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Home My WebLink AboutCO 450 , ) Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. G 0 1+50 Order File Identifier Organizing (done) o Two-sided 1111111111111111111 o Rescan Needed 1111111111111111111 R~AN VCo1or Items: o Greyscale Items: DIGITAL DATA OVERSIZED (Scannable) o Maps: o Other Items Scannable by a Large Scanner o Diskettes, No. D Other, No/Type: o Poor Quality Originals: OVERSIZED (Non-Scannable) o Other: D Logs of various kinds: NOTES: o Other:: BY: ~ Date: 3 , 0 b 151 vnP Project Proofing BY: CMaria ) 1111 ·1 Scanning Preparation BY: c:.. Mar,ia ) x 30 = I + vnVJ = TOTAL PAGES J li 0 (Count does not include cover sheet) II1A.. ý) 151 r fir 1111111111111111111 Is/ 'I Date: Ö I {J t, Date:"~ j 0 f.o Production Scanning Stage 1 Page Count from Scanned File: J L/-7 (Count does include cover sheet) Page Count Matches Number in Scan~inp P~eparation: _ V YES NO BY: CMaria) Date: 3, I Ob Isl Mj , Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Maria Date: 151 11II11I1I1111111111 Scanning is complete at this point unless rescanning is required. ReScanned 1111111111111111111 BY: Maria Date: /s/ Comments about this file: Quality Checked 1111111111111111111 10/6/2005 Orders File Cover Page.doc ) \ INDEX CONSERVATION ORDER NO. 450 West Foreland 1. April 20, 2000 Application for Exemption to Provisions of 20 AAC 25.055, Drilling Units and Well Spacing West Foreland #1 well 2. April 27, 2000 Fax from P White w/copies of letters addressed to DNR and BLM notifying of drilling the West Foreland #1 well 3. April 28, 2000 Fax from J Arlington w/copies of certified mail sent to DNR and BLM for notification of drilling. Copy of certified mail receipt showing letter of notification from Forcenergy was sent to and received by Cook Inlet Region, Inc. Notice of Public Hearing (w/mail out record) Public Hearing Transcript w/attendance record Copy of letter from Daniel Seamount to P. White, P Ditton and C Lee Letter from K. Boyd (DNR) to D Seamount responding to Seamount's letter of June 5, 2000 Letter from P J Ditton (BLM) to Daniel Seamount responding to Seamounts letter of June 5, 2000 Copy of letter from Daniel Seamount to G. Carlson requesting a follow up letter confirming 1. Arlington's conversation with Cammy Taylor Letter from G CaIson to D Seamount providing information requested by AOGCC 4. April 29, 2000 5. May 31, 2000 6. June 5, 2000 7. June 20, 2000 8. June 22, 2000 9. June 30, 2000 10. July 11,2000 CONSERVATION ORDER NO. 450 CASE NO. CO· J.4S0 y ) ) COUNSEL OF RECORD MAILING ADDRESS & PHONE NUMBER 5JD ~'St~~@ Dep-\- 0 ~ I ntenO( ~ï1 ) ~bbm ,;p fA, &. C\ ()¡~tJJ ' \~i \C i'f\Q~QY~ D~~ -TJ¡rec1DÝ ~o UJ··~ ~ ve 1t'N1J () CÃ Q') NAME . \~mQS I~, \\'Z\ú\ . er ve/~( D\ tvn TF-900 (1/98)(5~ x 8~)(canary-cs) KEEP ON TOP OF FILE FOR WHOM fô{ð, (jj { \ J 1 STATE OF ALASKA ALASKA OIL AND GAS CONSE.RV A TION COMMISSION 3001 Porcupine Drive Anchorage Alaska 99501-3192 Re: APPLICATION OF FORCENERGY,) INC. for an order granting an exception ) to the spacing requirements of 20 AAC ) 25.055 to allow for production from the ) West Foreland # 1 gas well ) Conservation Order No. 450 West Foreland Field July 24, 2000 IT APPEARING THAT: 1. Forcenergy, Inc. (Forcenergy) submitted an application dated April 20, 2000, requesting an exception to 20 AAC 25.055 to allow for gas production from the Forcenergy West Foreland #1 well (WF #1), which is closer than 1500 feet from the lease boundary. 2. Notice of hearing was published in the Anchorage Daily News on April 29, 2000, pursuant to 20 AAC 25.540. The applicant also mailed written notice to the landowners of the tract on which the well is located (Lease A-035017), namely Cook Inlet Region, Inc., and Bureau of Land Managelllent (BLM), and to the landowner of the adjoining affected tract (Lease ADL-3591 12), namely the Alaska Department of Natural Resources (DNR). BLM is administering lease A-035017 on behalf of Cook Inlet Region, Inc. 3.N 0 protests to the application were received. 4. A hearing was convened in conformance with 20 AAC 25.540 on May 31, 2000, at the COlllmission's offices, at which representatives of the applicant, BLM, and DNR appeared. 5. The hearing record was held open until July 11, 2000, to receive additional information from the parties. FINDINGS: 1. WF #1 has a surface location of9IO' FSL and 4669' FWL of Section 21 in T08N and RI4W of the Seward Meridian. It was originally drilled in 1962 to search for oil. No regular production of oil or gas has occurred from the well. 2. Forcenergy proposes to initiate gas production from WF #1 from a Tyonek reservoir between the measured depths of9336' to 9352'. The wellbore in this interval is located approximately 384' from the boundary between Leases ADL-359112 and A-035017. 3. Under 20 AAC 25.055(a)(2), tor a well drilling for gas, a wellbore may be open for test or regular production within 1500' of a property line only if the owner is the same and the Conservation Order 450 Page 2 ') ) July 24, 2000 landowner is the same on both sides of the line. N·o order has been issued by the Commission establishing drilling units or a spacing pattern for the reservoir that differ from the statewide spacing requirements. 4. Forcenergy is the sole working interest owner of both leases. The two leases have different landowners. 5. Forcenergy, BLM, and DNR have expressed an interest in negotiating a compensatory royalty agreement (CRA) under which a share of the gas production from WF #1 would, in effect, be allocated to Lease ADL-359112. Forcenergy's application states that the CRA "is in the process of being drafted with anticipation that it will be executed before production commences from the WF # 1 well." At the hearing DNR's representative confirmed that DNR conceptually agreed to the idea of a CRA but had not seen an example of one yet. 6. By letter dated July 11, 2000, Forcenergy agreed to continue negotiating as a willing party to the CRA. No CRA has been entered into yet. 7. F orcenergy proposes to establish an escrow account into which sufficient payments would be made to protect the interests of all royalty owners of both leases until a CRA is executed. 8. The Commission does not currently have enough information to determine how much, if any, of the gas production from WF #1 would represent drainage from Lease ADL-359112. 9. Lease ADL-359112 currently carries a 5% royalty obligation to the landowner. According to Forcenergy's July 11,2000 letter, there are overriding royalty interests (ORRI's) burdening the lease totaling 12.5%, of which Forcenergy re-acquired a 0.65625% interest. 10. Lease A-03 50 1 7 carries a 12 1/2% royalty obligation to the landowners. According to Forcenergy's July 11, 2000 letter, there are ORRI's burdening the lease totaling 5%. 11. Appropriate production testing for a period of approximately 12 months is likely to yield sufficient information to determine the 'relative contributions of the two leases to gas production from WF # 1. 12. The Alaska Department of Revenue publishes quarterly calculations of the prevailing value of Cook Inlet gas under 15 AAC 55.173(b). 13. By letter dated June 20, 2000, DNR stated that it conditioned its approval of a plan of development for the West McArthur River Unit on Forcenergy's negotiating a production allocation and royalty payment agreement before producing gas from the WF # 1 well and that F orcenergy has assured DNR that it will not produce gas from the well until Forcenergy, BLM, and DNR have a compensatory royalty agreement in place. CONCLUSIONS: 1. An exception to 20 AAC 25.055(a)(2) is necessary to allow production of gas from the Tyonek reservoir in WF # 1. Conservation Order 450 Page 3 'I: } July 24, 2000 2. Producing from the proposed exception location would potentially harm the interests of royalty owners of Lease ADL-359112 in the absence of conditions to protect them from the effects of drainage. 3 . Until allocation of production between the leases is determined either by agreement among the interested parties or by the Commission, the interests of the royalty owners will be adequately protected by requiring Forcenergy to escrow an amount equal to the volume of gas produced from WF # 1 times the maximum sum of the royalty percentages in the leases times the applicable prevailing value of Cook Inlet gas published under 15 AAC 55.173(b). NOW, TU·EREFORE, IT IS ORD:ERED: 1. Forcenergy's application for a spacing exception to allow for gas production from the WF #1 well from the 9336' to 9352' interval is granted subject to the following terms and conditions: a. The spacing exception expires on November 1, 2001, without prejudice to Forcenergy's right to apply for a permanent spacing exception after it has entered into a CRA or equivalent agreement or after it has acquired sufficient information to enable the Commission to determine the proportion of gas production from the WF # 1 well that is attributable to each of Lease A-035017 and Lease ADL-359112. b. Forcenergy shall establish an interest-bearing escrow account (Escrow Account) in a financial institution located in this state and (a) whose deposits are insured by an agency of the federal government or (b) that is subject to regulation by the Division of Banking, Securities, and Corporations in the Department of Community and Economic Development. F orcenergy shall pay all fees and costs associated with the Escrow Account. The Escrow Account shall be subject to the condition that no funds may be disbursed from the account except by written order of this Commission. Before commencing production from the WF # 1 well, F orcenergy shall provide the Commission with documentation sufficient to show that the Escrow Account has been established in accordance with the requirements of this order. c. No later than the 10th day of each month (or the next business day if the 10th day falls on a weekend or legal holiday), F orcenergy shall deposit in the Escrow Account an amount equal to 1 7-1/2 percent of the total gas production from the WF # 1 well during the previous month multiplied by the prevailing value for Cook Inlet gas published for that month's quarter by the Alaska Department of Revenue under 15 AAC 55.173(b)~ except that if the Commission determines that the total overriding royalty interests in either of the leases exceed the respective percentage set out in Findings 9 and 10 above, the Commission will require F orcenergy to deposit a correspondingly higher amount. d. If at any time the Commission is provided with a CRA or other agreement specifying how gas production from the WF #1 well is to be allocated between Lease A-035017 and Lease ADL 359111, the Commission will order the funds in the Escrow Account to be disbursed in accordance with such agreement and will terminate Forcenergy's obligation to Conservation Order 450 Page 4 ) ') July 24, 2000 maintain and pay into the Escrow Account. However, if such agreement is executed by fewer than all royalty owners in both leases, the Commission will first provide royalty owners with an opportunity to be heard (after personal notice served by F orcenergy) on the disposition of the escrowed funds as between the two leases and on the termination of Forcenergy's escrow obligation. Ifno such agreement has been provided to the Commission before the temporary spacing exception expires, the Commission will determine how the funds in the Escrow Account will be disbursed based on the information available to the Commission and in accordance with the Commission's estimate of the proportions of the well's gas production attributable to the respective leases. e. Forcenergy shall conduct appropriate production testing and provide the Commission with geologic and geophysical data and the results of the production testing to support a reasonable inference as to what proportions of the gas reserves producible from the 9336' to 9352' measured depth interval of the WF #1 well underlie Lease A-035017 and Lease ADL 359111. 2. The spacing exception granted by this order does not affect any limitations on production from the WF #1 well to which Forcenergy may be subject under contractual or regulatory provisions administered by DNR. DONE at Anchorage, Alaska and dated July 24, 2000. c~~~ Camillé Oechsli Taylor, CommissQoner Alaska Oil and Gas Conservation Commission 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 with the Commission 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 Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the lO-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, 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 (Le" 10th day after the application for rehearing was filed). DRII McGraw Hill Randall Nottingham 24 Hartwell Lexington, MA 02173 PIRA ENERGY GROUP LIBRARY 3 PARK AVENUE (34th & PARK) NEW YORK, NY 10016 OVERSEAS SHIPHOLDING GRP ECON DEPT 1114 AV OF THE AMERICAS . NEW YORK, NY 10036 NY PUBLIC LIBRARY DIV E GRAND CENTRAL STATION POBOX 2221 NEW YORK, NY 10163-2221 ALASKA OFC OF THE GOVERNOR JOHN KATZ STE 518 444 N CAPITOL NW WASHINGTON, DC 20001 ARENT FOX KINTNER PLOTKIN KAHN LIBRARY WASHINGTON sa BLDG 1050 CONNECTICUT AV NW WASHINGTON, DC 20036-5339 US MIN MGMT SERV CHIEF OCS STATS & INFO 381 ELDEN ST MS 4022 HERNDON, VA 20170-4817 LIBRARY OF CONGRESS STATE DOCUMENT SECTION EXCH & GIFT DIV 10 FIRST ST SE WASHINGTON, DC 20540 U S DEPT OF ENERGY PHYLLIS MARTIN MS EI823 1000 INDEPENDENCE SW WASHINGTON, DC 20585 TECHSYS CORP BRANDY KERNS PO BOX 8485 GA THERSBURG, MD 20898 ) ') US GEOLOGICAL SURVEY LIBRARY NATIONAL CTR MS 950 RESTON, VA 22092 DPC DANIEL DONKEL 1420 NORTH ATLANTIC AVE, STE 204 DAYTON BEACH, FL 32118 SD DEPT OF ENV & NA TRL RESOURCES OIL & GAS PROGRAM 2050 W MAl N STE #1 RAPID CITY, SD 57702 AMOCO CORP 2002A LlBRARYIINFO CTR POBOX 87703 CHICAGO, IL 60680-0703 ILLINOIS STATE GEOL SURV LIBRARY 469 NATURAL RESOURCES BLDG 615 E PEABODY DR CHAMPAIGN, IL 61820 LINDA HALL LIBRARY SERIALS DEPT 5109 CHERRY ST KANSAS CITY, MO 64110-2498 ALFRED JAMES III 107 N MARKET STE 1000 WICHITA, KS 67202-1811 MURPHY E&P CO ROBERT F SAWYER POBOX 61780 NEW ORLEANS, LA 70161 UNIV OF ARKANSAS SERIALS DEPT UNIV LIBRARIES FAYETTEVILLE, AR 72701 CROSS TIMBERS OPERATIONS SUSAN LI LL Y 210 PARK AVE STE 2350 OKLAHOMA CITY, OK 73102-5605 ') ) DWIGHTS ENERGYDATA INC JERLENE A BRIGHT DIRECTOR PO BOX 26304 OKLAHOMA CITY, OK 73126 ) ') IOGCC POBOX 53127 OKLAHOMA CITY, OK 73152-3127 R E MCMILLEN CONSULT GEOL 202 E 16TH ST OWASSO, OK 74055-4905 OIL & GAS JOURNAL LAURA BELL POBOX 1260 TULSA, OK 74101 GAFFNEY, CLINE & ASSOCIATES LIBRARY 16775 ADDISON RD STE 400 ADDISON, TX 75001 GAFFNEY, CLINE & ASSOC., INC. LIBRARY 16775 ADDISON RD, STE 400 ADDISON, TX 75001 BAPIRAJU 335 PINYON LN COPPELL, TX 75019 MARK S MALlNOWSKY 15973 VALLEY VW FORNEY, TX 75126-5852 US DEPT OF ENERGY ENERGY INFORMATION ADMINISTRATION MIR YOUSUFUDDIN 1999 BRYAN STREET STE 1110 DALLAS, TX 75201-6801 DEGOL YER & MACNAUGHTON MIDCONTINENT DIVISION ONE ENERGY SQ, STE 400 4925 GREENVILLE AVE DALLAS, TX 75206-4083 JERRY SCHMIDT 4010 SILVERWOOD DR TYLER, TX 75701-9339 STANDARD AMERICAN OIL CO AL GRIFFITH POBOX 370 GRANBURY, TX 76048 CROSS TIMBERS OIL COMPANY MARY JONES 810 HOUSTON ST STE 2000 FORT WORTH, TX 76102-6298 PRITCHARD & ABBOTT BOYCE B BOLTON PE RPA 4521 S. HULEN STE 100 FT WORTH, TX 76109-4948 SHELL WESTERN E&P INC G.S. NADY POBOX 576 HOUSTON, TX 77001-0574 ENERGY GRAPHICS MARTY LINGNER 1600 SMITH ST, STE 4900 HOUSTON, TX 77002 H J GRUY ATTN: ROBERT RASOR 1200 SMITH STREET STE 3040 HOUSTON, TX 77002 PURVIN & GERTZ INC LIBRARY 2150 TEXAS COMMERCE TWR 600 TRA VI S ST HOUSTON, TX 77002-2979 RAY TYSON 1617 FANNIN ST APT 2015 HOUSTON, TX 77002-7639 CHEVRON PAUL WALKER 1301 MCKINNEY RM 1750 HOUSTON, TX 77010 ) ') BONNER & MOORE LIBRARY H20 2727 ALLEN PKWY STE 1200 HOUSTON, TX 77019 OIL & GAS JOURNAL BOB WILLIAMS 1700 W LOOP SOUTH STE 1000 HOUSTON, TX 77027 PETRAL CONSULTING CO DANIEL L LIPPE 9800 RICHMOND STE 505 HOUSTON, TX 77042 MARK ALEXANDER 7502 ALCOMITA HOUSTON, TX 77083 MARATHON OIL CO GEORGE ROTHSCHILD JR RM 2537 POBOX 4813 HOUSTON, TX 77210 UNOCAL REVENUE ACCOUNTING POBOX 4531 HOUSTON, TX 77210-4531 EXXON EXPLORATION CO. T E ALFORD POBOX 4778 HOUSTON, TX 77210-4778 EXXON EXPLOR CO LAND/REGULA TORY AFFAIRS RM 301 POBOX 4778 HOUSTON, TX 77210-4778 CHEVRON USA INC. ALASKA DIVISION ATTN: CORRY WOOLlNGTON POBOX 1635 HOUSTON, TX 77251 PETRINFO DAVID PHILLIPS POBOX 1702 HOUSTON, TX 77251-1702 ") PHILLIPS PETR CO ALASKA LAND MGR POBOX 1967 HOUSTON, TX 77251-1967 PHILLIPS PETROLEUM COMPANY W ALLEN HUCKABAY PO BOX 1967 HOUSTON, TX 77251-1967 WORLD OIL MARK TEEL ENGR ED POBOX 2608 HOUSTON, TX 77252 EXXONMOBIL PRODUCTION COMPANY J W KIKER ROOM 2086 POBOX 2180 HOUSTON, TX 77252-2180 EXXONMOBIL PRODUCTION COMPANY GARY M ROBERTS RM 3039 POBOX 2180 HOUSTON, TX 77252-2180 PENNZOIL E&P WILL 0 MCCROCKLIN POBOX 2967 HOUSTON, TX 77252-2967 CHEVRON CHEM CO LIBRARY & INFO CTR POBOX 2100 HOUSTON, TX 77252-9987 MARATHON Ms. Norma L. Calvert POBOX 3128, Ste 3915 HOUSTON, TX 77253-3128 ACE PETROLEUM COMPANY ANDREW C CLIFFORD PO BOX 79593 HOUSTON, TX 77279-9593 PHILLIPS PETR CO JOE VOELKER 6330 W LP S RM 492 BELLAIRE, TX 77401 ) ') PHILLIPS PETR CO ERICH R. RAMP 6330 W LOOP SOUTH BELLAIRE, TX 77401 PHILLIPS PETR CO PARTNERSHIP OPRNS JIM JOHNSON 6330 W LOOP S RM 1132 BELLAIRE, TX 77401 TEXACOINC R Ewing Clemons POBOX 430 BELLAIRE, TX 77402-0430 WATTY STRICKLAND 2803 SANCTUARY CV KA TY, TX 77450-8510 TESORO PETR CORP LOIS DOWNS 300 CONCORD PLAZA DRIVE SAN ANTONIO, TX 78216-6999 INTL OIL SCOUTS MASON MAP SERV INC POBOX 338 AUSTIN, TX 78767 ROBERT G GRAVELY 7681 S KIT CARSON DR LITTLETON, CO 80122 DIANE SUCHOMEL 105070 W MAPLEWOOD DR LITTLETON, CO 80127 GEORGE G VAUGHT JR POBOX 13557 DENVER, CO 80201 AMOCO PROD CO LIBRARY RM 1770 JILL MALLY 1670 BROADWAY DENVER, CO 80202 ) ') C & R INDUSTRIES, INC. KURT SAL TSGA VER 1801 BROADWAY STE 1205 DENVER, CO 80202 US GEOLOGICAL SURVEY LIBRARY BOX 25046 MS 914 DENVER, CO 80225-0046 JERRY HODGDEN GEOL 408 18TH ST GOLDEN, CO 80401 NRG ASSOC RICHARD NEHRING POBOX 1655 COLORADO SPRINGS, CO 80901-1655 RUBICON PETROLEUM, LLC BRUCE I CLARDY SIX PINE ROAD COLORADO SPRINGS, CO 80906 JOHN A LEVORSEN 200 N 3RD ST #1202 BOISE, ID 83702 RUI ANALYTICAL JERRY BERGOSH POBOX 58861 SALT LAKE CITY, UT 84158-0861 TAHOMA RESOURCES GARY PLAYER 1671 WEST 546 S CEDER CITY, UT 84720 US GEOLOGICAL SURVEY LIBRARY 2255 N GEMINI DR FLAGSTAFF, AZ 86001-1698 MUNGER OIL INFOR SERV INC POBOX 45738 LOS ANGELES, CA 90045-0738 ) ", LA PUBLIC LIBRARY SERIALS DIV 630 W 5TH ST LOS ANGELES, CA 90071 BABSON & SHEPPARD JOHN F BERGQUIST POBOX 8279 VIKING STN LONG BEACH, CA 90808-0279 ANTONIO MADRID POBOX 94625 PASADENA, CA 91109 ORO NEGRO, INC. 9321 MELVIN AVE NORTHRIDGE, CA 91324-2410 76 PRODUCTS COMPANY CHARLES BURRUSS RM 11-767 555 ANTON COSTA MESA, CA 92626 TEXACOINC Portfolio T earn Manager R W HILL POBOX 5197x Bakersfield, CA 93388 US GEOLOGICAL SURVEY KEN BIRD 345 MIDDLEFIELD RD MS 999 MENLO PARK, CA 94025 SHIELDS LIBRARY GOVT DOCS DEPT UNIV OF CALIF DAVIS, CA 95616 H L WANGENHEIM 5430 SAWMILL RD SP 11 PARADISE, CA 95969-5969 ECONOMIC INSIGHT INC SAM VAN VACTOR POBOX 683 PORTLAND, OR 97207 ) ) US EPA REGION 10 LAURIE MANN OW-130 1200 SIXTH AVE SEATTLE, WA 98101 MARPLES BUSINESS NEWSLETTER MICHAEL J PARKS 117 W MERCER ST STE 200 SEATTLE, WA 98119-3960 DEPT OF REVENUE OIL & GAS AUDIT DENISE HAWES 550 W 7TH A V STE 570 ANCHORAGE, AK 99501 FAIRWEATHER E&P SERV INC JESSE MOHRBACHER 715 I ST #4 ANCHORAGE, AK 99501 GUESS & RUDD GEORGE LYLE 510 L ST, STE 700 ANCHORAGE, AK 99501 STATE PIPELINE OFFICE LIBRARY KATE MUNSON 411 W 4TH AVE, STE 2 ANCHORAGE, AK 99501 TRUSTEES FOR ALASKA 725 CHRISTENSEN DR STE 4 ANCHORAGE, AK 99501 DUSTY RHODES 229 WHITNEY RD ANCHORAGE, AK 99501 DEPT OF REVENUE BEVERLY MARQUART 550 W 7TH A V STE 570 ANCHORAGE, AK 99501 FORCENERGY INC. JIM ARLINGTON 310 K STREET STE 700 ANCHORAGE, AK 99501 ) ) YUKON PACIFIC CORP JOHN HORN VICE CHM 1049 W 5TH AV ANCHORAGE, AK 99501-1930 PRESTON GATES ELLIS LLP LIBRARY 420 L ST STE 400 ANCHORAGE, AK 99501-1937 ALASKA DEPT OF LAW ROBERT E MINTZ ASST ATTY GEN 1031 W 4TH AV STE 200 ANCHORAGE, AK 99501-1994 GAFO GREENPEACE PAMELA MILLER 125 CHRISTENSEN DR. #2 ANCHORAGE, AK 99501-2101 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS TIM RYHERD 550 W 7th AVE STE 800 ANCHORAGE, AK 99501-3510 DEPT OF REVENUE OIL & GAS AUDIT FRANK PARR 550 W 7TH AVE STE 570 ANCHORAGE, AK 99501-3540 BRISTOL ENVIR SERVICES JIM MUNTER 2000 W. INT'L AIRPORT RD #C-1 ANCHORAGE, AK 99502-1116 HDR ALASKA INC MARK DALTON 2525 C ST STE 305 ANCHORAGE, AK 99503 BAKER OIL TOOLS ALASKA AREA MGR 4710 BUS PK BLVD STE 36 ANCHORAGE, AK 99503 N-I TUBULARS INC 3301 C Street Ste 209 ANCHORAGE, AK 99503 ) ) ANADARKO MARK HANLEY 3201 C STREET STE 603 ANCHORAGE, AK 99503 ') ') ALASKA 01 L & GAS ASSOC JUDY BRADY 121 W FIREWEED LN STE 207 ANCHORAGE, AK 99503-2035 ANADRILL-SCHLUMBERGER 3940 ARCTIC BLVD #300 ANCHORAGE, AK 99503-5711 AKJOURNALOFCOMMERCE OIL & INDUSTRY NEWS ROSE RAGSDALE 4220 B Street Ste #210 ANCHORAGE, AK 99503-5911 DEPT OF NATURAL RESOURCES PUBLIC INFORMATION CTR 3601 C STREET STE 200 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JIM STOUFFER 3601 C STREET STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JAMES B HAYNES NATURAL RESRCE MGR 3601 C ST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JULIE HOULE 3601 C ST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OIL & GAS WILLIAM VAN DYKE 3601 CST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS BRUCE WEBB 3601 C ST STE 1380 ANCHORAGE, AK 99503-5948 FINK ENVIRONMENTAL CONSULTING, INC. THOMAS FINK, PHD ) 6359 COLGATE DR. ANCHORAGE, AK 99504-3305 ) ARLEN EHM GEOL CONSL TNT 2420 FOXHALL DR ANCHORAGE, AK 99504-3342 JAMES E EASON 8611 LEEPER CIRCLE ANCHORAGE, AK 99504-4209 US BUREAU OF LAND MNGMNT ANCHORAGE DIST OFC DICK FOLAND 6881 ABBon LOOP RD ANCHORAGE, AK 99507 RUSSELL DOUGLASS 6750 TESHLAR DR ANCHORAGE, AK 99507 STU HIRSH 9630 BASHER DR. ANCHORAGE, AK 99507 AMERICA/CANADIAN STRATIGRPH CO RON BROCKWAY 4800 KUPREANOF ANCHORAGE, AK 99507 US BUREAU OF LAND MNGMNT ANCHORAGE DIST OFC PETER J DlnON 6881 ABBon LOOP ROAD ANCHORAGE, AK 99507 US BLM AK DIST OFC RESOURCE EVAL GRP ART BON ET 6881 ABBon LOOP RD ANCHORAGE, AK 99507-2899 TRADING BAY ENERGY CORP P AU L CRAIG 5432 NORTHERN LIGHTS BLVD ANCHORAGE, AK 99508 THOMAS R MARSHALL JR 1569 BIRCHWOOD ST ANCHORAGE, AK 99508 ) ) UNIVERSITY OF ALASKA ANCHORAGE INST OF SOCIAL & ECON RESEARCH TERESA HULL 3211 PROVIDENCE DR ANCHORAGE, AK 99508 US MIN MGMT SERV AK OCS REGIONAL DIR 949 E 36TH AV RM 110 ANCHORAGE, AK 99508-4302 US MIN MGMT SERV RESOURCE STUDIES AK OCS REGN KIRK W SHERWOOD 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4302 US MIN MGMT SERV RICHARD PRENTKI 949 E 36TH AV ANCHORAGE, AK 99508-4302 GORDON J. SEVERSON 3201 WESTMAR CIR ANCHORAGE, AK 99508-4336 US MIN MGMT SERV LIBRARY 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4363 US MIN MGMT SERV RESOURCE EVAL JIM SCHERR 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4363 US MIN MGMT SERV FRANK MILLER 949 E 36TH A V STE 603 ANCHORAGE, AK 99508-4363 REGIONAL SUPRVISOR, FIELD OPERATNS MINERALS MANAGEMENT SERVICE ALASKA OCS REGION 949 E 36TH A V STE 308 ANCHORAGE, AK 99508-4363 JOHN MILLER 3445 FORDHAM DR ANCHORAGE, AK 99508-4555 USGS - ALASKA SECTION LIBRARY 4200 UNIVERSITY DR ANCHORAGE, AK 99508-4667 CIRI LAND DEPT POBOX 93330 ANCHORAGE, AK 99509-3330 ANCHORAGE TIMES BERT TARRANT POBOX 100040 ANCHORAGE, AK 99510-0040 ARCO ALASKA INC JOANN GRUBER ATO 712 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA I NC LEGAL DEPT MARK P WORCESTER POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC STEVE BENZLER ATO 1404 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC LIBRARY POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA I NC MARK MAJOR A TO 1968 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC LAND DEPT JAMES WINEGARNER POBOX 10036 ANCHORAGE, AK 99510-0360 ) ') ARCO ALASKA INC SAM DENNIS ATO 1388 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC SHELlA ANDREWS ATO 1130 PO BOX 100360 ANCHORAGE, AK 99510-0360 PETROLEUM INFO CORP KRISTEN NELSON POBOX 1 02278 ANCHORAGE, AK 99510-2278 ARCO ALASKA INC KUP CENTRAL WELLS ST TSTNG WELL ENG TECH NSK 69 POBOX 196105 ANCHORAGE, AK 99510-6105 AL YESKA PIPELINE SERV CO CHUCK O'DONNELL 1835 S BRAGAW - MS 530B ANCHORAGE, AK 99512 AL YESKA PIPELINE SERV CO PERRY A MARKLEY 1835 S BRAGAW - MS 575 ANCHORAGE, AK 99512 AL YESKA PIPELINE SERV CO LEGAL DEPT 1835 S BRAGAW ANCHORAGE, AK 99512-0099 US BUREAU OF LAND MGMT OIL & GAS OPRNS (984) J A DYGAS 222 W 7TH AV#13 ANCHORAGE, AK 99513-7599 ANCHORAGE DAILY NEWS EDITORIAL PG EDTR MICHAEL CAREY POBOX 149001 ANCHORAGE, AK 99514 DAVID W. JOHNSTON 320 MARINER DR. ANCHORAGE, AK 99515 ) ') JWL ENGINEERING JEFF LIPSCOMB 9921 MAIN TREE DR. ANCHORAGE, AK 99516-6510 NORTHERN CONSULTING GROUP ROBERT BRITCH, P.E. 2454 TELEQUANA DR. ANCHORAGE, AK 99517 GERALD GANOPOLE CONSULT GEOL 2536 ARLINGTON ANCHORAGE, AK 99517-1303 ASRC CONRAD BAGNE 301 ARCTIC SLOPE A V STE 300 ANCHORAGE, AK 99518 DAVID CUSATO 600 W 76TH A V #508 ANCHORAGE, AK 99518 ARMAND SPIELMAN 651 HILANDER CIRCLE ANCHORAGE, AK 99518 HALLIBURTON ENERGY SERV MARK WEDMAN 6900 ARCTIC BLVD ANCHORAGE, AK 99518-2146 OPST AD & ASSOC ERIK A OPSTAD PROF GEOL POBOX 190754 ANCHORAGE, AK 99519 JACK 0 HAKKILA POBOX 190083 ANCHORAGE, AK 99519-0083 ENSTAR NATURAL GAS CO BARRETT HATCHES POBOX 190288 ANCHORAGE, AK 99519-0288 ) ) MARATHON OIL CO BRAD PENN POBOX 196168 ANCHORAGE, AK 99519-6168 MARATHON OIL CO OPERATIONS SUPT POBOX 196168 ANCHORAGE, AK 99519-6168 UNOCAL POBOX 196247 ANCHORAGE, AK 99519-6247 UNOCAL KEVIN TABLER POBOX 196247 ANCHORAGE, AK 99519-6247 EXXONMOBIL PRODUCTION COMPANY MARK P EVANS PO BOX 196601 ANCHORAGE, AK 99519-6601 BP EXPLORATION (ALASKA), INC. MARK BERLINGER MB 8-1 PO BOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC SUE MILLER POBOX 196612 MIS LR2-3 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC PETE ZSELECZKY LAND MGR POBOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC INFO RESOURCE CTR MB 3-2 POBOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC BOB WILKS MB 5-3 POBOX 196612 ANCHORAGE, AK 99519-6612 ) ) BP EXPLORATION (ALASKA) INC MR. DAVIS, ESQ POBOX 196612 MB 13-5 ANCHORAGE, AK 99519-6612 AMSINALLEE CO INC WILLIAM 0 VALLEE PRES PO BOX 243086 ANCHORAGE, AK 99524-3086 DIANA FLECK 18112 MEADOW CRK DR EAGLE RIVER, AK 99577 L G POST O&G LAND MGMT CONSULT 10510 Constitution Circle EAGLE RIVER, AK 99577 o A PLATT & ASSOC 9852 LITTLE DIOMEDE CIR EAGLE RIVER, AK 99577 PINNACLE STEVE TYLER 20231 REVERE CIRCLE EAGLE RIVER, AK 99577 DEPT OF NATURAL RESOURCES DGGS JOHN REEDER POBOX 772805 EAGLE RIVER, AK 99577-2805 COOK INLET KEEPER BOB SHA VELSON PO BOX 3269 HOMER, AK 99603 COOK INLET VIGIL JAMES RODERICK POBOX 916 HOMER, AK 99603 PHILLIPS PETR ALASKA OPERATIONS MANAGER J W KONST PO DRAWER 66 KENAI, AK 99611 ) ) RON DOLCHOK POBOX 83 KENAI, AK 99611 DOCUMENT SERVICE CO JOHN PARKER POBOX 1468 KENAI, AK 99611-1468 KENAI PENINSULA BOROUGH ECONOMIC DEVEL DISTR STAN STEADMAN POBOX 3029 KENAI, AK 99611-3029 NANCY LORD PO BOX 558 HOMER, AK 99623 PENNY VADLA POBOX 467 NINILCHIK, AK 99639 BELOWICH COAL CONSULTING MICHAEL A BELOWICH HC31 BOX 5157 WASILLA, AK 99654 PACE SHEILA DICKSON POBOX 2018 SOLDOTNA, AK 99669 JAMES GIBBS POBOX 1597 SOLDOTNA, AK 99669 KENAI NATL WILDLIFE REFUGE REFUGE MGR POBOX 2139 SOLDOTNA, AK 99669-2139 AL YESKA PIPELINE SERVICE CO VALDEZ CORP AFFAIRS SANDY MCCLINTOCK POBOX 300 MSn01 VALDEZ, AK 99686 ) ) VALDEZ PIONEER POBOX 367 VALDEZ, AK 99686 VALDEZ VANGUARD EDITOR POBOX 98 VALDEZ, AK 99686-0098 NICK STEPOVICH 543 2ND AVE FAIRBANKS, AK 99701 UNIV OF ALASKA FAIRBANKS PETR DEVEL LAB DR V A KAMATH 427 DUCKERI NG FAIRBANKS, AK 99701 RICK WAGNER POBOX 60868 FAIRBANKS, AK 99706 JACK HAKKILA POBOX 61604 FAIRBANKS, AK 99706-1604 C BURGLlN POBOX 131 FAIRBANKS, AK 99707 FAIRBANKS DAILY NEWS-MINER KATE RIPLEY POBOX 70710 FAIRBANKS, AK 99707 FRED PRATT POBOX 72981 FAIRBANKS, AK 99707-2981 DEPT OF NATURAL RESOURCES DIV OF LAND REG MGR NORTHERN REGION 3700 AIRPORT WAY FAIRBANKS, AK 99709-4699 ) ) K&K RECYCL INC POBOX 58055 FAIRBANKS, AK 99711 ASRC BILL THOMAS POBOX 129 BARROW, AK 99723 RICHARD FINEBERG PO BOX 416 ESTER, AK 99725 UNIV OF ALASKA FBX PETR DEVEL LAB SHIRISH PATIL 437 DICKERING FAIRBANKS, AK 99775 UNIVERSITY OF ALASKA FBKS PETR DEVEL LAB DR AKANNI LAWAL POBOX 755880 FAIRBANKS, AK 99775-5880 SENATOR LOREN LEMAN STATE CAPITOL RM 113 JUNEAU, AK 99801-1182 DEPT OF ENVIRON CONSERV SPAR CHRIS PACE 410 WILLOUGHBY AV STE 105 JUNEAU, AK 99801-1795 ) ) #10 ) ) Forcenergy Inc July 11,200 Mr. Daniel T. SeamolUlt Jr., Commissioner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 Re: Application for Well Spacing Exemption West Forelands #1 Well Dear Mr. SeamolUlt: In connection with the application of Forcenergy Inc ("Forcenergy") requesting an order exempting the West Foreland #1 Well ("WF #1 ") ftom the drilling unit and spacing requirements of 20 AAC 25.055 as they pertain to the gas pool within the West Foreland Field, following the May 31, 2000 hearing the Alaska Oil and Gas Conservation Commission ("AOGCC") "invited" and "suggested" various parties to provide additional information. Most recently in your letter of JlUle 30, 2000, you have requested a written response regarding the total lease burdens affecting the two leases containing the West Foreland Field; federal lease A-035017 and state lease ADL-359112. This letter, and its attachments, provides the requested written information and in addition clarifies the position Forcenergy has consistently taken with the Alaska Department of Natural Resources, Division of Oil and Gas ("DO&G") regarding production ftom the WF# 1. Federal Lease A-035017 carries a 1/8 (12.5%) royalty interest ("RI") reserved by the lessor, the Bureau of Land Management ("BLM"), and an overriding royalty interest ("ORRI") of 5%, reserved by the original lessee. I have provided an attachment indicating the distribution of that 5% ORRI reflecting the best information Forcenergy has to date of the various conveyances divesting the 5% ORRI. A division order was never prepared for this lease, as the WF #1 was never put on production. Forcenergy plans to complete a division order in the near future. Forcenergy's total net royalty burden for A-035017 is therefore 17.5%. State of Alaska Lease ADL-359112 carries a 1/8 (12.5%) RI reserved by the lessor, the State of Alaska, Department of Natural Resources ("DNR"), and ORRI's totaling 12.5%. However, this 12.5% ORRI includes an ORRI of .65625% acquired by Forcenergy. Therefore, Forcenergy's total net ORRI burden is 11.84375%. I have also provided an attachment indicating the distribution of that 12.5°/ó ORRI reflecting the current information in Forcenergy's division order. As you know, the West Foreland Field Plan, approved by the AOGCC pursuant to AS 31.05.030 and 20 AAC 25.565, Page 1 of2 HEADQUARTERS Forcenergy Center 2730 SW 3rd Avenue Suite 800 Miami, Florida 33129-2237 REGIONAL OFFICE TELEPHONE 305/856-8500 FAX 305/856-4300 310 K Street Suite 700 Anchorage, Alaska 99501 TELEPHONE 907/258-8600 FAX 907/258-8601 ) ) conditionally reduced the RI for the DNR acreage in the West Foreland Field to 5% from 12.5%. Furthermore, the gas produced from the WF # 1 Well will be used to fuel the production facility for the West McArthur River Unit ("WMRU"), to which lease ADL-359112 is committed. Consequently, the West Foreland Field gas attributable to State of Alaska Lease ADL-359112 will be free of royalty obligations if it is used for unit/lease operations, pursuant to the terms of the lease and the WMRU Agreement. Finally, the issue of the compensatory royalty agreement ("CRA"), addressed in the DO&G letter to you dated June 20, 2000, also requires comment. While Forcenergy has always maintained and "assured DNR" of its intentions and desire to have a fully executed CRA in place before production begins from the WF #1, because other parties must agree to the terms of the CRA, over whom Forcenergy obviously has no control, Forcenergy can only agree to continue to negotiate as a willing party to the CRA. Forcenergy has no objection to a CRA and has agreed that it is the best mechanism to address the concerns of all parties. However, given the nature of negotiations, the possibility that all issues will not be resolved initially to the satisfaction of all parties to the CRA, and given Forcenergy's need to have a supply of fuel gas available soon for the WMRU, Forcenergy's position has always been that if a CRA cannot be fully executed prior to when it must begin production from the WF #1 Forcenergy will escrow all potential royalty obligations from the WF #1 well production illltil a CRA is executed by all the required parties. I trust that this information provides the AOGCC with all the remaining information it needs to render a decision and issue a spacing exception order for the WF #1 well. If there are any questions or you need additional information, please contact me at 907-868-2112. FORCENERGYINC p~d¥ ~ Jim Arlington Land Manager- Alaska Division Attachments: List ofORRI Owners for Lease ADL-359112 List ofORRI Owners for Lease A-035017 Cc: Peter Ditton Ken Boyd Gary Carlson Page 2 of2 \\FGEANCH\YOLl\ACC1\JARLINGT\Working Land Files\West Foreland Field\AOGCC ItT response re WF#l Spacing appl ]INAL_7-11-00.doc ADL-359112 ORRI Owners_7-1-2000 0.12500000 Total Overriding Royalty Burden 0.00062500 0.00062500 0.00062500 0.00062500 0.00031250 0.00031250 0.00031250 0.00875000 0.00375000 0.00125000 0.00500000 0.02000000 0.01250000 0.01000000 0.01000000 0.01000000 0.01000000 0.00562500 0.00500000 0.00250000 0.00250000 0.00250000 0.00187500 0.00125000 0.00125000 0.00062500 0.00062500 0.00656?50 1 Jeffery L Burgess 2 Coillnc 3 Jack H & Helen E Richardson 4 William Harry McDonald 5 Robert L & Deanna Persons 6 Jason M Burgess 7 Gregory S Burgess 8 Kenneth W Battley Trustee 9 SPC Inc 10 Robert Breeze Irrevocable Trust 11 Frank L Shogrin & Carolyn L Shogrin 12 Richard E Wagner 13 The Medema Family Trust 14 William G Stroecker 15 Charles ECole 16 Enea Tekan Investments 17 Limestone Oil & Gas Company 18 James L Thurman & Leta Thurman 19 John M Robinson 20 Polaris Fund L P 21 John K Garvey Revocable Trust 22 Sensor Oil & Gas Inc 23 LAB Properties Inc 24 William D Renfro (Estate) 25 Jin K Rhee 26 John C McDonald 27 Keith W Calder wood Revocable Trust 28 Forcenergy Inc Total Overriding Royalty Interest is 12.5% Lease ADL-359112 List of ORRI Owners as of July 1,2000 ) ) A-035017 ORRI Owners_7-1-2000 0.05000000 Total Overriding Royalty Burden 0.00125000 0.00125000 0.00125000 0.00125000 0.00406250 0.00125000 0.00062500 0.00062500 0.00062500 0.00125000 0.00093750 0.00125000 0.00062500 0.00062500 0.00375000 0.01468750 0.00734375 0.00734375 1 Barbara Dimock 2 Mary Pryor Thomas 3 James D. Medema 4 Oil Investment Trust 5 Leo T. Kreielsheimer 6 Warren L. Hines 7 L.W. Hines & William A. Erven 8 Dr. William A. Erven 9 Mary T. Brooks 10 Mary H.Hale 11 Winston C. Arnold 12 Harry J. Hill 13 Harold Kravik & Donald Dippel West Foreland Trust 14 Dippel West Foreland Trust 15 C.P. (Jack) Coughlan 16 David R. Cottis 17 Paul Dixon Beaulieu 18 Richard D. Beaulieu Jr. Total Overriding Royalty Interest is 5% Lease A-0350 17 List of known ORRI Owners as of 7-1-200 .) ) . I·.... #9 ~ S7,. 'fÆ~ .r:.-. ?. .. nE ¡ ; . ¡ I i :'\ ¡ ¡ . :: ,P I U U Ls (.0' ) fÃ\ n ill CQ? '~ifl' fÆ\ ~~ tkliLÆ®~~¿fu " ALASKA OIL AND GAS CONSERVATION COMMISSION / TONY KNOWLES, GOVERNOR 3001 PORCUPINE DRIVE ANCHORAGE. ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 June 30, 2000 Gary Carlson Vice President Forcenergy, Inc. 310 K Street, Suite 700 Anchorage, AK 99501 Re: Application for spacing exception for West Foreland No. 1 well Dear Mr. Carlson: At the May 31, 2000, hearing on the above-referenced application, Mr. Paul White of Forcenergy was asked to provide the Commission, within 10 days, a complete list of the overriding royalty owners and their percentages. On June 5, 2000 the Commission sent a follow-up letter to the parties repeating this request and asking for additional information. On June 13,2000, Mr. Jim Arlington of Forcenergy called Commissioner Cammy Oechsli Taylor with questions concerning the request. Mr. Arlington responded with information on total percentages but said he had not yet compiled a complete list of the current royalty owners. Mr. Arlington reported that the overriding royalty interests on the CIRI/BLM lease total five percent and that the overriding royalty interests on the state lease total 11 to 12 percent. Commissioner Oechsli Taylor requested a follow-up letter confirming Mr. Arlington's oral response. The Commission has not yet received the letter. Please submit the requested written response as soon as possible. Daniel T. Seamount Jr. Commissioner cc: Kenneth A. Boyd, Division of Oil and Gas Peter J. Ditton, Bureau of Land Management #8 ) ) United States Department of the Interior BUREAU OF LAND MANAGEMENT ANCHORAGE FIELD OFFICE 6881 Abbott Loop Road ANCHORAGE, ALASKA 99507-2599 West Forelands No.1 well/AK041/3160pjd June 22, 2000 Alaska Oil and Gas Conservation Commission Attn: Daniel T. Seamount, Jr. 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Dear Mr. Seamount: BLM's position regarding potential drainage, production, and royalty distribution for the West Foreland No. 1 well was formally stated at the May 31, 2000, hearing. As indicated in your June 5 letter, BLM will require 12.5% of the gas value to be placed in escrow and remain there until satisfactory division orders based on a drainage allocation are determined. The most expedient method for determining gas value would be to average the local gas sales price. As stated at the hearing, BLM does not adjudicate over-riding royalties. Therefore, we can not provide any additional information. Material balance or a volumetric analysis will be used to determine reserve estimates for drainage allocation. Selection of the best method will depend upon available information. Either method is a standard accepted engineering practice for reserve estimates. Should sufficient information be available, both methods will be used and any differences reconciled. Reservoir information necessary to perform volumetric and/or material balance calculations include: Porosity, initial pressure and pressure after a period of production, production volumes, temperature, gas compressibility and/or composition, water saturation, and thickness. Other information that will prove helpful is permeability data, structure and geologic maps, well logs, seismic data, and isopach or hydrocarbon pore volume maps. Provided this information is readily available, reservoir analysis should be completed in 12 - 18 months from initial production. Should you have any additional questions please contact me at (907) 267-1429. ~~~ Group Manager, Energy and Minerals F~~ E: \.HJr.1 23 2000 t::l¡J@3ka: #7 ) .) TONY KNOWLES, GOVERNOR DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS 550 WEST 7TH A VENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3510 PHONE: (907) 269-8800 FAX: (907) 269-8938 June 20, 2000 Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 t¡ '!\! 2 3', 2 ',,if "J!\J _ 0 00 RE: West Foreland Field Dear Mr. Seamount: On April 20,2000, Forcenergy Inc. (Forcenergy) applied to the Oil and Gas Conservation Commission (AOGCC) for an exemption to provisions of 20 AAC 25.055(a)(2) to open the West Foreland # 1 gas well to regular production from West Foreland Field. The State of Alaska, Department of Natural Resources (DNR) manages the adjacent state lease, ADL 359112 withi,n. the ,West McArthurRiverUnit,~hich will potentially be drained by production from the West Foì~land#1 well. At the May 31, 2000 hearing before AOGCC, Forcenergy proposed producing the well for 15 months t6 acqu,ireproduction data to help determine the appropriate aÌlocation of gas between the two leases. During which time all royalties would be deposited in an escrow account and Forcenergy would negotiate a compensatory royalty agreement with DNR and the Bureau of Land Management (BLM). However, Forcenergy has assured DNR that they will not produce gas from the West Foreland #1 well until we have a compensatory royalty agreement in place. On October 1, 1999, Forcenergy submitted the Ninth Plan of Development (9th POD) for the West McArthur River Unit (WIVIRU) to DNR for approval. Forcenergis 9th POD included plans to begin taking fuel gas from the West Foreland #1 well prior to the end of 1999. DNR conditioned its October 6, 1999 approval of the 9th POD on Forcenergy negotiating a production allocation and royalty payment agreement before producing gas from the West Foreland #1 well. On October 29, 1999, representatives from Forcenergy gave DNR and BLM a technical presentation on the West Foreland Gas Field, and all parties agreed to negotiate a compensatory royalty agreement. If DNR, BLM and Forcenergy execute a compensatory royalty agreement before production commences there should be no need to establish an . escrow account. However, if all parties agree that we need additional production data before allocating "Develop, Conserve, and Enhance Natural Re:;ources for Present and Future Alaskans." '"I Daniel T. Seamount, Jr., bGCC West Foreland Field June 20, 2000 Page 2 ) production between the leases, the compensatory royalty agreement could include a provision to establish an escrow account. All of the questions posed in your June 5, 2000 letter will be addressed in our negotiations with Forcenergy and BLM. Please contact Carol Lee, Unit Manager, at 269- 8813 if you have any additional questions. Si2ØUwvt ~O Kenneth A. Boyd \; Director cc: Gary Carlson, Forcenergy Peter Ditton, BLM Bonnie Robson, Dept. of Law AOGCC Response to 6.5.00 letter. doc #6 ~~~~t ~ })~~!Æ~~~!Æ TONY KNOWLES, GOVERNOR ~ ALASKA OIL AND GAS CONSERVATION COMMISSION 3001 PORCUPINE DRIVE ANCHORAGE. ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907)276-7542 June 5, 2000 Mr. Paul White Drilling Manager Forcenergy, Inc. 3 10 K Street, Suite 700 Anchorage, AK 99501 Mr. Peter Ditton u.S. Department of the Interior Bureau of Land Management 688] Abbott Loop Road . Anchorage, AK 99507 Ms. Carol Lee Department of Natural Resources Division of Oil and Gas 550 W. 7th, Suite 800 Anchorage, AI< 99501-3560 Re: West Foreland Field Dear Messrs. White and Ditton and Ms. Lee: In connection with Forcenergy's application for a spacing exception for the West Foreland No.1 well on May 3], 2000, Forcenergy proposed before the Commission the establishment of an escrow arrangement for a percentage of the well's production (to cover royalty interests) which would exist until all interested parties (BLM, DNR, and Forcenergy) ratified an allocation agreement. To ensure a more complete basis for the Commission's decision-making in this matter, it would be helpful to supplement the hearing record with additional information on how to value gas production from the well, what percentage of production to deposit into the account, and how the parties will determine recoverable gas reserves. Each of you is therefore invited to provide the Commission with the following information and recommendations: · List the total lease burdens, including ORRI's of the affected leases~ A-035017 (CIRI/BLM) and ADL 3591 ] 2 (DNR). · At the hearing, BLM confirmed that it would require a deposit of 12.5% into an escrow account. Forcenergy stated that they intended to deposit into the escrow account an amount equal to all royalty owed on the leases including ORRI. Please recommend a formula if the total potential royalty obligations exceed] 2.50/0. · Propose a plan/method for determining recoverable gas reserves contained within the reservoir. If material balance calculation is the method used, the plan should include the timing of the testing/production and the anticipated amount of drawdown on the reservoir. If the volumetric method is proposed, list the type of data to be incorporated. Messrs. White and Ditton ano ...Js. Lee J 2 June 5, 2000 . Recommend or comment on, including an explanation, the appropriate gas value or valuation formula that might be used to calculate the amount of money to be placed into the proposed escrow account. Please understand that any value or valuationformula the Conlmission might consider adopting would be solely for the purpose of providing reasonable assurance of sufficient escrow funds to secure future royalty obligations, and would not represent the Commission's detern1fnation or opinion as to the value of the gas for royalty, tax, or other purposes. Please respond within ] 0 days from today's date. Daniel T. Seamount, Jr. Com~issioner #5 I ~RlG~NA~ 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ^ " " MET ROC 0 U R T R E P 0 R TIN G, INC. l'l\\>"?- f) il & ¡;;S ÎÒ,::,f" ,"":,".,'; (ï~ ~~'$ . .:'ì... 't' * * * * * * MR. ROBERT E. MINTZ MS. CAMILLE OECHSLI TAYLOR MR. DAN SEAMOUNT Anchorage, Alaska May 31, 2000 9:50 o'clock a.m. TRANSCRIPT OF PROCEEDINGS PUBLIC HEARING Attorney General's Office: Commissioners: APPEARANCES: WEST FORELAND FIELD. In Re: ALASKA OIL AND GAS CONSERVATION COMMISSION ') ) 12 13 ) 14 15 16 17 18 19 20 21 22 23 24 25 11 10 9 8 7 6 5 4 3 2 1 ) ') ) 2 ) 1 PRO C E E DIN G S 2 (On record - 9:50 a.m.) 3 COMMISSIONER SEAMOUNT: I would like to call 4 this meeting to order -- this hearing to order. The date is 5 May 31, 2000. The time is 9:50 a.m. Sorry that we were late. 6 I didn't realize the time was passing so quickly. We're 7 located at 3001 Porcupine Drive, Anchorage, Alaska. That is 8 the offices of the AOGCC. I would like to start by introducing 9 the head table. My name is Dan Seamount. I'm the commissioner 10 holding the geological seat. To my left is Cammy Oechsli 11 Taylor who is a commissioner holding the public seat. Laura 12 Ferro of Metro Court Reporting is making a transcript of the 13 recordings or the proceedings. If you would like a copy, you ) 14 can get a hold of Metro Court Reporting. 15 The purpose of the hearing today is to consider an 16 application from Forcenergy Incorporated, considering a spacing 17 exception to provisions 20 AAC 25.055 for the West Foreland's 18 Number 1 Well. Title 31 Chapter 5.100 of the Alaska Oil and 19 Gas Conservation Act requires that an exception not create an 20 unfair advantage for the applicant, nor can the applicant 21 produce more than its just and equitable share. Notice of the 22 hearing was published on April 29, 2000. 23 At this time, I would like to disclose on the record 24 that my wife works for Forcenergy as a geophysical technician 25 who manages the computer and data system for the company. 'She MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Sevellth AVe1lue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 ) 9 10 11 12 13 ) 14 15 16 17 18 ) ) 3 1 is not involved in the case, nor would any decision I would 2 make affect her interest significantly. Therefore, I believe 3 that I would be able to make a fair and impartial decision with 4 regard to this application. 5 These proceedings are held in accordance with 20 AAC 6 25.540. These are regulations governing public hearings. This 7 hearing will be recorded. There will be no off the record 8 conversation except among the applicant himself during recesses or the in camera, which is a confidential session. We provide that we consider sworn testimony or unsworn statements. Greater weight would be given to the sworn statements. If you wish to be considered an expert, you should state your qualifications, and the Commission will rule whether to consider you as an expert. We'll hear from the applicant first, then we'll allow opportunity for other interested parties to ask questions. The basic way do that is to write questions -- write down your questions, forward them to the head table, and the Commission 19 will ask the question. However, if you wish to testify, we 20 will allow it. 21 testimony, your 22 other witnesses. We'll allow testimony, protests. If you give you will be allowed to cross examine any 23 The other -- one more thing I'd like to say about the 24 ground rules is if you have anything to say, to come up and use 25 the microphone there so that Ms. Ferro can get an accurate MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 11. I ) MET ROC 0 U R T R E P 0 R TIN G, INC. the early '60s by Panam, who has then became Amaco, and then it 25 the West Foreland Number 1 Well, gas well, which was drilled in 24 requesting here is a spacing exception so that we can produce 23 what Forcenergy is MR. WHITE: What we're 22 21 and proceed, Mr. White. 20 probably don't need to be an expert witness. Okay. Go ahead COMMISSIONER SEAMOUNT: Right. Okay. So, you 19 18 exception. MR. WHITE: We're talking about the spacing 17 16 would be the subject you're talking about? 15 Did you wish to be considered an expert witness? It's -- what COMMISSIONER SEAMOUNT: Thank you, Mr. White. 14 ) 13 represent Forcenergy. MR. WHITE: My name is Paul White, and I 12 11 and who you represent? COMMISSIONER SEAMOUNT: Please state your name (Oath administered) 5 6 7 please. 8 9 10 MR. WHITE: I do. COMMISSIONER SEAMOUNT: Raise your right hand, MR. WHITE: Yes. 4 Are you giving sworn testimony? 3 introduce themselves and approach the Commission. ) 1 recording or an accurate transcript of this hearing. 2 So, first, we would like to invite the applicant to 4 ) ) '\:, MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 25 apparently he's working on it but he doesn't -- he hasn't -- I 24 the present time. When I talked to him this morning about it, 23 at in that. I don't think there's been very much done on it at 22 sure. Jim Arlington is doing that, and I'm not sure where he's MR. WHITE: I -- you know, I'm not exactly 21 20 corning along in negotiation a CRA? COMMISSIONER SEAMOUNT: How is Forcenergy 19 MR. WHITE: No. 18 17 possibility of using it for anything other than fuel gas? COMMISSIONER SEAMOUNT: Do you anticipate the 16 10 agreement. And what we would like to do is escrow any 11 royalties that are due af- -- when this compensatory royalty 12 agreement is negotiated, we'd like to escrow any royalties 13 until the completion of this, but we'd like to get the spacing 14 exception so we can go ahead and produce the well, primarily 15 right now just for fuel gas. ) 9 agreeing to do is to negotiate an -- a compensatory royalty 8 produce this well, agreed to -- and this is what we are 7 spacing exception. Forcenergy in their -- in our plan to 6 has been some discussion over who has jurisdiction in the 5 lease boundary between a state and federal lease. And there 4 originally, it was drilled about 350 feet from what is now a 3 the fact that the well was drilled about 350 feet from a -- 2 Forcenergy bought the well from Phillips. The problem lies in 1 was -- and then it was -- then Phillips acquired the well, and ) 5 ') 550 West Sevellth Avellue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 '~i MET ROC 0 U R T R E P 0 R TIN G, INC. MR. WHITE: No, I don't, not right off hand. 25 24 overriding royalty owner's percentages are on each lease? COMMISSIONER SEAMOUNT: Do you know what the 23 22 division of the royalties between the state and federal lease. 21 far as -- what we're proposing as far as the -- a equitable 20 he's planning on or, you know, what we're planning on doing as 19 the -- in this royalty agreement, I really couldn't say what MR. WHITE: Yeah. Not having been involved in 18 17 percentages? Even a proposed formula. 16 or do have a formula for determining the allocation 15 have methods for determining how the allocation is going to be, COMMISSIONER SEAMOUNT: How would -- do you 14 ) 13 federal lease is to be divided. 12 the percentage of royalty between the state lease and the 11 a participating area I think is really yet to be decided how 10 royalty based on the aerial extent of the reservoir or based on 9 I think -- I think the issue is that is the division of the MR. WHITE: No. I don't -- I think that the 8 7 escrow? COMMISSIONER SEAMOUNT: That would go into 6 MR. WHITE: No. 5 ) 1 have no idea where it's at right now actually. I 2 COMMISSIONER SEAMOUNT: Do you have a proposal 3 of what would go into the CRA and what the royalty percentage 4 would be? 6 ') ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 MET ROC 0 U R T R E P 0 R TIN G, INC. 25 was divided strictly on a -- I think it was a 640 acre area 24 something like that. I don't have the exact number but that 23 attributable to the state lease was about 47 percent or 22 lease, and I believe the state lease, the percentage 21 this well, and it was divided between the state and federal 20 Stewart had a -- I think it was a participating area around 19 of is the one that went back to the Stewart Petroleum days when MR. WHITE: The only one that I'm really aware 18 17 corne up with any ideas as to what the allocation would be? 16 low when you're doing a geologic interpretation, but have they 15 department worked up a -- I know the probabilities are kind of COMMISSIONER SEAMOUNT: Has your geology 14 ) 13 primarily a hemlock objective. MR. WHITE: No. No, the Tomcat prospect is 12 11 targeting the same gas reservoir? COMMISSIONER SEAMOUNT: And that's not 10 MR. WHITE: Yeah, that's correct. 9 8 it's to the southwest. 7 paper where there was a Tomcat prospect a few miles I think COMMISSIONER SEAMOUNT: Okay. I saw it in the 6 MR. WHITE: No, we don't. 5 .... .in the area? COMMISSIONER SEAMOUNT: 4 MR. WHITE: No. 3 2 drilling plans targeting the same reservoir..... COMMISSIONER SEAMOUNT: Do you have any 1 ) 7 ) 550 West Seve1lth Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 MET ROC 0 U R T R E P 0 R TIN G, INC. 1, 25 those as well. I think the answer to that would be, yes. .... .in that well, would it address MR. WHITE: 24 COMMISSIONER SEAMOUNT: Right. 23 22 we -- if we were planning on perforating additional zones..... MR. WHITE: I guess what you're asking, do 21 20 encompass the entire Tyonic? 19 just the reservoir that's going to be produced or will it 18 this compensatory royalty agreement, is that going to consider 17 if that would be okay with the DNR folks. Let's see. Now, 16 going to want to ask the state to answer a few questions later, COMMISSIONER SEAMOUNT: Okay. I'm probably 15 MR. WHITE: No. 14 ) 13 Forcenergy doesn't? 12 have a set number that you would recommend at this COMMISSIONER SEAMOUNT: Okay. So, you don't 11 10 owe, and then be divided according to this royalty agreement. 9 into escrow would be the total amount of royalty that we would 8 overriding royalty interest. It would be the -- what would go 7 be whatever the state and the federal royalty, plus the MR. WHITE: No, what would go into escrow would 6 5 would go into escrow? 4 don't know if I've asked this question yet. What percentage 3 escrow, do you have any idea what percentage of production -- I COMMISSIONER SEAMOUNT: Okay. As far as 2 1 right around the well. ) 8 ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 } MET ROC 0 U R T R E P 0 R TIN G, INC. we would like to go ahead and produce the well as a fuel gas 25 24 decide how those escrowed royalties would be distributed. But 23 within 15 months complete a compensatory royalty agreement to 22 amount of royalties that would be due, and then in the -- and 21 agreement that we would escrow any royalties, that the total 20 is we would like to go ahead and produce the well with the MR. WHITE: That's -- what we would like to do 19 18 commences. And I'm not clear about what your plans are. 17 royalty agreement would actually be in place before production 16 agreement? The application actually says that the compensatory 15 you anticipate escrowing first, then a compensatory royalty overriding -- the compensatory royalty agreement, do you anticipate having that in place before production st~rts, and then work with it at some point after the money's escrowed or 13 ) 14 12 11 answer since you haven't been involved in this but is the 10 wanted to make sure we were clear about. You may not know the 9 confused about the order of events. And that's just what I COMMISSIONER OECHSLI TAYLOR: I'm just a little 8 7 Taylor, do you have any questions? COMMISSIONER SEAMOUNT: Commissioner Oechsli 6 5 were -- are behind pipe and that never were perforated. 4 there are some other zones that when the well was drilled 3 anticipate perforating any additional zones in that well but MR. WHITE: At this time we don't really 2 COMMISSIONER SEAMOUNT: Okay. 1 ): 9 ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ,) MET ROC 0 U R T R E P 0 R TIN G, INC. MR. WHITE: You know, I don't have any idea, 25 24 be able to see that fault barrier from the production data? COMMISSIONER SEAMOUNT: Do you believe you'll 23 22 in doing that very quickly. 21 negotiated, I think, and that's one of the problems that we see 20 going to have -- how that's divided is going to have to be 19 divided. But I think that'll have to be -- you know, that's 18 well, and that may have some bearing on how that reservoir is we believe that there's a fault fairly close to that 17 There 16 analysis in the reservoir, whether we were doing some testing. 15 an aerial extent, whether it was based on a transient pressure 14 of the different leaseholders were determined, whether it was ,) 13 any number of steps depending on how the relative percentages MR. WHITE: Well, one of the -- there could be 12 11 royalty agreement? 10 and the time that you were negotiating the actual compensatory 9 be dealing with between the time that you started production 8 the -- sort of the steps or the issues that you would expect to COMMISSIONER OECHSLI TAYLOR: What would be 7 6 some time to do that. 5 complete the compensatory royalty agreement but it could take 4 months 'til we -- or hopefully it wouldn't take that long to 1 well, and escrow whatever monies would be due, and then 2 distribute them according to the royalty agreement to be in 3 place within 15 months. But, yeah. We didn't want to wait 15 ) 10 ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ~ ,!' MET ROC 0 U R T R E P 0 R TIN G, INC. COMMISSIONER SEAMOUNT: Is it fine with us? COMMISSIONER OECHSLI TAYLOR: It's okay with Mr. Mintz, any. . . . . MR. MINTZ: No objection. MR. WHITE: It's fine with me. 21 22 23 24 me. 25 20 question herself? 19 the person with the written question would be able to ask the 18 like to do -- I'm new at this protocol but is it possible that other written questions to be addressed? What I'd COMMISSIONER OECHSLI TAYLOR: It is. 12 13 question? ) 14 15 16 couple of 17 there any written questions from someone in the audience. Are COMMISSIONER SEAMOUNT: Okay. I've gotten a COMMISSIONER SEAMOUNT: Is that your final 11 probably not be -- it wouldn't be a very good comment. MR. WHITE: I -- a comment on that by me would 10 COMMISSIONER OECHSLI TAYLOR: Okay. 9 8 to defer that question to our reservoir engineer. MR. WHITE: I think that -- actually I'd have 7 6 information? 5 this allocation of production? Or are you looking for more 4 have sufficient information now by which you could negotiate 3 one more question. Do you -- in your opinion, do you think you COMMISSIONER OECHSLI TAYLOR: I guess I have 2 1 Dan, whether we'll be able to see that or not. ) 11 ) } \ MET ROC 0 U R T R E P 0 R TIN G, INC. ~) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 25 we'll need additional gas from that. 24 that exploration will prove successful. So we'll need some 23 support the Redoubt Shoal, and possibly the Tomcat prospect if 22 long term, we expect to use the fuel gas from this well to 21 support the power generation at West McArthur River. In the 20 feet a day, which is, you know, a rather small amount to 19 we're producing -- we're purchasing about almost 300,000 cubic 18 from Unocal to support the West McArthur River Field. And 17 McArthur River Field. Presently, we're purchasing Grayling gas 16 have that we would use it in would probably be the West MR. WHITE: Right now, the only fields that we 15 14 fields would it be used? ) 13 you said that the gas would all be used for fuel gas. In what MS. LEE: I was just wondering. In the past 12 COMMISSIONER SEAMOUNT: Please proceed. 11 10 Resources, Division of Oil and Gas. MS. LEE: I'm with the Department of Natural 9 8 represent? COMMISSIONER SEAMOUNT: And who do you 7 MS. LEE: Carol Lee. 6 5 questions for you. Please state your name. COMMISSIONER SEAMOUNT: Yeah. I have a few 4 MS. LEE: I can ask. Step up to the mike? 3 2 the question yourself or would you want me to ask them? COMMISSIONER SEAMOUNT: Would you like to ask 1 ) 12 ') '} 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ')\ MET ROC 0 U R T R E P 0 R TIN G, INC. MR. WHITE: You know, I really can't answer 25 24 much was allocated each month? 23 how would you know how much to escrow if you didn't know how 22 royalty rates on the federal lease and the state lease. So, 21 compensatory royalty agreement. How -- there are different 20 be to escrow funds until we could agree on royalty -- 19 with escrowing funds. As I understand it, your proposal would MS. LEE: The other question I had had to do 18 17 probably eight million. 16 million. We feel like it's got an open flow potential of 15 I think it was tested in '82. And I think it tested at eight MR. WHITE: The last time that well was tested, 14 J 13 would produce? MS LEE: Do you have an estimate how much it 12 MR. WHITE: Yes. 11 10 well would produce more than 300,000 a day? MS. LEE: But you expect that the West Foreland 9 8 that with purchased gas now, approximately 300,000 a day. 7 enough power for our artificial lift so we're supplementing 6 the amount of gas that we're producing there doesn't provide 5 solution gas but as the wells at West McArthur River deplete, 4 we're burning at West McArthur River now, we're burning MR. WHITE: Yes. Yeah. Actually, all the gas 3 2 produce more gas than you need just for West McArthur? MS. LEE: So, you expect this well would 1 } ) 13 ) ) " 14 ) ) 1 that. Our land man would have to answer that because I don't 2 really know what the relative percentages are, and I think 3 there's some overriding royalty interest in there as well. And 4 I'm not really versed on what those are so I think that -- you 5 know, I think it's our intention to escrow whatever an 6 amount equal to whatever the maximum liability that we would 7 have, and -- but it's a good question. If you don't know 8 what -- if they have different percentages, and you don't know 9 what percentage is allocated to each one, it's difficult to 10 know how much to escrow. I don't know the answer to that. 11 We've got something -- that's one of the things that we'll have 12 to work out. 13 MS. LEE: Those are all my questions. ) 14 COMMISSIONER SEAMOUNT: What is the state 15 percentage on that lease? I'm wondering is it covered under 16 royalty relief or is it the full 12-1/2? 17 MS. LEE: The AOGCC granted royalty relief 18 under the legislation this past few years ago. 19 COMMISSIONER OECHSLI TAYLOR: I think that what 20 the..... 21 MS. LEE: Royalty production. 22 COMMISSIONER OECHSLI TAYLOR: . . . . .AOGCC did 23 was approve the plan. The AOGCC doesn't have any authority to 24 reduce the royalty. 25 MS. LEE: Okay. To be accurate, with AOGCC's ) MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ) 1 approval 2 percent. 3 4 5 6 7 8 9 10 11 12 13 ) 14 15 ) ) 15 of the plan, the royalty would be reduced to five COMMISSIONER SEAMOUNT: Five percent. COMMISSIONER OECHSLI TAYLOR: Five percent. COMMISSIONER SEAMOUNT: Okay. MS. LEE: My understanding is that if it is used as fuel gas in the West McArthur River Unit, it would be royalty free. COMMISSIONER SEAMOUNT: Right. MR. WHITE: That would be a..... COMMISSIONER SEAMOUNT: Anything that's..... MR. WHITE: .. .. . considered a non-lease use for the state's portion but it wouldn't be a non-lease use for the federal portion. COMMISSIONER SEAMOUNT: Right. And I'm 16 wondering do you know if you would put the full 12-1/2 percent 17 in escrow or estimate based on what the probable allocation 18 would be? 19 MR. WHITE: You know, I don't know what the 20 answer to that is. I know that we're going to have to - - in 21 order to make sure that we have enough money escrowed to cover 22 what the eventual distribution is going to be, I'm sure that 23 we're going to have to look closely at what those numbers are. 24 But I don't know how we can - - I don't know how we can - - I 25 don't know how that can be worked out right now but I'm sure ') MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 550 West Seve/lth Avellue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 MET ROC 0 U R T R E P 0 R TIN G, INC. MS. LEE: We've talked about the need for COMMISSIONER SEAMOUNT: You've talked about it. MS. LEE: We have talked about it. ) 25 24 23 COMMISSIONER SEAMOUNT: Have you been in 22 contact with Forcenergy about any kind of plans for the CRA? MS. LEE: No, I haven't. 21 20 COMMISSIONER SEAMOUNT: Have you been able to 19 look at an example of a compensatory royalty agreement? MS. LEE: Yes. COMMISSIONER SEAMOUNT: Okay. Ms. Lee? MR. WHITE: Yeah. Arlington couldn't make it COMMISSIONER SEAMOUNT: So, Arlington was too 12 13 busy? ) 14 15 this morning. 16 17 18 11 plans were with regard to that. 10 on that, and I don't know what -- I really don't know what our 9 Arlington had been here this morning because he's been working MR. WHITE: I -- you know, I wish that 8 7 agreement proposal? 6 overriding royalty interest in the compensatory royalty 5 a couple questions. And you said that you plan to cover the COMMISSIONER SEAMOUNT: Okay. I'm going to ask 4 the BLM representative to approach in a few minutes after I ask 3 ) 1 there's a formula that will make sure that there's enough money 2 in escrow to pay those royalties. 16 ) 550 West Sevellth Avellue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 }~ MET ROC 0 U R T R E P 0 R TIN G, INC. MS. LEE: We have told Forcenergy that we 25 24 royalty agreement? 23 money, and then negotiate the actual terms of the compensatory 22 on the basis of a specific formula escrow a certain amount of 21 DNR's position to the proposal as I understand it, which is to COMMISSIONER OECHSLI TAYLOR: What would be 20 MS. LEE: I think February. I'm not sure. 19 18 meeting? Approximately is fine. COMMISSIONER OECHSLI TAYLOR: When was that 17 COMMISSIONER SEAMOUNT: Okay. 16 15 staff was there. 14 where they presented their interpretation, and our geologic ) MS. LEE: We did have a meeting with Forcenergy MS. LEE: I don't know to what extent. 10 11 12 it? 13 COMMISSIONER SEAMOUNT: But they have looked at 9 this issue? 8 your geological or geophysical and engineering staff worked on COMMISSIONER SEAMOUNT: Okay. Have you -- has 7 6 can't answer that. MS. LEE: Not having seen the agreement, I 5 4 major problems with corning to an agreement? COMMISSIONER SEAMOUNT: Okay. Do you see any 3 2 haven't seen what it would look like. 1 having one. We conceptually agreed to the idea of one but we ) 17 ) ~~ MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Sevellth Avellue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 25 can't really answer that. 24 engineer, and I'm not sure -- I just -- I really don't -- I 23 be -- that would really be a question for our reservoir MR. WHITE: No, I really couldn't. That would 22 21 the state side? 20 any confidence what the maximum percent is that might corne from could you say with MR. MINTZ: Do you have 19 18 definite formula for that division right now. 17 reservoir engineer to answer but I'm not sure that we have a 16 that we have -- it would probably be a better question for our 15 comes from the federal lease. And right now, I don't think 14 the production comes from the state lease and what production ) 13 satisfaction how we're going to determine what percentage of 12 agreement is we would have to figure to everybody's lIon -- and that's one of the issues in this compensatory royalty MR. WHITE: No. We really don't. It depends 10 9 side of the lease boundary line? 8 estimate of what proportion of production would corne from each MR. MINTZ: Mr. White, does Forcenergy have an 7 COMMISSIONER SEAMOUNT: Go right ahead. 6 5 a couple questions? MR. MINTZ: Mr. Chairman, do you mind if I ask 4 3 plan of development. 2 that was a condition of the approval of the West McArthur River 1 prefer to have the agreement before they begin production. And ') 18 ) ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 .J MET ROC 0 U R T R E P 0 R TIN G, INC. a complete list of the overriding royalty owners and their 25 MR. MINTZ: Can you provide the Commission with 24 23 contact with them or not. MR. WHITE: I don't know whether he's had any 22 21 with the overriding royalty owners as well as the lessors? 20 compensatory royalty agreement, has Forcenergy been negotiating MR. MINTZ: In your negotiations over possible 19 18 that. 17 but I don't know what mechanism he had planned on using for 16 about that or land man. He's -- I think he's working on that MR. WHITE: I'd have to talk to our lawyer 15 14 setting up and administering the escrow? ) MR. MINTZ: What mechanism do have in mind for 13 12 value that would be right now. 11 comes from the federal side of the lease, I'm not sure what 7 side of the lease, being if we're using it just at West 8 McArthur River, that would be an on lease use so there wouldn't 9 be any value to that at all as far as -- because we normally 10 wouldn't -- we wouldn't pay for an on lease use. The gas that 6 right now. The course of the gas that's coming from the state a value we would assign to that gas 5 don't really know what MR. WHITE: No, I don't. There are -- no, I 4 3 assigned to the gas? 2 propose to set up, do you have a proposed value that you have MR. MINTZ: With regard to the escrow that you 1 I) ) 19 ") 550 West Seventh Avellue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 )! MET ROC 0 U R T R E P 0 R TIN G, INC. MS. LEE: May I be excused? 25 24 like. 23 I'd like to invite the BLM representative to testify if he'd COMMISSIONER SEAMOUNT: I guess at this time 22 21 so we haven't looked at that. MS. LEE: We weren't planning to do an escrow 20 19 other words.. . . . MR. MINTZ: But just in terms of escrow. In 18 17 have to come out of the negotiations with Forcenergy. MS. LEE: I think that's something that will 16 15 attributable to the state side? 14 example, we would assume that, say, no more than X percent is '\ l 13 that you would be comfortable with? If they're in escrow, for say, a minimum MR. MINTZ: Would you have a 12 MS. LEE: Not that I'm aware of. 11 10 come from each side of the boundary? 9 DNR have an estimate of the shares of production that would MR. MINTZ: That would help. MR. WHITE: Yeah. MR. MINTZ: Could I ask Carol Lee if -- does 8 7 6 5 all the overriding royalty owners. 4 think he's got -- I think our land man has a complete list of MR. WHITE: Yes, I believe we can do that. I 3 2 next 10 days? 1 percentages? Not today but could you do that within, say, the ') 20 ) ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 J~ MET ROC 0 U R T R E P 0 R TIN G, INC. .... .is covered under COMMISSIONER SEAMOUNT: 25 MR. DINTON: Five percent. 24 23 was five percent..... COMMISSIONER SEAMOUNT: I believe she said it 22 21 hear Carol as to what the state royalty was on that lease. MR. DINTON: I have one question. I could not 20 19 then proceed. COMMISSIONER SEAMOUNT: And -- okay. Well, 18 17 testimony at this point. MR. DINTON: I see no reason to give sworn 16 15 testimony? Do you see any reason to? 14 microphone? That's okay? Okay. Would you like to give sworn ) COMMISSIONER SEAMOUNT: Should he wear the 13 12 operational engineer and reservoir engineering. 11 group manager for Energy and Minerals. My background is MR. DINTON: Currently, I'm employed as the 10 9 Bureau of Land Management? COMMISSIONER SEAMOUNT: And what do you do for 8 7 Management. MR. DINTON: I work for the Bureau of Land 6 5 represent? 1 COMMISSIONER SEAMOUNT: You may be excused. 2 Would you please state name. 3 MR. DINTON: My name is Peter Dinton. 4 COMMISSIONER SEAMOUNT: And who do you ) 21 J ) 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ') )' MET ROC 0 U R T R E P 0 R TIN G, INC. right. 25 know, part of the lease is in the West McArthur River Unit, 24 MR. WHITE: Part of it. Part of the -- you 23 22 West McArthur River Unit? The..... 21 MR. DINTON: Is that lease contained within the 2 0 don't . . . . . MR. WHITE: I -- you know, I don't know. I 19 18 allocated production from the West McArthur River Unit? 17 overriding royalties currently receive for that lease some MR. DINTON: In terms of the overrides, do the 16 MR. WHITE: Right. COMMISSIONER SEAMOUNT: Okay. 15 14 ) 13 royalty in that escrow account? 12 to less than 12-1/2 percent, there would be an excess amount of 11 the five percent for the state royalty and the override add up 10 the entire royalty would be escrowed. And in this case, should 9 royalty rate on the federal lease. So, we would require that 8 percent at a minimum be escrowed because that would be the MR. DINTON: The BLM would require that 12-1/2 7 6 from Arlington. I don't expect them to be more than that, no. 5 much smaller than that. But that's only just what I've heard 4 don't know exactly what the overrides are but I think they're MR. WHITE: No. I should qualify that. I 3 2 in excess of seven and a half percent? 1 royalty relief. Mr. White, do you expect the overrides to be ) 22 ) ) ) ) 23 ) 1 MR. DINTON: 2 MR. WHITE: 3 MR. DINTON: 4 MR. WHITE: 5 MR. DINTON: 6 could answer this question. And it is not segregated? No. It is all one lease? Right. If it is contained -- maybe Carol Does that lease receive allocated 7 production from the West McArthur River Unit? 8 MS. LEE: No. 9 MR. DINTON: It does not? 10 MS. LEE: No. 11 MR. DINTON: Okay. I know you had testified 12 that you did not know what the percentages of allocation would 13 be, but you did say that I believe back in the early estimates J 14 that the percentage was somewhere around 47, 53, roughly? 15 MR. WHITE: I think that's right. But that was 16 based strictly on an arbitrary area that was drawn around that 17 well, and it was based on where the lease line bisected that 18 arbitrary area so whether or not that's going to be an 19 acceptable method of dividing that or not, I don't know. 20 MR. DINTON: I would offer that from the 21 meeting that we had at the DNR when this issue first arose, I 22 believe the numbers that were discussed in that meeting were 23 45, 55. 24 COMMISSIONER SEAMOUNT: That's 45 on the..... 25 MR. DINTON: State. MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Sevellth Averzue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 \ ,r' MET ROC 0 U R T R E P 0 R TIN G, INC. COMMISSIONER OECHSLI TAYLOR: Perhaps just for 25 MR. DINTON: That is correct. 24 23 regardless of any potential allocation? COMMISSIONER SEAMOUNT: And that would be 22 21 would be attributable to the state lease. 20 the allocation determination was that zero percent of that gas 19 place, the fed government has to protect its interest in case 18 until such time as the compensatory royalty agreement is in 17 percent of the production from that well be escrowed. Because 16 federal government would require that 12-1/2 percent on 100 MR. DINTON: Just so we're clear on this, the 15 14 the decline curve analyses. ) 13 allocation would be determined based on the production data, COMMISSIONER SEAMOUNT: Yes. Then the final 12 8 MR. DINTON: I'm not sure that I'm 9 understanding the question. Are you saying such as 12-1/2 10 percent to be escrowed, the value of 12-1/2 percent of the gas 11 or the royalty value? 7 after seeing the production data? For the final allocation? 6 number for the escrow account, and then fine tune it later 5 royalty agreement, would it be acceptable to use a pre-agreed 4 interested parties. If you were to work on a compensatory ) ) 24 ~ ) 1 COMMISSIONER SEAMOUNT: .... .state. 2 MR. DINTON: Fifty-five on the federal. 3 COMMISSIONER SEAMOUNT: Question to all the ) ) 25 ) 1 the record, Mr. Dinton, if you wouldn't mind explaining what it 2 is that the federal government's interests are in looking at 3 production with respect to the compensatory royalty agreement 4 being done now versus later? 5 MR. DINTON: The purpose -- the federal 6 government is charged with protecting the public interest in 7 all federal lands. As such, we are required to make reasonable 8 determinations on allocations that would affect royalty for the 9 United States. At this time there is insufficient information 10 to determine an equitable allocation for production from that 11 well. The well has to be produced for a period of time to 12 determine the declining curve. Under a reservoir engineering 13 process, you would analyze the decline curve to determine an ) 14 estimated ultimate recovery from the well. Based on that, you 15 would establish a drainage pattern and an allocation factor to 16 each lease. 17 COMMISSIONER SEAMOUNT: Would this analysis 18 include input from all the interested parties? 19 MR. DINTON: Yes, it would. The allocation 20 factors would be mutually agreeable to all interested and 21 affected parties. 22 COMMISSIONER SEAMOUNT: And what would happen 23 if you couldn't come to an agreement on the allocation? 24 MR. DINTON: We'd probably seek third-party 25 analysis, and then weigh each of those analyses to determine ) J MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ) ...~ 26 ) 1 which value would be -- probably some sort of arbitration 2 between the various values that would be determined. In my 3 estimate, you could give this information to 10 different 4 reservoir engineers. They would come up with 10 different 5 allocation factors but that they would all be relatively close, 6 say, plus or minus three to five percent. 7 COMMISSIONER SEAMOUNT: Now, it's my 8 understanding that DNR has not seen an example of the 9 compensatory royalty agreement. Could the BLM provide them 10 with one? 11 MR. DINTON: Absolutely. COMMISSIONER SEAMOUNT: Okay. Would the state 12 13 like an explanation of it at this time or -- okay. I think I'm ) 14 about done with my questions. 15 COMMISSIONER OECHSLI TAYLOR: I don't have 16 anymore. 17 COMMISSIONER SEAMOUNT: Are there any questions 18 from anybody else in the room? 19 MR. MINTZ: Mr. Chairman, I have a couple 20 questions. 21 COMMISSIONER SEAMOUNT: Okay. 22 MR. MINTZ: Mr. Dinton, with regard to the 23 es- -- your escrow requirement, do you -- would it be 24 satisfactory if there was an escrow administered by someone 25 other than MMS? For example, a bank serving as escrow agent ,) MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 550 West Seventh Avenue, Suite 1650 Anchorage, Alaska 99501 (907) 276-3876 ) MET ROC 0 U R T R E P 0 R TIN G, INC. MR. WHITE: Thank you for hearing us. 25 24 appearing on behalf of somebody else. COMMISSIONER OECHSLI TAYLOR: Thank you for 23 22 wish Forcenergy the best of luck, and everyone involved. 21 is -- was a pretty valuable communication session. I'd like 20 I'd like to thank everybody for contributing to what I think 19 I think it's appropriate to go ahead and close the meeting. COMMISSIONER SEAMOUNT: Any other questions? determination? 10 11 12 13 ) 14 15 16 17 18 MR. MINTZ: Thanks. MR. DINTON: Yes, it would. proceeds distributed according to the Commission's the -- would it be acceptable to BLM to have the escrow the Commission made a determination about allocation, would parties were unable to reach an agreement, would -- and then and negotiation with compensatory royalty agreement, the 9 that there was a certain amount of time allowed for production MR. MINTZ: If we would then -- let's suppose 8 7 required to be placed into an interest-bearing account. 6 agency. Typically, it is a financial institute. The money's 5 and tracked by MMS but typically MMS is not the controlling 4 administered by a financial institute. They are established ) 1 pursuant to instructions from the Commission? 2 MR. DINTON: I do not know the answer to that 3 question at this time. Typically, escrow accounts would be 27 ') ) ) ') 28 ) 1 (Off record 10:35 a.m. ) 2 END OF PROCEEDINGS 3 4 5 6 7 8 9 10 11 12 13 ) 14 15 16 17 18 19 20 21 22 23 24 25 ) METRO COURT REPORTING, INC. sso West Seventh Avenue, Suite 16S0 Anchorage, Alaska 99S01 (907) 276-3876 ,) ) i~,. i 1 C E R T I FIe ATE 2 UNITED STATES OF AMERICA) ) ss . 3 STATE OF ALASKA ) 4 I, Laura Ferro, Notary Public in and for the State of 5 Alaska, and Reporter for Metro Court Reporting, Inc., do hereby 6 certify: 7 That the foregoing Alaska Oil & Gas Conservation 8 Commission Public Hearing, was taken before myself on the 31st 9 day of May 2000, commencing at the hour of 9:50 o'clock a.m., 10 at the offices of Alaska Oil & Gas Conservation Commission, 11 3001 Porcupine Street, Anchorage, Alaska; 12 That the hearing was transcribed by myself to the best 13 of my knowledge and ability. ) 14 IN WITNESS WHEREOF, I have hereto set my hand and 15 affixed my seal this 5th day of June 2000. 16 c/~~ 17 Notary Public in and for Alaska My commission expires: 05/03/01 18 19 20 21 . , 22 23 24 25 J: MET ROC 0 U R T R E P 0 R TIN G, INC. 550 West Sevellth Avellue, Suite 1650 Allchorage, Alaska 99501 (907) 276-3876 ) ALASKA OIL ANn GAS CONSERV A TION COMMISSION May 31, 2000 9:30 AM FORCENERGY, INC. NAME - AFFILIA TION TELEPHONE Do Yon Plan to Testifv? Yes No (PLEASE PRINT) KY'\S~ Ne\SoY) - 'PN A ~'t8·'3b~~ \).t\\) \ W~\-\~, fG-{èc~tk(.,~ 2S8-8boü ~l AN ~v'[ Lc)C.~ At)Nr:( "46£1 . ß&07 (' ..- Þc <2...0 L-.. l.-€; ç:: "A DN R ;2. ~ <i - ~ ~, ~ >\ :'5&'f-e ':baVt'e!. ACJCi¡Cc 713-IZZc! _ðr:h C/4V1J.! A(Jr;~/& 79 ~ -/¿:so 0- o<-c-,L 11d:s r' 77 ~ -12- "3""2- ¡? G- r/-c~; I); #\, -Ie ;.. ¿)Ç ~ ~ X ~ No A/d ~ó #4 ') ) Notice of Public .Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: West Foreland Field Forcenergy Inc. by letter dated April 20, 2000, has requested an exemption to provisions of 20AAC 25.055(a)(2) to open the West Foreland #1 ("WF#1") well to regular production from a gas pool in the West Foreland Field. The WF#1 is the only well in the West Foreland Field and has a surface location of9]0' from the south line, 4669' from the west line, TORN, R14W, Section 21, Seward Meridian. A person Inay submit a written protest or written comments on the requested exemption prior to 4:00 PM on .May 30, 2000 to the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501. In addition, the Commission has tentatively set a public hearing for 9:30 AM May 31, 2000 at the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission prior to 4:00 PM on May 15, 2000. If a request for hearing is not timely filed, the Commission will consider the issuance of an order without a hearing. To learn if the Commission will hold the tentative hearing, please call 793-1221. If you are a person with a disability who lnay need special accomlnodation in order to attend the public hearing, please contact Diana Fleck at the address or phone number indicated above before May 21, 2000 to ensure that any necessary accommodations can be provided. Robert N. Christenson, P .E. Chair Published April 29, 20UO ADN AO - 02014034 ) Anchorage Daily News Affidavit of Publication 1001 Northway Drive, Anchorage, AI< 99508 AD# DATE PURCHASE ORDER EDITION ACCOUNT 367117 4/29/200 STOF0330 02014034 DN STATE OF ALASKA THIRD JUDICIAL DISTRICT Eva Alexie, being first duly sworn on oath deposes and says that 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 saia 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 pu5lished in regular issues (and not in supplemental form) of said newspaper on the above dates 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 fore~oing publication is not in excess of the rate charged private indIviduals. '" Signed ~ ~ ~ /JfP{à Subscribed and sworn to me before this date: Notar~in i fo~~~t~ of Alaska. Third Division, Anchorage, Alaska MY COMMISSION EXPIRES: !é.b ~ :?cJOjL I, Notice olPublicHearing ! Sl'~~k~ g~:"~A~~t i C~~~ê~~~:I:~' \ ¡ Re:lNest FpréløndFI,eld I Forcene·';9Y Inc. bvletter' ¡ daledA¡:¡ril,2Q:/.2000, has .rer, ~ ~',~ ;'I~;:'~" ~ ~t'; ":!(/' ~,..}(t W'O}~" I.:J II ~ I I.:, ')0':,1' rn.; '~"~,S,t f Forelt;'nd #1 ('yViF=4Il) "Yell to ,''; ~ ',' I ù r 1:, r,:,.:I -.Ie Ii.:.., i, (,m 'J I ~I;J ~ .: '=":"1 Ir' 1 nr:· '.r.'~; I r= I~r"-: ) 10'"'l' ¡: 1-:-1'1 I.~ ~e.vyi=!~ . íS.thF o~ iv ~.e II '" thl:" "'':'':,f :'"r~111'.j r-.,:,I,j ,.,n., r..'):, 0 ~ IJI"'I.,,)'= -:- 1,:,,~,;'1 r ..)n 1<" ;, I (I I r ':' ..Y' I t. to :) '.' I r. II r'1 ~ ,; Jf.,~,Q r..orn rrlf: ·~t~1 II"-=- ï I) Ii r ï;! I ~ '~,' S ~ , t .,) I" : I I '::;'~::~\~':'::Is'Ùbmit a ! written prolestor written co 1"11 men)s ..Q nl h~·..r e, Quested exen1Ptlar~'prlor to :4: 00 PM on Mov 30/ 200010 ' I he A I as,k a. 0.11 Øn de; as I...__,-,,_.,~ ' ¡?~... . II ( Ii:' (:'-(/ \\\>~\'\'( iBVž;' \.\. ,&~. . . . . . . ,..~, ,.'- \... <¿Y'. ...",,,", " t..' "/ ~ .' -.toO' 1'./\ ... {~. ".' 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'3 " "",".I I-?", r.; :"J.:' .!., , L 'toi ~~'Obh ~ ~ ~~ ~~~.; \05~fÓo6~r If a reQu~èt forhearin9 is ~~;i~~rl¡f~6en~'iJ~~e t~~~: \ suaflce,·a, f. an O. r.der W.·llh..O. ul a hearing, T,o:learn if. t~E¡, I Commis.sionwlll.hold the.· len., t...a,t, ".I..V.., e. 'h. é.a r.i. ns. ' pi ea ~e. .,.' cal.!7.~3.~ 221. ...'.. . ..1 II.fYaÜb~iap~~son with\) \dISÓ"bllitv who may need \ sP,ecial a,c.c,o.m,n:'IOdal.ion iI), order to attend the PlJbl ic hearing, please contact I. DianaFlec'k .atthe address I or..phane number indicöted I ~~~~1~;:orhea~g~/~'~~~~~, I sary accommod.a. lion, scan 'beprovided.~ I· IS/ldb~A.'::i~.L."'t'~r¡stensqn. :6~.2Ò~~O~~ :',',i;", I Pub.: ~~rir19/2000 DRII McGraw Hill Randall Nottingham 24 Hartwell Lexington, MA 02173 F Oil{} t'l.)t~e:~!~:~ 't J'; ,)"'~ lÁ~~~ I ~ PIRA ENERGY GROUP LIBRARY 3 PARK AVENUE (34th & PARK) NEW YORK, NY 10016 OVERSEAS SHIPHOLDING GRP ECON DEPT 1114 AV OF THE AMERICAS NEW YORK, NY 10036 NY PUBLIC LIBRARY DIV E GRAND CENTRAL STATION POBOX 2221 NEW YORK, NY 10163-2221 ALASKA OFC OF THE GOVERNOR JOHN KATZ STE 518 444 N CAPITOL NW WASHINGTON, DC 20001 ARENT FOX KINTNER PLOTKIN KAHN LIBRARY WASHINGTON sa BLDG 1050 CONNECTICUT AV NW WASHINGTON, DC 20036-5339 US MIN MGMT SERV CHIEF OCS STATS & INFO 381 ELDEN ST MS 4022 HERNDON, VA 20170-4817 LIBRARY OF CONGRESS STATE DOCUMENT SECTION EXCH & GIFT DIV 10 FIRST ST SE WASHINGTON, DC 20540 U S DEPT OF ENERGY PHYLLIS MARTIN MS EI823 1000 INDEPENDENCE SW WASHINGTON, DC 20585 TECHSYS CORP BRANDY KERNS PO BOX 8485 GA THERSBURG, MD 20898 j-'" r''!'f!'-'l.fJ .¡II ..,j- .- I·" () c) I US GEOLOGICAL SURVEY LIBRARY NATIONAL eTR MS 950 RESTON, VA 22092 ,) DPC DANIEL DONKEL 1420 NORTH ATLANTIC AVE, STE 204 DAYTON BEACH, FL 32118 SO DEPT OF ENV & NATRL RESOURCES OIL & GAS PROGRAM 2050 W MAIN STE #1 RAPID CITY, SO 57702 AMOCO CORP 2002A LlBRARYIINFO CTR POBOX 87703 CHICAGO, IL 60680-0703 ILLINOIS STATE GEOL SURV LIBRARY 469 NATURAL RESOURCES BLDG 615 E PEABODY DR CHAMPAIGN, IL 61820 LINDA HALL LIBRARY SERIALS DEPT 5109 CHERRY ST KANSAS CITY, MO 64110-2498 ALFRED JAMES III 107 N MARKET STE 1000 WICHITA, KS 67202-1811 MURPHY E&P CO ROBERT F SAWYER POBOX 61780 NEW ORLEANS, LA 70161 UNIV OF ARKANSAS SERIALS DEPT UNIV LIBRARIES FAYETTEVILLE, AR 72701 CROSS TIMBERS OPERATIONS SUSAN LILLY 210 PARK AVE STE 2350 OKLAHOMA CITY, OK 73102-5605 DWIGHTS ENERGYDATA INC JERLENE A BRIGHT DIRECTOR PO BOX 26304 OKLAHOMA CITY, OK 73126 IOGCC POBOX 53127 OKLAHOMA CITY, OK 73152-3127 R E MCMILLEN CONSULT GEOL 202 E 16TH ST OW ASSO, OK 74055-4905 OIL & GAS JOURNAL LAURA BELL POBOX 1260 TULSA, OK 74101 GAFFNEY, CLINE & ASSOCIATES LIBRARY 16775 ADDISON RD STE 400 ADDISON, TX 75001 GAFFNEY, CLINE & ASSOC., INC. LIBRARY 16775 ADDISON RD, STE 400 ADDISON, TX 75001 BAPIRAJU 335 PINYON LN COPPELL, TX 75019 MARK S MALlNOWSKY 15973 VALLEY VW FORNEY, TX 75126-5852 US DEPT OF ENERGY ENERGY INFORMATION ADMINISTRATION MIR YOUSUFUDDIN 1999 BRYAN STREET STE 1110 DALLAS, TX 75201-6801 DEGOL YER & MACNAUGHTON MIDCONTINENT DIVISION ONE ENERGY SQ, STE 400 4925 GREENVILLE AVE DALLAS, TX 75206-4083 ,) ') JERRY SCHMIDT 4010 SILVERWOOD DR TYLER, TX 75701-9339 ) STANDARD AMERICAN OIL CO AL GRIFFITH POBOX 370 GRANBURY, TX 76048 CROSS TIMBERS OIL COMPANY MARY JONES 810 HOUSTON ST STE 2000 FORT WORTH, TX 76102-6298 PRITCHARD & ABBOTT BOYCE B BOLTON PE RPA 4521 S. HULEN STE 100 FT WORTH, TX 76109-4948 SHELL WESTERN E&P INC K M ETZEL POBOX 576 HOUSTON, TX 77001-0574 ENERGY GRAPHICS MARTY LINGNER 1600 SMITH ST, STE 4900 HOUSTON, TX 77002 H J GRUY ATTN: ROBERT RASOR 1200 SMITH STREET STE 3040 HOUSTON, TX 77002 PURVIN & GERTZ INC LIBRARY 2150 TEXAS COMMERCE TWR 600 TRA VI S ST HOUSTON, TX 77002-2979 RAY TYSON 1617 FANNIN ST APT 2015 HOUSTON, TX 77002-7639 CHEVRON PAUL WALKER 1301 MCKINNEY RM 1750 HOUSTON, TX 77010 BONNER & MOORE LIBRARY H20 2727 ALLEN PKWY STE 1200 HOUSTON, TX 77019 OIL & GAS JOURNAL BOB WILLIAMS 1700 W LOOP SOUTH STE 1000 HOUSTON, TX 77027 PETRAL CONSULTING CO DANIEL L LIPPE 9800 RICHMOND STE 505 HOUSTON, TX 77042 MARK ALEXANDER 7502 ALCOMITA HOUSTON, TX 77083 MARATHON OIL CO GEORGE ROTHSCHILD JR RM 2537 POBOX 4813 HOUSTON, TX 77210 UNOCAL REVENUE ACCOUNTING POBOX 4531 HOUSTON, TX 77210-4531 EXXON EXPLORATION CO. T E ALFORD POBOX 4778 HOUSTON, TX 77210-4778 EXXON EXPLOR CO LANDIREGULATORY AFFAIRS RM 301 POBOX 4778 HOUSTON, TX 77210-4778 CHEVRON USA INC. ALASKA DIVISION ATTN: CORRY WOOLlNGTON POBOX 1635 HOUSTON, TX 77251 PETRINFO DAVID PHILLIPS POBOX 1702 HOUSTON, TX 77251-1702 ,) ) PHILLIPS PETR CO ALASKA LAND MGR POBOX 1967 HOUSTON, TX 77251-1967 PHILLIPS PETROLEUM COMPANY W ALLEN HUCKABAY PO BOX 1967 HOUSTON, TX 77251-1967 WORLD OIL MARK TEEL ENGR ED POBOX 2608 HOUSTON, TX 77252 EXXONMOBIL PRODUCTION COMPANY J W KIKER ROOM 2086 POBOX 2180 HOUSTON, TX 77252-2180 EXXONMOBIL PRODUCTION COMPANY GARY M ROBERTS RM 3039 POBOX 2180 HOUSTON, TX 77252-2180 PENNZOIL E&P WILL 0 MCCROCKLIN POBOX 2967 HOUSTON, TX 77252-2967 CHEVRON CHEM CO LIBRARY & INFO CTR POBOX 2100 HOUSTON, TX 77252-9987 MARATHON Ms. Norma L. Calvert POBOX 3128, Ste 3915 HOUSTON, TX 77253-3128 ACE PETROLEUM COMPANY ANDREW C CLIFFORD PO BOX 79593 HOUSTON, TX 77279-9593 PHILLIPS PETR CO JOE VOELKER 6330 W LP S RM 492 BELLAIRE, TX 77401 ) ) PHILLIPS PETR CO ERICH R. RAMP 6330 W LOOP SOUTH BELLAIRE, TX 77401 ) PHILLIPS PETR CO PARTNERSHIP OPRNS JIM JOHNSON 6330 W LOOP S RM 1132 BELLAIRE, TX 77401 TEXACOINC R Ewing Clemons POBOX 430 BELLAIRE, TX 77402-0430 WATTY STRICKLAND 2803 SANCTUARY CV KA TY, TX 77450-8510 TESORO PETR CORP LOIS DOWNS 300 CONCORD PLAZA DRIVE SAN ANTONIO, TX 78216-6999 I NTL 01 L SCOUTS MASON MAP SERV INC POBOX 338 AUSTIN, TX 78767 ROBERT G GRAVELY 7681 S KIT CARSON DR LITTLETON, CO 80122 DIANE SUCHOMEL 105070 W MAPLEWOOD DR LITTLETON, CO 80127 GEORGE G VAUGHT JR POBOX 13557 DENVER. CO 80201 AMOCO PROD CO LIBRARY RM 1770 JILL MALLY 1670 BROADWAY DENVER. CO 80202 C & R INDUSTRIES, INC. KURT SAL TSGA VER 1801 BROADWAY STE 1205 DENVER, CO 80202 US GEOLOGICAL SURVEY LIBRARY BOX 25046 MS 914 DENVER, CO 80225-0046 JERRY HODGDEN GEOL 408 18TH ST GOLDEN, CO 80401 NRG ASSOC RICHARD NEHRING POBOX 1655 COLORADO SPRINGS, CO 80901-1655 RUBICON PETROLEUM, LLC BRUCE I CLARDY SIX PINE ROAD COLORADO SPRINGS, CO 80906 JOHN A LEVORSEN 200 N 3RD ST #1202 BOISE, 10 83702 RUI ANALYTICAL JERRY BERGOSH POBOX 58861 SALT LAKE CITY, UT 84158-0861 TAHOMA RESOURCES GARY PLAYER 1671 WEST 546 S CEDER CITY, UT 84720 US GEOLOGICAL SURVEY LIBRARY 2255 N GEMINI DR FLAGSTAFF, AZ 86001-1698 MUNGER OIL INFOR SERV INC POBOX 45738 LOS ANGELES, CA 90045-0738 " ) LA PUBLIC LIBRARY SERIALS DIV 630 W 5TH ST LOS ANGELES, CA 90071 ) BABSON & SHEPPARD JOHN F BERGQUIST POBOX 8279 VIKING STN LONG BEACH, CA 90808-0279 ANTONIO MADRID POBOX 94625 PASADENA, CA 91109 ORO NEGRO, INC. 9321 MELVIN AVE NORTHRIDGE, CA 91324-2410 76 PRODUCTS COMPANY CHARLES BURRUSS RM 11-767 555 ANTON COSTA MESA, CA 92626 TEXACOINC Portfolio Team Manager R W HILL POBOX 5197x Bakersfield, CA 93388 US GEOLOGICAL SURVEY KEN BIRD 345 MIDDLEFIELD RD MS 999 MENLO PARK, CA 94025 SHIELDS LIBRARY GOVT DOCS DEPT UNIV OF CALIF DAVIS, CA 95616 H L WANGENHEIM 5430 SAWMILL RD SP 11 PARADISE, CA 95969-5969 ECONOMIC INSIGHT INC SAM VAN VACTOR POBOX 683 PORTLAND, OR 97207 US EPA REGION 10 LAURIE MANN OW-130 1200 SIXTH AVE SEATTLE, WA 98101 MARPLES BUSINESS NEWSLETTER MICHAEL J PARKS 117 W MERCER ST STE 200 SEATTLE, WA 98119-3960 DEPT OF REVENUE OIL & GAS AUDIT DENISE HAWES 550 W 7TH A V STE 570 ANCHORAGE, AK 99501 FAIRWEATHER E&P SERV INC JESSE MOHRBACHER 7151 ST #4 ANCHORAGE, AK 99501 GUESS & RUDD GEORGE LYLE 510 L ST, STE 700 ANCHORAGE, AK 99501 STATE PIPELINE OFFICE LIBRARY KATE MUNSON 411 W 4TH AVE, STE 2 ANCHORAGE, AK 99501 TRUSTEES FOR ALASKA 725 CHRISTENSEN DR STE 4 ANCHORAGE, AK 99501 DUSTY RHODES 229 WHITNEY RD ANCHORAGE, AK 99501 DEPT OF REVENUE BEVERLY MARQUART 550 W 7TH A V STE 570 ANCHORAGE, AK 99501 FORCENERGY INC. JIM ARLINGTON 310 K STREET STE 700 ANCHORAGE, AK 99501 ) J YUKON PACIFIC CORP JOHN HORN VICE CHM 1049 W 5TH AV ANCHORAGE, AK 99501-1930 PRESTON GATES ELLIS LLP LIBRARY 420 L ST STE 400 ANCHORAGE, AK 99501-1937 ALASKA DEPT OF LAW ROBERT E MINTZ ASST ATTY GEN 1031 W 4TH AV STE 200 ANCHORAGE, AK 99501-1994 GAFO GREENPEACE PAMELA MILLER 125 CHRISTENSEN DR. #2 ANCHORAGE, AK 99501-2101 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS TIM RYH ERD 550 W 7th AVE STE 800 ANCHORAGE, AK 99501-3510 DEPT OF REVENUE OIL & GAS AUDIT FRANK PARR 550 W 7TH AVE STE 570 ANCHORAGE, AK 99501-3540 BRISTOL ENVIR SERVICES JIM MUNTER 2000 W. INT'L AIRPORT RD #C-1 ANCHORAGE, AK 99502-1116 HDR ALASKA INC MARK DALTON 2525 C ST STE 305 ANCHORAGE, AK 99503 BAKER OIL TOOLS ALASKA AREA MGR 4710 BUS PK BLVD STE 36 ANCHORAGE, AK 99503 N-I TUBULARS INC 3301 C Street Ste 209 ANCHORAGE, AK 99503 ANADARKO MARK HANLEY 3201 C STREET STE 603 ANCHORAGE, AK 99503 ALASKA OIL & GAS ASSOC JUDY BRADY 121 W FIREWEED LN STE 207 ANCHORAGE, AK 99503-2035 ANADRILL-SCHLUMBERGER 3940 ARCTIC BLVD #300 ANCHORAGE, AK 99503-5711 AKJOURNALOFCOMMERCE OIL & INDUSTRY NEWS ROSE RAGSDALE 4220 B Street Ste #210 ANCHORAGE, AK 99503-5911 DEPT OF NATURAL RESOURCES PUBLIC INFORMATION CTR 3601 C STREET STE 200 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JIM STOUFFER 3601 C STREET STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JAMES B HAYNES NATURAL RESRCE MGR 3601 CST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS JULIE HOULE 3601 C ST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OIL & GAS WI LLlAM VAN DYKE 3601 CST STE 1380 ANCHORAGE, AK 99503-5948 DEPT OF NATURAL RESOURCES DIV OF OIL & GAS BRUCE WEBB 3601 C ST STE 1380 ANCHORAGE, AK 99503-5948 ) ) FINK ENVIRONMENTAL CONSULTING, INC THOMAS FINK, PHD ) 6359 COLGATE DR. ANCHORAGE, AK 99504-3305 } ARLEN EHM GEOL CONSL TNT 2420 FOXHALL DR ANCHORAGE, AK 99504-3342 JAMES E EASON 8611 LEEPER CIRCLE ANCHORAGE, AK 99504-4209 US BUREAU OF LAND MNGMNT ANCHORAGE DIST OFC DICK FOLAND 6881 ABBOTT LOOP RD ANCHORAGE, AK 99507 RUSSELL DOUGLASS 6750 TESHLAR DR ANCHORAGE, AK 99507 STU HIRSH 9630 BASHER DR. ANCHORAGE, AK 99507 AMERICNCANADIAN STRA TIGRPH CO RON BROCKWAY 4800 KUPREANOF ANCHORAGE, AK 99507 US BUREAU OF LAND MNGMNT ANCHORAGE DIST OFC PETER J DITTON 6881 ABBOTT LOOP ROAD ANCHORAGE, AK 99507 US BLM AK DIST OFC RESOURCE EV AL GRP ART BON ET 6881 ABBOTT LOOP RD ANCHORAGE, AK 99507-2899 TRADING BAY ENERGY CORP PAUL CRAIG 5432 NORTHERN LIGHTS BLVD ANCHORAGE, AK 99508 THOMAS R MARSHALL JR 1569 BIRCHWOOD ST ANCHORAGE, AK 99508 UNIVERSITY OF ALASKA ANCHORAGE INST OF SOCIAL & ECON RESEARCH TERESA HULL 3211 PROVIDENCE DR ANCHORAGE, AK 99508 US MIN MGMT SERV RICHARD PRENTKI 949 E 36TH AV ANCHORAGE, AK 99508-4302 US MIN MGMT SERV AK OCS REGIONAL DIR 949 E 36TH AV RM 110 ANCHORAGE, AK 99508-4302 US MIN MGMT SERV RESOURCE STUDIES AK OCS REGN KIRK W SHERWOOD 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4302 US MIN MGMT SERV FRANK MILLER 949 E 36TH A V STE 603 ANCHORAGE, AK 99508-4363 REGIONAL SUPRVISOR, FIELD OPERATNS MINERALS MANAGEMENT SERVICE ALASKA OCS REGION 949 E 36TH A V STE 308 ANCHORAGE, AK 99508-4363 US MIN MGMT SERV LIBRARY 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4363 US MIN MGMT SERV RESOURCE EVAL JIM SCHERR 949 E 36TH A V RM 603 ANCHORAGE, AK 99508-4363 JOHN MILLER 3445 FORDHAM DR ANCHORAGE, AK 99508-4555 ) ) USGS - ALASKA SECTION LIBRARY 4200 UNIVERSITY DR ANCHORAGE, AK 99508-4667 ') CIRI LAND DEPT POBOX 93330 ANCHORAGE, AK 99509-3330 ANCHORAGE TIMES BERT TARRANT POBOX 100040 ANCHORAGE, AK 99510-0040 ARCO ALASKA INC JOANN GRUBER ATO 712 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC LEGAL DEPT MARK P WORCESTER POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC STEVE BENZLER A TO 1404 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC LIBRARY POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC MARK MAJOR ATO 1968 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC LAND DEPT JAMES WINEGARNER POBOX 10036 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC SAM DENNIS ATO 1388 POBOX 100360 ANCHORAGE, AK 99510-0360 ARCO ALASKA INC SHELlAANDREWS ATO 1130 PO BOX 100360 ANCHORAGE, AK 99510-0360 ) PETROLEUM INFO CORP KRISTEN NELSON POBOX 102278 ANCHORAGE, AK 99510-2278 ARCO ALASKA INC KUP CENTRAL WELLS ST TSTNG WELL ENG TECH NSK 69 POBOX 196105 ANCHORAGE, AK 99510-6105 AL YESKA PIPELINE SERV CO CHUCK O'DONNELL 1835 S BRAGA W - MS 530B ANCHORAGE, AK 99512 AL YESKA PIPELINE SERV CO PERRY A MARKLEY 1835 S BRAGAW - MS 575 ANCHORAGE, AK 99512 AL YESKA PIPELINE SERV CO LEGAL DEPT 1835 S BRAGAW ANCHORAGE, AK 99512-0099 US BUREAU OF LAND MGMT OIL & GAS OPRNS (984) J A DYGAS 222 W 7TH AV #13 ANCHORAGE, AK 99513-7599 ANCHORAGE DAILY NEWS EDITORIAL PG EDTR MICHAEL CAREY POBOX 149001 ANCHORAGE, AK 99514 DAVID W. JOHNSTON 320 MARINER DR. ANCHORAGE, AK 99515 JWL ENGINEERING JEFF LIPSCOMB 9921 MAIN TREE DR. ANCHORAGE, AK 99516-6510 NORTHERN CONSULTING GROUP ROBERT BRITCH, P.E. 2454 TELEQUANA DR. ANCHORAGE, AK 99517 GERALD GANOPOLE CONSULT GEOL 2536 ARLINGTON ANCHORAGE, AK 99517-1303 DAVID CUSATO 600 W 76TH A V #508 ANCHORAGE, AK 99518 ASRC CONRAD BAGNE 301 ARCTIC SLOPE A V STE 300 ANCHORAGE, AK 99518 ARMAND SPIELMAN 651 HI LANDER CIRCLE ANCHORAGE, AK 99518 HALLIBURTON ENERGY SERV MARK WEDMAN 6900 ARCTIC BLVD ANCHORAGE, AK 99518-2146 OPST AD & ASSOC ERIK A OPSTAD PROF GEOL POBOX 190754 ANCHORAGE, AK 99519 JACK 0 HAKKILA POBOX 190083 ANCHORAGE, AK 99519-0083 ENSTAR NATURAL GAS CO BARRETT HATCHES POBOX 190288 ANCHORAGE, AK 99519-0288 MARATHON OIL CO OPERATIONS SUPT POBOX 196168 ANCHORAGE, AK 99519-6168 } ') MARATHON OIL CO BRAD PENN POBOX 196168 ANCHORAGE, AK 99519-6168 UNOCAL KEVIN TABLER POBOX 196247 ANCHORAGE, AK 99519-6247 UNOCAL POBOX 196247 ANCHORAGE, AK 99519-6247 EXXONMOBIL PRODUCTION COMPANY MARK P EVANS PO BOX 196601 ANCHORAGE, AK 99519-6601 BP EXPLORATION (ALASKA), INC. MARK BERLINGER MB 8-1 PO BOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC SUE MILLER POBOX 196612 MIS LR2-3 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC PETE ZSELECZKY LAND MGR POBOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC BOB WILKS MB 5-3 POBOX 196612 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC MR. DAVIS, ESQ POBOX 196612 MB 13-5 ANCHORAGE, AK 99519-6612 BP EXPLORATION (ALASKA) INC INFO RESOURCE CTR MB 3-2 POBOX 196612 ANCHORAGE, AK 99519-6612 ) ) AMSINALLEE CO INC WILLIAM 0 VALLEE PRES PO BOX 243086 ANCHORAGE, AK 99524-3086 L G POST O&G LAND MGMT CONSULT 10510 Constitution Circle EAGLE RIVER, AK 99577 o A PLATT & ASSOC 9852 LITTLE DIOMEDE CIR EAGLE RIVER, AK 99577 PINNACLE STEVE TYLER 20231 REVERE CIRCLE EAGLE RIVER, AK 99577 DIANA FLECK 18112 MEADOW CRK DR EAGLE RIVER, AK 99577 DEPT OF NATURAL RESOURCES DGGS JOHN REEDER POBOX 772805 EAGLE RIVER, AK 99577-2805 COOK I NLET KEEPER BOB SHA VELSON PO BOX 3269 HOMER, AK 99603 COOK INLET VIGIL JAMES RODERICK POBOX 916 HOMER, AK 99603 PHILLIPS PETR ALASKA OPERATIONS MANAGER J W KONST P 0 DRAWER 66 KENAI, AK 99611 RON DOLCHOK POBOX 83 KENAI, AK 99611 } ) DOCUMENT SERVICE CO JOHN PARKER POBOX 1468 KENAI, AK 99611-1468 KENAI PENINSULA BOROUGH ECONOMIC DEVEL DISTR STAN STEADMAN POBOX 3029 KENAI, AK 99611-3029 NANCY LORD PO BOX 558 HOMER, AK 99623 PENNY VADLA PO BOX 467 NINILCHIK, AK 99639 BELOWICH COAL CONSULTING MICHAEL A BELOWICH HC31 BOX 5157 WASILLA, AK 99654 PACE SHEILA DICKSON POBOX 2018 SOLDOTNA, AK 99669 JAMES GIBBS POBOX 1597 SOLDOTNA, AK 99669 KENAI NATL WILDLIFE REFUGE REFUGE MGR POBOX 2139 SOLDOTNA, AK 99669-2139 VALDEZ PIONEER POBOX 367 VALDEZ, AK 99686 AL YESKA PIPELINE SERVICE CO VALDEZ CORP AFFAIRS SANDY MCCLINTOCK POBOX 300 MS/701 VALDEZ, AK 99686 ) ) VALDEZ VANGUARD EDITOR POBOX 98 VALDEZ, AK 99686-0098 UNIV OF ALASKA FAIRBANKS PETR DEVEL LAB DR V A KAMATH 427DUCKERING FAIRBANKS, AK 99701 NICK STEPOVICH 543 2ND AVE FAIRBANKS, AK 99701 RICK WAGNER POBOX 60868 FAIRBANKS, AK 99706 JACK HAKKILA POBOX 61604 FAIRBANKS, AK 99706-1604 C BURGLlN POBOX 131 FAIRBANKS, AK 99707 FAIRBANKS DAILY NEWS-MINER KATE RIPLEY POBOX 70710 FAIRBANKS, AK 99707 FRED PRATT POBOX 72981 FAIRBANKS, AK 99707-2981 DEPT OF NATURAL RESOURCES DIV OF LAND REG MGR NORTHERN REGION 3700 AIRPORT WAY FAIRBANKS, AK 99709-4699 K&K RECYCL INC POBOX 58055 FAIRBANKS, AK 99711 ) ') ASRC BILL THOMAS POBOX 129 BARROW, AK 99723 RICHARD FINEBERG PO BOX416 ESTER, AK 99725 UNIV OF ALASKA FBX PETR DEVEL LAB SHIRISH PATIL 437 DICKERING FAIRBANKS, AK 99775 UNIVERSITY OF ALASKA FBKS PETR DEVEL LAB DR AKANNI LAWAL POBOX 755880 FAIRBANKS, AK 99775-5880 SENATOR LOREN LEMAN STATE CAPITOL RM 113 JUNEAU, AK 99801-1182 DEPT OF ENVIRON CONSERV SPAR CHRIS PACE 410 WILLOUGHBY AV STE 105 JUNEAU, AK 99801-1795 ) ') #3 04/28/00 FRI 08:46 FAX 907 258 8601 FORCENERGY ALASKA 141001 ) Forcenergy Inc 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258-8600 258·8601: FAX ) FAX TRANSMITTAL SHEET DATE: "Y-~(,... ,;?~Ÿp PAGES TO FOLLOW ~, TO: ':þ!~1( eL, F/e~-J Æ () t'r/-C-- FAX: /f7~ - .?:i-f~ Phone: FROM: affl A f"' /''::J f~ CONFIDENTIALITY NOTE: The Information in this facsimile transmittal is legallv l?!ivJfeged and confiQential informatloll intended onl,£ for the use of the Individual or entity named above. If the reader of this message is not the intended recipient. you are hereby notified that any dissemination, distribution or copy of the transmittal is strictlv prohibited. If you receive this transmittal in error, plnse immediatelv notify us by telephone, and return the original transmittal to us at the sbove address , via the United States Postal Service. Thank you. FAXALA.DOC 2/11197 MESSAGE: D(~<L- 41/dJJ q....c:.- (J",~/t:s' ðf2 lie.. rcc-If!:; 4.....;Øe. (!er#¡;"'¿ /eß.rs 6W,,"kt"7t re'i-r r7dA, ILl!;' 0r=-#/ ,:S"'1'~eIHl ek"1""~"'''' ~Z4e.s-~ rey ð« -- C'ðW v.,........5-.;: ~.;"'-- ø.Js ,lq'r7'r HI k¡J , ~ J o E.c~\\I€ ~ '0 '1. 'ijYJ 'ij ,,~~ 2, ~\~WR' r ... ~s.\Þ~ .. G'ðs'vlJ ~&~e 0\\ ~ ~~~owfiP 04/28/00 FRI 08:46 FAX 907 258 8601 27 lP <, -(~Y- -----, FORCENERGY ALASKA @ 002 " ) P Ub7 71.'~ 169 ) P ¡J67 714 171 US Postal Service Receipt for Certified Mail No Insurance Coverage Provided. Do not use for l.ntematlonal Mall (See reverse) Sent 10 . peter D~tton s,reet & Number 6881 Abbott I.,oop US DIO BIM . ... 1m8t~~~~:IÞ~e 99507 _ . Postage $ I. r7 Certified Fee ,. r t.f. ð Special Delivery Fee us Postal Service Receipt for Certified Mail No Insurance Coverage Provided. Do not use for International Mall (See fÐverse) Sent to . Ken Boyd . . St!!et & Nunibér . bOA DNR D1V. O&G 550 W. 7t Þ~horre~f'ö'l:P~chorage-, ~. 5950' PostIge $ I f: <t7 Certified Fee {. <{ Ù ~eJ Delivery Fee r o,;J~ tf C; J-., ff:~.~ - Lf.~;;:;L _..._-----~-, ~ TCITAL ~ $ CHECK TENI.EREII$ 9..€14 9.. 0'-1- ~*. U~S. POSTAL SERVICe **~ 1'1A I N (IFF I (:6 4~4~ POSTMARK DR -~---~----_._--------------- CLERI< #0:1 IIf04TE: 04t"27f"@0 091104::1Ee PH --_.~~---,~----~~~-~-~-~~~~~~- ------~-------_._---------~- :.l0S- PV I :1Ø9 PVI 4..52 4..52 --.---------- TOTAL; $ CHECK TENDEREII$ 9.Ø4 9.04 --~-------------~---------- **:i4 THANI< ~t'(fU **If< . . ~~~'O ~V~ ~~ 0. 1\)~\) . .~\' ~ ~ ü c.~~~~~ ~\> ... ~\\fi¡. r":..';).~ \J t\e, â\;~~ ~ ~~~~ ~?J.~'(..'ô. ~ 04/28/()O FRI 08:46 FAX 907 258 8601 FORCENERGY ALASKA [4J 0 0 3 ) ) "" SENbet:t: - ~ -Comp(ete Itemg 1 andfor ~ -. ',r additional øøMceG. "i -ComplÐte Items 3. 4a. 81 . I: -Print your name and addn,....~ on the reven;9 of IhiG foml 80 that we can return thJ3 .. card to you. ~ · A"ach this form to the front of the mallplec:e, QI' on the b<1c1c; If space does 001 ., pem1it ;; -Write °Retum Rf~pt Requfn1ted° 00 1m, mallplece betow the article number. .r:. Uhe Retum Receipt will show 1o whom Ihlil artlcla wall dêflvemd and the date -;; deUvered. : 3. Article Addressed to: !! GI ã. ~ u o en w a: Q ~ Z ~. 5.RÐCÖ~~~ g '6.. Signature~E:10. r !J.ent) >- X ¿'i.._9- 0 ~ .!! -PS Form 3811, ecemb'er 1994- Mr. Kirk McGee Cook Inlet Region, rne. PO Box 93330 Anchorage, AI( 99509-13330 I also y'¡"''' to receive the folloWi ~rvfces (for an extra fee): 1. D Addressee's Address 2. 0 Restricted Delivery Consult postmaster for fee. 4a. Article Number P 067.714 170 ! ~ (f) õ. w. u. .,. a: c ... :I W a: ~. .5 '4b. Service Type o Registered Qj Certified o Express Mail 0 Insured o Return ReceIpt fOf Merchandise 0 COD 7. O¿'~II~ry~ ¿:70 e. Addressee's Address (On/ÿ if rè and fee ;s paid) ~. >- ~ c. ! ..... Domestic RetÌJrn Receipt . . .... ", .... ....... ~ ''',. .,""..-11 "." ... ..."...,.. ..... UNITED STATES PO:-~') SEAvlqe ß p.. G €' ~ --- ,nrat.ett&~~· Mol' (~()~ -4?- -'-.:" ') ~J~~~,~:re:oGP~:. 'v PM --~·l ·usPS . '12 ~ Permlt'N<T."6.1(}...".... .._- . Print your na~~_ a:¿ ZI P Code in this bOX. · >:-:: -..- file: ... ~#I' ---- ""f1,t#f."1:.s $I'~:¡"'i ;.f(""1'~ Jim Arlington Forcenergy Inc 310 K Street, Suite 700 Anchorage, AI< 99501 \R\EC~ßV\EO APR 2 5 ,aoo .....--.......------,-.....---:- . . ~~.... . tI'....':"C,,~.,,~ 1'-.:."".1. -r ¿'I..J::+',"-' . n;li~'h III ,'I,} ¡ "'111" II" 1,ln 11 f.I, fitfu. 1,111 f t ,I. t I. 1ft \ (~. . . ø.~~J ~.P (j !'\\)'\} .;,~\\ a~ ~~ \~':I' ~ () '0.¡:,..'\~ ~~ l.-- \J\) \~ (J;j~c;,. ß ~1J.~ tb~~ \)\~ ~~ ~~~~ ,L'. #2 04/27/00 THU 15:05 FAX 907 258 8601 FORCENERGY ALASKA 141 001 ) Forcenergy Inc 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258·8600 258-8601: FAX ) FAX TRANSMITTAL SHEET DATE: q 2-7 00 PAGES TO FOllOW L -.- TO: ÛIA;I\')¥\ ~Lfw~ FROM: 2 7 [q- 7~Lf 7- Phone: Y~v\ ~\\çu FAX: CONF'DENTIAUTY NOTE: The information in this facsimile transmittal Is legally privileQed and confidential infqrmi!ltion Intended onlv for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are herebv notified that any dissemination, distribution or copy of the transmittal is strictly prohibited. If you receive this transmittal in error, please Immediatelv notify us by telephone. and return the original transmittal to us at the above address v1a the Untted States Postal Service. Thank you. FAXALA.DOC 2/11(91 MESSAGE: Tt1 f.<; E LElViQS .AAr: CJj f> \ c¿5 G~ ll-J. ~ S<UJT C)D\, TO M'-- 7c4 04/27/00 THU 15:06 FAX 907 258 8601 FORCENERGY ALASKA @ 002 ) Forcenergy Inc April 27, 2000 Mr. Ken Boyd, Director Alaska Departrnent of Natural Resources Division of Oil and Gas 550 West iJ1 St. 800 ~chorage,AJ( 99501 SENT VIA CERTIFIED MAIL Re: Application for Exemption to Provisions of20 AAC 25,055, Drilling Units and Well Spacing West Foreland #1 Well Dear Mr. Boyd: Foreenergy Ine ("Forcenergy") has requested the Alaska Oil and Gas Conservation Cormnission ("AOGCC") to issue an order exempting the West Foreland #1 Well ("WF #1 ") frOlTI the drilling unit and spacing requirements of20 AAC 25.055 as they pertain to the gas production interval within the West Foreland Field. The AOGCC requires an exemption from 20 AAC 25.055 if a well will be doser than 1,500' to the lease line. Since the State of Alaska, Department of Natural Resources is a mineral interest owner within 3,000 feet of the well, the regulations also require that F orcenergy provide this letter as notification of said drilling and spacing exeluption requcst. To comply with the notification requirements, I have attached for your review and information a complete copy of the application and transmittal letter Forcenergy submitted to the AOGCC regarding this matter. If there are any questions you may have regarding this marter, please contact UIe at 907-258-8600. Sincerely yours, FORCENERGYINC JÌ1n Arlington Land Manager-Alaska Division Attachments: Transmittal letter, with attachments, to AOGCC dated 4/20/2000 Page 1 of 1 \\FGEANCH\YOL1\ACCNARLTNGT\Working Land Files\West Foreland Field\Spacing notice DNR WF#I_ 4-27-00.doc - --_. .----- HEADQUARTERS Forcenergy Center 2730 SW 3rd Avenue Suite 800 Miami, Florida 33129-2237 REGIONAL OFFICE TELEPHONE 305/856-8500 FAX 305/856-4300 310 K Street Suite 700 Anchorage, Alaska 99501 TELEPHONE 9071258-8600 FAX 907/258-8601 04/27/00 THU 15:06 FAX 907 258 8601. FORCENERGY ALASKA I4J 003 ) Forcenergy Inc April 27, 2000 Mr. Peter Ditton U.S. Department of the Interior Bureau of Land Management 6881 Abbott Loop Road J\nchorage,AJe 99507 SENT VIA CERTIFIED MAIL Re: Application for Exemption to Provisions of20 AAC 25.055, DriUing Units and Well Spacing West Foreland #1 Well Dear Mr. Ditton: Forcenergy Ine ("Foreenergy") has requested the Alaska Oil and Gas Conservation Commission ("AOGCC") to issue an order exempting the West Foreland #1 Well ('TWF #1 ") rrom the drilling unit and spacing requirements of20 MC 25.055 as they pertain to the gas production interval within the West Foreland Field. The AOGCC requires an exemption fron1 20 AAC 25.055 if a weU will be closer than 1,500' to the lease line. Since the U.S. Department of the Interior, Btu'eau of Land Management is a mineral interest owner within 3,000 feet of the well, the regulations also require that Forcenergy provide this letter as notification of said drilling and spacing exemption request. To cOInpIy with the notification requirements, I have attached for your review and infonnat:ion a complete copy of the application and transmittal letter Forcenergy sublnitted to the AOGCC regarding this matter. If there are any questions you may have regarding this matter, please contact me at 907 ~258-8600. Sincerely yours, FORCENERGYINC ~mgton Land Manager-Alaska Division Attachments : Transmittal letter, with attachments, to AOGCC dated 4/20/2000 Page 10f1 \\FGEANCH\VOLl\ACCT\lARLfNGnWorking Land fiJes\West Foreland Field\Spacing notice BLM WF#l_ 4-27-00.doc . ~-----~'--" .._---. HEADQUARTERS =orcenergy Center 2730 SW 3rd Avenue Suite 800 \/Iiami, Florida 33129-2237 REGIONAL OFFICE TELEPHONE 305/856-8500 FAX 305/856-4300 310 K Street Suite 700 Anchorage, Alaska 99501 TELEPHONE 907/258~8600 FAX 907/258-8601 #1 ) ) Forcenergy Inc RECEIVED April 20, 2000 fPR 20 2000 A)æka Oil & Gas Cons. Commission Mr. Robert P. Crandall, Senior Petroleum Geol~æOrage Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 Re: Application for Exemption to Provisions of20 AAC 25.055, Drilling Units and Well Spacing West Foreland # 1 Well Dear Mr. Crandall: F orcenergy Inc ("F orcenergy") by this letter requests that the Alaska Oil and Gas Conservation Commission ("AOGCC") issue an order exempting the West Foreland #1 well ("WF #1 ") trom the drilling unit and spacing requirements of20 AAC 25.055 as they pertain to the gas pool within the West Foreland Field. The West Foreland Field is defined by a discovery gas well, the WF #1, that was drilled on federal lease A- 035017 in Section 21, Township 8 North, Range 14 West, Seward Meridian, Cook Inlet Basin and completed on March 29, 1962 by Pan American Petroleum Corporation. The WF #1 is the only well in the West Foreland Field and has a surface location of910' FSL, 4669' FWL, T08N, RI4W, Section 21, Seward Meridian. The West Foreland Field gas reserves are contained within two oil and gas leases: (1) Federal Lease A-035017 and, (2) State of Alaska Lease ADL-359112. State of Alaska Lease ADL-359112 is presently one of two State of Alaska leases c01Tll11itted to the West McArthur River Unit but has no producing wells located within its boundaries. All WMRU producing wells are located within State of Alaska Lease ADL-359111. Federallease A-035017 is not committed to any state or federal unit and there are no plans to include this lease in any new or existing unit. Both leases are physically located in the Cook Inlet area near the West Foreland peninsula, approximately four miles south of the Trading Bay Unit Production Facilities. The WF #1 was drilled to a total depth of 13,500' MD & TVD in 1962. During the completion, several zones were tested and two productive sands found in the well in the lower tertiary; one at 9502'-9527' and one at 9336'-9352'. At completion, the lower sand tested an AOF potential of 5.6 MMCFD and the upper sand had an AOF of 16.5 MMCFD. The lower zone was plugged back and currently only the upper zone is open in the wellbore. The WF #1 was subsequently shut-in and has remained in that status since. When this federal lease was made effective on October 1, 1958, it covered 2,400 acres, all of which was on federal land. Subsequently, following formation of a federal unit involving this lease and the units' later contraction and ultimate termination, the lease acreage was reduced to 857 acres. As a result of the Alaska Native Claims Settlement Act ("ANCSA"), Cook Inlet Region, Inc. ("COO") acquired the mineral interest to 802 acres within the boundary of federal lease A-035017. However, pursuant to certain provisions in ANCSA the Bureau of Land Management ("BLM") retained administration responsibilities for the entire lease. Page 1 of2 \\FGEANCH\VOLl\ACCT\JARLINGT\Working Land Files\West Foreland Field\Spacing appl AOGCC WF#l_ 4-l7-00.doc HEADQUARTERS REGIONAL OFFICE Forcenergy Center TELEPHONE 2730 SW 3rd Avenue 305/856-8500 Suite 800 FAX Miami, Florida 33129-2237 305/856-4300 310 K Street Suite 700 Anchorage, Alaska 99501 TELEPHONE 907/258-8600 FAX 907/258-8601 ') } The AOGCC asserts jurisdiction in this matter pursuant to 20 AAC 25.055 because the well bore ofthe WF #1 is closer than 1,500' to the lease line; specifically, it is 384' from the lease line. However, the BLM asserts that state spacing requirements do not apply in this circumstance. As F orcenergy wishes to cooperate with both the AOGCC and the BLM, Forcenergy agrees to submit this request for spacing exemption to the AOGCC but specifically asserts that in doing so it is not waivin~ any rivhts that it may have in equity or law to argue the jurisdictional authority of either the AOGCC or the BLM, or any other issue regarding this matter. To support the position of the BLM they have provided correspondence from other BLM offices that have dealt with and resolved this jurisdictional issue. I have attached that correspondence for your consideration as well. Please be advised that Forcenergy has met with both the BLM and the Alaska Department of Natural Resources, Division of Oil and Gas ("DO&G") to address, among other issues, concerns regarding the prevention of waste and protection of correlative rights. All parties have agreed that the best mechanism for addressing those concerns is for all affected parties to execute a compensatory royalty agreement. That agreement is in the process of being drafted with anticipation that it will be executed before production commences from the WF #1 well. Also attached are a map indicating the sections offsetting the WF #1 well and a table describing the lease ownership of all offsetting sections. Since Cook Inlet Region, Inc. is an affected mineral interest owner within 3,000 ft of the well, Forcenergy has sent COO a letter by certified mail, a copy of which is attached, notifying them of this requested action.. By evidence of my signature below, I hereby verify that I am acquainted with the facts surrounding this matter and that the facts presented in this application, including the attachments, are true and correctly portray all pertinent and required data as defined in 20 AAC 25.055 (a)(1) and (b). If there are any questions regarding this matter, please contact me at (907) 258-8600. Sincerely yours, R~ Gary E. Carlson Vice President RECE\VED f?R 20 2000 Aia*a OU & Gas Cons. comimssíon Anchorage Attachments: West Forelands Area Lease Map Map Highlighting Sections with Mineral Interest Owners Adjoining WF #1 Table Listing Mineral Interest Owners Offsetting WF #1 Copy of Notification Letter to CIRI Excerpt from H.R. 10367-17, page 52 Fax, with attachments, dated April 3, 2000 from BLM to Jim Arlington Memorandum to Montana Oil and Gas Division staff dated 8/25/1989 Notice to Operators from Montana Bd. of Oil and Gas Conservation dated 2/1/1990 Letter dated 1/17/1984 from BLM to Amoco Production Company Letter dated 2/24/1984 from BLM to Amoco Production Company Instruction Memorandum No. 89-201 dated 1/4/1989 from BLM Director Page 20f2 \\FGEANCH\VOL1\ACCl\JARLINGnWorking Land Files\West Foreland Field\Spacing appl AOGCC WF#l_ 4-17-00.doc West Forelands p T8N,R1 Seward Meridian 2 WMRU-3 . #1 #2A . . 8 9 10 11 17 15 CIRI 20 22 29 32 14 23 26 35 13 24 25 36 1" :::: 1 mile ') ') West Foreland #1 Spacing Exception Request Table of Mineral Interest Ownership In Sections Within 3,000' Offsetting WF #1 T8N, R14W Section Lessee and/or Mineral Interest Owner Lease # Unit 21 Forcenergy/ADNR ADL-359112 West McArthur River Unit ForcenergylBLM A-035017 CIRI 22 Forcenergyl ADNR ADL-359112 West McArthur River Unit ForcenergylBLM A-035017 27 Forcenergy/ADNR ADL-359112 West McArthur River Unit ForcenergylBLM A-035017 CIRI 28 ForcenergylBLM A-035017 CIRI RECEIVED /,PR 20 2000 Alaska Oil & Gas Cons. Commission Anchorage ) ") Forcenergy Inc April 20, 2000 RECEiVED Mr. Kirk McGee Cook Inlet Region, Inc. P.O. Box 93330 Anchorage, AK 99509-330 /.PR 20 2000 Alaska Oil & Gas Cons. Commission Anchorage SENT VIA CERTIFIED MAIL Re: Application for Exemption to Provisions of20 AAC 25.055, Drilling Units and Well Spacing West Foreland # 1 Well Dear Mr. McGee: F orcenergy Inc ("F orcenergy") has requested the Alaska Oil and Gas Conservation Conlnlission ("AOGCC") to issue an order exempting the West Foreland #1 Well ("WF #1 ") fronl the dlilling unit and spacing requirements of20 AAC 25.055 as they pertain to the gas production interval within the West Foreland Field described below. An exemption rrom 20 AAC 25.055 is required if a well will be closer than 1,500' to the lease line. Since Cook Inlet Region, Inc. ("CIRI") is a nlineral interest owner within 3,000 feet of the well, the regulations also require that Forcenergy provide this letter as notification of said drilling and spacing exemption request. The West Foreland Field is defined by a discovery gas well, the WF #1, that was drilled on Federal Lease A-035017 in Section 21, Township 8 North, Range 14 West, Seward Meridian, Cook Inlet Basin and completed on March 29, 1962 by Pan American Petroleum Corporation. The WF # 1 is the only well in the West Foreland Field and has a surface location of910' FSL, 4669' FWL, T08N, R14W, Section 21, Seward Meridian. The West Foreland Field gas reserves are contained within two oil and gas leases: (1) Federal Lease A-035017, which is entirely onshore, and, (2) State of Alaska Lease ADL-359112, which is entirely offshore. State of Alaska Lease ADL-359112 is presently one of two State of Alaska leases committed to the West McArthur River Unit ("WMRU") but has no producing wells located within its boundaries. All WMRU producing wells are located within State of Alaska Lease ADL-359111. Federal Lease A-035017 is not committed to any state or federal unit and there are no plans to include this lease in any new or existing unit. Both leases are physically located in the Cook Inlet area near the West Foreland peninsula, approximately four miles south of the Trading Bay Unit Production Facilities. Page 1 of2 \\FGEANCH\YOL1\ACCl\JARLfNGT\Working Land Files\West Foreland Field\Spacing notice CIR! WF#l_ 4-17-00.doc HEADQUARTERS Forcenergy Center 2730 SW 3rd Avenue Suite 800 Miami, Florida 33129-2237 REGIONAL OFFICE TELEPHONE 305/856-8500 FAX 305/856-4300 310 K Street Suite 700 Anchorage, Alaska 99501 TELEPHONE 907/258-8600 FAX 907/258-8601 ) ) The WF #1 was drilled to a total depth of 13,500' MD & TVD in 1962. During the con1pletion, several zones were tested and two productive sands found in the well in the lower tertiary; one at 9502'-9527' and one at 9336'-9352'. At con1pletion, the lower sand tested an AOF potential of 5.6 MMCFD and the upper sand had an AOF of 16.5 MMCFD. The lower zone was plugged back and currently only the upper zone is open in the wellbore. The WF #1 was subsequently shut-in and has remained in that status since. When Federal Lease A-035017 was made effective on October 1, 1958, it covered 2,400 acres, all of which was on federal land. Subsequently, following formation of a federal unit involving this lease and the units' later contraction and ultimate termination, the lease acreage was reduced to 857 acres. As a result of the Alaska Native Claims Settlement Act ("ANCSA"), Cook Inlet Region, Inc. ("COO") ultimately acquired the mineral interest to 802 acres within the boundary of Federal Lease A-035017, among other acreage on the West Foreland Peninsula. However, pursuant to certain provisions in ANCSA, the Bureau of Land Management ("BLM") retained administration responsibilities for the entire lease. Attached are a lease map, a map indicating the sections offsetting the WF #1 well and a table describing the lease ownership of all offsetting sections. If there are any questions regarding this matter, please contact me at 907-258-8600. Sincerely yours, FORCENERGYINC c.··......"'. a~ ", ',.. ~~..... I/"~ / V;;m Arlington ( ~' Land Manager-Alaska Division RECEIVED I.PR 20 2000 Alaska Oil & Gas Cons. Commission Anchorage Attacml1ents: Lease Map Map with Adjoining Sections to West Forelands #1 Table of Offsetting Section Ownership Page 2 of2 \\FGEANCH\YOL1\ACCNARLINGT\Working Land Files\West Foreland Ficld\Spacing notice CIRI WF#I_ 4-1 7-00.doc 11/19/99 FRI 17:42 FAX 9072714143 ) REGIONAL SOLICITOR ~002 H, R# 103670:--17 , . . , , (d) the Sooreta.ry mo.y apply tbG ru]o of apPl'Oxill1ntiol1 witIa l'cspect to tne acreage ~imitations contai,ned in this s~tion. . . ( e) ImmooltLtely a.fter selectl?l1 by a Regloß(~l Co~~Orlttl0n, the Sec- retary sbaJl collvey to the Regi.òno.l <X>rporatlon tItle to the surface and/or the subsurface estn.~es, ns is o.pproprinte2 in the lands s~Iected. (f) Wben the Se~retary ISSUes a pSlte¡1t to a. Vi}lø.ga C'Alrporation for tl\Ð(!§yrtnP,e e'tt~h.\~ 1U lands p:ursuant to subsectIons (It) and (b), he shalf issue to thø Rßg1nnS\l Cl}t1W1"~tin" fQr t.h.e region ill whIch the lands are located a..patent to tlU(~lbSUl'face es~tè'>in such lands, except , ]a.uds located in the National Wildlife Refuge System o.nd lands with.. drawn or reservêd. for nllotíoll0l1 defense I?urposes~ inGluding NavaJ retl'oleum Res~rve Numbered 4, for. which. in lieu 11.g~t9 are provided for in subsectIon 12(0.) (1): P1"ovidoà, That tbe fIght to explore, develop, or remove minerd9 from the subsurlace eat;a,te in the Jands 'Yithin the boun~a.ries of o.ny ~a.tive village shall be subject. to the COl1St3nt of the V 1l:1o.ge CorporatIon. ' , (g) ..{\.U cc:mveyallC'.CS .IJln.de pursuant tQ 'this Act s11all be Rn,bjed to ~ø,lid oxistìn~ rights. Where, prior to patel}t of, any la.nd or minerals under thìs Act, J, lease, contract, permIt, rlght-ai-way" or ease- ment (Í1,1cludiug alen.se issued under section 6 (g) of the Alaska State- hood Act) hø.s been issued for the surface or minerals covered under SUCl~ pa~nt, the patent shall. contain provisions making it 6~j~t to t11G cJ\sß" contract, permit, rj~bt-of-wn.y, or easement, and e nght -of the Jessee, ~outractc~, .pennlttee or grø.ntee to the complete enj~y- . ~. ment of all rIghts, prlvlleges, and bcme6ts thereby granted to hIm. c.. \ f.. l S\:-tps.. ,.r"\.~ ......,... Upon issuance of ~he patent, the'lJatentee shall succeed and become -'. ~ ~lti~c\-to my and all interests 0 the ~. 'tate or the United ~tates,a~ DCS' 'S. v",,-OQ S a... ~coD;tractor, permitter, or grantor, in any such leases, contracts" l.l. ~ ~r permIts, l"lghts·of..w-ay, or ea8ðlnentscovering the estm.ta patented, and a Jel\SO issued lmder section 6(g) of the Alaska Statehood Act shan be treated for.aU I~UrpOs~ as though the patent had been i~sue~ to the ~ G..,()0~J\.Lú\..o~-o \J~ _ S.tate...,,1;he a.dni~m~tru.tlOn o~ s.uch Ip.o$e, r.ont.rnct, pArm1t) rJgþt, Qf· ~~lJ D ,.I" I n -!( 'Way, or easement shall contmue to be by the State or tIlo Umted ~ r<""'\. ~ '\ \ ~~ r ~-L Stn.tes~ \1nl~ss thn nf'.t-ncy 1'Æ\ponsible for admiuistration waÍves (), ~ ndmInIstratlOn. In t.he event . that the patent does not cover all of the ...t,Q.Ll'O.JL U ^. r I J. A rand embraced within any such lease, contract, permit, right-af-wIlY, \ *- v.):..L..~ ~ or ensement, the p1l.teutee shan only be entitled to the proportionate \ J . ~\mOUl1t of th.e revenues reserved under such len.se, contract, permit, (À.cl rI\ ,-f"\. \'b ,,\( ()...J'\"\ð;¡ right-of·wa.y, or easement by the State or the United States which ¡'esu1ts from multiplying the total of such r~enues by 0. fraction in which the numerator is· the o.crea~ of such~ lease, qoutract, permit, right-of-way, or easement whióh IS includ~'· in the patent and the denol}1in~tor is the total .n.crea.ge contained ~ such lease, contraèt, penult, rIght-of-wILY, 01' en.sement~ :' . (h) The Secretary is lLuthorized to withdq1w and convey 2 million ~cres of ~reservcd and u~appropriO;ted pu~lic la.nds located outside the areas wIthdrawn by sectIons 1land 16, nnq follows: (1) The Sccreta.ry may 'withdraw add convey to the. appro" , pl"Ìate. Regional Corporation fee title tþ existing cemetery sites and historical places; , .' ~ '(2) The Secrotllry may withdraw and·.convey' to a Nutiv0 group thät does not~qun.1ify ~s 0, Native vino.g~, if it h~corporOltes under the· laws of Alusko., tItle to the surface estate Iil not more thall 23,040 acres surrounding the Native group's locality. The sub. surf!1-oo estate in s~ch lundshlLll be conveyed to the appropriate ReKIona1 Oorr>oratIon ; \ a) The Secreta!)' ma,! withdraw and convey to the N ntives resIdi.n~ ill Sitka, JCona,i, Juneau, and ICodia.k, if they incorporate ûnder the laws of Aln.s1(a, thè surface estate of lands of n. smùlar pO--i:er--': ~·o sJ>rÚ:~~ ~0, ~\a.~~ f) 'r^-\±':""'--\-'\o ~0\if~,{({C( IV\. L. l e.. ) 52 RECEIVEO /.?R 2 0 2000 Alaska Oii & Gas Cons. Commission AnchOfaQe APR-03-2000 14:56 ELM MSO FLUID MINERALS 1 406 255 2941 P.01 ) ) Bureau 0.,-'" Land Management P.O. Box 36800 Billings, Montana 59107-6800 (406) 896-5005 Fox: (406) 896-5292 FAX TRANSMISSION COVER SHEET Date: April 3, 2000 To: Jim Arlington Faz: (907) 258-8601 Re: Jurisdiction on Federal Lands Sender: PascUlJl "Pas" Laborda YOU SHOULD RECEIVE 21 PAGE(S),1NCLUDING THIS COVER SHEET. IF YOU DO NOT RECEIVE ALL THE PAGES, PLEASE CALL (406) 896-5102. .....".. ".-..- Hi Jim! ! I'~ faxing you the information we discussed. I'm including a copy of the De~ember 9, 1997 letter f~om, the Montana State Dir@ctor, Larry Hamilton, solicitoris Opinion from Tim Vollman, Regional Soli~itor, Southweøt Region dated September 19, 198~, regarding E£fect of State Agency Oil and Gas Cons@rvation Orders on Indian and Federal Lands Intersperøeð with Lands Subject to State Jurisdiction, a oopY of the Memorandum of Understanding signed between the 8LM and the Montana BOârd of Oil and Gas Conservation datèd october 8, 1992, ~nd ~he first two pa~os of ~ memorandum from the US Attorne~ with the Western Dis~rict Of Columbia, stating that nthe Federal government and ite propoer~y are not s~bjeèt eo such actions and orders wi~ho~t the governments' affirmative, express ~onsent. I think ~hese will get you enough referenceø regarding ~he questions we diåCtlSsed, In addition. I would also refer you to our solicitor who have represented the Feåera1 GQvernrnent in such pro~eedings if you need additional information, and other A~torneY'ß who are very aware of the jurisdictional issues. Kemp Wilson has presented papers before the Rooky Mountain MiñQra1 Law Foundation discuss the very same issues. Pepa:rt:.rn~t. of In.terior A~t:orney {S.plicitortt Dennis Daugh@rty, Fluids ~n@ra1s Solicitor, Washington DC (202)208-4803. Outeide Attorney~.s Famili~r with t.his__TSS1.le: ~emp Wilsort, crowley Law Firm, Billings, Montana (406) 255~7217 John ~. Lee, Crowley Law Firm, Billings, Mon~ana (406) 255-7252 Gary Broeder, A~tcrneYI ~i11ings, Mcntana (406) 255-8630 RECE\VED If you have uny other que~tion~, please feal free ~o ~all me. r ~~IR 20 ZOOO ¡ .J . \ PJaSKa 01\ &: Gas Coos. Commi~ion Anchorage LateJ:"! ! ! Pascual ~Pas· R. Laborda APR-03-2000 14:56 BLM MSO FLUID MINERALS 1 406 255 2941 P.02 ~ IIlNa :i - :II \:~ -.-..... . '4JIleN ~. IN IœPLY TO; Uniteci Jtates Department of the ulterior BUREAU OF LAND MANAGÐÆENT Montana State Office 222 North 32nd Stnt:èt P.O. Box 36800 Bittings, Montana 59107..6800 NW Roeky Riãge Unit NDM S6104X 3160 £,922. PL) . December g~ 1997 Charles M. Carvell Assistant Attorney General Office of Attorney general 900 East Boulevarå Avenue Bismarck, Nortb Dakota 58505 Dear Mr. Carvell: This offiee has recently received copis$ of correspondence betwé@n your office, and Mr. Nicholas J. Spaeth, an attorney representing IN Exploration and ~roductiQn. Inc. (IN). IN is the unit operator of the Northwest Recky Ridge Unit (NWRRU), located in Billings County, NQrth Dakota. In your letter dated Octob@r 31, 1997, to Mr. Nicholas J. Spaeth. you stated that, II (AJccording to Wes. Päscual said that the unit must CQmply with state s~acing and well permitting lawsn. Pascual Laborda is a Petroleum Engineer with this office. In another letter to ~. Nicholas J. Spaeth dated November 6, 1997¡ you also stated that, ~The Commission'S position is that the Unit is fully subject to state regulatory laws". In Qrder to clarify Mr. Laborda's conversation with Wes, we believe it is important to explain the spa~ing issues and their relationship to federal leases which are committeå to ~he federally approved e~loratory unit. The NWRRU was approved On June 10. 1997, by this officè and encompasses about 4.498_96 açres+ All the wo~king and royalty interest owner$ are committed to the unit except fer those interest owners ~ithin section 20, T. 136 N.. R. 100 W. An exploratory \\nit allows a.tl operator to drill wells at the optimal location which thereby allows ~he opërator ~o manage e~loratiQn and development of hydrocarbons in the most efficient and economical manner. ?Qr thi$ reason, tbe federal.$pacing requirements for a well being dr~lled in a committed fed@~al lease within a unit is considered waived by the Federal government. The correla~ive rights of interest owners committed to a unic agreement are governed and protected by the unit ~greement. The unit well IN planned to drill is located in che SE~S~ of Section 18, T. 138 N.. R. 100 W. The unit well was included with the unit application. All the lands in section 18 are under two Federal oil and gas leases. NDM- 72390 and NDM-865~7. Both leases were co~tted to the unit and the spacing requirement for a well within the section is considered waived by the Federai gevernmen~. In other words, we have permit~ed the unit operator to drill a well at a location that the operator beli@v@~ would most likely discQver hydrocarbons and yet avoid the drilling of unnecessary well(s) . APR-03-2000 14:57 ELM MSO FLUID MINERALS 1 406 255 2941 P.03 ') 2 For spacing requirements on a committed f@oèral lease within a federal exploratory unit 1 our advise t.o any unit opera1:or is chat it would be up Co them to dete:z:minè whether they wish co request a spacing hearing or not from the Norch Dakota Industrial Commission (NDIC). If a spacing hear ins is requested by the unit: opera Cor 1 the BUM will testify at the hearing that Chè leas$ is committed to a federal exploràto~ unit and that the correlative rights of interest owners are protected and governeð þy che unit agreement. Our position is t.hat spaeing rulings on a federal lease co~tteQ to a fèderally ~pproveã exploraco~ unit when the entire requested spacing is committed to the explQratory unit will not be applicable to those federal leases. The abo-ve discussions for spacing of federal or In.dian leases is back@d by lEJgal precec!ent. See Ass; niboin@ apd Sio\µC...Tribei!ijJ.. V. ~tarta ÐQ.ard o..f oil and Gas CQn!t~;va tion, 792 F. 2d 782. 78 S (9ch eir. 1986); and R:irkpa tr~ck Oi.l &. Go!..s Co. v. United States, 675 F.2d 112, 1126 (~Oth Cir. 1982). Enclosure 1 for your information is ~ copy of a Solicitor's opinion dated September 19, 19891 regarding the same issue. Howevti!,r, we wish 1:Q cooperate fully with the NDIC and à paramount concern to us is that lessees/operators not be "trapped" in å cro5s-jurisdio1:ional situation. We are suggesting that 1:he BLM qnd the NDIC en~er into an MOU in order to resolve the ongoing issues ~hat arise as they affe~t Federal and Indian lands in the State of NQrth Dakota* Enelo$ure 2 for your info~tion is a eopy of our Memorandum of Understanding (MOV) with the State of Montana on spacinq issues. The MeU disouSS8S both the pro~edure and process regarding spacing on fœderal and Indian lands. This ~OU was developed based en a Consent Decre@ as a final judgemen~ for a lawsuit bro~ght by the Assiniboine and sioux Tribes against the Montana Board of oil and Gas Conservation which was signed September 22, 1987, by Judge Paul Hatfield of the u.s. District Court of Great FallSI ~ontana. If you have ~y questicn$1 please feel free to either contact Chun Wong or Pascual Laborda a1: (406) 255-2857/2862. Sinc::erely, 70. ,JL 2 Enclosure 1- Solic::itor's Opinion dated September 19, 1989 (11 pp) 2- MBOGC/BLM MOU (5 pp) c:c: (wI encl.) Donna Heisler, IN Exploracion & Production, 440 North 31st Street, Sui~e 3QO. Billings, Montana 59103-7167 Nicholas J. Spaeth. Dorsey & Whitney LLP, Dakota Center S1 North Broadway, Suite 402, Fargo, North Dakota 58107-1344 Was Norton, North Dakota Industrial Commission, oil and Gas Division, 600 East Boulevard, Bismarck, NO 58505 John Chaffin, Office of the Fielà Solicitor. PO Box 31394, Billings. MT 59107-1394 DM, Dakotas DO RECE\VED "~:.I? 2. 0 LOOO ,I . '. aKa Oi~ &. Gas Cons. Commi5~ton A\a Anchorage APR-03-2000 14:57 ELM MSO FLUID MINERALS 1 406 255 2941 P.04 .. . .. ,........ t .. '11I . " -.' , ).. ....-.:. I' ... , , .. "~.- .-- ¿,. .. , BIA;SW.2466 BLH.SW,,9950 : j MEMORANDUM REGEiVED, . -:i~ ....,\0 .. . , I' ....(.) r) 0 2000 . I .j'n '- . sep~.mber 19, 1989 '1'0: , . Alaska "Oil & Gas Cons. Commission Solic1tor . Anchorage FROM: Tim Vollmann, Keq10nal So11c1~or, Southwest Region SU&:rEc::t': Effec:t of state A9'ency Oil anèl Gas conserva1:1on Orders I on Indian and Federal Lands Intersperseå with Lands I Subject to state Jurisdiction This paper is intended to hiqhlight legal anQmalies associated with the:~r~ct~ appl1ca~ion of oil and gas spacinq orders issued by state a;encies with respect to Indian and federal lands. These anomalies occur when Indian or federal lands are situated· in the same spacinq unit as lands subject to state jurisdiction. This is very cammon in Oklahoma, and not uncommèn elsewhere in the West. Bac.~qround State aqencies, like ~è Oklahoma corporation commission, regulate the. location and spacing of vella in relation to property¡line6 in order, to protect the corralative riqhts af mineral owners Þy prevent1nq net drainaqe amcnq neiqhDor1nq tracts anå economic waste as a result of the dril!lnq of unnecessary wells.: However, state spacinq and pOQlin; orders are normally not reqaraed as havinq a bindinq effect on oil and gas develQpmen~ on Ih4ian or federal lanås. See Assinibo~ne.and Sioux Tr!Þes v. Montana Bd. of Oil and Gas conservation,'· 79'2 F.2d 782, 7aS -(9th C1r. ¡986>"; and KirkÞatrick oil '_ G'as Co~ v. Uraited states, 675 F.2c:l 1122, 1126 (lOth C:ir.-1982). RathQr, feder~ì ' statutés qive thè Seçre~ary the au~ho~ity to approve communitizat1on aqreements for the development of oil anå1Qas. See 25 tr.S.C. § 396d: 30 t1.S.C.A. S 226(m) (19S9 supp.). .Y Thé statute applicable to federal lands, 30 U.$.C. § 226, authorizes lessees; to join toqether in a cooperative or unit plan of development -whenever de~erminéd anå certified by the Secretary of the Interior to be necessary or advisaDle in the public interest.- 30 U.S.C. § 226(m). Also, as part of the leasin~ process, the Secretary -may prescribe such a plan under Yhich the. lessee sh~ll operate. ... .- ~ The statute does not incorporate s~ate aqency spac1nq orders as a point of reference for determinin~ the adv1sabili~y or a unit plan. Nor do BLM !I The la~ter statute was amended in 1987, resultin~ in the redesign~tion of subsec~ions. All citations. in this memorandum to the Mineral Leasin~ Act, 30 U.S.C § 181 et seq.. are to the Act as amended in 1967, 101 stat. 1330-256. /. ' . . RPR-03-2000 14:57 ELM MSO FLUID MINERRLS 1 406 255 2941 P.0S -. ,~ ..r" . J\.~ c. \-" 'Õu:\"';'¿~ ."... \ (A.0 "",/ ~ ,\r.".' ., . requlations rarer. to s~ate,agen~y øpec1hg orders. See 43 CPR. Parts 310S, '3180-3186. ; The realit.y, ot this . process, bovever, is that BLK officials·relY,Qn state aqency' orders sa a critical point o~:,reterenc:e i~<their. re~iew at. c:ammunitizat:1on agreements.,. ~~r .example,." in',~ex~s' oil' "Gas Corp. ..v. PhilliÞ,s.: Pet~oleWD.. Co.., ~,06 P.2cl 1303 .(lOth· cir. 1969), 'cert. d.eníed 396 U.S. . 829, ~e courts upheld forceå pooling of the interests or a lessee at public land because the BLK had approved communitizatlon of the lease þased on ~he order of the Oklahoma çorporat1on Commission. 4,06 F.2d at 1305, n.l; compare ~1rJcpat~1c:k" 0.11 .& ~as_ Co'., supra., 675 F.2d at 1124, vhere the Secretary had not consented to state 'ordered PQolinq. . , - ).~., ).~ ., 4.,-- ....~::I./ I # .. "r~.'.·~ " 'When federal lands are unleased, but:. arE! in danqer of beinq drained of oil or gas by vellQ on adjacent lands, the Secretary is authorized to neqotiate and enter into drainaqe agreements with the lessee or owner or the adjacent land. 30 U.S.C. § 226{j). These aqreements provide for the payment of compensatory royal~ies to the United states. Such dra1naqe aqreements may also be neqatiated vhen the fèderal lands are under lease, vith the consent of the lessee. Aqa1n, the statute and regulations maXQ no reference to state aqency spacinq orders, but in practice there is heavy reliance by BLK on such orders. The statute qoverninq InQi~n lands is less detailed. It provides merely: ·All operations under any oil, qas, or other miner~l lease issued pursuant ~o the terms ot . . . any . . . Ac~ affecting restricted Indian lands shall be sUbject to ~e rules and regulations pro=ulgated by the Secretary of the Interior. In the discretion of said Secrétary, any lease for oil or qas issued under the provisions of this Act [a 1938 Act which qoverns the issuance of leases to' , ~ribal lands only] shall be ~ade subject to the terms of any reasonable cooperative unit , or other plan approved or prescribed Þy said Secretary prior or subsequent to the issuance of any such lease . . . .' 52 stat. 348 (193a); 25 U.S.C. § 396d. Although the provision far a -reasonable cooperative unit or other plan- is made expressly applicable only to tribal lands, BrA regulations provide for unit plans for Þoth tribal and 1ndi~idually allotted lands. See 2S CFR § 211.21(b) and § ,212.24(C): see also Sanguine, Ltd~ ~_ Dept. _of the ~nter~or, 736 F..2d 1416, 141.7 (10th cir. ·1984). BÎA practice 1"s tó refer proposed communit1zation 8qreements ~o BLH tør technical review before BIA approv~l is given. There is virtually always 2 RECE\VED \ .¡ ¡" ~)~ 20 2000 I .. r\ , Aiaska Oil & Gas Cons. Commission Anchorage . ',1- ., ." __" , , "". f'" .... ". - .. APR-03-20Ø0 14:58 ELM MSO FLUID MINERRLS 1 406 255 2941 P.06 ._'. .. ...' .. .- -. ,. ... --.... J y~. adherence to state aqency. spacinq orders in this process, as the requlat10ns permit the Secretary, in his judqmen~ to -take into' consideration . . . state laws or regulations . . .- 2S CFR § 212.24(b). Ho~ever, it has been held that the Secretary m~y not merely rubberstamp s~ate orders as a substitute ~or hi. exercise of judgment in the aþp~oval of a communiti~ation aqreément. Asslnibo1ne and sioux Tribes v. Montana Bd. of oil and Gas ¢ons~,rYat~o~, suÞra, 792 F.2d 782, 793-96 (9th ~ir.Y198'). Lec:al Añòma~ies There are two broa~ cateqories of anomalies which occur under the above statutory schemes: the first occurs when the federal qovernment is faced with the necessity of selec~ins a leqal remedy when þotential drainaqe from a well on an aãjaeent tract is encountered; the second occurs when state aqency spac1nq application proceedinqs are manipulated by applicants to avoid the cQnsequences of ãealinq with Indian ownership of nearby tracts. These two cateqories are discussed in detail belo~. A third situation is then discussed: the. role of the Secretary with reqard to oklahoma Corporation Commission proceedinqs under the special statutory scheme for restricted lands of Indians o~ the Five Civilized Tribes. ...I~.- A. Remedies rrom Drainaqe 1. Drainaqe A~reements As discussed abo~e, the Mineral Leasinq Act qives ~he Secretary express authority to enter into drainage agreements with landowners or lessees of land adjacent to, non-prcducinq federal lands, vhether or not the federal lands are leased. 30 U.S.C. § 226(j). No co~parable authority fQr Indian lands may be found; ðnå it vould be difficult to imply the existence or such authority, at lea.st for allotted lands. First, Departmental requlations rec:oqnize no such author! ty. Second.ly,. ~ederal. atatutes appear to þrohibi~ such aqree=ents. The Gener~l Allotment: Act, ~pplicable to most Indian allotted lands, states: ·tI)f any conYeyance shall be made of the lands set apart and allotted as herein provided, or any contract made touchinq the . same . . . such conveyance or contract shall be absolutely null and void. . . .. 2S U.S.C. § j48. . , Subsequent leasinq statutes, e.q., 2S U.S.C. § 396, provided some relief from this severe restrlction on alienation, but one cannot raad into them an authority on the Secretary's part to enter into drainaqa aqree~ents becðuse the statutes provide only for lèasinq -by said allottee.- See PaafÞYb...itty v. S~ellY O~l Co." J90 U.S'. RECEIVED 3 ..~>~. 20 2000 Ak~5ka Oil & Gas Cons. Commission Anchorage APR-03-2000 14:58 ELM MSO FLUID MINERALS 1 406 255 2941 P.07 " , ~ h -,- II. ... - ,. ,J 365, 372, (1968). S1~11arly, ~r1bal lands are sUbject to the , èevere rèstriction a9a1nst alienation found in the Indian ,Nonintercóurse Aci:," 25 U.S.C. § 177. And., until 1982', t.ribal lands coulc;i only Þe 'leàsed ',for. oil and gas' -by authority of t.be· ~tribal çouncil,.-":' :25 ,U.·s·.C.,'.S ~·396a. ,.The' enactment: of the Znd1an Ki1:1er.l De'Vêlopment:. Act at 1982" ;25 U.S~C. §§ 2101 et seq., créated broader authority to~ -minerals aqreements·~vhich could encompass a drainaqe aqreemènt. See 2S U.S.C. § 2102. But this 'too must ,be initiated by the Indian tribe: the Secretary is given no independent authori~y to neqotiate or execute drainage . agreements t~ protect tribal lands. of., .;~, ( :.":', , 't~-'''. .. . ""-". "I I. .., ~ .~ , . . Consequently, insofar as Indian lands are concerned, BIA and BLK officials have rou~inely responded to find1nqs of potential drainGqe by recommending to thé Indian landowners that they should lease their lands for oil and qas as soon as possible so that the lessee may promptly negotiate a communitizat1on agreement wi~h the opera~or of the vell on the adjacent tract. This 1s not alvays satisfactory. The leasin~ process may ~akè ~onths, and drainage prior to lease may be substantial. Moreover,' even when a 'Well goes into production on aClj ac:ent land, a public advertisement of the Indian tract for an oil and qas lease 1s nO guarantee that there will bé any bidders, at leas~ since the oil bust' of 1983, unless ~roductian is demonstrated to be qreat enouqh to repay the costs of all the vorkinq interests· in the spacinq unit. Finally. an Indian allotted lease leaves the indivi4ual Indian landowners with only a pa~icipatinq royal~y interest in production. Hore and more In~ian allottees have expressed interest in takin9 risks as vórkinq interests, but the statutes provide no evident authority for such a contractual arranqement, e~cep~ in the rare instance where the allotted lands can be incorporated in a larger tribal minerals aqreement pursuant:."to 25 tJ'.S.C. § 2102(b). At any rate. for the reasons discussed below, ~1thout a lease the Indian lands may Þe subject to complete dr~inaqe by an adjacent vell operator with i}Dpuni ty . 1 2. Forced Pooling As discussed above, the courts have held that forced pooling of federal lands may be effectuated when the BLM approves a state agency order. Texa~ Oil a~d Gas Corp.ß, v. Phillips Petroleum, sµpra, 406 F.2d 1303' (loth Cir. -1969) I cert. den:Ï-ed ·396 U.s~ 829. HQ~ever. absent such approval, a federal ~eas~ may not be extended by virtue of production elsewhere within a state-ordered spaci~g unit. even whèrø all the vo~kin9 interests have aqreeå to pool the royalty i~tereø~s. Bruce Anderson, 91 I.D. 20J, ao ISLA 286 (1984). Ironically, this ru~e has led' BLK to deny that the gov~rnment is eVen entitled to a compen$atQry royalty for otf- leà:se producticn wi1:hin the spacing- unit, g., 9~ :I.D. a.t 206, R~CE'VED u:: .I 4 '!I. '. ."~.>? 2 0 2000 ,Alaska Oi! & Gas Cons. Commission Anchorage " . '. APR-03-2000 14:59 ELM MSO FLUID MINERALS 1 406 255 2941 P.08 ..~ ). . . .' }~I . . presumably because payment ot a compensatory royalty effectively extends the term of ~he 1ea8e. 30 u.s.c. S 226(j) 43 CFR ' § 3107.9-1 (1988).' . This il1ustratès vell the anomalies which arise when tederal or Indian lands are interspersed with lands subject to state agency poo11nq orders.. Non-enforceab1111:y of these state orders (absent federal approval) means that lessees af federal or Indian land must either drill and produce their leaseholds in order to bold the~r leases, or, in the alternative, negotiate a communit1zation aqreement with ~e other vo~kinq interests in the spacin9 unit so that off-lease production vill be attributable to their own leases when the com=unitization aqreement is approved by BLK or BIA. The benefit of this 1s apparent: the lessee is compelled to participate in economic production of the unit, or lose the leasa. Bu~ there 18 a signifioant detriment assoëiated with this legal position: ,if ~he lease 1s lost by the lessee, or if the federal or Indian tract is unleased in the first place; the nonapplicability af state Qrders could mean that the federal or Indian tract must suffer drainage undér the old -Law of capture-. This result can be avoided with respect to federal lands it a d11iqent BLK official negotiates a drainage aqreement with a cooperatinq unit operator. But what remedy 1s available to the BIA as trustee of an Indian tract subject ~o drainaqe? Courts have been unwillinq to impose poolin9 in the absence of authorizing- leqislation. E.q., Western Gulf oil Co.. v. Superior oil C.o. 206. P. 2d 944 (Cal'. App. 1.949):. California Co. '~.. B~it.t, 154 So.2d 144 (Miss. 1963). ,1..- , ,.-" 3. Ac~ions for Trespass or an Accounting Where Indian lands are unleased and have not been drilled but are threatened with draina~e by a well on an adjacent non-Indian tract, ve have consiäered ~he possibility of an action for trespass, or conversion. At CQmmon law, of course, any such claim would be overcome by the Law of capture. However, that prin~iple has largely been superseded ~y the appli~at1on of state ccnserva tion laW's. Thus, for example, in~~n O,~l c~. v w. Ka7i'.tin, 218 F~Supp. 6~e (S.D. Tex. 1963), i~ vas held tha~ 1f drìll~nq and production is pursued in accordance with a lawful order of the Texas Railroad Commission, the court could not entertain an action for conversion because the Commission retaineQ primary jurisdiction, and the plaintiff ~ould have to seek relief thérew Ho~ever, in Baumqartner v. Culf oil co., 168 N.W.2d 510 (Neb. 1969), the court held that,' while operators who ~ere cQmplying with an oil and Gas Conservation commission order'cQuld not be liable far vilful trespass, the non-consentinq workin9 interest holder on ðàjacent land shQuld have a riqht to reco~er from those operators in court an amount equal to ~hat he could prove he could have obtained through drillinq and developin~ his property as if it were outside the unit. This Nebraska ruling appears to Ri:£CE\VED 5 , \.'., ,. 1">'2 20 2000 Ata$ka Oi~ & Gas Cons. Commission Anchorage - .,.",..- . . .. APR-03-2000 14:59 ELM MSO FLUID MINERALS 1 406 255 2941 P.09 '-'. ) ) be part of a trend not to apply the taw of Capture strictly to drainage situ4tions ar1s1nq out at secondary recovery' operations. See ~ame~on v. EthVl Co~., 609 S.W.2à 346, 19 A.L.R.4th 1174 (Ark. 1980), and ~e, annotation àt 19 A.L_R.4th 1182. . . , . , , I . . ...;......: . I ,. , , . The ,~w of capture has älso be~n limited ,in its application ~o ~èaspn~ble operations. Thus, for example, a recklessly conducted operation ~hich results in drainaqe of an adjacent parcel could give rise to nQisance or trespass damages on a theory ot waste, notwithstandlnq a state aqency order authorizing the operation. See ~llift v. Texon Dr111inq co., 210 S.W.2d SSS (Tex. 1948): see alsoPhillipsPè~~oleum' Co" v, Ame~ican Trad1nq ~ Production COr1),-;· 361. S..W.2d 942 (Tex. App. 1962), limiting rights under the Law of Capture to -leqitimate operations.- Accordinqly, if an operation is conducted in violation of an aqency rule, s~ch as drillinq too close to property lines. an aotion tor -wronqful drainaqe- may ensue. Loeff!er v. Kinq, 228 S.W.2à 201 (Tex. App. 1950), rev'd on other qroQnds, 236 S.W.2d 772 (Tex. 1951); see a.lso Hall Jones O,il Corp. v. C~aro, 459 P.2å 858 (Okla. 19(9), ~herQ a proQucer was held liable to an adjacent owner of land in a~othér spacing unit for -fraudulent dra1naqe- where it had falsified reports to the Corporation commission. ... ':..~.;: The Q~ers of unleased land oyørlyinq a common source of supply have been known to file an action for an accountinq aqainst well operators on adjacent lands. In .Bart~n v. C¡earv petrole~ COro-1 566 P.2d 462 (Ok. App. 1977), the court held ~hat unåer Okiahoma statutes the plaintiff ~as limited to petit1oni~q the corporation commission for a poolinq order which would enable him to recover a 1¡8th interest in his pro rata share·of production from the pool. If he vare to pay his pro ratä share of production costs to the operator, he could be authorized by the Commission to receive the other 'laths share af production attributable to his portion of the pool. See 52 Ok.Stat. § 87.1(d). For our purposes, this raises ~he question Yhether the Secretary should invoke the protections of state law and petition the Commission ~o pool an unleased Indian tract so ~hat the Indian landowners vill at least be able to earn a ~/8th pro rata share of ~ross production. The Commission, of course, has no inherent authority to pool Indian lands. Thus, before we' can an5~er the question whether the Secretary has a trust obligation to petition the Co~ission, we must deoiäe whether he even has the au~hority to do SQ. This assumes efforts to lease and communitize the Indian tract have been unsuccessful, whether because no satisfactory bids were madé at a public sale or because the Indian landQwners cannot or will not aqree to execute a RECE\VEO 6 :' ??, 20 2.000 A\aska Qit & Gas Cons. Commission Anchorage . ;. .,', ..' t .- I ' . . .:. . . I:. , APR-03-2000 15:00 ELM MSO FLUID MINERALS 1 406 255 2941 P.10 "', _. ... .' I . . ø_, }. ') . Y particular lea.se. 9IA regulations e:uthorize the Secret.ary -to .'¡' take into considGra~1on state laws and regula~ionsJ- 25 CFR S 21.2.24 (b) 11 but. this has never been construeå to aut:hò:rize aSIA orficial,to peti~iQn a sta~e agency for re11er. In sum, but ror the PQssibility of such a paollnq pe~itiQn, we, appear to lack a remedy from thre.~ened dra1naqe or an Indian tract under circumstances where the adjacent vell operator has complied \ fully vith all state aqency orders in conduc~inq his . operatiQris. ~ , . I also' perceive..a manag'8mont problem in the responsiveness to drainaqe:situations on Indian lands. The BXA and/or BLM should normally!receive notice from the state Commission when a spacinq application involving Indian land has been filed. However, ih my experience BIA rarely responds to such notices, except perhaps to pass them on to BLM, and sometimes to conàuc~ an oil an4 qas lease sale for an unleaseå Indian tract. (I believe that BIA officials seldom notify Indian landowners ot these notices.) In Oklahoma it is my understandinq that BLK reviews state aqency spacinq only if it is the subject of a coftmunitization ðqreement for vhich BIA approval is SQuqht. The la~ter only occurs when the Indian tract is already leased and the operator has negotiated an agreement. We do not knov to vhat extent production occurs from non-Indian land sharinq a common source of supply with adjacent Indian land withQut compensation to the Indian landovners. But I am certain it does occur~ B. Exclusion of Indian Lands fro~ Spacinq Units throuqh Manipulation of State Aqency Procedures 1. 'Applications for Small Spacin~ Units to Avoid Indian Lands Query: How often do operators apply for smaller than normal spa~inq units to avoiã the difficulties involved with nèarby Indian lands and/or to a~oid the ÐXpense of ~ompens~tin9 Indian lando~ers? Ten-acre oil spacinq units a~é not ~nusual in Oklahoma. Neither the BIA nor the Indian landovners ~ould necessarily receive no~ice of such an application because the Y AU. S. Distr1c~ Court held in 1987 that the Secretary could.. approve a mineral lease on an Indian allot~ent only if the unanimous consent of all Inài~" heirs hOlding indiv1àed interests in the allotDent had ~een obtained. KcClan~han v. ~cdel, 14 Ind. L. Rep. 3~13 CD.N.H. 1987). We are presently consiãerinq advice to the Navåjo Area BIA that a lease with 95 percent Indian ownership assent may be ."pproved when t.he tract will othervise };).e drained. This situation vas not addressed in MCClanah~n, which concerned uranium leasing pursuant ~o the same sta~u~e, 2~ U.S.c. § 396. RECEiVED 7 . .:....2 20 2000 . ,~ Alaska Oil & Gas Cons. Commission Anchorage ~. ~':.. \. RPR-03-2000 15:00 ELM MSO FLUID MINERRLS 1 406 255 2941 P.l1 ..~"" ) , .f Indian land is QU~8ide ~he proposed un1t.J/ ,BLK 1ø supposed to ,monitor 011 and, gas development in the vicinity o~ federal and Indian lands in order , to identify'threats of dra1naqè. I am not familiar,vith,their pro~eðures qenerally, bu~.they appear to vary ., from state ~o ø'tat:E!.~ :.:.,As. di'scutlsed 'belov·,in ·section. C, there is ' ./10· BLM ',inspec1:ion or monitorinqo'proqra. at all for'inherited lands of Indians of thQ F1ve civilized Tribes"in eastern OklahQma. When a drainaqe situation is identified, BIA leoks to a lease sale as the exclusive remedy. The leSSée then would drill an off-set well or petition for expahded spacinq and neqotiatø a cQmmubiti~ation aqreeme~t with the vell Qpera~or. (Indeed, the terms of the standard BIA lease obliqate the lessee either to drill off-set vella or pay compensatory royalties.) However, I am not 'cont1àen~ that drainaqe situations of this nature are usually identified in a ti~elY fashion by either aqency. The BIA response, if any, has often proveQ to be slow. A .1 ' {~.~..".: 2. -De-Spacinq- Applications In the past eiqht years there has been quite a bit of litiqation in western Oklahoma over BIA decisions ~hether to approve or ãisapprove communitization aqreements encompassinq non-produclnq Indian la~ds when the aqreemen~s were submitted for approval very shortly before the expiration of the primary term of the Indian lease. A judicial decision in 1982 suqqested that BIA had a trust responsibility to consider the Indian eCQnomic Þenefit of thé option of letting the old lease expire and then re-leasing the land for a new bonus. Xenai oil and CàS v. Deþt. of the I~terior, 611 F.2d 383 (10th ci~. 19~~). ìn ~he ~our~e ot consi~eration of proposed communitization aqreements, BIA officials often advised In~ian landowners to acquiesce in . communiti~8tion because, if thè land were ~nleased, the operator could successfully apply to the Oklahoma Corporation Commission to Ide-space- the Indian tract and thus drain it with impunity. In at least one case where BIA approval of a conununlti~ation aqreement vas challenqed in federal court, BIA officials offered this threat of ~de-sþacinq· as a rationale for approval -in the best interests· :0£ the Indian allottees. . , 3/ Oklahoma Corporation commission rules only appear to require service of notice by mail ·uPQn ~ach person or govern~ental entity havinq the right to þarticipate in production from the proposed drillinq and spacinq unit. . . _- RUle 8-2(8), o.c.c. Rules of PracticE:! (19S9).. B· RECE\VED '''::';J 2 0 2000 \ .., Alaska Oil & Gas Cons. Commiss\on Anchorage 1'..-. '"-,,, """ . · " ., , , , . : ..... "'" '. 'J ' I l' r .. I'" " '.J.. I....... . "I .. I '. ~ þ. .. ..... '. I ".,.¡, .....' . . ' - - , APR-03-2000 15:00 ELM MSO FLUID MINERALS 1 406 255 2941 P.12 . ... ..' ... " ) ') I"~. When I came to Tulsa in 1987, BIA c:1id not 'as a practice aclvise ·,,,,.~,I the Ragional Solicitor's Office when it rec.i~ed notice or spacinq applieations. Hence, we had no rirst hand ~amiliari~y ~ith Corporation Commission praQ~ices as they ~élated ~o Indian lands. ,A' year la~er an Indian landowner not1r1ed us that a na~ural qas well oþerator on an adjacent non~Xndian ~ract had applieã ~o ~he commission to change the spac1nq from 640 acres to ~60 acres so that 'the unleased Indian land would be outside the unit. Evidently, lease neqotiations between the operator and the Indian landowners had proved fruitless. BIA officials aðvlsed the landowners that nothing could be done to prevént ~is -de- . spac1ns·. We advised the BIA Area Direc~or otherwise, sU9qestinq ~hat we tile an opposi~ion to the application. He agreed, we did so, and as a result, the application vas moved f~om the uncontested docket of the Commission to ~be contested docXet. Since the operator was anxious to beqin production, it farced him back to the neqotia~inq table, and a lease vas successfully neqotiated. ' We do not knov how common this ~ractice has been in Oklahoma. When I recounted this situation to the BIA/BLM/HMS S~eerinq committee in Denver last month, officials of all three aqencies were outraqed anå said that they had never heard of suoh a practice in other vestern states where there are Indian lands in~ersperse~ with lands, subject to state spac1n9 orders. In Oklahoma an appticant for a change in spacinq must show new or previously unavailaDle geoloql~ data to justify revi$ion of ~he corporation Commission's previous or~er. However, when the application is on the uncontested docket (rèspanddnts have only 15 days w1~hin vh1ch to file their, opposition), it appears that the level of justification required at the non-aaversarial hearing is quite lov. Thus, we fear that so~e Indian lands in western Oklahoma may have ~een drained throuqh the use of this procedural mechanism. We have no hard evidence of this at this t~me. ' This matter is now the subject ot further scrutiny by a subqroup of the Steerin9 co~ittee, and I am particlpatinq in that exercise. ' c. Special Situation: Restrlc~ed Lands of Members of the Five Civilized Tribes Lands of ind1~1dual Indians of the Five Civilized Tribes in eastern Oklahoma are subject to a different statutory scheme than c~her allotted lands. Lan4s still held by the original Five Tribes allottees (what few survive are octoqenarians or older) are leased subject ~o SIA approval pursuant to procedures which 'are similar to ~hose for other Indian allotted lands. See 25 CFR Part 213. However, inherited allotments of members of the Five Tribes ~hQ are h~lf-blood or moré may be leased only ~ith the approval of the Oklahoma state ãistrict court judge of the county 9 RECEtVED " ~J? 2 0 2000 Alaska Oil & Gas Cons. Commission Anchorage APR-03-2000 15:01 ELM MSO FLUID MINERALS 1 406 255 2941 P.13 . . . ~" .. , I . ~"'-:. ~':" ~, -., _, .....-I,."...,A, . ). ~ I ).: ' , .' "'I where the allotment is si~u4teã, pu~suant ~o section 1 a~ the Ac~ ~Ç0 of August 4. 194~,:6~ Sta~. 731., 'Trial'attorneys wo~kin9 cut of :this office ·appear'.atsuc.h lease~apprOY'al proceedings in order to·:· .in$u~e, that, 'the, Iric1ia,J:I. l.a.ndcwners' 'rights. are. ad.equately '. .~' , prÞt:eC:1:ecl,. '..~ See., Wa.l~$'r v.·( Unit:ed. . St.ates,· 663 P .:Supp.· 258 .,' .(~~D.Qkiä.' ¡1987·). ;:; ifl'·! .:' :-_" " ",' ..;, ~,.' . r . '. ',~I ...... ,. I 1 .: : I' se~tion 11 of the'1947 Act, 61 stat. 734" provides: ,i ' , " -All restricted lands of the Five Civilized Tribes are ,hereby made s~ject.to all oil and qas conservation laws of Oklahoma: . Provided, Tbat no order of the Corporation Commission affectinq restricted Indian land' shall be valid as to such land until submitte~ ~o and approved by the Sedretary of the Interior or his duly authorized representatives.··' Unlike the ø~atute$ qoverninq other Indian and redera1 lands, this statute makes'express reference ~o the orders at a state aqency; ~ut it conditions their validity on Secreta~1al approval. Inexplicably, neither BLA nor BLM in eastern Oklahoma performs any reqular review of Corporation Commission orders. Until recently,' well operators had rarely Þotheraå to submit spacing' orders to BIA Huskogee Area otfice for approval. We understand tha~ in the past the Kuskogee Field Solicitor advised BIA that approval .af spac1nq orders was unnecessary, and that the statute only contemplated the necess1~y of approval for poollnq orders. We have found no leqal memarandu. explainlnq thi$.distinc~ion. And a recent increase in reques~s for approval of spacinq orders has 'led BIA to seek our leqal advice en the scope of Departmental responsibilities. We met with BIA and BLM officials last Friday to discuss this further, since BLM would presumably provide technica~ reviev of any Corporation Commission orders. BLM has historically provi~ed no assistance with respect to inherited lands of the Five Tribes, on the cstensible qround tha~ state district court approval of a lease tOQk the land outside Oepa~en~al,jurisàictiQn. There is lQn9sta~Qin9 adœinistrative prac~ice consistent ~ith this positiQn. For example, neither KKS nor U..S. ceoloqical Survey (prior 'to the c::re~tiQn of MMS in 19B1) has eVér accounted for royalty pay=ents made pursuant to cQurt- approved leases; and the leases thémselves are ~ade, not on SIA, 9Qvern=ent-approved forms, bu~ on cQmmercia~ lease forms ava1~able from any lanãman. However, whatever the comfort level associated with the paø~ practice, we cannot 1qnore the fac~ that the 9$neral anomalies and PQtBn~ial &buses, discussed above, with respect ~o the unitizinq and drainage of Indian lands are ' presumably compounded for Five ~ribes lands, qivén the almo$t total lac~ of supervision by InterlQ~ aqencies. A ~road jud1cial interpretction of the approval authority in Section 11 vould 10 RECE\VED .. ~)~ 20 2000 , ,I ., , ' . ..'~:.. I .' I' , '. .. '.. , . I: ',,1 '.. . I'. '. .,.......~.. ~,.' , ".. .,.1 ·,1. rI -" .; '.' ~ .. ~ . ,Ala5ka Oi¡ & Gas Cons. Commìsst~,i1, Anchorage .. ':' r ,'__.....',.. ~ "".: ,'" APR-03-2000 15:01 ELM MSO FLUID MINERRLS ~ ) 1 406 255 2941 P.14 ),~ eertainly leave ~he Department VUlnerable at this time. On the other hand, mere adminiøtr~~iva assert10ns ot aUthority may have little i=med1ate effect, since operators vill no doubt be more inclined to ðisobey BIA then the Corporation Commission it tha decisions ot the two are in contllct. We may have ~a I1ti9ate the scope or our "authority first. Indeed, any considêrat1on ot increased programmatic involvement in Okl~homa Corporation commission orders, due to Section 11, must also Inelude a look at the anticipated workload of the ReqiQnal Solicitor's office. Query: will our attorneys have to appear before the Corpòration Commission to assért Departmental jurisdiction or to defend BlA disapproval at spacinq and poolinq orders? One limited construction of Section 11 would involve BIA ,anå BLM review and approval of communit1zation aqreements in the sa=e fashion as is done fer other Indian lands pursuant to 25 u.s.c. § 396à, a 1938 statute. However, ve ~ay expect ~at the tirst 8IA disapproval ac~ion which afte~ts a lessée/s riqhts will be litigated, since ~he exercise ot that authori~y is novel, nQtwithstanding that the au~horizin9 s~atute is 4~ years old. The upshot of Friday's interagency meet1nq vas that Interior officials vill firs~ seek a meet1nq vith corporation co=mission , officials to exploré the Co=mis.1on's O~ view or the scope of its authority over lands of Indians of the Five Tribes. Also, a better unåerstandinq of the Commission's procedures will þe necessary before makinq any decision to revise our awn. The BIA/BLH/MMS Steerlnq committee vill also play a role in oversee1nq any"proqrammatic decision to exercise authority pursuant ~o Section llf Meanwhile, this office will continue to research:the oriqins of ~hat statutory provis1cn in order to qlean its intendeå meaninq. At best, we may only be able tQ advise the aqencies of a ranqe of options, all òf which will be tinqed with a certain amount of litiqation risk. I will keep you advised of thé prc9re$s of our daliberations. Any advice you can qive us in this cQmplex endeavor wi~l be appreciated. Tim vollmann ., cc: Deputy Solicitor Associate Solicitor, Indian Affairs Associate Solicitor, Enerqy and Resources !"..'_~_......".... - """'!'I!~:,...~,.I_".!_~"'\;":.~~~". ..._,0',' .,- . ~ ~ ,. . I, :..-. '". , p:r /-::, f¡·_. i ':': <::0-. : I ~ ,I .. _._~.. ..:. . \' a , i RECE\\JED .. ~)"J 20 2.00() ¡ .j ¡ \ A\s!\<.a au & Gas Cons. Commission Anchoíage ..... ........ . ----. ---- .-r --....... ,-- ... 11 "":':'jo,\ ) ,) 1 406 255 2941 P.15 BLM MOU MT922 9211 APR-03-2000 15:02 ELM MSO FLUID MINERALS KemorandUŒ of Understanding hebleen U.S. Departmenc of ebe Incerlox Bureau of Land Managemenc. Mon1:atla State OffIce and The Scace of Montana. Board of 011 and Cas Conservaeion concerning Oil and Cas Yell Spaçing¡Well Location Jurlsdiccion If Pur'Pos~ The Scace of gontana, Board of Oil and Gas Conservacion (Hoard) has jurisdic~ion for well spacing/well locacion On Sc~ee and fee lands. The Bureau of Land Ma~agement (B~) has jurisdiction over federal and Indian lands. Thi's agreement between the !IJt and t:he B08.td is intended co (I) promoce cooperation beeween BLM and' the Scate of Montana; (2) provide consiscency in establishing spacing units and well location requ,irements in a~eas involving diverse mineral ownerships; (3) protect cQr~elative righcs; (~) eliminate unnecessary duplication of effort; and (5) define d~tles and responsibilities. This agreement shall nOL supersede existing laws, rules. or regulations of either party, nor require commic~en~ of manpower or funds beyond legal authorities or appropriations. II. Aut.ho-r-; r.y Montana Code Anno~~ced 82-11-112; the Mineral Leasing Act of 1920; the Acquired Land Leasing Act of 1947; che Indian Minerals Development Act of 1982: ~he Alloc~ed Indian Land Leasing Ace of 1909: the Unallocced Indian Leasing Ace of 1938; and Interior D@partment Secretarial Ord@r No. 3087. Regulacions per~ain1ng to well spacing programs exists at 43 Code ~f Federal Regulations 3162.3-1. R~=-CEi\ffED ~ 11 ,.,J ';J . ~_ .;G. . >"J. 20 2000 A\aska Oiì &. Gas Cons. Cornmission Anchorage . APR-03-2000 15:02 ELM MSO FLUID MINERALS 1 406 255 2941 P.16 ) ) 2 I I I . .P.:r::oc~.dures THE BLK AND THE BOARD ACaR! AS FOLLDYS~ A. Poi~t of.Concacc Each par~y shall appoint a specific person or per$ons who shall be che paint 9f contac~ co faci11~ate communication and coordina~ion in impleœenting this agreement. B. Procedures ~n~ Jur~~dictlons (1) Feåer~~ Land Subjecc co BLM approval. che Board shall issue well spacing/well locacion orders affecting federal lands. Upon receipt of a well spacing/well locacion docket requ8sc involving federal lands. che Board shall notify BLM of ~he hearing and hold the hearing. The BLM shall be entitled to present expert LBs~i~ony wi~h respec~ to such spacing determinations. and shall be informed in writing of any disposicion. If thè 8LK should desire to procesc any requested dete~inacion ic shall do so by vriccen protest delivered Co the Board prior to the hearing or by appearance at che hearing. Any such prot$SC shall specify ~he BLM objeccions and che conditions, if any. under which the BLM will approve the relief requested. The Board's de~ermination/order is approved if the BLK does not objec~. If the BtM objec~s, the final decision as relating to federal lands shall be made by BLM. Orders issued by the Board which affect spacing units containing both federal and non-federal lands shall contain ~he follo~ing statement: "A federal communicizacion agreement: for spacing units which contain both federal and nonfederal lands shäll be ~ubœitced ~o the Au~horized Officer of the Bureau of Land M~agement prior LO or upon completion of a producible well." Rffi=C~\\lED ¡._ lilt: t~ . ,. ',':J 20 200() I .. I I. PJa3ka Oi' & Gas Cons. Commission Anchorage RPR-03-2000 15:02 ELM MSO FLUID MINERRLS 1 406 255 2941 P.17 ) 3 (2) Tndj~ft TAnd The ILK will Aøopt. as scandard practice for crust lands. che scate-w1de spacing rules anà set-back requiremenes as defined in the Board's General Rules and Regulations. Section 36.22.702. Applica~ions for field spåcing or excepcion location re~uests on trust lands will be submitted to the &LK. The BLK shall forward copies of said applications ~o che Board for inclusion intQ the Board's nocice of hearing. The Board's nocice of hearing shall serve co notify the general public of applications concerning crust lands. The 8LM shall ensure chac any affected c~ibes and che Bureau of lndian Affairs (BIA) Area Office receive timely notice and èopies of àpplica~iQns for field spacing,or exception locat:ion requescs on trust lands. The Board shall conduc~ hearings involving trust lands, and will receive evidence and hear ~escimony rela~ing to trust land applIcations. The Board will not issue orders gran~ing excep~ion locations or establishing spacing on trust lands. Pleadings, papers, documents, or testimony fro= any hearing bèfore the Board shall be made a part of the administrative record upon which trust land decisions will be maåe by BLM. Afcer completion of thë å~1n1strat1ve record, which will be che basi5 for approval or disapproval of a field spacing or exception location applicacion involving cruse lands. che BLK will issue a decision. The BLM will nQtify the BrA and affected crlbes of any applicat10ns involving trust lands. Upon requesc, an affect:ed cribe or individu~l Indian will be granced an opportunity for a pre~decls1on meeting ~o review the administrative record. submit additiónãl information, and express their views. An applicanc may also reques~ such a meecing. If requesced, Lhe BLM shall nocify the affected tribe, if any. and ~h@ BrA Ar@a Office of the cim@ and plac@ of che meeting. Th~ BLH shall notify chs applicanc. chs Board, ehe BIA. and che affecc8d cribe of ~he Bureau's decision. R·- r'""'",...... - 'i ~ ¡ F... q"--, c' . ¡;D.~;¡ !-- \ \:v· .. J,J , .,,1.. \., .J -, ,." I ~1 ......._ l",," APR 20 2000 AlasKa \jjj ( l.;:;J::J \,,;,nn:ò, :¡';o;¡Jrl!~~jDn li\n cflOfaga RPR-03-2000 15:03 BLM MSO FLUID MINERRLS 1 406 255 2941 P.18 , ~ ') ) 4 ( 3 ) C.ø.n;~ïdeñt. a 1 :i ty Each agency will abide by 'che confiden~iality requirements of ics own laws and regulations. (4) Acces$~O Reèords Each agency will provide for public access to records in aëcordance'vith its own laws and regula~ions. IV. Expirat:io~ Tbi$ Memorandum of Understanding will ~ontinue in effecc indefinitely ~nless formally cancele~ by ei~her party. V. Review Each of ~he parties eo this Memorandum of Unders~anding will review ic annually co decermîne its currency, adequacy. and çoncinuing need. VI. Amendment: Each of the parties to chis Memorandum of Understanding may propose changes co ic ac any eime. Any such change shall be proposed in wricing in che form of an amendment, and $hall not become effective uncil agreed to and signed by hoth of the pa~ties. "'II. CaD~ellat;~,C?n Eicher of the par~ia5 to chis Memorandum of Unders~anding may unIlaterally ce~inace i~ by providing 60 days ~ic~en notice to che ocher par~y. '~:~~'> <.. ~I~ ,/t: APR 20 2000 Aj~':~s~a Ui¡ 0~ ba~) ~~:.; .::. ò",,,,;,,. Aneh~)!' ::~ge .o.,:.1j{)1 APR-03-2000 15:03 ELM MSO FLUID MINERALS 1 406 255 2941 P.19 ) ) 5 VII!. Affec~ Qn '~is~1ni Avreem~~~s this Memorandum of Understanding specifically supersedes che Cooperacive Agreemèntbe~ween the par~1es hereeo, signed by che ILK Scate Director on November 3, 1987. and the Board Chairman on Nove~ber 19. 1987. APPROVED: . 7. ~ ,e(L.,~ / __ s~or. Montana s;~fice Bureau of Land Managemenc U.S. Departmenc of the Incerior :\: C,,~'"\V.. \,A~~~"':j . Chä!rman Montana Board of Oil and Gas Conservation DacE! signed:. 19""7 #¿.. "; " ,"--; ~,.,... Date signed: /- /if /.:? I J/.. . ./ t~:··· ". ~;, .: : .' I ' " ¡;...~. \ II ',- APR 20 2000 ÞL::."...; '.. ~.;:.., , AnC1'i(;" :\g~. ~ , ',:~[~~' APR-03-2000 15:03 BLM MSO FLUID MINERRLS 1 406 255 2941 P.20 "" ""~!!Ý .!.::i: : ~": I.,.~.. ..~ :'''l"o,..rf:M Ð;"' , , .....,.... .~. ¡o..._ .' .1._.' I"..' ." ........,. -.----.,.. -.. 20 1)'000 ;;r:.~~: ~ AP·R· c..: ... =-,,, -: t \/ ~:. . ~ - ...-- 1'"'. '- t", '- I . c;...... f:' . . . . ~ l\fEMORANDUM . . t' ;:!:..~, ::¡:~1 p.'.. ' . .........-.. r 7 1 r,..·tJC:j Oil 8£ Gar~¡ c(:'n;j.Gomm!~ton ~ t;, RECEIVEÒ~'\;'·W~~~:r.~~~~~i~~~~==: OCT 15 1992 4..34 V. 8. CQ1IrlboWle:z .. , ~...,...,.... ZOO .... C~_ Stt'..L ~--...... F1ELD SOUCrrcFt Okla!¡o.. city, OK 731D2 SanraF......1IøIrJI (COS) 231-5281 (PAZ) 231-'810 Subject: ~ ·:She.~,n -..\ Dai:e: OC~OÞer 5, 19~2 ) ·'~\,g·F ¡r') '.') ,~;: ~ç:"::'1 \'h~·ß' . ~ - -. ... '.. "._ .~;~:. :- : ; II.,. . , ;' To; Margaret Brovn Pro.: Ron Pyle, AtrSA /j ,.~ I .. -, .. In ~espanse to your memo Friday...Yes, I De11eve I do ~ecall the conversation Mr. Calns$s refers ~a. First, in all my discus· sions I am presentinq what I uncierstand the lav i:o be. In résponse to your' questions, I suqqest how that law aiqht be applied to BLM practice, but I am not saying what SLK policy and practice shoul~ be - that's not for .e to do. The question is a~out my prior s'tatement about "a citation or authørity for the United States's ability to demand all escrQW monies attrì~utable to unleased federal minetal lands to be turned =::I'Ve:, . ~c t.~8 Uni tad Sta1:eshe'f..9"'~ the United States leases the land If . I vas reférrinq to a Department of Inter iQr ~re5pass requlaticn which is completelY consistant ~ith our position in the She~~n case. Unfortunately for YO\¡, as usual. I feel it:. helpfQl to place that reference in context. The full ans'Wer to. the "authority ta demand" question requires ãetermininq (1) what ownership riqhts does the u.s. have in the federal minerals and (2) are ~e federal minerals Þeinq prgduceå. The ans~er ta the lat~er tells us vhe~er we can make any demand; and ~he answer to the. tormer tells us what we can demand. 1.. ES'T'.ABLI~HING fl~ERATJI .tJJNERALS ~,,~ PRODtTC~: ThUS, the· initial requirement is that it be esta~lished that federal minerals are bainq produced. . When the well is not actually located en the unleased federal acreraqe; the United states' rights to proceeds from the unit well would seem to Þ. established either: (a) by fac:oeually provinq drainag'8 by 'leoloc;ical expert opinion ~~ same binding' forum (I suait t;his course i,one or last resort) ;_ (~) by enterinq a volun~ary agreement such as a "Communit- ization Aqreement" (et.her SLM agreements such as a "produci"q unit. agreement.. may alse 40 'this -- I do not knew; in ~he.a.rn, the APR-03-2000 15:04 ~ ELM MSO FLUID MINERALS 1 406 255 2941 P.21 ) , operator refused ~o enter a communitiza~iøn Agreement which would be retroactive to fi:st produc~ion)i or (c::) where the tede:t'al minerals are located. within ~ state created drilling and. spacinq unit, by the BLH/Uni1:ed States consen~in9 to the state oil and gas ~e~la~ory aqency cr~e~ which makes the tactual determination that ~8 unit shares the commmon source of hydrocarbons. (In most jurisdictions, operators "ho proceed in relia.nce on such orders cannot la't.er contest: their factual find.~nq.. However, the Federal Government a"d its property X~' are not su:bJect. to such state actions and orders without the I, . Gove-rnJleni:'s affirmative, express consent) J '" , ~ In Oklahoma, ~he Corpora~ian commission spacinq artd drillinq unit order makes a tinàinq of tact that ~he unit comprises ~ common SOQrce of hydrocarbon supply and thus estaclishes the unit owners as co-~enants, i.e. each is entitled to share prøportiQna~ely in all ~nit production. It does not impose financial or Qrillinq obli9'a'tions an the owners and does not. attec1: any transfer of interests amont¡' 'the owners (t.hai: must be clone in subsequent voluntary aqreements or a force poalin~ action).l , In ~e~n, ra~her ~han preving ärainaqe qeoloqiçallY (and, in fact., ~o prevent any such evidence t.o the cont.rary from being' admitted) the BLM ratified (qavé its consent re~aactively to first production to) the Oklahoma C:crpcration CO'llmissicn spacinq and drillinq unit cråer. This established. tha~ any productiQn fram the unit well vas;·as a matter o~ law, producing federal minerals.. Once BLK consent mac!e 'the st:ate requla'to2:'Y order applicable to X federal mineral trac1:, all the state la'W' establishinc; riqhts CJ~· . -.... minerals owners und.er such an order became applicable to the riqhts af the Unit.ed states. " 2. '9..~, s . .... OWN1t:R~H,T~ RTGJi..'J'$ TN tJ.'K1.!'J'.SE" F~f'AT. JfIN~L~ ~ a. FedeTa 1. MinA""1 sand s. P"'oceedf' Re 1 OJ1CJ ...to bij~ f..nv'rnme.nt Unla1=~ and, untU Tt'an<t,er"'eå Aw"y; ~. ~ . ~ :-:-,. ..- (1). It is axiomatic that any owner who ~~the~uli mineral int.eres't. and bas never transferred any rigãts-to~~ÿQne -::. '"?'" - to. ", -:::r -- < .-.::!: m o - :: ~ -.-J Z 0 . Q ~ I Differences exist amanq 'the s't.ates. Thus, the leqal effect of a pa~icular s~ate requlatory acticn must be discerned hefore the Government's consent is qiven; otherwise unauthorized consen~. miqh~ be given ~o a state action which carries financial obliqa- tions or requires a turther eleC't.ion of the manner cf participation in a unit (suçh as an O~lahoma force po~linq order).. 2 . r ~'" ':" :'( ~" :'ì; "f'W V I,·'?"~t t\ ~'. f r.. " ,. ._~. I' ~:... .. . ....,. .c. "APR 20 lOOO TOTAL P.21 .; ~~ " f~.~~:'·.:~:>f. ~:.'t. \Jt~ Ó\ ':~~t~~ '~..i1! .;"; ~'~, ...;~'.. .. j\m~hü;' -::¡9~ APR-03-2000 15:07 BLM MSO FLUID MINERALS 1 406 255 2941 P.01 ) ,) 81 ili !sf ';. ~'\ ~0 ,W;'!; ,':;;\ .,.. TO: 1989, AUG 3D AM 9; 00 H· ,TA~ï CEi'Yj~p " oil and Gas Division sta~lUNG~r;MArr.. :"F,F.H;r ,.,. OH r"~H'~ Donald A.' Garrity, Attorney MEMORANDOM FROM:: DA'rE: August 25, ì989 RE: Issuance of Drilling Permits for Oil and Gas Wells on Federal Lands . ' , '" .'" ''''¡'' , This will confirm my v~~bal advice giveh at the A~9ust· 24th Board Meeting i~....,Whitefish, Montana, that the Board .nee~· t;lP.~ , require permits~lo~ oil and ~as wells drilled on Federal, minerals because Section ~'2-11-103 MCA. provides that the Montana·Oi! and Gas ConscX"vation,' Act ".applies to the lands of the United states...only ~o the extent that control and supervision of conservation of oil and gas by the United States on its lands fails to effect the intent and purposes of this chapter and otherwise applies to those lands to auch extent as any officer of the United States having jurisdiction or is duly author~2ed representative approves any provisions of this ohapter or an order of the Board which affects those lands." , (.: " , Until further noticet the Board will not issue permits for Federal oil arid gas wells but, upon receipt of the fee, they may file a notice for informational purposes and may issue the Federal well an, API number. DG I j n \" II. ".... , . .J.. "... ( ...·'c·· ."', ,/ Ì"rJ,./' "0. .' ",.'.,.," ~i' ,., .... :.;, '" ~:... ¡) r;" ., APR 20 2000 /\~,;:.,~ " ., ~\JI. ......... ::'~~. ~.~.!,..:~..... .' :,.':<..;~.~ }{nchc; ¿:g.J TOTAL P.01 APR-03-2000 15:11 ELM MSO FLUID MINERALS 1 406 255 2941 P.01 DEPARr..)rENT OF NATURAL RESO~~CES AND CONSERVATION BOARD OF OIL AND GAS CONSERVATION S1"AM ST.I:PIØJl8, GOVQNOR OIl.....D GAS C'ONSQVATlO. DIVISION . STATE ÖF MONTANA February 1, 1990 NOTICE TO OPERATORS In all further applications for Board action affecting lands owned by the Federal Gove~nme~t or Indian Trust Landø~ the application shall specifically state that Federal and/o~ Indian Trust Lahds are affected and give a specific lègal description of said lands. Applications for field spacing or exception location requèsts on trust lands must be submitted to the BLM. BOARD OF OIL AND GAS CONSERVATION OF THB STATE OF MONTANA Dee (!;:~~ Exeeutive Secretary : ;.~. . f" ~ '."I:t" Q.\ ~~--=::. i APR 20 2000 J'~2ska üd & Gas Cc~::~. i~o!"r~m!'::;;.ion Ai1f'~ 1',; :::f""~ JI 1... .,t) v DIVISION orne! '~I. ZDT1t AYhUl IWnfA, MON'tAlfA ....2:111 (&aI) ......75 1'ICNIftCU .."., XIIn'1UIIII J'III.D OPICK 2SØft IORNI AVIJIVI IILJ.QIGS. MONTANA n1ll2 (-) ..... IfCI'I1IDIf naa emet J.lJU,DI ØTam . p.o. ."¡SIID SkIl.81'. MONTA"" søn. c-) ~.lQ¡ TOTAL P.01 \.'.'~N 2 ~z. '84 ;..f: 311 ~ f..NCfWR/l.GE D;C,TRICT loš---r·~·--·'"·-t--- '.I..~.Df _~~.:-.. -:.-~*'.. January 17, l~S4[~tl.wr---·-· ?J"Ëš·ï- ¡~.~ ·-1 /~ lj - 1·-=r;::."R-t~...,· r..'_-t· -1:--1 _:~:._L_~+_._____ ',I I ----~-----.--l,-·-·---1 ··~,~~~~_·_·,,·t-·_-,-_.J '--·"----11 ~ ," l' I ';~~E.j_ --~:=! =~==: ;: ~t i~fÎ i f'j j i ~ ------.-- --- .--,_._-' ------1 -::--:-::~:--·ll.----+·_-_··_-_.il ../' ¡ ~~:... L_____._...__ ________, This letter is to inform you that under the terms of the 43 CFR 3160 Oil and Gas Operating Regulations, we are instructing AMOCO to submit to the Bureau of, Land Management, within five (5) days of receipt of this letter, for approval, ¡a Subsequent Report of well operations concerning the date and description of oJthe removal of the subsurface safety valve (SSV) from the West Forelands -II No. 1 well. If the flow test is not performed within the next 30 days, then d II:; (! tß'y SSV shall be replaced forthwith. d- ..~ þ 5- ;~. c~;'? After the flow test of the West Forelands well, we are instructing AMOCO to: /(1) If the well is going to remain on shut-in status for an indefinite period v of time, to replace the malfunctional SSV with a serviceable one, and (2) inform us via a Sundry Notice of the equipment, operational procedures, and proposed dateof repair to the well. Upon completion of such operations, another Subsequent Report shall be filed with us. In addition, please be reminded that arrangements shall be made through this office at least seven (7) days prior to commencing operations so that one of our petroleum engineering technicians /' may be present at the wellsite for both the flow test and replacement operation of the SSV. ~--... ., '-", ') ) .~ ) United States Department of the Interior 3109 (015) IN REPLY REFER TO; BUREAU OF LAND MANAGEMENT Anchorage District Office Division of Mineral Resources 4700 East 72nd Avenue . Anchorage, Alaska 99507 CERTIFIED -- RETURN RECEIPT REQUESTED Dear Mr. Dawson: J -to . (C' f . ,/(;'Co'I /:.i '....~ f r II ..' itl~... (c ð ¡. ¿¡sf J f,{'l J .t; rf . Þ/ { [e 99510 "j\j¿ . r(:P IS"of ! I ¡1 () . r l' (1') t'X~ j' r r Mr. L. A. Dawson District Superintendent AMOCO Production Company P.O. Box 100779 Anchorage, Alaska We must emphasize the importance of maintaining all appropriate safety devices and procedures in good workmanlike order, in order to protect the safety and integrity of the well, personnel, and public. \ In closing, AMOCO may be interested to know that an incident of noncompliance now includes a schedule of various financial assessments and civil penalties. Enclosed is a copy of the new operating regulations. 'J..¡¡t;' :'.\, ," , I ,,-'- t; '.\ Fr·:.:· Sincerely, 'APR 20 2.000 ~ (¿,aL- ...1ames E. Callahan ." y ~ .,,". ~ ..~ I' ~n \ r{~I"~:'L}¡Or: ffl~..,ré'~IV~I\ Ó\ \.::8.16 \,...!.d;~. \A...I' .~ 'Ü~" I?\ .\ .~. . Anchm ~ge ,/ Assistant District Manager for Mineral Resources Enclosure (1) ·,. t :~. ~"~1'~' í""'~rts. con~ffli~Q¡On N;~"f;,KCi UII iI,.I\ .:;¡::,.),,¡.,.. . ,,, ~ i\nct\(Jí~e ¡::Jvj'1/\ . k ./tQ ·~,AÁ..-VV\ "S-/.~-S·V Ci. ·ft-*--..:p ·f 1.0 (~)k~;.+- Enclosed are the approved copies of the Sundry Notices. In the future, Sundry Notices will be required for all well and lease operations except for minor maintenance and repairs. It has been our policy to require SSSV's on shut in wells which are located in inaccessible, remote locations where daily or even weekly attention is not possible. In addition, the well file history on the West Foreland No. 1 indicated a prior need for the SSSV as well. C ..".. t. ') ) IN REPLY REfER TO: United States Department of the Interior BUREAU OF LAND MANAGEMENT Anchorage District Office Division of Mineral Resources 4700 East 72nd Avenue Anchorage, Alaska 99507 \p\ / " ' I fefruary 24, 1984 '\,) Mr. W. E. Nielsen Supervisor in Charge Amoco Production Company P.O. Box 100779 Anchorage, Alaska 99510 APR 20 ~OOO Dear Mr. Nielsen: Fi:,d ~2 t; 'e:!t ""';" ~'.. ¡'! :"} ,:"\ /\ .. .~. ~!: ,:,. ~ : , ; ¡ .._....-:~ ---..'~ "-- ..., r"'-'··""''' .......-....... 'n ~ I I 1"" ;:; .~:-._. -.-- ·i::· ··?~·>~;··~,::::~;··l::··"'··~; ! .,': .'I~r...-:"·I........ I ..../ ....¿u¡I'..: :··)I)~-;;:!~i~t'l.·:::,i Ii..,......., ...... .:ClJ.lM: :,~'I£Ji "1,\ ~ ¡ ,t1'''-'''~-_', . ) ..~:" ... ,"...~-". ....,.... ~.... ....' ".'-'. ,.,. .'. j ! i I i I,. .....¡-.. -.-.....-.--..; ..···1 \ . ! I . ..... .. ... .. :... T ...............-.,. . . .., , ; ~!J~~~=:-¡~¡;5 r r In view of Amoco's confusion over whether or not the State of Alaska or the Federal Governmnent has jurisdiction over lease and well operations, we highly recommend a careful review of the Federal Oil and Gas Operating Regulations, now known as 43 CFR 3160, previously entitled 30 CFR 221. Subpart 3161, on "Jurisdiction and Responsibility" clearly states that ". . . a Federal lease are subject to the regulations in this part. . ." The subsequent subpart 3162.2 describes the responsibilities of the Federal Government's authorized officer. Among a number of items, we draw your attention to, . to perform technical and procedural reviews; to approve and monitor other operator proposals for drilling, development or production of oil and gas; to assess monetary penalties or liquidated damages; to provide technical information and. advice relative to oil and gas development and operations on Federal and Indian lands; to approve, ins pect and regulate the operations that are subject to the regulations in this part; to require compliance with lease terms, with the regulations in this title and all other applicable regulations promulgated under the cited laws; and to require that all operations be conducted in a manner which protects other natural resources and the environmental quality, protects life and property and results in the maximum ultimate recovery of oil and gas with the minimum waste. . ." Subpart 3162.1, under "Requirements for Lessees and Operators" states in part, "The lessee shall comply with applicable laws and regulations; with the lease terms, onshore oil and gas orders, NTL's, and with other orders and instru~t~ons of the authorized officer." It is precisely in this light, that we asked for Amoco to submit Sundry Notices, because after three months of some very confusing and questionable information that our staff received fro'm Amoco's staff over the tele1,)hone, it appeared (, . ~ ) .) 2 necessary to send Amoco our written instructions as per the letter of January 13, 1984, according to subpart 3162.3. Furthermore, subpart 3162.5-3, on "Safety Procedures" requires that, "The lessee shall perform operations and maintain equipment in a safe and workmanlike manner . . . and compliance with health and safety requirements prescribed by the authorized officer shall not relieve the lessee of the responsibility for compliance with other pertinent health and safety requirements under applicable laws or regulations. . ." Clearly, a SSSV is a significant safety device which has been in the West Forelands well for many years without ever being checked. Since we required: the well to be checked out and the SSSV was fóund to be faulty, our instructions to Amoco's staff over the phone were to repair and/or replace it with a working one, and to notify us so that our field inspector could witness the well operation. We do not believe these instructions to be outside the limits of the regulations. In closing, we would like to welcome Amoco to join us in conducting future lease operations in a workmanlike, yet amicable style. We attempt to enforce the appropriate Federal regulations in a fair, firm, and consistent manner on· all lessees. We have also enclosed for Amoco's future use some blank forms which have been recently revised and reprinted, and will be needed for producing operations. If any of this letter is still confusing to you, or if you disagree with part or all of its content, please give us a call and we will arrange a meeting to discuss it further. Sincerely, r) ·1 1 g' \' ,./'} ./! .1)'70 . . . ..' '..',/ l ß"¿ ~f..t./ t.t'-~--- ..'.¿::....- ' .i"James E. Callahan Assistant District Manager Division of Mineral Resources Enclosures (6) Approved Sundry Form 3160-5 Form 3160-3 Form 3160-6 Form 3160-7 Notices (2) [,.;'..' .1 . .,:- ~; :\ ,i ~:.".,.. I'j ': ./ APR 20.. ?OO() . (".. I'·' I ·'·H·"ln'I!~~·ìO!1 ,'~~7":,¥":JV'lliJ.\.:,)as ,J'!.:;;::¡.\.JI~,UIt ~,) I ~ ',...~.q..L.A Anchm ~ge } ) C. : CJjJ;: ¿ ~~ C t. fA.../ é ð/Y ~ eel: T4~) -.-----.- . Mes~age 496-460 Subj: 1.M. .89::.20+.~ c.· ~ In i::~ :'~ \:~:'t t~.} ;. . UNITED STATES DEPARTMENT OF THE INTERIOR \......"" J ~.. BUREAU OF LAND HANAGEMENT WASHINGTON, D.C. 20240 EMS Transmission - 1/9/89 Instruction Memorandum No. 89-201 Expires: 9/30/89 fo~/r.II1~)._I-I{ kOUTJ¡,J kcíf. DATE 04IE IN _9OT (!,~, ~;~, ' 7 ' I ~ ,^ - I L , -, L \ .lA\'1 E..\F J . ,. , " ............-,~ In R~Dl~}Rr~~~r tR: 3100 ,..(,h7 a-~ Q'\, , ~J _""if .,_ ~ ltftH -"". . Pffl All:A ' ",. . . . '" .1',.'" :- t· , ... \ i : ~ '. ~ - . . , .' ." . :. ,~ .. I January 4, 1989 From: Director . ~C;o. ~ï" ¡:~~.;~ _{..,~" I .... '/t_ , -. . . ~aÛi~ " - . I Z·,'f{ 5 f' 111-. f~ '~').'", . _ ( f "( 'C .~ oJ. r- PooA ~ r) , ... - -...... II I To: All State Directors Subject: Legal Responsibilities of BLM for Oil and Gas Leasing and Operations on Split Estate Lands Program Area: Oil and gas leasing and approval of lease operations on lands where the surface estate is non-Federal and the mineral estate is Federal (split estate). Geophysical exploration is not covered in this instruction, since it was covered earlier in Instruction Memorandum No. 88-281. Issue: The Bureau needs to establish policy guidance for clear consistent enforcement of BLM's legal responsibilities for split estate lands under the following statutes: 1) 2) 3) 4) The Federal Land Policy and Management Act (FLPMA) The National Environmental Policy Act (NEPA) The National Historic Preservation Act (NHPA) The Endangered Species Act (ESA) \;\) ?)~,~ 'I ./ ',' APR 2.0 2000 Pl;::::.tj{:~i \)H Q¡ \..;Ìas C(;fl~S;. Cornmis'ßio¡) The Bureau also needs to have a uniform approach to meeting its Ancl'¡().r-3g(~ responsibility ~ith respect to the above statutes on split estate lands in the event that surface owners attempt to prevent activities necessary to âchieve compliance. Policy and Procedures: The following policies and procedures are being adopted after careful review of recent opinions from the Office of the Solicitor. Two opinions were distributed earlier via W.O. Information Bulletin No. 88-271. concerning resolution of Resource Management Plan (RMP) protests on split estate. 1). FLPMA Responsibilities - Under FLPMA requirements, BLM is responsible for both considering the impacts of its actions and approvals in land use plan~ing. as well as for managing those impacts, but only for "public land." Public Land is defined as any land and interest in land owned by the United States. With respect to split estate lands the Federal Government has an "interest" only iC\ the minerals not the surface. Thus. the private surface is not "public land" subject to the planning and management requirements of FLPMA. BLM need only consider the planning and management of the Federal minerals. Activities and use of the surface are not subject to FLPMA planning requirements) and BLM has no authority under FLPMA over use of ) ') ~ . II' ~. ¡'/ ,.,1'.; \'~. I~}; YA:t, t'! . ,"\ lro, 'i ~ . HI'· . ~ c ',~ APR 20 2000 P¡1;2:5~'{L~ Chi C\ ¡..:~as CÙf¡~:~. comm¡'Sr~ion 2 f~J1chùr ~e the surface by t~e surface owner. However, the impacts to surface resources and surface uses from BLM-authorized mineral development must be considered under NEPA, NHPA, and ESA. .. BLM is to· declare how the Federal mineral estate will be managed in RMP's. including identification of lease stipulations. In order to meet the consistency requirements of FLPMA, it will usually be necessary to apply the same standard for environmental protection of split estate lands as would be used for Federal surface. 2). NEPA Responsibilities - BLM's NEPA responsibilities on split estate lands are basically the same as for Federal surface. The fact that impacts will occur on private surface does not diminish our responsibility to consider alternatives or our authority to impose mitigation measures since the impacts will be caused as a direct consequence of activity approved by 8LM and conducted pursuant to a Federal oil and gas lease. Once consideration is given, however, there is a good deal of flexibility. BLM should carefully consider the views of the surface owner and the effect on the owner's use of the surface from implementatioa of possible mitigation measures, as well as the effect such measures would have on attaining other program goals. With respect to mitigation of offsite impacts, please be aware that, if such action is deemed necessary, it is to be taken regardless of whether the offsite surface is Federal or private. 3). NHPA Responsibilities - The BLM is responsible for taking into account the effects of its actions and authorizations on historic properties ( i.e., properties listed in or eligible for the National Register of Historic Places) and, if effects would occur, for giving the Advisory Council on Historic Preservation an opportunity to comment. These responsibilities are the same on split estate lands as on public lands. The BLM's NHPA obligations on split estate lands are limited, commencing only with a proposed action that requires BLM's approval. If activities to be conducted on split estate lands under the terms and conditions of a Federal oil and gas lease ~ould result in adverse effects to historic properties, BLM has the authority to impose appropriate avoidance or mitigation measures. Under 36 CFR Part 800, the Advisory Council's standard compliance procedures. "taking into account" means, in brief, that the responsible BLM manager consults with the State Historic Preservation Officer to identify historic properties thût might be affected, to assess effects, and to determine satisfactory means for avoiding or mitigating adverse effects. The BLM manager then submits documentation to the Advisory Council for its concurrence or comment; however, there is no Advisory Council involvement if listeà or eligible properties would not be affected. This standard process can be simplified. ~e recommend development of State-specific programmatic aereernents to define and streamline consultation and comment procedures. Such agreements can reduce or eliminate the need to consult on routine 011 and gas operations. 0) ) - If . -- - - - 3 If the surface owner refuses access for compliance with NHPA, it may be feasible to obtain needed information without actual entry onto the private sürface. For example. there may previous inventory or sufficient information on the surrounding area to determine whether eligible resources are likely to b~ present. If it is necessary to enter onto the private surface to determine ~ffects or otherwise to comply with NHPA, every effort should be made to obtain the owner's cooperation. If these efforts are not successful, it may be necessary for the operator. BLM. or both to obtain an order from the district court (see procedural guidelines below) to be allowed access. A proposed surface disturbing action cannot be approved until all applicable Federal statutory requirements have been met. 4) ESA Responsibilities - Oil and gas leasing and operations on split estate lands constitute Federal actions under the ESA. As such, the requirements and procedures of the ESA apply to split estate lands j~st as they do to Federal lands including. as appropriate, preparation of biological assessments and conduct of consultations. If it is necessary to enter onto private surface to comply with the ESA, every effort should be made to obtain the surface owner's cooperation. If these efforts are not successful, an order from the district court, as explained earlier, may be the last resort. A proposed surface disturbing action cannot be approved until all applicable Federal statutory requirements ha ve be e n me t . 5). \lhen a Surface Owner Refuses Access - The following procedure is usually necessary if all efforts of negotiation for entry onto the private surface fail. An order from the district court is needed. The first step is to contact the appropriate Regional or Field Solicitor and advise them of the situation. Generally, two documents are required to file the court action. A copy of the original patent for the lands and a signed. notarized affidavit for each BLM employee that was refused entry. The affidavit must explain the reason(s) why entry is needed for each person, the dates and times the surface o\mer was contacted and the date entry was refused. In the event that the operator must obtain a court order, the operator ~ill be required to file the same proof for right of entry. BLM is not to file anything on the operator's behalf. Action Required: The policies and procedures established in this memorandum are to be implemented immediately. Existing State-specific guidance and directives are to be reviewed and necessary changes maJe. .~ S· ','t~ ~ ':,\ / ~r'~~" ~\: ./ . . ·APR 20 200Q f:.~>':'<:). V~I (;,'. \):~lt~ ~)::':::~.\~\Jl~(1\\'3·i;)\l.)'¡ì .' .,. Andj(;; ::.:~~¡; ) 4 Budget Implications: These instructions will not add substantially to existing workloads and budget. If offices believe they will. they should contact WO-622 and discuss the circumstances. Contact Person: Inquiries regarding this instruction should be directed to Richard Hopkins (FTS) 653-2187. or Frank Lanzetta (FrS) 653-2152. Signed Roland G. Robison Deputy Director Authenticated Mary Beasley EMS Coordinator W0855 for MT910 12:40 MST 09-Jan-89 Message 496-460 (2) -.., -------.. TO: All DOs and RAs This WO directive is consistent with MSO policies on these matters and should be implemented concurrent with MSO policy. Any actions pursuant to point 5 of the direc~ .e should be coordinated through MSO (922). Questions should be referred to Paul Kruger at 255-2860 or FTS 588-7860. . .. -- .. ..-..-.--.... .... -----.-- ._--.... "';';.. L ~ ,., ~"".:' w..] -.-,. i3':.-'.- 'APR 20 200G . ",.' ,..... ,'., ." .', '·'ot\!\mll~~~lon f:J2~:~O VII & i~1:a~'"; \..A.:¡[,.,. 'v ¡¡ -,.., AAchü;age