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Home My WebLink AboutCO 323Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. ,~~_~_ Conservation Order Category Identifier Organizing RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: DIGITAL DATA [] Diskettes, No. [] Other, No/Type OVERSIZED (Scannable with large plo. j.tt, c'/sca n ner) ,~~Maps: [] Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) [] Logs of various kinds [] Other BY: ~ MARIA Scanning Preparation Production Scanning Stage I PAGE COUNT FROM SCANNED DOCUMENT: '~ PAGE COUNT MATCHES NUMBER IN SCANNING PR~/AR(ATION: ~ YES ~ NO BY: Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: __ YES NO (SCANNING IS COMPLETE AT THIS POINT UNLESS SPECIAL ATTENTION IS REQUIRED ON AN INDIVIDUAL PAGE BASIS DUE TO QUALrTY, GRAYSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd • INDEX CONSERVATION ORDER NO. 323 West McArthur River No. 2A 1.) September 8, 1993 Stewart Petroleum Company Requests Spacing Exception 2.) October 5, 1993 Notice of Public Hearing, Affidavit of Publication 3.) October 19, 1993 Letter from Z-Energy Inc. to protest Spacing Request 4.) October 26, 1993 Response from AOGCC to Z-Energy Inc. 5.) October 27, 1993 Letter from AOGCC to Stewart Petroleum Company notifying about protest 6.) November 4, 1993 Transcript Conservation Order No. 323 Re~ STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 Porcupine Drive Anchorage Alaska 99501-3192 THE APPLICATION OF STEWART ) PETROLEUM COMPANY for an order ) granting an exception to the spacing ) requirements of Title 20 AAC 25.055 ) for the Stewart West McArthur River Unit ) No. 2A exploratory oil well. ) Conservation Order No. 323 Stewart Petroleum Company West McArthur River Unit No. 2A November 4, 1993 IT APPEARING THAT: . o Stewart Petroleum Company submitted an application dated September 8, 1993 requesting exception to 20 AAC 25.055(a)(3) to allow drilling the Stewart West McArthur River Unit No. 2A exploratory oil well to a bottom-hole location that is closer than 500 feet to a drilling unit boundary. 'Notice of an opportunity of public hearing was published in the Anchorage Daily News on October 5, 1993 pursuant to 20 AAC 25.540. Z-.Energy Inc. filed a written protest dated October 19, 1993 and received by the Conumssion on October 20, 1993 which raised issues relative to the Conunission's detemfination of Stewart Petroleum Company's request. A public hearing was held at the Conunission office on November 4, 1993 at which the concern of Z-Energy was addressed and the protest withdrawn. FINDINGS: l., Stewart Petroleum's West McArthur River Unit No. 2A well is a deviated hole drilled from a surface location 2804' from the south line (FSL) and 11418' from the west line of Section 16, TSN, R14W, Seward Meridian (SM) to a bottom-hole location 2067' FSL and 2616' from the east line of Section 10, T8N, R14W, SM. . The West McArthur River Unit No. 2A well is the only well drilled to the SW 1/4 of Section 10 mad no other well is opened to the oil pool within 1000 feet of the No. 2A well. . Stewart Petroleum Company is the owner and operator of all govermnental quarter sections directly and diagonally offsetting the bottom-hole location of the well. . exception to 20 AAC 25.055(a)(3) is necessary to bring this well into compliance with statewide rules governing well spacing and drilling units. Conservation Order No. 32! { November 4, 1993 Page 2 CONCLUSION: Granting a spacing exception for the Stewart West McArthur River Unit No. 2A exploratory oil well will not result in waste nor jeopardize correlative rights. Granting this spacing exception does not imply that the Commission has waived its right to impose appropriate penalties for drilling the West McArthur River No. 2A well before applying for or receiving the required spacing exception. NOW, THEREFORE, IT IS ORDERED: Stewart Petroleum Company's application for exception to 20 AAC 25.055 for the West McArthur River Unit No. 2A well is approved. DONE at 3mchorage, Alaska and dated November 4, 1993. David W. JClinston, Chairman Alaska Oil ~ation Conunission Russell A. Douglass, Co~mn~ Alaska Oil and Gas Conservation Co~mnission T/uckem~an Babcock, Commissioner Alaska Oil and Gas Conservation Co~mnission AS 31.05.080 provides that within 20 days after receipt of written notice of the entry, of an order, a person affected by it may file witt~ the Conmfission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Conunission shall grm~t or refuse the application in whole or in part within 10 days. The Conunission cm~ relhse m~ application by not acting on it within the 10-day period. An affected person has 30 days from the date 'fl~e Conmfission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Conmfission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 O GINAL ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING NOVEMBER 4, 1993, 9:00 O'CLOCK A.M. TRANSCRIPT OF PROCEEDINGS HELD AT THE ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA RECEIVED NOV 16 Alaska Oil & Gas CODS. Commission Anchorage 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROCEEDINGS CHAIRMAN JOHNSTON: Good morning. I'd like to call this hearing to order. I note the time is approximately five minutes after nine o'clock. The date is November 4, 1993. We are located in the offices of the Commission, located at 3001 Porcupine Drive, Anchorage, Alaska. I'd like to begin by introducing the head table. My name is David Johnston, Chairman of the Commission; to my left is Commissioner Tuckerman Babcock; to my right is Commissioner Russ Douglass; to our far right is Laurel Kehler, of R & R Court Reporters, who will be making a transcript of these proceedings. The purpose of this hearing is to consider a request for spacing exception for the West McArthur River Number 2-A well. At this time I'd like to request that Commissioner Douglass read the public notice that was provided. MR. DOUGLASS: Notice of Public Hearing, State of Alaska, Alaska Oil and Gas Conservation Commission, regarding the application of Stewart Petroleum Company for exception to 20 AAC 25.055 to allow drilling the West McArthur River Unit Number 2-A exploration oil well. Stewart Petroleum Company, by letter dated September 8, 1993, and received by the AOGCC on September 30, 1993, has requested an exception to the provisions of 20 AAC 25.055(a) (3) for the drilling of an exploratory oil well in the 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 West McArthur River Unit, in the Cook Inlet. The exception would allow Stewart Petroleum Company to directionally drill the West McArthur River Unit Number 2-A exploratory oil well to a bottom-hole location that is closer than 500 feet from a quarter section line. The proposed surface location is 2,804 feet from the south line, and 1,418 feet from the west line of Section 16, Township 8 North, Range 14 West, Seward Meridian, and the proposed bottom-hole location is 2,099 feet from the south line and 2,740 feet from the east line of Section 10, Township 8 North, Range 14 West, Seward Meridian. A person who may be harmed if the requested order is issued may file a written protest prior to 4:00 p.m., October 20, 1993, with the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska, and request a hearing on the matter. If the protest is timely filed and raises a substantial and material issue crucial to the Commission's determination, a hearing on the matter will be held at the above address at 9:00 a.m. on November 4, 1993, in conformance with 20 AAC 25.540. If a hearing is to be held, interested parties may confirm this by calling the Commission's office after October 20, 1993. If no protest is filed, the Commission will consider the issuance of the order without a hearing. Signed Russell Douglass, Commissioner, Alaska Oil and 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277'8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Gas Conservation Commission, published October 5, 1993. CHAIRMAN JOHNSTON: Thank you. And the Commission did receive a protest on the spacing exception request from Z-Energy Incorporated. So we will be holding a hearing in this matter. This hearing will be held consistent with our regulations governing hearing procedures; those are 20 AAC 25.540. Those regulations provide that the Commission will consider sworn testimony or unsworn statements. Greater weight, of course, will be given to sworn testimony. What we'd ask is as you appear before the commission that you state your name and who you represent. If you wish to be considered an expert witness in this matter, we'd ask that you state your qualifications. The Commission will then render a decision as to whether we would consider you an expert witness in the deliberations before us. At the conclusion of the sworn testimony unsworn statements will be solicited from the audience. Questions from time to time will be asked of the participants by the Commission. Members of the audience will not be allowed to ask questions directly. If you do have a question, we would ask that you write them down, forward them to the front. If the Commission believes that the question is germane and is helpful to our deliberations in this matter we will then consider asking that question. At the end of these proceedings a written transcript 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will be made and available to the public. We would ask that those people wishing to obtain a copy of that contact R & R Court Reporters directly and attain that copy. In this particular case we have a bit of a unique circumstance. We are considering a spacing exception for a well that has already been drilled. What we are attempting to do at this juncture is to bring this well into compliance, and as part of that process a spacing exception is required, and so we will consider the facts surrounding the necessity of that spacing exception to determine if any correlative rights are at issue in this particular case. At this time I would like to invite the applicant, Stewart Petroleum, to step forward to address the Commission, and I believe Bill Stewart, you will provide the introduction to your group? MR. STEWART: Yes, thank you. CHAIRMAN JOHNSTON: Before we begin, Mr. Stewart, do you or any one of your contingent wish to offer sworn testimony? MR. STEWART: I would say some of the technical data, perhaps, by staff. CHAIRMAN JOHNSTON: Perhaps we could swear those individuals in at this time. MR. STEWART: Very well. CHAIRMAN JOHNSTON: If those individuals would 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 please stand ..... MR. DOUGLASS: And introduce themselves. CHAIRMAN JOHNSTON: ..... and state your name and your affiliation. MR. MOHRBACHER: My name is Jesse Mohrbacher. I'm employed by Fairweather Exploration and Production Services, Inc., and we are currently under contract to Stewart Petroleum Company for petroleum engineering services. CHAIRMAN JOHNSTON: Okay. And any ~other individual? MR. GIVENS: Mr. John Givens, with the firm of Bankston and McCollum, legal counsel and also a petroleum engineer. CHAIRMAN JOHNSTON: Is Mr. Bankston ..... MR. BANKSTON: Yes, I'm general counsel, and I'm not going to testify. CHAIRMAN JOHNSTON: Okay. MR. STEWART: Right. CHAIRMAN JOHNSTON: So just one person providing sworn testimony at this time? MR. GIVENS: That's correct. I just want to make a brief statement after Mr. Stewart and Mr. Mohrbacher testifies. CHAIRMAN JOHNSTON: That will be fine. Mr. Mohrbacher, if you would please stand and be sworn in. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DOUGLASS: Please raise your right hand. (Oath administered) MR. MOHRBACHER: Yes. MR. DOUGLASS: Thank you. CHAIRMAN JOHNSTON: Thank you. Please ..... MR. STEWART: Thank you. CHAIRMAN JOHNSTON: Begin again, Mr. Stewart. MR. STEWART: Thank you. Mr. Chairman and members of the Commission, my name is Bill Stewart, President of the Stewart Petroleum Company. We're a small, independent oil and gas company based in Alaska. We're active in Alaska and seven other states. Our current area of interest within Alaska is Cook Inlet basin. We've been fortunate, and I believe the State of Alaska is fortunate also in that we discovered an oil field of significant size in the west side of Cook Inlet, and we're in the early stages of development of that field, which is named West McArthur River Oil Field at this time. According to available information we're the first independent company to establish commercial oil production in Alaska in modern times. Investment in West McArthur River Field to date totals approximately $30 million. Almost nothing has been realized so far in the way of returns. Future investment is estimated at another 40 to $50 million. About 60 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on-site and support jobs are involved. Total revenues to the State of Alaska in taxes and royalties are estimated at 180 to $250 million over field life, depending on oil prices. It's my understanding that the purpose and scope of this hearing is limited to consideration of the application of our company for a spacing exception with respect to our second well, West McArthur River Unit Number 2 -- I guess it's called 2-A at this point. Since I'm not well versed in spacing exceptions I brought other representatives of the company who are, and introductions have already been made; Mr. Bankston, Mr. Givens, and Mr. Mohrbacher. These gentlemen will present testimony today which I believe will fully support our application for a spacing exception, and they're available to answer questions of the Commission in that regard. I have another meeting of importance to the project. Unless there are questions of me at this point, I respectfully request permission to leave these proceedings and allow these gentlemen to present the balance of our testimony. Thank you. CHAIRMAN JOHNSTON: Any questions? COMMISSIONER BABCOCK: Mr. Stewart, I just have two questions. Stewart Petroleum is the owner of all adjacent properties to the bottom-hole location at this well? MR. STEWART: That's correct. COMMISSIONER BABCOCK: Is the ownership 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 percentage of each of those pieces identical? MR. STEWART: Yes, there are two leases -- oh, if you mean only the surrounding spacing units, those are all identical. Those -- the ownership is 50% Stewart Petroleum Company, 50% Sang Yung Oil Refining of South Korea. COMMISSIONER BABCOCK: And what steps have you taken to inform other owners of Stewart Petroleum of the location of this well? MR. STEWART: They're informed by weekly reports. They know of the change in direction that was accomplished in this well. COMMISSIONER BABCOCK: Thank you. MR. STEWART: Thank you very much. CHAIRMAN JOHNSTON: I have just a follow-up question, Mr. Stewart. Is the proposed location of the 2-A well, is this -- is the location in surrounding Anchorage all on one lease ..... MR. STEWART: Yes. CHAIRMAN JOHNSTON: ..... or are there multiple leases? MR. STEWART: One lease. CHAIRMAN JOHNSTON: So ..... MR. STEWART: ADL 359111. CHAIRMAN JOHNSTON: Very good. And then the -- we've described this as a unit area. Was that unit area 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 established by the Department of Natural Resources? MR. STEWART: Yes, it was. CHAIRMAN JOHNSTON: And is it an area for exploration or an area for development? MR. STEWART: It is an area for exploration initially. We are on our third plan of development at this point. CHAIRMAN JOHNSTON: Very good. Thank you very much. MR. STEWART: Thank you. CHAIRMAN JOHNSTON: Any further questions? MR. GIVENS: Before presenting testimony to the Commission from Mr. Mohrbacher, on behalf of Stewart Petroleum, John Givens. I'd like to make a brief statement as basically outlining what we intend to show today. Pardon me if my voice fails at times, but I've had a cold of late. The sole issue before the Commission today is the granting of a spacing exception, and that spacing exception is for the West McArthur River Unit Well Number 2-A. Consistent with this Commission's request in writing of October 27, 1993, we're prepared to present testimony justifying that exception today. Stewart Petroleum's objectives in reaching its present bottom-hole location are consistent with the objectives of this Commission. That being to minimize the waste of hydrocarbon 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST ,THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 resources and maximize the production of hydrocarbon from these leases. Based upon updated geological information obtained during the drilling of this well, it became obvious that there would need to be a change in bottom-hole location. Stewart Petroleum had applied in September for a change in location and for a spacing exception, and that application is what we are here on today. The spacing exception we're seeking for Well 2-A is to allow the well to be located within 500 feet of a quarter section line, an exception we're seeking to 20 AAC 25.055(a) (3). I want to emphasize, and I think we'll demonstrate very adequately today and quite strongly, in fact, that we're talking about being within 500 feet of a quarter section line which is wholly inside Stewart Petroleum's property and Stewart Petroleum's lease. It is not within 500 feet of an adjoining lease, it is not within 500 feet of any boundary to an adjoining lease or a lease owned by Stewart Petroleum or any other property; it is within 500 feet of a quarter section line internally inside Stewart's lease. There are six surrounding leases once we get outside the lease that Mr. Stewart just referred to, there are six other leases surrounding this tract. The closest one, and we'll have a large map which Mr. Mohrbacher will show you in quite detail, but the closest lease belongs to Unocal. Unocal has not protested this application for spacing exception, and 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12 Unocal's lease is over half a mile away from the bottom-hole location as well. CHAIRMAN JOHNSTON: Do you know -- if I may interrupt, what the ADL number is on that lease and in what direction it is? Is it to the east of the location? MR. GIVENS: It is due east. I don't know the ADL number. I believe it may be on the map. It would be 17602, I believe. CHAIRMAN JOHNSTON: And would that be the lease in Section 11 of the adjacent -- just to the ..... MR. GIVENS: I'm afraid Mr. Mohrbacher has the map. I think he can clarify that. The second closest lease you'll find would be due south. It belongs to Stewart Petroleum Company. The third closest lease, I think, you'll find is due north, it also belongs to Stewart Petroleum Company. Again, Stewart Petroleum Company obviously has not protested this spacing exception and they have the second and third closest leases. The fourth closest lease belongs to CIRI, which actually, I believe, would not be technically a lease, but CIRI is the fourth closest adjacent landowner, approximately 1.6 miles due west. CIRI has not protested this application for an exception. The fifth closest lease you would find would be to the southwest, belonging to Phillips, approximately another 1.6 miles. Phillips Petroleum Company has not protested this application 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13 for the exception. The sixth of the surrounding leases is the furthest away surrounding the lease. It belongs to Mr. Zamerillo's group, and it is approximately 2.1 miles away from the bottom-hole location of the well to the northwest, I believe you'll find. There is no harm, no effect, no implication on any of the other leases due to the great distance we're dealing with. For that reason we think that a spacing exception to 20 AAC 25.055(a) (3) is justified, and we'd also point out that (a) (1) of that very section of the Alaska Administrative Code provides that you can be within 500 feet or 500 feet or more from a boundary line. We're not 500 feet from a boundary line. The closest we are to a boundary line is over half a mile, which is over 2,600 feet, over five times what the statute allows for closeness to boundaries to other properties. That's all the comments I have for opening at this time. I'll turn the matter over to Mr. Mohrbacher to give you sworn testimony and to kind of walk through the exact well locations and any further questions that you might have. CHAIRMAN JOHNSTON: Would you clarify your -- one of your closing statements there where the provision allows an exception within a boundary line? MR. GIVENS: I believe (a) -- I wasn't -- I may have misstated myself. I wasn't trying to say that the Commission allowed an exception within a boundary line; I was 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 simply stating that I believe you'll find in 25.055(a) (1) that you can be within 500 feet of a boundary to another lease, or you can be 500 feet or more to a boundary to another lease. We're not talking about being 500 feet to a boundary; we're talking about being five times what the regulation allows. CHAIRMAN JOHNSTON: Right. I understand what you're saying there. Just for identification of everybody here, when we speak of the drilling unit boundary that is the boundary of the drilling unit that is either established in state regulation as a governmental quarter section or by the Commission in a Conservation Order. We could establish drilling unit boundaries. For example, we could, based upon evidence, present and establish an 80-acre or 40-acre drilling unit boundary, and I think that's the boundary that we are talking about, not necessarily talking about the boundaries between leases, although I do agree it does make sense when you consider that what we're really interested in is protecting the correlative rights of individuals, and those are as represented by lease boundaries. Unfortunately the way the regulations are written, we have to be cognizant of the governmental quarter sections. MR. GIVENS: Certainly. CHAIRMAN JOHNSTON: Thank you. MR. MOHRBACHER: My name is Jesse Mohrbacher, and I'm affiliated with Fairweather Exploration and Production 810 N STREET 277'0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 15 Services, Incorporated, under contract to Stewart Petroleum, to provide petroleum engineering services, and I'd like to lay out a map of the well locations and surrounding property areas to facilitate the discussion. How would the Commission like the map to be presented? CHAIRMAN JOHNSTON: Why don't we roll it out here on the front table. What I'd like to do is just hold it up so the members of the audience can refer to it. This is the map that we're being shown. Hold that end. Why don't we just show it to the audience so they can see what we're doing. Then we'll put it down and you can talk from it. MR. MOHRBACHER: Okay. CHAIRMAN JOHNSTON: But basically this shows -- what does this show? If you can just briefly sketch it out for US. MR. MOHRBACHER: This map shows the West McArthur River Unit which consists of two leases held by Stewart Petroleum Company, outlined in yellow. Those are ADL 359112 and ADL 359111. The map also depicts each of the surrounding leases and lease numbers of the West McArthur River Unit; those previously mentioned by Mr. Givens. CHAIRMAN JOHNSTON: So what we have is Unocal up over here; down here -- SPC stands for? MR. MOHRBACHER: Stewart Petroleum Company. CHAIRMAN JOHNSTON: Right. The Phillips lease; 810 N STREET 277'0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16 and this is the CIRI land here? MR. MOHRBACHER: That belongs to CIRI. CHAIRMAN JOHNSTON: And then the Zamerillo acreage is right here? MR. MOHRBACHER: Correct. CHAIRMAN JOHNSTON: Very good. MR. MOHRBACHER: In addition to that it shows the locations of the Stewart Petroleum Company West McArthur Unit Number 1 and 2-A wells. Chairman Johnston and members of the Commission, I would like to discuss a little bit about the map that we have in front of us. We have the West McArthur Unit Number 1 well, which is a -- was the discovery well fo'r the West McArthur River Unit. Adjacent to that well, located approximately at a bottom-hole location of approximately 1,100 feet. To the west we have the West McArthur River Unit Number 2-A well. I'd like to take a moment to address each of the items in Z-Energy Incorporated's protest to the spacing exception, and in Mr. Craig's letter. Item number 1 requested that final or true bottom-hole location for the West McArthur River Unit Number 2-A well and that bottom-hole location is displayed on the map in front of us, and that is 2,067 feet from the south line, 2,616 feet from the east line of Section 10, Township 8 North, Range 14 West, Seward Meridian. Item number 2 in Z-Energy's letter discussed how would 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17 the well be incorporated into the field's development scheme. The well will be incorporated into the field's development scheme through production of existing and previously proven reserves and new additional proven reserves in the well. The third item discusses closeness of the well and how it will affect correlative rights. Mr. Givens has already gone over the distances that are involved in each of these leases surrounding the West McArthur River Unit and surrounding the area of the West McArthur Unit Number 2-A well, and he has demonstrated fairly clearly that there is a significant distance to any of the other leases for the West McArthur River Unit Number 2-A well. Z-Energy has filed a protest with regards to the closeness of these two wells and possible concern on the field's development. Z-Energy's lease being at least 2.1 miles to the northwest and with no evidence of any geological structure affiliated with the West McArthur River oil field on Z-Energy's lease, it is difficult to believe that Z-Energy's subsurface rights could be harmed by a well drilled 2.1 miles away. At this time, that's all of the testimony that I have to give. If there are any questions from the Commission, I would be happy to answer. MR. DOUGLASS: How close is the Number 2-A to the Number 1, as far as the open intervals, the producible 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 intervals; how close are they together? MR. MOHRBACHER: I have some additional documentation to show that. The second exhibit before the Commission is an exhibit that shows -- is a blowup of the bottom-hole locations for the wells. That exhibit shows open intervals or perforations in bench two of the Hemlock Formation. The West McArthur River Unit Number 1 well has open perforations in bench two of the Hemlock Formation. The Number 2-A well also has open perforations in the -- in bench 2 of the Hemlock Formation. The diagram in front of the Commission shows that the distance between the closest distance between perforations in bench two of the Hemlock Formation is 1,300 feet. MR. DOUGLASS: And these are based on the gyroscopic survey, single shot, what? MR. MOHRBACHER: These are based on MWD surveys and also multi-shot surveys. CHAIRMAN JOHNSTON: Is there any portion of the Number 2-A that is within 1,000 feet of the Number 1 except at the surface? In other words, let's limit our discussion to the bottom-hole location. MR. MOHRBACHER: The bottom-hole locations of the two wells are greater than 1,000 feet apart; approximately 1,100 feet. COMMISSIONER BABCOCK: Mr. Chairman, if there's 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 19 no objection, I'd like to suggest that the first map showing the leases and bottom-hole locations be entered into the record as Stewart Petroleum Company Exhibit Number 1-A and Exhibit B for the distance between the perforations, the two exhibits provided by Mr. Mohrbacher. CHAIRMAN JOHNSTON: Yes, I would like to mark these as exhibits, except I believe it would be appropriate to indicate that Exhibit A is the application for spacing exception, and that these would then be Exhibits B and C. COMMISSIONER BABCOCK: I'm making those corrections on the document and also on Exhibit C, identifying it as Stewart Petroleum Company. CHAIRMAN JOHNSTON: Very good. No objection? MR. DOUGLASS: No objection, unless someone else does. Mr. Chairman. CHAIRMAN JOHNSTON: Any questions? COMMISSIONER BABCOCK: No questions, CHAIRMAN JOHNSTON: We have no further questions of you at this time, although I believe we'd like to reserve the right to call you back to the stand after the testimony of the protesting group, Z-Energy. Thank you. MR. MOHRBACHER: Thank you. CHAIRMAN JOHNSTON: At this time I'd like to ask Mr. Erik Opstad, who apparently is representing Z-Energy, 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 to appear before the Commission. Mr. Opstad, do you wish to give sworn testimony today or unsworn statement? MR. OPSTAD: I don't think it's necessary to give sworn testimony; unsworn would be satisfactory. CHAIRMAN JOHNSTON: Very good. Did you want to be considered an expert in this matter or ..... MR. OPSTAD: Only if the Commission thinks it's appropriate. I don't recall or know whether it is or not. I've testified as an expert witness before the Commission on other matters previously, and if the Commission desires, I can also testify as an expert. CHAIRMAN JOHNSTON: I think we would just as soon have you make that decision as to whether you want to be considered an expert in this particular matter. ~ MR. OPSTAD: I don't think it's necessary to ..... CHAIRMAN JOHNSTON: Very good. MR. OPSTAD: ..... be sworn in as an expert. CHAIRMAN JOHNSTON: Then if you'd just, again for the record, indicate your affiliation with Z-Energy. MR. OPSTAD: Right. My name is Erik Opstad, I'm a licensed professional geologist in the state of Alaska, and a consultant for Z-Energy on matters related to oil and gas exploitation on their properties in the Cook Inlet basin and elsewhere. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 21 CHAIRMAN JOHNSTON: Thank you. MR. OPSTAD: Our primary reason for filing a protest in the matter of the spacing exemption requested by Stewart Petroleum principally revolved around the fact that the filing was made after the fact and since the well had already been down. Typically in the industry here in Alaska requests for spacing exemptions are made prior to the drilling of the well which allowed adjacent property owners, whether they be the closest or the furthest away, an opportunity to review the proposed bottom-hole locations, and oftentimes if the companies have problems with it or questions, those issues can be addressed informally among the parties and prior to the drilling of the well. In this case the well had already been completed and the application for spacing exemption submitted by Stewart Petroleum contained a proposed bottom-hole location which we felt was perhaps inappropriate given the fact that the well was already down and the actual location of the well certainly would have been available to them at that time. We were -- because of some of these apparent inconsistencies my client, Z-Energy, was somewhat concerned about the development activities in the area. They were also somewhat surprised, I think to see the relative proximity of the two wells, one to another, and as already testified here, that concern was, I 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 22 think, justified. We -- particularly since the Number 1 well had been on production, Z-Energy was concerned as to the status of the Number 2 well, whether that was going to be a quote, unquote, long-term production tests so that there would be then two wells on production in fair proximity to one another, essentially draining perhaps the same area, and Z-Energy was interested in seeing just a little clarification on the intent of Stewart Petroleum, not only with regard to the specific location of this well and perhaps others, but also perhaps their intent as far as the testing of the well. I think that the testimony that is offered by Stewart has largely -- largely answered our questions. I wonder perhaps though if I remember correctly, and perhaps you can clarify this for me, but if I remember correctly on exploration wells in the statute there is a provision that exploration wells that are, I believe, less than 1,500 feet, they have to be more than 1,500 feet apart at open intervals. Is that correct? CHAIRMAN JOHNSTON: I believe you're referring to a well that has -- is drilled to a known reservoir, and in that particular case you have certain offsets that you must adhere to. The 1,500 foot would represent for a gas well. In other words a well that has been drilled to a gas reservoir has to have an offset from a quarter -- excuse me, from a section 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 , R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 line of 1,500 feet and be separated by at least 3,000 feet from gas or wells in the same gas pool. With oil we have much smaller spacing offsets, 500 feet from a quarter section line, and 1,000 feet between well bores. MR. OPSTAD: Right. The issue that Z-Energy was, I think, raising was the -- was not only the spacing exception as far as the section line offset but also to determine and have clarified what the offset between the two open production zones would be in the two wells since they appeared -- at least on the basis of the preliminary data filed in the spacing exemption application, they appeared to be relatively close. And so the other principal reason for requesting some clarification from Stewart was just to insure that those offsets were being reasonably maintained or if not then the application for a spacing exemption was modified to reflect that spacing, particularly in light of the fact that both wells are likely to be on test production. CHAIRMAN JOHNSTON: Perhaps at this point it might be appropriate to establish for the record by asking Mr. Mohrbacher whether the Number 1 and the Number 2-A have encountered oil or have encountered gas. MR. MOHRBACHER: Both wells have encountered oil in the Hemlock Formation. CHAIRMAN JOHNSTON: Thank you. 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 COMMISSIONER BABCOCK: Mr. Opstad, have there been any harm to Z-Energy as a result of this spacing exception request or made any harm result? MR. OPSTAD: Basically the testimony I've heard today, I'm satisfied that there is no harm being done or that would be done from Stewart's request for a spacing exemption if granted by the Commission to Z-Energy's interests. CHAIRMAN JOHNSTON: So if I interpret that correctly then basically what you are saying is that Z-Energy would not object to the issuance of the spacing exception and essentially you are withdrawing your protest? MR. OPSTAD: Based on the information presented by Stewart Petroleum today, that is correct. CHAIRMAN JOHNSTON: Thank you. Any questions? COMMISSIONER DOUGLASS: No questions. COMMISSIONER BABCOCK: I have one question, Mr. Mohrbacher. Are you aware of any other wells that may need a spacing exception on Stewart Petroleum's lease? MR. OPSTAD: Not at this time. There are currently two wells on the lease and the only one requiring the spacing exception is the Number 2-A well. COMMISSIONER BABCOCK: Thank you. That's all I have, Mr. Chairman. CHAIRMAN JOHNSTON: Thank you, Mr. Opstad. I guess what I'd like to say in this particular case, it was the 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 Commission's determination in this matter that we would hold this public hearing primarily because this well had been drilled already. Normally spacing exceptions are obtained before the actual drilling of the well. In this case it's being done after the fact. So we need to bring this well into compliance. Generally we would have looked at this protest and probably ruled that there was no harm done since the acreage was so far removed, however, in this particular case because the well was actually already drilled, the Commission decided that we needed to proceed very cautiously in this matter and make sure that we gave a higher standard perhaps to this particular well, to the requirements that we would consider as to whether harm actually existed or not. We are somewhat reassured that the parties to these proceedings have agreed that there is no harm, and so I think the Commission will feel content with allowing the spacing exception to be granted. So any other ..... COMMISSIONER BABCOCK: I agreed with your comments, Mr. Chairman, except that of course there's always potential harm whenever regulations and requirements of the Commission are not followed. But I agree with your conclusion. CHAIRMAN JOHNSTON: Is there any members of the audience that would wish to make a statement at this time to 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 the Commission? I see none. Therefore, the Commission will adjourn this hearing and close the record in this matter. Thank you. (Off record - 9:43 a.m.) (END OF PROCEEDINGS) * * * * * 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277-7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 26 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 CERTIFICATE UNITED STATES OF AMERICA) ) SS. STATE OF ALASKA ) I, Laurel L. Kehler, Notary Public in and for the State of Alaska, residing at Anchorage, Alaska, and reporter for R & R Court Reporters, Inc., do hereby certify: THAT the annexed and foregoing Public Hearing of the Alaska Oil and Gas Conservation Commission was taken before me on the 4th day of November 1993, commencing at the hour of 9:00 o'clock a.m., at the offices of the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska, pursuant to Notice; THAT this Transcript, as heretofore annexed, is a true and correct transcription of the testimony given at said Public Hearing, taken by me and thereafter transcribed by me; THAT the original of the Transcript has been lodged with the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska; THAT I am not a relative, employee or attorney of any of the parties, nor am I financially interested in this action. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal this llth day of November 1993. Notary Pub~l-i~ in and for Alaska My commission expires: 10/20/94 RECEIVED NOV 1 6 AlaSka Oil & Gas Cons. Commission Anchorage 810 N STREET 277-0572 OR 277-0573 FAX 274-8982 R & R COURT REPORTERS 509 WEST THIRD AVENUE 277-8543 1007 WEST THIRD AVENUE 277"7515 ANCHORAGE, ALASKA 99501 1135 WEST EIGHTH AVENUE 272-3022 NOVEMBER 4, 1993 PUBLIC HEARING STEWART PETROLEUM SPACING EXCEPTION WEST MCARTHUR RIVER UNIT 2A NAME (print) COMPANY TESTIFYING (yes/no) a:\c:\forms~attend.doc [jo] ALASKA OIL AND GAS CONSERVATION COMMISSION WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 October 27, 1993 Mr. Bill Stewart Stewart Petroleum Company 2550 Denali St Ste 1300 Anchorage, AK 99503-2737 Dear .Mr. Stewart: The Commission has received a protest to your application for spacing exception for the West McArthur River 'Unit No. 2A well. Accordingly, a hearing on your application will be held at the Commission office at 9:00 am on 'November 4, 1993. The Commission recommends you .or your representative present testimony supporting the application and be available for questions. Sincerely, David W. Joh~ Chairman ALASKA OIL AND GAS CONSERVATION COMMISSION October 26, 1993 WALTER J. HICKEL, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE, ALASKA 99501-3192 PHONE: (907) 279-1433 TELECOPY: (907) 276-7542 Paul L. Craig President Z-Energy Inc. 2900 Boniface Pkwy, #610 Anchorage, AK 99504-3132 'Dear Mr. Craig: The Commission has reviewed your protest of a spacing exception for the West McArthur River Unit No. 2A (WMRU2A) well. Your protest was timely filed and raises questions regarding the appropriateness of the WMRU2A location. Accordingly, a hearing will be held at the Commission offices at 9:00 am on November 4, 1993. The Commission looks forward to hearing your testimony concerning the appropriateness of the W.MRU2A spacing exception. David W. Jo n Chairman (: Z_ENERGY iNC.i, October 19, 1993 Russell A. Douglass, Commissioner Alaska Oil & Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 Subject: WMRU Well #2A 20 AAC 25.055 Exception Dear Commissioner Douglass: Z-Energy Inc. is a Delaware Corporation licensed to do business in Alaska. The Corporation is a hydrocarbon exploration and development company e. ,.ablished as a vehicle to exploit *~ e,..~ o..t,~ of Alaska Oil & Gas leases held by Mr. Zamarello and myself. As a neighbor immediately to the north of WMRU Well #2A, Z-Energy Inc. objects to Stewart Petroleum Company's request for an exception to 20 AAC 25.055 without Public Hearing. We believe that a .hearing is warranted for the following reasons: It is our impression that WMRU #2A has already reached total depth (TD), has been logged, and tested. As such, the application by Stewart Petroleum Company for an exception to 20 AAC 25.055 may post-date actual events. We believe that Stewart Petroleum Company should submit actual well survey data, rather than a proposed bottomhole location, as the basis for evaluating their exception request. . R appears that the bottomhole location for WMRU #2A exploration well is close to the field's WMRU gl discovery well. Since this location is. materially different from the originally permitted bottomhole location, Z-Energy Inc. wished to know how Stewart Petroleum intends to incorporate this well into the field's development scheme. , As immediate neighbors of the Stewart Petroleum discovery well and WMRU #2A delineation well, Z-Energy Inc. is concerned about the impact on the underlying reservoir associated with long-term production testing prior to adequate pool delineation. This concern relates to correlative rights as well rcs maximization of Stare of Alaska royalties. Z-Energy Inc. enthusiastically supports Stewart Petroleum Company's activity in the West McArthur River Unit and requests Public Hearing in order to insure that correlative rights and reservoir integrity are adequately protected. Sincerelv,?~~~/ . , President / RECEIVED OOT 2 0 199 Alaska Oil .& Gas Cons. Commission Anchorage 2900 BONIFACE PARKWAY, #610 ANCHORAGE, AK 99504-3132 TELEPHONE: 907-563-5686 FAX: 907-562-7489 Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re~ The application of STEWART PETROLEUM COMPANY for exception to 20 AAC 25.055 to allow drilling the WEST McARTHUR RIVER UNIT No. 2A exploration oil well. STEWART PETROLEUM COMPANY by letter dated September 8, 1993 (and received by the A.O.G.C.C. on September 30, 1993) has requested an exception to the provisions of 20 AAC 25.055(a)(3) for the drilling of an exploratory oil well in the West McArthur River Unit, in the Cook Inlet. The exception would allow Stewart Petroleum Company to directionally drill the West McArthur River Unit No. 2A exploratory oil well to a bottom-hole location that is closer than 500 feet from a quarter section line. The proposed surface location is 2804' from the south line (FSL) and 1418' from the west line of Section 16, T8N, R14W, Seward Meridian (SM) and the proposed bottom-hole location is 2099' FSL and 2740' from the east line of Section 10, TSN, R14W, SM. A person who may be harmed if the requested order is issued may file a written protest prior to 4:00 PM October 20, 1993 with the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501, and request a hearing on the matter. If the protest is timely filed and raises a substantial and material issue crucial to the Commission's determination, a hearing on the matter will be held at the above address at 9:00 am on November 4, 1993 in conformance with 20 AAC 25.540. If a hearing is to be held, interested parties may confirm this by calling the commission's office, (907) 279-1433 after October 20, 1993. If no protest is filed, the Commission will consider the issuance of the order without a hearing. Russell A. Douglass, Commissioner Alaska Oil and Gas Conservation Commission Published October 5, 1993 2430 STOF0330 {~ 08-5754 AFFIDAVIT OF PUBLIC/[TION STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT. ) Eva M. Kaufmann being first duly sworn on oath deposes and says that he/she is an advertising representative of the Anchorage 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 aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was °published in regular issues (and not in supplemental form) of said newspaper on 10/05, 1993 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. si~ned ~~ ~' Subscribed and sworn to before me this ...~.... day of ....~...~.. .... the State of Alaska. Third Division. Anchorage. Alaska MY COMMISSION EXPIRES ............ ...... iq;,i~:e of Public He,~r:ing STATE oF ALASKA Alaska Oil and Gas . Conservation Commission Re: The application of STEWART.- PETROLEUM COMPANY for exception to 20 AAC 25.0S5 to allow drilli0g the WEST McARTHUR RIVER UNIT No. 2A exploration .~il well. · .. . STEWART ' PETROLEUM COMPANY by letter dated September 8, 1993 (and re- ceived by the A.O.G.C.C. on September 30, 1993) has re- quested an' exception to the provisions :. of. 20 AAC 25.055(a)(3) for the drilling of an exploratory oil well in the West MCArthur River Unit, in the Cook Inlet. ' ~ ';':" · The ~exception would,allow Stewart'Petroleum Company. to dii'ectionally drill the West ' McArthur River .Unit No. 2A. exploratory 011 well to a ,~,,, bottom-hole location that is closer1than ~1500, feet from a quarter ~ection line. The pro- posed surface location is 2804' from. the south line.(FSL) and' 1418~.'~ from, the west line of .Section 16,,TSN, R14W, Seward "Meridian (SM)',and the pro- ' .'posed. botlom.hole location is' :2099' FSL and 2740' from the east;?line of Section 10, TaN,~ : .RMW;:i SM.:?!"~:, .'.',,~,,~;., .,. ,;~,]y!, ,. r. !~i~;~:!?,~:~': ':~~ ,;i::,'~ '~,,,~i,~,:',;~?!: ;~,!: 'i' ;,,:!;,:;:~ ,:,~ ', ~.".?.';.¥":':::':'"'. .... . .... - :... ';,, ":: :" ,' · ~- A person who may be harm- ~'ff..5:the'! requested order'ds ;'issbed' may 'fllea'wrltten pro, test', prior:to.'4:00 'PM 'October 20,.'~'11993 *, with:.'.the.~':'Alaska Oil and:SGas:? Conservation Com- . mis$1oni!3001~ Porcupine DriVe,: Anchorage/~'Alaska 99501;;?and: requ'est'~,a, hearing on:.the, mat:') ter~ ~'1 f.;:.;tll~.:!.., protest ,~:ts: .timely*i! : filed:i and~raises:':a.?sU6stantlal . andi~'materlal~,, issue?crucial .. t hei:::Comm!ssi0.n's:'~i:deter m ina-a tloni ?a .:hea~a~i:On:'i..the .:matte~:: ~Will: i~",'llt!l~",'~i~he:;above~l ad~ dress aL~.tO0~am;:on:. Nove.~bec.', 4, 1993.ih~confothlance wit~ 20'. AAC 2S.S40;-'I[::a hearing,'is to be held, inte.r'e~ted parties may..l confirm :. this:: '~y~.. calling the' corn mlssion's:',of ricer · (907) 279-1433 after October 20, 1993..' If no protest is timely filed, the,.~ Commission ·.will 'consider...lbe ' i ~ fi a fii~:~o't"t fi 6'*'~'.r.d;e~''~ifhc~ui , nearing: .~'+~ ~ ::.~,v~"..!,~;.*,':. ri. ~' J : .-/s/Russell .A!'.-D6uglass, ~ .. 4 :'Commissio'ner,!:~laska O;1~ ).~ and'Gas Conservation · ' ':i. Commisslon~k~, AO-08.5754" :.,.a:,~%,,:':.. I/ .Pub ish: Oct. ob.e. Lr..~.5.~ 1._~_3 TM '.' September 8, 1993 ENSR Consuhing and Engineering 4640 Busincss Park Blvd. Building D Anchorage, AK 99503 (907) 561-5700 FAX (907) 273-4555 Mr. David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 Attention: Mr. Robert P. Crandall, Senior Petroleum Geologist Re: Application for Exemption to Provisions of 20 ACC 25.055 (Drilling Units and Well Spacing) Stewart Petroleum COmpany, West McArthur River Unit No. 2A Dear Mr. Crandall: Stewart Petroleum Company hereby makes application to the Alaska Oil and Gas Conservation Commission for an exemption to the Provisions of the drilling unit and well spacing requirements of 20 ACC 25.055 as they pertain to the bottomhole location of the above-referenced well. The bottomhole location is as follows: 2740 FEL, 2099 FSL, Sec 10, T8N, R14W SM This location is less than 500 feet from the nearest drilling unit boundary as defined in 20 ACC 25.055. All adjacent governmental quarter sections are held under a lease to Stewart Petroleum Company (ADL-359111) and are committed to the West McArthur River Unit, which was approved by the Department of Natural Resources effective August 1, 1990. Therefore, the applicant (Stewart Petroleum Company) is the only affected party as defined in 20 AAC 25.055(b). This exemption is requested to optimize the structural location of the BHL of well 2A. This exemption application was made necessary by a change in the BHL of the McArthur River Unit No. 2 well. This change in BHL, which occurred after the No. 2 well was spudded, was in response to a revised geological interpretation of the West McArthur River structure.. The undersigned hereby verifies that he is acquainted with the facts surrounding this application for exemption; that the facts presented herein, and on the attached plat and table, are true and correctly portray all pertinent and required data as defined in 20 ACC 25.055(a)(1) and 20 ACC R ¢ IVED S E P ,,z 0 Alaska 0il .& Gas Cons. C0mmissi0~ Anchorage Mr. David W. Johnston, Chairman September 8, 1993 Page 2 Please Contact the undersigned at (907) 561-5700 if you have any questions or need additional information. Robert C. Gardner Regional Director of Technical Services and Agent for Stewart Petroleum Company RCG/rm Attachments: I Direct and diagonal offsetting quarter sections to bottomhole location of Stewart Petroleum Company, West McArthur River No. 2A. Proposed surface and bottomhole locations. Cc: Mr. Bill Stewart, President, Stewart Petroleum Company P, EEEJVED $ E P ;~ 0.199~ Alaska .Oil .& Gas Cons. C0m~lissi0n Anchorage ATTACHMENT I TO APPLICATION FOR WELL SPACING EXEMPTION STEWART PETROLEUM COMPANY, WEST MCARTHUR RIVER NO. 2A Direct and diagonal offsetting quarter sections to bottomhole location of Stewart Petroleum Company, West McArthur River No. 2A (2,740' FEL, 2,099' FSL, Sec 10, T8N, R14W, SM). Quarter Section Reference No. ADL Lease (see Plat) Description Lessee Number Unit 1 NE 1/4, Sec 9 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 2 NW 1/4, Sec 10 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 3 NE 1/4, Sec 10 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 4 SE 1/4, Sec 10 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 5 NE 1/4, Sec 15 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 6 NW 1/4, Sec 15 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 7 NE 1/4, Sec 16 Stewart Petroleum 359111 West McArthur Unit T8N, R14W, SM Company 8 SE 1/4, Sec 9 Stewart Petroleum 359111 West McArthur Unit TSN, R14W, SM Company , RI EIVED $ EP 0 t99 Alaska Oil & Gas Cons. C0mmissio~" Anchorage SEC. 17 SURFACE 5280 FT. SEC. 5280 I WEST McARTHUR RIVER UNIT NO. 2A BHL STEWART 20gg FSL, 2740 FEL PETROLEUM SEC. 10, TSN, R14W, SM CO. HORIZONTAL DISPLACEMENT= 78BI SEC. 9 COOK INL ~ 5280 7' ADL 359111 STEWART PERTOLEUbl CO. HBU (~ STEWART PETROLEUM CO. STEWART PETROLEUM CO. T8N, R14W, S.M. I I .. 'EWART PETROLEUM SEC. 16, co. 2,804" SEC. 10 I 2099' STEWART PETROLEUM 2763' CO. I McARTHUR RIVER UNIT NO. 1 BHL 2765 FNL., 1572 FEL SEC. 10, TSN RI4W, SM STEWART PETROLEUM co.__ --SEC TSN, R1 SEC. 1 1 740' -- I I ® , STEWART I PETROLEUM I I I I STEWART I PETROLEUM I 15 co. -- .... SEC. I.W, S.M. 14- 5280 FT. SEC. 21 ADL 359112 STEWART PERTOLEUM CO. COOK INLET BLUFF West McArfhur River Unit Boundary Lease Boundary Quarter Section Line Quarter Section Reference Numbers (See Table Attachment 1) ADL 359111 and ADL 359112 are committed fo the West McAHhur River Unit, effective July 27, 1990. (Prepared in support of Application for Exemption fo Provisions of 20 AAC 25.055) 5280 FT. SEC. 22 SEC. 25 RECEIVED $ E P 3 0,,199 ) Alaska Oil & Oas Cons. Commission 12so 2soo 'Anchorage I I SCALE IN FEET I ATTACHMENT II ~.NSR CONSt~L?ING & ~,~GIN~.~,RI~~ PROPOSED SURFACE AND DRAWING: PSBH2A DRAWN: SR/ABB/JLm C/SC: 1:2500 DISK: 722/93 m BOTTOM HOLE LOCATIONS BATE: 09/29/95 CHECK: B.G. ~ · , ,, .,~ STEWART PETROLEUM CO. WEST k4cARTHUR RIVER UNIT NO. 2A, T.SN., R.14W., SM. PROJECT 6;597-003-700