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Home My WebLink AboutCO 068 ACONSERVATION ORDER 68A Docket Number: CO -20-001 1. January 31, 2020 Hilcorp application to amend CO 68 2. February 6, 2020 Notice of public hearing, affidavit of publication, mailing list 3. March 12, 2020 Transcript, exhibits and sign in sheet ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 71 Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF HILCORP ) Docket Number: CO 20-001 ALASKA. LLC to amend Conservation ) Conservation Order 68A Order 68 to expand the vertical limits of the ) North Cook Inlet Field reservoir interval, revise well spacing ) North Cook Inlet Unit requirements, and add a new rule allowing ) Tertiary System Gas Pool administrative amendments for the Tertiary ) Kenai Peninsula Borough, Alaska System Gas Pool, North Cook Field, North ) Cook Inlet Unit, Cook Inlet, Alaska. ) April 20, 2020 IT APPEARING THAT: 1. By letter dated January 31, 2020, Hilcorp Alaska, LLC (Hilcorp), operator of the North Cook Inlet Unit (NCIU), requested the Alaska Oil and Gas Conservation Commission (AOGCC) amend Conservation Order No. 68 (CO 68) to expand the vertical limits of the Tertiary System Oil Pool as defined with the stratigraphic interval 3,943' to 8,608' measured depth (MD) in well North Cook Inlet A-15 and to add a new rule to allow for administrative approval of amendments to that Order. 2. Pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for March 12, 2020. On February 06, 2020, the AOGCC published notice of the hearing on the State of Alaska's Online Public Notices website and on the AOGCC's website, and the AOGCC 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 February 6, 2020, the notice was published in the ANCHORAGE DAILY NEWS. 3. The AOGCC received no comments or request to hold the proposed hearing. 4. On AOGCC's own motion, the public hearing was held March 12, 2020. Hilcorp provided testimony and presented evidence in support of its application. The hearing record was left open until March 17, 2020 for Hilcorp to respond to AOGCC's requests for additional information. 5. On March 13, 2020, Hilcorp submitted the requested additional information. The hearing record closed. 6. Hilcorp's application, testimony, evidence, additional information, and AOGCC public records for NCIU wells are the basis for this order. FINDINGS: 1. Operators: Hilcorp is the operator of the NCIU, which lies offshore within the Cook Inlet, Kenai Peninsula Borough, Alaska. 2. Owners and Landowners: All leases in the NCIU are owned 100% by Hilcorp. These include ADL 27589, ADL 17590, ADL 18740, ADL 18741, and ADL 37831. The State of Alaska, Department of Natural Resources (DNR) is the landowner. 3. Tertiary System Gas Pool Designation: CO 68 defines the current Tertiary System Gas Pool as the vertical interval between the measured depths (MD) of 3,500' and 6,200' in the Pan CO 68A April 20, 2020 Page 2 of 9 American Petroleum Corporation North Cook Inlet State 17589 No. 1 wells (API No. 50-883- 10012-00-00). Hilcorp requested the AOGCC amend CO 68 to expand vertically the Tertiary System Gas Pool to correlate with the interval from 3,943' to 8,608' MD in the North Cook Inlet A-15 well (API No. 50-883-20126-00-00; see Figures I and 2, below). 4. Well Spacing: CO 68 specifies development gas wells be drilled on a "cluster" spacing pattern in accordance with the pattern shown in Exhibit B of CO 68 (a diagram depicting 15 wells that radiate in all directions from a platform centered atop the northeast -trending, elliptical dome- shaped NCIU anticline). Hilcorp requested a revision to Rule 2 of CO 68 such that there will be no gas well restrictions within the Tertiary System Pool, except that no gas well shall be completed less than 1,500 feet from an exterior property line of the NCIU where owners and landowners are not the same on both sides of the line. 5. Administrative Approval: Hilcorp also requested the AOGCC add a new rule to allow for administrative approval of amendments to the Order. CONCLUSIONS: I. Amending the Pool Rules for the Tertiary System Gas Pool is appropriate. 2. Extending vertically the Tertiary System Gas Pool and revising well spacing requirements will facilitate further development drilling and ensure greater ultimate resource recovery, but will not promote waste, jeopardize correlative rights, or result in an increased risk of fluid movement into freshwater aquifers. 3. Adding an Administrative Approval rule is appropriate. NOW, THEREFORE, IT IS ORDERED: The continued development and operation of the Tertiary System Gas Pool is 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 Order 68 and Conservation Order 40. Affected Area* Seward Meridian Township, Ranee Sections T1, R09W 2N 33: NW/4 TI IN, R09W 8: N/2, SW4 T12N, R10W 35: SE/4 TI IN, RIOW 2: E/2; 11: E/2 T12N, R09W 31: All; 32: All Tl IN, R09W 5: All; 6: All; 7: All; 18: N/2 T11N, R10W 12: All; 13: N/2 T12N, R09W 21: W/2; 28: W/2 T12N, R09W 19: SE/4, 20: NEA, S/2; 29: All; 30: All T12N, RIOW 25: SEA; 36: All TI IN, R10W 01: All ' In CO 68, the reference well used to define the Tertiary System Gas Pool is incorrectly referred to as North Cook Inlet State 17589 No. 1. AOGCC's records for this well show the name as Cook Inlet State 17589 No. 1. CO 68A April 20, 2020 Page 3 of 9 COOK INLET ST 17589 1 1620080 TWP: 11 N - Range: 9 W - Sec. 6 Reference Log- CO 68 N COOK INLET UNIT A-15 2080970 TWP: 11 N - Range: 9 W - Sec. 6 Reference Log– Revised This Order 3800 3800 4000 4im 4EW -YW 1)00 W 6500 6800 �2 50W aaro 5100 m 5200 53W 41W 5000 JA 5000 AM Sem J.m 5)00 5 J W 800 BOO mm JA elm B00 em6 Jvm 6300 bm 0400 SIQ 8500 Figure 1. Reference Logs (Upper Portions) - CO 68 and Revised for This Order Z Figure 1 is for illustration purposes only. Refer to well logs recorded in Cook Inlet State 17589 No. I and North Cook Inlet A-15 for the precise representations of the Tertiary Gas System Pool. �-.�� 60 Ve�� d(W 9100 aero 3200 � 3300 J4N ONgi Padrop 3100 a.00 CO 68 1 ab3 3800 0 9)00 a)W 3800 ]Bm 9800 zao " 4030 JOW •� % 4100 m CCC 4200 um - 4300 JAW 44M Jaoo .4500 Sc: 4600 JNO ..— nm J,m i 48 50 s9oo J� _ Bs 5000 5100 s1W 4 5200 S o $300 j . b]IX1 y t N COOK INLET UNIT A-15 2080970 TWP: 11 N - Range: 9 W - Sec. 6 Reference Log– Revised This Order 3800 3800 4000 4im 4EW -YW 1)00 W 6500 6800 �2 50W aaro 5100 m 5200 53W 41W 5000 JA 5000 AM Sem J.m 5)00 5 J W 800 BOO mm JA elm B00 em6 Jvm 6300 bm 0400 SIQ 8500 Figure 1. Reference Logs (Upper Portions) - CO 68 and Revised for This Order Z Figure 1 is for illustration purposes only. Refer to well logs recorded in Cook Inlet State 17589 No. I and North Cook Inlet A-15 for the precise representations of the Tertiary Gas System Pool. CO 68A April 20, 2020 Page 4 of 9 508831001200 COOK INLET ST 17589 1 1620080 TWP: 11 N - Range: 9 W - Sec. 6 O.s CO 69 N COOK INLET UNIT A-15 2080970 TWP: 11 N - Range: 9 W - Sec. 6 Reference log —Revised This Order Figure 2. Reference Logs (Lower Portions) - CO 68 and Revised for This Order J Figure 2 is for illustration purposes only. Refer to well logs recorded in Cook Inlet State 17589 No. 1 and North Cook Inlet A-15 for the precise representations of the Tertiary Gas System Pool. CO 68A April 20, 2020 Page 5 of 9 Rule 1 Pool Definition (Revised this order) The Tertiary System Gas Pool is the accumulation of hydrocarbons common to, and correlating with, the stratigraphic interval between the measured depths of 3,943' and 8,608' on the gamma ray and resistivity log recorded in well North Cook Inlet A-15. Rule 2 Well Snacine (Revised this order) There shall be no restrictions as to well spacing within the pool except that no pay shall be opened in a well within 1,500' of an external property line where the owners and landowners are not the same on both sides of the line. Rule 3 Administrative Action (Revised this order) 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 aquifers. DONE at Anchorage, Alaska and dated April 20, 2020. Jeremy M.,°",�,''"M;M; Bernie Karl K&K 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. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 INDEXES AOGCC 3/122020 D'MO: APPLICATION ALCORP AK TO AMEND CONSERVATION 20.008 Docktt No. MC0.20-001 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Application of ) Hilcorp Alaska to Amend Conservation ) Order 68 Which Governs the Tertiary ) System Gas Pool, North Cook Inlet Field. ) Docket No.: CO 20-001 PUBLIC HEARING March 12, 2020 Anchorage, Alaska 10:00 a.m. BEFORE: Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computes Matrix, LLC Phow. 907-2A3-0668 135 Chile[ Dq, Ste. 2, Aach. AK 99501 F. 907-243-1473 Email: s"eft6nd AOGCC 3/122020 ITMO:APPLICATIOi- HILCORP AK TO AMEND CONSERRV TIOONORNo DER 01 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Seamount 03 3 Testimony by Mr. Denolo 09 4 Testimony by Mr. Yancey 17 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matri, LLC Phone: 907-243-0668 Email: sohilomF-et 135 Christensen Or_, Ste. 2., Aueh. AK 99501 Fax: 907-243-1473 AOGCC 3;12/2020 ITMO:APPLICATION_- ALCORP AKTOAMEND CONSERVATION ORDER 68 Page 3 1 P R O C E E D I N G S 2 (On record - 10:02 a.m.) 3 COMMISSIONER SEAMOUNT: Okay. I'll call this 4 meeting to order. The date is March 13th [sic], 2020. 5 We're located at 333 West Seventh Avenue, Anchorage, 6 Alaska. That is the address of the Alaska oil and Gas 7 Conservation Commission. 8 Is today the 12th? 9 UNIDENTIFIED VOICE: Yes. 10 COMMISSIONER SEAMOUNT: I always get that 11 wrong. The 12th. So I'm one day earlier from dying 12 then, right. Okay. So correction, today's March the 13 12th, 2020 at 10:02 a.m. 14 This is docket number CO 20-001. We're here to 15 consider the application of Hilcorp Alaska, 16 Incorporated, we'll call you Hilcorp in this order, and 17 that's to amend the conservation order number 68 or CO 18 68 which governs the Tertiary System Gas Pool, North 19 Cook Inlet Field. 20 We have hardly gotten any information from 21 Hilcorp prior to this. It would be helpful to get 22 information prior so that this agency can study up on 23 the order so that we don't have any delays in our 24 decision in the future, but you probably all know that 25 anyway, you've probably been busy. Computer Mav x, LLC Phone. 907-243-0668 Emeil sahilbti6ci net 135 Christrnsrn O,_ So,. 2., Acch. AK 99501 Pm: 907-243-1473 AOGCC 3/12/2020 ITMO APPLICATION ALCORP AK TO AMEND CONSERVATION ORDER 61 Page 4 1 Before I begin I'll introduce my co - 2 Commissioner. To my right is Commissioner Chmielowski 3 and I am Dan Seamount, a Commissioner. The Chair, 4 Jeremy Price, is excused due to unforeseen reasons 5 today. If he is included in the decision he will be 6 sure to read the transcript and look at all of the 7 submitted record material. g If any persons here need special accommodations 9 to participate in these proceedings please see Samantha 10 Carlisle who's way in the back in the corner. I don't 11 suppose anybody here needs any special considerations. 12 Computer Matrix will be recording the 13 proceeding. Upon completion and preparation of the 14 transcript, persons desiring a copy may be able to 15 obtain it by contacting Computer Matrix. 16 This hearing is being held in accordance with 17 AS 44.62 and 20 AAC 25.540 of the Alaska Administrative 1 : ••= 19 We've got a few housekeeping topics that I 20 don't think I need to remind -- well, one thing I -- 21 you've already signed in, that's good. And when you're 22 testifying please make sure that the bright green 23 button is lit on your microphone. Sometimes it's dark 24 green, it's hard -- it's difficult to tell. And that's 25 so that people in the rear of the room can hear and the Compute Matix.LLC Phone. 907843-0668 Email eahile�mgcina 135 Chnteunen Dc. Ste. 2.. Anch. AK 99501 Pax: 907-243-1473 AOGCC 3/12/2020 ITMO- APPLICATION -, HILCORP AK TO AMEND CONSERVATION ORDER 68 Docket No. CO -20-001 Page 5 1 court reporter can get a clear recording. 2 This public hearing is not a debate. I don't 3 expect it to be. I only see members of -- is it true 4 that everyone -- that all three of you are with 5 Hilcorp? 6 UNIDENTIFIED VOICE: (Indiscernible - away from 7 microphone)..... 8 COMMISSIONER SEAMOUNT: Okay. So I doubt if 9 you're going to debate each other, if you do that would 10 be interesting. And I'm sure you'll be courteous to 11 each other. And especially in this room is dedicated 12 to Tom Marshall who died on February 19th. And I don't 13 know if you realize it, but he was one of the first 14 Commissioners and he's the reason why the State 15 acquired all that bug infested, swampy land on the 16 North Slope called Marshall's Folly that is the reason 17 everybody here gets their PFD check and the reason why 18 the State has the mineral rights to Prudhoe Bay and all 19 of the satellite surrounding it, but you all know that 20 I think. 21 So if you have a question directed to anybody 22 testifying, we ask that you provide your question in 23 writing along with your name and that of the witness to 24 Samantha Carlisle in the back, she just raised her 25 right hand. Before the end of the hearing the Computer Mutnx, LLC Phone_ 907-243-0668 F.ma11- sehile�'m6ci.nd 135 Crem,een Th,Sta 2, And. AK 99501 1.,907-243-14]3 AOGCC 3/12'2020 ITMO: APPLICATIOI IILCORP AK TO AMEND CONSERVATION ORDER40-001 Page 6 1 Commission will review these questions and ask those it 2 believes will be helpful in eliciting relevant 3 information. 4 The notice of the hearing was published in the 5 Anchorage Daily News on February 6, 2020. It was also 6 posted on the State of Alaska Online Notices website 7 email distribution list as well as AOGCC's own website. g So, Commissioner Chmielowski, did I leave 9 anything out? 10 COMMISSIONER CHMIELOWSKI: No, you did a great 11 job. 12 COMMISSIONER SEAMOUNT: Do you -- oh, thank 13 you. Did you have anything to add..... 14 COMMISSIONER CHMIELOWSKI: No. 15 COMMISSIONER SEAMOUNT: .....any opening 16 comments? 17 COMMISSIONER CHMIELOWSKI: Nope. lg COMMISSIONER SEAMOUNT: Okay. Okay. Who is 19 testifying today? 20 MR. DENOLO: Myself, Thomas Denolo, and Daniel 21 Yancey. 22 COMMISSIONER SEAMOUNT: Okay. Could you both 23 raise your right hand? Oh, yeah, everybody raise your 24 right hand that could possibly be testifying. 25 (Oath administered) Compma Matrix, LLC Phare 907-243-0668 Email: sah dg sci on 135 Cmistmsm Dc. Sm 2.. Amhfi AN 99501 Pax: 907-243-1473 AOOCCD.eke 3,12,2020 ITMO.APPLICATIOkHLCORPAKTOAM NDCONSERR ATHOO ER68 N.. Page 7 1 IN UNISON: Yes. 2 COMMISSIONER SEAMOUNT: So who's going to be 3 testifying first? 4 MR. DENOLO: I will. 5 COMMISSIONER SEAMOUNT: And please state your 6 name, your education, your experience and I guess 7 that's enough. 8 MR. DENOLO: My name is Thomas Denolo. I have 9 an undergraduate degree in chemical engineering from 10 the Colorado School of Mines, I have a master's in 11 petroleum engineering from the University of Alaska 12 Fairbanks. I've been working in the industry for 12 13 years now, worked now every basin in the state along 14 with a number of basins overseas. Currently I work for 15 Hilcorp Alaska, I'm the reservoir engineer for a number 16 of the fields in the Cook Inlet Basin, one of which is 17 the Tyonek Platform, North Cook Inlet unit. 18 COMMISSIONER SEAMOUNT: And at Colorado School 19 of Mines do they talk about petroleum much when you're 20 doing chemical engineering? 21 MR. DENOLO: We did in some respects, but the 22 beautiful thing about reservoir engineering is it's 23 understanding fluid flow and we had a lot of focus on 24 that. 25 COMMISSIONER SEAMOUNT: Okay. Compter Matrix, LLC Phovc 907-243-0668 EmatL sahiltt UgG.ncl 135 Chns�®sen a., Ste_ 2.. M,h. AK 99501 Pax 90]-243-14]3 AOGCC 3/12/2020 ITMO: APPLICATIO.,, fRLCORP AK TO AMEND CONSERVATION ORDER 68 1 MR. DENOLO: Yeah, and getting the master's 2 with University of Alaska Fairbanks helped round out 3 the experience incorporating rocks. 4 COMMISSIONER SEAMOUNT: Okay. And what was 5 your degree at Fairbanks? 6 MR. DENOLO: Petroleum engineering. 7 COMMISSIONER SEAMOUNT: Petroleum engineering. 8 One of my nephews just graduated in chemical 9 engineering from the School of Mines. 10 MR. DENOLO: Excellent. 11 COMMISSIONER SEAMOUNT: He's looking for a job 12 too. I'm not -- I mean, I'm not requesting it, but I 13 told him where to look and who to send his resume to. 14 But I didn't mention you guys. SO..... 15 MR. DENOLO: All right. 16 COMMISSIONER SEAMOUNT: They're in high demand 17 in Colorado by the way. They can't find enough 18 engineers. 19 Commissioner Chmielowski, do you have any 20 questions? 21 COMMISSIONER CHMIELOWSKI: I don't have any 22 questions. Thank you. 23 COMMISSIONER SEAMOUNT: Okay. Then please 24 proceed, Mr. Denolo. 25 THOMAS DENOLO Phone- 907-243-0668 Email: sehllftabecina Computer Matrix. LLC Far 907-243-1493 135 Christensen Dr., Ste. 2.. Mn h. AN 99501 AOGCCCO 3/122020 ITMO. APPLICATIO- HILCORP AK TO AMEND CONSERcATIOO ORDER 69 Page 9 1 previously sworn, called as a witness on behalf of 2 Hilcorp Alaska, testified as follows on: 3 DIRECT EXAMINATION 4 MR. DENOLO: All right. So we'll start with 5 the proposed amendment to give an overview. Really 6 there's the two rules, number 1 and number 2 and..... 7 COMMISSIONER SEAMOUNT: Oh, I forgot, there's a 8 -- excuse me, there's one more rule. You need to name 9 the slide number..... 10 MR. DENOLO: Okay. 11 COMMISSIONER SEAMOUNT: .....as you speak to 12 it. 13 MR. DENOLO: I apologize. It's slide number 2 14 that I will start from. And really the key points that 15 I'd like to make here is that in an effort to maximize 16 recovery from this field we need to expand the vertical 17 definition of the pool and improve the well spacing and 18 we're going to have to have tighter well spacing. And 19 I'll explain why with the help of Daniel Yancey here to 20 explain why we need that. 21 The current rule number 1, pool designation, 22 defines the vertical limits of the Tertiary System's 23 gas pool as the interval correlating between 3,500 feet 24 to 6,200 feet and the Pan American Petroleum 25 Corporation, North Cook Inlet, State 17589, well number C.Rp to Matrix, LLC Phone: 907-243-0668 135 Chnslensen Dr., Ste. 2., AccM1. AK 99501 Fax: 907-243-1473 Emvl sahBr(a',.ycina AOGCC 11 2,2020 ITMO: APPLICATIO1, _. HILCORP AK Sb AMFNH CONSERVATINo ON (T CO -2E8 Page 10 1 1, that is the initial discovery well, we propose the 2 pool designation to be expanded such that its vertical 3 limits of the Tertiary System's gas pool to correlate 4 with the interval 3,943 feet to 8,608 feet measured 5 depth in the North Cook Inlet A15 well. The A15 was 6 drilled in the 2008/2009 time frame. We have a modern 7 log suite and as you can see we're expanding both -- 8 well, we'll show on a cross section, but we're 9 expanding both the top and the base and we'll show how 10 the two wells compare in terms of the cross section. 11 COMMISSIONER SEAMOUNT: Did the A15 well 12 encounter oil? 13 MR. DENOLO: It was not drilled to the deep 14 oil, no. 15 COMMISSIONER SEAMOUNT: Okay. And then the Pan 16 American well, is that the one that blew out for six 17 weeks? 18 MR, DENOLO: It did. It actually blew out for 19 14 months..... 20 COMMISSIONER SEAMOUNT: Fourteen months. 21 MR. DENOLO: .....before a relief well, the 22 number 1A, was drilled and completed and was able to 23 kill the well. And it blew out because of the deep 24 oil. 25 COMMISSIONER SEAMOUNT: I've -- okay. I've Compotes Matnx. LLC Phones 907-243-0668 Knot, ssh n(,Rti.0 135 Chnstensen Th, Ste. 2, Aneh,AK 99501 Pax: 907-243-1473 AOGCC 3/122020 ITMO'. APPIACATIO1, MLCORP AK TO AMEND CONSERVATION ORDER 68 Dacket No. CO -20-001 Page 11 1 always been confused as to where the blowout zone was 2 and..... 3 MR. DENOLO: It was in the North Foreland 4 interval which is deep oil, about 10,000 subsea, 10 to 5 12. 6 COMMISSIONER SEAMOUNT: But it didn't blow out 7 oil, did it? 8 MR. DENOLO: It blew out a combination of oil 9 and gas, but primarily the condensate. 10 COMMISSIONER SEAMOUNT: Okay. Okay. I always 11 understood it was from shallow gas. So I was wrong for 12 the last 30 years. 13 MR. DENOLO: Yeah, they took a kick from 14 approximately 10 pound per gallon to 14.5 over -- you 15 know, when they touched into the North Foreland 16 interval. It's about a 10,000 psi reservoir. 17 COMMISSIONER SEAMOUNT: Thank you. That's very 18 interesting. 19 MR. DENOLO: Rule number 2 is in -- it concerns 20 well spacing and the current rule 2 states that gas 21 wells may be drilled on a cluster spacing pattern in 22 accordance with the pattern shown in exhibit B of the 23 original application which is made part of the existing 24 conservation order 68. Our proposed rule 2 is that 25 there shall be no gas well spacing restrictions within Computer Marrix, LLC Phoae, 909-243-0668 135 Christensen Dc, Ste 2. An,h-AK 99501 F. 909-243-1493 EmvL suhile(u-beinn AOGCC 3,122020 ITMO. APPLICATIO. IILCORP AK TO AMEND CONSERVATION ORDER 68 6 And really what the rule 2 amendment is it 7 allows us to take advantage of the current well stock 8 to drill more wells specifically targeting Sterling and 9 Beluga sands where we have a fluvial deposition 10 environment that has led to trapped gas that can't be 11 recovered with the existing well stock. 12 COMMISSIONER SEAMOUNT: Is it stratigraphic 13 trapping? 14 MR. DENOLO: Page 12 1 the Tertiary System gas pool except that no gas well 2 shall be completed less than 1,500 feet from an 3 exterior property line of the North Cook Inlet unit 4 where the owners and landowners are not the same on 5 both sides. .....structure, yeah. 20 6 And really what the rule 2 amendment is it 7 allows us to take advantage of the current well stock 8 to drill more wells specifically targeting Sterling and 9 Beluga sands where we have a fluvial deposition 10 environment that has led to trapped gas that can't be 11 recovered with the existing well stock. 12 COMMISSIONER SEAMOUNT: Is it stratigraphic 13 trapping? 14 MR. DENOLO: I'm sorry. 15 COMMISSIONER SEAMOUNT: Is it stratigraphic 16 trapping or is it controlled by structure? 17 MR. DENOLO: It's controlled..... lg MR. YANCEY: Structure. 19 MR. DENOLO: .....structure, yeah. 20 COMMISSIONER SEAMOUNT: Okay. 21 MR. DENOLO: And Daniel will provide a little 22 bit more insight on the geology..... 23 COMMISSIONER SEAMOUNT: Okay. 24 MR. DENOLO: .....up next. And we also just 25 added in the administrative approval rule as the pool CompMannx. LLC Phone uter -90]-243-0668 Ennn] en 1011911-0 135 Ch Mmseu Dr.. Ste. I. Aneh. AK 99501 F. 90Y243-14]3 AOGCC 3/122020 ITMO. APPLICATIOI .1LCORP AK TO AMEND CONSERVATION ORDER 68 Docket No, CO -20-001 Page 13 1 rules had not been amended since 1969 when they were 2 first created. We added that in to up -- help update 3 the pool rules. 4 Now moving to slide three. This is just 5 showing the map of the basin. Hilcorp operated fields 6 are highlighted in -- outlined in a dark green there. 7 You have the oil and gas fields indicated by green for 8 oil and pink for gas. Currently North Cook Inlet unit 9 is produced from the Tyonek platform. It's a single 10 platform. The field has produced approaching now 2 11 trillion cubic feet of gas, a very prolific field. The 12 deep oil was prospected through a series of wells in 13 the 1960s and then a follow-up campaign in the 1990s 14 with eight wells encountering oil. We will be -- as 15 the Tertiary System's gas pool specifically addresses 16 gas we'll be focused on that. 17 Moving on to slide four. What we'd like to do 18 is just represent the initial field development plan 19 assumptions for the endeavor which thereafter it made 20 sense to develop this field. Now that we're later in 21 the life and understand the complexities of the 22 reservoir we're requesting these amendments to help us 23 maximize ultimate recovery. 24 So the initial development plan assumptions 25 were that you had laterally continuous sands and a Computer Matrix, LLC Phone- 907-243- 668 Email: sxhiletn;get vet 115 Chnsleosen Dr, Ste, 2., Aveh, AK 99501 F. 907-243-1473 AOGCC 3/122020 ITMO. APPLICATION 71.CORP AS TO AMEND CONSERVATION ORDER 068 Page 14 1 depletion drive reservoir. You know, rooting through 2 the transcripts that's what they based this cluster 3 spacing plan on. Now it absolutely achieved the 4 economic objectives of the time, however we believe 5 there's a lot more remaining resource to go after. The 6 remaining potential is derived from the completions to 7 date were designed to deliver high rate to meet the LNG 8 contracts, essentially you would perf all the zones 9 together, blow them until you couldn't any longer 10 usually due to sanding up of the wells or watering of 11 the wells and then you have to shut it in. 12 There's variable waterdrive strength so in each 13 of these sands you have some that are depletion and 14 some that are not, some are moderate waterdrives, some 15 that are high strength waterdrive. There's a lot of 16 bypass pass due to the chaotic deposition environment, 17 you have a fluvial system which Daniel will touch on 18 here in a moment, but it's impossible to hit all the 19 channels with the current well stock. And the 20 penetrations did actually miss the top of the 21 structure, it's a fairly shallow structure, but they 22 did miss the top and so gas tends to migrate to the top 23 of the hill so we think there's opportunity in that. 24 So this is just cartoonish, we'll actually get 25 into maps here, but it's -- rather than being long -- Co.,m , M.,d . LLC Ph.va 907 243-0 68 aL sehll�gd.va 135 Chrjsaysm Dr., S,a 2., A.ch- AK 99501 Faz 907-243-148 3122020 15 MO: APPLICAT1Oh dTLCORP AK TO AMEND CONSERVAHEN EO ORDCO-ER68 Docket AOGCC Page 15 1 you know, continuous sands you have the channelized 2 nature, you have water up at the top of the hill in 3 some, others you have no water present. And so going 4 after some of those sands that are disconnected from 5 our current well stock will be critical and therefore 6 requiring the rule change to the State well spacing. 7 In addition we have found shallower gas 8 opportunities. We are currently producing one of those 9 sands, we refer to it as the Sterling X. Last year we 10 requested approval to do so, it's in the undefined pool 11 and it's currently making 2 to 3 million a day and we 12 brought it online in December. 13 COMMISSIONER SEAMOUNT: Which one is making 2 14 to 3 million? 15 MR. DENOLO: That's the North Cook Inlet unit 16 A3 and I can show a production plot. It had 17 capabilities when we first brought it on of 7 to 8 18 million a day. We keep it choked back to mitigate sand 19 production. 20 COMMISSIONER SEAMOUNT: Are you going to talk 21 about what zone? 22 MR. DENOLO: Yes, we will. 23 COMMISSIONER SEAMOUNT: Okay. Now I believe 24 this is slide five that you're showing. 25 MR. DENOLO: Yes, slide five. I.... Phone 907-243-0668 Email sahile'plge! hd Compmer Mari%, LLC Fex: 907-243-1473 135 Chnacrnsen Dc. S,e. 2., Andt AK 99501 A06CCCO 3/12,2020 ITMO: APPLICATION AILCORP AK TO AMEND CONSERVATION ORDER Page 16 1 COMMISSIONER SEAMOUNT: Okay. Because..... 2 MR. DENOLO: .....have slide four showing the 3 initial..... 4 COMMISSIONER SEAMOUNT: Right. 5 MR. DENOLO: .....cartoon of what the field 6 development plan was predicated upon and then slide 7 five is just showing what it truly is just in a cartoon 8 in terms of there's a lot of variability..... 9 COMMISSIONER SEAMOUNT: Right. 10 MR. DENOLO: .....to sand..... 11 COMMISSIONER SEAMOUNT: Right. 12 MR. DENOLO: .....and waterdrive strength. 13 COMMISSIONER SEAMOUNT: Yeah, it's important to 14 distinguish those two slides for the record. 15 MR. DENOLO: Unless there's any questions we'll 16 move on to slide six and I'll hand off to my colleague, 17 Daniel Yancey, the geologist for Tyonek. 18 MR. YANCEY: Would you like me to introduce 19 myself? 20 COMMISSIONER SEAMOUNT: Yes, please, and all 21 your qualifications, education. 22 MR. YANCEY: My name is Daniel Yancey. I am a 23 geoscientist with Hilcorp Alaska. I work along with 24 Tommy, the North Cook Inlet field, Tyonek platform and 25 several other of the fields in the Cook Inlet Basin. I Computer Mamx, LLC Phone -907-241-0 6N EaiL sahilt'(,ga,ne 135 Cm,so, en Dr., Ste. 2., Anch. AK 99501 Far. 907-243-148 AOGCC 3;12,2020 ITMO.APPLICATIOn HILCORP AK SO AMEND CONS RVA II TONORDOR 68 Page 17 1 got a bachelor's degree in geophysics from Virginia 2 Tech, I got a master's degree in geophysics, geoscience 3 from Virginia Tech and I have been working in the 4 industry for 14 years now. I started originally with 5 BP, worked there 10 years and came over with Hilcorp 6 during the Milne acquisition almost six years ago now. 7 COMMISSIONER SEAMOUNT: And, Mr. Yancey, when 8 did you go to Virginia Tech, what years? 9 MR. YANCEY: 2000 to 2006. 10 COMMISSIONER SEAMOUNT: Okay. Do you have any 11 questions, Commissioner? 12 COMMISSIONER CHMIELOWSKI: No questions. 13 Thanks. 14 DANIEL YANCEY 15 previously sworn, called as a witness on behalf of 16 Hilcorp Alaska, testified as follows on: 17 DIRECT EXAMINATION 18 MR. YANCEY: So as Tommy was discussing in some 19 of the previous slides, the discontinuous nature of 20 some of these sands, this is -- you know, we always 21 look at modern day analogs to try and understand what 22 we're seeing in the subsurface currently. This is just 23 a picture of the Yentna River and what we'll see in the 24 subsequent slides is the discontinuous nature of some 25 of these sands. Specifically there's two formations Computer Metrix, LLC Phone: 907-243-0668 Ein it eehile�oSei.vet 135 Clvisteus® hh, Ste 2.,An& AK 99501 Pax 907-243-1493 AOGCC 3,'12,2020 ITMO: APPLICATIO, JILCORP AK TO AMEND CONSED ATIO CO -20 001 ORDER 68 Page 18 1 that we produce from, the Sterling which is the 2 shallowest. They tend to be a little more continuous, 3 but that's not absolutely true and then below that is 4 the Beluga formation. Those are the two primary 5 producing systems in the Tertiary System gas pool. 6 COMMISSIONER SEAMOUNT: What do you see as the 7 seal on top of the Sterling? 8 MR. YANCEY: It -- it varies. There's -- so 9 because you're in a fluvial system you see lots of 10 coals, a lot of coals, in fact that -- that's how you 11 pick a lot of the different tops. The structures are 12 very, very shallow dipping anticline and we'll see that 13 on a subsequent map. So it's probably -- it's a 14 structural trap, certainly doesn't appear to be 15 stratigraphic and very, very, very shallow dips all 16 around. So it's coal and there's a mix of silt, 17 siltstone throughout this entire section. Many, many 18 thousands of feet of coal, silt, sand, coal, silt, 19 sand. And those coals and those silts act as some of 20 those seals. 21 COMMISSIONER SEAMOUNT: And how about volcanic 22 tuff? 23 MR. YANCEY: There is some of that mixed in. 24 You -- in both the Sterling and in the Beluga that is 25 absolutely mixed in. If you look at XRD, X-ray Computer Mattix, LLC Fax. 90]Pb,.,. 907-243-0668 2meil- while@ 9cine 135 Christensen a.. Sm. 2, Anch. AK 99501 -343-147- AO CC 3/122020 ITMO'. APPLICATTO, AILCORP AK TO AMEND CONSEDcker(ON ORDER 61 Page 19 1 diffraction of cuttings and core you do see volcanic 2 constituents as part of that. 3 COMMISSIONER SEAMOUNT: It seems like there's a 4 lot of thick Sterling above the production that is wet 5 and it looks like it's freshwater. 6 MR. YANCEY: uh-huh. 7 COMMISSIONER SEAMOUNT: All of a sudden you run 8 into gas and it's difficult to determine the gas from 9 the freshwater. And I'm just wondering if you can 10 actually see a seal between the water and the gas? 11 MR. YANCEY: It's not straightforward. 12 COMMISSIONER SEAMOUNT: Okay. That's what I 13 thought. 14 MR. YANCEY: But we have a very good idea of 15 what's productive and what's not. 16 Slide number 7. So what I'm showing here is 17 the logs for the discovery well and what the initial 18 pool rules were based off of. That's the Cook Inlet 19 State, 17589-1 on the left. And the well that we are 20 proposing using the definition in is A15. I've also 21 denoted on there where the current top is. Now of 22 course that's in measured depth and what we're looking 23 at here is a structural cross section so it's in tvd. 24 And as you can see when the original casing point was 25 set for the exploration well it was set in the middle Computer Mavlx. LLC Ph.ee.909-243-0668 Email 1a ile(a6el.-d 135 CO sleasen Dr -.Ste 2.,Anch.AK 99501 Fax907-243-1473 AOGCC 3,12 2020 ITMO-APPLICATIO. NLCORP AK TO AMEND CONSERVATION ORDER 68 Doek,, NoCO-20-001 Page 20 1 of some of the uppermost Sterling sands that are 2 productive elsewhere. At the time they -- they 3 probably didn't know that and these are smaller sands 4 as well. This is what Tommy's referring to when we say 5 we're producing, we find shallower and shallower 6 intervals to produce from it's the things that sit 7 above this. So the original definition is wherever 8 this red line I have drawn here is. And you can 9 actually see that it splits some of the uppermost 10 Sterling into pieces. 11 COMMISSIONER SEAMOUNT: So..... 12 MR. YANCEY: And our proposal is to use A15, 13 we've just simply picked a coal marker that's fairly 14 continuous across the field so we can include all of 15 these shallow producing sands as part of the pool. 16 COMMISSIONER SEAMOUNT: That 3,943, is that the 17 top of the gas producing sands? 18 MR. YANCEY: The very uppermost one we 19 currently have production from is the Sterling X here, 20 this interval. 21 COMMISSIONER SEAMOUNT: Uh-huh. 22 MR. YANCEY: We just picked a continuous coal 23 marker a couple hundred feet above that. 24 COMMISSIONER SEAMOUNT: So it does contain some 25 water, correct? Computer Matrix, LLC Phone: 907-243-0668 135 Christ®sen Dr., St, 2, Auch. AK 99501 Pax: 907-243-1473 Emml suhile agci ne AOGCC 3/12/2020 ITMO-APPLICATIO_ ATCORP AN TO AMEND CONS D ATIO ORDER 6CO 8 Page 21 1 MR. YANCEY: I don't know if they've tested 2 that. Have they tested that? 3 MR. DENOLO: There hasn't been testing shallow, 4 there are indications of potential gas shallower than 5 the Sterling X that we would like to test in subsequent 6 wells. 7 COMMISSIONER CHMIELOWSKI: Are these..... g MR. YANCEY: So the -- sorry. 9 COMMISSIONER CHMIELOWSKI: Excuse me. Are 10 these sands in pressure communication? 11 MR. DENOLO: No. If you're looking at the -- 12 let's take a look at the Sterling A and B. There is a 13 potential that those two are, but then you move to the 14 Sterling stray sands and those seem to be completely 15 isolated tanks. 16 COMMISSIONER CHMIELOWSKI: Okay. 17 MR. YANCEY: And Tommy has a really good slide. 18 I think in a handful of slides that show sand by sand 19 what we think is truly waterdrive connected versus 20 depletion for all of the different sands. 21 COMMISSIONER CHMIELOWSKI: Okay. 22 MR. YANCEY: So it is a mixed bag absolutely. 23 COMMISSIONER CHMIELOWSKI: Right. Thanks. 24 MR. YANCEY: Let's go on to the next slide. 25 COMMISSIONER SEAMOUNT: Which slide is that? Computer Matrix, LLC Phoner. 909-243-0668 Email_ saho Vayun¢ 135 Christensen Or, Ste. 2., Ameh. AK 99501 Tax, _907-243-1473 AOGCC 3/12/1020 ITMO-APPLICATIO_ NILCORP AK TO AMEND CONSERVATIONe OCR-'_0-068 Page 22 1 MR. YANCEY: This is slide number 8. 2 COMMISSIONER SEAMOUNT: Okay. 3 MR. YANCEY: And this is a structure map on top 4 of the shallowest Sterling stray sand. And all this is 5 to do is to give you guys an idea of what the structure 6 looks like. This is a fairly tight contour interval, 7 it happens to be 25 -- this would be contour interval 8 25 feet. And also as Tommy pointed out you can see 9 where all of these wells originate from, the platform 10 here. You see it's slightly offset to the actual high 11 of the structure. And all of these penetrations are 12 what defines the structure, this is constructed with a 13 combination of well tops and also seismic data that we 14 have in the area. So a fairly simple, shallow dipping 15 anticline is really what sets up this whole gas field. 16 COMMISSIONER SEAMOUNT: Have you counted up all 17 the individual gas producing sand bodies to date, I 18 mean, I..... 19 MR. YANCEY: You..... 20 COMMISSIONER SEAMOUNT: .....I think you're 21 talking that there's more out there, but how many..... 22 MR. YANCEY: Yes. 23 COMMISSIONER SEAMOUNT: .....how many have you 24 encountered, is it..... 25 MR. YANCEY: Oh, my gosh, let's see. Computer Matnx. I.LC Phone. 90]-243-0668 E.M sahileCh6d.na 135 Misteosee Dr., Sem1, A.ch_ AK 99501 Fax- 909-243-1473 AOGCC 312/2020 ITMO:APPLICATIO, ELCORP AK TO AMEND CONSERVATION T ORDER 008 Page 23 1 COMMISSIONER SEAMOUNT: .....like 20, 40? 2 MR. YANCEY: Let's see, Sterling is probably 3 approaching 20 and that's four more new ones that we've 4 identified and Beluga, it's at least another 20 there 5 so at least 40. 6 COMMISSIONER SEAMOUNT: So theoretically you 7 could have 40 different pools. What about the g gas/water contacts, do they vary? 9 MR. DENOLO: Yes, they do. 10 MR. YANCEY: They do. 11 COMMISSIONER SEAMOUNT: Do you have a map that 12 shows your deepest gas/water contact? 13 MR. YANCEY: We do have that. I don't have it 14 in this presentation, but we do have that. And a lot 15 of what we have are for instance the lowest known gas 16 and the highest known water. Only in some of the sands 17 do you actually -- can you define a contact easily with 18 logs. 19 And just for spacial reference here, where 20 these two wells are that we're proposing using, this is 21 the original discovery well here where my cursor is and 22 we're using -- they're structurally about the same 23 depth, but A15 has a fuller log suite where all of the 24 sands are present and you can easily define it. 25 Let's go on to the next slide. Crmpmer Matix. LLC Phone909-243-0668 Emeil snhile(a,gd.oet 135 Christensen Dr.. Ste. 2., Anch. AK 99501 Fac: 90c-243-143 AOGCC 3/122020 ITMO-APPLICATIOi SILCORP AK TO AMEND CONSERVATION ORDER 68 Page 24 1 So now we've moved deeper -- slide nine, sorry. 2 Now we've moved deeper, we're in the Beluga whereas 3 before we were looking at the Sterling. Again Tommy's 4 going to talk about continuity here in the next slide 5 in terms of the reservoir. The original definition for 6 the base of the Tertiary System gas pool is up here at 7 6,200 feet in 17589-1. What we propose is pushing that 8 base of the pool to the base of the Beluga which is the 9 marker that I have on the A15, the log suite that you 10 see next to you there. 11 COMMISSIONER SEAMOUNT: Would that be the 12 lowest known gas? 13 MR. YANCEY: Yes. As far as I'm aware that 14 would be the lowest known gas and at the base of the 15 Beluga, correct. 16 COMMISSIONER SEAMOUNT: Okay. I woula -- 11- L17 17 it's not confidential I would like to see a map showing 18 where the lowest known gas is. 19 MR. YANCEY: We can do that. 20 COMMISSIONER SEAMOUNT: How many -- how long 21 would it take you to get it to us? 22 MR. YANCEY: I could have it done the early 23 part of next week. I've gotten most of that done, it's 24 just a matter of printing it out and sending it over to 25 you guys. Computer Mavlx. LLC Phouc 907-243-0668 Email: x tle( yn.nd 135 Chrixtensert D,. Ste 2_ Areh-AK 99501 Fax 907-243-1473 AOGCC 3112,2020 ITMO-APPLICA'CIOh, - ALCORP AK TO AMEND CONSERVATIONORDPR 68 Docke, No, CO -20-001 Page 25 1 COMMISSIONER SEAMOUNT: Okay. What date would 2 that be? 3 COMMISSIONER CHMIELOWSKI: Well, today's the 4 12th so we could give them a couple of weeks. 5 COMMISSIONER SEAMOUNT: Oh, I thought it was 6 the 13th. 7 COMMISSIONER CHMIELOWSKI: Today's the 12th. g Tomorrow is Friday the 13th. 9 COMMISSIONER SEAMOUNT: Okay. So what date are 10 we talking about? 11 COMMISSIONER CHMIELOWSKI: You want two weeks? 12 MR. YANCEY: That's plenty of time. 13 COMMISSIONER CHMIELOWSKI: So that would be 14 March 26. 15 MR. YANCEY: Yeah, by then..... 16 COMMISSIONER CHMIELOWSKI: Okay. 17 MR. YANCEY: .....certainly, yes. 18 COMMISSIONER CHMIELOWSKI: All right. 19 MR. YANCEY: Certainly. So that -- those are 20 our proposed changes. We're vertically expanding the 21 pool to include all known producing gas intervals, 22 shallower and deeper as well. 23 COMMISSIONER CHMIELOWSKI: Does the A15 well -- 24 what was the total depth of that well, it didn't 25 penetrate the oil you said, but it went though all the Computer Manx, LLC Phone. 907-243 0668 135 Chnsomxen Dr., Ste. 2., Arch AK 99501 Fax -907-243-1473 Ema11 sehRIXippn.net AOGCC 1 gas sums? 3 12 2020 ITMO: APPLICATIOT, JLCORP AK TO AMEND CONS RVAAmO ORDER 69 Page 26 2 MR. YANCEY: Yes. 3 COMMISSIONER CHMIELOWSKI: Okay. 4 MR. YANCEY: The -- I don't recall the total 5 measured depth offhand, but it's going to be very close 6 to -- it doesn't go much deeper than this 8,600, maybe 7 a couple hundred of feet and deeper. 8 COMMISSIONER CHMIELOWSKI: Okay. 9 MR. YANCEY: Not a whole lot more than that. 10 COMMISSIONER CHMIELOWSKI: Okay. 11 MR. YANCEY: Uh-huh. We're very close to the 12 end of it there. 13 MR. DENOLO: And just to add in on this, you 14 know, in 2009 -- 2008, 2009 there's a three well 15 grassroots development plan and what you see across the 16 structure is sands coming and going very rapidly. And 17 so expanding our pool vertically down gives us more 18 opportunity to encounter sands that may have been 19 missed during the initial development plan. And so 20 we're giving ourselves a little bit of room to 21 encounter upside. 22 MR. YANCEY: And they observe that in a lot of 23 offset fields, Beluga River..... 24 COMMISSIONER CHMIELOWSKI: Uh-huh. 25 MR. YANCEY: .....they see similar types of Campma Matnx, LLC Phone -907243-0668 Em l-xahil�(119J 135 Chnstwxxn a. Sty 2., Aneh. AN 99501 Fax 907-243-1473 AOGCC 3,122020 ITMO: APPLICATION _IILCORP AN TO AMEND CONSERVATION ORDER 68 Docket No. CO -20-001 Page 27 1 observations in that, you know, you drill a well in a 2 new locations there's this, you know, a sand body you 3 hadn't hit before. That -- that's quite common 4 actually 5 COMMISSIONER SEAMOUNT: And, Mr. Denolo, you 6 made a statement and we need to put that on the record 7 that it was Mr. Denolo that..... 8 REPORTER: Right. 9 COMMISSIONER SEAMOUNT: You got it? Okay. 10 Thanks. 11 MR. DENOLO: All right. This is Mr. Denolo 12 again. So this is a slide, slide number 10, where we 13 have fortunately what is quite good pressure data. So 14 there was development wells drilled in the 1997 to 2003 15 time frame and there's a subsequent round of 16 development in 2009. Those are the only two 17 development periods since initial development. So 18 looking at the chart on the left on the Y axis you have 19 your depth in subsea tvd and on your X axis is your 20 equivalent mud weight in pound per gallon. The green 21 triangles represent the 1997 to 2003 data. This is 22 RFT, RA through RFT. And in red circles is the 2009 23 data which is a combination of RFT and MDT. So with 24 that what we can see that there's quite a variability 25 in your pressures as you go through. And I've lumped Computer Matrix, LLC Phone. 907-243-0668 135 C1visteosen D@, Ste 2.. Avch, AK 99501 Paz- 907-243-148 1]..] sandl ci,,et et AOGCC 3,122020 ITMO. APPL[CAT'ION AILCORP AK TO AMEND CONSERVATION ORDER 68 Dockw No. CO -20001 Page 28 1 the upper Beluga, middle Beluga and lower Beluga here 2 just because the sands come and go so rapidly. The 3 Sterling sands are more continuous, but there is still 4 some variability as you move across the structure due 5 to the fluvial system. 6 what you can do from looking at this data is 7 you can get a pretty good idea of what sands are 8 supported by a waterdrive and relatively what that 9 strength is. So if you look at the Sterling A and B 10 sands those two sands are at eight pound per gallon and 11 through the Sterling sands were at a normal gradient 12 during -- when the field was initially developed at 13 about 8.1 pound per gallon as you move into the Beluga 14 it starts to get a little bit more than normal 15 gradient, slight -- slightly overpressured up to about 16 9.5 pound per gallon as you get deeper. You can see 17 the Sterling 1 and 2, you know, those two sands are 18 roughly, you know, a pound to pound and a half. So 19 this chart on the right is showing your sand, starting 20 from the shallowest to the deepest, that's within the 21 Tertiary System's gas pool, showing their pressure in 22 red, that's on the Y axis, you have your sand pressure 23 and equivalent mud weight, pound per gallon, and the 24 black bar is showing the range of data for that sand. 25 So what I want to point out is, you know, the three Coropmer Metrix. LLC Phone: 907-243-0W 135 Chnstensen Dr- Ste- 2, Mch. AK 99501 Pm. 909-243-1473 Em.L net AOGCC 3t 122020 ITMO-APPLICAT1O. ALCORP AN TO AMEND CONSERVATION ORDER 68 Docket No CO -20-001 Page 29 1 wells drilled and we'll show where they are on the 2 structure here shortly, but those three wells were 3 drilled basically on the periphery of the structure and 4 you encountered identical mud weight. And so what that 5 tells us is these sands are very laterally continuous 6 and they're in pressure communication across the whole 7 structure. 8 As you move to the Sterling 3 sand you have 9 quite a range so it's hard to tell on the projector, 10 but your lowest pressure was about one pound per gallon 11 and your highest pressure is six pound per gallon. So 12 you've got a lot of lateral discontinuity of these 13 sands as they're moving around in each of these 14 Sterling packages. 15 And the Beluga is just that example of the 16 Sterling 3 and expanded. You have quite a range on 17 almost every sand in the Beluga and I'm just showing 18 the upper Beluga and the top of the middle Beluga here 19 to give you an idea of what that range looks like. The 20 number at the bottom of each bar is the number of 21 sample points we have. So again there are three wells 22 in 2009 and so if we have -- each well will be able to 23 encounter the Sterling 3, but they obviously 24 encountered tanks that were disconnected from each 25 other. Computer Matrix, LLC Phore:909-243 0668 135 C xtenacn Dr.,Ste .2 -, Arch .AN 99501 Eaa.907-243-1473 Fraaflu sahilc(ioci net AOGCC 311°_'2020 ITMO. APPLICATIOT ALCORP AK IO AMEND CONSFDR�et[OO 04)FR 68 Page 30 1 COMMISSIONER SEAMOUNT: Seems like every sand 2 you're showing there is somewhat depleted; is that 3 right, or you'd be up to 8.4 at least? 4 MR. DENOLO: Yes. 5 COMMISSIONER SEAMOUNT: So they've all been 6 produced somewhat, correct? 7 MR. DENOLO: We believe so. There are some 8 sands as you can see down in the middle and lower 9 Beluga that could be very much normally pressured 10 or..... 11 COMMISSIONER SEAMOUNT: Okay. 12 MR. DENOLO: .....sorry, not normally 13 pressured, but at original pressure. 14 COMMISSIONER SEAMOUNT: All right. If you had 15 some waterdrive wouldn't they be normally pressured? 16 MR. DENOLO: Yes. If they had a strong 17 waterdrive or moderate waterdrive they should be back 18 to normal. 19 COMMISSIONER SEAMOUNT: So what -- what's your 20 argument that there's some waterdrive in this field, 21 what's the supporting argument? 22 MR. DENOLO: It's very -- it's very clear in 23 the Sterling A and B, you know, those were produced 24 from 1969 to the early 190s, those two sands were shut - 25 in together across the field. And the original Comp tor Matrix, LLC Phouc 907-243-0668 [mail sahflewgdnrx Fax 90]-243-14)3 135 Chnstensen a.. Ste I. Ane. AK 99501 AOGCCDocket No. 3'122020 ITMO: APPLICATION AILCORP AK TO AMEND CONSERVATION ORDER 68 Page 31 1 pressure was about 8.1 and they're currently at 8.1, 2 yet have been known to produce significant quantities 3 of gas. 4 COMMISSIONER SEAMOUNT: Okay. Thanks. 5 MR. DENOLO: No problem. Moving on to slide 6 11. So just to show some of the potential we see 7 especially in the shallower Sterling sands or we move 8 -- want to move the vertical limits of the pool 9 definition shallower, this is the Sterling X sand and 10 as I mentioned earlier we had requested the ability to 11 produce the sand which is currently in the undefined 12 pool and it was brought online at about 5 million a day 13 and we've produced it close to that -- close to that 14 level since early December. And it's been a great -- 15 great add for us in the field. And we see more 16 opportunities. Going back to slide seven, just early 17 February we perforated the Sterling stray 3 18 sand which -- which sits just below the current 19 definition of the top of the Tertiary gas systems pool. 20 And it came online at about 5 million a day also. And 21 we'd like to go and add the Sterling 2 and Sterling 1 22 in several wells across the field. 23 COMMISSIONER SEAMOUNT: I might have missed it, 24 but did you say how much production's been added since 25 you took over the field..... Computer Matrix, LLC Phoa,'. 909-243-0668 Email sahilckl gci.oet 135 Christmsrn Dr.. Ste. 2., Anah. AK 99501 Fax: 90J -243-14J3 AOGCC 3,122020 ITMO-APPLICATIOn HILCORP AK TO AMEND CONSERVATION ORDER 68 Da&d No -CO -20 -NI Page 32 1 MR. DENOLO: I have not. 2 COMMISSIONER SEAMOUNT: .....what kind of rate 3 or what kind of volume? 4 MR. DENOLO: I don't have those..... 5 COMMISSIONER SEAMOUNT: I mean just a ball park 6 figure, I don't need an exact number. 7 MR. DENOLO: We -- at the PPD decline of when 8 we acquired the assets we're producing in the range of 9 10 million more a day than we -- than it would have 10 been if we had done no activity. There is one key 11 point to that. It -- it -- that number would be 12 higher, however we needed to remove the existing 13 quarters and add new quarters because the existing 14 quarters covered the slots of the existing wells. So 15 last summer we completed work to upgrade the helipad as 16 well as move the quarters below deck such that we can 17 access all of the wells because we were not able to get 18 a rig on them, we could only do wireline intervention 19 on a hand -- a very small handful of wells. And so 20 this was the Sterling X sand and there's -- we have 21 more potential behind pipe in that A3 well, that 22 Sterling X sand was our first workover and that was 23 completed December of 2019. So this -- later this 24 spring we'd like to go out and do more. 25 COMMISSIONER SEAMOUNT: Where's the gas going? Computer MaMx, LLC Phone -907-243 0668 Email sehile�agni.nn 135 Mistmsen Dr., Ste, 2., An,h. AK 99501 Fax: 907-243-1473 AOGCC 3'112020 ITMO: APPLICATION __ ALCORP AK'TOAMEND CONSERVATION ORDER68 Docks Nb. CO -20 001 7 Petroleum News more closely, but does any of it go -- 8 is the NGL plant still running? 9 MR. DENOLO: No, it is not. 10 COMMISSIONER SEAMOUNT: Okay. Ignorant 11 question. 12 MR. DENOLO: All right. Moving on to slide 12. 13 I just want to give you an idea of -- this is an 14 initial development plan. This is showing the 15 structure of the top of the Sterling A sands and the 16 red dots indicate sidetracks which we'd like to do and 17 I'll show you and what the completion looked like here 18 on the next slide. So basically you're side -- 19 sidetracking shallow, you're going through and you're 20 logging those sands to identify where there's pay 21 remaining. So it would be about 3,500 feet of measured 22 depth would be the sidetrack up to 4,500 feet depending 23 on the angle. we also have a grassroots well that we 24 plan to drill. It's the final appraisal well for the 25 deep oil which would go right at the top of the Computer Matnx, LLC Phone 907 243-0668 135 Christwseo Dc, Sa_2_, Aveh. AK 99501 Fax909-243-1493 Email: sehil{w�d,vn Page 33 1 MR. DENOLO: We ship it into our integrated 2 system to feed the different offtake point such as 3 Enstar and pool six for the storage. It goes to a lot 4 of different places because it mingles with our other 5 produced gas that we help to feed to the market. 6 COMMISSIONER SEAMOUNT: I should be reading 7 Petroleum News more closely, but does any of it go -- 8 is the NGL plant still running? 9 MR. DENOLO: No, it is not. 10 COMMISSIONER SEAMOUNT: Okay. Ignorant 11 question. 12 MR. DENOLO: All right. Moving on to slide 12. 13 I just want to give you an idea of -- this is an 14 initial development plan. This is showing the 15 structure of the top of the Sterling A sands and the 16 red dots indicate sidetracks which we'd like to do and 17 I'll show you and what the completion looked like here 18 on the next slide. So basically you're side -- 19 sidetracking shallow, you're going through and you're 20 logging those sands to identify where there's pay 21 remaining. So it would be about 3,500 feet of measured 22 depth would be the sidetrack up to 4,500 feet depending 23 on the angle. we also have a grassroots well that we 24 plan to drill. It's the final appraisal well for the 25 deep oil which would go right at the top of the Computer Matnx, LLC Phone 907 243-0668 135 Christwseo Dc, Sa_2_, Aveh. AK 99501 Fax909-243-1493 Email: sehil{w�d,vn AOGCC 3'122020 ITMO'. APPLICATIO. AILCORP AK TO AMEND CONSERVATION ORDER fib Da.kd N., CO -20-001 Page 34 1 structure and that's indicated by the green circle 2 there. And we think that as we learn with this initial 3 development plan there will be potential for more wells 4 to be drilled out there. 5 COMMISSIONER CHMIELOWSKI: So Hilcorp currently 6 has line of sight on four sidetracks within the gas 7 pool? 8 MR. DENOLO: We do have line of sight and we're 9 drafting our development plan for the DNR as part -- as 10 part of the plan cycle. 11 COMMISSIONER CHMIELOWSKI: Okay. And you 12 mentioned that there are no wells on the top of the 13 structure. Is this appraisal well going to access the 14 gas on the top of the structure? 15 MR. DENOLO: I -- there's -- there are wells at 16 the top of the structure, however they -- the next 17 slide will help me explain..... 18 COMMISSIONER CHMIELOWSKI: Okay. 19 MR. DENOLO: .....the challenges associated 20 with producing these sands and why we'd like to go back 21 to the top of the structure. So the -- there was the 22 A3 and the A9 located here and here that were drilled 23 in 1969 and then the A13 which was drilled in 1993, 24 those are the three wells near the top of the structure 25 currently. And so we'd like to go back through the Cmpwv %1,1—, LLC Phove.909-243-0668 135 Chrisevscn Dr.. Sm 2 , ANmh. AK 99301 Fax909-243-1473 E..] sahile(,gci.na AOGCC 3,12 2020 ITMO: APPLICATIOi HILCORP AK TO AMEND CONSERVATION ORDER 68 DocketNo CO -20-001 Page 35 1 top, go through all the gas sands and do our RFT/MBT in 2 each sand so we can understand where pay resides and 3 then..... 4 COMMISSIONER CHMIELOWSKI: Uh-huh. 5 MR. DENOLO: .....help us steer the development 6 plan. So just to give you an idea of what this looks 7 like. The challenges -- I'm on slide 13 now. The 8 challenges associated with developing gas from the 9 Tertiary gas systems pool initial -- the initial 10 schematics or wellbores basically what they did is they 11 shot everything and produced a commingled so you had 12 all the Sterling sand and all Beluga sand produced 13 together. As sands deplete, as water was produced, you 14 bring with it sand. So whenever you're producing water 15 you're typically bringing sand with you. And 16 especially in the Sterling sands that sand is very much 17 equivalent to mud that you see out on the mudflats. 18 It's very mucky and dense. And that can inhibit your 19 gas production because now you've got a liquid column 20 in addition to a sand column acting as a choke to your 21 gas production. And as you're moving down into these 22 lower pressure sands which still have significant gas 23 remaining even at a couple pound per gallon you want to 24 have that barrier out of your way to maximize your 25 ultimate recovery. Campmer Mmo,.. LLC Phone'. 907-243-0668 135 Ch smnsen Dc. Sm2., Anch_AN 99501 Pac'.907-243-1473 Email: sehilc�¢eavtt AOGCC 3'122020 ITMO. APPLICATIO. HILCORP AK TO AMEND CONSERVATION ORDER 68 Docket No CO -20 001 Page 36 1 So in the 190s there was a big campaign to go 2 through and workover the wells to isolate this work -- 3 these water producing or sand producing zones. And so 4 that's -- the typical wellbore at Tyonek looks like 5 this where you have many stack packers with sliding 6 sleeves associated with it. What they often did 7 though, I don't believe there is an exception to this, 8 is they would do that for the Sterling sands, but for 9 the Beluga they left it commingled. So there hasn't 10 been any isolation between the different Beluga sands 11 which we see as a big opportunity for us. 12 So what we plan to do is kick off shallow, you 13 know, be able to log through the entire suite of 14 Sterling and Beluga sands as we go down to depth and 15 run a very small line or basically a tubing string, 16 cement it back, and then we would set it up so we could 17 have easy wireline reentry, perf at the bottom, produce 18 those sands, plug it, perf, plug and just move through 19 and maximize your recovery that way. Because if you 20 try to commingle these sands it can be very challenging 21 to get your ultimate recovery because as soon as one 22 waters outs or produces sand it now effectively kills 23 everything below it. 24 COMMISSIONER SEAMOUNT: The base of the 25 proposed pool, how high above the North Foreland would Computer Matrix. LLC PLome:909-243-0668 Email: emile,,geina 135 C]6cNmum D1.. Ste. 2., Am,h AN 99501 Pax: 907-243-1413 AOGCC 1 that be? 3/122020 ITMO: APPIICATIC HILCORP AN TO AMEND CONSERVATION ORDER 68 Daeket N. CO -20-001 Page 37 2 MR. DENOLO: It's quite a ways. You 3 know, subsurface in the 7,000 subsea tvd, 7,200. The 4 North Foreland is at about 11 to 12,000. The Tyonek C 5 and Sunfish sit just above the North Foreland and so 6 those are encountered around 10,000 feet subsea tvd. 7 So you've got approximately 3,000 feet subsea before 8 you hit the oil sands. 9 COMMISSIONER SEAMOUNT: Do you have any plans 10 to test the pretertiary in this field? 11 MR. DENOLO: The pretertiary? 12 COMMISSIONER SEAMOUNT: Jurassic. 13 MR. DENOLO: The Jurassic we do not plan to 14 test. It has been tested and the rates were not 15 prolific enough to warrant further appraisal. 16 COMMISSIONER SEAMOUNT: I think what you got 17 out of the Naknek was -- or ARCO, got over a thousand 18 barrels a day of water, but the mudlog shows were just 19 outstanding. And I was told that it could have been a 20 poor cement job involved. 21 MR. DENOLO: That was for which well? 22 COMMISSIONER SEAMOUNT: It was -- I believe it 23 was called North Foreland number 1. 24 MR. DENOLO: Okay. North Foreland State 1. 25 Yeah, that's where they did test the Jurassic. I'll Computer Maty, LLC Pho., 909-2434)668 135 Chnstmsen Dr, Ste 2., Anch. AK 99501 F. 907-243-1473 Email szhil�4Tci.nw AOGCC 3,122020 ITMOAPPLICATIL. HILLORP AK TO AMEND CONSERVATION ORDER fib Docks No. CO -20-001 Page 38 1 have to go back to my notes and look at that. 2 COMMISSIONER SEAMOUNT: Take a look at those 3 mud logs, it's pretty incredible, but sometimes the 4 best shows are -- are the worst rock so..... 5 MR. DENOLO: Yeah. 6 COMMISSIONER SEAMOUNT: .....so that could have 7 had something to do with it. 8 MR. DENOLO: Yeah, the Hemlock was also tested 9 which sits below the North Foreland and it did produce 10 a little bit of oil also. Yeah, so you have about 11 3,000 feet between your -- base of your subsea tvd -- 12 between the base of your gas sands and..... 13 COMMISSIONER SEAMOUNT: Okay. Three thousand 14 feet. All right. 15 MR. DENOLO: Uh-huh. 16 COMMISSIONER CHMIELOWSKI: I'm looking at your 17 slide 13 with the schematic. Has Hilcorp used this 18 completion type and strategy in other fields in the 19 Cook Inlet as far as perfing low and moving up the well 20 and how long does it take, is there a ball park between 21 when an interval will, you know, water out or sand out? 22 MR. DENOLO: Good -- good questions. Yeah, 23 this is definitely not an original idea. Our Kenai 24 asset teams work primarily the onshore gas fields. 25 They utilize this extensively and that's been a big Composer M.,ls, LLC Phones 907-243-0668 135 Chnslenscn Dr., Sle.2., An6. AK 99501 Far:907-243-1473 EmeiL sehilIXg6u net AOGCC 3,122020 ITMO_ APPLICATIO HILCORP AK' DO AMEND CONSERVATION ORDER 68 Docket No CO 20-001 Page 39 1 part of how we've been able to increase gas production 2 in the inlet. The time it takes between depleting each 3 sand is simply just dependent on the size of those 4 sands and the pressure. We expect this will take on 5 the order of magnitude of a decade to produce all the 6 gas. 7 COMMISSIONER CHMIELOWSKI: Uh-huh. So would 8 you drill all four of these sidetracks at once and then 9 perf them all that the bottom and move your way up in 10 all four wells at the same time or..... 11 12 13 they're 14 15 d MR DENOLO: Yeah. COMMISSIONER CHMIELOWSKI MR. DENOLO: To max..... .....depends if COMMISSIONER CHMIELOWSKI: .....communicating with each other? 17 MR. DENOLO: Yeah, to maximize the drilling 18 efficiency we'd likely complete them as a batch. And 19 then we would start from the bottom. And we -- because 20 of the location, moving back to slide 12, you know, 21 this is a very large geographic area and we think the 22 sand from -- from logs, the sand continuity especially 23 in the Beluga sands, is certainly not, you know, more 24 than this is roughly 2,000 feet between these wells, is 25 typically not that laterally continuous. Computer Manx. LLC Phone: 900-243-0668 135 Chnensen Dr., Ste. 2- Anch_ AN 99501 F. 907-243-1493 EmvL sehEgw-gdnel AOOCC 3/122020 ITMO'. APPLICATIO, ULCORP AK TO AMEND CONSERVATION ORDER68 Docket Na. CO -20-001 Page 401 1 COMMISSIONER CHMIELOWSKI: So you would 2 coordinate between the wells and have a strategy for 3 depletion with -- between all of the sidetracks is what 4 you're saying? 5 MR. DENOLO: Definitely. 6 COMMISSIONER CHMIELOWSKI: Yeah. 7 MR. DENOLO: So that concludes our 8 presentation. Do you have any questions, we'd be happy 9 to answer. 10 COMMISSIONER CHMIELOWSKI: I think we'll take a 11 short recess and just confer and see if there's any 12 other information we need. And so we can take -- how 13 long do you think, Dan, 15 minutes? 14 COMMISSIONER SEAMOUNT: Well, let me ask a few 15 questions..... 16 COMMISSIONER CHMIELOWSKI: Okay. 17 COMMISSIONER SEAMOUNT: .....first. And I 18 notice that Mr. Schoetz..... 19 MR. SCHOETZ: Yes, sir. 20 COMMISSIONER SEAMOUNT: .....were you going to 21 testify? 22 MR. SCHOETZ: I'm here just in case. 23 COMMISSIONER SEAMOUNT: Okay. Good. All 24 right. Then I do have a few questions before we take a 25 short recess. And that -- those are -- they're pretty C.,,m , Metrix, LLC Phone.. 909-243-0668 135 Chrismnseo Ur.. Ste. 2, Auch, AK 99501 Fu: 907-243-1493 Email sehile7¢punm AOGCC 3,12/2020 ITMO. APPLICA'110_ ALCORP AK TO AMPND CONSERVATION ORDLR 68 D &et No. CO20001 Page 41 1 basic, but they may be impossible to answer. 2 How much gas do you think might be left to 3 produce, already you've got 2 tcf, how much more is 4 there left? 5 MR. DENOLO: Well, we -- we're working that 6 problem diligently. Our existing volumetrics indicate 7 there's potentially another 100 or more of these left 8 to recover under this type of development scenario. 9 COMMISSIONER SEAMOUNT: Another hundred what, 10 gas? 11 MR. DENOLO: Hundred b's, 100 billion cubic 12 feet. 13 COMMISSIONER SEAMOUNT: Oh, a 100 b's. Wow. 14 Okay. 15 MR. DENOLO: Which would be about an additional 16 5 percent above the 1.93 trillion that has been 17 produced. 18 COMMISSIONER SEAMOUNT: Okay. And what's the 19 present production of the field? 20 MR. DENOLO: As of today it's about 12 million, 21 but we have a couple wells down. When we're both -- 22 when we have those wells up it's about 17, thanks in 23 large part to the stray 3 and the X sand. 24 COMMISSIONER SEAMOUNT: Okay. So you mentioned 25 that you've added 10 million cubic feet per day when C..,w Matrix, ITC Phone. 907-243-0668 135 Ch srensen Dr., Ste. 2., Anch. AK 99501 F. 907-243-1493 E.v I cehflefttB ria AOGCC 311'_2020 D'MO: APPLICA'DO. dILCORP AK TO AMEND CONSERVATION ORDER 68 Docket No, CO -20-001 Page 42 1 you take decline into account. So before you bought 2 the field what was it making? 3 MR. DENOLO: I believe it was in about the 10 4 range..... 5 COMMISSIONER SEAMOUNT: Okay. 6 MR. DENOLO: .....10 to 12. But, yeah, in 7 2000..... 8 COMMISSIONER SEAMOUNT: So you've got a net of 9 2 million, but with the decline it's much more than 10 that? 11 MR. DENOLO: Right. 12 COMMISSIONER SEAMOUNT: Okay. 13 MR. DENOLO: And we've been operating more 14 consistently in the 15 to 18 range these last couple 15 years. We did lose a -- we did lose a well that was 16 making about 5 and a half million a day, the A2. And 17 unfortunately we had a tubing part right about the 18 Beluga sands which is what that well was producing from 19 and so a short sidetrack as we showed on that schematic 20 would effectively allow us to recover all of that which 21 with that well alone we project at 40 hits. 22 COMMISSIONER SEAMOUNT: Okay. And earlier I 23 requested a map. I'm not sure that we need that. 24 We'll have to discuss that at -- during the recess. 25 But the question is is there unleased area around the Computer Matrix. LLC Phooe:907-243-0668 135 Ch,,,,.. Dr., Site 2., Auch. AK 99501 Tax 907 243-1473 ErewL sahi101,cinet AOGCC 3/12/2020 ITMO: APPLICAT16. ALCORP AK TO AMEND CONSERVATION ORDER 68 Do&a No. CO -20-001 Page 431 1 unit? 2 MR. SCHOETZ: Yes. Yes, sir, there is some 3 unleased acreage to the northwest of the unit boundary, 4 slide three. So looking at the unit boundary on slide 5 three..... 6 COMMISSIONER SEAMOUNT: Please identify 7 yourself. 8 MR. SCHOETZ: This is Michael Schoetz, landman 9 for Hilcorp Alaska. 10 The -- this light blue area right here, these 11 are all leases, darker blue is unleased. So all this 12 area to the north/northwest and up to the north right 13 now remains unleased. 14 COMMISSIONER SEAMOUNT: Okay. So you may have 15 an argument for confidentiality then; is that correct 16 on the map I requested? 17 MR. DENOLO: Our lowest known gas is within the 18 unit boundary. 19 COMMISSIONER SEAMOUNT: Thank you. That's what 20 I needed to hear. 21 Okay. We can take a recess. 22 COMMISSIONER CHMIELOWSKI: Okay. Do you want 23 to adjourn us and tell us when to reconvene. 24 COMMISSIONER SEAMOUNT: It is 10:55 according 25 the clock on the wall, why don't we reconvene at I Computa Matrix, LLC Phone: 907-243-0668 135 Ch mm Dr., Ste. 2., Anch. AK 99501 F. 907-243-1473 Email: sahil @96.va AOGCC 3:122020 I IMO'. APPLICATK. EILCORP AK TO AMEND CONSERVATION ORDER 68 Docket No CO 20 001 Page 44 1 think -- staff, is this going to be a short recess or 2 do you have a lot of questions? Okay. We'll reconvene 3 at -- we always lie about this, but we'll reconvene at 4 12:05. We'll take 10 minutes. 5 COMMISSIONER CHMIELOWSKI: 11:05. 6 COMMISSIONER SEAMOUNT: 11:05. Geez. I'm 7 dyslexic..... 8 (Off record - 10:55 a.m.) 9 (On record - 11:10 a.m.) 10 COMMISSIONER SEAMOUNT: Okay. We're back on 11 the record at 11:10. 12 Do you have any questions, Commissioner 13 Chmielowski? 14 COMMISSIONER CHMIELOWSKI: Yes, I do. It was a 15 great presentation so thank you. I think I heard you 16 say for the top of the -- the proposed top of the pool 17 you used the continuous coal as a marker. What did you 18 use as the marker for the proposed base of the pool? 19 MR. YANCEY: Also coal. 20 COMMISSIONER CHMIELOWSKI: Also coal. So a 21 relatively continuous coal. Is that a coal you could 22 see..... 23 MR. YANCEY: It is. 24 COMMISSIONER CHMIELOWSKI: .....across the 25 field? Okay. That's it. Computer Matrix. LLC Phone'. 907-243-0668 135 Clnismnseu Or., Sia 2., Anch. AK 99501 F. 907-243-1473 Email sahile(¢gppet AOGCC 3/12/2020 1 DAD APPLICATIO. AILCORP AK TO AMEND CONSERVATION ORDER 68 Dock, No CO -20-001 Page 45 1 COMMISSIONER SEAMOUNT: Okay. In the beginning 2 I said I wished that you had provided information 3 before this hearing. If you had provided that 4 information we wouldn't have had the hearing. However 5 I think it was an outstanding presentation and I 6 learned a lot so I'm glad we did have the hearing after 7 all even though it was unnecessary. But there's a lot 8 of additional information that we wouldn't have had 9 known about. 10 So thank you all very much and is there anyone 11 else that would like to testify? 12 (No comments) 13 COMMISSIONER SEAMOUNT: Any further statements 14 by the applicants? 15 MR. YANCEY: No. 16 COMMISSIONER CHMIELOWSKI: Commissioner 17 Seamount, did you still want to request that map and 18 keep the record open? 19 COMMISSIONER SEAMOUNT: Yes, I'd still like to 20 request..... 21 COMMISSIONER CHMIELOWSKI: Okay. 22 COMMISSIONER SEAMOUNT: .....the map and you 23 still have the opportunity to claim confidentiality if 24 you have a reason for confidentiality and a lot of 25 times that is something that's corner shooting. But it Computer Matrix- LLC Phone 907-243-0668 135 Christensen Dr- Ste 2.. Aach AK 99501 Par. 907-243-1473 Email sehilNritgci me AOGCC 3'122020 ITMO'. APPLICATION AILCORP AK TO AMEND CONSERVATION ORDER 68 Docket N. CO -20-001 Page 46 1 sounds like you don't have that problem here, it's all 2 within the unit. 3 MR. DENOLO: We can definitely provide that map 4 and we'll -- one question is on the timing of the 5 ruling on the proposed amendments. If there is -- we 6 expect to have an answer in 30 days, 20 days, what? 7 COMMISSIONER SEAMOUNT: It would be 30 days 8 after the submission of the map. 9 COMMISSIONER CHMIELOWSKI: Or the record closes 10 which is currently March 26th if you wanted to bump 11 that up, whatever's convenient for you for the closing 12 of the record. 13 COMMISSIONER SEAMOUNT: If you sped up the map 14 then it would be 30 days after we got the map. 15 MR. DENOLO: Okay. Excellent. So we will 16 speed up that map. There's development..... 17 COMMISSIONER CHMIELOWSKI: Well, it's the 18 record close date. So we will leave the record open. 19 So if you want to pick a date that's sooner than two 20 weeks we can do that. 21 MR. DENOLO: Okay. So we'll -- we could set it 22 as Tuesday potentially. 23 COMMISSIONER CHMIELOWSKI: Sure. So the close 24 of business on Tuesday which is the 17th. Great. And 25 then we have -- we'll plan to have it out within 30 Computer Matrix LLC Phone. 907-243-0668 135 Christensen Dr., Ste. 2.Arch, AK 99501 F. 907-243-1473 Eumt while(d r. AOOCC 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 3/122020 ITMO: APPLICATIO, ALCORP AK TO AMEND CONSERVATION ORDER 68 Docket N. CO -20-001 Page 47 days from that time MR. DENOLO: Excellent. Thank you. COMMISSIONER CHMIELOWSKI: Thank you. COMMISSIONER SEAMOUNT: Okay. Thank you. And hearing no other people requesting to testify this hearing is adjourned at 11:14. (Off record - 11:14 a.m.) (END OF PROCEEDINGS) Compmm Mamix. LLC Phoni,'. 907 243A668 135 Chnsmnsnt Dr., M, 2. Anch. AK 99501 F. 907-243-148 Email sahile iiLyci.aa AOGCC 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 3/122020 ITMO: APPLICATIQ ALCORP AK TO AMEND CONSERVATION ORJYER S Docktt M20 -M No. CQ20-001 � TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 48 are a true, accurate, and complete transcript of proceedings IN RE: Docket No.: CO 20-001, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. C..Nt. Matrix, LLC Ph.. 9094A3-0 8 135 Ch ton. IN., Ste. 2.. Ao& AK 99501 Fac: 907-243-1493 Ema& sah Cwgcine RECEIVED MAR 13 2020 A®GCC XG,Torsas �000 0 0 0 rn 09�� 0 o 0 .68p0 / � o P / e1tl iM] GF MYA1 fa' / a,w'' 1 0 yOp 3 e � X00 6 o xclbn O a.in. I e v� O o OOi 1 O ' x Fw � n0 •nn .d.. sj0 • n, 1. .uu��om UNFM1_ �y15o 0W 0 T,nn.z -6900 m� -- - 000 Hilcorp Alaska, LLC ` CIO OFFSHORE 2018 I orenn aa�ye c� xG M FOREViI�ATt f N. a:IW �•� Carlisle, Samantha J (CED) From: Tommy Nenahlo <tnenahlo@hilcorp.com> Sent: Friday, March 13, 2020 10:04 AM To: Carlisle, Samantha J (CED) Cc: Daniel Yancey, Michael Schoetz Subject: NCIU Pool Rules Amendments Hearing - LKG Map Attachments: DEEPEST_GAS_AOGCC.pdf Samantha — In yesterday's North Cook Inlet Unit (NCIU) Pool Rules Amendments Hearing the Commissioners requested a map showing the Lowest Known Gas (LKG). Attached is a map that Hilcorp has prepared for the Commissioners. We do not request confidentiality. Please let me know if this map needs to be provided in a hard copy format and if you need anything further! Thanks, Tommy Nenahlo I Reservoir Engineer Cook Inlet Asset Team Hilcorp Alaska, LLC Office: +1 (907) 777-8424 Mobile: +1 (720) 273-2685 The information contained in this e-mail message is confidential information intended only for the use of the recipient(s) named above. In addition, this communication may be legally privileged. If the reader of this e-mail is not an intended recipient, you have received this e-mail in error and any review, dissemination, distribution or copying is strictly prohibited. If you have received this e-mail in error, please notify the sender immediately by return e-mail and permanently delete the copy you received. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. North Cook Inlet Unit Pool Rules Amendments Hearing - March 2020 - RECEIVE® LIAR 12 2020 ACGCC ➢ Current Rule 1: Pool Designation o The pool affected by this order is called the Tertiary Systems Gas Pool. Its vertical limits are defined as the interval which will correlate with the interval 3,500 feet to 6,200 feet in the Pan American Petroleum Corporation North Cook Inlet State 17589 well No. 1. ➢ Proposed Rule 1: Pool Designation o The pool affected by this order is called the Tertiary Systems Gas Pool. Its vertical limits are defined as the interval which will correlate with the interval 3,943 feet to 8,608 feet measured depth in the North Cook Inlet A-15 well. ➢ Current Rule 2: Well Spacing o Gas wells may be drilled on a "Cluster" spacing pattern in accordance with the pattern shown in Exhibit "B" of the original application, which is made part of this order. ➢ Proposed Rule 2: Well Spacing o There shall be no gas well spacing restrictions within the Tertiary Systems Gas Pool, except that: o A.) No gas well shall be completed less than 1,500 feet from an exterior property line of the North Cook Inlet Unit where the owners and landowners are not the same on both sides of the line. ➢ Proposed New Rule: Administrative Approval o Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the Commission 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 aquifers. / North Cook Inlet Unit . L.M11 .1,La„IT •p FNERT • ,.... \r IfELUA RIVERVNI • Cook Inlef ��• - ANCHORAGE GI @(/OITJ � \URIIIf UUA • •gpl•P'a r T, a I\I.Fi 1'\'ll _ _ y •. fgFFt R R.\\ITl NORTH PUI\T • TRAOIKG flA1' COT 1 MT Gb °^ North Cook Tanonc -•1 c'N 601\rt • y�..r 111. Inet JPA RIVER m: \ERCREKCn]SERT LTK..EEAAI Co,NorM Cook UNIT Jan. L-a,na „ ................... .. -.....--.-------.1 E E O 4 Lagena NeuIN# • Wlbirs v • FxYes GEEK i� OAeM Gae Fear ,\IT ®c Faaa < uVr y'h \IKOIAE\YK ISNKMp Opwa1e401 mp Wi Un'. lWR OMr0.1dM WS Vnrb 1 uµaai CO%rgM^J 1014ESu ➢ Initial Field Development Plan Assumptions: o Laterally Continuous Sands o Depletion Drive Reservoir ➢ Remaining Potential Derived From: o Completions To -Date designed to deliver high rate to meet LNG contracts o Variable water drive strength o By-passed pay o Penetrations missed top of structure ➢ Initial Field Development Plan Assumptions: Laterally Continuous Sands Depletion Drive Reservoir ➢ Remaining Potential Derived From: o Completions To -Date designed to deliver high rate to meet LNG contracts o Variable water drive strength o By-passed pay o Penetrations missed top of structure 0 NCIU Gas Sands - Deposition Environment - =g' Sand -Bed Meandering Yentna R., Cook Inlet, AK ➢ Top Proposed Tertiary Gas System vs. Current Definition 3500' MD Current Tc BA,@ff_3fERLINI§- TOP I\lr-!U STPAY. TOP NCIU STRAY TOPSTE_RLING- NCI A-15 512009 0 841, CIST 17589-1 8, 700,,5275213 8/1962 512009 o 3943' MD Proposed Top 6200' MD Current Base (Base Beluga M) North Cook Inlet Gas Field MW (pp{) uu to ao ar ¢.o v o iza I 11W o,ow .ss5w aoo • zss7.zow mu •zoos om NCIU Gas sands Pressure Estimates - PPg EMW - C.I. spar. c.Ia e 9.00 c.In c.is i.i.i MI .ao T I.B C.I.10 3 W 5.00 s C.I.11 pp a ° 5.00 upp:r ax.w v _ 4.00 x 3.00 M14EIeBeluy N 2.00 i 1.00 0.00 ti , O (i L L zp NCIU Gas Sand Eow. as ,. r Sterling X Sand Production History NCRI A -W3 -66.6674.6666 3 y_ 3 l tOt 8 Itl L B 6 p 5 toy e 6 5 6 ° f 3 } I IL 8 Oemnper _.. - 5 1 ® muvY E plt pp s 7 North Cook Inlet Unit Development Plan: 0 Gas Well Sidetracks: o A-02: Sterling & Beluga Sands o A-06: Sterling & Beluga Sands o A-08: Sterling & Beluga Sands o A-11: Sterling & Beluga Sands Grass Roots Well Targets o B-04 (Zeus): Deep Oil Appraisal Well Drilling Sidetracks Install Liner Top Packer & GL Completion Set Whipstock Manage KO Inclination & DLS to Enable Wireline Re -Entry — Run GR/Res on CTD, Run PNL/Sonic Through Liner ■ Setup for Wireline Plug & Perf Going Back Up Hole Run 3-3/16" Liner & Cement Back STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: CO -20-001 March 12, 2020 at 10:00 am NAME AFFILIATION Testify (yes or nol �IbMAS I�ENAULo ldfl [of{P AGAS7(A As STATE OF ALASKA ADVERTISINGNOTICE ORDER TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVITOF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER 1 AO-08-20-019 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 2/5/2020 907 279-1433 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: I✓ LEGAL DISPLAY r CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE CO-20-001 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO. CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae I of I Total of All Pages $ AEF Type I Number Amount Date Comments I PVN IVCO21795 2 Ao AO-08-20-019 3 4 FIN AMOUNT SY Act. Template PCM LGR Object FY DIST LIQ I 20 AOGCC 3046 20 2 3 4 arch ng o Ti Purchasing Authority's Signature Telephone Number 1. A .# andreceiving agency name must appear on all invoices and documents relating to this purchase. e state is registered for tax free transactions under Chapter 32, IRS code. Registration number 92-I3-0006 K. Items are for the exclusive use of the state and Iff for resale. DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fisca4 Receiving Form: 02-901 Revised: 2/5/2020 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -20-001 The application of Hilcorp Alaska, LLC (Hilcorp) for amendments to Conservation Order No. 68 (CO 68), which governs the Tertiary System Gas Pool, North Cook Inlet Field Hilcorp, by letter dated January 31, 2020, requests the Alaska Oil and Gas Conservation Commission (AOGCC) amend CO 68 by repealing and replacing Rules I and 2 in their entirely and adding a new rule to allow for administrative approval of amendments to that Order. The AOGCC has tentatively scheduled a public hearing on this application for March 12, 2020, at 10:00 a.m. at 333 West 7a' 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 February 24, 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) 793-1221 after February 26, 2020. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7a' Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on March 7, 2020, except that, if a hearing is held, comments must be received no later than the conclusion of the March 12, 2020 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 March 10, 2020. rerice r, 'ssioner 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 #: W0013421 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Misa being fust 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 Cost: $229.12 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -20-001 The application of Hilcorp Alaska, LLC (Hilcorp) for amendments to Conservation Order No. 68 (CO 68), which governs the Tertiary System Gas Pool, North Cook Inlet Field Hilcorp, by letter dated January 31, 2020, requests the Alaska Oil and Gas Conservation Commission (AOGCC) amend CO 68 by repealing and replacing Rules 1 and 2 in their entirely and adding a new rule to allow for administrative approval of amendments to that Order. 02/06/2020 The AOGCC has tentatively scheduled a public hearing on this application for March 12, 2020, at 10:00 a.m. at 333 West 7th 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 February 24, 2020. 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 IA IV \_ R Subscribed and sworn to before me this 6th day of February 2020. Not#y Public in and for - U /' State of Alaska. V\0_1 \: Tftird Division dot Anchorage, Alaska ✓ada MY COMMISSION EJ IRES J Z� 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) 793-1221 after February 26, 2020. In addition, 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 March 7, 2020, except that, if a hearing is held, comments must be received no later than the conclusion of the March 12, 2020 hearing If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombia, at (907) 793-1221, no later than March 10, 2020. //signature on file// Jeremy M. Price Chair, Commissioner Pub: Feb. 6, 2020 aaa l n 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 Denver, CO 80201-3557 Ninilchik, AK 99639 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 JAN 3 1 2020 AO VC January 31, 2020 Hilcorp Alaska, LLC Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 76' Avenue, Suite 100 Anchorage, Alaska 99501 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Email: mschoetz@hilcorp.com Phone: (907) 777-8414 Fax: (907)777-8301 RE: Proposed Amendment to Conservation Order 68 (North Cook Inlet Unit) Dear Commissioner Price, Hilcorp Alaska, LLC, as Operator of the North Cook Inlet Unit, respectfully requests the Alaska Oil and Gas Conservation Commission ("AOGCC") to amend Conservation Order No. 68 (December 7, 1968) by repealing Rules 1 and 2 in their entirety and replacing them with the following language: Rule 1. Pool Designation The pool affected by this order is called the Tertiary System Gas Pool. Its vertical limits are defined as the interval which will correlate with the interval 3,943' feet to 8,608 feet measured depth in the North Cook Inlet A-15 well. Rule 2. Well Spacing There shall be no gas well spacing restrictions within the Tertiary System Gas Pool, except that: a) No gas well shall be completed less than 1,500 feet from an exterior property line of the North Cook Inlet Unit where the owners and landowners are not the same on both sides of the line. Additionally, Hilcorp requests the addition of a new pool rule to allow for administrative approval to be consistent with the most current language. Hilcorp suggests the below language: Administrative Approval Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the Commission may administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste Hilcorp Alaska, LLC Proposed Amendment to CO 68 January 31, 2020 Page 2 of 2 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. Hilcorp would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at 777-8414 or via email at mschoetzna,hilcorp.com. Sincerely, Michael W. Schoetz, CPL Hilcorp Alaska, LLC Senior Landman cc: State of Alaska, Department of Natural Resources, Division of Oil and Gas