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Home My WebLink AboutCO 207 ECONSERVATION ORDER 207E 1. September 22, 2020 Hilcorp's request for Administrative Approval to Commingle Production between Lisburne and Prudhoe Bay Oil Pool L3-24 2. September 27, 2020 Notice of hearing, affidavit of publication, email distribution, mailings ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7'h Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF HILCORP ) Docket Number: CO -20-018 NORTH SLOPE, LLC for an order to allow ) Conservation Order 207E downhole commingling in Well PBU L3-24 ) Prudhoe Bay Unit between the Lisburne and Prudhoe Oil Pools ) Lisburne Oil Pool North Slope Borough, Alaska February 3, 2021 IT APPEARING THAT: By letter dated September 22, 2020, Hilcorp North Slope, LLC (HNS), operator of the Prudhoe Bay Unit (PBU), applied for authorization for downhole commingling of production between the Prudhoe Oil Pool (POP) and the Lisburne Oil Pool (LOP) in the PBU L3-24 well (PTD 186-182). Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for October 27, 2020. On September 23, 2020, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website, the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On September 27, 2020, the notice was published in the Anchorage Daily News. 3. No comments or requests to hold the hearing were received by the AOGCC. 4. HNS provided sufficient information in its application to make a decision, so the proposed hearing was vacated on October 15, 2020. FINDINGS: 1. Lisburne Oil Pool The LOP, described in CO 207 and in production since 1982, is a complex carbonate reservoir that underlies the POP. 2. Prudhoe Oil Pool The POP, in production since 1977, consists of an immense oil rim overlain by a massive gas cap. The POP has numerous enhanced recovery projects underway. POP wells are typically very productive due to the high-quality reservoir rocks within the pool. 3. Proposed Commingling Operation The PBU L3-24 well is currently completed in the LOP and has been effectively shut in since May 1997. There have been a few attempts to restore the well to production over the intervening years without success. The most recent attempt occurred in November 2016, at which time the well produced no oil and --1,900 BWPD. A workover was conducted to isolate the LOP in preparation to perforate and produce the POP on its own. The plug did not provide an adequate seal to isolate the LOP. The well was reanalyzed to determine whether to attempt CO 207E February 3, 2021 Page 2 of 9 the workover again or pursue a different route to try to bring this well back into production. Given that hydrate formation issues resulted in less than 50% on time experienced by the nearby L3-22 well when it produced from the POP,HNS determined that the water production and the heat associated with it from the LOP should reduce the risk of hydrate formation and thus improve on-time and economic recovery from the L3-24 well. Although water production from the LOP would likely reduce production rates from the POP versus if it was produced without downhole commingling, with the anticipated issues with hydrate formation the commingled producer should have much greater on time and less need for well interventions to restore flow, resulting in the well having a longer economic life and thus increase ultimate recovery over standalone production. 4. Potential for Crossflow Based on current fluid compositions HNS does not anticipate that crossflow would damage the POP and thus cause waste. Should fluid compositions change and thus cause an incompatibility, chemical inhibition would be evaluated. Crossflow during short shut in periods is not expected to be significant because the formations are at similar pressures. In the event of longer term shut ins a mechanical plug can be set to prevent crossflow. 5. Production Allocation Based on past flow test no, or very little (less than 5 BOPD), oil production is expected from the LOP. To confirm this HNS plans to flow and test the LOP prior to perforating the POP. If significant oil production occurs during this test a sample will be collected for geochemical analysis. If there is not oil production it will be assumed that no oil will be produced in the future from the LOP in this well. After the POP is perforated and brought online the incremental changes in production will be assumed to be from the POP and used for the basis of production allocation going forward. If changes in the production profile occur, such as rates, water cut, or GOR, or if the initial test of the LOP indicates a significant amount of oil is being produced, a downhole production log or differential flow test, or possibly geochemical analysis, can be used to adjust the production allocation between the POP and the LOP. CONCLUSIONS: 1. Downhole commingling of production between the POP and LOP should improve resource recovery from the Prudhoe Bay Unit by encouraging production of resources within the POP that would be challenging to produce as a standalone development in this well. 2. Crossflow between the POP and LOP is not expected to be significant due to similar reservoir pressures in this portion of the Prudhoe Bay Field. 3. An acceptable production allocation methodology can be devised. NOW THEREFORE IT IS ORDERED: Development and operation of the Lisburne Oil Pool are subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules. This order supersedes conservation orders 207, 207A, 207B, 207C, 207D, and 721 and all of their associated administrative approvals, except for CO 207.1 and CO 207C.001, which remain in effect. The records of those orders and approvals are incorporated by reference into this order. CO 207E February 3, 2021 Page 3 of 9 AFFECTED AREA: UMIAT MERIDIAN TION, R13E Sections 1, 2, 3, IQ 11, and 12. TION, R14E Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 1Q 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 35, and 36. TION, R15E All. TION, R16E All. TION, R17E Sections 3, 4, 5, 6, 7, 8, 9, 10, 15, 16, 17, TI IN, R17E Sections 18, 19, 20, 21, 22, 27, 28, 29, 30, 31, 32, 33, and 34. TI IN, R13E Sections 1, 2, 3, 4, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, T12N, R13E Sections 23, 24, 25, 26, 27, 28, 29, 30, 31, T12N, R14E Sections 32, 33, 34, 35, and 36. TI1N, R14E All. TI IN, R15E All. TI IN, R16E All. TI IN, R17E Sections 3, 4, 5, 6, 7, 8, 9, 10, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36. T12N, R13E Sections 35 and 36. T12N, R14E Sections 13, 14, 15, 16, 21, 22, 23, 24, 25, 26, 27, 28, 31, 32, 33, 34, 35, and 36. T12N R15E Sections 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36. T12N, R16E Sections 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36. Rule 1. FIELD AND POOL NAME (Source: CO 207) The field is the Prudhoe Bay Field and the pool is the Lisburne Oil Pool. CO 207E February 3, 2021 Page 4 of 9 Rule 2. POOL DEFINITION (Source: CO 207) The Lisburne Oil Pool is defined as the accumulations of oil and gas which occur in stratigraphic sections which correlate with the stratigraphic section found in the Atlantic Richfield -Humble Prudhoe Bay State No. 1 well between the depths of 8,790 feet measured depth and 10,440 feet measured depth. Rule 3. WELL SPACING (Source: CO 207D.001) There shall be no restrictions to well spacing within the affected area except that no pay may be opened in a well which is closer than 500 feet of an external property line where the owners and landowners are not the same on both sides of the line. Rule 4. CASING AND CEMENTING (Source: CO 207, Revised: CO 207.2) a) A conductor casing shall be set at least 75 feet below the surface and sufficient cement shall be used to fill the annulus behind the pipe to the surface. Rigid high-density polyurethane foam may be used as an alternate to cement, upon approval by the Commission. The Commission may also administratively approve other sealing materials which are supported by sound engineering principles and performance data. b) Surface casing to provide proper anchorage for equipment to prevent uncontrolled flow, to withstand anticipated interval pressure and to protect the well from the effects of permafrost thaw -subsidence or freeze back loadings shall be set at least 500 feet, measured depth, below the base of the permafrost but not below 5000 feet true vertical depth. Sufficient cement shall be used to fill the annulus behind the casing to the surface. c) Surface casing types and grades approved for use through the permafrost interval include: 1) 13-3/8 inch, 72 pounds/foot, L-80 Buttress; 2) 13-3/8 inch, 72 pounds/foot, N-80 Buttress; 3) 13-3/8 inch, 68 pounds/foot, MN -80 Buttress; and 4)13-3/8 inch, 68 pounds/foot, K-55 d) The Commission may administratively approve additional types and grades of surface casing through the permafrost interval upon a showing that the proposed casing and connection can withstand the permafrost thaw -subsidence and freeze back loadings which may be experienced. Evidence submitted to the Commission shall include: 1) full scale tension and compression testing: or 2) finite element model studies: or 3) other types of axial strain data acceptable to the Commission. e) Alternate casing programs may be administratively approved by the Commission upon application and presentation of data which show the alternatives are appropriate, based upon accepted engineering principles. Rule 5. COMPLETION PRACTICES (Source: CO 207). Wells completed for production may utilize casing strings or liners cemented through the productive intervals and perforated, slotted liners, screen -wrapped liners, gravel packs or open CO 207E February 3, 2021 Page 5 of 9 hole methods, or combinations thereof. The Commission may administratively approve alternate completion methods where appropriate. Rule 6. HYDROGEN SULFIDE (Rescinded CO 207B). Rule 7. AUTOMATIC SHUT-IN EOUIPMENT (Rescinded by Other Order No. 66) Rule 8. GAS VENTING OR FLARING (Source: CO 207) a) The venting or flaring of gas is prohibited except for operational necessities and for safety volumes set out in this rule; b) A daily average volume of 1,000 MCF per day is approved for the safety flare at the Lisburne Production Center; c) Volumes of gas to provide safety flares for additional facilities may be approved by administrative order upon proper application; d) The volumes of gas for safety flares may be decreased or increased by administrative order; and e) Gas flaring may be approved by administrative order during commissioning of new equipment, purging, and start-ups after major repairs or interruptions. Rule 9. GAS -OIL RATIO TESTS (Rescinded: CO 207D.001) Rule 10. PRESSURE SURVEYS (Source: CO 207, Revised CO 207.11 and CO 20713.001). a. a) An Annual Pressure Surveillance Plan shall be submitted to the AOGCC in conjunction with the Annual Lisburne Oil Pool Reservoir Surveillance Report by June 15' of each year. This plan will contain the number and approximate location of pressure surveys anticipated for the next calendar year and, unless AOGCC orders otherwise, the plan will be deemed approved 45 days after submission to AOGCC. b. Data from the surveys required in (a) of this rule shall be submitted with the Annual Lisburne Oil Pool Reservoir Surveillance Report by June 15`^ of each year on Form 10- 412. Data submitted shall include rate, pressure, time depths, temperature and any well condition necessary for the complete analysis of each survey. The datum for the pressure surveys is 8,900 true vertical feet subsea. Transient pressure surveys obtained by a shut-in build-up test, and injection well pressure fall-off test, a multirate test, or an interference test are acceptable. Calculation of bottom -hole pressures from surface data will be permitted for water injection wells. Other quantitative methods may be administratively approved by the AOGCC. c. Results and data from any special reservoir pressure monitoring techniques, tests, or surveys shall also be submitted as prescribed in (b) of this rule. Rule 11. UNITIZATION (Source: CO 207) To ensure the protection of correlative rights and to prevent waste, the Lisburne Oil Pool shall be administered in accordance with the Prudhoe Bay Unit Agreement. CO 207E February 3, 2021 Page 6 of 9 Rule 12. PILOT PROJECTS (Source: CO 207) Upon application, the Commission may administratively approve field pilot projects, well production and injection tests and other filed operations necessary for the purpose of developing a prudent enhanced recovery method and reservoir depletion program. Rule 13. POOL OFFTAKE RATE (Source: CO 207) No more than 160,000 barrels of oil per day may be produced from the Lisburne Oil Pool. However, when evidence can be presented to the Commission showing that a higher offtake rate will not affect ultimate recovery, the Commission may increase the daily offtake rate by administrative order. Rule 14. CONSERVATION ORDER NO. 83-C (Source: CO 207) Conservation Order No. 83-C is hereby cancelled. Rule 15. ANNULAR PRESSURE OF PRODUCTION WELLS (Source: CO 207D.002) a. At the time of installation or replacement, the operator shall conduct and document a pressure test of tubulars and completion equipment in each production well that is sufficient to demonstrate that planned well operations will not result in failure of well integrity, uncontrolled release of fluid or pressure, or threat to human safety. b. The operator shall monitor each production well daily to check for sustained pressure, except if prevented by extreme weather conditions, emergency situations, or similar unavoidable circumstances. Monitoring results shall be made available for Commission inspection. c. The operator shall notify the Commission within three working days after the operator identifies a well as having (1) sustained inner annulus pressure that exceeds 2500 psig for wells processed through the Lisburne Processing Center and 2100 psig for all other production wells, or (2) sustained outer annulus pressure that exceeds 1000 psig. d. The Commission may require the operator to submit in an Application for Sundry Approvals (Form 10-403) a proposal for corrective action or increased surveillance for any production well having sustained pressure that exceeds a limit set out in paragraph (c) of this rule. The operator shall give the Commission notice consistent with the requirements of Industry Guidance Bulleting 10-OIA of the testing schedule to allow the Commission to witness the tests. If the operator identifies sustained pressure in the inner annulus of a production well that exceeds 45% of the burst pressure rating of the well's production casing for inner annulus pressure, or sustained pressure in the outer annulus that exceeds 45% of the burst pressure rating of the well's surface casing for outer annulus pressure, the operator shall notify the Commission within three working days and take corrective action. Unless well conditions require the operator to take emergency corrective action before Commission approval can be obtained, the operator shall submit in an Application for Sundry Approvals (Form 10- CO 207E February 3, 2021 Page 7 of 9 403) a proposal for corrective action. The operator shall give the Commission sufficient notice of the testing schedule to allow the Commission to witness the tests. f. Except as otherwise approved by the Commission under (d) or (e) of this rule, before a shut-in well is placed in service, any annulus pressure must be relieved to a sufficient degree (1) that the inner annulus pressure at operating temperature will be below 2000 psig, and (2) that the outer annulus pressure at operating temperature will be below 1000 psig. However, a well that is subject to (c) but not (e) of this rule may reach an annulus pressure at operating temperature that is described in the operator's notification to the Commission under (c) of this rule, unless the Commission prescribes a different limit. g. For purposes of this rule, 1. "inner annulus" means the space in a well between tubing and production casing; 2. "outer annulus" means the space in a well between production casing and surface casing; 3. "sustained pressure" means pressure that (A) is measurable at the casing head of an annulus, (B) is not caused solely by temperature fluctuations, and (C) is not pressure that has been applied intentionally. Rule 16. GAS -CAP WATER INJECTION PROJECT (Source: CO 207B. Revised CO 207D.001) a. Water injection is authorized into Well L5-29 only and is limited to perforations within the upper Wahoo Formation (Zone 6) between the measured depths of 13,585' and 13,634'; and b. Injection pressures must be maintained below 0.85 psi/ft. Rule 17. ADMINISTRATIVE ACTION (Source: CO 207B) Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the Commission my 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 aquifers. Rule 18. DOWNHOLE COMMINGLING OF PRODUCTION IN WELLS PBU L5-21 PBU K-333. K-322, and L3-24 (Revised This Order) (a) Downhole commingling of production between the POP and LOP in the PBU L5- 21 well is approved subject to the following allocation methodology; i. All oil and water allocated to the well shall be allocated to the LOP, ii. All NGLs allocated to the well shall be allocated to the POP, iii. Gas shall be allocated to the POP and LOP based on the following formulas; 1. Prudhoe Formation Gas Rate = Total Gas Rate — Lisburne Formation Gas Rate CO 207E February 3, 2021 Page 8 of 9 2. Lisburne Formation Gas Rate = allocated oil rate x Lisburne Oil Pool Solution Gas Oil Ratio 3. Lisburne Oil Pool Solution Gas Oil Ratio = 863 scf/stbo (b) Downhole commingling of production between the POP and LOP in the PBU K- 333 well is approved subject to the following allocation methodology; i. All oil and water allocated to the well shall be allocated to the LOP, ii. All NGLs allocated to the well shall be allocated to the POP, iii. Gas shall be allocated to the POP and LOP based on the following formulas; 1. Prudhoe Formation Gas Rate = Orifice Gas Pass Through Rate 2. Lisburne Formation Gas Rate = PBU K-333 Total Gas Rate — Orifice Gas Pass Through Rate (c) Downhole commingling of production between the POP and LOP in the PBU K- 322 well is approved subject to the following conditions; i. The well must be completed with the sliding sleeve and interchangeable orifice over the POP perforations, as described in the application; ii. The PBU K-322 well must be tested periodically in accordance with the established well testing and allocation procedures to allocate a total production volume for the well. Production to the POP and LOP shall be allocated as follows: 1. NGLs —allocated 100% to POP; 2. Oil —allocated 100% to LOP; 3. Water— allocated 100% to LOP; and 4. Gas — POP Formation Gas Rate — Orifice Gas Pas Through Rate, LOP Gas Rate = Total Gas Rate — Orifice Gas Pass Through Rate (d) Downhole commingling of production between the POP and LOP in the PBU L3- 24 well is approved subject to the following allocation methodology; i. Prior to perforating the POP the LOP must be flowed and tested 1. If the test yields more than 5 BOPD of oil from the LOP; a. An oil sample shall be collected for geochemical analysis purposes; b. Production shall be allocated to the POP and LOP based on; i. Cased hole production logging, differential production test, or geochemical analysis ii. Allocation test shall be conducted a minimum of once per year unless a significant change in fluid rate, water cut, or GOR occurs, in which case additional tests will be conducted. 2. If the test yields less than 5 BOPD it will be assumed that the LOP will produce only water going forward and any incremental oil, gas, and water produced after the POP perforations are added will be assumed to be coming exclusively from the POP. If a significant change in fluid rate, water cut, or GOR occurs cased hole production logging or differential production tests will be utilized to allocate production. DONE at Anchorage, Alaska and dated February 3, 2021. CO 207E February 3, 2021 Page 9 of 9 Jeremy M. Price DMf01°L03 'see,n. Jeremy A Price Chair, Commissioner Danieli. Digitally signed by Daniel T. Seamount Seamount, Jr. Date: 2921.02.03 Jr. 15:0651-09'00' Daniel T. Seamount, Jr. Commissioner AND APPEAL NOTICE Digitally signed by Jessie L- Jessie L. Chmielowski Chmielowski Dal,: 2021.02.03 15:31:18 -09'00' Jessie L. Chmielowski Commissioner As provided in AS 31.05.080(a), within 20 days atter written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision ofthe AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Bernie Karl Gordon Severson Richard Wagner K&K Recycling Inc. 3201 Westmar Cir. P.O. Box 60868 Fairbanks,, AAK 99711 P.O. Box Anchorage, AK 99508-4336 Fairbanks, AK 99706 K George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 INDEXES Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -20-018 Prudhoe Bay Unit, Lisburne and Prudhoe Oil Pools The application of Hilcorp North Slope, LLC (HNS) for an order in accordance with 20 AAC 25.215 authorizing the downhole commingling of production in the wellbore of the Prudhoe Bay Unit L3-24 (PBU L3-24) well. HNS, by letter dated September 22, 2020, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order in accordance with 20 AAC 25.215 to authorize the downhole commingling of production from the Lisburne and Prudhoe Oil Pools in the PBU L3-24 well. The AOGCC has tentatively scheduled a public hearing on this application for October 27, 2020, at 10:00 a.m. at 333 West 7w Avenue, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on October 13, 2020. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 274-1433 after October 15, 2020. If a hearing is requested, the COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC the day before the hearing to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800- 315-6338 and, when instructed to do so, enter the code 14331 followed by the # sign. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7' Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on October 26, 2020, except that, if a hearing is held, comments must be received no later than the conclusion of the October 27, 2020, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than October 21, 2020. �� 4— Jeremy M. Price Chair, Commissioner STATE OF ALASKA ADVERTISINGNOTICE ORDER TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFHAVITOFPUBLADVERTISMENT.AATTACHED COPY OF ADVERTISING ORDER NUMBER AO-08-21-007 O FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 9/23/2020 90 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: F%0_ LEGAL DISPLAY CLASSIFIED - OTHER (Specify below) DESCRIPTION PRICE CO-20-018 Initials of who prepared AO: Alaska Non -Taxable 92-600185 '9I.MMEr iNvOICESHOM'{tiCADVERT151NG' ::::OkDERNO.'CERTIF'[4;OAT+YBIAVPI`:OF .. -:P.UIiuCXTDiNiNTH AT'fACIIEDCOFv oe. AUYERTISMENT([6.... AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae I of 1 Total of All Pages S REF Type Number Amount Date Comments I PVN VCO21795 2I AO AO-08-21-007 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FV I DIST LIQ l 21 AOGCC 3046 21 2 3 4 5 Purchasing Authority Name: Title: Purchasing Authority's Signature Telephone Number 1. A.O. k and receiving agency name must appear on all invoices and documents relating to this purchase. 2. The state is registered for tax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for resale. i)iYl.... FascBUOngmal210 Caples Pnbtisbgr.taxed .......oaFiscal, Beosrviug Form: 02-901 Revised: 2/24/2021 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 HHileorp Hilcorp North Slope, LLC September 22, 2020 RECEIVED By Samantha Carlisle at 10:55 am, Sep 24, 2020) Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 RE: Application for Administrative Approval to Commingle Production from Lisburne Oil Pool (CO 207B) and Prudhoe Oil Pool (CO 341F) in Prudhoe Bay Unit well L3-24 Dear Chair Price: Hilcorp North Slope LLC., as the Operator of the Prudhoe Bay Unit which includes the Lisburne Oil Pool (LOP) and the Prudhoe Oil Pool (POP), respectfully requests that the commission administratively approve commingling of production from the Lisburne Oil Pool and Prudhoe Oil Pool in well L3-24 which produces to the Lisburne Production Center (LPC). The commission previously approved downhole commingling of production of the POP and the LOP in the proposed K-322 well (CO 721) and the L5-21 well (CO 341 H). L3-24 is an existing well that produces exclusively from the Lisburne Wahoo Formation. Planned add-perfs into the Ivishak Oil Pool would be commingled with Lisburne Oil Pool fluids and produced up L3 -24's tubing to the LPC. Well integrity is not expected to be compromised with the addition of these perforations. L3-24 is a LTSI Lisburne producer that produced 100% water cut prior to shut-in; it has not produced since 2016. The proposed Ivishak perforations would access zone I oil intersected by well L3-24 uphole of the Lisburne Wahoo formation. It is believed that water production from the Lisburne Oil Pool comingled with the Prudhoe Oil Pool production will reduce the risk of hydrate formation in L3-24 and therefore improve on-time and economic recovery for this well. The proposed completion for L3-24 is shown in Exhibit A. Additional information in support of this application is included below. Hilcorp North Slope staff are available should you have any questions or need any additional information. If you need any additional information, please contact Leah Droege at 564-4764 or Kirsty Schultz at 564-5258. Sincerely, Bo York PBE Operations Manager orona0veroo.a by eo von Bo York sow �ke��m" baro: 2026.092410.%086 01Y Attachments: Exhibit A — 1-3-24 Proposed Wellbore Schematic, Exhibit B — MIT -T Details 3800 Centerpoint Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hilcorp.com �H corp, Hilcorporth Slope, LLC Additional Information in Support of Application Introduction Commingling of production within the same well -bore from two pools is permitted under 20 AAC 25.215(b) if the Commission, after notice and opportunity for public hearing, "(1) finds that waste will not occur, and that production from separate pools can be properly allocated; and 2) issues an order providing for commingling for wells completed from these pools within the field." Waste Will Not Occur 1. Production Considerations Low total flow rates from Ivishak zone I vertical penetrations often result in hydrate formation in the wellbore, as demonstrated in analog producer L3-22. Hydrates restrict flow to surface and require regular maintenance and remediation to allow continual production from the well. Analog producer L3-22 experienced only 44% ontime and approximately $100,000 spend within a 5 month period as a result of hydrates and paraffin issues. The initial plan for L3-24 in 2018 was to isolate the Lisburne perforations with a sand plug and cement cap, and convert the well from a LOP producer to a POP producer (See 10-403 Sundry 319-072). However, a MIT -T following the isolation intervention identified lack of competent cement and insufficient isolation from the LOP (Exhibit B). When faced with the decision of a second attempt to establish a competent seal over the LOP, the issue of hydrate formation was revisited. The subsurface team determined that additional water production from the Lisburne would assist in preventing hydrate formation in the wellbore as a result of the additional heat contribution. L3-24 produced approximately 1,900 bwpd, 0 bopd, and 1 MMSCF/d from the Wahoo formation in 2016. Hydraulic (Prosper) modeling indicated that the additional fluid in the wellbore from the LOP may reduce flow rates from the POP by as much as 50%, assuming full pre -sand plug production rates from the LOP. However, the flowing temperature modeled was above the hydrate formation threshold. Therefore, although total flow rate would be reduced, L3-24 would likely experience much higher on time and reduced intervention costs associated with hydrate remediation, and therefore would benefit from commingled production with the LOP. 2. Cross flow Based on the reservoir fluids in the POP and LOP, fluid incompatibility and formation damage due to commingling and crossflow is not expected. If changes to produced fluid compositions or ratios result in potential fluid incompatibility, chemical inhibition to prevent productivity degradation would be evaluated. 3800 Centerpolnt Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hiicorp.com ik Hilcorp Worth o th Slope, LLC Crossflow associated with short term shut in periods under typical operations are not anticipated to result in significant volume flowing between pools or to adversely impact reservoir management. Reservoir pressure is not expected to be substantially different between the two pools with the local LOP pressure most recently measured at 3263 prig 8900' TVDSS datum) and the local POP most recently measured at 3293 psig 8800' TVDSS datum). Minimal crossflow is anticipated as a result of this small dP. For any extended shut in periods, an IBP may be set above the LOP or cement may be pumped to prevent long-term crossflow between pools. Appropriate Surveillance and Production Allocation Will Be Assured Appropriate surveillance and production allocation measures will be undertaken to meet reservoir management objectives and to provide an acceptable allocation methodology. 1. Production Allocation Little to no oil production (less than 5 bopd) is anticipated from the LOP based on previous well tests. To confirm initial LOP contribution, L3-24 will be put on production and tested prior to adding POP perforations. If enough oil is present to obtain an oil sample, a sample will be obtained for geochemical analysis. If there is no oil present, it will be assumed that no oil will be produced in the future from the LOP. Incremental oil, water, and gas production from the add- perfs will be used to allocate production rates until a significant change in flow characteristics is observed. If a significant change in production occurs, either in fluid rate, water cut, or GOR, a cased hole production log or differential production test will occur. Conclusion Hilcorp requests approval for wellbore commingling of production from the Lisburne Oil Pool (LOP) and the Prudhoe Oil Pool (POP) in well L3-24. Hilcorp North Slope LLC respectfully submits that this activity will not cause waste, will promote conservation through greater ultimate recovery of oil and gas resources by allowing increased recovery from the POP. Produced liquids and gas from the separate pools can be properly allocated based on the production allocation procedure in the proposed methodology. 3800 Centerpoint Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hilcorp.com � ilcorp o lco Hilcorp orth Slope, LLC Exhibit A: L3-24 Proposed Wellbore Schematic tQ• MIX Iafaa m a a fr,N fovw IIIY INNO W 111YiR W rrerrMw gY1N �I�f 01�aN1 M'f1 vl (1Y11MY K E da p• v0W. ffsr-Iffy las.IwC• anw iiV.-. PROPOSED L3-24 IinYnnl D v 9'160' P 1179/• 1 2.7A' CI1MC0 D NPPLE I vovoMfolfwww Iafaa m a a fr,N AMUA1f®NF IIIY INNO W 111YiR W rrerrMw gY1N �I�f 01�aN1 M'f1 vl (1Y11MY K YOGI AIpR �Eh YMNRW - w da f9�RN 1�Y 1 ffsr-Iffy o anw t.w a IlanIWO o anw !-OR 1 11pa NSM O oww Iw • nr,infis o ea+ar sw • ffrw. nru o eufw I•w � nfn. mw o elnw 3800 Centerpoint Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hilcorp.com w�oufwr un a wvn m awn a fivn gY1N �I�f 01�aN1 M'f1 vl (1Y11MY M4 u]I YOGI AIpR �Eh YMNRW - w f9�RN 1�Y OAOO R 1111Ww MN 1sm0.ft�g2 _ fp01g1 fl�B% lLwti'lo! iL 11 NISI. Va 1Y • Mf f w IYgtOY w woowcrcw ooqufi iarwlc iiv ._ ��...1.-w..« 3800 Centerpoint Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hilcorp.com Hikorp Hilcorp orth Slope, LLC Exhibit B: MIT -T Details The sand plug and cement cap isolation was completed 04/28/2019, but a subsequent MIT -T to 1500 psi on 5/2/2019 failed clearly. The test lost approximately 750 psi in the first 15 minutes. However, no response was seen in the IA- On 08/23/20, 2900 psi was applied to the tubing. Again the IA pressure did not respond. The fluid level of the IA was monitored for 1 hour, and there was no change, indicating lack of competent cement over the sand plug and communication with the Lisburne perforations rather than TxIA communication - 3800 Centerpoint Drive, Suite 1400, Anchorage, AK 99503 Phone: 907/777-8300 hilcorp.com