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Home My WebLink AboutDIO 0441. October 29, 2019 2. November 1, 2019 3. November 12, 2019 4. November 22, 2019 5. November 26, 2019 6. December 12, 2019 7. December 27, 2019 DISPOSAL INJECTION ORDER 44 Amaroq application Notice of Public Hearing, Affidavit of Publication and Bulk Mailing Emails Supplemental affidavit from Amaroq TLO non objection to publis hearing Transcript, presentation and sign -in sheet Amaroq additional information )ERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 71 Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Amaroq ) Disposal Injection Order 44 Resources, LLC. for disposal of Class ) Docket No. DIO-19-002 II oil field wastes by underground ) Tyonek Formation, Carya 2-1.2 zone injection in the Tyonek formation in ) Southern Undefined Upper Tyonek Gas well 1B located in the Nicolai Creek ) Pool Unit Section 29 TI IN, R12W S.M. ) Nicolai Creek Field Nicolai Creek Unit January 28, 2020 IT APPEARING THAT: 1. By application received October 31, 2019, Amaroq Resources, LLC (Amaroq) requested authorization for underground disposal of Class II oil field waste fluids into the Nicolai Creek Unit O1B well (NCU 1B). 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) scheduled a public hearing for December 12, 2019. On November 3, 2019, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list and mailed printed copies of the Notice of Public Hearing to all persons on the AOGCC's mailing distribution list. On November 3, 2019, the notice was published in the ANCHORAGE DAILY NEWS. 3. On November 22, 2019, Amaroq sent AOGCC a supplemental affidavit naming Alaska Mental Health Trust Land Office (TLO) as an additional surface owner within a one quarter mile of the proposed NCU 1B well and stating TLO was provided a copy of the application for disposal. 4. On November 26, 2019, TLO issued a letter to Amaroq stating the TLO does not object to the hearing scheduled by the AOGCC for December 12, 2019. AOGCC received a copy of the TLO letter on December 2, 2019 via email. 5. At the December 12, 2019 hearing, Amaroq provided testimony and presented evidence in support of its application. The hearing record was left open until December 27, 2019 for Amaroq to respond to AOGCC's requests for additional information. 6. On December 27, 2019, Amaroq submitted the requested additional information as well as an errata section of clarifications to the original application and exhibits submitted at the hearing. The hearing record closed. 7. Amaroq's application, testimony, supplemental information, and AOGCC public records for NCU wells are the basis for this order. Disposal Injection Order 44 January 28, 2020 Page 2 of 9 FINDINGS: 1. Location of Adiacent Wells (20 AAC 25.252(c)(1)) Currently, Amaroq has identified one candidate well, NCU IB, for possible conversion to disposal injection operations. The surface location for NCU IB lies onshore, about 120 feet north of the Cook Inlet shoreline. The proposed injection zone and the bottom -hole location for the well lie offshore, beneath the Cook Inlet. Figure 1, below, displays NCU 1B and the five wells that fall within a one-quarter mile radius of the planned disposal. NCU 1B currently produces gas from the Oligocene- to Miocene -aged Tyonek Formation (Tyonek), which includes the Carya 2-1.2 planned disposal injection interval. NCU 2 is a shut-in commingled gas producer for the overlying Beluga Formation (Beluga) and Tyonek that is also open to the Carya 2-1.2. NCU 9 is an active gas producer open only to the Beluga. Nicolai Creek State 1, Nicolai Creek State 1 A, and NCU 6 are plugged and abandoned. i NCU 13 i NC 9 NC n NCU IB f) \ f NICC�I CK ST 1.A(� Perforated i Intervals orf \ NICCUI CK ST 1 - - - - NCU 4 0' 1,000, ,All NCU6 NCU4 Figure 1. Index Map - Southern Nicolai Creek Unit Area (The large circle represents a radius of Y< mile from the planned disposal interval, and the small, blue -colored dots represent perforated intervals within the wells.) 2. _Notification of Operators and Surface Owners (20 AAC 25.252(c)(2) and 20 AAC 25.252(c)(3)) Amaroq is the only owner and operator of properties within a one-quarter mile radius of the proposed disposal interval, which lies offshore beneath the Cook Inlet. The State of Alaska, Department of Natural Resources (DNR) is the only offshore surface and subsurface owner. DNR and Alaska Mental Health Trust Land Office (TLO) are the only surface owners within Disposal Injection Order 44 January 28, 2020 Page 3 of 9 a one-quarter mile radius of the proposed disposal well. Amaroq provided AOGCC an affidavit affirming that DNR and TLO were provided a copy of the application. 3. Geological Information on Disposal and Confining Zones (20 AAC 25.252(c)(4)) Figure 2, below, illustrates the target zone for disposal in NCU 1 B. This planned disposal zone consists of two perforated intervals within a depleted gas reservoir located within the informally named Carya 2-1.2 zone within the Tyonek that lies between the depths of 2,307 and 2,370 feet measured depth (MD, equivalent to -2,218 and -2,281 feet true vertical depth subsea). Within the NCU, this portion of the Tyonek consists of numerous channel- and floodplain -deposited sandstone and conglomerate layers that are interbedded with—and bound above and below by—impermeable siltstone, claystone and scattered layers of non -reservoir coal. The reservoir sandstones and conglomerates display good intergranular porosity and are poorly cemented. Amaroq estimates reservoir porosity ranges from 24 to 28 percent and permeability ranges between 50 and 100 millidarcies based on similar sandstones the NCU 3 well, which lies about 1-1/3 miles north. The NCU structure is a northeast -trending anticline that measures about 1.2 miles long and 0.7 miles wide. The northern anticline limb terminates against a large, east -trending fault. At the Carya 2-1.2 horizon, the anticline is divided into two blocks by a small, northeast -trending, down -to -the -east normal fault that separates the planned NCU 1B disposal zone, in the western fault block, from stratigraphically equivalent sediments in NCU 2, in the eastern fault block. Amaroq testified this small fault is sealing due to the measured pressure difference of more than 700 psi between the wells. 4. Evaluation of Fluid Confinement (20 AAC 25.252(c)(9)) Based on the pressure difference between the two, the fault separating the NCU 1 B proposed disposal zone from stratigraphically equivalent sandstone and conglomerate layers in NCU 2 forms a lateral seal. The siltstone, claystone and non -reservoir coal layers that overlie the disposal zone in NCU IB form an effective top seal for this depleted gas reservoir. Similar layers beneath the proposed disposal zone will also prevent out -of -zone migration. 5. Aquifer Exemption (20 AAC 25.252(c)(11))• Standard Laboratory Water Analysis of the Formation (20 AAC 25.252(c)(10)) An aquifer exemption (AEO 12) was issued April 16, 2010 for portions of the Nicolai Creek Field occurring deeper than 2000 ft. Plentiful sources of freshwater have been identified onshore shallower than 450 ft below sea level. The proposed disposal zone in NCU 1B is a depleted gas reservoir located offshore about 2,200 feet below the floor of the Cook Inlet. Amaroq supplied a laboratory analysis for a commingled, produced water sample from NCU 1B that measured a total dissolved solids concentration of 7,540 mg/1. 6. Well Logs (20 AAC 25.252(c)(5)) Log data from existing wells in NCU are on file with the AOGCC. NCU 1B has a complete set of logs. 7. Demonstration of Mechanical Integrity and Disposal Zone Isolation (20 AAC 25.252(c)(6)) Thirteen and 3/8%inch surface casing was set at 1904 feet MD, cemented to surface and tested. Intermediate 10 -3/4 -inch casing was cemented to surface in the original well before being sidetracked with a window from 2186 to 2207 feet MD. The 7 -inch production casing was set i Disposal Injection Order 44 January 28, 2020 Page 4 of 9 at 3650 feet MD, cemented to surface, and tested. Analysis of cement bond logs indicates casing strings have adequate cement behind casing to prevent vertical migration of disposal fluids. A mechanical integrity test of the production casing will be performed in accordance with 20 AAC 25.412 prior to initiation of disposal operations. Amaroq will perform mechanical integrity tests of the tubing and tubing -casing annulus (including packer) and provide the results of those tests to the AOGCC before disposal injection commences. Additional baseline assessments and subsequent evaluations may be necessary to confirm the well has the proper mechanical integrity for disposal injection as proposed. The operator will monitor the 7 -inch casing by 2 7/8 -inch tubing annulus pressure daily and report the results on the Monthly Injection Report. 8. Disposal Fluid Tyne, Composition, Source Volume and Compatibility with Disposal Zone (20 AAC 25.252(c)(7)) The majority of disposed fluids will be produced water from the NCU wells. Additional solids, free workover fluids and completion brines from future workover operations could contribute up to approximately I% of the total disposal volumes anticipated by Amaroq. Amaroq does not intend to dispose of solids laden fluids (including drilling muds or cuttings) at this time. Amaroq states that the IB well will not be used for commercial disposal (disposal of fluids generated by non Amaroq operations and locations). Injected fluids derived within the NCU are expected to be compatible with the lithology and in-situ formation water of the proposed disposal injection zone. The average density of these fluids is expected to be about 8.4 ppg, and daily injection volumes are expected to average between 100 and 200 barrels per day over the expected life of the project. 9. Estimated Injection Pressures (20 AAC 25.252(c)(8)) Amaroq estimates average surface pressures around 200 psig when injecting water at 0.24 bpm. Amaroq estimates the maximum surface injection pressure could reach 900 psig if sporadic plugging of perforations or fracture -flow channels occurs. Accordingly, Amaroq requested 900 psig as the maximum allowed surface injection pressure. Disposal Injection Order 44 January 28, 2020 Page 5 of 9 Perforated Intervals Figure 2. NCU 1B Well Log Disposal Injection Order 44 January 28, 2020 Page 6 of 9 10. Mechanical Condition of Wells Penetrating the Disposal Zone Within a'/ Mile Radius of the proposed disposal wells (20 AAC 25.252(c)(12)) Five wells lie within a quarter -mile radius of NCU 113: Nicolai Creek State 1, Nicolai Creek State IA, NCU 2, NCU 6, and NCU 9 (see Figure 1, above). Of these, NCU 2 is a shut-in commingled Beluga and Tyonek gas -producer that is also open to the Carya 2-1.2 interval. NCU 6 was plugged and abandoned in 1980 (it penetrated the Carya 2-1.2 proposed disposal zone). NCU 9 is an active gas producer that is open only to the overlying Beluga Formation; it is a shallow well that did not penetrate the proposed Carya 2-1.2 disposal zone. Nicolai Creek State 1, Nicolai Creek State IA have been plugged and abandoned but they did not penetrate the proposed disposal zone. NCU 6 experienced shallow gas flows up the 20 -inch x 13 -3/8 -inch annulus after the cementing of the 13 -3/8 -inch casing. The gas was partially shut off after bullheading cement down the 30 -inch x 20 -inch and 20 -inch x 13 -3/8 -inch casing annuli. The 13 -3/8 -inch casing was also perforated twice, and cement was squeezed behind the casing at 730 feet and 665 feet to completely shut off the shallow gas flow. The 9 -5/8 -inch casing was cemented to surface with the assistance of a stage collar at 4200 feet MD with good cement returned to surface. The well was drilled deeper and logged prior to being plugged and abandoned in 1980 with three cement plugs set in the 9 -5/8 -inch casing. Amaroq has determined NCU 2 to be fault separated from NCU 1B in the proposed disposal zone. NCU 2 records and calculations show the 13 -3/8 -inch casing was cemented to surface without incident. The 7 -inch casing was cemented with good fluid returns but no cement back to surface. The cement bond log showed good cement to 2500 feet, fair from 2500 to 1900 feet, and no cement above 1900 feet. The well is currently shut in. Records documenting the drilling, casing, cementing, and testing of these wells are in the AOGCC's files. 11. Evaluation of Remaining Reserves in the Carya 2-1.2 Sand The NCU 1-B well was opened to production from the Carya 2-1.2, Carya 2-2.1, Carya 2-2.2 Sands in December 2006. At the time the NCU 2 well was also producing from the Carya 2- 1.2 and Carya 2-2.1 sands, but the pressure at the time the NCU 1-B well was perforated in these sands was much higher than the pressure at NCU 2, which indicates the sand bodies are not connected between these two wells. Due to the fact that multiple sands were open to production at the same time it's difficult to assign reserves to the individual sands. However, after producing about 580 MMCF of gas over its life production from the well was down to 10-30 MCFPD, which indicates that the sands currently open to production are depleted and the well is no longer a viable producer. CONCLUSIONS: 1. The requirements of 20 AAC 25.252 for approval of underground disposal are met. 2. An aquifer exemption is not required for the planned disposal injection into this depleted gas reservoir at a location that is offshore beneath the Cook Inlet. 3. Laterally continuous, impermeable confining intervals lie above and below the Carya 2-1.2 in the vicinity of NCU 1 B. Disposal Injection Order 44 January 28, 2020 Page 7 of 9 4. A sealing fault separates the proposed disposal zone in NCU 1B from stratigraphically equivalent sediments in nearby well NCU 2. 5. No compatibility issues are to be expected by disposing of produced water from the Beluga and Tyonek Formations within the NCU by injecting it back into the Tyonek within NCU 1 B. 6. Reviews of the mechanical integrity of NCU I B and nearby wells NCU 2 and NCU 6 (which intersect the proposed disposal zone) show that the wellbores are adequately cemented and cased to prevent the movement of injected fluids outside of the disposal zone. 7. A fracture gradient greater than 0.88 psi/ft (1,990 psi sand face pressure) can be estimated based on in -field Formation Integrity Tests (FIT) above the proposed Carya 2-1.2 disposal zone. Amaroq's requested surface pressure of up to 900 psi while injecting produced water, and the normal operating parameters of 0.24 bpm and 200 psi surface injection pressure, predicts that fractures will not penetrate the upper confining zone or breach the lower confining zone. Disposed waste fluids will be contained within the receiving interval by confining lithologies, cement isolation of the well bore, and planned operating conditions. 8. Supplemental mechanical integrity demonstrations and regularly scheduled surveillance of disposal injection operations—including baseline and subsequent temperature surveys, monitoring of injection performance (i.e., pressures and rates), and analyses of the data for indications of anomalous events— will ensure that waste fluids remain within the disposal interval and ensure appropriate operation of the field. 9. Future wells within 1/2 -mile of the proposed injection interval in each of the disposal wells must be constructed to ensure they do not serve as a conduit for fluid migration from the disposal zone. 10. The Carya 2-1.2 sand is depleted in the area of the NCU 1B well and thus converting it to a disposal zone will not cause a loss of reserves. NOW, THEREFORE, IT IS ORDERED THAT Amaroq's request for authorization for underground disposal of Class II fluids into well NCU 1 B in the Nicolai Creek Unit (NCU) is GRANTED. The following rules, in addition to statewide requirements under AS 31.05 and 20 AAC 25—to the extent not superseded by these rules—govern Class II disposal injection operations into the Tyonek within the NCU 1B well: RULE 1: Iniection Strata for Disposal Underground disposal of the Class II fluids listed below is permitted into the Tyonek Formation in the interval between 2,307 and 2,370 feet measured depth in well NCU 1B. RULE 2: Authorized Fluids This authorization is limited to Class II gas field waste fluids generated within the NCU during production and workover operations, including: Produced water; well workover fluids; stimulation fluids; rig wash water; chemicals used in the well or for production processing at the surface (in direct contact with produced fluids); and precipitation accumulating in drilling and production impoundment areas. The eligibility of other fluids for Class II waste disposal injection will be considered by the AOGCC on a case-by-case basis upon application by the operator. Commercial Class II disposal injection is prohibited. Disposal Injection Order 44 January 28, 2020 Page 8 of 9 RULE 3: Infection Rate and Pressure Injection rates and pressures must be maintained such that the injected fluids will not initiate or propagate fractures through the confining intervals or migrate out of the approved injection stratum. Disposal injection is authorized at wellhead injection pressures that do not exceed 900 prig while pumping water. RULE 4: Demonstration of Mechanical Integrity An AOGCC-witnessed mechanical integrity test must be performed after injection is commenced for the first time in the well, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent mechanical integrity tests must be performed at least once every two years after the date of the first AOGCC-witnessed test if the well injects solids laden slurries, and at least once every four years if the well only injects solids -free fluids. The AOGCC must be notified at least 48 hours in advance to enable a representative to witness a MIT. Unless an alternative means is approved by the AOGCC, mechanical integrity must be demonstrated by a tubing/casing annulus pressure test using a surface pressure of 1500 psi or 0.25 psi/ft multiplied by the vertical depth of the packer, whichever is greater, that shows stabilizing pressure and does not change more than 10 percent during a 30 -minute period. Results of MIT's must be readily available for AOGCC inspection. RULE 5: Well Inteerity Failure and Confinement The Operator shall immediately shut in the well if continued operation would be unsafe or threaten contamination of freshwater, or if so directed by the AOGCC. If fluids are found to be fracturing through a confining interval or migrating out of the approved injection stratum, the operator must immediately shut in the well. Upon discovery of such an event, the operator must immediately notify the AOGCC, provide details of the operation, and propose actions to prevent recurrence. Injection may not be restarted until approved by the AOGCC. A monthly report of daily tubing and casing annuli pressures and injection rates must be provided to the AOGCC if the well indicates any well integrity failure or lack of injection zone isolation. The AOGCC may immediately suspend, revoke, or modify this authorization if injected fluids fail to be confined to the approved disposal interval. An existing well may not be converted to a disposal well absent prior AOGCC approval of an Application for Sundry Approvals (Form 10-403). The well must meet the AOGCC well integrity requirements and demonstrate zonal isolation prior to disposal approval. Amaroq will be required to perform the mechanical integrity tests and injection testing to confirm feasibility of utilization for disposal operations. RULE 6: Surveillance The operator shall run a baseline temperature log and perform a baseline step -rate test prior to initial injection. A subsequent temperature log must be run one month after injection begins to delineate the receiving zone of the injected fluids. Amaroq shall perform an annual reservoir pressure survey of the disposal zone. Surface pressures and rates must be monitored continuously during injection for any indications of anomalous conditions. Results of daily wellhead pressure observations must be documented and available to the AOGCC upon request. The conduct of subsequent temperature surveys or other surveillance logging (e.g., water flow; acoustic) will be based on the results of the initial and follow-up temperature surveys and injection performance monitoring data. Disposal Injection Order 44 January 28, 2020 Page 9 of 9 The annual report of underground injection (Form 10-413) shall also include data sufficient to characterize the disposal operation, including, among other information, the following: injection and annuli pressures (i.e., daily average, maximum, and minimum pressures); fluid volumes injected (i.e., in disposal and clean fluid sweeps); injection rates; an assessment of the fracture geometry; a description of any anomalous injection results; a calculated zone of influence for the injected fluids; and an assessment of the applicability of the disposal order findings, conclusions, and rules based on actual performance. The annual report must be submitted by April 1 St. The annual report shall also include a section titled "Induced Seismicity" in which Amaroq shall detail its monitoring efforts and evaluate the risks. RULE 7: Notification of Improper Class 11 Iniection Injection of fluids other than those listed in Rule 2 without prior authorization is considered improper Class II injection. Upon discovery of such an event, the operator must immediately notify the AOGCC, provide details of the operation, and propose actions to prevent recurrence. Notification or other legal requirements of any other State or Federal agency remain the operator's responsibility. RULE 8: Administrative Action Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the AOGCC may administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater or outside of the authorized injection zone. DONE at Anchorage, Alaska, and dated January 28, 2020. e�' OIc 0 J r YPnce Daniel T ount, Jr. J Ie L. ChmielowskiC Coner Commissioner missioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter detemtined t it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration most set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial ofmconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial ofmconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to ran is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend nr ante hntiA— Carlisle, Samantha J (CED) From: Carlisle, Samantha 1 (CED) Sent: Tuesday, January 28, 2020 11:24 AM To: 'AOGCC Public Notices' Subject: Disposal Injection Order 44 Attachments: dio044.pdf Re: THE APPLICATION OF Amaroq Resources, LLC. for disposal of Class II oil field wastes by underground injection in the Tyonek formation in well 1B located in the Nicolai Creek Unit Section 29 T11N, R12W S.M. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7111 Avenue Anchorage, AK 99501 (907) 793-1.223 CONI IDEN I IA 11Y N0110E. Thiµ c -mail message, including an}-attachmenr-s, Contains information from the Alaska Oil anti G,is Concer�-ation Commussion (A0GCC), State 0l .Slasktl and is for the sole use of the intended ovipwnt(s). It alar t ontain Confidential and/or privileged Information. The unauInonzed reiriew, use. or disclosure oP>uch information anal � iodate. sta le or federal last. 111=oo are an unintended 1eeipient of this e-mail, pleavc delete it, it Itlst saving or forwarding it, and, so thll the AOG('C is aware of the mistake in sc rit int, it to von, contact Samantha Carlisle at (rA)7) 703 12111 or Som u2th I (arh.!,tilc il rska e vv. Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 INDEXES Z� r0q Resources, LLC 4665 Sweetwater Blvd., Suite 103 Sugar Land, TX 77479 December 27, 2019 Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7"' Avenue, Suite 100 Anchorage, AK 99501 RE: Docket Number: DIO-19-002, Nicolai Creek Unit, South Undefined Upper Tyonek Gas Pool, Carya 2-1.2 Zone, Application for Disposal of Class II Oilfield Wastes by Underground Injection, Nicolai Creek Unit 16 Well Dear Mr. Price: Amaroq Resources, LLC (Amaroq) hereby submits the enclosed additional information requested by the Commission during the December 12, 2019 public hearing at AOGCC offices for the referenced project. Additional information attached includes the following: • Estimated recoverable gas reserves remaining in the NCU 1B well; • Answers to questions asked by the Commissioners during the hearing that were not fully answered during the hearing; and • An errata section for clarifications to the original DIO submittal and exhibits submitted at the aforementioned hearing. If you have any questions or require additional information to support Amaroq's request for a Disposal Injection Order for the NCU 1B well, please contact me at your earliest convenience. Sincerely, � /, 44V G. Scott Pfoff President Amaroq Resources, LLC cc: Jesse Mohrbacher, SolstenXP Inc. R'I=rIFIVEED DEC 2 7 2019 AOGCC 0 R I G 1 96$SW etwater Blvd., Suite 103 0 Sugar Land, Texas 774790 (832) 999-4603 0 (832) 999-4382 roq Resources, LLC 4665 Sweetwater BIA. Swte M Sugar Land, Tx 77479 December 27, 2019 Supplemental Information Submittal, Docket Number: DIO-19-002, Nicolai Creek Unit, South Undefined Upper Tyonek Gas Pool, Carya 2-1.2 Zone, Application for Disposal of Class II Oilfield Wastes by Underground Injection, Nicolai Creek Unit 1B Well The AOGCC held a hearing for Amaroq Resources, LLC's (Amaroq) Application for a Disposal Injection Order (DIO) for the Nicolai Creek Unit 1B well on December 12, 2019. During the hearing, the Commissioners asked questions regarding geological and reservoir data that required follow up supplemental information that is presented below. The hearing record was kept open for 10 working days and closes on December 27, 2019. Supplemental information included in this submittal includes the following: • Estimated recoverable gas reserves remaining in the NCU 113 well; • Answers to questions asked by the Commissioners that were not fully answered during the hearing; and • An errata section for clarifications to the original DIO submittal and exhibits submitted at the aforementioned hearing. Bythis submittal, Amaroq believes that it has provided the AOGCC with a complete Application for DID and provided all requested additional information. Should any additional clarifications be required, Amaroq is prepared to respond to any future data requests regarding the DIO Application. 1. Estimated Remaining Recoverable Gas Reserves in the NCU 1B Well Estimated remaining recoverable reserves for the NCU 1B well were calculated using both volumetric and material balance methods. For the volumetric analysis, original gas in place (OGIP) was estimated utilizing the following equation: OGIP = 43,560 ` cp` (t -S„ )"Ah` Bg 43,560 = cubic feettacre feet (I) = Porosity, fraction S„, = water saturation, fraction A = Area, acres h= thickness, ft B, = Gas formation volume factor, SCF/CF Assumptions for the equation inputs include the following: Porosity = 25% Water saturation = 40% Area = 25 acres Height = thickness = measured for each sand from the resistivity log, t 1 ohm Gas formation volume factor calculated for each sand based on data of initial flow testing Isopach maps were not used in the volumetric analysis as Amaroq does not currently have access to what it believes are accurate isopach maps for the Carya sands in the NCU 1B well. Instead, a 25 acre area for each productive interval has been assumed. The results of the volumetric analysis are shown in Table 1, Amaroq believes the volumetric estimates above for OGIP are significantly higher than the actual OGIP based on the NCU 1B production to date and the material balance analysis presented below. This may be due to differing reservoir properties than the assumptions listed above. Prior to drilling the NCU 1B well, Amaroq's predecessor, Aurora Gas, LLC, estimated the most likely recoverable reserves for the well at 1,780,000 MCF. Clearly, the well did not contain the estimated quantity of recoverable reserves or OGIP quantities necessary to deliver those recoverable reserves. The results of the material balance analysis are presented in Table 2 and Charts 1, 2, 3, and 4. Table 1. NCU 18 volumetric OGIP estimate based on initial reservoir test data. Sand Sand Production Interval MD (ft) Sand Thickness (ft) Perf Datum Depth TVDss p (ft) Calculated Initial Reservoir I'l—re(psia) Reservoir Temperature °R - Gas FVF IS -1 Estimated Original Gas In Place (MCF) %OGIP Carya 2-1.2 2307-2370 35 -2250 1040 536 0.01282 445,922 30.2% CarVa 2-2.1, Carya 2-2.2 2480-2622 26 -2462 1045 539 0.01283 330,996 22.4% Carya 2-3 2837-2918 24 -2788 1350 545 0.00981 399,443 27.0% Carya 2-4.2,2-5.1,2-6.1 3191- 3575 15 -3328 1644 554 1 0.00810 302,600 20.5% Total 1,478,962 100% Notes: 1. 23ohm value used for idemifyin sand thickness on resistivity to 2. NCU IS cumulative well production through Nov 2019= 699,229 MCF including 117,379 MCF as NC St. 1A Amaroq believes the volumetric estimates above for OGIP are significantly higher than the actual OGIP based on the NCU 1B production to date and the material balance analysis presented below. This may be due to differing reservoir properties than the assumptions listed above. Prior to drilling the NCU 1B well, Amaroq's predecessor, Aurora Gas, LLC, estimated the most likely recoverable reserves for the well at 1,780,000 MCF. Clearly, the well did not contain the estimated quantity of recoverable reserves or OGIP quantities necessary to deliver those recoverable reserves. The results of the material balance analysis are presented in Table 2 and Charts 1, 2, 3, and 4. Amaroq believes that the material balance estimates are more realistic than the volumetric analysis presented above. That said, the material balance analysis may also overstate the economically recoverable reserves when consideration is given to the recent low production volumes of 10,640 and 5749 MCF in 2018 and 2019, respectively. Table 2. NCU IS estimated proved OGIP and remaining recoverable gas reserves from P/Z data. Sand PmduRbn Sand Interval Depth Thkkness MD (it) (ft)(ft) Perf Datum InRial Curtent Reservoir Reservoir Depth TVDu Pressure pressure Ipsia) (Psla Estimated OGIPIMCF) Cumulative Pmduction(MCF) Estimated Remaining Recoverable Reserves 85%Recovery (MCF) Ca 2-1.2 2307-2370 35 -2250 1040 290 305,000 225,000 34,250 Ca 2-2.1,Carya 2-2.2 2480-2622 26 -2462 1045 377 240,OW 160,000 44,000 Carya 2-3 2837-2918 1 24 -2788 1350 511 285,000 185,000 57,250 Carya 2-4.2,2-5.12-6.1 3191-3575 1 IS -3328 1644 734 220,000 130,000 57.000 Totals 1 1,0501000 1 7M000 1924500 Notes: 1. 21 ohm value used for identi i sandthickness on resistivity log 2. NCU 18 cumulative well production through Nov 2019=699,229 MCF including 117,379 MCF as NC St. Ix Amaroq believes that the material balance estimates are more realistic than the volumetric analysis presented above. That said, the material balance analysis may also overstate the economically recoverable reserves when consideration is given to the recent low production volumes of 10,640 and 5749 MCF in 2018 and 2019, respectively. P/z P/z Chart 1. P/z plot for Carya 2-1.2 sand (proposed disposal zone). Chart 2. P/z plot for Carya 2-2.1 and 2-2.2 sands. 1400 -- —_ 1200 ----- 1000- ------ - 800 600------- ------ 400 200 OT-T--T-T-.... _1 0 50,000 100,000 150,000 200,000 250,000 300,000 Cumulative Production (MCF) 3 Chart 3. P/z plot for Carya 2-3 sand. 1800 — --- 1600 - 1400 1200 - - - -_ P/z 1000 -- 800 - 600 I 400 - — -- ---�--�I, 7=8- 5%.ecovery200a i0 50,000 100,000 150,000 200,000 250,000 300,000 Cumulative Production (MCF) Chart 4. P/z plot for Carya 2-4.2, 2-5.1, 2-6.1 sands. 2500 2000 1500 i P/z 1000 113 0 0 85% Recovery 50,000 100,000 150,000 200,000 250,000 Cumulative Production (MCF) 4 It is important to note that disposal injection into the Carya 2-1.2 zone will void only the estimated 34,250 MCF remaining recoverable reserves in this sand. The other remaining reserves in the NCU 113 well could be produced at a later time if an alternative for water disposal became available as the zones below the Carya 2-1.2 sand are isolated by geologic confining layers and the completion design in the NCU 1B wellbore. Amaroq's current estimate for proved reserves in the NCU is on the order of 1.8 BCF. Approximately 1 BCF of the proved reserves is allocated to the NCU 10 well which is anticipated to produce 100 to 200 bbl/day water when on production. If Amaroq is unable to dispose of water into the Carya 2-1.2 zone, the entire 1.8 BCF of reserves will be wasted as there is no other economically viable disposal option for the produced water from the NCU production wells. The material balance analysis for the proposed Carya 2-1.2 disposal zone provides an estimate for the minimum available disposal quantity if the reservoir was only re -pressured to 1040 psia (mimimum formation fracture pressure is estimated at 1990 psia). By multiplying the formation volume factor (0.0128 RCF/SCF) by the estimated 225,000 MCF produced yields a minimum of 514,000 bbls of void space in the reservoir at original reservoir pressure of 1040 psia. This equates to over 4 years of disposal injection at the maximum anticipated injection rate of 0.24 bbl/minute. 2. Commissioner Questions During the December 12, 2019 Hearing Requiring Clarification 2.1. Commissioner Seamount asked if a water drive was present at NCU? Answer: No. 2.2 Commissioner Chmielowski asked if the reservoir(s) were channel sands? Answer: Yes, the NCU producing sands are channel and floodplain sands. See page 4-1 of the DIO Application. 3. Errata in the Original DIO Application and Hearing Exhibits 3.1. Page 4-4 of the DIO Application. The shale lithology that reads 2430 — 2430 MD should read 2430-2458 MD. See attached corrected page 4-4. 3.2. Page 12-1 of the DIO Application lists the Carya 2-1.2 penetration depths for the NCU 1B and NCU 6 wells at 2200' and 2190', respectively. These depths should be 2185' for the NCU 1B well and 2191' for the NCU 6 well. See attached corrected page 12-1. 3.3. The PowerPoint presentation for the hearing contained several items that require correction or edits including: a. The pages/slides have been numbered. b. The fault shown on pages 6 and 9 should have been downthrown to the west instead of the east. Page 6 has been eliminated. Page 9 is now page 8. C. The structural cross section should have shown the fault downthrown to the west instead of the east. This has been corrected. d. The estimated available disposal volume and areal extent of the disposal volume has been revised based on the material balance analysis above. e. The dates of preparation for the maps in the powerpoint have been noted. Please see the revised power point presentation containing the edits discussed in 3.2 a - e above. Table 4-1. NCU 18 interpreted lithology above and below proposed Carya2-1.2 disposal zone. Table 4-1. NCU 1B interpreted lithology above and below proposed Carya 2-1.2 disposal zone. Depth MD Lithology Perforated Interval MD Zone 1900-1940 sllstoneand shale 1940-1955 coal 1955-2000 siltstone 2000-2010 coal 2010-2060 siltstone 2060-2072 coal 2072-2130 silstone and shale 2130-2140 sandstone 2140-2165 siltstone 2165-2175 coal 2175-2240 silstone and shale 2240-2250 coal 2250-2307 siltstone, shale and coal 2307-2326 sandstone 2307-2326 Carya 2-1.2 (disposal) 2326-2335 coal 2335-2350 shale 2350-2380 sandstone 2350-2370 Carya 2-1.2 (disposal) 2380-2390 coal 2390-2430 interbedded shales and coals 2430-2458 shale 2458-2472 Interbedded shales and coals 2472-2490 sandstone 2480-2486 Carya 2-2.1 2490-2530 interbedded sands, shales and coals 2530-2590 shale 2590-2595 coal 2595-2630 sandstone 2604-2622 carya 2-2.2 2630-2652 coal and siltstone 2652-2690 siltstone and shale Page 4-4 12.0 Mechanical Condition of Wells [20 AAC 25.252(c)(12)] The NCU 1B well is located on the same pad as the NCU 2, 9, and 6 wells as shown above in Figure 1-1. The NCU 2 (shut in) and NCU 9 wells are completed gas producers while the NCU 6 well was P&A'd in 1980. Both the NCU 6 and NCU 2 wells have penetrated the Carya 2-1.2 sands within ''/< mile radius of the NCU 1B well. The NCU 6 well penetrated the proposed Carya 2-1.2 disposal zone at approximately 2191' TVDSS which is very close to the TVDSS depth for the NCU 1B Carya 2-1.2 depth of 2185' TVDSS. The horizontal distance between these two penetrations of the proposed disposal zone is approximately 295'. During drilling operations for the NCU 6 well, shallow gas was encountered between 700' and 750' which eventually resulted in a gas flow in the 20" x 13.375" annulus after cementing the 13.375" casing. The gas was partially shut off after bullheading cement down the 20" x 13.375" and 30" x 20" annuli. Prior to setting 9.625" casing, the 13.375" casing was perforated twice and cement was squeezed behind the casing at 730' and 665' to completely shut off the shallow gas flow. After drillout of the 13.375" cement retainer, the 9.625" casing was run to 9110' and cemented to surface with the Carya 2-1.2 interval cemented via a stage collar at 4200' MD with good cement returns and 300 ft3 of cement returned to surface. After the completion of drilling operations to 11776', the well was P&A'd with 3 cement plugs set in the 9.625" casing. Amaroq believes that the NCU 6 well is secure and will not be a conduit for Class II wastes to reach freshwater sources due to the cementing of the 9.625" casing to surface with good cement returns, the cement squeeze jobs performed on the 13.375" casing at 665' and 730' prior to running the 9.625" casing, and the cement bullheaded into the 20" x 13.375" annulus. The NCU 2 well also penetrated the proposed disposal zone, however, the Carya 2-1.2 zone is fault separated in these two wells as shown in Figure 4-1 above. Furthermore, as discussed above in section 4.2, pressure data obtained following perforating of these sands in the NCU 1B well in June 2006 indicated that they are not in direct communication with the same sands in the NCU 2 well as the sands in the NCU 1B well exhibited virgin reservoir pressure of approximately 1040 psi while the same zones in the NCU 2 well had been on production since August 2002 and had declined significantly below a similar initial reservoir pressure. The NCU 9 well is a Beluga Formation gas producer and does not penetrate the Carya 2-1.2 sands. Page 12-1 Amaroq Resources, LLC Docket Number: DIO-19-002 Nicolai Creek Unit, South Undefined Gas Pool, Carya 2-1.2 zone Upper Tyonek Application for Disposal Injection Order Geologic Cross Section for NCU 1 B & Vicinity Wells and Volumetric Calculations Revised December 27, 2019 RECEIVED DEC 2 7 2019 AOGCC CA RYA 2-1.2 SAND DEPTH STRUCTURE Contour Interval 50 FEET Map showing NCU South PA wells. Map produced in 2006. Shaded area = 165 acres. Productive area in NCU 1 B estimated at < 25 acres in 2019. 2 MILE 2 Map produced in 2003 Shows fault separating NCU 1 B and NCU 2 k, WEST rrr NN IA ¢ P6Ad m M STRATIGRAPHIC SECTION, DATUMED ON TOP TYONEK FORMATION Revised 2019 NCV IB Cas Producer NCV 6 NCV 2 comirgled PARA bas Producer (shut in) e m v comingled i� n WEST NCU IA PaA•a �'B 6az Producer ... comimind STRUCTURAL SECTION NCV 6 a PdA'd m u NCII z / Gas Producer (shut in) coaftled EAST EAST 1 r 3aoo- i 4 -_. 1 2100 - -" 2000 3100 2200- 2200 NN. 3300- r Non . -3100 w —Jt S 2201 2300. 28M -2200 3200- j. 3- - 2300 �— � - �° f _— ,m- + .Um. 31M. 3200. — _ __ .2600 .2600 3300. >im ry r -r, - WEST NCU IA PaA•a �'B 6az Producer ... comimind STRUCTURAL SECTION NCV 6 a PdA'd m u NCII z / Gas Producer (shut in) coaftled EAST EAST 1 r 3aoo- 2000 aim -3100 —Jt 2201 -2200 2300 �— - _— .Um. 2500- — _ __ .2600 .2600 ry r -r, 2800- -2008 - 2 200 3w- O q ew .3008 - f 3100- -J100 - p '3200. ' r ye qy1 4300- Volumetric Calculations NCU 1B Well Carya 2-1.2 Disposal Zone Reservoir Assumptions: Porosity = 25% SW = 40% Temp constant at 76° F Current Pressure = 313 psia @ 2350 ft MD Thickness = 35 ft 225,000 MCF gas produced = 514,000 bbl reservoir void available Maximum Injection rate = 0.24 bpm Final reservoir pressure = original = 1040 psia Minimum estimated fracture pressure= 1990 psia 5 Volume available = reservoir volume of produced gas From Material Balance Analysis Void space = 225,000 MCF x 0.01282 RCF/SCF x 1000 SCF/MCF = 2,884,500 RCF = 514,000 bbls = 1487 days injection at 0.24 bpm = 4+ years at max injection rate to reach original reservoir P Lost recoverable gas reserves in Carya 2-1.2 estimated at 34,250 MCF Recoverable gas reserves in lower Carya zones remain available for production at a later date. 101 Estimated Areal Extent of Injection Over 7 Year Disposal Project Assume radial flow in semi -circle due to faulting (see slides 3, 4 and page 4- 2 of the D10 Application) Estimated max disposal volume over 4 years = 514,000 bbl Areal extent = volume disposed / volume/acre Volume/acre = 43,560 ft2/acre x 0.25 porosity x 0.6 SW x 35 ft thick sand = 228,690 ft3/acre = 40,731 bbl/acre Areal extent = 514,000 bbl / 40,731 bbl/acre = 12.6 acres Semi -circle area = n x r2 x 0.5 = 12.6 acres = 548,856 ft2 r2= 349,413 ft2 r=591 ft=0.11 mile 7 CARYA 2-1.2 SAND DEPTH STRUCTURE Contour Interval 50 FEET AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) Amaroq Resources, LLC for a Disposal ) Injection Order for the Nicolai Creek ) Unit, South Undefined Upper Tyonek Gas ) Pool, Carya 2.1-2 Zone, 1B Well. ) Docket No.: DIO 19-002 PUBLIC HEARING Anchorage, Alaska December 12, 2019 10:00 o'clock a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner computer Matrix, LLC Phone: 907-243-0668 135 ChristensenDr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email• sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chair Price 03 3 Remarks by Mr. Mchrbacher 05 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahileggci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 CHAIRMAN PRICE: This is docket number DIO 19- 4 002. We are here to consider Amaroq Resources, LLC's 5 request for a disposal injection order for the Nicolai 6 Creek Unit, South Undefined Upper Tyonek Gas Pool, 7 Carya 2.1-2 zone, specifically Nicolai Creek 1B well. 8 This hearing is being held on the morning of 9 December 12, 2019 at 10:00 a.m. This location is the 10 Alaska Oil and Gas Conservation Commission offices at 11 333 West Seventh Avenue, Anchorage, Alaska. Before we 12 begin I'll introduce my fellow Commissioners to the 13 right and left of me. To the right is Commissioner 14 Jessie Chmielowski, to the left is Commissioner Dan 15 Seamount. I'm Jeremy Price, Commissioner and Chair. 16 If any persons need special accommodations to 17 participate in this proceeding please see Samantha 18 Carlisle who is in the back with her hand raised. She 19 will do her best to accommodate. 20 Computer Matrix will be recording the 21 proceeding. On completion and preparation of the 22 transcripts persons desiring a copy will be able to 23 obtain it by contacting Computer Matrix. 24 This hearing is being held with -- in 25 accordance with AS 44.62 and 20 AAC 25.540 of the computer Matnx, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 4 1 Alaska Administrative Code. This hearing will be 2 recorded. 3 So we just have one person testifying today, 4 correct? 5 MR. MOHRBACHER: (Indiscernible - away from 6 microphone)..... 7 CHAIRMAN PRICE: Okay. Jesse, how do you say 8 your last name again? 9 MR. MOHRBACHER: Mohrbacher. 10 CHAIRMAN PRICE: Mohrbacher. And are you 11 testifying today as an expert witness? 12 MR. MOHRBACHER: I'd have to have you explain 13 that for me. 14 CHAIRMAN PRICE: What's your qualifications to 15 testify today? 16 MR. MOHRBACHER: My qualifications is that I am 17 an engineer, I've worked in the petroleum industry 18 (indiscernible - away from microphone) this project. 19 CHAIRMAN PRICE: Okay. 20 REPORTER: Sir, you need to turn on your mic. 21 CHAIRMAN PRICE: Oh. 22 REPORTER: Sorry. Could you repeat..... 23 MR. MOHRBACHER: There we go. 24 CHAIRMAN PRICE: Can you repeat that answer? 25 MR. MOHRBACHER: Yeah. Can you hear me okay? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahileCgci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 5 1 My qualifications are that I'm an engineer and I have 2 been involved in the oil and gas industry for the last 3 30 years here in Alaska. And I'm familiar with this 4 project and have worked on a number of disposal 5 injection orders in the past. 6 CHAIRMAN PRICE: Okay. 7 COMMISSIONER CHMIELOWSKI: What is your degree 8 in and where did you go to university? 9 MR. MOHRBACHER: My degree is in chemical 10 engineering and I attended the University of Minnesota. 11 CHAIRMAN PRICE: Is that satisfactory, 12 Commissioners? 13 COMMISSIONER SEAMOUNT: Do you have experience 14 in the geology of this field? 15 MR. MOHRBACHER: I have very limited experience 16 in the geology of this field. And I have to apologize 17 for the Commission, our geological representative that 18 I planned to bring to the meeting with me who has 19 assisted me in preparation of some of this information 20 is Larry Casarta and he is at home sick in bed. 21 COMMISSIONER SEAMOUNT: Oh. Okay. 22 COMMISSIONER CHMIELOWSKI: Mr. Mohrbacher, did 23 you work for Solsten during the Iko Bay P&A work for 24 BLM? 25 MR. MOHRBACHER: Yes, I worked for SolstenXP at Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 1 that time, yes. 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 6 2 COMMISSIONER CHMIELOWSKI: Okay. 3 CHAIRMAN PRICE: Any other -- any other 4 questions about the credentials of the witness? 5 COMMISSIONER SEAMOUNT: We may have quite a few 6 questions related to geology. So if you can't answer 7 them we'll take time for -- a few days to get the 8 answers from you. 9 MR. MOHRBACHER: Yeah, we'd be happy to do 10 that. 11 CHAIRMAN PRICE: Commissioners, do you have -- 12 want to make any comments before I swear him in? 13 COMMISSIONER CHMIELOWSKI: No, I'm ready. 14 Thank you. 15 COMMISSIONER SEAMOUNT: Well, we haven't 16 decided whether he's an expert yet. 17 CHAIRMAN PRICE: Okay. 18 COMMISSIONER SEAMOUNT: I would say he's an 19 expert in petroleum geology. 20 COMMISSIONER CHMIELOWSKI: Not geology. 21 COMMISSIONER SEAMOUNT: I mean, petroleum 22 engineering of the Nicolai Creek field. 23 Does that sound right? 24 MR. MOHRBACHER: That -- that's reasonable, 25 yes. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DTO I 0 -nm Page 7 1 COMMISSIONER SEAMOUNT: Okay. 2 MR. MOHRBACHER: I'm not an expert in geology. 3 COMMISSIONER SEAMOUNT: Okay. Thank you. 4 CHAIRMAN PRICE: I concur. 5 COMMISSIONER CHMIELOWSKI: I concur. 6 CHAIRMAN PRICE: Can you stand and raise your 7 right hand. 8 (Oath administered) 9 MR. MOHRBACHER: (Indiscernible - away from 10 microphone)..... 11 CHAIRMAN PRICE: Thank you. Please be seated. 12 We have your presentation before us. 13 One thing I forgot to mention that this hearing 14 -- the notice of the hearing was published in the 15 Anchorage Daily News on November 3rd, 2019. It was 16 also posted on the state of Alaska online notices 17 website email distribution list as well as our AOGCC 18 website. 19 Please proceed. 20 MR. MOHRBACHER: Okay. 21 JESSE MOHRBACHER 22 called as a witness on behalf of Amaroq Resources, 23 testified as follows on: 24 DIRECT EXAMINATION 25 MR. MOHRBACHER: Well, I have prepared a brief �urnpmer tviatrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 E 1 presentation largely under the instructions of Steve 2 Davies related to the geologic cross section and the 3 vicinity wells of the Nicolai Creek Unit number 1B 4 well. I did not prepare a presentation to go through 5 the entire application for injection disposal order 6 because it's part of the record already. I can answer 7 any questions on that if you'd like, but I have not 8 prepared a presentation on that part. 9 Would you like me to proceed with this 10 presentation and answer questions afterwards? 11 CHAIRMAN PRICE: Go ahead and go through the 12 presentation that you prepared to give today and then 13 we'll go from there. 14 MR. MOHRBACHER: Okay. 15 COMMISSIONER SEAMOUNT: And we may cut you off 16 at times with questions. 17 MR. MOHRBACHER: Sure. 18 (Off record comments - microphone) 19 MR. MOHRBACHER: Okay. So this is docket 20 number DIO, standing for disposal injection order, 19- 21 002. This is for the Nicolai Creek Unit, South 22 Undefined Upper Tyonek Pool, the Carya 2.1-2 sand 23 package proposed as the disposal zone for the 24 application for our disposal injection order that's 25 been submitted previously to the Commission. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahile@gci.net AOGCC 12/12/2019 APPLICATION OFAMAROQRESOURCES, LLC DOCKET NO. DIO 19-002 Page 9 1 We've prepared a geologic cross section for the 2 NCU 1B well and the vicinity wells and volumetric 3 calculations for the proposed disposal activity. 4 So this is an image of the Carya 2-1.2 [sic] 5 sand depth structure map, subsea TVD. And it shows the 6 key wells in the area of the Nicolai Creek Unit number 7 1B well. All of the wells are on a central pad, a 8 common pad here along the coast near a location called 9 Shirleyville for the Nicolai Creek Unit. And the 10 original well was the Nicolai Creek Unit number 1 well. 11 That well was subsequently sidetracked to -- as the lA 12 well. Later the well was sidetracked as the Nicolai 13 Creek Unit 113 well as shown right here in this 14 particular location at 2,185 feet. The subsea is where 15 it penetrates the Carya sands. 16 Additional wells on the list or on the images, 17 the Nicolai Creek Unit number 6 well and the Nicolai 18 Creek Unit number 2 well. The number 2 well 19 penetrating the sand at approximately 2,197 subsea TVD 20 and the number 6 well penetrating it at 2,190 21 something. I'd have to double check, it's on a future 22 slide. 23 So that's what the proposed disposal zone sand 24 looks like based on seismic interpretation. And this 25 particular interpretation was used as part of the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 10 1 justification for drilling the number 1B well. 2 COMMISSIONER CHMIELOWSKI: Is the 1B well the 3 only well that's produced out of this? 4 MR. MOHRBACHER: No, other wells have produced 5 in the past and I'll show which ones are producing now. 6 But Nicolai Creek Unit number 6 well producing gas at 7 one point in time, it's plugged and abandoned. 8 Likewise these -- all of these wells produced some gas 9 at some point in time, either through sidetrack or by 10 perforating shallower zones. The early wells were 11 looking for oil which wasn't successful. So and I'll 12 show which wells have produced. And there's current 13 two producing -- three producing wells on this pad, but 14 only two that penetrate this particular gas or gas 15 sand. 16 This is another image showing the structure of 17 the 2-1.2 sand and this image shows an interpreted 18 fault here that runs in a northeast/southwest fashion 19 across the sand. And this fault is important because 20 we believe that it -- well, we have empirical evidence 21 that it isolates the Nicolai Creek 1A, 1B wells from 22 the Nicolai Creek Unit number 2 and most likely the 23 Nicolai Creek Unit number 6 well as well. 24 COMMISSIONER SEAMOUNT: I'm kind of confused. 25 The slide before it -- I guess we need to number these Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 11 1 slides, that would be slide number 2. 2 MR. MOHRBACHER: Yeah, I apologize. I didn't 3 put pages on this, I realized that coming over here. 4 There's..... 5 COMMISSIONER SEAMOUNT: Okay. 6 MR. MOHRBACHER: .....nine pages total. 7 COMMISSIONER SEAMOUNT: Well, slide number 3 8 shows a fault and slide number 2 does not show the 9 fault. 10 MR. MOHRBACHER: Yeah, I didn't show the fault 11 on this slide because it -- I wanted to just talk about 12 where the wells are and it gets -- the fault comes 13 right through this area and would make it very 14 difficult to show these particular little points where 15 the -- excuse me, right there, where the wells 16 penetrate the sand. And I have subsequent slides that 17 have this fault on it. 18 COMMISSIONER SEAMOUNT: And the dashed line 19 that surrounds a color, is that the gas/water contact 20 in this zone or..... 21 MR. MOHRBACHER: Are you referring -- that's 22 the estimated gas/water contact at the time this was 23 produced, yes. And if we go back to -- well, if we go 24 to this one it -- this is a larger area. This was 25 produced at a previous time. So that was produced in Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch, AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DID 19-002 Page 12 1 2003. So when this image was produced in 2006 the 2 estimated gas/water contact and containing gas zone was 3 reduced in size. 4 COMMISSIONER SEAMOUNT: Is there a water drive 5 here? 6 MR. MOHRBACHER: I don't believe so. 7 COMMISSIONER SEAMOUNT: Okay. And the top of 8 the structure, has it been produced? 9 MR. MOHRBACHER: Yes. 10 COMMISSIONER SEAMOUNT: Okay. So you believe 11 that all the gas has been recovered from this structure 12 at -- in that zone? 13 MR. MOHRBACHER: Yes. And we have a -- in the 14 application for a disposal injection order we have a P 15 over Z plot that shows the well is very near its 16 economic recovery limit. 17 COMMISSIONER SEAMOUNT: Okay. 18 CHAIRMAN PRICE: On that note how much is being 19 recovered now, and it is being produced now, correct? 20 MR. MOHRBACHER: It is being produced now and 21 the flows are very low on the order -- I would have to 22 double check what the current flow rates are, but they 23 are -- they're pretty low, on the order of probably, 24 you know, 30,000 a day to 100,000 a day, somewhere in 25 there. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 13 1 COMMISSIONER CHMIELOWSKI: You say the fault is 2 isolating. Is there -- do you have pressure data to 3 verify? 4 MR. MOHRBACHER: Yes, we refer to that in the 5 application. And what we have is that the -- this 6 particular sands was produced in the Nicolai Creek Unit 7 number 2 well which is this well. And it had been put 8 on production several years prior to the Nicolai Creek 9 Unit number 1B well, putting that same sand on 10 production. And so the zone was depleted in the number 11 2 well and in the number 113 well the zone was a virgin 12 reservoir pressure of approximately 1,040 PSI. 13 COMMISSIONER CHMIELOWSKI: Okay. So just to 14 double check, the 113 well's perfed only -- is it to the 15 west? 16 MR. MOHRBACHER: Yes. 17 COMMISSIONER CHMIELOWSKI: Yes. And the 2's 18 perfed only to the east of the fault? 19 MR. MOHRBACHER: Yes. 20 COMMISSIONER CHMIELOWSKI: Yeah. Okay. 21 MR. MOHRBACHER: And I have some traditional 22 diagrams that show that later. 23 CHAIRMAN PRICE: I think -- so in your 24 application -- sorry, in response to your previous -- 25 my previous question to you, I'm just looking at your Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 14 1 application on page 41, cumulative gas production, as 2 of September, 2019 the NCU 1B well is 581,539 MCF? 3 MR. MOHRBACHER: Yes, that was production to 4 date at the time. 5 CHAIRMAN PRICE: Okay. 6 COMMISSIONER SEAMOUNT: The closure to the 7 northwest, the one that says NCU 1A, is there 8 production from that closure? 9 MR. MOHRBACHER: Yes. The -- this image was 10 produced before the NCU 1B well was drilled. This 11 closure is produced by the Nicolai Creek Unit number 1B 12 well and has been since it was completed back in 2006 13 or when that zone was put on production. I would have 14 to go back and check if it was put on after 2006. 15 COMMISSIONER SEAMOUNT: And the 1B is producing 16 from other zones than the proposed disposal zone..... 17 MR. MOHRBACHER: Yes. 18 COMMISSIONER SEAMOUNT: .....is that correct? 19 MR. MOHRBACHER: Yes. It has other zones that 20 are open in the lower part of the well as well that are 21 all depleted. This well's been commingled for a long 22 time. 23 COMMISSIONER SEAMOUNT: Okay. 24 CHAIRMAN PRICE: Can you proceed? 25 MR. MOHRBACHER: Sure. So this image shows the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(N,gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 15 1 mapping of the fault and again we have the Nicolai 2 Creek Unit number 2 well that penetrates this sand at 3 approximate 2,199 feet subsea. And the Nicolai Creek 4 Unit lA and 113 wells penetrated on the other side of 5 the fault at approximately 2,185 subsea. And besides 6 the mapping of the fault we have empirical data from 7 the reservoir production of -- that, you know, we had 8 virgin pressure in wells on this side of the fault in 9 the same zone where they've been producing on that side 10 of the fault for some time. 11 This is the stratigraphic and structural cross 12 sections for the wells in the vicinity. We have other 13 wells in the Nicolai Creek field, but they're far 14 removed from this particular -- this package of wells. 15 And also there's one well on the same pad, but it is 16 only a Beluga producer and never produces these sands 17 that being the Nicolai Creek Unit 9 well. And that's 18 shown -- that location is shown in the application, but 19 it is -- it never enters the Tyonek. 20 So in the stratigraphic column we've got the lA 21 well which is plugged and abandoned, the 113 well is a 22 gas producer with commingled production. The 1B well 23 is a sidetrack of the lA well that was done in 2006. 24 The legend is over here down on the lower right, but 25 we've got perforated zones in the Carya 2-1.2 sands, Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 16 1 two different perforated zones which are 2,307 feet to 2 2,320 -- excuse me, 2,326 measured depth and 2,350 to 3 2,370 measured depth. So that's these two sands right 4 here that are perforated in red. Red shows the 5 perforated intervals and the green images show 6 confining levels which would be shales, siltstones, 7 things like that. And we have some intermixed coal 8 seams in -- above and below these -- this 2.1 sand 9 that's slated for disposal. Additional perforations in 10 each of the Carya sands lower into the well as well. 11 So all of these zones have been commingled for 12 several -- some years. I would have to double check to 13 verify how many. And the well has low pressure. Our 14 recent reservoir pressure estimate for -- not estimate, 15 but field results for the Carya 2-1.2 sands was 313 PSI 16 at the middle of the reservoir. 17 COMMISSIONER SEAMOUNT: Which -- okay. Where 18 is your proposed disposal zone? 19 MR. MOHRBACHER: The proposed disposal zone is 20 right here. 21 COMMISSIONER SEAMOUNT: And you have productive 22 zones below it; is that correct? 23 MR. MOHRBACHER: Yes. 24 COMMISSIONER SEAMOUNT: Are you going to keep 25 producing from those production zones? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 17 1 MR. MOHRBACHER: No. No, this well is of 2 marginal economic benefit to the field. And it -- it's 3 been selected for disposal zone due to a variety of 4 factors including its location, its low productivity 5 rate and higher -- wells with higher production 6 capability that require water disposal. 7 COMMISSIONER SEAMOUNT: I see in the I guess 8 the south and upper Tyonek gas sands, the last 9 production we have recorded on it is about 7 million 10 cubic feet per month. Does that sound right to you? 11 MR. MOHRBACHER: I would have to verify by 12 looking at your records online. 13 COMMISSIONER SEAMOUNT: Okay. And the Beluga 14 gas is down to 10 MCF a month. 15 MR. MOHRBACHER: What month are you looking at? 16 COMMISSIONER SEAMOUNT: Oh, that was back in 17 let's see, X15, X16, 117, 2017 looks like you stopped 18 producing that zone? 19 MR. MOHRBACHER: So Amaroq has in the month of 20 November, their production from this area was shutdown 21 because they were -- had to make compressor repairs and 22 were waiting on parts and things like that. So they 23 had approximately no production from this area, zero 24 production from this area for the month of November. 25 COMMISSIONER SEAMOUNT: Okay. Lomputer Matnx, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OFAMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 18 1 MR. MOHRBACHER: The other producing wells in 2 this vicinity that produce into this facility are 3 better producers. The Nicolai 11 well and the Nicolai 4 number 9 well, which are outside of the area of 5 influence of this proposed disposal..... 6 COMMISSIONER SEAMOUNT: Okay. 7 MR. MOHRBACHER: .....activity. The -- so we 8 have two plugged and abandoned wells on the pad, two 9 gas producers on the pad, the Nicolai Creek Unit number 10 2 is a gas producer as well, it's currently shut-in due 11 to some fill. And it has a number of perforated 12 intervals in it as well that have been produced over 13 the years and it has commingled production when it is 14 produced. A remaining -- the number 9 well is the best 15 well in this area and that's also located on the pad, 16 but that's a Beluga producer that produces the majority 17 of the production from this area. 18 CHAIRMAN PRICE: The number 6, did Amaroq plug 19 that? 20 MR. MOHRBACHER: Number 6 was plugged by Texaco 21 I believe. Yeah, Texaco was the operator back then. 22 For the structural section everything is set at 23 subsea. And so we have the same wells and, you know, 24 in the upper part of the reservoir it's fairly flat, we 25 see some separation down lower. This is representative Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 19 1 of the fault which goes between the 1B and the 6 and 2 2 wells. We have down thrown side over here and the 3 fault map on the seismic, we've got some pretty vintage 4 seismic, but it was mapped on the seismic and then in 5 addition to that it was confirmed by the pressure 6 differential between virgin reservoir pressure on one 7 side in the one Nicolai Creek Unit number 1B well and 8 the previously produced number 2 well for the same 9 since. 10 So to get an idea of the volume capability of 11 this proposed zone for disposal, the 2-1.2 Carya 12 disposal zone we made some reservoir assumptions. 13 Porosity is 25 percent, that's a reasonable assumption. 14 We've also mentioned that in our application in the 15 supporting information there. Water saturation of 40 16 percent. Assuming that the temperature's constant in 17 the reservoir Amaroq's going to inject at pretty low 18 volumes which is not going to drastically change 19 reservoir temperature over time, it's not anticipated 20 to anyways. 21 CHAIRMAN PRICE: Your porosity and permeability 22 estimates are based on the NCU 3 well, correct? I 23 think that's what said in your..... 24 MR. MOHRBACHER: They're based on kind of field 25 wide information. But, yeah, these are -- a lot of Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 20 1 these sands were very porous and highly permeable. 2 COMMISSIONER CHMIELOWSKI: Is it from core 3 analysis or log analysis and which wells was it based 4 on? 5 MR. MOHRBACHER: I would have to get back to 6 you with an answer on that, but it's a combination. I 7 don't -- I don't know if Amaroq ever done any 8 coring..... 9 COMMISSIONER CHMIELOWSKI: Uh-huh. 10 MR. MOHRBACHER: .....or their predecessor, 11 Aurora Gas, I don't know if they ever cored any of 12 these wells. I would have to go back to the records 13 and look. 14 COMMISSIONER CHMIELOWSKI: Okay. 15 MR. MOHRBACHER: But those are reasonable 16 assumption for the area and at this depth. 17 COMMISSIONER CHMIELOWSKI: I think your 18 application states they're from the Nicolai Creek Unit 19 3 well..... 20 MR. MOHRBACHER: Okay. 21 COMMISSIONER CHMIELOWSKI: .....which is like 22 what, a mile..... 23 MR. MOHRBACHER: To the north. 24 COMMISSIONER CHMIELOWSKI: .....over a mile 25 away so we were just thinking that if these sands are Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 21 1 discontinuous channels if that data would apply to the 2 1B also? 3 MR. MOHRBACHER: It's my understanding these 4 are not discontinuous channel sands. 5 So we assume Boyle's law behavior for the gas 6 that remains in the reservoir. Current reservoir 7 pressure from our recent data is 313 PSI. Applying a 8 thickness of 39 feet, that's the perforated interval, 9 that's a fairly conservative number given that there's 10 additional sand that was not perforated for water 11 management and other purposes. Ninety-five acres of 12 depleted gas zone available. I'll show that on a 13 subsequent slide, where we came up with that. Maximum 14 injection rate is anticipated to be 0.24 barrels per 15 minutes. Amaroq has identified a small injection pump 16 that will be used to inject produced water into the 17 well. The injection facilities at the former Aspen 18 well have been procured and are on site at Nicolai 19 Creek to be utilized for this injection program. 20 COMMISSIONER CHMIELOWSKI: Is the quarter 21 barrel per minute like an estimated average or will it 22 be continuous injection or will it be kind of sporadic, 23 fast injection or..... 24 MR. MOHRBACHER: Amaroq anticipates somewhere 25 in the vicinity of 150 to 250 barrels a day of produced Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. D1O 19-002 Page 22 1 water to dispose of, the majority of that coming from 2 the Nicolai Creek Unit number 10 well which is also the 3 best producer in the unit. The 0.24 barrels per minute 4 will yield 346 barrels per day continuous. We don't 5 anticipate continuous injection and we anticipate this 6 well to be on vacuum a lot. 7 The final -- and 0.24 barrels per minute is the 8 maximum capacity of the proposed injection pump. 9 For the purposes of these calculations we've 10 assumed going back to the original reservoir pressure 11 of 1,040 PSI, however our fracture data and everything 12 shows that we could go significantly higher than that, 13 but 1,040 is what we're using just to bring -- go back 14 to original reservoir pressure and using it as a 15 conservative number. 16 COMMISSIONER CHMIELOWSKI: What kind of volume 17 of injected water would take you back to original 18 pressure, do you know? 19 MR. MOHRBACHER: I think we're getting there. 20 COMMISSIONER CHMIELOWSKI: Okay. 21 MR. MOHRBACHER: So this is the same image, but 22 we've put the fault on it. And the fault comes through 23 this area and cuts these wells in the 2-1.2 sand right 24 here. So we have the Nicolai Creek Unit number 1B well 25 on the west side of the fault and we have the number 6 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 23 1 -- number 2 well right here where it's penetrated on 2 the east side of the fault. And also the -- where the 3 number 6 well is believed to penetrate the sand right 4 there. So we see the 2 and the 6 wells on the downturn 5 side of the fault and the Nicolai Creek Unit number 1B 6 well on the other side of the fault. 7 The -- this particular assessment of the 8 gas/water contact and producible sand was utilized in 9 the justification for drilling the Nicolai Creek Unit 10 number 1B well. And it's 165 acres in total aerial 11 extent with 95 acres to the west of the fault. 12 So the volume available would be the void space 13 minus the remaining gas volume. So the void space with 14 95 acres, 43,650 feet per acre, 39 foot thickness of -- 15 which is the perforated interval, 25 percent porosity 16 and 40 percent water saturation leaving 60 percent 17 available works out to 24 million and change cubic 18 feet. For the remaining gas assuming P1/V1 are 19 constant with P2/V2 at constant temperature so the 20 existing reservoir pressure's 313 PSI times the void 21 space which is volume 1 would be equal to the final 22 reservoir pressure or the original reservoir pressure 23 times volume 2 which would give us the volume of the 24 remaining gas in place once compressed back to original 25 reservoir pressure which would be 7,285 or 7,285,000 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO, DIO 19-002 Page 241 1 plus for that volume cubic feet. So the volume 2 available is the void space minus the gas remaining in 3 the reservoir and that equates an available volume of 4 16.9 million cubic feet which is 3 million barrels and 5 31,580 barrels per acre. 6 So at the massive injection rate of 0.24 7 barrels per minute to go back to 1,040 reservoir 8 pressure would 23 years plus..... 9 CHAIRMAN PRICE: So..... 10 MR. MOHRBACHER: .....based on the assumptions 11 we've made. 12 CHAIRMAN PRICE: .....if I understand this 13 correctly you're estimating there's 24 million cubic 14 feet of gas left in that reservoir that will never be 15 recoverable again once this becomes an injection well, 16 correct? 17 MR. MOHRBACHER: I have not done specific 18 standard MCF calculations on how much gas is left in 19 that reservoir, but we could. 20 CHAIRMAN PRICE: I guess I wanted you to make 21 the argument for the public to -- for their awareness 22 as to why that would not be considered waste? 23 MR. MOHRBACHER: Well, it wouldn't be 24 considered waste if you look at the entire unit as a 25 whole. This well is a very low producer and it is at Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOOCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 251 1 the end of its economic life as we've shown in the 2 application. And having access to a disposal facility 3 is very important for the ultimate recovery of an 4 additional 1.8 or more BCF from the Nicolai Creek Unit. 5 The existing Nicolai Creek Unit number 10 well is -- 6 has over 1.8 BCF of proved reserves in it, however 7 these reserves cannot be produced without access to a 8 disposal well. So Amaroq has selected this well as the 9 best well for a disposal well because it is capable of 10 -- it is the least capable producer in the existing 11 wells that are available for this type of activity. 12 And therefore a small amount of production would be 13 sacrificed out of this well to accommodate 14 significantly more production out of other wells. 15 CHAIRMAN PRICE: Thank you. 16 COMMISSIONER CHMIELOWSKI: How is Amaroq 17 disposing of water currently? 18 MR. MOHRBACHER: Amaroq is not disposing of 19 water currently because their former access to the 20 Aspen well is -- is no longer available because that 21 well's been plugged and abandoned. So currently Amaroq 22 is storing their very low volumes of produced water on - 23 site in produced water storage tanks. And the Nicolai 24 Creek Unit number 10 well which is capable of producing 25 200,000 to a million a day depending on how it's Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 26 1 managed for water production is shut-in because there's 2 nowhere to go with the water. 3 So we have -- at these disposal rates we have 4 lots of volume available for disposal. 5 The estimated aerial extent of injection over a 6 seven year disposal project. For this we would assume 7 radial flow in a semi -circle due to the faulting that 8 you've seen earlier. And the Nicolai Creek Unit number 9 1B well located close to the fault. Estimated maximum 10 disposal over seven years is 884,000 barrels. Aerial 11 extent of that would be 28 acres based on the amount of 12 barrels -- volume -- barrels volume available per acre. 13 So when we look at a semi -circle area, that would be pi 14 squared times a half because the semi -circle of 28 -- 15 that equals 28 acres. It works out that a semi -circle 16 radial extent of injection can be estimated at 881 17 feet. 18 So this image shows what a 881 foot or 19 approximately thereabouts injection area would look 20 like in this particular gassing (ph). And we see that 21 it doesn't leave the existing sand or doesn't approach 22 the limits of the existing sand. And it doesn't affect 23 any other wells in the producing area. 24 That's the extent of my presentation. And I'm 25 available to answer any questions that you may have. L.omputerMatnx, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 27 1 COMMISSIONER CHMIELOWSKI: I just have one 2 question. There's road access to the pad and has 3 Amaroq never trucked water out? Just curious. 4 MR. MOHRBACHER: There is road -- limited road 5 access, but it's geologically or geographic -- excuse 6 me, geographically restricted in that you could 7 potentially get as far north as Beluga or something 8 like that, but that is -- and that is not cost 9 effective in any way to be trucking that distance. 10 These are not primitive gravel roads, but they are 11 certainly slow driving gravel roads. And in the six 12 months of winter they're risky to be running up and 13 down with a lot of heavy loads and a lot of road 14 maintenance that's required to plow snow and those 15 kinds of things. So it would be much more efficient 16 for Amaroq to be able to dispose of their water 17 locally. 18 COMMISSIONER CHMIELOWSKI: But you're able to 19 get quilian (indiscernible) and that sort of stuff for 20 well work? 21 MR. MOHRBACHER: Yes, those are barged into 22 Tyonek. 23 COMMISSIONER CHMIELOWSKI: Okay. 24 MR. MOHRBACHER: And it would be completely 25 impractical from an economic standpoint to barge Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 28 1 produced water out of the Nicolai Creek area. 2 COMMISSIONER CHMIELOWSKI: You have lower 3 perforations in this 1B well, do you plan to plug those 4 with cement? Do you have a propose schematic or..... 5 MR. MOHRBACHER: We do not have a proposed 6 schematic, but conversations with the AOGCC technical 7 staff, we would leave those available until final plus 8 and abandonment simply by setting a plug in the tubing 9 and dumping some sand and then cement on top of that 10 plug so that it holds to ensure that the fluids are 11 injected into the zone we want and not migrating down 12 the tubing into other zones. 13 COMMISSIONER CHMIELOWSKI: Okay. And so you 14 have a surveillance plan, you would have -- want to run 15 some logs perhaps in this well after injection..... 16 MR. MOHRBACHER: Well, we've done that..... 17 COMMISSIONER CHMIELOWSKI: .....may commence? 18 MR. MOHRBACHER: .....before. 19 COMMISSIONER CHMIELOWSKI: Right. 20 MR. MOHRBACHER: We've done an injection test 21 and, you know, I would expect that we would follow the 22 standard MIT requirements and do that on a scheduled 23 basis as required. 24 This well has a fluid level of 1,625 feet. 25 It's very -- and it goes on vacuum the minute you start Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 291 1 putting any fluid in the well at all. So it's very 2 depleted. 3 COMMISSIONER CHMIELOWSKI: Okay. 4 CHAIRMAN PRICE: Commissioner Seamount, do you 5 have any questions? We're going to take a 15 minute 6 recess by the way and full reconvene. But before we do 7 I want to make sure we have the opportunity to ask 8 anything else. 9 COMMISSIONER SEAMOUNT: I don't think I have 10 any that -- okay. You say this is more than 800,000 11 barrels of storage of disposal potential out of this 12 well, correct. 13 MR. MOHRBACHER: In the -- in this particular 14 zone and the calculated void space that we have 15 available to bring the reservoir back to original 16 reservoir pressure. 17 COMMISSIONER SEAMOUNT: Okay. So it's been 18 stated in the news that if you -- if Amaroq can find 19 additional investment they have a lot more potential 20 for extending the resource recovery. Do you know what 21 Amaroq's plans are to extend the life of this field and 22 if so are we going to be looking at more disposal -- 23 more disposal applications? 24 MR. MOHRBACHER: I don't believe so, no. 25 Amaroq's plans are to optimize production out of the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 30 1 Nicolai Creek Unit number 10 well, to be able to 2 produce the proven and additional potential pay behind 3 pipe in that well of, you know, in excess of 1.8 bcf. 4 That's our immediate plan. Longer term plans are that 5 they believe -- Amaroq believes that they have some 6 lower Tyonek, Hemlock oil plays within the vicinity of 7 the Nicolai Creek Unit and would like to get additional 8 investment into the company in order to pursue those 9 oil prospects which may not be very large by Alaska 10 standards, but you're only a few miles away from the 11 Granite Point production facility. So they could be 12 very economic oil accumulations at a relatively small 13 volume. 14 COMMISSIONER SEAMOUNT: What's the deepest well 15 at Nicolai Creek? 16 MR. MOHRBACHER: I'd have to check for you, but 17 I'm going to say 9,000 plus or minus. 18 COMMISSIONER SEAMOUNT: So does that penetrate 19 the Hemlock? 20 MR. MOHRBACHER: They have wells that have 21 touched the Hemlock I believe, yes. 22 COMMISSIONER SEAMOUNT: Okay. But they haven't 23 been productive? 24 MR. MOHRBACHER: Haven't been productive. 25 There's been some shows, but like many places in Cook Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahile a)gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO, DIO 19-002 Page 31 1 Inlet there's some complex geology going on that is 2 pretty hard to figure out sometimes on vintage seismic. 3 COMMISSIONER SEAMOUNT: Thank you. 4 CHAIRMAN PRICE: At this time it's 10:41, we'll 5 take a 15 minute recess and reconvene at 10:55. 6 (Off record - 10:41 a.m.) 7 (On record - 10:55 a.m.) 8 CHAIRMAN PRICE: .....order. The time is 9 10:55. Commissioner Chmielowski, you have a few 10 follow-up questions? 11 COMMISSIONER CHMIELOWSKI: Yeah, I have one. 12 Mr. Mohrbacher, could Amaroq please provide an estimate 13 with justification of the reserves that would be 14 written off should 1B become a disposal well, please? 15 MR. MOHRBACHER: Sure. 16 COMMISSIONER CHMIELOWSKI: How much time would 17 you or Amaroq need to provide that information? 18 MR. MOHRBACHER: We should be able to handle 19 that within five working days. 20 COMMISSIONER CHMIELOWSKI: Okay. We can keep 21 the record open if you like for 10 working days. 22 MR. MOHRBACHER: That would be great. 23 COMMISSIONER CHMIELOWSKI: And provide that 24 information and then we can close the record and 25 proceed with our decision. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 32 1 MR. MOHRBACHER: Okay. 2 CHAIRMAN PRICE: Go ahead. 3 COMMISSIONER SEAMOUNT: Samantha, did we have 4 any other questions that weren't answered? 5 MS. CARLISLE: (Indiscernible - away from 6 microphone)..... 7 COMMISSIONER SEAMOUNT: Okay. I thought we had 8 a couple more, but my memory's shot. 9 MR. MOHRBACHER: We all have a lot of gray hair 10 that seems to cause that. 11 CHAIRMAN PRICE: Well, if there's nothing else 12 that we have today then we'll close the hearing. 13 MR. MOHRBACHER: I'd like to have one more 14 thing. 15 CHAIRMAN PRICE: Please, go ahead. 16 MR. MOHRBACHER: There are a couple of 17 typographical errors in here, a number off by 10, 2,190 18 versus 22,000, a couple things like that. In this open 19 record time I'd just like to provide a brief statement 20 that says -- points out where those errors were in our 21 original application. 22 CHAIRMAN PRICE: Great. 23 MR. MOHRBACHER: They don't -- they don't 24 affect anything materially. 25 COMMISSIONER CHMIELOWSKI: And, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 Page 33 1 Price, I just wanted to clarify for Mr. Mohrbacher, 2 When you do the estimation of the reserves make sure 3 it's for the total net sand, not just the perforated 4 intervals. Sometimes you reference just the perforated 5 intervals..... 6 MR. MOHRBACHER: Uh-huh. 7 COMMISSIONER CHMIELOWSKI: .....for some of the 8 volumes. We'd like the total net sand. 9 Thank you. 10 CHAIRMAN PRICE: Okay. It's 10:57. We'll 11 close the hearing out. 12 Thank you. 13 (Hearing adjourned - 10:57 a.m.) 14 (END OF PROCEEDINGS) 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 12/12/2019 APPLICATION OF AMAROQ RESOURCES, LLC DOCKET NO. DIO 19-002 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 34 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 34 are a true, accurate, and complete transcript of proceedings in Docket No.: DIO 19-002, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. DIN.09 PAS -RN -A A. 11TFI3 (Transcriber) Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net roq Resources, LLC DEC 12 2019 AOGCC Docket Number: D I O-19-002 Nicolai Creek Unit, South Undefined Upper Tyonek Gas Pool, Carya 2.1-2 zone Application for Disposal Injection Order Geologic Cross Section for NCU 1 B & Vicinity Wells and Volumetric Calculations LoCARYA 2-1.2 SAND DEPTH STRUCTURE Contour interval 50 FEET LI 360 \ •� � c N !� 7,11 i NCU '2 1191 NC!!7A. •"199 1 . i i � •�� ' j i 1 NCU 1. N �• 3 U 2350 1 1 'L y4 1'-""""'"--- NCU Asp 600 0 %z MILE WLaST STRATIGRAPHIC SECTION, DATUMED ON TOP TYONEK FORMATION NCU 1B NCV IA Gas Producer NCU 6 y P&Ad o, v comingledo o m PSA'd ^^ ^- NCV 2 Gas Producer (shut in) comingled Tw 0. 2 rc.nre f-,3 Ce. z-, I WEST NCU 1A P&A'd 3� i NCU 1B Gas Producer comingled STRUCTURAL SECTION NCU 6 PS A'd NCU 2 Gas Producer (shut in) comingled EAST CAR A Z -Z2 [MYI z.t i [NYI z -D EAST -20W" r -_. _. _.2100 -2000 `i rowv. z -n -1100 - � ___. -21m- r ! 320° -2200 t .1201 L.MY.1 14.2 -2300 - -2400- -3WO -_2000- F - --- c.wv. 2.21 .2T110 -2000 - -2= F -23W j [MYI Z-2] '3gp0" 2800• t g 2800 _ -J000- -3000. k9eM a100- _3200 -2800 - - _ -2800 -3300- 3800 -280D .3000. 4000 5 a:w - a2c0 NCU 2 Gas Producer (shut in) comingled EAST CAR A Z -Z2 [MYI z.t i [NYI z -D EAST moo _._. a300 - _. -2100 - `i rowv. z -n -1100 - � ___. r 320° -2200 t F L.MY.1 14.2 -2300 - -2400- -3WO -_2000- F - --- c.wv. 2.21 -2000 - F [MYI Z-2] '3gp0" 2800• -2100_ 2800 _ -J000- -3000. k9eM a100- _3200 _ -3300- Volumetric Calculations NCU 1 B Well Carya 2-1.2 Disposal Zone Reservoir Assumptions: Porosity = 25% SW = 40% Temp constant at 75° F Boyle's law behavior for gas in reservoir Current Pressure = 313 psi Thickness = 39 ft = perforated interval 95 acres of depleted gas zone available Maximum Injection rate = 0.24 bpm Final reservoir pressure = original = 1040 PSI CARYA 2-1.2 GAS SAND DEPTH STRUCTURE Contour Interval 50 FEET %2 MILL f 95 acres depleted gas zone west of fault 165 ACRES �" -•_ Total I NCU i 1 ♦ � ! h 1 j ! � I .y N 00 iii I f m m i � ! ' NT 1A t•J N � ;•� ��••I •- �� , � Ny .. NCU 1 � U i �h Z3p0 ^hp i 2350 ti�oo ��oo 1 t gp00 ti NCU p� 600 N %2 MILL Volume available:,- void space — remaining gas volume Void space = 95 acre x 43,560 ft2/acre x 39 ft thickness x 25% porosity x (1-0.40 Sw) = 24,208,470 ft3 Remaining gas (V2) @ 1040 psi = P1 x V1 = P2 x V2 (temp constant) = 313 psi x 24,208,470 ft3 = 1040 psi x V2 = 7,285,818 ft3 =V2 Volume available = 24,208,470 — 7,285,818 = 16,9221652 ft3 = 3,000,000 bbls = 31,580 bbl/acre Disposal time @ 0.24 bbl/min = 3,000,000 bbl / 0.24 bbl/min = 8,680 days = 23+ years Estimated Areal Extent of Injection Over 7 Year Disposal Project Assume radial flow in semi -circle due to faulting Estimated max disposal volume over 7 years = 884,000 bbl Areal extent = volume disposed / volume/acre = 884,000 bbl / 31580 bbl / acre = 28 acres Semi -circle area = n x r2 x 0.5 = 28 acres = 1,219,680 ft2 r2 = 776,472 ft2 r=881 ft=0.16 mile CARYA 2-1.2 SAND DEPTH STRUCTURE Contour Interval 50 FEET %2 MILL Estimated areal extent of injection after 7 years, 884,000 bbl total. Radius = 881 ft. • : � —.moi �.� \ 1 0 o i � 1 1 % ` NCf 1A: t. ry I i I N I ry 1 ' 1 rNeu "�•� - _ 1. ff1111t U � ? // 0 00 i 2350 ti0 �� 1 I 1 1 4� ry ---------- NCU ---- o �1 w %2 MILL STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Nicolai Creek Unit DIO December 12, 2019 at 10:00AM NAME AFFILIATION Testify (yes or no) l/ r 3 !n/(L ,1� L /,V CSC C— lyn j//C fvricz-Y o Tr�O6CC /VD November 26, 2019 G. Scott Pfoff, President Amaroq Resources, LLC 4645 Sweetwater Blvd., Suite 200 Sugar Land, Texas 77479 Land Office 2600 Cordova Street, Suite ioo Anchorage, AK 9950; Tel 907.269.8658 www.trustlandoffice.com Re: December 12, 2019 Public Hearing — Amaroq Resources, LLC Application for Disposal Injection Order Dear Mr. Pfoff: The Trust Land Office (TLO) does not object to the hearing scheduled by the AOGCC for December 12, 2019 at 10:00 a.m. at West 333 7°i Avenue, Anchorage, Alaska 99501. Sincerely, Dr. Karsten Eden, CPG, EurGeol Minerals & Energy Section Chief Friday, November 22, 2019 at 2:17:01 PM Alaska Standard Time Subject: Re: Amaroq Resources DIO application affidavit Date: Friday, November 22, 2019 at 1:59:17 PM Alaska Standard Time From: G Scott Pfoff To: Roby, David 5 (CED), Wallace, Chris D (CED) CC: Rixse, Melvin G (CED), Schwartz, Guy L (CED), Boyer, David L (CED), Jesse Mohrbacher Priority: High Dave, I have attached copies of the supplemental affidavit and a corrected Page 2-1. Originals will be delivered to your office. The answer to your question is yes, DNR and MHT are the only affected surface owners and is Amaroq the only affected operator within 1/4 mile radius. Regards, Amaroq Resources, LLC G. Scott Pfoff, President 4665 Sweetwater Blvd., Suite 103 Sugar Land, Texas 77479 (832) 999-4603 — direct (713) 816-6870 — mobile Please note new permanent email address: gapLoff@amaroqresources.com From: "Roby, David S (CED)" <dave.roby@alaska.gov> Date: Thursday, November 21, 2019 at 3:20 PM To: Jesse Mohrbacher <jesse solstenxp com>, "Wallace, Chris D (CED)" <chris.wallace@alaska.eov> Cc: "Rixse, Melvin G (CED)" <melvin.rixse@alaska.gov>, "guy. schwartz" <guy.schwa rtz@,alaska.gov>, "Boyer, David L (CED)" <david.boyer2 alaska.gov>, Gregory S Pfoff <gapfofflaamarogresources.com> Subject: RE: Amaroq Resources DIO application affidavit Jesse, Yes, a supplemental affidavit is acceptable. 20 AAC 25.252(c)(3) requires operator to notify all operators and surface owners within 124 mile radius, are DNR and MHT the only affected surface owners and is Amaroq the only affected operator? Dave Roby 907-793-1232 DECEIVED NOV 2 2 2019 AOGCC Page 1 of 2 SUPPLEMENTAL AFFIDAVIT OF G. SCOTT PFOFF PRESIDENT AMAROQ RESOURCES, LLC State of Alaska Second Judicial District I, G. Scott Pfoff, declare and affirm that I have personal knowledge of the matters set forth in this affidavit, and that on the 22nd day of November 2019, the following surface owner was provided a copy of this permit application by hand delivery: Dr. Karsten Eden, CPG, EurGeol Minerals & Energy Section Chief Alaska Mental Health Trust Land Office 2600 Cordova Street, Suite 100 Anchorage, Alaska 99503 The following surface owner was previously provided a copy of this permit application: Attn: Clark Cox Natural Resource Manager III Alaska Department of Natural Resources Division of Mining, Land and Water 550 W. 7th Ave, Suite 900C Anchorage, AK 99501-3563 There are no other surface owners or operators within a one-quarter mile radius of the Nicolai Creek Unit 1B well which is planned to be converted to an injection disposal well. ZSt — G. Scott Pfoff nd Subscribed and sworn before me this ZZ day of ref 2019. &Xm �)U k � Notary P4 lic in and for th4 State of Alaska Page 3-2 MARY NOVOTNY Notary Public State of Alaska My Commission Expires Sep 17, 2021 2.0 List of Operators and Surface Owners [20 AAC 25.252(c)(2)J Amaroq is the only operator and lease owner within one-quarter mile of the NCU 1B well. Amaroq's corporate office location is the following: Amaroq Resources, LLC 4665 Sweetwater Blvd., Suite 103 Sugar Land, Texas 77479 Surface owners within one-quarter mile of the NCU 1B well are: Alaska Mental Health Trust Land Office 2600 Cordova Street, Suite 100 Anchorage, Alaska 99503 Alaska Department of Natural Resources Division of Mining, Land and Water 550 W. 7th Ave, Suite 900C Anchorage, AK 99501-3563 Page 2-1 Carlisle, Samantha J (CED) From: G Scott Pfoff <gspfoff@amaroqresources.com> Sent: Tuesday, November 12, 2019 10:51 AM To: Carlisle, Samantha J (CED) Subject: FW: DIO application for Nicolai Creek Unit 1 B Samantha, There is no confidential information in our application. Thanks, roq Resources, LLC G. Scott Pfoff, President 4665 Sweetwater Blvd., Suite 103 Sugar Land, Texas 77479 (832) 999-4603 - direct (713) 816-6870 - mobile Please note new email address: gspfoft@amaroqresources.com From: G Scott Pfoff [mailto:gspfoff@aurorapower.com] Sent: Tuesday, November 12, 2019 1:14 PM To: G Scott Pfoff <gspfoff@amaroqresources.com> Subject: Fw: DIO application for Nicolai Creek Unit 1B From: Carlisle, Samantha J (CED) <samantha.carlislepalaska.eov> Sent: Friday, November 8, 2019 1:28 PM To: G Scott Pfoff <gspfoff aurorapower.com> Subject: DIO application for Nicolai Creek Unit iB Mr. Pfoff, Is there any confidential information in your application for disposal for Nicolai Creek Unit 1B? Please submit a redacted copy with the pages marked as confidential if there is. If there is no confidential information, then a simple reply to this email stating so will be sufficient. Thank you, Samantha Carlisle Executive Secretan- III Alaska Oil and Gas Conservation Commission 333 West 701 Avenue Anchorage, AK 99501 (907) 793-1223 CONFIDENTIALITY NOTICE: This e-mail message, including anv attachments. contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it. without fust saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it: to you, contact Samantha Carlisle at (907) 793-1223 or Saniantha.Carlislo,izalaska.cov. STATE OF ALASKA ADVERTISINGNOTICE ORDER TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OFPUBLADV RTIMENT.�ACHEDCOPY OF ADVERTISING ORDER NUMBER AO -20-014 FROM: AGENCY CONTACT: Jody Colombie,/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 11/1/2019 907 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: SPECIAL INSTRUCTIONS: Anchorage Daily News LLC PO Box 140147 Anchora e, Alaska 99514-0174 TYPE OF ADVERTISEMENT: FV LEGAL 1 DISPLAY r CLASSIFIED j OTHER (Specify below) DESCRIPTION PRICE DIO-20.002 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWINGADVERTISING ORDER NO., CERTIFIED AFFIDAVITOF PUBLICATION WITHATTACNEDCOYY OF .ADVERTISMF.NT I'O: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Page 1 of 1 Total of All Paves $ REF Tye Number Amount Date C.rnnneito I PvN VCO21795 2 AG AO -20-014 3 4 FIN AMOUNT BY Act Template I PGM LGR Obert FY DIST LIQ I 20 AOGCC 3046 20 2 3 5 Farthest Ao "N e: Ti Purchasing Authority's Signature Telephone Number TBredA. .# re g agency name must appear on all invoices and documents relating to this purchase. e state is regi fortax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the stale and h or resale. DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (taxed), Division Fiscal, Receiving Form: 02-901 Revised: 11/1/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: DIO-19-002 Nicolai Creek Unit, South Undefined Upper Tyonek Gas Pool, Carya 2.1-2 zone The application for Disposal Injection Order Amaroq Resources, LLC, by letter dated October 29, 2019, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue a Disposal Injection Order to allow the disposal of produced water and other Class II eligible waste fluids from the Nicolai Creek Unit (NCU) in the Tyonek formation in the NCU. The AOGCC has scheduled a public hearing on this application for December 12, 2019, at 10:00 a.m. at 333 West 7`h Avenue, Anchorage, Alaska 99501. Written comments regarding this application may be submitted to the AOGCC, at 333 West 7`h Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on the conclusion of the December 12, 2019 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 (907) 793-1221, no later than November 29, 2019 . 0 J ePrice Chair, mmissioner Bernie Karl M Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 ANCHORAGE DAILY NEWS AFFIDAVIT OF PUBLICATION Account #: 270227 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION 333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501 Order#: W0012255 Cost: $184.28 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- chorage Daily 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 afore- said 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 11/03/2019 and that such newspaper was regularly distrib- uted 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 4th day of November 2019. F.ECEI ED NOV 0 7 2019 AOGCC Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: DIO-19-002 Nicolai Creek Unit, South Undefined Upper ryonek Gas Pool, Carya 2.1-2 zone The application for Disposal Injection Order Amaroq Resources, LLC, by letter dated October 29, 2019, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue a Disposal Injection Order to allow the disposal of produced water and other Class II eligible waste fluids from the Nicolai Creek Unit (NCU) in the ryonek formation in the NCU. The AOGCC has scheduled a public hearing on this application for December 12, 2019, at 10:00 a.m. at 333 West 7th Avenue, Anchorage, Alaska 99501. Written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on the conclusion of the December 12, 2019 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 (907) 793-1221, no later than November 29, 2019. //signature on file// Jeremy M. Price Chair, Commissioner Published: November 3, 2019 Th tate of Alaska. of A% /r, S/r, ird Division tiP NpTARY Anchorage, Alaska MY COMMI SIGNE} II2ES pU6��C c� O 3� 2Tr ✓aba L. N0 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Friday, November 1, 2019 3:28 PM To: ANC Legal Ads Subject: RE: Public Notice Approved. From: ANC Legal Ads <legalads@adn.com> Sent: Friday, November 1, 2019 3:27 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Re: Public Notice Sorry, I missed it. Below is the confo and proof. Order Number; W0012255 Order Status: Submitted Ciassfieation Legal5& Pub; is Notices Package: Legals ADN Final Cost: 184.28 Referral Code: ao-20-014 Payment Type; User ID,. W0010445 ACCOUNT INFORMATION ST OF AK OIL AND GAS CONSERVATION COMMISSION 333W. 7TH AVE STE 100 ANCHORAGE. AK 99501 907-279-1433 legalads@adncom ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION TRANSACTION REPORT Date 3:34 PM - Fri. Nov 1. 2019 Amount: 184.28 SCHEDULE FOR AD NUMBER WO0122550 Suis Nov 3.2019 Anchorage Daily News Legals Lisi Misa Legal Advertising IeoaladsCle adn.com 1907-257-4286 Anchorage Daily News I adn.com 1 Hearing STATE OF ALASKA ALASKA OIL AND CAS CONSERVATION COMMISSION Re: Docket NtlNW. DIO.19-002 NiC01al Creek Milk South Undefined Upper Tyonek Gas Pool, Catya 2.1-2 Zone The apPlIC410011 for Disposal Injection order ts the AI aska Oil aId`GaS Coot On�Commisssion ( October 29SCC) Issue a OSal Infection Order to allow the disposal ofpprrM xm water a other Class II eligible waste fluids from the NMI Creek Unit iNCUj In the ly"k formation In the NCU. Tits AOGCC tm sthaduled a public heann� on this application for December 12, 2019, at 10:00 a.m. at 333 Wast 7M A9enue. AnChOrage, Alaska 99501. written comments t ardi7M dI1S aPPliraton may be Submitted to the AOGCC, at 333 VveSt AVenue, Anc?Wage, Alaska 99501. Comments must be reoeNed no later than 4:30 P.m- On the COMIUSIOn Of the December 12, 2019 hearing. 0, because of a dlsabpky, Special accommodations may be neadW t0 comment Or attend the heark�. Contact the AOGCCS Special ASSIStant. tok1Y C0lomble, at (9071 J93-1221, no later tnan November 29, 2019. t/signature on fileli ieremy M. Price chat, commissioner Published: November 3, 2019 Pre fe.Yw, Ad log joeg Preview pdf preview Reuse Ad Copy 300 W. 31st Ave. Anchorage, AK 99503 ©00 ' As of July 8th, we will be charging for affidavits. The standard affidavit charge is $5. This charge will automatically be included in all cost/quotes unless requested otherwise. Please keep all correspondence for legal advertising addressed to leaalads(c adn.com, to assure best service and tracking. . On Fri, Nov 1, 2019 at 11:09 AM Colombie, Jody J (CED) <lody.colombie@alaska.gov> wrote: Thank you. Jody J Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7'h Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax Z� roq Resources, LLC 4665 SWeet.waLer B;vd. Suite 103 Sugar Land, TX 77479 October 29, 2019 Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, AK 99501 RECEIVED OCT 31 2019 AOGCC RE: Application for Disposal of Class II Oilfield Wastes by Underground Injection, Nicolai Creek Unit 16 well Dear Mr. Price: Amaroq Resources, LLC (Amaroq) hereby submits the enclosed Application for a Disposal Injection Order for the Nicolai Creek Unit (NCU) 16 well. Amaroq recently completed field work including mechanical integrity testing and an injection test on the NCU 16 well in accordance with AOGCC Sundry No. 319- 316. The results of this work are included in the attached Application. If you have any questions or require additional information, please contact me at your earliest convenience. Sincerely, G. Scott Pfoff President Amaroq Resources, LLC 4665 Sweetwater Blvd., Suite 103 • Sugar Land, Texas 774790(832)999-4603 • (832) 999-4382 aroq Resources, LLC APPLICATION FOR DISPOSAL OF CLASS II OILFIELD WASTES BY UNDERGROUND INJECTION NICOLAI CREEK UNIT NICOLAI CREEK UNIT 1B WELL GRANITE POINT, ALASKA October 28, 2019 Table of Contents 1.0 Property Description and Plat [20 AAC 25.252(c)(1)].....................................................1-1 2.0 List of Operators and Surface Owners [20 AAC 25.252(c)(2)] ........................................2-1 3.0 Affidavit [20 AAC 25.252(c)(3)].....................................................................................3-1 4.0 Geologic Information [20 AAC 25.252(2)(4)].................................................................4-1 4.1 Upper Tyonek Sandstone..................................................................................4-1 4.2 Injection Zones..................................................................................................4-1 4.3 Confining Layers................................................................................................4-3 5.0 Well Logs [20 AAC 25.252(c)(5))....................................................................................5-1 6.0 Casing and Cementing Program [20 AAC 25.252(c)(6)]..................................................6-1 7.0 Fluids to be Injected [20 AAC 25.252(c)(7)]...................................................................7-1 8.0 Estimated Maximum and Average Injection Pressure [20 AAC 25.252(c)(8)] .................8-1 9.0 Fracture Information [20 AAC 25.252(c)(9)]..................................................................9-1 10.0 Laboratory Water Analysis..........................................................................................10-1 11.0 Freshwater Aquifer Exemption...................................................................................11-1 12.0 Mechanical Condition of Wells [20 AAC 25.252(c)(12)]...............................................12-1 13.0 Mechanical Integrity of Disposal Well [20 AAC 25.252(d)] ..........................................13-1 14.0 Areal and Local Considerations for Disposal Injection Order.......................................14-1 Attachment Attachment 1. NCU 16 Produced Water TDS Analysis Attachment 2. Aquifer Exemption Order No. 12 List of Figures Figure 1-1. NCU 1B well pad plat............................................................................................. 1-2 Figure 1-2. NCU southern participating area wells with directional well paths .........................1-3 Figure 4-1. Southern NCU top of Carya 2-1.1 structure map . ................................................... 4-2 Figure 4-2. BHP/z plot for NCU 113 ........................................................................................... 4-3 Figure 6-1. NCU 16 current well schematic..............................................................................6-2 Figure 6-2. NCU 1B CBL across the proposed disposal zone, gross interval 2307'- 2370' MD..6-3 Page Figure 6-3. NCU 1B CBL above proposed disposal zone, gross interval 2307'— 2370' MID ........ 6-4 Figure 6-4. NCU 1B CBL below proposed disposal zone, gross interval 2307'— 2370' MID ........ 6-5 Figure 8-1. NCU 1B Carya 2-1.2 pressure during injection test, October 6, 2019 . ..................... 8-2 Figure 8-2. NCU 16 Carya 2-1.2 pressure and temp survey time plot . ...................................... 8-3 Figure 8-3. Baseline temperature and pressure survey, NCU 16, 6 -Oct -19 ...............................8-5 Figure 8-4. One hour post injection, temperature and pressure survey, NCU 1B, 6 -Oct -19. ..... 8-6 Figure 8-5. Two hours post injection, temperature and pressure survey, NCU 1B, 6 -Oct -19....8-7 Figure 8-6. Three hours post injection, temperature and pressure survey, NCU 113, 6 -Oct -19..8-8 Figure 8-7. Three hours post injection and baseline temperature and pressure overlay, NCU 113, 6-Oct-19..................................................................................................................8-9 Figure 8-8. Three hours post injection and baseline temperature and pressure overlay, bottomhole detail, NCU 16, 6-Oct-19....................................................................8-10 Figure 13-1. MIT results for the NCU 1B well . .......................................... ............................ ..13-1 List of Tables Table 1-1. NCU multi -well pad location information................................................................ 1-1 Table 4-1. NCU 18 interpreted lithology above and below proposed Carya2-1.2 disposal zone.4-4 Table 6-1. NCU 1B casing and cementing program.................................................................. 6-1 Page ii 1.0 Property Description and Plat [20 AAC 25.252(c)(1)] The Nicolai Creek Unit 1B well (NCU 113) is a depleted gas well that was directionally drilled to State of Alaska lease number ADL 17585 which is 100% owned by Amaroq Resources, LLC (Amaroq). This lease is located offshore in Trading Bay on the northwest side of Cook Inlet and is comprised of 5620 acres. The surface location for the well is located onshore on ADL 391471. The NCU 1B well was drilled in 2002 as a sidetrack of the Nicolai Creek State 1A well which was a sidetrack of the original Nicolai Creek State 1 well. The NCU 1B well was sidetracked at 2186' and 7 inch casing was set from 3650' measured depth (MD) back to surface. There are no other lease holders within one-quarter mile of NCU 1B surface location. Figure 1-1 is a current plat showing the surface location for the NCU 16, NCU 2, NCU 9 and NCU 6 wells which are located on the same well pad. The NCU 6 well was plugged and abandoned in 1980. The other wells on the pad are completed gas wells. Figure 1-2 is a map of the NCU southern participating area that shows the surface location and the well paths for the NCU 1B, NCU 2 and NCU 6 wells which were directionally drilled. Location information for the wells on the NCU 1B well pad is presented in Table 1-1. Table 1-1. NCU multi -well pad location information. Page 1-1 Well Name NCU 1B NCU 2 NCU 6 NCU 9 Status Gas well Gas well P&A'd Gas well Lease # surface ADL 391471 ADL 391471 ADL 391471 ADL 391471 Lease # bottom hole ADL 17585 ADL 17585 ADL 17598 ADL 391471 Surface location 1999' FSL, 186' FWL, S29, T11N, R12W, SM 1999' FSL, 209' FWL, S29, T11N, R12W, SM 2048' FSL, 295' FWL, 529, T11N, R12W, SM 2010' FSL, 261' FWL, 529, T11N, R12W, SM Bottom hole location 1625' FSL, 289' FWL, S29, T11N,R12W, SM 246' FNL,1603' FWL, S32, T11N, R12W, SM 1206' FNL, 176' FEL, S31, T11N, R12W, SM 2010' FSL, 261' FWL, S29, T11N, R12W, SM Total Depth MD/TVD 36721/3617' 5011'/4102 11776'/11159' 2102'/2102' Page 1-1 30 NCLI 1 A 29 NCU 2 NC( Southern FA N C l 14 C'ana 2-7.? Ferfs 1@ Carta 2-22 Ferf% 0 114 nti Figure 1-2. NCU southern participating area wells with directional well paths. Page 1-3 2.0 List of Operators and Surface Owners [20 AAC 25.252(c)(2)] Amaroq is the only lease owner within one-quarter mile of the NCU 1B well. Amaroq's corporate office location is the following: Amaroq Resources, LLC 4665 Sweetwater Blvd., Suite 103 Sugar Land, Texas 77479 Page 2-1 3.0 Affidavit [20 AAC 25.252(c)(3)] The affidavit of Mr. G. Scott Pfoff, President of Amaroq Resources, LLC, is provided below. Page 3-1 AFFIDAVIT OF G. SCOTT PFOFF PRESIDENT AMAROQ RESOURCES, LLC State of Alaska Second Judicial District 1, G. Scott Pfoff, declare and affirm that I have personal knowledge of the matters set forth in this affidavit, and that on the 21*h day of OeA-o&ttr 2019, the following surface owner was provided a copy of this permit application by placing said copy in the United States mail with postage prepaid and certified at Houston, TX. ( Fed bc� Attn: Clark Cox Natural Resource Manager III Alaska Department of Natural Resources Division of Mining, Land and Water 550 W. 7th Ave, Suite 900C Anchorage, AK 99501-3563 There are no other surface owners or operators within a one-quarter mile radius of the Nicolai Creek Unit 1B well which is planned to be converted to an injection disposal well. G. Scott Pfoff /i / Subscribed and sworn before me this day of (/LSD Gr 2019. V Notary Public in and for the to of Texas Page 3-2 LAURIE DELONG KANE Notary Public, State of Texas Comm. Expires 05-10-2020 Notary ID 1550422 4.0 Geologic Information [20 AAC 25.252(2)(4)] This section includes information on the nature and distribution of the sediments in the proposed injection zone and of the confining zones which bound it. 4.1 Upper Tyonek Sandstone The injection zone is contained within the Tyonek formation. This formation is comprised of numerous channel and floodplain sands and conglomerates with silt, clay and coal beds throughout. The boundary with the overlying Beluga Formation is difficult to determine with accuracy due to the gradational nature of the contact; however, Amaroq has estimated the contact between the two formations to be 2100' MD (2050' TVDSS) in the NCU 1B well. 4.2 Injection Zones For the purposes of this application, all formation depths are referenced to the NCU 1B well. The proposed injection zone is present between the depths of 2307'MD to 2370'MD as recorded on the logs of the NCU 1B well. The injection will take place in the gross interval from 2307'MD — 2370'MD. Perforations are already present at 2,307'-2326' MD and 2350'-2370' MD. The lithologies at these depths are primarily sandstones, conglomerates and siltstones with minor coal beds interbedded with shales above and below the perforated intervals. The sandstones and conglomerates are poorly cemented with expected, good intergranular porosity. On the logs, this zone appears to exhibit good properties for fluid injection. A reasonable estimate of porosity from this zone within the sands is 24 - 28%, with permeabilities of 50-100 millidarcies based on equivalent sands within the Nicolai Creek Unit #3 well, which is approximately 6769' to the north. The Carya 2.1-2 zone is also open in the Nicolai Creek Unit No.2 well. However, pressure data obtained following perforating of these sands in the NCU 1B well in June 2006 indicate that they are not in direct communication with the same sands in the NCU 2 well as the Carya 2.1-2 in the NCU 1B well exhibited virgin reservoir pressure of approximately 1040 psi while the same zones in the NCU 2 well had been on production since August 2002 and had declined significantly below a similar initial reservoir pressure. The isolation of these zones is likely due to fault separation as shown in Figure 4-1. The proposed disposal zone is depleted along with the other gas producing zones in the NCU 1B well. Cumulative gas production as of September 2019 in the NCU 16 well is 581,539 MCF. This volume is in agreement with the BHP/z plot shown in Figure 4-2. Page 4-1 4.3 COUNTY, STATE: KENAI PEN. SOR.(WEST SIDE OF COOK INLET). ALASKA RESERVOIR: COMMINGLED CARYA2-1.2 T02-312307-2918'1 COND.CORR7 Z tvder Scott Reservoir 6= Z Solutions (P ., (Panue) �Ratectedl IUR, MMCF 581 IMMCF 581 I Recovery Factor 0.8871 200 •LS%T Gam eE.0 C.a *FUF-5fI •Oc"F-6ii 000 800 600 400 200 0 O M 0 100 200 300 400 500 Cumulative Production, MMc1 Confining Layers Figure 4-2. BHP/z plot for NCU 16. 800 700 The interval being considered for Class II non -hazardous injection activities is from 2307' to 2370' MD. Above the proposed disposal zone in NCU 113 are interbedded siltstone, shale and coal up to the 13 3/8" casing shoe at 1904' MD. These nonporous and non -permeable sediments will form an effective upper seal and prevent the upward migration of injected fluids. Numerous layers of shale, siltstone and coal are also present at depths greater than 2370' MD below the proposed injection zone. Examples of these are the coal from 2380' to 2390' MD and the interbedded coal and shale sequences from 2390' to 2470' MD. These layers will be effective barriers to downward migration of the injected fluids. Table 4-1 details the interpreted lithology for 400' above and 300' below the proposed injection interval. Page 4-3 Table 4-1. NCU 18 interpreted lithology above and below proposed Carya2-1.2 disposal zone. Depth MD Lithology Perforated Interval MD Zone 1900-1940 silstone and shale _ 1940-1955 coal 1955-2000 siltstone 2000-2010 coal 2010-2060 siltstone 2060-2072 Icoal 2072-2130 silstone and shale 2130-2140 sandstone 2140-2165 siltstone 2165-2175 coal 2175-2240 silstone and shale 2240-2250 coal 2250-2307 siltstone, shale and coal 2307-2326 sandstone 2307-2326 Carya 2-1.2(disposal) 2326-2335 coal 2335-2350 shale 2350-2380 sandstone 2350-2370 Carya 2-1.2(disposal) 2380-2390 coal 2390-2430 interbedded shales and coals 2430-2430 shale 2458-2472 Interbedded shales and coals 2472-2490 Isandstone 2480-2486 Carya 2-2.1 2490-2530 interbedded sands, shales and coals 2590 shale 2590-2595 coal 2595-2630 sandstone 2604-2622 Carya 2-2.2 2630-2652 coal and siltstone Page 4-4 5.0 Well Logs [20 AAC 25.252(c)(5)] Well logs for the Nicolai Creek State #1/IA, NCU 1B and the NCU 2, 6, and 9 wells are on file at the AOGCC. These logs include measurements for spontaneous potential (SP), resistivity, sonic, gamma ray, and formation mud logs and have been used to support the technical presentation herein. The cement bond log (CBL) for the 7" casing in the NCU 1B well is also part of the data set to support this application. Page 5-1 6.0 Casing and Cementing Program [20 AAC 25.252(c)(6)] The casing and cementing program for the NCU 1B well is presented in Table 6-1. The current wellbore schematic for the NCU 1B well is shown in Figure 6-1. In 2002, the 10.75" casing in the Nicolai Creek State 1A well was sidetracked from a casing window at 2186' to 2207'. The 8.5" sidetrack hole was TD'd at 3672' MD and 7" casing was run and cemented from 3650' MD back to surface with good cement returns observed at the surface. Table 6-1. NCU 16 casing and cementing program. Casing Hole Size Size Weight/Grade Depth Shoe MD Depth Top MD Cement 26" 20" 94# / H-40 232' Surface 594 sx to surface 17.5" 13.375" 55# / J-55 1904' Surface 1530 sx to surface 12.25" 10.75" 40.5# / J-55 3817'(1) Surface 900 sx to surface 8.5" 7" 23# /J-55 3650' Surface 82 bbls 12.5 ppg lead 67 bbls 15.8 ppg tail Cement to surface (1) 10.75" casing sidetracked from casing window at 2186' into 8.5" hole. Following cementing of the 7" casing cement job, a CBL was run. The NCU 113 CBL shows good cement bonding across the proposed disposal interval and above and below the proposed injection zone. Excerpts of this log are presented below in Figure 6-2, Figure 6-3, and Figure 6-4. Page 6-1 Amaroq Resources. LLC Nicolai Creek Unit # I -B Current Col? iguralion (OCtoher 2019) $-7B' 6 S P.1-55 IN1 to air/arc 13-3:8" 5" J-55 Surface Cap at 19M'. Cmtd to surface W 1530 sx "G Carya 2.1.2 Perfs: 2307' -2.326 MD 2,3511'-2370'1,4I) (TVP 225,1 _2316'1 ('saya 2-2.11'',1'': 2480 .2-186 NW (TVD 2.426 -2434') C'arya 2.2 .2 Perfa: 2504 -2622 MD (TVD 2550 2568) Carva 2-3 Perlis: 2837' -2R42' N1D 3862' -2867' MD 2913' -2918' (TVD 2783' -2,864) Carya 2-4.1 Perlis: 3191' -3211' nw (TVD3137'-3157') Cama 2-5.1 Perls: 3371'-340U MD (TVD 3307'-3348') Capes 2-6.1 Pmf.: 3560 -3575'MD (TVD 35(Mi -3521) Float collar iu 3601' A Most shoe rn . 64R' AID TD Ai 3672' MD (3hI-' "f\'Di Drilled 26"Hole _ 20"948 H-40C'onducloi ,• " sct at 232' C4ntd to surface 55'/300 sx "G", ..w 1kiIIM 17-tit"Ilole .4i 10-314" casing (nol shown) sidetracked with 8-1 n_" window Ginn _ 2186' to 2207' a a Sliding Sleeve w; X-profide i 2263' (closed) G-77 Packer ((7 2275' Hole in tubing r@- 2294' Sliding Sleeve w X -profile d 2359' • ' (Open) G-77 Pa&:cr ➢i 2436' Sliding Sleeve w/ X -profile It? 1749' (open -1/13) G-77 Packer Id 2761' X -ripple fi` 2774' (1!X plug in X -nipple VTAPacker(d 3.145' NN Nipple %d 3181' Figure 6-1. NCU 1B current well schematic. Page 6-2 Well completed xith rand exchssion screen.a.r,s the - indicated perforatiotas tx ttmt at 33%, J an 2013- 011lag tagat 3255' iaa CenientRetainer :a 33fM1 Lower 3completions treated w/ l5'csthcrf,rd Sand Aid 20 10 11 7'238 J-55 production Cag U 3650'MD (3595' T\'D). Cmtd to .wfacc wl 82 bbl. 'C3" lead at 12.5 ppg and 67149s "u" tail at15.8 ppg. Figure 6-1. NCU 1B current well schematic. Page 6-2 '1 .11.1_14..I. -i gg,. r :� 3 ins iii �'i Y- P'r='` z 7.0 Fluids to be Injected [20 AAC 25.252(c)(7)] The primary purpose of converting the NCU 1B for injection disposal is to dispose of produced water from the other NCU wells. Additional solids free fluids for disposal could include workover and completion brines from any future workover operations which are anticipated to contribute less than 1% of the overall volume of fluids to be injected. At this time, Amaroq does not intend to dispose of drilling muds or cuttings or other heavily solids laden fluids in the NCU 1B well nor does it intend to take in Class II wastes from other local operators. Produced water will contain dissolved chloride salts and other naturally occurring minerals with an estimated total dissolved solids concentration of 10500 ppm. Completion and workover fluids will be composed of potassium and/or sodium chloride type brines, cement residue/rinsate, viscosity enhancing agents and formation fluids. All fluids to be injected will be non -hazardous Class II waste. The average density of injected produced water and workover fluids is estimated at 8.4 ppg. Amaroq has purchased the surface injection facilities that were located at the Aspen 1 disposal well and moved the equipment to the NCU. AOGCC field inspection personnel are familiar with this injection facility. The maximum injection rate for this equipment is planned to be 0.24 bpm after installation of a new injection pump. From this pumping capacity, the maximum anticipated daily injection volume is 346 bpd. Average daily injection volumes are estimated to be 100 to 200 bpd with an intermittent injection rate of 0.24 bpm. Page 7-1 8.0 Estimated Maximum and Average Injection Pressure [20 AAC 25.252(c)(8)] Amaroq recently conducted an injection test and temperature survey on the Carya 2-1.2 zone to establish the injection pressure at rates up to 1 bpm and identify any temperature anomalies in the well after the injection test which could indicate migration of injection fluids beyond the proposed injection zone. The injection test was performed with 160 IF clean produced water and the temperature survey was run from 2395' MD (2341' TVD) back to surface at 1, 2 and 3 hour intervals after the injection of 120± bbls of hot fluid. A static baseline survey was also run prior to the injection test. The results of the injection test are presented below in Figure 8-1 and Figure 8-2. The results show that the maximum surface injection pressure was 745 psi which corresponds to formation pressures of 1772 psi at gauge depth of 2395' MD (2341' TVD) and 1706 psi at 2307' MD (2254' TVD). These pressures were reached after pumping 110 bbls of 8.4 ppg produced water at 1± bpm. The sawtooth type fluctuations in the pressure versus time graph are the result of continuous throttle adjustment while attempting to maintain the 1 bpm rate with vintage equipment. The formation fracture pressure was not reached during the injection test. The NCU 1B well has an estimated formation fracture pressure in excess of 1990 psi at the shallowest perforation of 2307' MD (2254' TVD). This value is derived from NCU 1B drilling operations where a 17 ppg equivalent mud weight (EMW) test was performed at 2137' TVD (0.88 psi/ft gradient). Amaroq plans to inject fluids at a rate of 0.24 bpm. The injection test results do not provide good data for this injection rate as the well was on vacuum and the tubing was not full when pumping at 0.25 bpm for 5 minutes. The same situation affects the 0.5 and 0.75 bpm rates that were pumped for 5 minutes each before increasing the injection rate to 1 bpm which finally filled the tubing after about 16 minutes of pumping. However, an estimated injection pressure at 0.24 bpm can be inferred from the pressure decline data and the static reservoir pressure of 315 psi at 2307' MD (2254' TVD). Amaroq estimates that the average surface injection pressure at the anticipated injection rate of 0.24 bpm will be on the order of 200 psi with periods during an injection cycle where the well is on vacuum. The injection pressure may rise over time as additional fluids are disposed into the zone; however, this pressure rise is anticipated to be modest for the following reasons: • The zone is a depleted gas zone with estimated porosity of 25% and permeability of 50 to 100 millidarcies. With these formation properties, the injected produced water fluids will leak off rapidly into the reservoir; • The injected fluid will be primarily produced water which has a very low viscosity and will contribute to rapid leak off, and • The remaining gas in the disposal zone is compressible and will provide less resistance to injection than a water wet sand resulting in higher leakoff rates. Page 8-1 1600 800 1 Injection Pressure @2395' RKB 0.25 bbl/m, 0.5 bbl/m 1600 0.75 bbihn, 1 bbl/nn 700 1400 600 1200 0 500 •� a d N 1000 N `+ � 400 a N � y V w C 800 300 rn 600 _._—__.__ _. _ 200 400 100 200 0 11 12 13 14 15 Time (hrs) —Pressure —Surface Pressure Figure 8-1. NCU 1B Carya 2-1.2 pressure during injection test, October 6, 2019. Page 8-2 2000 120 Inj Pressure 1800 - 1,21 bbl/m, 05bbl/rn 110 ,800 100 Surveys 11w, 21,,,31,rs afte, Injection ,400 1200 '90LL a 1000 80 800 d G d 70 � MIMIMMKMEN "WIMUM 600 60 400 ML 200 50 S'a'ic un M rij 0 d0 10 11 12 13 14 15 16 17 18 19 Time (hrs) —Pressure —Temperature Figure 8-2. NCU 113 Carya 2-1.2 pressure and temp survey time plot. Page 8-3 To allow for potential increase in injection pressure over time, Amaroq proposes to set the maximum surface injection pressure at 900 psi based on 8.4 ppg produced water injection fluid. This pressure limit will provide a minimum 100 psi safety factor for injection pressures to remain below the minimum estimated formation fracture pressure. The temperature survey results are presented below in Figure 8-3 through Figure 8-8. The purpose of the temperature survey was to identify any temperature anomaly(s) that could show migration of the injected fluids beyond the proposed Carya 2-1.2 injection zone. The results show a cooling effect from the injection activity in the bottomhole area of interest below 2000' MD. During injection, the majority of the fluid would have exited the sliding sleeve at 2359' MD and then entered the perforated intervals from 2307' to 2326' and 2350' to 2370' MD. There is also a hole in the tubing at approximately 2294' that was identified during MIT of the tubing which likely transmitted some fluid to the perforations. The enlarged graphical results shown in Figure 8-8 may indicate that the fluid was preferentially entering the upper perforated interval due to the upper interval being slightly (<0.5 °F) cooler than the lower interval but this minor temperature change across the upper interval may be due to other factors. The temperature data does not show that fluid is migrating upwardly beyond the perforated intervals. Furthermore, the temperature increase of both the baseline and 3 hour post injection curves below 2385' MD, show that the fluid at the gauge depth of 2395' MD has remained at formation temperature of 76 IF. This indicates that the injected fluid has not migrated downward into deeper zones. Page 8-4 T MEN 4" Depth (feet) RKB o oc N o e e o e O O I T i N O e Depth (feet) RKB N N � N O V (71 N O V N N xl O �1 O N O N O rNi s O O I O O T Depth (feet) RKB N O (V N N O V N N O O O O O O O O O 0 N O O O O m V 0 0 M o 0 O n J M T O O y 0 7 ao m O � m m CD N O � Z 3 n m c '. H (D w 3 I..- I ko m d 3 a Depth (feet) RKB O O N O O J I J O O 9.0 Fracture Information [20 AAC 25.252(c)(9)] Injection disposal of produced water as described in sections 7 and 8 is not expected to create a fracture(s) in the disposal formation during routine injection operations for the following reasons: • The proposed disposal zone is a depleted gas zone and is on vacuum with a fluid level above 1625' MD; • The Carya 2-1.2 disposal formation has estimated porosity of 25% and permeability of 50 to 100 millidarcies which leads to rapid bleed off of fluid into the formation when the hydrostatic pressure is above the static formation pressure of 315 psi at 2307' MD (2254' TVD); • Injection testing at 1 bpm for 110 bbl of pumped produced water was unable to reach the minimum estimated fracture formation pressure of 1990 psi at 2307' MD (2254' TVD); and • Amaroq plans to inject produced water at 0.24 bpm which will result in very low injection pressures and the inability to build pressure in the formation approaching the minimum estimated fracture pressure. Furthermore, the proposed injection zone is bounded above and below by thick shales and siltstones that will impede any upward migration of injected fluids at the minimal injection rate of 0.24 bpm. Page 9-1 10.0 Laboratory Water Analysis Amaroq does not have water quality test results specific to the Carya 2-1.2 zone in the NCU 1B well which has been comingled with other deeper producing zones in the NCU 1B and has likely been subject to crossflow over the years from deeper zones. Test results obtained for produced water from the comingled production in the NCU 1B well are provided as Attachment 1. The analysis shows that the total dissolved solids (TDS) in the NCU 1B produced water measures 7540 mg/L (see Attachment 1). The salinity of formation waters can be determined from log analysis by the SP interpretation and Rwa methods. However, both of these methods assume the formation is a water -wet sand with no hydrocarbons present and these analytical techniques do not apply to a depleted gas zone such as the Carya 2-1.2 sands in the NCU 1B well. Thus, Amaroq has not analyzed the salinity of any water in the Carya 2.1-2 sands by log analysis techniques. The NCU 1B well has also been treated with a sand conglomeration product which contributes to the existing foul smell of produced water from the NCU producing zones. Given that the proposed disposal zone is a depleted hydrocarbon bearing zone, has high TDS and is malodorous, it has no potential to be a potable water source for any residential or commercial development in the foreseeable future. Page 10-1 11.0 Freshwater Aquifer Exemption Aquifer Exemption Order No. 12 covers portions of the NCU for aquifers deeper than 2000' and the proposed disposal zone in the NCU 18 well is within the area covered under this order. A copy of this Order is provided as Attachment 2. Page 11-1 12.0 Mechanical Condition of Wells [20 AAC 25.252(c)(12)] The NCU 1B well is located on the same pad as the NCU 2, 9, and 6 wells as shown above in Figure 1-1. The NCU 2 (shut in) and NCU 9 wells are completed gas producers while the NCU 6 well was P&A'd in 1980. Both the NCU 6 and NCU 2 wells have penetrated the Carya 2-1.2 sands within '% mile radius of the NCU 1B well. The NCU 6 well penetrated the proposed Carya 2-1.2 disposal zone at approximately 2190' TVDSS which is very close to the TVDSS depth for the NCU 1B Carya 2-1.2 depth of 2200' TVDSS. The horizontal distance between these two penetrations of the proposed disposal zone is approximately 295'. During drilling operations for the NCU 6 well, shallow gas was encountered between 700' and 750' which eventually resulted in a gas flow in the 20" x 13.375" annulus after cementing the 13.375" casing. The gas was partially shut off after bullheading cement down the 20" x 13.375" and 30" x 20" annuli. Prior to setting 9.625" casing, the 13.375" casing was perforated twice and cement was squeezed behind the casing at 730' and 665' to completely shut off the shallow gas flow. After drillout of the 13.375" cement retainer, the 9.625" casing was run to 9110' and cemented to surface with the Carya 2-1.2 interval cemented via a stage collar at 4200' MD with good cement returns and 300 ft' of cement returned to surface. After the completion of drilling operations to 11776', the well was P&A'd with 3 cement plugs set in the 9.625" casing. Amaroq believes that the NCU 6 well is secure and will not be a conduit for Class II wastes to reach freshwater sources due to the cementing of the 9.625" casing to surface with good cement returns, the cement squeeze jobs performed on the 13.375" casing at 665' and 730' prior to running the 9.625" casing, and the cement bullheaded into the 20" x 13.375" annulus. The NCU 2 well also penetrated the proposed disposal zone, however, the Carya 2-1.2 zone is fault separated in these two wells as shown in Figure 4-1 above. Furthermore, as discussed above in section 4.2, pressure data obtained following perforating of these sands in the NCU 1B well in June 2006 indicated that they are not in direct communication with the same sands in the NCU 2 well as the sands in the NCU 1B well exhibited virgin reservoir pressure of approximately 1040 psi while the same zones in the NCU 2 well had been on production since August 2002 and had declined significantly below a similar initial reservoir pressure. The NCU 9 well is a Beluga Formation gas producer and does not penetrate the Carya 2-1.2 sands. Page 12-1 13.0 Mechanical Integrity of Disposal Well [20 AAC 25.252(d)] A mechanical integrity test (MIT) was performed on the NCU 1B prior to conducting the injection test described above in section S. The results of the MIT are presented in Figure 13-1. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Mechanical Integrity Test Submit to: nm.reW(aaleska.00v AWCC.Inspectorsdalaska.guv phoebe. brooksaalaska.gov chris.metlace0alaska.gov OPERATOR: Amerog Resources LLC FIELD / UNIT / PAD: Ncolal Creek Unit 1B/2/9 Pad DATE: 9/7/2019 IA 10/512019 Tubing OPERATOR REP: Lyle Savage AOGCC REP: Waited WON NCU 1B Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PID 202-162 Type Inj W Tubing 220 220 220 Type Test P Packer ND 2223' BBL Purtp 0.25 IA 2245 2150 2150 Interval I Test psi 2000 BBL Return 1 0.25 OA NA NA NA Resuk P Notes: Work conducted as part of work program in Sundry number 319-346. NCU 1B Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD 202-162 In Typj W Tubing 2100 2100 2100 Type Test P Packer T/D 2223' BBL Punpe 0.25 IA 1 1 40 40 40 Interval I Test psi 2000 113131-Returril 0.25 OA I NA I NA NA Resuk P Notes: Plug in tubing set at 2276 WLM for tubing W. Figure 13-1. MIT results for the NCU 1B well. Page 13-1 14.0 Areal and Local Considerations for Disposal Injection Order There are no known water wells or other borings within % mile of the NCU 1B well that could potentially be a conduit to fresh water for injected Class II wastes. The closest known water wells to the NCU 1B well are located at the NCU 3 pad approximately 6700' NNE and at the Hilcorp Granite Point Production Facility (GPPF) located approximately 6900' to the ENE from the NCU 1B well. The closest residences to the NCU 1B well are 4 cabins along the coastal road to the Shirleyville camp, the Shirleyville camp itself, and the GPPF camp. The cabins are generally seasonal use with one full time resident. The commercial housing facilities at Shirleyville and GPPF provide lodging for local oil and gas workers for Amaroq, Hilcorp and others. Both the cabin residents and the local oil and gas workers are accustomed to the ongoing production operations at the NCU and the addition of injection disposal operations at the NCU 1B well are not anticipated to have any impact on local residents. Page 14-1 Attachment 1 NCU 1B Produced Water TDS Analysis SGS SCS Rein 1194597001 Client Name S ASIMXP Printed Datellane 08/202019 15.55 P.jeet NmneM N61H Culk"vel Date/Time 081132019 14:14 Client Sample ID NC -IN Reethed Duttaime 08/13/201914:45 Mani: Water (Surface, Eff., Ground) Tml adeal Direttm- Stephen C Ede Sample Rcmmk,' .Nll..M, W, Aadya6 Nuemder Reauha IDD Unita Metad Carwame, ID Lima, Dale Date Lail Naiaca Departnant TMuI Dmsolwd Solid, 7540 2M mSA. 9M21 2540C A MI9!I9 F3VW Pape 205 Attachment 2 Aquifer Exemption Order No. 12 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 71p Avenue, Suite 100 Anchorage, Alaska 99501 Re: THE APPLICATION OF Aurora Gas, ) Docket Number: AEO-10-01 LLC for an Aquifer Exemption Order for ) Aquifer Exemption Order No. 12 portions of the Nicolai Creek Unit in I Township I I North, Range 12 West, ) Nicolai Creek Field Seward Meridian, Kenai Peninsula ) Nicolai Creek Unit Borough, in conformance with 20 AAC I South undefined Gas Pool 25.440. ) Kenai Peninsula Borough, Alaska ) April 16, 2010 IT APPEARING THAT: 1. On March 16, 2010, the Alaska Oil and Gas Conservation Commission (Commission) received the application of Aurora Gas, LLC (Aurora) for an aquifer exemption order for portions of Section 29, Township I IN, Range 12W, Seward Meridian (SM). below 2000' true vertical depth (I VD) within the Nicolai Creek Unit (NCU), Kenai Peninsula Borough, Alaska. 2. The same date, the Commission requested and received additional information from Aurora. 3. On March 22, 2010 pursuant to 20 AAC 25.540, the Commission published in the Anchorage Daily News notice of opportunity for public hearing on April 15, 2010. It was also published in Peninsula Clarion on March 24, 2010. The Commission has jurisdiction in this matter under 20 AAC 25.440. 4. Auroras proposed underground storage of `hydrocarbons which are of pipeline quality and are gases at standard temperature and pressure" is specifically excluded from federal Underground Injection Control ("UIC) regulations. 5. The Commission has authority to issue an aquifer exemption in accordance with the standards set forth in 20 AAC 25.440. 6. No protests to the application or requests for hearing were received. 7. Because Aurora's submittals and the Commission's public records provide a sufficient basis upon which to make an inf'omed decision, the Commission determined the request could he resolved without a hearing. The public hearing was vacated on April 12, 2010. Aquifer Exemption Order 12 Nicolai Creek Unit No, 2 April 16, 2010 page 2 FINDINGS: I. Operator Aurora operates the NCU and the NCU No. 2 well (NCI; 2) located on the west side of Cook Inlet, approximately LG miles west of Shirleyville Camp and 11.5 miles west-southwest of Tyonck. 2. Extent of Aquifer Exemption Area Aurora's NCU 2 well is a gas production well proposed for conversion to gas storage injection service. Data in the record supports an aquiler exemption covering an area within Township I IN, Range 12W, SM, specifically described as: Section 29: SF. 'I/ SW '/, NW ''/; SW % SE V NW %; SW 'A NW 'I/ SW '/.; E'/•.NW'/+SW%;W%zNE'/.SW'/.:SW'/SW'/+;NW'/SE'/.SW'/+ 3. Gcolocv and Groundwater Hydrolom The stratigraphic colunm on the western margin of the Cook Inlet includes clastic rocks of Quaternary through Tertiary age that lie unconformably on top of Mesozoic -aged basement rocks. Glacial, Pleistocene shallow sand and gravel deposits are locally 400' to 500' thick' and contain freshwater. The underlying Rcluga and Tyonck Formations (in descending stratigmphic order), consist mainly of a series of reservoir and non -reservoir fluvial -derived rocks. The Beluga Formation, approximately 1,550' thick within the affected area. is comprised of clay, siltstonc, coal and sand. Individual sand beds within the Beluga Formation are generally less than 30' thick and are separated by numerous low -permeability layers, resulting in a heterogeneous sequence of rocks with very poor or no vertical connectivity or pemtcability. Three uppennost Tyonck sandstone strata (in descending order, Carya 2-1.1, 2- 1.2, and 2-2.1) that range in thickness from 15' to 35' are currently being drained by gas production well NCU 2. Only these three strata are proposed for use as storage reservoirs. Gas in these strata is trapped within a small, east -trending fold bounded to the west and to the cast by small, north -northeast -trending faults. The Carya 2-1.1, 2-1.2, and 2-2.1 reservoir strata are separated from the ovaiying BCluga Formation by more than 150' of low permeability clay, siltstone, and coal that persist laterally across the area proposed for aquifer exemption. 4. Fomlatiun Water Salinity The very low water yield from NCU 2 (only I hazel of water was reported during the most recent year of production) precluded sampling and analysis of produced water from the proposed storage reservoirs. A produced water sample obtained during July 2007 from Beluga reservoirs in nearby well NCU 9 measured 9,820 ppm total dissolved solids (TDS). During February. 2010, a commingled Beluga and Upper Tyonek produced water sample from nearby well NCIJ 3 measured ' All thicknesses presented herein are expressed as true vertical feet unless otherwise specified. Aquifer Lxentptinn Order 12 Niculai Creek Unit No. 2 .April 14 2010 Page 3 3,500 ppm chlorides, equal to approximately 7,200 ppm TDS'. Other February. 2010 produced -water analyses reported by Aurora from the Beluga in NCU 9 and Upper Tyonck in NCU 1 B, measured 19,000 and 18,000 ppm chlorides (39.000 and 16,400 ppm TDS'), respectively. Calculated TDS concentrations using well log data from the Beluga and Upper Tyonek reservoirs are not reliable for NCU 2 due to significant amounts of methane present at depths greater than 650' below sea level. 5. Suitability of NCU 2 Sediments as Drinking, Water Aquifers Under 20 AAC 25.440 (a)(I) the Commission may grant a aquifer exemption if the aquifer "is hydrocarbon producing" or "is situated at a depth or location that makes recovery of water for drinking purposes economically of technologically impractical'. The aquifer exemption requested by Aurora is supported by the following: a. the area has plentiful surface and groundwater available to a depth of approximately 450' below sea level; b. mud logs from wells drilled to date nearby NCLJ 2 show that hydrocarbon gas. primarily methane. frequently occur at depths greater than 650' below sea level; c. the proposed storage reservoirs produce. or have produced, commercial quantities of hydrocarbon gas; d. produced water samples suggest that the Bcluga and Upper Tyanek reservoirs in the storage area have TDS concentrations between 3,000 and 10,000 ppm, or greater than 10,000 ppm; and c. at the March 17, 2010 public hearing for Storage Injection Order No. 8 regarding NCLJ 2, Aurora testified that the nearest drinking water wells are located at Shirleyville Camp, about 1.6 miles to the cast, and arc less than 100' below ground surface. According to the Alaska Department of Natural Resources' Water Rights (ioneraphic Information System and Land Administration System Case Abstracts websites, the nearest rogistered surface water rights claim is for Markiey's Spring. which lies about 2 miles east of the proposed storage project (ref. DNR Case File LAS 3400). There are no other surface or subsurface water rights claims recorders within 14 miles of the proposed storage operation. I Ilie July, 2007 Beluga rrsenoir produced mater sample. tiotn NCLJ 9 measured 4790 ppm chlorides and 9820 ppm TDS. Applying that same ratio ( I to 2 05) to the NCLJ 1B sample that mcasmvd 3500 ppm chlorides yields 7175 plain TDS. ' Conversion from chloride concentration to TDS concemrmion is baud on the 1 to 2.05 ratio of chlorides to TDS established in footnote i, above. Aquila FxCmplion Order 12 Niculai Cnu:k Unil No. 2 April IG, 2010 CONCLUSIONS: Page 4 I. Those portions of theshwater aquifers occurring deeper than 2000' below sea level within NCU 2 wellbore and affected area do not currently serve as a source of drinking water. All known and foreseeable ground water consumption from the NCU vicinity is consistent with usable surface and ground water resources occurring above a depth of about 450' below sea level; 2. those portions of freshwater aquifers occurring deeper than 2000' below sea level within the NCU 2 wellbore and affected area contain hydrocarbon gases, TDS concentrations between 3,000 ppm and 10.000 ppm or exceeding 10,000 ppm, and are situated at locations and depths that make recovery of these waters for drinking water purposes economically impractical; 3. those portions of aquifers occurring deeper than 2000' below sea level within the affected arca cannot reasonably he expeewd to serve as underground sources of drinking water; and 4. those portions of aquifers occurring in the NCU 2 storage injection stiala within the affected area and deeper than 2000' below sea level qualify as exempt freshwater aquifers under 20 AAC 25.440(a)(1)(A), 20 AAC 25.440(a)(1)(B), and 20 AAC 25.440(x)(2). NOW, THEREFORE, IT IS ORDERED THAT the aquifers or portions of aquifers occurring deeper than 2000' below sea level in the following areas within TI IN, RIM SM; are exempt as provided by 20 AAC 2.5.440 for the purposes of gas storage injection operations: Section 29: SE'/SW'/<NWV;SW'/SE!/,NW'/.;SWI/NW%SW '1: E/NW MSW'/:WINE'/SW '/4;SW /SW %; NW '/SE V4 SW '/ Aquifer Exemption Order 12 Page 5 Nicolai Creek Unit No. 2 April Ih, 2010 Note that this Order does not authorize the injection of any fluids or gas within the exemption area. Storage Injection Order No. 8 governs storage injection operations within the exemption area. DONE at Anchorage, Alaska, and dated April lfi, 2010. Daniel T. Seamount, Jr., Commissioner, Chair Alaska Oil and CARConservation Commission Commission Cathy P Foerster, Commissioner Alaska Oil and Gas Conservation Commission As pmMW to AS 3105ANfxa I. within 20 days Oft, mitt- nolkc of dw naryof lhi. order nl dahion. a awh fi n 1. lime as dw ('mmnosim pmts Or pad cause f mxn. apoem aneci d by it nay file with the Caion6vion an ap lieation for nxroruidrntiat of tmhewnt mxlltaomdlilt lWmlbin which the take urs lmncd, then the paind of tine dell hr 23 days. An Nplirmi�m tir camsidarabm the mdv or deisinn is heliev.W N be emmm+us. It¢ coon ifini. dull pant a.1. the ePlAnalinn for mwtskl ration in whole ase in tun within to da,s after it is liicd. Failure to wt on itenial I. isalk. aro f FINAL ill , eshe Cwmmissialdenty n+nnsidermim. upem denial, Chiu adamdmiu,n aM the donut of rttarxida �ns are FINAL R entry be app -h W to supnio cam. ise appeal MAST Ise filed within l5 days aftm the date on on. U me S die d sion is by ON a0 drys if tilt ca Cnm piscal V%T br dislri within the older In die n whiir ch mmxiJamim. UNLESS 1M 4-ial is by ilmmim, in wM1irlt ruse oho aPPa-I MIAT A 111c,1 xiNin a0 daYx aeon' da• Jatr on whirls theaPPliuvum fancnmideraohm was It If the Cotmmssion pants m .,H.h.o f r r,,c lsidnmion. this ad r or decision does not hecane final. anther. Ne order or decision on nrmaidemtion will he Ihe FINAL order or d vision of U. Cmmtdaxkm, aM it Iney be appealed to sopeda MM, Tse appal h/11Sihe Glad within da days after the dale on which the Comnisskm mails. OR 20 days if the Canmis ial ahesui.e di-ribmn. Ilse suJcr,u d:nsiimmraonsidcrmian. As pmvided in AS 310.5 ONryb)."pryv opwviima nsinadmnppal are limimt h, the Nwdinns p unlN to Ilw Cmnolisv'm by Ihu applicotim fix raamskkmiion:' In minpWmg a paw Of ince almea'. Ibi dale of ale c,cm m dafanh afton which tlMdeSlpland Iniad btips. to. i, hot irlf laded is dw gmhdahe Inst day ofine Wind is inclaJN. nnless it Will, on a weeLend or Ww solidly, in which ceennhe poked rum rmlil 5 W p.m. nn tlw tat day dW dons nm fall nn s u'.ekrnJ ser Wla hMiday. STATE OF ALASKA ALASKA OIL AND CAS CONSERVATION COMMISSION 333 West Ys Avenue, Suite 100 Anchorage, Alaska 99501 Re: THE APPLICATION OF Aurora Gas, LLC for an Aquifer Exemption Order for portions of the Nicolai Creek Unit in Township I I North, Range 12 West, Seward Meridian, Kenai Peninsula Borough, in conformance with 20 AAC 25.440. BY THE COMMISSION: Docket Number. AEO.10-01 Aquifer Exemption Order No. 12 Nicolai Creek Field Nicolai Creek Unit South Undefined Gas Pool Kenai Peninsula Borough, Alaska April 16, 2010 NOTICE CLOSING DOCKET The Commission has the closed the Docket in the above captioned matter. ENTERED AND EFFECTIVE at Anchorage, Alaska and this 16th day of April, 2010. BY DIRECTION OF THE COMMISSION 1 J. Colontbie S ial Assistant to the Commission LEGEND 0 FOUND 1/2 REBAR W/MCLANE CAP 0 SET 1/2 REBAR W/MCLANE CAP NORTH I® WELL NOTES gg$ G W — — — — —— — - — — — — —�" 1) BASIS OF COORDINATES IS ALASKA STATE PLANE NAD 27 ZONE 4, AND IS FROM A g PAD LIMITS \ DIRECT TIE TO AOL NO. 31270. yO! J O / 2) BASIS OF ELEVATION IS FROM DIRECT TIDAL OBSERVATION ON 9-22-93. DATUM IS tlI' MLLW ALL ELEVATIONS SHOWN HEREON WERE TAKEN ON GROUND. 3) SECTION LINES SHOWN HEREON ARE BASED ON PROTRACTED VALUES. P / 1 4) BEARINGS SHOWN HEREON ARE GRID. ~ 5) DATE OF SURVEY AUGUST 14, 2002 Id W O N to � 1 WELL = N80'27'1 p GRID I'J: 2565^-38.314 9"yy GRID E:241532.129 284.53' - -- -- La TI TI DE: 61'00'+8.459" _r oNCITCDE:-1sr2T24.459" SECTION 29 ELL`.-. 33.2 ET rnu_+`;� TOWNSIHP 11 NORTH FFR RIR N:?5_;52a4.;a1 RANGE 12 WEST 295tI1999'FSL f GRID E 24-626.P32 �LaIIIUDL: e1'oo'4�.aHe" SEWARD MERIDIAN, AK Lon;cln_IDe-1sr2T22.:13" Q 261' FWELE.t. 33E FT. MLLA1'27' aj 209' 186' FWL 186' FWL WELL GRID P;: 2565248.12D 1GRID C241E85.426 LATITUDE 61'00 AIRSTRIP 4e.51�" ' �LDraclruoe-1sr2T2:;.4Dz" i'IELE`+. 32.3 . MLLN— IQ — aPAD LIMITS ^LELL 1B czlD rd: ^565-38.429 GRID E: 241503.651 LATITUDE. 6T'00'43.4c5" I1999' FSL 2048FSL T LorJ,ITUDE: -151"7"4.9--5" / ELE`:. '25 F-. Id -LPI PPOTPACTED SEFTON CrFNEP GRID 1,:2563243.909 CRID E 2-1264.057 Lh TITUDE: 61'C'D28 720" LOIJGITUDE: —15.1'27'28.610" ENGINEENNO-tE'>lIN_ SVP.E i'N�i-MWp41NC ii:E Ism�aa�a�e S88'44'34"E �T. soEUZ N/: ORWC. NO. 02MM SHEET 1 Figure 1-1. NCU ].B well pad plat. Page 1-2 of 4L Grid: nkalai c" 2-11 dtF*h 6tep10D7 (CbM FW&Greenl Data T)pe: Depth (Active Contour mcobm carya 2-1 .1 depth 22Nov2M fchfn Mkckl Dab Type Danlhl Vercwn. Fm75 I to OEM —LOD'"i b:: ;J ;2- M to s r AI-- a;19 L& Figure 4-1. Southern NCU top of Carya 2-1.1 structure map. Page 4-Z Q3 fa rr 4 til • la C 27 is9C88. . 2m521 N8 3,5S 2NA 3!ce +•. 3-e.9 >ss3 MCI