows on:
16 DIRECT EXAMINATION
17 MR. KNOCK: Good morning. I'm Doug Knock, a
18 geologist with ConocoPhillips. I would like to be
19 recognized as an expert witness today.
20 CHAIR FOERSTER: In geology?
21 MR. KNOCK: In geology.
22 CHAIR FOERSTER: Okay. So give us your
23 credentials.
24 MR. KNOCK: I have 27 years of experience
25 working the North Slope, Prudhoe Bay, greater Prudhoe
34
1 Bay, greater Kuparuk, greater Alpine areas. I have a
2 master's degree in geology from the University of
3 Alaska at Fairbanks.
4 CHAIR FOERSTER: Do you have any questions?
5 COMMISSIONER MAYBERRY: No questions.
6 COMMISSIONER SEAMOUNT: I worked with Mr.
7 Knock's father 30 years ago in Wyoming and he was a
8 fine geophysicist and his son is a fine geologist.
9 MR. KNOCK: Oh, boy. A lot of pressure on me,
10 Dan. Thank you
it CHAIR FOERSTER: Oh, so does it skip a
12 generation? So are you going to change the name of
13 this one to the greater Colville Delta area since
14 everything else you've touched has been a greater?
15 MR. KNOCK: Yeah. Yeah, really. Yeah.
16 CHAIR FOERSTER: Might think about that, huh?
17
MR. KNOCK: Yeah.
18
CHAIR FOERSTER: Any concerns with recognizing
19
Mr. Knock as an expert?
20
COMMISSIONER SEAMOUNT:
I just said I didn't.
21
CHAIR FOERSTER: Okay.
And.....
22
COMMISSIONER SEAMOUNT:
Or I indicated that.
23
COMMISSIONER MAYBERRY:
Well, with that
24
endorsement I have no objection.
25
CHAIR FOERSTER: Okay.
Nor do I. We recognize
35
1 you as an expert in geology. Please proceed with your
2 testimony.
3 MR. KNOCK: Thank you. I think this is slide
4 number 7 here, Alpine area stratigraphic cross section.
5 This line of section goes across Alpine from west to
6 east. There's a location map on the inset that the
7 well -- the cross section starts with the Nuiqsut well
8 and continues -- which is near CD5 pad. That's the
9 only vertical well near CD5 pad, it's about a mile and
10 a half away. From that the cross section goes to the
11 east to wells near respectively CD4, CD2 and CD1 pads
12 as you can see through here. You can also see that we
13 have continuous stratigraphy across the greater Alpine
14 area. The cross section starts at the surface and goes
15 down below 7,000 feet below the Alpine interval.
16 The -- what we have found with all the drilling
17 of the -- you know, 100 and -- or 200 and some wells in
18 this area is that the rocks above the Nanushak which
19 contains the Koniq (ph) reservoir are generally weakly
20 consolidated softer rocks. As we get below the
21 Nanushak the rocks harden up and you can drill a little
22 faster, a bit more easier and were more brittle, harder
23 rocks in general below 4,000 feet. on this cross
24 section the left track is along the shale from gamma
25 ray and resistivity, the middle track is density, row
36
1 B, and the right track is resistivity. So if you
2 toggle the button I'm showing here a 25 percent V shale
3 line and I'd like to make the point that we do not have
4 a lot of clean sandstone, more porous sandstone that
5 has low V shale content in the stratigraphic column
6 particularly below the Santacrone (ph) C30 interval.
7 So down through here in the Torok for instance. Yes,
8 there are some stray sands, there's even a reservoir,
9 the Nanuk reservoir occurs in the Torok, a basin floor
10 fan there. But what we have found with all the
11 drilling is these sands in -- that we do encounter
12 locally in the greater Torok which is the thickest unit
13 that we've got below the Nanushak, those are slope
14 sands, channelized slope sands to some Turbidite sand
15 at the base of slope that are not continuous, they're
16 not very thick and they're dirty to tight. So we -- at
17 one point we had looked for a water source for Alpine
18 trying to convince ourselves that we didn't need to
19 import water from Kuparuk which is very expensive. And
20 we could not find a good reservoir -- water reservoir
21 sand to do that with. So the point here is that Alpine
22 is a clean sand and then on down to 1,500, 2,000 feet
23 deeper Ivishak, Sag River the sand cleans up again and
24 you have a reasonably clean sand at -- below 9,000
25 feet. But these other sands that we've run across have
37
1 not proven to be continuous and when we move a mile and
2 a half away from Nuiqsut 1 over to CD5 pad I don't know
3 that even that stray sand there is going to be present,
4 I would venture it would not be on the slope in the
5 Torok there. So I've kind over belabored that point
6 maybe, I know Dan had addressed it earlier and we do
7 have concerns of finding anything else in this interval
8 that would be a disposal candidate below the C30.
9 COMMISSIONER SEAMOUNT: How high to you bring
10 the cement up in those wells?
11 MR. KNOCK: We bring it above Kuparuk if we
12 have a Kuparuk reservoir. I'll let Brian speak to
13 this.
14 MR. NOEL: That's correct. We bring the top of
15 cement above Alpine or Kuparuk if it's there or even
16 shallower if we find a Nanuk equivalent. You know,
17 anything that's hydrocarbon bearing that's -- could be
18 a potential productive horizon.
19 COMMISSIONER SEAMOUNT: Okay. Could you go
20 back to the last slide?
21 MR. KNOCK: And one more point. We do a second
22 stage cement job on the Koniq sand if it is present, we
23 isolate the Koniq with cement if it is a sandstone with
24 reservoir quality. And the Koniq falls right in here.
25 COMMISSIONER SEAMOUNT: Okay. So you're
0:3
1 disposal zone is above the Nanushak and below.....
2 MR. KNOCK: Yes, we set.....
3 COMMISSIONER SEAMOUNT: .....below surface?
4 MR. KNOCK: That's right. So we set surface
5 casing right here and the sandiest interval that we
6 have 50 feet below surface casing is the C30 interval.
7 COMMISSIONER SEAMOUNT: Okay.
8 MR. KNOCK: And I'm going to address that in
9 the next slide. This is a -- this is slide eight,
10 Alpine annular disposal stratigraphic cross section is
11 the same line of section going from west to east as the
12 previous slide. Here we're looking at in more detail
13 at the rocks above 3,000 feet. You can see the
14 stratigraphy is continuous again across the area. The
15 sand prone C30 interval is 150 to 200 feet thick and
16 continuous into the Nuiqsut well which we view as our
17 type well for CDS. We set surface casing 25 to 50 feet
18 above the C30 on a consistent basis and then upon our
19 drill out of 20 feet we do a leak off. And the leak
20 offs are typically averaging 16 pounds per gallon or
21 better. So we -- we're in a silt, clay rich lithology
22 there that allows us to get a good leak off. Now so
23 again the C30 is continuous to the west, into this
24 area, it looks favorable. Above that is the upper CD
25 and we have a mudstone rich environment in the upper CD
39
1 which I view as a nice confining barrier of 200 to 300
2 feet thick and continuous over the Alpine drill sites.
3 So that's sort of what the geology looks like
4 below surface casing into the annular disposal with the
5 C30 interval.
6 COMMISSIONER SEAMOUNT: What -- historically
7 what percentage of the wells like at CD1 are used for
8 annular disposal?
9 MR. KNOCK: I'm going to let Brian address that
10 I think.
11 MR. NOEL: Up to half of the wells. I think we
12 showed for the Colville River unit we realized 74
13 annuli, we're approaching 200 total wells drilled for
14 the four drill sites to date.
15 COMMISSIONER SEAMOUNT: Okay. So you're saying
16 the geology is -- of that section is silty, sandy, a
17 lot of clay, mushy?
18 MR. KNOCK: It -- yes, it is, it's soft. The
19 -- yeah, we got a -- none of -- we get -- you know, we
20 don't get good cuttings back with the water based mud,
21 but what we have gotten back is softer rock,
22 particularly in the mudstones. They are somewhat
23 gummy, we get clay balling going on frequently around
24 the bit. So, yes, we view this as poorly consolidated,
25 weakly consolidated, in fact, soft sediment deformation
M
1 is probably a mechanism in our disposal, we're pushing
2 the waste away into some of that muddy, you know,
3 fairly clay rich C30 interval. So we're not viewing
4 this as hard, brittle fracturing of real competent rock
5 with this annular disposal method.
6 COMMISSIONER SEAMOUNT: Let's say you drilled a
7 disposal injection well into that section and, you
8 know, open up the entire section, what concerns would
9 you have about volumes?
10 MR. KNOCK: I think it would take reasonable
11 volumes. It's continuous enough obviously. The --
12 really the major concern is that it's at 2,400 feet
13 where we have wells coming down and going to their
14 targets, a lot of them are fairly vertical at that
15 point at 2,400 feet and you would be pressuring up a
16 zone that you're going to be continuously drilling
17 through at a shallow depth.
18 COMMISSIONER SEAMOUNT: And an annular disposal
19 takes that.....
20 MR. KNOCK: It's small volume, small volume in
21 well bores. It's -- as we've stated it's quite a small
22 volume at low pump rate. So we -- you know, that gets
23 moved around from well to well. We view that as
24 differently than a point source, you know, high volume
25 injection in one well.
1 MR. NOEL: I might add to that. With annular
2 disposal allows us to distribute the 35,000 barrels per
3 each well over the regional area right under the pad
4 instead of the point source injection where you risk
5 over pressuring that interval. And what we see is we
6 drill the adjacent wells on the pad where we've
7 utilized annular disposal we're not running into over
8 pressured rock over time and we don't see sustained
9 pressures on any of the annualized wells we utilize for
10 annular disposal. So as Doug mentioned it's a large
11 area and it accepts the volumes.
12 COMMISSIONER SEAMOUNT: I thought I remembered
13 a long time ago like in the early 2000s that there was
14 some concern out at CD1 about over pressuring, is that
15 -- did I misread that?
16 MR. NOEL: Not in the C30 wells.
17 MR. KNOCK: I think what we found was we didn't
18 -- we needed to drill, you know, 500 feet or 700 feet
19 away from an annular disposal well, we couldn't -- we
20 did have an instance where we saw some.....
21 COMMISSIONER SEAMOUNT: Okay.
22 MR. KNOCK: .....some affects by drilling too
23 close to an annular disposal well.
24 COMMISSIONER SEAMOUNT: That's what I'm
25 remembering.
42
1 CHAIR FOERSTER: So the area of impact is about
2 a 500 foot radius?
3 MR. KNOCK: We try to maintain a minimum of 500
4 feet of.....
5 CHAIR FOERSTER: Okay.
6 MR. KNOCK: .....standoff so if you're.....
7 CHAIR FOERSTER: Okay.
8 MR. KNOCK: .....pumping in the horizon and the
9 well you're drilling we don't see the influence.
10 COMMISSIONER SEAMOUNT: And how long does it
11 take for that over pressuring to go away?
12 MR. KNOCK: We don't really see sustained
13 pressures and when we're done and we freeze protect the
14 well it bleeds off fairly quickly.
15 COMMISSIONER SEAMOUNT: But you said 500 feet
16 so I assume you're going to come back and drill within
17 500 feet at some time?
18 MR. KNOCK: Right. We could take another well
19 bore through that area and we don't see any elevated
20 pressures.
21 COMMISSIONER SEAMOUNT: So the pressure's
22 dissipated?
23 MR. KNOCK: Correct.
24 COMMISSIONER SEAMOUNT: Okay.
25 MR. KNOCK: So in summary the C30 sand package
43
1 is continuous and looks just as good in the -- near CD5
2 areas as it does to the east and the barrier mudstone
3 package above it is continuous across that area.
4 Now I'm going to move on to the next slide,
5 slide number 9, Nanushak well penetrations in the
6 greater Alpine area. This slide shows all the wells
7 that have gone down, you know, below 8,500 feet to
8 penetrate the Permo-Triassic/Sag River, Shublic/Ivishak
9 sequence. It's -- you know, there's not a whole lot of
10 wells that go down there. Ivishak is wet in this area,
11 it's not been found to be a perspective hydrocarbon
12 interval. CD5 pad falls about seven miles to the west
13 of CD1 where we have a -- we have class I, class II
14 disposal going on at CD1-01A and WD -02. And as I said
15 these rocks are separated from Alpine by, you know,
16 1,500 to 2,000 feet of (indiscernible) shale.
17 So we're going to look at a line of section
18 shown on the map on the next slide from West Fish Creek
19 1 in South Harrison Bay and NPRA on over to CD1 pad and
20 then Fiord 1 well.
21 So next. So this is the said cross section
22 from west to east covering about 30 miles. You can see
23 that the permo-triassic is continuous across this area.
24 On the left is a gamma ray log, the middle track is
25 resistivity and the right track is porosity. The
M
1 porosity is calculated from density. Also shown in
2 boxes are calculations for the Sag River and Ivishak
3 intervals for net sand and average porosity into that
4 sand. And that sand is created from a 12 percent
5 porosity cutoff which is highlighted oh, in the CD1-01
6 well where there's sort of a yellow shade. You can see
7 where the rock makes a 12 percent porosity cutoff. So,
8 yes, we've got a reasonably thick Ivishak sequence here
9 and we've got 100 plus feet of net sand in the CD1 area
10 where we have the CD1-01A and WD-2. As we head to the
11 west into the NPRA area, to South Harrison Bay and West
12 Fish Creek we note a fall off in the calculated net
13 sand at a -- and quite a fall off in the average
14 porosity within that net sand. So we do have concerns
15 as we head seven miles to the west to the CD5 drill
16 site from CD1 that we're going to see a fall off in
17 sand quality and in effective net sand thickness in
18 that area from what we saw at CD1 pad. You know, at
19 CD1 we restricted the amount of -- we have not been
20 injecting large volumes of cuttings at CD1 trying to
21 preserve those wells. So we have some uncertainty of
22 what's going to happen when we did dedicate the drilled
23 solids, drilled cuttings to one of these types of wells
24 in these pretty hard, fairly low porosity sands. One
25 more point I'd like to make is that the Ivishak
45
I underneath Alpine is not the Ivishak underneath Prudhoe
2 and Kuparuk which is of much better sand quality than
3 what we have up here.
4 So in summary Ivishak and Sag River are
5 continuous across a large area and the porosity is
6 slowly decreasing as we go to the west.
7 CHAIR FOERSTER: What zone does your class I
8 well inject into?
9 MR. KNOCK: It is -- it's perforated in the
10 sands, kind of coming down in every -- pretty much the
11 yel -- where it's shaded in yellow, we've got
12 perforations throughout the yellow shade in this well
13 and in this well.
14 CHAIR FOERSTER: Okay.
15 MR. KNOCK: And with the very best sand being
16 right down here near the bottom.
17 CHAIR FOERSTER: Okay. Thank you.
18 MR. KNOCK: So I think we have a summary slide,
19 but if there are no further questions for me.....
20 COMMISSIONER SEAMOUNT: I have one question.
21 Overall on the North Slope are you able to see
22 hydrocarbons in the Ivishak from seismic, are there
23 indicators?
24 MR. KNOCK: I may not be the best one to answer
25 that. Yes, there are. Around Alpine we looked at
"
1 Ivishak and Lisburne as, you know, looking for
2 potential hydrocarbon zone and we thought we did have
3 some amplitude signatures, but my memory serves me
4 correctly, Dan, that we were really, you know, more
5 positive out with hydrocarbon indicators for the
6 Lisburne in the Alpine interval -- Alpine area with a
7 trap, with a fault and with amplitudes and migration
8 pathways suggesting that maybe we had some chance of
9 finding gas or oil in the Lisburne. The Ivishak with
10 more penetrations reaching the Ivishak not so much. We
11 were looking at it pretty hard as a water source and we
12 tried to convince ourselves whether or not we would
13 want to give a go on some Ivishak wells for a water
14 source for Alpine and we never got around to doing
15 that.
16 COMMISSIONER SEAMOUNT: So the Lisburne's a
17 future exploration target?
18 MR. KNOCK: Ooh, boy. Yeah, with a lot of
19 risk, very high geologic risk.
20 COMMISSIONER SEAMOUNT: Okay. As it should be.
21 MR. KNOCK: Yep.
22 COMMISSIONER SEAMOUNT: And the Lisburne's been
23 so successful for ConocoPhillips.
24 MR. NOEL: Okay. On our last slide, slide
25 number 11 is just conclusion and summarizes the key
47
1 points already shown. As you know annular disposal's
2 been used across the Slope very successfully for
3 decades for development drilling. It's a safe,
4 efficient, very effective way to get rid of our mud and
5 cuttings. As we've shown by utilizing rigs with ball
6 mills we can use annular disposal on the pad, we don't
7 have to transfer to a limited number of class II wells
8 that we have at Alpine or Slope wide in other fields.
9 It helps reduce our footprints and also improves the
10 economics of these smaller satellite developments. And
11 it's really important out here in the remote areas
12 where you're isolated from the main infrastructure of
13 Kuparuk and Prudhoe Bay. Without annular disposal we
14 only have one option as you've seen the deep disposal
15 horizon is questionable moving west. You know, in
16 summary we think CD5 is another good candidate for
17 annular disposal. We have the C30 horizon we've been
18 successfully using on the other drill sites. And
19 moving forward our plans were to seek approval for
20 annular disposal as the wells were drilled at CD5 for
21 drilling mud and cuttings.
22 CHAIR FOERSTER: Okay. Thank you. Do you have
23 any questions before we take a recess?
24 COMMISSIONER SEAMOUNT: No, I don't.
25 COMM1ISSIONER MAYBERRY: No, I think go to
EH
I recess.
2 CHAIR FOERSTER: Well, we're going to recess.
3 It's almost 10:10, let's come back at 10:20. We're
4 adjourned -- I mean, we're recessed.
5 (Off record)
6 (On record)
7 CHAIR FOERSTER: All right. We're back on the
8 record at 10:22. Commissioner Seamount, did you want
9 to ask any questions?
10 COMMISSIONER SEAMOUNT: I have no questions at
11 this time.
12 COMMISSIONER MAYBERRY: I guess you guys can
13 just field them as you feel appropriate. Well, I guess
14 one of the thoughts -- one of the things we were just
15 discussing is why not drill a class II well at either
16 CD4 or CD2, is there possibly a P&A well that could be
17 re -purposed. And then with the idea being that you
18 could possibly transport drilling waste from CD5 for
19 disposal there. Now I know that runs into the issues
20 that you've been addressing about avoiding the risk of
21 transportation, but has that issue been looked at?
22 CHAIR FOERSTER: Say your name as you start to
23 answer the question.
24 MR. JOHNSTONE: So Sam Johnstone. So
25 specifically looking at particular wells at CD2 or CD4
.z
1 for use as disposal wells we haven't looked at any
2 specific wells. We've typically looked at -- most of
3 the wells that are at that maturity level, flood
4 maturity level where they're shut-in for economic
5 reasons, are at CD1. And that -- that's kind of that
6 candidate pool of a place on our well row where we
7 could use a well would be at CD1. CD4 also has
8 concerns. We looked at a picture earlier for the
9 disposal -- any type of disposal facility, there's
10 really with the current gravel layout footprint at CD4,
11 we don't have the room at CD4.
12 COMMISSIONER MAYBERRY: I guess what are you
13 going to do with the muds and cuttings for the first
14 well at CDS, I assume the idea is that they would be
15 disposed of annular?
16 MR. NOEL: This is Brian Noel. First of all we
17 would have to take all those wastes to our class I
18 disposal well in CD1 pad.
19 COMMISSIONER MAYBERRY: Another thought is --
20 and this is just speaking hypothetically, have you
21 thought about what if you found a good zone for UIC
22 injection in CD5 somewhere?
23 CHAIR FOERSTER: One you start drilling.
24 MR. KNOCK: Yeah, this is Doug Knock.
25 Certainly possible you could find something. You could
U1]
1 -- when you're drilling down to Alpine or Kuparuk and
2 you may find something in the Torok unexpectedly and we
3 would have to evaluate it, but it's a roll of the
4 dice.....
5 COMMISSIONER SEAMOUNT: Yeah.
6 MR. KNOCK: .....on what we would find. We see
7 the sands there in the Torok are hard to predict.....
8 COMMISSIONER MAYBERRY: Uh-huh.
9 MR. KNOCK: .....when they're going to occur.
10 COMMISSIONER MAYBERRY: Yeah, I mean, we're
11 just speaking completely hypothetically because we
12 don't even have a specific well proposal in front of us
13 so we'd just have to look at the proposed depths that
14 you're looking at drilling at and just seeing what
15 turns up?
16 MR. KNOCK: Yeah, we drill through that
17 sequence as we go down to Alpine, we'd get a good look
18 at it.
19 COIMIISSIONER MAYBERRY: Okay. And then I think
20 if I understood your comments right it was your -- the
21 indications are and your concerns are, your thinking is
22 that as you're going west your -- the sands in terms of
23 their thicknesses and porosity are actually diminishing
24 and so you're thinking that the situation will just get
25 worse as you go west?
51
I MR. KNOCK: That's right for the -- for the
2 deeper rocks, the Permo-Triassic Ivishak/Sag River.
3 That is the trend in those rocks. In the shallower
4 rocks it's more on we're -- we're just not a very sandy
5 system so pretty much mud rich system in the Albian
6 Torok.
7 COMMISSIONER MAYBERRY: Okay.
8 MR. KNOCK: It comprises a lot of the rocks
9 we're drilling through.
10 COMMISSIONER MAYBERRY: Okay. And just to
11 confirm sort of my understanding of what I was taking
12 away from your presentation about the quality of the
13 C30 zone is that -- I guess one of the questions I have
14 is sort of, you know, the non -geologist here, is that
15 like well, if it's suitable for annular disposal why is
16 it not suitable for class II or class I for UIC
17 injection let's say. And I guess what I was
18 understanding from you is well, it's suitable enough
19 for the limited disposal from the drilling of the
20 single well, but if you were going to start using it
21 for multiple wells then that's where you would likely
22 have a problem?
23 MR. KNOCK: Yeah, I think again we could
24 pressure up that zone and it could cause us problems
25 when drilling other wells through the C30. It's so
52
I shallow we're going to be continually drilling through
2 that horizon fairly close -- wells are going to be
3 fairly closely spaced at that 2,000, 2,400 foot depth
4 going through that. And you may be within the high
5 pressure bulb very easily when you're drilling a new
6 well from your dedicated disposal well that you would
7 have for the C30.
8 COMMISSIONER MAYBERRY: Okay.
9 MR. KNOCK: It -- yeah, it's continuous and you
10 could run into problems with -- pressure problems while
11 drilling and we'd have to set a casing perhaps to deal
12 with that.
13 COMMNISSIONER MAYBERRY: Okay. And, yeah, I did
14 get the point about the pressurization. And then there
15 was a comment that eventually that pressure dissipates,
16 but how long does it take for that pressure to
17 dissipate?
18 MR. KNOCK: We don't have an answer for that
19 directly.
20 COMMIISSIONER MAYBERRY: Okay. Are we talking
21 weeks or months or years or.....
22 MR. KNOCK: In my.....
23 CHAIR FOERSTER: How long did it take in other
24 -- I think that's more probably a question for Mr.
25 Noel.
53
1 MR. KNOCK: Probably more of a question for
2 Brian.
3 MR. NOEL: It -- within a month the pressure
4 dissipated from that 35,000 barrels that we put down
5 the annulus.
6 COMMISSIONER MAYBERRY: Okay.
7 CHAIR FOERSTER: For small volumes?
8 MR. NOEL: And then we moved the injection to a
9 different annulus which is a different spot subsurface.
10 COMMISSIONER MAYBERRY: Okay.
11 MR. NOEL: So the class II well is continuing
12 injection at that single point source is where we worry
13 about creating a large pressure bulb over time instead
14 of spreading it out regionally.
15 COMMISSIONER MAYBERRY: Okay. I think that's
16 all I have.
17 CHAIR FOERSTER: I had two more questions more
18 for my personal curiosity. How confident are you that
19 you're going to find Alpine and Kuparuk as you move
20 west since you don't have any exploratory wells there?
21 MR. KNOCK: I'll address that. This is Doug
22 Knock. We're very confident we're going to have Alpine
23 present in the 13 well development area.
24 CHAIR FOERSTER: Okay.
25 MR. KNOCK: We've got enough seismic across the
1:1
1 area with the -- tied to the Nuiqsut well and we have a
2 couple of slant wells that come from CD4 and CD2 into
3 that area that we're calling Alpine West CDS. And we
4 feel real confident that the Alpine reservoir's going
5 to be there for the 13 well case. And hopefully get us
6 to a, you know, a 20 -- we have an upside, you know, 19
7 well case.
8 CHAIR FOERSTER! Uh-huh.
9 MR. KNOCK: But the quality of the Alpine is
10 slowly dropping off in the west.....
11 CHAIR FOERSTER: Uh-huh.
12 MR. KNOCK: .....so it's -- the interval's
13 going to be there it's just how fast does the quality
14 degrade.
15 CHAIR FOERSTER: So the 13 well development is
16 going to tell you.....
17 MR. KNOCK: Is in the.....
18 CHAIR FOERSTER: .....more about the.....
19 MR. KNOCK: It is. We're going to.....
20 CHAIR FOERSTER: .....remaining 20 wells?
21 MR. KNOCK: .....kind of step from east to west
22 so we're going to watch that quality as we step to the
23 west.
24 CHAIR FOERSTER: Okay.
25 MR. KNOCK: And then on the Kuparuk it's very
55
1 much a coin flip.....
2 CHAIR FOERSTER: Okay.
3 MR. KNOCK: .....and we are desperately hoping
4 that we have continuation of the Kuparuk sand to the
5 west from the Kuparuk we found at CD4. Seismic doesn't
6 do a whole lot for us with the Kuparuk.
7 CHAIR FOERSTER: Okay. So my last question is
8 I see in the audience that Jack Walker is still working
9 for Conoco and, you know, having known Jack Walker for
10 a number of years and worked with him I find him to be
11 a great asset, but how much longer are you all going to
12 have him before he retires? Never mind.
13 All right. Any other questions from anybody?
14 COMMISSIONER SEAMOUNT: I don't have any
15 questions, I'd just like to thank you guys for coming
16 in and giving a very good presentation. It went beyond
17 testimony, it was a presentation.
18 COMMISSIONER MAYBERRY: I believe Mr. Goltz had
19 a comment.
20 CHAIR FOERSTER: Okay.
21 MR. GOLTZ: Yeah, with your permission I do
22 have a couple housekeeping matters that I'd like to
23 address on the record before.....
24 CHAIR FOERSTER: Okay.
25 MR. GOLTZ: .....you conclude the hearing.
W
I This is Jon Goltz again. There have been a couple of
2 questions that were raised that I'd like to get a
3 partially more complete answer into the record one of
4 which from Commissioner Seamount was whether the BLM
5 has been notified. And that's something that we did
6 take a look at and I'd just like the record to reflect
7 that the 2004 EIS that has been mentioned and is
8 available online refers to the plan to use annular
9 disposal at the Alpine satellites including CD5 in a
10 number of locations. And a quick perusal of my papers
it indicates that page 40 of that EIS and page 428 are
12 good points where plans for annular disposal was
13 clearly analyzed by BLM and recognized to be the plan
14 going forward.
15 And we also recognize that the fact that we
16 planned to use annular disposal at CD5 doesn't
17 constrain the Commissioners -- the Commission's
18 discretion. We respect the duty that you have to take
19 a look at the regulatory issues and make sure that if
20 we do submit an application as we intend to that it
21 does meet the criteria and serves the purposes that you
22 do regulate. It also is important as you can
23 understand from our point of view that the annual
24 disposal program hasn't changed recently and in our
25 view our plan for CD5 doesn't represent pre with
57
I respect to annular disposal, it's the same type of
2 narrowly constrained waste types that we plan to
3 propose, narrowly constrained limits that are allowed
4 for annular disposal and for a variety of other reasons
5 we think is very consistent with the way annular
6 disposal has been regulated in the past. And for that
7 reason we have felt reasonably comfortable that it was
8 a -- it was good to go ahead and plan to use that. And
9 although I think it's important too to note that the
10 regulations don't necessarily require us to prove that
11 it's -- the merits of annular disposal in comparison to
12 any particular other option I think we have shown today
13 why we think it is the right option for CDS. It -- in
14 our view it is the best option notwithstanding the fact
15 that it's not a clear regulatory requirement to prove
16 that.
17 The issue of circumvention was raised too and I
18 guess I -- hopefully we have addressed that by showing
19 that we don't think there is pre with respect to our
20 plan for CD5 here. I think the regulatory criteria for
21 annular disposal addresses that issue about what would
22 be circumvention or what would not be and we are
23 clearly within those limits.
24 And I also just wanted to make a more specific
25 reference than I did previously to 1991 MOU with the
9.1
1 EPA where the agencies clearly agreed that the pumping
2 away of drilling muds into the annuli of any well
3 approved in accordance with 20 AAC 25.005 is an
4 operation incidental to the drilling of the well and is
5 not a disposal operation subject to regulation as a
6 class II well. And I'm reading from the MOU there
7 because I think it's important to recognize that it
8 does refer to the annuli of any well, not necessarily
9 to the annuli of an exploratory well even though that
10 is separately mentioned and that it is something that
11 has long been understood to be separate from the UIC
12 program. And I know the EPA does occasionally review
13 the UIC program including the scope of it and my
14 understanding is that there has not been a concern with
15 the way that has been implemented by the operator or
16 approved by the regulator at the Colville River unit.
17 COMMISSIONER SEAMOUNT: So can I assume that
18 your technical people have talked directly with the
19 technical people at BLM about annular disposal?
20 MR. GOLTZ: I can't speak to whether there have
21 been express discussions about that from subject matter
22 expert to subject matter expert. I know it has been
23 very expressly acknowledged in the environmental
24 analysis documents that that has been the plan and the
25 potential impacts of annular disposal have been
I analyzed and the conclusions drawn from those. I --
2 that's all I can say for sure based on what I reviewed.
3 MR. JOHNSTONE: Sam Johnstone again. For CD5
4 specifically I can't speak to that, but I know as we go
5 further west to NPRA developments we have had those
6 discussions with BLM and have discussed with them and
7 let them know for that development which is currently
8 in the permitting process that we would also be
9 applying for annular disposal as a drilling waste
10 disposal option.
11 COMMISSIONER SEAMOUNT: And you don't sense any
12 heartburn from them?
13 MR. JOHNSTONE: No.
14 CHAIR FOERSTER: I have one last question. If
15 -- as you guys continue with your westward march do you
16 see any future development or exploration or extension
17 work that will cause you to be on land where any of the
18 BLM legacy wells reside?
19 MR. JOHNSTONE: I think I can answer that with
20 100 percent confidence and that would be a no.
21 CHAIR FOERSTER: All right. Thank you. All
22 right. If there are no further questions.....
23 COMMISSIONER MAYBERRY: Just a comment, I'd
24 just like to say thank you for.....
25 CHAIR FOERSTER: Oh.
1 COMMISSIONER MAYBERRY: .....coming, very good
2 information.
3 (Adjourned - 10:38 a.m.)
4 (END OF PROCEEDINGS)
61
1 TRANSCRIBER'S CERTIFICATE
2 I, Salena A. Hile, hereby certify that the
3 foregoing pages numbered 2 through 62 are a true,
4 accurate, and complete transcript of proceedings of
5 January 5, 2015, Docket No.: OTH 14-26 transcribed
6 under my direction from an electronic sound recording
7 to the best of our knowledge and ability.
8
E
10 Date Salena A. Hile
11
62
STATE OF ALASKA
OIL AND GAS CONSERVATION COMMISSION
Public Hearing
OTH 14-26 Hearing
ConocoPhillips Alaska Inc.
January 5, 2015 at 9am
NAME AFFILIATION Testify (yes or no)
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Annular Disposal at CD5
Outline:
1. Annular Disposal Overview and History
2. CDS Overview
3. Disposal Plan for Muds and Cuttings at CD5
4. Western North Slope Geology
5. Conclusion
January 5, 2015
Annular Disposal vs. UIC Class II Well
Annular Disposal
'O" run"", z Regulated underi""
.andualn pan,
20 AAC 25.080
' Sundry Approval
(post drilling)
— . "Drilling wastes"
10 7.—.— 2400'rva
sing
at Limited volume
Limited duration
Limited to waste
-5000'Nd from same pad
>"e;ng Early in well's life
(drilling)
A101ne
UIC Class II Well
ConocoPhillips
Regulated under
20 AAC 25.252 &
20 AAC 25.412
0- Injection well
approvals
Class II wastes
No volume limits
w- No time restrictions
No waste location
restrictions
Long term operation
(production)
]5/8"P/odu[fon
`� ConocoPhllllps
Annular Disposal Integral to North Slope Development
• Long history since mid 1980's of successful use of annular disposal in development
areas on the North Slope. Supported by industry and regulatory agencies.
• "The goal of the annular disposal program is to provide an efficient means for the
on-site and safe disposal of waste from drilling activities. Oversight of annular
disposal of drilling waste was transferred from ADEC to the Commission on July 1,
1995. Regulations governing annular disposal were created and became effective on
September 22, 1995." [From AOGCC website]
• Annular disposal has been utilized in the following fields and wells during the field
development:
Field # of Wells
Endicott 66
NK 5
Prudhoe Bay 416
GPMA 56
Milne Point Unit 82
Kuparuk 312
Colville River Unit 74
Total 1011
Conoco Nlrips
CD5 Development Overview
5 Standard Alpine Drilling
• Similar to Wells Drilled
From CD2 and CD4
— 15,000' to 22,000' MD
Initial CD5 Development Plan
• 13 Alpine Wells
s 2 Kuparuk Wells
• Commence drilling April
2015
• First Production December
2015
c DI
i�]NgH
A,�i.Prr.e POai. i.ihursPOOi. i.ihurs
Annular Disposal in CRU Expansion Plans
y 2004 EIS — covered CD3, 4, 5, 6, 7 and anticipated annular disposal of
drilling waste; annular disposal expressly addressed in EIS
CD5 pad was sized, permitted and constructed to minimize foot print
Dedicated disposal well not included because regulations allow
annular disposal of drilling waste; operator encouraged to use
existing CRU infrastructure when feasible (e.g., CD1-01A well)
5 year planning cycle requires stable regulatory environment
E
Disposal Plan for Muds and Cuttings at CD5
at Limited use of Class I Disposal well CD1-01A (primarily for liquids)
Annular disposal for most CD5 drilling waste (including most solids)
Similar to plan used for CD1, CD2, CD3 and CD4
Benefits:
• Minimizes gravel foot print — critical issue in Alpine Satellites EIS
• Minimizes fluid hauling and transferring
• Minimizes loading Class I Disposal well CD1-01A with solids
• Utilizes existing Colville River Unit infrastructure
• Maintains multiple well options for solids disposal
• Improves economics of satellite developments
• Avoids concerns with deteriorating deep disposal zone quality at CD5
ConocoPhillips
Alpine Area Stratigraphic Cross Section
CD5 CD4 CD2 CD1
Nuigsut 1 Nanuk 1 Alpine 1 Bergschrund 1
West RNOR Reoe _RHOS_ RES East
Alpine Annular Disposal Stratigraphic Cross Section
West CDs CD4 CD2 CD1 East
Nuiqsut 1 Nanuk 1 Alpine 1 Bergschrund 1
RHOS RHOS RIDE
Sand and Gravel
Sand, Siltstone
and Mudstone
Mudstone
Barrier: 200.300 R thick
Surface casing shoe _
LOT'S -16 ppg
Annular disposal
Sandstone, Siltstone
and Mudstone
8
Gubi
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. .
Prince
Creek
—
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Location Map SS".dl
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Alpine Annular Disposal Stratigraphic Cross Section
West CDs CD4 CD2 CD1 East
Nuiqsut 1 Nanuk 1 Alpine 1 Bergschrund 1
RHOS RHOS RIDE
Sand and Gravel
Sand, Siltstone
and Mudstone
Mudstone
Barrier: 200.300 R thick
Surface casing shoe _
LOT'S -16 ppg
Annular disposal
Sandstone, Siltstone
and Mudstone
8
Gubi
Prince
Creek
—
W
Schrader
Bluff
r
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Location Map SS".dl
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Ivishak Well Penetrations - Greater Alpine Area
Sag River
I7 jamel
M
S
Ivishak-Sag River Stratigraphic Cross Section
West East
W Fish Cr S Harris Bay CD1-01A WD -02 Nechelik 1 Fiord 1
Conclusion
Annular disposal used successfully on the North Slope for decades
aw Key benefits:
■ Reduces fluid transfers and hauling
• Reduces solids loading of Class I / II wells
• Reduces pad footprint
■ Improves economics
An important option for remote oil & gas development
Annular disposal used for CD1-4, and planned for CD5
■ CD5 is a good candidate for annular disposal
■ Concerns about deteriorating disposal interval (Ivishak) to the west
ConocoPhillips plans to seek approval for annular disposal at CD5
ConocoPhillips
Ivishak Well Penetrations - Greater Alpine Area
Top Sag River h Contou I e St
S Harris 1
rd
Nechelik 1
ect,
CD1-
8
W Fish C
950
mi
9�
1000
It ' ik
9
Ivishak-Sag River Stratigraphic Cross Section
West
W Fish Cr S Harris Bay CD1-01A WD -02 Nechelik 1 Fiord 1
GR RD PORO GR RD TORO
East
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M
TME STATE,
o ALASKA
(,0VERNO R $ILI, WALi;FR
December 10, 2014
CERTIFIED MAIL —
RETURN RECEIPT REQUESTED
7014 2120 0004 7782 7475
Ms. Misty J Alexa
WNS Development Manager
ConocoPhillips Alaska, Inc.
P.O. Box 100360
Anchorage, AK 99510-0360
Re: Docket Number: OTH-14-026
Annular Disposal of Drilling Waste at CD5
Dear Ms. Alexa:
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax: 907.276.7542
vvvvvv.aogcc.alaska.gov
AOGCC agrees that quick identification and resolution of potential issues related to annular
disposal is necessary to avoid any delays in development of CD5. However, the AOGCC does
not agree with ConocoPhillips Alaska, Inc.'s assertion that a hearing is not necessary. The
hearing will proceed as scheduled.
Should you have any questions, please contact Chris Wallace at 907-793-1250 or
chris.wallacegalaska.gov .
Sincerely,
2t�
Commissioner
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■ Attach this card to the back of the mailpiece,
or on the front if space permits.
1. Article Addressed to:
Ms. Misty J. Alexa
W NS Development Manager,
Conoco Phillips Alaska, Inc.
Post Office Box 100360
Anchorage, AK 99510-0360
A. Signa
Agent
X ❑ Addressee
B. Ra I ad b Pr7 d me) C. Date of Dal
c�C 5 / ff>
D. Is deliveryaddress dlfiemnt from item 17 ❑ yes
If YES, enter delivery address below: ❑ No
3. Service Type
❑ Certified Mall ❑ Express Mal
❑ Registered ❑ Return Receipt for Merchandise
❑ Insured Mail ❑ C.O.D.
4. Restricted Delivery? (Extra Fee) ❑ Yes
2. Article Number 7014 2120 004 7782 7475
(Aansfer from service label
Ps Form 3811, February 2004 Domestic Return Receipt 102595-02-M-1540
Certified Fee
7
OReturnReceipt
Fee
Postmark
C3
(Endorsement Required)
Here
C3
Restricted Delivery Fee
C3
(Endorsement Required)
rt1
r-4
Total Postage a Fees
$
ru
Ms- Misty J. Alexa
s
�"rTO
WNS Development Manager
o
glrmw Xptw------------"""----
Conoco Phillips Alaska, Inc.
r
°`P°e°"N°------------------------
Post Office Box 100360
ctiy stale: nP.a
r
Anchorage, AK 99510-0360
■ 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. Misty J. Alexa
W NS Development Manager,
Conoco Phillips Alaska, Inc.
Post Office Box 100360
Anchorage, AK 99510-0360
A. Signa
Agent
X ❑ Addressee
B. Ra I ad b Pr7 d me) C. Date of Dal
c�C 5 / ff>
D. Is deliveryaddress dlfiemnt from item 17 ❑ yes
If YES, enter delivery address below: ❑ No
3. Service Type
❑ Certified Mall ❑ Express Mal
❑ Registered ❑ Return Receipt for Merchandise
❑ Insured Mail ❑ C.O.D.
4. Restricted Delivery? (Extra Fee) ❑ Yes
2. Article Number 7014 2120 004 7782 7475
(Aansfer from service label
Ps Form 3811, February 2004 Domestic Return Receipt 102595-02-M-1540
3
RECEIVED
DEC 0 8 2014
AOGCC WNS De
Misty JAlexa
AOGCC P.O. Box V10 360nt Manager
Anchorage, AK 99510
(907) 265-6822 (phone)
Conocom i I I i ps misty.j.alexa@conocophillips.com
December 8, 2014 Hand Delivered
Cathy P. Foerster
Commissioner, Chair
Alaska Oil and Gas Conservation Commission
333 W. 7th Avenue, Suite 100
Anchorage, Alaska 99501-3539
Re: Annular Disposal of Drilling Waste at CD5
Dear Commissioner Foerster:
ConocoPhillips Alaska, Inc. (CPAI) received the Notice of Public Hearing regarding "The
application of ConocoPhillips (Alaska), Inc. (CPAI) for annular disposal of drilling waste at
Colville River Unit CD5 drillsite". This notice was in response to a letter that CPAI wrote
addressed to the Alaska Oil and Gas Conservation Commission (AOGCC) and dated
November 7, 2014, which sought to quickly identify (to avoid CD5 development delays) any
potential issues related to annular disposal if the AOGCC plans to treat annular disposal at
CD5 differently than at other CRU pads. CPAI appreciates that the AOGCC responded so
quickly to the November 7, 2014 letter, but would like to reiterate our view that a hearing is
not required by the regulations (20 AAC 25.080) and should not be necessary.
CPAI would also like to clarify that we did not apply for annual disposal authorization in our
November 7, 2014 letter to the AOGCC, but rather informed the AOGCC of CPAI's intent to
seek authorization for annual disposal of drilling waste after drilling at CD5 commences in
April 2015 as per 20 AAC 25.080 (the regulation governing annular disposal), which requires
that an authorization request contain well specific information that will not be available until a
well is drilled.
If you have any questions or need further information please contact Sam Johnstone (907)
263-4617.
Sincerely,
Mis J Ale' x: '
WNS Development Manager
cc: Anadarko E&P LLC
i
Notice of Public Hearing
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
Re: Docket # Other 14-026. The application of ConocoPhillips (Alaska), Inc. (CPAI) for annular disposal
of drilling waste at Colville River Unit CD5 drillsite.
CPAI, by letter received November 7, 2014, requests that the Alaska Oil and Gas Conservation
Commission (AOGCC) approve annular disposal into Colville River Unit CD5 under 20 AAC 25.080.
The AOGCC has tentatively scheduled a public hearing on this application for January 5, 2015, at 9:00
a.m. at 333 W. 7'" 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 21, 2014.
In addition, written comments regarding this application may be submitted to the AOGCC, at 333 W. 7°i
Ave., Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on December 23,
2014, except that, if a hearing is held, comments must be received no later than the conclusion of the
January 5, 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 December 28, 2014.
a/' Cathy P. oersteer�
Chair, Commissioner
270227
0001353970
$ 194.24
'RECEWL
t,IOV 2 5 2014
AFFIDAVIT OF PUBLICATION OGCC
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 20, 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
Subscribed and sworn to before me
this 20th day of November, 2014
e04EV�
Notary Public in and for
The State of Alaska.
Third Division
Anchorage, Alaska
MY COMMISSION EXPIRES
Notice of Public Nearing
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
Re: Docket # Other 14-026. The application of ConocoPhillips (Alaska),
Inc. (CPAP for annular disposal of drilling waste at Colville River Unit
CDS drillsite.
CPAI, by letter received November 7, 2014, requests that the Alaska Oil
and Gas Conservation Commission (AOGCC) approve annular disposal
into Colville River Unit cos under 20 AAC 25.080.
The AOGCC has tentatively Scheduled a public hearing on this
application for January 5, 2015, at 9:00 a.m. at 333 W. 7th Ave.,
Anchoragge, 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 21, 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 23,
2014, except that, if a hearing is held, comments must be received no
later than the conclusion of the January 5, 2015 hearing.
If, because of a disabilispecial accommodations may be needed to
comment or attend the hearing, contact the AOGCCs Special
Assistant, Jody Colombia, at 793-1221, no later than December 28,
2014.
AO -15-010
Published: November 20, 2014
Cathy P. Foerster
Chair. Commissioner
STATE OF ALASKA
ADVERTISING
ORDER
NOTICE TO PUBLISHER
SUn\IIT INVOICESHOWING ADVERrISING ORDER NO., CER I'IFIED
AFFIDAVIT OF PUBLICATION WITH ATI'ACHEDCOPTOFAD\ EIUISMENT.
ADVERTISING ORDI R N1 ,v11WR
A
A O-15-Ol0
FROM: AGENCY CONTACT:
Jody Colombie/Samantha Carlisle
Alaska Oil and Gas Conservation Commission DATE OF A.O. AGENCY PHONE:
333 West 7th Avenue 11/19/14 (907) 793-1221
Anchorage, Alaska 99501
DATES ADVERTISEMENT REQUIRED:
COMPANY CONTACT NAME:
PHONE NUMBER: Publish 11/20/14.
FAX NUMBER:
(907) 276-7542
TO PUBLISHER:
Alaska Dispatch News
SPECIAL INSTRUCTIONS:
PO Box 149001
Anchorage, Alaska 99514
TYPE OF ADVERTISEMENT:
F LEGAL r DISPLAY i— CLASSIFIED r OTHER (Specify below)
DESCRIPTION PRICE
OTH-14-026
Initials of who prepared AO:
Alaska Non -Taxable 92-600185
SUBMIT INVOICE SHOWING ADVERTISING
ORDER NO., CERTIFIED AFFH)AVIT OF
PUBLICATION \\'ITH ATTACHED COPY OF
ADYERTIsnteNT To:
Department of Administration
Division of AOGCC
333 West 7th Avenue
Anchorage, Alaska 99501
Pae I of 1
Total of
All Pa es s
REF TYpe Number
:\mount Date Comments
I PVN ADN84501
2 AO AO -15-010
3
4
FIN AMOUNT SY
CC Il DIE1 1.1Q
1 15 0214010015
2
3
4
M(=
5
Purchwin Aut rity
a
-Si alure Telephone Number
A AA
h99 �.WiL$fl6lIRPAi @4R7@ 1 1 9h*tfocu n relating to thispurcha Y.
2. The state is e9i teretl for tax fres transactions under Chapter 32, IRS co e. egistralion number 92-73-0006 K. Items are for the exclusive use of the state and not for
resale.
DISTRIBUTION:
Division Fiscal/Original AO
Copies: Publisher (faxed), Division Fiscal, Receiving
Form: 02-901
Revised: 11/19/2014
Singh, Angela K (DOA)
From: Colombie, Jody J (DOA)
Sent: Wednesday, November 19, 2014 11:11 AM
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); Paladyczuk,
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 Vandedack,
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 (LDZ)Q;
Francis S. Sommer, Frank Molli; Gary Oskolkosf; George Pollock; ghammons; Gordon
Pospisil; Greg Duggin; Gregg Nady; gspfoff, Jdarlington Qarlington@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, lames 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: Notice of Public Hearing, OTH-14-026
Attachments: Notice of Public Hearing, OTH-14-026.pdf
James Gibbs
lack Hakkila
Bernie Karl
Post Office Box 1597
Post Office Box 190083
K&K Recycling Inc.
Soldotna, AK 99669
Anchorage, AK 99519
Post Office Box 58055
Fairbanks, AK 99711
Gordon Severson
Penny Vadla
George Vaught, Jr.
3201 Westmar Cir.
399 W. Riverview Ave.
Post Office Box 13557
Anchorage, AK 995084336
Soldotna, AK 99669-7714
Denver, CO 80201-3557
Richard Wagner Darwin Waldsmith Misty J. Alexa
Post Office Box 60868 Post Office Box 39309 W NS Development Manager
Fairbanks, AK 99706 Ninilchil4 AK 99639 Post Office Box 100360
Anchorage, AK 99510
rte: Lp c�
��over✓��of ��� 20�`�
Angela K. Singh
1
ConocoPhillips
November 7, 2014
Cathy P. Foerster
Commissioner, Chair
Alaska Oil and Gas Conservation Commission
333 W. 7th Avenue, Suite 100
Anchorage, Alaska 99501-3539
Re: Annular Disposal of Drilling Waste at CD5
Dear Commissioner Foerster:
Misty JAlexa A0 GtcC
WNS Development Manager
P.O. Box 100360
Anchorage, AK 99510
(907)265-6822(phone)
misty.j.alexa@conocophillips.com
Hand Delivered
ConocoPhillips, as operator of the Colville River Unit (CRU) on the North Slope, is engaged
in the development of a new drillsite, called CD5. This new development will make use of
existing infrastructure and bring additional oil production to TAPS. ConocoPhillips plans to
commence drilling in April 2015, and to see first production in December 2015. The plan for
CD5 is predicated on an expectation that drilling muds and cuttings (drilling waste) will be
pumped into the annuli of development wells on the pad, an Alaska Oil and Gas
Conservation Commission (AOGCC) approved practice that has worked well at the CRU for
many years. By this letter, ConocoPhillips is notifying AOGCC of our intent to seek
authorization for annular disposal of drilling waste at CD5 under 20 AAC 25.080 when
drilling begins. This notice is based on our understanding that AOGCC may wish to hold a
hearing on this topic before proceeding to review applications for annular disposal
authorization under the applicable regulation and according to the normal process.
On January 29, 2013, ConocoPhillips provided a CD5 Drillsite Project Overview to AOGCC
staff. In this meeting and in follow-up informal discussions as recently as July 16, 2014,
AOGCC staff expressed caution and informed ConocoPhillips of potential future changes
within the AOGCC regarding authorization for annular disposal of drilling waste. To avoid
potential delay in CD5 development, ConocoPhillips seeks to identify any potential issues
with respect to authorization of annular disposal. If a hearing is desired by AOGCC,
ConocoPhillips strongly prefers that it be held soon for planning purposes, before drilling
begins at CD5.
The regulation governing annular disposal, 20 AAC 25.080, requires well -specific
information in the request, and that information is not available until the well that will be used
for disposal has been drilled. So, ConocoPhillips cannot request authorization for annular
disposal until drilling begins at CD5. Yet for planning purposes, ConocoPhillips has a strong
interest in confirming the expectation that a future request for annular disposal authorization
will be considered by the AOGCC under the existing regulations and in a manner consistent
with past practice at other CRU drillsites. If future permitting for annular disposal at CD5 will
be more restrictive, the implications could be significant and wide-ranging.
Annular disposal of wastes from the drilling of development wells is an agency approved
practice that dates back decades. The practice is regulated by the AOGCC as an activity
incidental to the drilling of a well, outside the scope of the federal underground injection
control (UIC) program. This understanding of the nature of annular disposal was
documented in the Memorandum of Agreement between the AOGCC and the U.S.
Environmental Protection Agency (EPA), Region 10, which was signed by the EPA on
November 21, 1991, and signed by the AOGCC on November 22, 1991. Section 10 of that
Memorandum provides: "The pumping away of drilling muds ... into an exploration well or
stratigraphic test well, or into the annuli of any well approved in accordance with 20 AAC
25.005, is an operation incidental to the drilling of the well, and is not a disposal operation
subject to regulation as a Class II well."
Since then, the AOGCC has adopted regulations that provide for the authorization of
annular disposal. The regulations were adopted in 1996, amended in 1999, and are codified
at 20 AAC 25.080. Subsection (a) of that regulation prohibits annular disposal except as
authorized by the AOGCC. Subsection (b) lists the extensive, detailed information that an
operator must provide in connection with a request for authorization of annular disposal.
Subsection (c) provides that the AOGCC "will authorize" annular disposal if the commission
makes certain determinations. That subsection, 20 AAC 25.080(c), reads as follows:
The commission will authorize an annular disposal operation described in the
Application for Sundry Approvals, as that application has been supplemented under
this section, and subject to any modifications prescribed by the commission, if the
commission determines that the
(1) waste will be adequately confined;
(2) disposal will not
(A) contaminate freshwater, except to the extent allowed under
(e)(91) [presumably, (e)(1)];
(B) cause drilling waste to surface;
(C) impair the mechanical integrity of any well; or
(D) damage a producing or potentially producing formation or impair
the recovery of oil or gas from a pool; and
(3) disposal will not circumvent 20 AAC 25.252 or 20 AAC 25.412.
Subsection (d) of the regulation imposes presumptive limits on annular disposal, including a
volume limit of 35,000 barrels per well, and a temporal limit of one year per well. The
remainder of the regulation provides for other potential conditions and imposes specific
reporting and other obligations on operators in connection with annular disposal.
Annular disposal, as governed by 20 AAC 25.080, has worked well at CRU for years. It has
allowed for the efficient placement of drilling waste in a manner that avoids the use of
reserve pits, and avoids the risks and complications associated with hauling waste in tanker
trucks and the associated transfers. The end result is that drilling fluids and cuttings that are
generated in the course of drilling a well are generally disposed of in the annuli of wells on
the same pad. This is a good solution for a place like the CRU, which has an extremely
small gravel footprint and does not have permanent road access to landfill facilities, which is
the common disposal option for drilling wastes in the Lower 48.
Annular disposal helps maintain the capacity of permitted Class I and Class II UIC wells for
disposal of substances other than drilling waste, which is especially important at CRU,
where a lack of a road system severely limits alternative options in case a UIC well
encounters problems. ConocoPhillips believes the incident -free history of annular disposal
at CRU supports continuation of the practice at the new CD5 pad. But because the UIC
wells are needed for disposal of non -drilling waste, it is important to have options for drilling
waste disposal. The large amount of drilling waste slurry anticipated from CD5, if injected at
a UIC disposal well at CD1, would increase the risk of a problem at that well. If a UIC
disposal well is removed from service, it poses a very real risk of having to shut down not
just drilling operations but also other operations at CRU, because without road access to
other waste disposal options, there may be no place to put wastes that must go in a UIC
well. Authorization for annular disposal of drilling waste at CRU provides important
flexibility, and the option should continue with the CD5 development.
Geology in the vicinity of CD5 presents a good opportunity to use annular disposal in
compliance with the criteria of 20 AAC 25.080 and good oilfield engineering practices. CD5
is premised on developing existing CRU reservoirs. ConocoPhillips has shared information
on CD5 geology with AOGCC staff, and no geological impediment to annular disposal has
been identified. The AOGCC Disposal Injection Order No. 18 for the Colville River Unit
expressly notes, at finding 14, that ConocoPhillips plans annular disposal of muds and
cuttings at CRU, and Rule 3 of that order even requires notice to AOGCC if the operator
expects to initiate routine disposal of drilling waste into the approved Class II well.
Annular disposal of drilling mud and cuttings has been an integral and successful part of
CRU development. Over 85 CRU wells have been permitted under 20 AAC 25.080 and
successfully used for annular disposal in the CRU to dispose of 2,600,000 barrels of muds
and cuttings. This has been a successful program because ConocoPhillips has rigorously
complied with 20 AAC 25.080. A key to ensuring that drill cuttings are disposed into the
intended zone is real time monitoring of the calculated bottom hole injection pressure (real
time fluid density, wellhead pressure and friction calculation). The calculated BHIP is
continuously monitored against the surface shoe formation integrity pressure to ensure the
confining zone's integrity is not compromised.
Conservation Order 443 for the Alpine Oil Pool in the Colville River Field recognizes at
finding 14 that the operator intends to dispose of drilling waste in the annuli of wells
authorized by the Commission, and recognizes at finding 21 that the available data indicate
annular disposal can occur without causing fractures near the surface casing shoe.
ConocoPhillips is not aware of any change that would make the plan for annular disposal
any less viable now for CD5 than it has been for other pads at CRU. If a future request for
authorization for annular disposal at CD5 is considered in a manner consistent with other
applications at CRU in the recent past, ConocoPhillips expects to be able to receive
authorization for annular disposal.
3
However, if the AOGCC intends to treat an annular disposal request for CD5 differently than
such requests have been treated for other CRU pads, then ConocoPhillips would like to
understand the basis for this change as early as possible. At this point, ConocoPhillips does
not see any option at CD5 that could serve as a good substitute for annular disposal, so if
annular disposal is preemptively precluded, the planning basis for CD5 development would
have to be reconsidered.
AOGCC staff has expressed a desire for a public hearing to discuss annular disposal at
CD5, but a hearing is not required by the regulations, and should not be necessary in our
view. ConocoPhillips does not oppose a hearing, however, and to help progress this issue
we are providing this notice and background information to give the AOGCC the opportunity
to hold a hearing, if it chooses to do so, on the issue of annular disposal at CD5.
If you have any questions or need further information please contact Sam Johnstone (907)
263-4617.
Sincerely,
MistAle/xa
Y
WNS Development Manager
cc:
Anadarko E&P LLC
