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Home My WebLink AboutCO 532 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. c~ 53.?- Order File Identifier Organizing (done) D Two-sided 1111111111111111111 ~Rescan Needed 1111111111111111111 RES CAN æ(éolor Items: D Greyscale Items: DIGITAL DATA OVERSIZED (Scannable) D Maps: D Diskettes, No. D Other, No/Type: D Other Items Scannable by a Large Scanner D Poor Quality Originals: OVERSIZED (Non-Scannable) rn1.09S of various kinds: ~ D Other: BY: Helen Maria ~K D Other:: Date: /o/;)/t;tj /s/ NOTES: Project Proofing 1111111111111111111 Scanning Preparation x 30 = + Date: I ZJ /?A~ /s/ = TOTAL PAGES I~~ (Count does not include cover sheet) Date: /O/:J- /0 L/ /s/ , Ilíllllllllllllllll BY: Helen Maria ¿:<~ BY: Helen Maria £~ Production Scanning Stage 1 Page Count from Scanned File: I ~ (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: --YES NO BY: Helen Maria Date: /s/ Stage 1 BY: If NO in stage 1, page(s) discrepancies were found: YES NO Helen Maria Date: /s/ 11111111111111I1111 Scanning is complete at this point unless rescanning is required. 1111111111111111111 ReScanned BY: Helen Maria Date: /s/ Comments about this file: Quality Checked 1111111111111111111 8/24/2004 Orders File Cover Page.doc . . INDEX CONSERVATION ORDER NO. 532 West Foreland #2 1. July 2, 2004 2. July 12, 2004 3. July 21,2004 4. July 23, 2004 August 10, 2004 August 11, 2004 August 18,2004 5. 6. 7. 8. 9. September 9, 2004 10. December 23,2004 11. June 11, 2007 ---------------- Forest Oil Application for Spacing Exception West Foreland #2 Notice of Hearing, Affidavit of publication, e-mail Distribution list, bulk mailing Operators Request to Reschedule Hearing Notice of Hearing, Affidavit of publication, e-mail Distribution list, bulk mailing Letter to AOGCC from operator Letter to AOGCC from operator Operator supplemental APD Info #2 Various e-mails Transcript e-mail from Forest to AOGCC Commissioner Seamount Recusal Conservation Order No. 532 :----- -- STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: APPLICATION OF FOREST OIL ) CORPORATION for an order granting an ) exception to the spacing requirements of 20 ) AAC 25.055 to allow for the drilling and ) operation of the West Foreland #2 gas) production well. ) Conservation Order No. 532 West Foreland Field West Foreland Undefined Gas Pool September 16, 2004 IT APPEARING THAT: 1. Forest Oil Corporation ("Forest"), by letter dated July 2, 2004 and received by the Alaska Oil and Gas Conservation Commission ("Commission") that same day, requests exception to the well spacing provisions of regulation 20 AAC 25.055 to allow for the drilling and operation of the West Foreland #2 gas production well ("WF #2"), which is closer than 1,500 feet to a property line and within the same governmental section as, and less than 3,000 feet from, a well capable of producing from the same gas pool. 2. Notice of opportunity for public hearing was published in the Anchorage Daily News on July 12,2004, pursuant to regulation 20 AAC 25.540. 3. On July 21,2004, Forest requested the public hearing be rescheduled. 4. Subsequent notice of opportunity for public hearing was published in the Anchorage Daily News on July 23,2004. 5. On August 11, 2004, Forest submitted documentation that a notice had been sent to all known royalty interest owners in the affected leases. 6. All owners, landowners and operators within 3,000 feet of the anticipated productive interval have been notified. 7. No protests to the application were received. 8. A hearing was held in conformance with 20 AAC 25.540 on August 26, 2004 at the Commission's offices. Representatives from Forest, the Bureau of Land Management ("BLM"), and the Alaska Department of Natural Resources ("DNR") attended. ~ Conservation Order 532 Page 2 September 16, 2004 FIND IN GS: 1. The record for this order includes the records for Conservation Orders 450, 450-A and 450B. 2. WF #2 will be drilled as a deviated well. The surface location of the well is onshore, 886 feet from the south line and 571 feet from the east line of Section 21, T08N, R14W, Seward Meridian ("SM"). The proposed bottom hole location of the well lies offshore beneath the western side of the Cook Inlet, 1,365 feet from the north line and 1,105 feet from the east line of Section 21, T08N, RI4W, SM. 3. WF #2 will lie entirely within Section 21, T8N, RI4W, SM, which also contains the existing West Foreland #1 gas production well ("WF #1 "). 4. The affected leases are onshore Federal Lease A-035017 and offshore State of Alaska Lease ADL-359 1 12. 5. Testimony in the record of CO 450 established that: a. Lease ADL-359112 currently carries a 5% royalty obligation to the landowner. According to Forest's July 11, 2000 letter, overriding royalty interests (ORRI's) burden the lease by 12.5%, of which Forest re-acquired a 0.65625% interest. b. Lease A-035017 carries a 12-1/2% royalty obligation to the landowners. According to Forest's July 11,2000 letter, ORRI's burden the lease by 5%. 6. WF #1 is located entirely within Federal Lease A-035017. This well drilled and tested two gas-bearing sands, informally known as the "9200-foot sand" and the "9400-foot sand." 7. As presently equipped, WF #1 produces gas from only the 9200-foot sand. A bridge plug in the wellbore ofWF #1 prevents production from the 9400-foot sand. 8. Recompletion ofWF #1 to allow production from the 9400-foot sand may jeopardize the well. 9. Forest testified that a steady fuel gas supply is critical to maintaining uninterrupted oil and gas production operations in this portion of the Cook Inlet Basin. 10. Forest utilized well data and 3D seismic data to map the West Foreland structure, including faulting that traps the gas accumulation being produced by WF #1 (CO 450B, Finding 5). 11. WF #2 is targeting the 9200-foot and 9400-foot sands updip of WF #1 on the same structure. ~ ~ Conservation Order 532 Page 3 September 16, 2004 12. In WF #2, the top of the 9200-foot sand will be located within State Lease ADL-359112, approximately 242' east of the boundary with Federal Lease A-035017. The top of the 9400-foot sand will also located within State Lease ADL-359112, approximately 293' east of the boundary with Federal Lease A-035017. 13. Forest proposes to equip WF #2 to allow gas production from the 9200-foot and 9400-foot sands, using either a single or dual completion. 14. Forest has identified additional, shallower prospective intervals that may also be encountered while drilling WF #2. The top of the potential shallow pay intervals lies within the Federal Lease A-035017, about 216' west of the common lease boundary. 15. If the shallower, prospective intervals contain sufficient pay, Forest may equip WF #2 to allow gas production from them. 16. WF #1 and WF #2 may both produce from the 9200-foot sand at take points approximately 2,685' apart within the same governmental section. 17. In order to drill and operate WF #2 as planned, the following exceptions to statewide spacing regulations are needed: a. Under 20 AAC 25.055(a)(2): "for a well drilling for gas, a wellbore may be open for test or regular production within 1,500' of a property line only if the owner is the same and the landowner is the same on both sides ofthe line." b. Under 20 AAC 25.055(a)(4): "if gas has been discovered... not more than one well may be drilled to and completed in that pool on any governmental section; a well may not be drilled or completed closer than 3,000 feet to any well drilling to or capable of producing from the same pool." c. Under 20 AAC 25.055(b): "a well may not. ..begin regular production of gas from a property that is smaller than the governmental section upon which the well is located, unless the interests of the persons owning the drilling rights in and the right to share in the production from the quarter section or section, respectively, have been pooled under AS 31.05.100." 18. No order has been issued by the Commission establishing drilling units or a spacing pattern for the reservoir that differ from the statewide requirements. 19. Forest is the sole working interest owner of both leases for all intervals including, and shallower than, the 9400- foot sand. 20. Phillips Petroleum Company, or a successor or affiliate, has an interest in zones below 9,527 feet (measured depth) in the WF #1 well (CO 450A, Finding 4). 21. Landowners of Federal Lease A-035017 are Cook Inlet Region, Inc. and the U.S. Government. The State of Alaska is the landowner of Lease ADL-359112. The DNR ~ ~ Conservation Order 532 Page 4 September 16, 2004 administers State Lease ADL-359 I 12. The BLM administers Federal Lease A-035017 on behalf of Cook Inlet Region, Inc. In addition to the landowners, there are numerous Overriding Royalty Interest Owners ("ORRIs"). 22. On August 11, 2004, Forest submitted documentation to the Commission indicating that notice had been sent via certified mail to all known royalty interest owners in the affected leases and all owners, landowners and operators within 3,000 feet of the anticipated productive interval. 23. In response to Forest's notice, evidence was presented indicating all but one of the notices had been successfully delivered. In response to the notices, only one comment had been received regarding drilling and producing WF #2. That comment supported granting the requested spacing exception. 24. Due to non-compliant spacing, the Commission issued CO 450 on July 24, 2000 granting a temporary spacing exception to allow the regular production of WF #1 from the 9200-foot sand. The performance terms of CO 450 were extended by CO 450A, issued April 23, 2001. 25. CO 450 required that Forest establish an escrow account and make sufficient payments to protect the interests of all royalty owners caused by differing landownership and uncertain production allocation. Forest was further required complete negotiations with BLM and DNR to establish a compensatory royalty agreement ("CRA"). 26. Forest, BLM, and DNR negotiated a CRA to allocate production from WF #1 to each lease. Pursuant to that agreement, all parties agreed to an allocation of 58% to Federal Lease A- 035017 and 42% to State Lease ADL-359112 of all gas reserves producible from any interval not deeper than 9,527' from the West Foreland #1 well. The allocation percentages were determined based on analysis of seismic information, production history and formation pressure data using accepted geological and petroleum engineering methods. 27. The Commission issued CO 450B on September 29,2003. CO 450B granted a permanent spacing exception for WF # 1, approved the allocation factors from the CRA and ordered disbursement of the escrow funds. 28. The CRA applies to portions of the 9200-foot and 9400-foot sands that lie within Federal Lease A-035017 or State Lease ADL-359112 and are in hydraulic communication with those same sands in WF #1. The CRA is valid until the Federal and the State leases have terminated and all wells producing gas from the 9200-foot and 9400-foot sands are plugged and abandoned. 29. The CRA does not apply to sands other than the 9200-foot and 9400-foot sands. The CRA did not include a provision to adjust the allocation interests if new information were to be developed. ~ ~ Conservation Order 532 Page 5 September 16, 2004 30. Forest desires a permanent spacing exception for drilling and production of the 9200-foot and 9400-foot sands within WF #2, and proposes to allocate any production from those sands according to the existing CRA. The notice described in Finding No. 23 informed recipients of this proposed allocation. 31. Forest recognizes there is a possibility that the 9200-foot and 9400-foot sands in WF#I and WF #2 may not be in hydraulic communication within the 9200-foot sand, and that if there is no hydraulic communication, a revised allocation formula may be required to ensure fair allocation of production. 32. Forest desires a temporary spacing exception for drilling and production of gas-bearing sands within WF #2 that are stratigraphically shallower than the 9200-foot sands. If the prospective shallow sand(s) are capable of producing gas, Forest proposes to establish a separate escrow account and deposit sufficient royalty payments to protect the interests of all royalty owners of both leases until an additional CRA is executed. A new CRA would include a provision to adjust the allocation interests if new information is developed. 33. The Alaska Department of Revenue publishes quarterly calculations of the prevailing value of Cook Inlet gas under 15 AAC 55.173(b). 34. Both the BLM and DNR representatives present at the public hearing agreed to the facts presented in the hearing and support granting the spacing exception. CONCLUSIONS: 1. Exceptions to 20 AAC 25.055(a)(2), (a)(4), and (b) are necessary to allow drilling and operation ofWF #2. 2. Ensuring a steady fuel gas supply is key to maintaining uninterrupted oil and gas production in this portion of the Cook Inlet Basin. 3. WF #1 only produces from the 9200-foot sand, and that production is allocated according to the CRA executed between the operator and landowners on April 20, 2001. 4. Drilling and operation of WF #2 will allow production from the 9400-foot sand without jeopardizing WF #1. 5. The CRA, which governs production from the 9200- foot and 9400- foot sands, provides for additional wells. 6. Since the 9200-foot sand will be opened by WF #1 and WF #2 closer than 3,000' and on the same structure, this sand can be reasonably assumed to be in hydraulic communication between the two wells. 7. The Commission does not expect production from the 9200-foot sand at the proposed exception location to cause waste or adversely affect ultimate recovery. ~ -----, Conservation Order 532 Page 6 September 16, 2004 8. Regular production of WF #2 for a period of approximately 24 months is likely to yield sufficient information to confirm whether the 9200-foot sand within WF #1 and WF #2 is in hydraulic communication and that the previously agreed allocation percentages are valid. 9. In the absence of formal pooling of the two affected lease tracts, the purposes of AS 31.05.100 require that allocation of production from sands stratigraphically shallower than the 9200-foot sand either be agreed on by all interest owners or be approved by the Commission after notice to all interest owners. 10. If sands in addition to the 9200-foot and 9400-foot sands are produced, until an appropriate allocation of production is established, a separate escrow account should be established and Forest should deposit funds equal to the volume of gas produced from those other sands 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, THEREFORE, IT IS ORDERED: 1. Forest's application for a spacing exception to allow for drilling and initiating gas production from the WF #2 well from any interval not stratigraphically deeper than the 9400-foot sand is temporarily granted. This spacing exception expires 30 months after Forest completes WF #2, without prejudice to Forest's right to apply for an extension of this temporary spacing exception or for a permanent spacing exception. 2. Until it is otherwise ordered by the Commission or it is otherwise agreed by all interest owners in Lease A-035017 and Lease ADL 359111, including overriding royalty owners, Forest shall allocate WF #2 production from the 9200-foot and 9400-foot sands in accordance with the allocation percentages established in the CRA. 3. Promptly after the WF #2 well has been produced from the 9200-foot and 9400-foot sands for 24 months, Forest shall provide the Commission geologic and geophysical data and the results of the production pertinent to establishing a. whether hydraulic communication exists between WF #1 and WF #2 in the 9200-foot sand; and b. what proportions of the gas reserves producible from WF #1 and WF #2 underly Lease A-035017 and Lease ADL 359111. 4. Before regular production of gas commences from any sands stratigraphically shallower than the 9200-foot sand, Forest shall establish a separate escrow account for royalties on such production, substantially similar to the account required under Conservation Order No. 450. Forest shall fund this escrow account on the same basis as that set out in Conservation Order No. 450 as amended by Conservation Order No. 450-A, except that the funding obligation applies to production from any sands stratigraphically shallower than the 9200- foot sand. No funds may be disbursed from the new escrow account except by order of the /'- Conservation Order 532 Page 7 September 16, 2004 Commission, after Forest provides at least 30 days notice prior to hearing to all royalty owners in both leases. Jo an, Chairman Alaska Oil and Gas Conservation Commission DONE at Anchorage, Alaska and dated September 1 Original Signed By DAN SEAMOUNT Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commis 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 1O-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 3O-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i,e" 10th dav after the application for rehearing was filed), Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Kelly Valadez Tesoro Refining and Marketing Co, Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wadman Halliburton 6900 Arctic Blvd, Anchorage, AK 99502 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 /-" Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Schlumberger Drilling and Measurements 3940 Arctic Blvd., Ste 300 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 ,~" David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise, ID 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 CO 532 ~ ~ Subject: CO,532 From: JpdyColombie <jody--colombie@admin.state.ak.us> Date: Fri, 17 Sep 2004 09:22:25 -0800 To: undisclosed-recipients:; ,.' BCC: Cynthia BMciver <bren_mciver@adnûn.state.ak.us>, Robet1 E Mi11r~ ..':.:"" ":'. <robert -Ämin~@law.state.ak.us::f, Christîne Hansenfc.hansen@iogcc.stat<:.ok.us>, T errieHUbble+ . <hubblet1@bþ,com>, Sondra Stewmat): <SteWtí1aSÐ@BP.com>, Scott & Cammy Taylor <staylo~J.aslu1.net>, stanekj .<stanekj@unocal.co'tn>;ieco law <ecolaw@trustees~o~&>,,'ro~eragsdale <roseragsdale@gci.net>, trmjrl <trmiFl @~LëOm~:\ jbriddle<jbriddle@tnaratho$)n.c~>, rockhill <rockhiJ1@aoga.órg>, shaneg<Shaneg@evergreengas.com>, jdarlington .,:. .'."?, <jdarlington@forestoi1.com>, nelson<knelson@petroleumncws.com>, cboddy <cboddy@usibelli.com>, Mark Dalton <l1lark.dalton@hdri(lc.com>, Shannon DonneJJy <shannon'.40nnelly@conocOJ>"hillips.com>, "MarkP. Worcester" <mark.p:wO(Cester@conocophillips.com>,"JeJ:ryC~ Dëthlefs" / . .' ,. '.>i:< ,',. . <jerry.c.dethlefS@conocophillìps.cottt>, 13<>b <bob@intetkeeper.org>, wdv <wdv@dDr.st~e.~;ijs>, tjr <tjr@dnr;state.ak.us>, bbritch <bbritch@alåSka.net>, mjl1elson:<mjnel$On@purvingertí~com?, '.. qharles O'Donnell<charles.o'donnel1@veco.com>, "Randy t~ Skillern" <$killeRL@BP.c()rrt>,"':'" "Jeanne H. Dickey" <DickeyJH@BP.com>, "Deborah J. Jones" <JonesD6@BP.com>, "Paul G. Hyatt" <hyattpg@BP.com>, "Steven R. Ro~berg"<RossbeRS@BP.com>; Lois <lois@inletkeeper;otg>, Dan Bross <kuacnews@kuac.org>, Gordon Pospisil <PospisG@BP.com>, "Francis S. Sommer" <SommerFS@BP.com>, Mikel Schultz <Mike1.Schultz@BP.com>, "Nick W. Glover"<9IoverNW@BP.com>, "Daryl J. Kleppin"<Igeppij)E@BP.com>,"Janet D. Platt" .. <PlattJD@BP.com>, "Rosan11e M. Jacobs~" <IacgbsRM@JllP.com>, dclonkel .' <ddönkel@cfl.rr.com>, Collins Mount <collins_m(junt@revenue.state.ak.us>, mckay :'" <mckay@gci.net>, Barbara F Fullmer <ba],'bara. f. fullmer@conocophillips.com>, bocastwf ...: . <bocastwf@bp.com>, Charles Barker <barker@usgs.gov>, doug_schultze .. <doug_schultze@xtoenergy.com>, Hank Alford <hank~alford@exxonmobi1.com>, MarkKovac <yesno 1 @gci.net>, gspfoff <gspfoff@aurorapower.com>, Gregg N ady <gregg.nady@shell.com>, Fred Steece <fred.steece@state.sd.us>, rcrotty:;<rcrotty@ch2m.com>, jejones <jejones@aurorapower.com>, dapa <dapa@alaska.net>, jroderick <jroderick@gci.net>, eyancy <eyancy@seal-tite.net>, "James M. Ruud"<james.m.ruud@Conocophillips.com>, BritIJyely <mapaiaska@ak.net>, jab <jah@dnr.state.ak.us>, KurtE Olson <kurt_olson@legis.state.ak;us>, buonoje <buonoje@bp.com>, Mark Hanley <mark_hanlcy@anadarko.com>, 10renJeman <loren_Ieman@gov.state.ak.us>, Julie Houle <julie_houle@dnr.state.ak.us>, John W Katz <jwkatz@sso.org>, Suzan J Hill <suzan_hill@dec.state.ak.us>, tablerk <tablerk@unoca1.com>, Brady <brady@aoga.org>, Brian Havelock <beh@dnr.state.ak.us>, bpopp .... <bpopp@borough.kenai.ak.us>, Jim White <jimwhite@satx.rr.com>, "John S. Haworth" <john.s.haworth@exxonmobi1.com>, marty <marty@rkindustrial.com>, ghammo:ns .. . <ghammons@ao1.com>, rmclean <rmclean@pobox.alaska.net>" mkm7200 <mkm7200@äpl.com>, Brian Gillespie <ifbmg@uaå.alaska.edu>;pavid L Boèlens:<=dboelens@aurorapower:com>,Todd ... Durkee <TDURKEE@KMG.ëom>, Gary Schultz <gary-,-schultz@dnr.statë.ak;us>, Wayne Rancier <RANCIER@petro~anada.ca>, Bill Miller <Bill_Miller@xtoalaska.com>, Brandon Gagnon <bgagnon@brenalaw.com>, Paul Winslow <pmwinslow@forestoil.corn>, Garry Catron <catrongr@bp.com>, Shannaine Copeland <copelasv@bp.com>, Suzanne Allexan <sallexan@helmenergy.com>, Kristin Dirks <kristin_dirks@dnr.state.ak.us>, Kaynell Zeman <kjzeman@marathonoil.com>, John Tower<John.Tower@eia.doe.gov>, Bill Fowler .. <Bill_F owler@anadarko.COM> 10f2 9/17/20049:22 AM CO 532 2 of2 /'- ~ Content-Type: applicationlmsword Content-Encoding: base64 9/17/20049:22 AM :¥:= 11 . . STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchora2e Alaska 99501 Re: APPLICA nON OF FOREST OIL CORPORA nON for an order granting an exception to the spacing requirements of 20 AAC 25.055 to allow for the drilling and operation of the West Foreland #2 gas production well. ) Conservation Order No. 532 ) ) West Foreland Field ) West Foreland Undefined Gas Pool ) ) June 11,2007 Recusal from Decision Daniel T. Seamount, Jr., Commissioner hereby recuses himself from the above entitled case. June 1 L 2007 Date Daniel T eamount, Jr. Commissioner ::t:t:: ¡.....t. 0 [Fwd: Re: Forest Oil Company's Spacing Excep:ti~n Application for 1... ") Stlbject:... [Fwd: Re: > Forest Oil Company's. Spacing Exception Application for the De epened. Pòrtion öf wçst.Porela-nd.4] Frhw: JoOO Norfuarr <jõOO--}1(jrfuaJi@adniill.state.ak.us> Date: Thu, 23 Dee 2004 14:37:42 -0900 T():J o<iyJ ÇolQnibie <jody~ê(jl(jnibie@Et<itl1iri.state;åk.ûs> cc: file -------- Original Message -------- Subject:Re: Forest Oil Company's Spacing Exception Application for the De epened Portion of West Foreland 2 Date:Wed, 17 Nov 200407:53:41 -0900 From:Stephen Davies <steve davies(a}admin.state.akus> Organization:State of Alaska To:Jim Arlington <JDArlington(a}forestoil.com> CC:JoOO Norman <;ioOO norman(a}admin.state.akus>, Daniel Seamount <dan seamount(a}admin.state.akus>, Tom Maunder <tom maunder(a}admin.state.ak.us>, JoOO Hartz <;iack hartz(a}admin.state.ak.us>, Jody Colombie <;iody colombie(a}admin.state.akus>, Rob Mintz <robert mintz(a}law.state.akus>, Leonard Gurule <LCGurule(a}forestoil.com>, Bradley Brice <B WBrice(a}forestoil.com>, Larry Casarta <LJ Casarta(a}forestoil.com> References:<79043A4902B60F 41 B435D608340433 3 7 6CDDE9(a}ancexc 1.forestoil.com> Jim, In retrospect, Forest should have provided notice via certified mail to ConocoPhillips Alaska, Inc. concerning the spacing exception approved in CO 532 because ConocoPhillips is also an owner of Federal Lease A-035017, which lies within 3000' of the West Foreland 2 well. Please consider the last sentence in my email of November 16,2004 to be a request by the Commission in addition to the requirements of CO 532. Steve Davies Jim Arlington wrote: Steve, THANKS! I appreciate your prompt attention to Forest's request to clarify the authorizations inherent in the two AOGCC approved Permit(s) to Drill for the referenced well and Conservation Order (CO") No. 532. However, could you please clarify the last sentence in your email below and help me to understand how it is consistent with Part 1 of CO No. 532 which says: 1. Forest's application for a spacing exception to a llow for drilline: and initiatine: e:as production from the WF #2 well from any interval not stratie:raphically deeper than the 9400-foot sand is temporarily granted. This spacing exception expires 24 30 months after Forest completes WF #2, without prejudice to Forest's right to apply for an extension of this temporary spacing exception or for a permanent spacing exception. (Emphasis added.) Is your email to be considered by Forest as either an amendment to CO No. 532 or a separate order of the AOGCC? My understanding is that CO No. 532 already gives Forest permission to test and initiate regular production from the 9400-foot sand (i.e. the stratigraphic equivalent of the same sand 10f2 1/3/2005 3:45 PM [Fwd: Re: Forest Oil Company's Spacing Exce"" ':,n Application for 1... ) in the WF #1 well). I look forward to hearing from you soon. Jim Arlington -----Original Message----- From: Stephen Davies [mailto:steve davies@admin.state.ak.us] Sent: Tuesday, November 16, 2004 1 :31 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Tom Maunder; John Hartz; Jody Colombie; Rob Mintz Subject: Forest Oil Company's Spacing Exception Application for the Deepened Portion of West Foreland 2 Mr. Arlington, This is in reference to Forest Oil Company's ("Forest") spacing exception application for the deepened portion of the West Foreland 2 well (that interval from 10,649' measured depth to the total depth of the West Foreland 2 well). The Commission will not require a spacing exception for the deepened portion of West Foreland 2 well for the following reasons: 1. the deepened interval in West Foreland 2 lies within 1500' of a property line, but lies entirely on Alaska State Lease ADL 359112, a lease owned 100% by Forest; 2. Forest has represented to us that only that portion of the deepened interval in West Foreland 2 from approximately 10,660' to 10,649' measured depth will be tested; and 3. testing of, or regular production from, West Foreland 2 to a measured depth of 10,660' will not violate Conservation Order 532, as that measured depth does not lie stratigraphically deeper than the 9400- foot sand as defined in Conservation Order 532. The Commission has determined the 9400- foot sand in West Foreland 2 may be tested, but may not be put on regular production until the Commission receives proof from Forest.of notice sent via certified mail to ConocoPhillips Alaska, Inc. concerning the location of the well and Forest's intent to begin regular production from the 9400-foot sand. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission John K. Norman <JoOO Norman(a}admin.state.us> Commissioner Alaska Oil & Gas Conservation Commission 20f2 1/3/20053:45 PM #9 ý" 1 2 3 4 5 6 7 8 9 10 11 12 "r--i 13 14 15 16 17 18 19 20 21 22 23 24 25 , y--"'. ,---- ~ ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING In re: FOREST OIL COMPANY DRILLING AND OPERATING WEST FORELANDS #2 GAS PRODUCTION AND WELLBORE TRANSCRIPT OF PROCEEDINGS Anchorage, Alaska August 26, 2004 9:00 o'clock a.m. COMMISSIONERS: JOHN NORMAN, Chairperson DAN SEAMOUNT, Commissioner * * * * RECEIVED SEP - 9 2004 AI.akl Oil & Gal Cena. Commi.sion Anchorage METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 I ~RlG~~ I .r--. ~ 1 2 3 ~ TABLE OF CONTENTS OPENING REMARKS BY CHAIR NORMAN . . . . . . . . . 4 TESTIMONY OF JIM ARLINGTON . . . . . . . . . . . . . 5 END OF PROCEEDINGS 6 7 8 9 10 11 12 13 ~. 14 15 16 17 18 19 20 21 22 23 24 25 /"'"' . Page 3 Page 12 ..................Page39 * * * * * METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 ",.- , r-, r- ~ ~ 1 PRO C E E DIN G S 2 (On record 9:05 a.m.) 3 CHAIR NORMAN: Good morning. I'll call this hearing to 4 order. This is a hearing before the Alaska Oil and Gas 5 Conservation Commission upon the application of Forest Oil 6 Company for spacing exception to allow for the drilling and 7 operation of the West Forelands #2 gas production wellbore. 8 This has been filed in accordance with drilling unit spacing 9 exception requirements under the Alaska Administrative Code, 10 specifically 28 AC25.055. A first notice of the hearing was 11 published on July 12th and then a supplemental notice was 12 published on July 23, 2004. Copies of the affidavits of 13 publication are in the file. I'll cover right now the 14 proceedings, generally. The hearing is being recorded and will 15 be subject to the hearing rules of the Alaska Oil and Gas 16 Conservation Commission. The Commission will receive both 17 sworn and unsworn state- -- statement. If a party does not 18 wish to be sworn then for obvious reasons greater weight is 19 given to sworn statements than unsworn statements. Each 20 witness testifying should state their name and who they 21 The applicant, a representative of Forest Oil represent. 22 Company, and I recognize Mr. Arlington here, will be the first 23 to testify and then others may testify if they wish to do so. 24 This -- there is a bit of history related to this application. 25 MR. SEAMOUNT: Mr. Chairman. Before we start, I -- I METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 3 ".---. r' ,,--., ~ ~ 1 think it would be appropriate for me to make a disclosure on 2 the record. 3 CHAIR NORMAN: Please, go ahead. 4 MR. SEAMOUNT: My wife works for Forest Oil as a -- I 5 believe a geophysical technician, is that correct? We don't 6 talk much at home. I don't believe that any decision I make in 7 this matter will have significant impact on her emploYment or 8 on her financial status. 9 CHAIR NORMAN: Okay. Could you state your wife's name 10 for the record Commissioner Seamount? 11 Her name is Barbara Kruk. MR. SEAMOUNT: 12 CHAIR NORMAN: K.... . 13 MR. SEAMOUNT: K-r-u-k. 14 CHAIR NORMAN: All right. I'll note that disclosure 15 has been made. I also note that Commissioner Seamount's 16 indicated that his spouse does not have any participation 17 directly in this matter and that there will be no significant 18 personal benefit to you or members of your immediate family. 19 Is that correct? 20 MR. SEAMOUNT: That is correct. 21 CHAIR NORMAN: Okay. Then as the ethics supervisor for 22 the Alaska Oil and Gas Conservation Commission, I'll note that 23 that disclosure has been made. I'll ask if there are any 24 comments or objections from anyone present at the hearing on 25 that disclosure? The record should reflect that there Okay. METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 4 r--. --. / ,r--. ~ ~. 1 are no comments based upon the disclosure in the representation 2 that a ruling one way or the other in this matter will have no 3 significant impact upon Commissioner Seamount and or members of 4 his immediate family. I will determine that there is no -- 5 there is no potential for significant personal benefit to 6 Commissioner Seamount and therefore under the provisions of the 7 Executive Branch -- Executive Branch Ethics Act, we will find 8 that there is no conflict of interest and go forward. 9 Thank you Mr. Chairman. MR. SEAMOUNT: 10 I was going to briefly summarize the CHAIR NORMAN: 11 matter because there are - - there are two properties here 12 involved - - two leases. One to the - - one to the east in Cook 13 Inlet, that being State Lease - - State of Alaska Oil and Gas 14 Lease ADL 359112 and then immediately to the west onshore 15 Federal Lease A035017. Original the West Foreland's #1 was 16 drilled and completed quite some time ago on the Federal Lease 17 at an onshore location and there were proceedings before the 18 commission related to that lease. As one of the conditions to 19 allowing the drilling and production from that lease, the 20 Commission entered certain orders and among those orders -- 21 I'll reference those orders, Conservation Order 450 followed by 22 Conservation Order 450 -- I believe A -- Conservation Order 23 450A and then 450B and those were based upon there being a -- 24 an allocation of production as between the Federal Lease and 25 the State Lease and also an agreement to escrow the royalties METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 5 ,r--- .r--- ~- ~ .---, 1 pending completion of that. In this instance, a second well 2 has been proposed in the area. This well being identified as 3 the West Forelands #2. That well being to the -- to the north 4 of the present location. The proposed location is not in 5 compliance with existing statewide drilling units and spacing 6 requirements, hence the need for a hearing and an exception. 7 As currently proposed, the location would conflict with 28 8 AC.25055A2, requiring a setback of fifteen hundred feet from 9 property line. Additionally, under that same section of the 10 Administrative Code, there is a requirement for gas wells that 11 they be situated on one governmental section. In this 12 instance, the spacing would be closer than that and then 13 finally there is a provision under again the same section 055B, 14 prohibiting regular production from a property smaller than the 15 governo- -- governmental section unless rights have been pooled 16 under AS 3105100 and that is a statute that the -- that the 17 Commission will look at in a situation such as this in order to 18 establish a legal spacing unit. The regulation does say that a 19 pooling agreement will be filed and the reference is 3105100 20 and before commencement of regular production. The agreement 21 is to be entered into by the owners of the drilling rights and 22 then it also states, and persons who have a right to share in 23 the production would enter into the pooling agreement. In the 24 absence of a pooling agreement, then there are certain other 25 provisions that could come into play. If -- I wanted to put METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 6 ~- 6 7 8 9 10 11 12 ,r--- 13 14 15 16 17 r--- ~. ~. 1 that background into the record. That is a very, very brief 2 summary of some of the background and Mr. Arlington, if in 3 skipping through that, I have in any way misstated anything, 4 why I would encourage you to feel free to either set the record 5 straight or expand on the record. I think what the Commission is interested in now, we'd like to hear whatever you want to say and then we -- I have a couple of questions that I'll throw out now so that you could be thinking of them either in your initial presentation of later on. This is the second -- second well and the relationship of this to the compensatory royalty agreement if -- how controlling that is on the operations and particularly allocation of production of the second well is an issue that the Commission will look at. A second point that's a bit unusual, I don't -- I don't know there are ramifications to it but apparently the proposed bottom hole location is within the existing State West McArthur (ph) River unit so it's a bit unusual to have a pooling agreement that crosses into an 18 existing unit, part in part out. I understand that there are 19 different target formations but that is a feature. Generally 20 what would happen, is a unit would be expanded to encompass the 21 new producing property with part of that framework and that's 22 -- that's an option and I think the Commission would be 23 interested in hearing from either you or representatives of DNR 24 or BLM as to whether there has been any thought to just simply 25 expanding the unit and creating a new participating area. With METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 7 /"- _. .r---, .;--0. .~ 1 that as a preliminary, let me ask Commissioner Seamount if he 2 wants to add anything before the applicant testifies? 3 4 5 you. 6 MR. SEAMOUNT: I have nothing to add. CHAIR NORMAN: Okay. So Mr. Arlington, we'll hear from Thank you very much, Mr. Chairman. MR. ARLINGTON: My 7 name is Jim Arlington. I'm the land manager for the Alaska 8 Business Unit for Forest Oil Corporation and that was just a 9 -- the first clarification I wanted to make, I think 10 inadvertently, we are identified as Forest Oil Company, we're 11 actually Forest Oil Corporation. And then secondly, I wanted 12 to confirm the statements made by Commissioner Seamount. I've 13 been the -- the principal party for Forest Oil Corporation to 14 prepare the application for the spacing exception and am 15 familiar with all the activities by Forest Oil employees 16 concerning the application and Barbara Kruk has not been 17 involved in any manner whatsoever with this application and as 18 far as I know has no knowledge whatsoever of the -- the 19 contents of the application or the preparation of the 20 application or testimony I'm going to be making today. I'd 21 like to thank the Chairman for the brief summary he made of the 22 history for the West Foreland #1 spacing exception. I think 23 that was accurate, I wouldn't have anything to add or correct 24 to that. I'd like to make just a few additional statements. 25 Most of the information that I'm going to be providing is METRO COURT REPORTING 745 West Foul1h Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 8 ~, r-- r-- ~ .------ 1 already including in the application that we've provided and in 2 notices that Forest Oil has sent to all of the royalty interest 3 owners and mineral interest owners concerning the -- the two 4 leases identified by the Chairman in his summary. Forest Oil 5 made the application for the well spacing exception on July 6 2nd. We mailed a copy of the application by certified mail on 7 July 2nd to the mineral interest owners or owners as they are 8 defied the regulations of the Alaska Oil and Gas Conservation 9 Commission. Those being the Department of Natural Resources, 10 Division of Oil and Gas for the State of Alaska, the u.S. 11 Department of the Interior, Bureau of Land Management and Cook 12 Inlet Region Inc. As indicated, we are proposing to drill the 13 West Foreland #2 well as a variance to the requirements, 14 spacing requirements of 28 AAC 25.055, to allow the operation 15 production of the wellbore within fifteen hundred feet of the 16 -- the property line which separates the Federal Lease A-035017 17 and State of Alaska Lease ADL 359112, and it's also in the same 18 governmental section as the -- the West Foreland #1 well. The 19 West Foreland #2 is a gas well that will be drilled as a 20 deviated well bore with drilling planned to commence in 21 approximately one month. The need for fuel gas on the -- the 22 west side of Cook Inlet and the West Foreland area is critical. 23 It is going to be necessary to -- to have a steady supply of 24 fuel gas in order to continue the oil producing operations for 25 the the West McArthur River Unit, the Redoubt Unit, which are METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 9 r-" ,-- ~. ~ .~ 1 both owned and operated by Forest Oil as well as the -- the 2 Trading Bay Unit and Trading Bay field in which Forest Oil 3 Corporation has an interest with Unocal and Marathon. Forest 4 requested the exception to the spacing regulations for the West 5 Foreland #2 to optimize gas recovery from the Tyonek formation 6 in the West Foreland field. There is a field plan called the 7 West Foreland Field Plan, that has been submitted to the 8 Commission, was approved by the Commission pursuant to State 9 statutes and the regulations pulmugated (ph) by the Commission 10 that provide for royalty reduction for the State of Alaska 11 Lease I've identified. Those regulations and statutes do not 12 apply of course to the Federal Lease involved but I just wanted 13 to point out that there is a field plan called the West 14 Foreland Field Plan that also affects our drilling operations. 15 The proposed bottom hole location is already been identified. 16 The West Foreland #2 is projected to encounter productive 17 intervals in what we identify and commonly annotate as the 18 9,200 foot sand and the 9,400 foot sand. Those are the sands 19 that are currently productive in the West Foreland #1 well of 20 the West Foreland #1 well, is however only producing out of the 21 9,200 foot sand. There's a bridge plug in the West Foreland #1 22 well that is prohibiting our producing from the lower sand, the 23 9400 foot sand for soil deems it to be risky at this point to 24 jeopardize production from the West Foreland #1 to go in and -- 25 and work over and attempt to attain production from the 9,400 METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 10 r---. 1 2 3 4 5 6 ".--. r-" ~ . ------ foot sand at this time which is why the request for drilling the second well, the West Foreland #2. Again, to obtain another supply for fuel gas which is, I've indicated is critical for operations on the west side of Cook Inlet. Forest is seeking a permanent spacing exception from the Commission for the 9,200 foot sand and the 9,400 foot sand in the West 7 Foreland #2 well. As -- Mr. Chairman already identified, those 8 sands were the subject of several hearings before the 9 Commission regarding the production from the West Foreland #1 10 well. There was a compensatory royalty agreement entered into 11 that allocated production from the West Foreland #1 well for 12 the reservoir that was identified as containing those two 13 sands. The Commission has a copy of that compensatory royalty 14 agreement which I'll refer to in an annotated form CRA for -- 15 for future reference. The -- the sands are -- are part of what 16 was defined in the CRA as reservoir and as I said are already 17 the -- the subject of a an agreement and I would characterize 18 that agreement, the CRA, as meeting the requirements of the 19 pooling agreement that the Chairman identified as being 20 required in the regulations. And because of that, the -- the 21 CRA identifying the reservoir as those two sands and I'll quote 22 from the CRA, the reservoir's defined as the two gas bearing 23 zones as encountered in West Foreland #1 at 9,502 feet to 9,527 24 feet and 9,336 feet to 9,352 feet and all gas bearing strata in 25 communication therewith are jointly referred to here and after METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 11 r---. 12 r---. 13 14 15 16 17 18 19 20 21 22 23 24 r--- .r"-. ~ 1 as quote the reservoir unquote. Because we have a pooling 2 agreement as I've just indicated which Forest believes and I 3 have received verbal confirmation recently from the other 4 owners, the DNR, Division of Oil and Gas and the BLM, 5 representatives which are I note are already here or here at 6 the hearing to testify if you so call upon them. We are in 7 agreement that the existing CRA does address production from 8 the West Foreland #2 well in those two strata as identified as 9 the -- the reservoir. 10 Mr. Arlington, if I could interrupt you CHAIR NORMAN: 11 for a moment. I neglected to swear you in and it would.. ... MR. ARLINGTON: Oh, okay. CHAIR NORMAN: : .....be important and I so I do apologize for and going through the history of this, I overlooked that..... MR. ARLINGTON: Sure. CHAIR NORMAN: .... .that formality. Would you raise your right hand please? (OATH ADMINISTERED) MR. ARLINGTON: I do and I affirm that the testimony I've already provided meets that requirement. CHAIR NORMAN: Thank you. Please continue. MR. ARLINGTON: Thank you. As I've indicated, the owners as identified by the AOGCC regulations are in agreement 25 to the best of my knowledge with Forest Oil, the operator of METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 12 r--' 11 12 r-. 13 14 15 16 or- /--, ------ 1 the West Foreland #1 well and also the operator of the West 2 Foreland #2 well that the existing CRA compensatory royalty 3 agreement in effect for the West Foreland #1 well also covers 4 the production from the reservoir as defined in the CRA for the 5 West Foreland #2 well. Therefore, Forest believes that it 6 qualifies now for a permanent spacing exception to be grated by 7 the Commission for the West Foreland #2 well for production 8 from that strata or reservoir. Forest has identified the 9 potential however for shallower sands to be encountered while 10 drilling the -- the West Foreland #2 well. There's a potential that there can be production from those shallower sands since we recognize we don't have an agreement currently in place with the owners, Forest is seeking a temporary spacing exception from the Commission for any producing sands that it may encounter in the West Foreland #2 well that are shallower than the top of the 9,200 foot sand or the top of the reservoir as 17 identified in the -- the CRA. Forest anticipates that these 18 shallower sands will be no shallower than minus 8,850 feet TVD 19 subsea. Forest would expect that the AOGCC would prescribe a 20 procedure similar to that that they prescribed for the 21 establishment of an escrow account for the production from the 22 West Foreland #1 well for any production in those shallower 23 sands where we would escrow an amount equal to 17 1/2 percent 24 of the total production of the West Foreland #2 shallow sands. 25 For the production month multiplied by the prevailing value for METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 13 /"--"'. ~ ,.-- ~ .---, 1 Cook Inlet gas and put that into an escrow account until a CRA 2 is entered into and a final, excuse me, and a final allocation 3 for production among the two leases is agreed to by in between the royalty owners or the parties to the -- 'the CRA subject to 4 5 the approval of the Commission. At the direction of the 6 Commission, Forest Oil prepared a personal notice regarding 7 this hearing that was mailed to all of the overriding royalty 8 interest owners and royalty owners and mineral owners. I 9 outlined -- Forest Oil outlined in that notice which the 10 Commission has a copy of in its' record, the information that 11 I've just relayed, the history regarding the CRA for the West 12 Foreland #1 well. Its' plans to seek a permanent spacing 13 exception for the reservoir as I've defined and its' plans to 14 seek a temporary spacing exception for the shallower sands that 15 it may encounter. That personal notice was mailed on August 16 10th, and I've got copies and I believe those copies confirming 17 the certified mail to each of those royalty owners have already 18 been provided to the Commission and it's in the record. To 19 date, I have received only one comment in response to that 20 notice that I have sent to all the royalty owners. I 21 established a separate e-mail account which was identified in 22 the notice that I sent to all the owners and roy- -- overriding 23 royalty interest owners. I've got a copy of that response, 24 it's from Charles E. Cole. I've got a copy of the mailbox 25 account that I've established that indicates there three METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 14 r-" ".--. . ~ ."--"" .---, 1 messages in the mailbox account, I'll provide that to you for 2 the record. Two of those messages are from me. They were 3 basically a text message that confirmed that the messages were 4 being received by the mailbox that was set up and I had sent 5 another message internally to employees at Forest notifying 6 them of the existence of the -- the mailbox. Those messages 7 were both sent on July 29th and as you'll see from the printout 8 here, the only other message in the in box was received, as I 9 said, from Charles E. Cole however, it indicates that it's from 10 Christine Cole. I can only presume it's a relative of Charles 11 E. Cole. It was sent on August 19th, 2004. Can I provide 12 those to you. . . . . 13 CHAIR NORMAN: 14 MR. ARLINGTON: 15 CHAIR NORMAN: Please. .... .at this time? Okay. Okay. Mr. Arlington has handed the 16 documents that he just identified. Those being a log of the 17 West Foreland #2 mailbox, the responses and a copy identified 18 as a response from Charles E. Cole and Charles E. Cole would be 19 one of the overriding royalty interest owners in the -- under 20 the State lease. 21 MR. SEAMOUNT: Should you tell what it says? 22 CHAIR NORMAN: And in the statement of Charles E. Yes. 23 Cole, it says, in response to proposal dated August 10, 2004, I 24 have no objection. So I'll ask that this be attached as part 25 of the record please. Okay, Mr. Arlington? METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 15 ,"'--' . ~. ~. r-". /--, 1 MR. ARLINGTON: Once again, thank you. In regards to 2 the notice that's -- notices that were sent to the overriding 3 royalty interest owners that I previously identified, I have 4 only received one returned as not being delivered, that to a 5 Mary H. Hale and as previously identified, I've only received 6 one response to the e-mail account as no other written 7 responses or phone calls from any of the other party to whom 8 the notice was sent. Because of that absence of concern or 9 response, Forest believes we should go forward with the -- the 10 permanent spacing exception as requested for the -- the 11 reservoir as defined and that the Commission grant that -- that 12 permanent spacing exception where we can forward and begin 13 immediate production and payment of any royalties due therefrom 14 on a month to month basis. And that the Commission grant the 15 temporary spacing exception for any of the shallower sands as 16 identified. At this point, I'd like to address the questions 17 that the Chairman identified. As far as the relationship of 18 the West Foreland #2 well to the existing CRA, I think I have 19 addressed that. We believe that we have a current pooling 20 agreement in effect with the CRA does cover the drilling of the 21 West Foreland #2 well into the reservoir or strata in 22 communication with the reservoir or sands as identified and 23 defined in the CRA for the West Foreland #1 well. The pooling 24 agreement being in -- in place versus the West McArthur River 25 Unit, we have had discussions with the Department of Natural METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 16 '---. ~. r--- .-- /"".. 1 Resources, Division of Oil and Gas and the BLM as to whether 2 it's appropriate to expand the West McArthur River Unit to 3 include the -- the Federal Lease and establish a participating 4 area for the gas producing intervals or go forward with another 5 compensatory royalty agreement. The consensus among the 6 parties at this point is that it's appropriate not to expand 7 the West McArthur River Unit. At this point and time we only 8 see the potential for this one additional well, the West 9 Foreland #2 well, which is drilling into the -- the same 10 structure if you will, it will up dippa's (ph) as I previously 11 indicated from the bottom hole location of the West Foreland #1 12 well. So, the parties did not feel it prudent or necessary to 13 either establish a -- a new unit of expand the West McArthur 14 River Unit at this time. Particularly since the West McArthur 15 River Unit is do to contract by regulation and by the terms of 16 the West McArthur River Unit agreement which requires 17 contraction to the existing P.A.'s on the ten year anniversary 18 of the establishment of the first participating area. There is 19 only one participating area currently in the West McArthur 20 River Unit that consists of 640 acres. It's in an oil 21 participating area and it is not involving the -- the lease in 22 question here. It's the northern lease in the West McArthur 23 River Unit, ADL 359111. Well, I hope that addresses adequately 24 the questions that you've posed at -- at this point in time, 25 I'll conclude my testimony and identify or indicate that I do METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 17 r---- . ~' /--. .-- ~ 1 have technical staff here from Forest Oil Corporation that can 2 answer any technical questions you may have if I've not 3 answered those already in my testimony. 4 CHAIR NORMAN: Thank you for that very thorough 5 statement Mr. Arlington and you did touch on a number of things 6 that were questions of the Commission so I commend you for that 7 testimony. Mr. Seamount, do you have any questions at this 8 time? 9 MR. SEAMOUNT: I think the only question I have is -- 10 can people hear very well in the back? Because I notice Okay. 11 we don't have the microphones up today, probably should. Is -- 12 is -- is the trapis (ph) a closed structure on this field, or 13 some sort of vaulted structure? 14 MR. ARLINGTON: I'd like to defer to my technical staff 15 for the answer to that question. Would you like to hear from a 16 geophysicists or a geologist or a reservoir engineer? 17 MR. SEAMOUNT: 18 expert witness? 19 CHAIR NORMAN: Would we have to swear them in as a We can -- you can decide if -- if the 20 information will be an element that is going to be considered 21 in making our decision, they should be sworn. If it more is 22 just by way of background information then they can.. ... 23 MR. SEAMOUNT: Okay. Well -- well, what I'm getting to 24 is , the -- the offset on the West Foreland #2 is quite a bit 25 north of the West Foreland #1 and the question would relate to METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 18 ,r--- ----- 13 14 15 16 17 18 .r--- ~ ..--..... 1 -- you're drilling it up dip and if it's a closed structure, 2 you're -- you're trying to get to the top of the structure and 3 if that's the case, will it have an impact on the allocation? 4 MR. ARLINGTON: The information that we have at this 6 that question. time to the best of my knowledge is not sufficient to answer 5 7 MR. SEAMOUNT: Has there -- there's -- there's been 8 discussion about the CRA among the -- the three or four owners, 9 correct? 10 MR. ARLINGTON: 11 MR. SEAMOUNT: Yes, there has been. 12 verbally things are coming along fine? And you indicated that it's -- that MR. ARLINGTON: the existing CRA does apply to the West Foreland #2 well for Yes, the parties are in agreement that the reservoir as it's been defined. MR. SEAMOUNT: And they feel comfortable with the numbers, the percentages, allocation? MR. ARLINGTON: The al- -- the allocation numbers, to 19 the best of my knowledge they do. We have had discussion that 20 if there is additional information that comes to light as a 21 result of drilling the West Foreland #2 well, the parties are 22 in agreement to revise the allocation numbers. And would you have an estimate about how 23 MR. SEAMOUNT: 24 close you are to a written signed agreement? 25 MR. ARLINGTON: Well, as I said, we believe that we METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 19 /'"""'- .r--- .r--- ~ ~ 1 already have a written signed agreement..... 2 MR. SEAMOUNT: Okay. 3 MR. ARLINGTON: .... .in effect. It was felt primarily 4 by me that that it was premature to put an agreement in effect 5 for any shallower sands because at this point we have no idea 6 if we're going to need or encounter productive sands in those 7 intervals and didn't know what criteria the Commission may want 8 to put in place so we wanted to wait or I felt that it was more 9 prudent to wait until after the hearing to see if there was any 10 direction from the Commission as to what they might want to see 11 in another CRA. But to answer that a little more clearly, the 12 discussions among the owners has included agreement that an 13 additional CRA will include a provision in it that it will 14 allow for redeterminations or if additional information comes 15 to light anywhere down the line during production from the 16 shallower sands that would indicate that there should be a 17 revision to the allocation percentage. And the parties are in 18 agreement to -- including that provision. 19 MR. SEAMOUNT: Okay now, on the overriding royalty 20 interest owners, you indi- -- you stated that you only had one 21 mail returned, one of your notices returned? 22 MR. ARLINGTON: Yes. 23 MR. SEAMOUNT: Do you feel confident that all the other 24 appropriate owners got their -- I mean because of that -- is 25 that you assume that -- that they got their notices? METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 20 r--- 8 9 10 11 12 .----- 13 14 15 16 17 18 19 20 21 22 23 24 /'""'" - , .r--- ~ 1 MR. ARLINGTON: Yes, I do. I believe that we've 2 performed due diligence search of the records. We have a title 3 opinion that's been prepared by a member of the Alaska Bar that 4 identifies the owners of record, overriding royalty interest 5 owners of record. We've identified the address to the best of 6 our knowledge to the best of our knowledge of those overriding 7 royalty interest owners and the mailing list that was provided to the Commission includes the information to the best of our knowledge of the current addresses of those owners. MR. SEAMOUNT: Okay. Thank you Mr. Arlington. I have not further questions. CHAIR NORMAN: Thank you Commissioner Seamount. What I would envision is we'll have questions now and then we'll take a brief recess and we'll see if we can collect -- I think it will save time if we see if we have an remaining questions and then we'll come back on the record and that should finish up the hearing. MR. SEAMOUNT: You think we should invite the others to -- any people in the audience..... CHAIR NORMAN: Yeah, yeah. I want to introduce with us this morning, Assistant Attorney General Rob Mintz also and would ask Mr. Mintz now, do you have any points that you would like to address? MR. MINTZ: Thank you Mr. Chairman. I I -- I do. 25 wanted to ask first of all, Mr. Arlington, with regard to the METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 21 ,-- .r--- /'""'" ' r- .--....., 1 notice that was mailed to the overriding royalty interest 2 Did the notice specifically state that Forest proposed owners. 3 to allocate production from this additional well according to 4 58/42 percentage split? 5 I'll sight from the notice, it MR. ARLINGTON: Yes. 6 said, this means that production from the West Foreland #2 will 7 be allocate9 58 percent to the Federal Lease and 42 percent to the State of Alaska L~ase in royalty paid from West Foreland #2 8 9 subject gas. That's a defined term in the CIA -- or CRA 10 subject gas, produced from the reservoir's provided pursuant to 11 the terms of each lease without the need to deposit said 12 production into the escrow account which the AOGCC authorized 13 Forest to terminate in Conservation Order 450B. Does that 14 answer your question? 15 Thanks, yeah. And did -- and did the MR. MINTZ: 16 notice inform the owners that they could either submit comments 17 or appear at the hearing today? 18 On page 1 of the notice, this MR. ARLINGTON: Yes. 19 personal -- the notice says, this personal notice is to inform 20 you of your opportunity to be heard by the AOGCC at a public 21 hearing tentatively scheduled for August 26, 2004 at 9 a.m. at 22 the Alaska Oil and Gas Conservation Commission at 333 West 23 Seventh Avenue, Suite 100, Anchorage, Alaska, 99501. At this 24 hearing the AOGCC will act upon their request submitted by 25 Forest to approve an exception to the drilling unit spacing METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 22 .--- .- .r--. r- ~. 1 requirements at 20 AC25.055 to allow drilling and operation of 2 the West Foreland #2 gas production wellbore to a location 3 within 1500 feet of the property line, et cetera, et cetera. 4 MR. MINTZ: Okay. Now you mention that there may be a 5 desire to revise the allocation percentages in the future. 6 MR. ARLINGTON: In so far as the shallow sands are -- 7 are concerned. 8 MR. MINTZ: Not the a -- not the 5200 and the 5400? 9 MR. ARLINGTON: Well, at this point, there's not data 10 available that indicates that there's a need to revise that 11 allocation. The current CRA doesn't provide for a re- 12 determination. I've discussed with DNR and with BLM that if we 13 have additional data that would suggest that there's a need to 14 revise the allocation that we're in agreement to -- to do that. 15 But currently that CRA doesn't provide for that procedure. 16 MR. MINTZ: Okay, because I would note that 17 Conservation Order 450B includes Commission approval of the 18 58/42 percent allocation. 19 MR. ARLINGTON: Right. 20 MR. MINTZ: I assume that you need to come back to the 21 Commission if you wanted approval to change that in the future. 22 Is that your understanding? 23 MR. ARLINGTON: Well, that's a good point. I would 24 ima- -- well, my understanding is that that Conservation Order 25 applies just to production from the West Foreland #1 well, METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 23 ~, ,r-. .r-' ,----- ~ 1 because that was a spacing exception for the single well. That 2 if we're to amend for whatever reason the CRA, my understanding 3 at this point in time that it would probably only pertain to a 4 reallocation pertaining to production from the West Foreland #2 5 well. However, I think you're correct, if the date would 6 indicate that for whatever reason, that there needs to be 7 reallocation to production from the West Foreland #1, it would 8 require an amendment by the Commission for the allocation. 9 Right. But I mean, the -- the current MR. MINTZ: 10 application that the Commission's hearing today would also 11 require the Commission to approve the allocation for production 12 from West Foreland #2, isn't that correct? 13 That's the only request that we're MR. ARLINGTON: 14 putting before the Commission at this time is for the West 15 Foreland #2, is that we have a an allocation agreed to among 16 the parties that's currently in place that is 58 percent to the 17 Federal Lease, 42 for the State Lease for the West Foreland #2 18 well but for the reservoir. 19 Okay. But is Forest the shallower gas that MR. MINTZ: 20 you may produce is concerned. What is your proposal in terms 21 of paying royalties on -- on that? 22 The proposal would be to establish an MR. ARLINGTON: 23 escrow account as we did for the West Foreland #1 well. Put 17 24 1/2 percent which is the -- the highest possible total amount 25 of royalties that could be paid on either lease into the escrow METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 24 ,---' /""""'- ,r--- r- ~ 1 account until the - - the parties have an agreement among 2 themselves and we come to the Commission and get approval of 3 the allocation for those shallower sands. 4 5 then? 6 7 8 MR. MINTZ: So that is part of your current proposal MR. ARLINGTON: Yes. MR. MINTZ: Okay, thanks. That's all I have. CHAIR NORMAN: I have a couple of just clarifying 9 questions. On the leases -- on the two leases, the Federal 10 Lease is currently held in effect by virtue of the existence of 11 the West Foreland #1, is that..... 12 MR. ARLINGTON: That is -- that is correct. 13 CHAIR NORMAN: And the State Lease to the east is 14 currently held in effect by virtue of being committed to the 15 West McArthur River Unit? 16 MR. ARLINGTON: That is correct. 17 CHAIR NORMAN: And you mentioned that Unit is scheduled 18 to contract and expel portions that are not within 19 participating areas? 20 MR. ARLINGTON: Well.... . 21 CHAIR NORMAN: Is that..... 22 MR. ARLINGTON: The Unit would contract, the -- the 23 Leases would not be terminated because under the terms of the 24 -- each lease, there's production allocated to -- to either 25 Lease then it goes beyond the primary term. There is METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 25 ,---' ...----- ~ 1 production allocated to -- to both Leases at this time so even 2 though the Unit would contract to just those 640 acres, at this 4 Leases still in effect. point and time we would still have all of the acreage in both 3 5 CHAIR NORMAN: And the production allocated that would 7 Foreland #1? hold ADL 359112 in effect, is the production for the West 6 8 MR. ARLINGTON: 9 CHAIR NORMAN: Correct. 10 with the reference to the lease boundary lines would you Yeah, okay. The -- where would -- where 11 anticipate opening up to production of the 9200 foot interval? 12 Would it be..... -----, 13 MR. ARLINGTON: 14 application..... 15 CHAIR NORMAN: r--- I -- that was included in the I -- I se- -- yes, uh-huh (affirmative), 16 I did see that and it looked to me like it was at some point 17 just about at the boundary line. Is that -- that right? 18 MR. ARLINGTON: 19 CHAIR NORMAN: be the 9400 foot interval? And in it the bottom hole location would 20 21 MR. ARLINGTON: 22 CHAIR NORMAN: That's correct. Correct. And what, right now, what would -- what 23 would the shallow -- shallower sands that you've been talking What -- what are 25 the targets there? about that may require some re-determination. 24 METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 26 "r--. --. 13 14 15 16 17 18 19 20 r---, ..----., . ~- 1 MR. ARLINGTON: Well, what we've referred to as the 2 7200 or 7400 foot sand in -- in those areas is that -- that 3 range that we've identified as the possible potential producing 4 areas. 5 CHAIR NORMAN: Okay. And Mr. Arlington, you have 6 represented on the record that you've had discussions with the 7 three owners, that being the State of Alaska, the Federal 8 Government and Cook Inlet Region and that they are all 9 supportive of the application for this spacing exception? 10 MR. ARLINGTON: I've received a -- a verbal affirmation 11 from the -- the DNR and from BLM. I've not received any 12 communication one way or the other from CIRI, Cook Inlet Region Inc. We have had a meeting that was with CIRI and the BLM jointly where the application and the information was presented to them and as I've indicated, notice was given to them and I've received no response. CHAIR NORMAN: Okay. Following your testimony, I do intend to ask if they're any other persons present in the room that wish to be heard so if there are any representatives of those other owners that wish to be heard, you'll have an 21 opportunity to speak. Anything more of this witness? Mr. 22 Arlington, what we will do then, I'll -- I'll thank you for 23 your testimony and I'll ask if there are any others in the room 24 that wish to speak. Following that, we will then take a brief 25 recess, we'll collect among ourselves any final questions we've METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 27 ""--'-. 12 13 /""- 14 15 16 ~ r--. ~. 1 found. That saves times as opposed to going back and forth in 2 duplication and then that should conclude the hearing. So, if 3 you would -- wouldn't mind, if you will remain because we may 4 want to recall you for some final questions after the recess. 5 And I'll now ask, are there any others -- any other interested 6 parties here present today at the hearing that would like to 7 make a statement? It could be either in the form of a 8 statement or if there are any questions that you believe should 9 be addressed, you may put those on the record and the 10 Commission will follow-up. Okay, the record -- I'm sorry sir, 11 yes? MR. RUFF: My name is Chris Ruff. I'm the (indiscernible - no microphone on) manager, West McArthur River Unit at the DNR, and I just have one minor question -- one clarification of what you have said. CHAIR NORMAN: Could you come forward Mr. Ruff and 17 we'll have you..... 18 I just have one minor clarification MR. RUFF: 19 (indiscernible) . If the well encounters the -- the reservoir, 20 but it's not in communication with the reservoir in the West 21 McArthur River for the West Foreland #1 well. The it's not 22 considered the reservoir, quote, un-quòte even though it's the 23 same sands. And then it be another CRA just like the shallow 24 sands, needing another CRA and I think Jim implied that but he 25 didn't actually say that. METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 28 ~ ,-;-- .~. ~ ~ 1 MR. ARLINGTON: Yeah, that's correct. I think the 2 definition that I read of reservoir was specific that the sands 3 needed to be in communication with the same interval sands that 4 are producing from the West Foreland #1 well to be considered 5 as part of the CRA. 6 CHAIR NORMAN: Okay. The -- the record will reflect 7 that was Mr. Chris Ruff with -- with DNR and as a follow-up to 8 that question, the 9400 foot sand -- if that is encountered in 9 the West Foreland #2, that right now is understood to be in 10 communication so that that's not in question, it's the 11 shallower sands that Mr. Ruff¡s question addressed. Is my -- 12 is my understanding correct? 13 MR. ARLINGTON: Essentially correct. At this point, we 14 cannot confirm until we drill the West Foreland #2 well, that 15 either the 9200 foot or 9400 foot sands are in fact in 16 communication. It is our anticipation that they are. We will 17 plan to conduct certain tests and obtain the information, the 18 pressure data primarily that would confirm that the 9200/9400 19 foot sands in the West Foreland #2 well are in fact in 20 communication with those same sand intervals in the West 21 Foreland #1 well. 22 CHAIR NORMAN: Thank you Mr. Arlington. Then -- that - 23 - that's helpful. Then is it correct to say that if the 24 Commission grants this exception and a -- under essentially the 25 same conditions as the existing CRA, with that still in effect, METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 29 .~ r". 14 15 16 17 18 19 20 21 22 23 24 25 ,,---.. - ~ ~ 1 that CRA and that allocation will effect only production from a 2 reservoir that is in communication with the West Foreland #1? 3 MR. ARLINGTON: Correct. 4 CHAIR NORMAN: And if even the 9200 foot sand interval, 5 that -- that reservoir were shown not to be in communication 6 with the West Foreland #1, then you would have to do a re- 7 allocation? 8 MR. ARLINGTON: And in our -- and in my view it Yes. 9 would also require either an amendment of the existing CRA or a 10 new CRA because that would fall outside the definition of the 11 reservoir that's currently covered under the existing CRA. 12 CHAIR NORMAN: And then the final -- and -- and so 13 before going into regular production, if it cannot be conclusively shown that it's in communication with the West Foreland #1, then we would have to re-visit that and make sure there is an allocation in place, is that -- what procedure would you see follow in there? MR. ARLINGTON: Because there may be production required for a certain period of time if we don't conduct say an NDT log in the -- the West Foreland #2, in order to affirm- -- affirmatively ascertain whether there is or is not communication in various sands. It may take you know, a year, two years like we had established as a procedure for the spacing exception for the #1 well to get enough data and information to determine what the appropriate allocation should METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 30 ..,,--. . 10 11 12 13 ,-;--. 14 15 16 17 18 19 20 21 ,-;--. ~ ~ 1 be. So, my thought would be, a proposal -- is that, if initial 2 data indicates that we cannot affirmatively make that 3 conclusion right after the drilling of -- of the well or at 4 some time after we drill the well, we have information that 5 determines that there is not communication between the West 6 Foreland #2 sands and the West Foreland #1 sands, the 9200 or 7 the 9400, that we would come back and -- to the Commission, and 8 seek a separate spacing exception and provide a compensatory 9 royalty agreement among the owners identifying the allocation for those sands and that separate reservoir. Did that answer your question? CHAIR NORMAN: It -- it did. And then my understanding would be the parties would attempt to reach agreement on that in return for separate allocation failing that any of the affected parties could come back and petition the Commission to reopen the matter? MR. ARLINGTON: Correct. MR. MINTZ: Mr. Chairman, if I could ask one more question? CHAIR NORMAN: Please. MR. MINTZ: But are you proposing to escrow potential 22 royalty obligations with regard to the 9200/9400 sands? 23 MR. ARLINGTON: Not at this time. As I indicated in 24 the notice that I sent to the royalty owners, the overriding 25 royalty owners and as I indicated in the -- in the testimony METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 31 .,,-- . 9 10 11 12 13 ,,---.. - 14 15 16 ,"-""'. ~ ~ 1 maybe it wasn't as clear as it should have been. Our proposal 2 is that there is not a need to escrow monies at this time for 3 production from the 9200/9400 foot sands because we have the 4 existing CRA. All the data that we have to date indicates that 5 the targets in the West Forelands #2 well are in communication 6 with the West Foreland #1 well. Until we get data that 7 contradicts that assumption, that there's no reason to escrow 8 those funds. And then we just go forward and -- and pay the royalty owners on a month to month basis pursuant to the terms of the lease. MR. MINTZ: All right. But at two years down the road, it's determined that there's no communication and the difference allocation form is agreed upon, what would you -- make retroactive adjustments at that point or just go forward from that point on? MR. ARLINGTON: I -- I think it would need to be 17 determined between the -- the owners, the -- the DNR and the 18 BLM what the appropriate way going forward would be. I 19 wouldn't presume to speak for them at -- at this point. 20 And maybe the overriding royalty owners? MR. MINTZ: 21 Pardon me? MR. ARLINGTON: 22 And the overriding royalty owners would MR. MINTZ: 23 have a concern also presumably. 24 Well, they -- they would, but as I've MR. ARLINGTON: 25 indicated in communications that I've had with AOGCC staff and METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 32 . ,,---... 11 12 13 ./"""'- 14 15 16 17 18 19 20 21 22 23 24 25 ..-- ---, ~, 1 my personal position is that the overriding royalty interest 2 owners interest is derived contractually. That their interest 3 is not that of a mineral interest owner and they are not a 4 party to the negotiations as far as the allocation percentage 5 is concerned. 6 MR. MINTZ: But they do share in production, right? 7 MR. ARLINGTON: They do. There -- there right is 8 derived as a -- a means of contract with the working interest 9 owners primarily, you know, that has an interest that was given 10 to them or assigned to them out of the -- the working interest. MR. MINTZ: But I mean if there's a ma- -- there's language in the statute on pooling, talks about persons who have the right to share in production and I guess the statutory construction issue is does that include override of royalty interest owners? MR. ARLINGTON: I think it's going to be an issue that may need to be addressed later and as the Commission has established its procedures before for Oilfields #1 well and in fact, you say, say directed for us for this hearing, we have notified all of the potentially affected parties, including the override and royalty interest owners and if they, you know, had an interest or concern regarding the allocation, I would have expected that they would have expressed that concern and as I have already indicated in the testimony, no such concern has been expressed. METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 33 ~ ~ .r-, ~ ~ 1 MR. MINTZ; Thank you. 2 Mr. Arlington, a question generally CHAIR NORMAN: 3 without getting into any specific names but could you describe 4 generally the royalty and overriding royalty burdens on the two 5 leases? 6 MR. ARLINGTON: The federal lease has the -- what Yes. 7 used to be the standard royalty of 1/8th which is 12 1/2 8 percent, that is paid to the lessor. There is a five percent 9 total overriding royalty interest burden on that federal lease 10 that makes the total burden, royalty burden on the federal lease, 17 1/2 percent. On the State of Alaska lease the lease 11 12 terms also provide for the standard 1/8th royalty but as I 13 indicated in the testimony, that lease is subject to the West 14 Foreland field plan, which was established pursuant to statute 15 and I'm sorry I don't have the citation for that. But that 16 allowed for royalty reduction to five percent for production, 17 either oil or gas, from the West Foreland field and we only -- 18 the West Foreland field has been identified as containing the 19 federal lease and the one state lease, ADL 359112, but as 20 indicated in my testimony the state statutes obviously can only 21 apply to reduce the royalty on the state lease. That state 22 lease royalty for production on 359112 is at five percent at 23 this point in time. The overriding royalty burdens total 24 approximately 12 1/2 percent, Forest Oil Corporation owns some 25 of that overriding royalty interest so again, just METRO COURT REPORTING 745 West Fourth Avenuè, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 34 .-r--. 1 2 3 4 5 6 12 13 .,,--. 14 15 16 17 18 19 20 21 22 23 24 ,~ ~ /---. coincidentally the total burden -- royalty burden at this point in time for the state lease, 359112, is also 17 1/2 percent. MR. NORMAN: The -- there is not commonality of identify I take it though between the overriding royalty interest owners on the two leases there, they're different? MR. ARLINGTON: Correct, that is correct, and you can 7 confirm that with a list of the overriding royalty interest 8 owners I provided the Commission. 9 MR. NORMAN: Okay. We 'will take about a - - it's a 10 little after 10:00 a.m. We'll take a 10 minute recess and 11 during that recess the Commissioners will confer and we'll try to collect any final questions we may have and then we'll come back on the record in approximately 10 minutes. There should be coffee out there for any of you that would like it and there are restroom facilities in the direction that I am pointing and we'll reconvene in about 10 minutes. (Off record) (On record) MR. NORMAN: We'll go back on the record. The time is approximately 10:25 a.m., on the morning of Thursday, the 26th. This is a hearing upon the Application of Forest Oil Corporation for a spacing exception for the West Foreland #2. Mr. Arlington, I think the consensus is that you did a very good job of laying things out clearly and I think we have an 25 understanding of the facts that we need to have. My under- -- METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 35 .,,-- . ..,,--. ,.,,--. ,,-- ------ 1 our understanding is that upon the drilling of the well and 2 commencement of production, determination will then be made as 3 to whether there is communication with the West Foreland #1. 4 If there is communication, then as to the two zones identified, 5 the 9200 and 9400, they will be governed by the existing CRA. 6 If there is not communication, then the parties recognize the 7 need to either voluntarily arrive at a new CRA which we're 8 equating with the pooling agreement under our statute, or come 9 to the Commission and we will then resolve it to make sure that 10 the production is fairly allocated. As to intervals other than 11 those two -- the 92 and 9400 foot interval, the shallower 12 production as it has been called, if there is production from 13 that interval, that will need to be the subject of a new 14 agreement between the parties and again, you'll need to come 15 back before the Commission before there can be production 16 there. Is that? 17 MR. ARLINGTON: Well, let me just clarify. I would ask 18 that the Commission allow production to proceed from any 19 shallower intervals under a temporary spacing exception and 20 that before a permanent spacing exception is put in place, that 21 we come before the Commission with a compensatory royalty 22 agreement. I would ask, because of the -- the need for gas, 23 that there not be a restriction placed on a production from any 24 interval at -- at this time. 25 MR. NORMAN: Sure, I understand that. Let me put one METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 36 r-.. 13 "'--'. 14 15 16 17 18 19 20 21 22 23 24 25 '-'. , .---. ,~ 1 final question to you, go one step further. It looks to me 2 like there is some additional information that's going to be 3 gained from the -- upon the completion of this well, and at 4 that point then the parties will have the benefit of that 5 information. So, lets call it a conditional order or temporary 6 order, what have you, what would be the problem with entering 7 that order, allowing you to go forward and produce as we talk 8 about and then once that information is in, then we'll know 9 whether there is communication with the West Foreland #1. In 10 other words, why distinguish the shallow and the 92 and 94 11 hundred foot, why not just wait and get more solid information 12 as to the entire potentially productive column? MR. ARLINGTON: If production would be allowed from any of the intervals I guess I don't see a problem, you know, with that approach. MR. NORMAN: Okay. Mr. Ruff. MR. RUFF: (Speaking without a microphone) Well, there is the issue of, you know, if you're producing the 92 or 94, and there's no gain (ph) if it says it's not in communication, you want to go ahead and distribute it, 52/48 or 48/52. MR. ARLINGTON: The 58..... MR. RUFF: So, and if there's (indiscernible) from any other intervals then it needs to be escrowed so there's where the (indiscernible). MR. ARLINGTON: And that's correct so there would be I METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 37 ,-;-. /~-'. ~' ~ -~ 1 guess an issue on what, as the operator, and as the working 2 interest owner, we should be doing with the production and the 3 royalty payments. So if the Commission could clarify what our 4 obligation is in that respect, that would be helpful. 5 MR. NORMAN: The record will reflect that that was Mr. 6 Ruff raising that issue. 7 MR. MINTZ: Mr. Chairman, could I ask a question? 8 MR. NORMAN: Please do. 9 MR. MINTZ: If you do produce from both the 92, 94 10 hundred sand and the shower sand, is it your plan to have 11 separate completions for those two sources? 12 MR. ARLINGTON: I'm sorry, separate what? 13 MR. MINTZ: Completions. 14 MR. ARLINGTON: That is not then determined as yet, 15 I've provided to the DNR/BLM with a copy to the AOGCC staff 16 yesterday, the current proposal for both a single and dual 17 completion in the West Foreland #2 well. That decision's not 18 been made as yet as to how the well would be completed. I 19 think to get at what you're asking is how we -- how we would 20 determine, you know, what production comes from which zone, 21 that my understanding is that they're spinner surveys that can 22 be done that can determine what the production is from each 23 producing interval in the well, even if we have a single 24 completion. 25 MR. MINTZ: Thank you. METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 38 ~. 3 4 5 6 7 8 9 10 11 12 13 ~ 14 15 16 17 18 19 20 21 22 23 24 25 /""" ~ ~ -. 1 All right. It is approximately 10:38 MR. NORMAN: 2 a.m., and the Commission believes that we have received the information that we needed. Again, we commend you for your testimony and presenting a well organized batch of information, Mr. Arlington. MR. ARLINGTON: Thank you. MR. NORMAN: Last call, if there's nothing further, then we will stand adjourned. (Off record at 10:35 a.m.) * * * END OF PROCEEDING * * * METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 39 ~. 7 8 9 10 11 12 ~. 13 14 15 16 17 18 19 20 21 22 23 24 25 ~. ,,---. ..-. 1 2 SUPERIOR COURT 3 STATE OF ALASKA C E R T I F I CAT E ) ) ss. ) 4 5 I, Jerri Young, Notary Public in and for the State of Alaska, do hereby certify: 6 THAT the annexed and foregoing pages numbered 2 through 39 contain a full, true and correct transcript of the Public Hearing before the Alaska Oil and Gas Conservation Commission, taken by Jan Scott transcribed by Sharon Wilcox: THAT the Transcript has been prepared at the request of the Alaska Oil and Gas Conservation Commission, 333 West Seventh Avenue, Anchorage, Alaska, DATED at Anchorage, Alaska this 9th day of September, 2004. SIGNED AND CERTIFIED TO BY: ,\\\\'\\1111"11,1, ~, ~,y OJ."~ ~ ~ø~,...."..."v+, ~ #§ ")y,. ..:'\ ~ :§ l O'TA., ~ ::::+ J. :: = i. -*- =:: - Þ "'- ~ \ (JBL\V ¡ ;:: ~+" 1+:;:: ~ ~ '.. .' ,~ ~ ~ ...--....., ~ ~/h~8~~\~~ for Alaska Expires: 11-03-07 METRO COURT REPORTING 745 West Fourth Avenue, Suite 425 Anchorage, Alaska 99501 (907) 276-3876 40 #8 West Foreland #2 Gas Well -... ~ Subject: West Foreland #2 Gas Well From: Jim Arlington <JDArlington@forestoil.com> Date: Thu, 26 Aug 2004 18:43:11 -0600 To: "'robert - crandall@admin.state.akus'" <robert - crandall@admin.state.ak.us> CC: Robert Elder <RGElder@forestoil.com>, tom_maunder@admin.state.ak.us, Stephen Davies <steve - davies@admin.state.akus>, "'Kirsten - Ballard@dec.state.ak.us'" <Kirsten - Ballard@dec.state.ak.us>, "'lydia - miner@dec.state.ak.us'" <lydia - miner@dec.state.akus> Bob, Both Bob Elder (Health, Safety and Environment Manager for Forest Oil's Alaska Business Unit) and I spoke with Lydia Miner this morning, as you suggested following our hearing with the AOGCC this morning. She informed us that the statutory changes made by the Alaska legislature this past legislative session now precludes the ADEC from granting exemptions from an oil discharge prevention and contingency plan ("C-Plan") requirement for exploratory gas wells as a "natural gas production facility", which is why she informed you last week that they will not be asking the AOGCC anymore to provide the "certification letters" to support such requests for exemptions. She did say that the ADEC will ask the AOGCC to confirm from the data available to them that wells being permitted as gas wells either are or not likely to encounter liquid hydrocarbons while drilling. She told us this "confirmation' or information can be provided to the ADEC either verbally or by email. are that Bob and I asked her if it would be sufficient for the ADEC review concerning the possible need to revise Forest's C-Plan, as it pertains to Forest's proposed WF #2 gas well, if we ask you to send Kirsten Ballard at the ADEC an email confirming that the logs Forest has provided to you and the other information the AOGCC has from Forest's application for a spacing exception and application for permit to drill. She said that would be sufficient. Therefore, I am sending you this email to respectfully request that you send Ms. Ballard an email with your assessment as to whether or not there is potential for the WF #2 well, as it is proposed to be drilled by Forest, to encounter oil or oil bearing formations. It is our understanding that the data Forest has provided to the AOGCC, and other data available to the AOGCC, will allow you to conclude that the WF #2 well cannot reasonably be expected to encounter any liquid hydrocarbons, oil or oil bearing formations. As you know, time is of the essence in order to be able to drill this well before the onset of winter and complete the well before ice accumulations in Cook Inlet. Therefore, I would appreciate it if you could send her this email as soon as possible and copy me with your transmittal. If you have any questions or concerns regarding this request please call me at 868-2112. THANKS. Jim 1 of 1 8/27/2004 3 :08 PM [Fwd: ~ #2 well] ,,---. ~ f( r e-- Subject: [Fwd: WF #2 well] From: Thomas Maunder <tom - maunder@admin.state.ak.us> Date: Wed, 25 Aug 200415:36:48 -0800 To: Jody J Colombie <jody_colombie@admin.state.ak.us> CC: Steve Davies <steve_davies@admin.state.ak.us> Jody, I received this message from Jim Arlington regarding matters on the proposed WF #2. I have printed copies and put them in the file that John has. Tom -------- Original Message -------- Subject: WF #2 well Date: Wed, 25 Aug 2004 17:23:32 -0600 From: Jim Arlington <JDArlington@forestoil.com> To: Chris Ruff (car@dTIr-:-stat-e~iik.us) <chrisruff@dnr.state.ak.us>, Steve Martinez (steve martinez@ak.blm.gov)~Stëve-martinëz@ak.blm.gov> CC: 'Tom Maunder' <tom maunder@admin.state.ak.us>, Bradley Brice <BWBrice@forestoil.com>, Stephen Davies <steve davies@admin.state.ak.us> Chris & Steve, As we discussed this morning, and as I promised, attached are the two well schematics currently proposed by Forest for the single and dual completions of the WF #2 well. Forest has not made a definite decision as to whether the completion of the WF #2 will be single or dual; however, our leaning at this point in time is for a dual completion. As for the testing to confirm communication with the "Reservoir" in the WF #1 well. Forest will probably use a MDT (I am told there is no longer a RFT). If a MDT is done, it may either be open hole or cased, a decision has yet to be made. Also, as we have discussed before, Forest hopes it is not required to do certain tests, as certain tests may either be unnecessary, uneconomical or the well conditions preclude us from doing them. If Forest determines that it is too risky to conduct the MDT and it is not done, there are other methods available to determine whether there is communication with the WF #1 Reservoir, i.e. monitoring WF #1 reservoir pressure versus cumulative production. Finally, I have copied the current inbox for the West Foreland #2 Mailbox I established for questions from royalty owners for the two affected leases regarding Forest's spacing exception application. As you can see, I have to date only received one email (from Charles E. Cole) which indicates no objection to Forest's planned drilling operation for the WF #2. I have copied the text of that email below for your review. If you have any questions regarding any of the information contained in this transmittal, please give me a call at 868-2112. THANKS. Jim Please find below the e-mail address for Charles E. Cole: 10f2 8/25/2004 3:37 PM [Fwd: ~ #2 well] ~ ~ cvcole@att.net. In response to your proposal dated Augsut 10, 200 4, I have no objection. Charles E. Cole ~vcole@a ~~:.:'.net # 2 Completion Schematic Dual Content-Type: applicationlvnd.ms-excel Content-Encoding: base64 # 2 Completion Schematic Single Content-Type: applicationlvnd.ms-excel Content-Encoding: base64 #2 Mailbox-Inbox as of 8-25-2004.doc Content-Type: applicationlmsword Content-Encoding: base64 2 of2 8/25/20043:37 PM West Foreland #2 Mailbox All inbox mail as of 8-25-2004 ) ) ELEVATION: 88' RKB: 25' --- FORE,-. OIL CORPORATION WEST FORELAND # 2 PROPOSED WELL COMPLETION SINGLE Date: 8/4/04 Prepared: Roy Smith Methanol Injection Mandrel @ 3,000' wI 3/8" Control Line w/6' pups above and 13 3/8" @ +1- 3,000' MDITVD 75/8" 29.7# X 7" 29 # XO @ +1- 3,100' 3% KCL Completion Fluid TUBING STRING - 23/8" 4.7#/ft N-80 CS 2 3/8" "X" Nipple 1 joint above Packer w/6' pups above and below ... 7" 29 # Hydraulic Packer for 2 3/8" @ 9,800' MD ... 7" 29# N-80 10,649'MD/9,445' TVD ELEVATION: 88' RKB: 25' Trip Sub - ----- FOREt.. OIL CORPORATION WEST FORELAND # 2 PROPOSED WELL COMPLETION Date: 8/4/04 Prepared: Methanol Injection Mandrels @ 3,000' LS & 2,940' SS w/ 3/8" Control Lines w/6' pups above and below 133/8" @ +/- 3,000' MDITVD 75/8" 29.7# X 7" 29 # XO @ +/- 3,100' 3% KCL Completion Fluid BOTH TUBING STRINGS - 2 3/8" 4.7#/ft N-80 CS 2 3/8" "x" Nipple 2 joints above Packer in SS w/6' pups above and below 2 3/8" "x" Nipple 1 joint above Packer in LS w/6' pups above and below 7" 29 # Dual Hydraulic Packer for 2 3/8" @ 9,800' MD 2 3/8" Blast Joints across peñorations +/- 60' 2 3/8" "x" Nipple 1 joint above Packer in LS w/6' pups above and below 7" 29# Permanent Packer @ +/-10,275' MD 4111 7" 29# N-80 10,649'MD/9,445' TVD ~ ~. ~ C'~ í òr \L ¡, RE: West Foreland 2 - Path Forward Subject: RE: West Foreland 2 - Path Forward From: Jim Arlington <JDArlingtoo@forestoil.com> Date: Tue, 10 Aug 2004 14:41 :45 ..()6()() To: 'Stephen Davics' <steve - davies@admin.state.ak.us>, Jim Arlington <JDArlingtoo@forestoil.com> CC: John Norman <john - nonnan@admin.state.ak.us>, Daniel Seamount <4an - seamount@admin.state.ak.us>, Rob Mintz <robert_mintz@Jaw.state.ak.us>, "Chris Ruff(car@dDr.state.ak.us)" <chrisJuft@dnr.state.ak.us>, "Steve Mar1inez (steve - martinez@ak.blm.gov)" <steve - martinez@ak.bIm.gov> Steve, Thanks for the detailed response. I have attached the draft of the notice I plan to send. I believe it addresses each of the issues you described below that you wanted discussed in the notice. I need to get this completed and sent today as I will be leaving tomorrow for 10 days on the Yukon River. Please review the attached and confirm that it sufficiently addresses your directives. THANKS. Jim -----Original Message----- From: Stephen Davies (mailto:steve_davies@admin.state.ak.us] Sent: Tuesday, August 10, 2004 12:04 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz; Chris Ruff (car@dnr.state.ak.us); Steve Martinez (steve_martinez@ak. blm .gov) Subject: Re: West Foreland 2 - Path Forward Jim, Forest Is Not Being S~led Out or Treated UnJàirly First of all, you are correct you when you say below "...F orest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the ]ast hour (planned spud date is now about 30 days away), the Commission has been willing to set aside projects 1Ì"om other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1 ) lie within a single drilling unit, 2) lie within 1,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each of these characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359112 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 31.05.050(b) provides that "the Commission may also give, or require the giving lof6 8/10/2004 5:28 PM RE: West Foreland 2 - Path Forward -------- --- "'. of, additional notice in a proceeding, or class of proceeding, which It considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I personally am aware of two Commission actions where a petitioning party was requested to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359112 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant in the CRA is interested in revisiting allocation between tracts. A public hearing at the end of the temporary spacing exception period will allow the Commission to review all data, review any re-determination of allocation, and act to ensure that the rights of all affected parties are protected. Existing CRA Is Still In Effect The text of the CRA is clear: it is still in effect, and will be for the foreseeable future. Mentioning this in the notice to all affected parties simply increases awareness. Allocating Production Any notice to affected parties must clearly explain Forest's mechanism for determining allocation of production between each lease. The existing CRA provided a means to establish allocation of production ftom the two known productive intervals ("reservoir") to each of the affected leases. All parties agreed to the current allocation of 58% to lease A-035017 and 42% to lease ADL-359112. You mentioned that, based on a new seismic interpretation, the perceived structure has changed and, accordingly, at least one party to the CRA is interested in revisiting the current allocation percentages. Production ftom any additional sand outside the known reservoir would fall outside of the CRA, requiring a separate CRA. Your notice must also address this issue. Escrow of Royalty Funds Because of the potential for re-visiting allocation determination and the potential for having West Foreland #2 tap reserves outside of the current reservoir, it seems best to separate the royalty funds ftom West Foreland #2 ftom those of West Foreland #1. This would provide a clearer accounting picture for all funding. I hope this is helpful Please feel ftee to contact me if you have any further questions or comments. Steve Davies Petroleum Geologist 2 of6 8/10/20045:28 PM RE: West Foreland 2 - Path Forward -----.. ~ "' Alaska Oil and Gas Conservation Commission Jim Arlington wrote: Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not required by the AOGCC regarding the WF #1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds trom the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest owners. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afforded the ORRIs. It appears to me that just the owners, as that term is defined in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an owner or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence of the ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding from our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand, since these sands have already been scrutinized and were the subject of the AOGGCC hearing regarding the WF #1 well and are already the subject of a CRA by and between the mineral interest owners and the operator for allocation of production trom other wells into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir. " Forest is seeking a temporary spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be 3 of6 8/10/20045:28 PM RE: West Foreland 2 - Path Forward .~ ~ "' no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF #1 well, i.e. place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCC. 2. Forest's position is that the existing CRA is still in effect; As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production ITom the WF # 1 well does address additional wells to be drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas ITom WF # 1 and potentially ITom additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottom hole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had DNR affirmatively state that this is their position as well, I believe it is very clear ITom the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language ITom the CRA excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas ITom the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas ITom the Reservoir are plugged and abandoned. " 3. Forest will allocate production ftom West Foreland 2 based on the existing CRA; and As stated in my response to items # 1 and #2 above, Forest plans to allocate WF #2 well production ITom the Reservoir as provided for in the CRA and CO 450B and distribute royalties due ITom said Reservoir production to the mineral interest and ORRI owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to terminate. The existing CRA was already subject to the scrutiny and review of the AOGCC and all parties with any potential correlative rights in the Reservoir when the AOGCC approved the permanent spacing exception for the WF #1 well. 4. Royalty monies will be escrowed pending equitable determination. 4 of6 8/10/2004 5:28 PM RE: West Foreland 2 - Path Forward .-~ .~ ........ As stated in my response to item #3 above, the obligation for an escrow account established for the WF #1 well was terminated by the AOGCC and Forest will plan to distribute royalties due from WF #2 Subject Gas produced ITom the Reservoir as provided pursuant to the terms of each lease without placing said production into an escrow account. If there is any production ITom any sands other than the Reservoir, Forest will place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA for said shallow sands, subject to approval of the AOGCc. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRIs. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant A. G. can review that position and use the definition used by Williams and Meyers, to wit: "The landowner's share of production, ITee of expenses of production." (Emphasis added). Further, in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty owner" refer to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to afford notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCc. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived ITom a property interest, not ITom a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. Jim -----Original Message---- From: Stephen Davies [mailto:steve davies@admin.state.ak.usl Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz Subject: West Foreland 2 - Path Forward Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26, 2004 to all royalty owners (including ORRIs) for both 5 of6 8/10/20045:28 PM RE: West Foreland 2 - Path Forward .--'""'- .~"' Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 7. Forest will allocate production ftom West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out of the office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission - --------- . Content-Type: applicationlmsword Notaee from Forest to ORRI s RE AOGCC Hearing on 8-26-2004 DRAFT#4 8-10-2004.doe - - Content-Encoding: base64 -- -----_u-- 6of6 8/10/20045:28 PM ~ RE: West foreland 2 - Path Forward ~ .~ Subject: RE: West Foreland 2 - Path Forward From: Jim Arlington <JDArlington@forestoil.com> Date: Tue, 10 Aug 2004 14:41 :45 -0600 To: 'Stephen Davies' <steve_davies@admin.state.ak.us>, Jim Arlington <JDArlington@forestoil.com> CC: John Nonnan <john_nonnan@admin.state.ak.us>, Daniel Seamount <dan_seamount@admin.state.ak.us>, Rob Mintz <robert- mintz@law.state.ak.us>, "Chris Ruff (car@dnr.state.ak.us)" <chris Juff@dnr.state.ak.us>, "Steve Martinez (steve- martinez@ak.blm.gov)" <steve - martinez@ak.blm.gov> Steve, Thanks for the detailed response. I have attached the draft of the notice I plan to send. I believe it addresses each of the issues you described below that you wanted discussed in the notice. I need to get this completed and sent today as I will be leaving tomorrow for 10 days on the Yukon River. Please review the attached and confirm that it sufficiently addresses your directives. THANKS. Jim -----Original Message----- From: Stephen Davies [mailto:steve_davies@admin.state.ak.us] Sent: Tuesday, August 10, 2004 12:04 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz; Chris Ruff (car@dnr.state.ak.us); Steve Martinez (steve_martinez@ak. blm .gov) Subject: Re: West Foreland 2 - Path Forward Jim, Forest Is Not Being Singled Out or Treated Unfairly First of all, you are correct you when you say below" ...Forest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the last hour (planned spud date is now about 30 days away), the Commission has been willing to set aside projects from other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1) lie within a single drilling unit, 2) lie within 1,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each ofthese characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359112 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 31.05.050(b) provides that "the Commission may also give, or require the giving of, additional notice in a proceeding, or class of proceeding, which it considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, lof6 8110/20044:57 PM RE: West Foreland 2 - Path Forward ~ ~ and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I personally am aware of two Commission actions where a petitioning party was requested to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359112 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant in the CRA is interested in revisiting allocation between tracts. A public hearing at the end of the temporary spacing exception period will allow the Commission to review all data, review any re-determination of allocation, and act to ensure that the rights of all affected parties are protected. Existing CRA Is Still In Effect The text of the CRA is clear: it is still in effect, and will be for the foreseeable future. Mentioning this in the notice to all affected parties simply increases awareness. Allocating Production Any notice to affected parties must clearly explain Forest's mechanism for determining allocation of production between each lease. The existing CRA provided a means to establish allocation of production ITom the two known productive intervals ("reservoir") to each of the affected leases. All parties agreed to the current allocation of 58% to lease A-035017 and 42% to lease ADL-359112. You mentioned that, based on a new seismic interpretation, the perceived structure has changed and, accordingly, at least one party to the CRA is interested in revisiting the current allocation percentages. Production from any additional sand outside the known reservoir would fall outside of the CRA, requiring a separate CRA. Your notice must also address this issue. Escrow of Royalty Funds Because of the potential for re-visiting allocation determination and the potential for having West Foreland #2 tap reserves outside of the current reservoir, it seems best to separate the royalty funds from West Foreland #2 from those of West Foreland #1. This would provide a clearer accounting picture for all funding. I hope this is helpful. Please feel free to contact me if you have any further questions or comments. Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission Jim Arlington wrote: 2 of6 8/1 0/2004 4:57 PM . RE: West .Foreland 2 - Path Forward /""'------ ~ Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not required by the AOGCC regarding the WF # 1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds from the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest owners. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afforded the ORRIs. It appears to me that just the owners, as that term is defined in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an owner or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence ofthe ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding ITom our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand, since these sands have already been scrutinized and were the subject of the AOGGCC hearing regarding the WF # 1 well and are already the subject of a CRA by and between the mineral interest owners and the operator for allocation of production from other wells into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'.9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir. " Forest is seeking a temporary spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF # 1 well, i.e. place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow 3 of6 8/10/2004 4:57 PM RE: West Foreland 2 - Path Forward ~ ~ account until a CRA is entered into and a final allocation of production among the t\\/O leases is agreed to by and between the royalty owners or the parties to the CRA. subject to approval of the AOGCc. 2. Forest's position is that the existing CRA is still in effect; As stated above. the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production from the WF # I well does address additional wells to be drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas from WF #1 and potentially from additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottomhole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had DNR affirmatively state that this is their position as well. I believe it is very clear from the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language from the CRA excerpted below: "5. Ten11 and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas from the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas from the Reservoir are plugged and abandoned." 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and As stated in my response to items # 1 and #2 above, Forest plans to allocate WF #2 well production from the Reservoir as provided for in the CRA and CO 450B and distribute royalties due from said Reservoir production to the mineral interest and ORRI owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to terminate. The existing CRA was already subject to the scrutiny and review of the AOGCC and all parties with any potential correlative rights in the Reservoir when the AOGCC approved the permanent spacing exception for the WF #1 well. 4. Royalty monies will be escrowed pending equitable determination. As stated in my response to item #3 above, the obligation for an escrow account established for the WF #1 well was terminated by the AOGCC and Forest will plan to distribute royalties due from WF #2 Subject Gas produced from the Reservoir as provided pursuant to the terms of each lease without placing said production into an escrow account. If there is any production 4 of6 8110/20044:57 PM RE: West Foreland 2 - Path Forward ~ ~ '"' from any sands other than the Reservoir. Forest will place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month. multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA. is entered into and a final allocation of production among the two leases is agreed to by and between the royalty O\vners or the parties to the CRA for said shallow sands. subject to approval of the AOGCc. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRIs. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant AG. can review that position and use the definition used by Williams and Meyers, to wit: "The landowner's share of production, free of expenses of production." (Emphasis added). Further, in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty owner" refer to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to afford notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCC. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived from a property interest, not from a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. Jim -----Original Message----- From: Stephen Davies [mailto:steve davies@admin.state.ak.us] Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz Subject: West Foreland 2 - Path Forward Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26,2004 to all royalty owners (including ORRIs) for both Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 5 of6 8110/20044:57 PM . RE: West.Foreland 2 - Path Forward ~ "-'...... 7. Forest will allocate production from West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out of the office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission Content-Type: application/msword Notice from Forest to ORRI s RE AOGCC Hearing on 8-26-2004 DRAFT#4 8-10-2004.doc b - - Content-Encoding: ase64 6 of6 8/10/20044:57 PM ~ '~ <8 Forest Oil Corporation 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258-8600 Fax: (907) 258-8601 DRAFT TO: Attached Distribution List DATE: August 10, 2004 SUBJECT: Forest Oil Corporation spacing exception application in accordance with 20 AAC 25.055. West Foreland #2 Well; Allocation of Reserves & Production Federal Lease (A-035017); State of Alaska Lease (ADL-359112) Forest Oil Corporation ("Forest") is providing you this letter as a personal notice pursuant to directions received by Forest ITom the Alaska Oil and Gas Conservation Commission ("AOGCC"). This personal notice is to inform you of your opportunity to be heard by the AOGCC at a public hearing tentatively scheduled for August 26, 2004, at 9:00 arn at the Alaska Oil and Gas Conservation Commission at 333 West -¡ili Avenue, Suite 100, Anchorage, Alaska 99501. At this hearing the AOGCC will act upon the request submitted by Forest to approve an exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A- 035017 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet trom, a well capable of producing ITom the same gas pool. The West Foreland #2 gas well ("WF #2") will be drilled as a deviated well bore with drilling planned to commence in approximately one month. Production ITom the WF #2 is contingent upon approval of a spacing exception issued by the AOGCC, otherwise production ITom the WF #2 well will not be allowed, nor any royalties paid, as it would violate the statewide spacing requirements stated in 20 AAC 25.055. The surface location of the well is 880 feet ITom the south line and 631 feet trom the east line of Section 21, TO8N, RI4E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet ITom the north line and 1,105 feet ITom the east line of21, TO8N, RI4E, SM. The AOGCC tentatively scheduled the public hearing on this application for August 26, 2004 at 9:00 arn at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. The AOGCC public notice, published July 23, 2004, provided that a person may request that the tentatively scheduled hearing be held by filing a written request with the AOGCC no later than 4:30 pm on August 10, 2004. The public notice went on to say that if a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call (907) 793-1221 or check the Commission's hearing calendar at: httD:llwww. state.ak. usJl ocal/ akoagesl AD MINI ogc/hearlhear .htm However, even if a public hearing is not held, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 24, 2004 except that if the AOGCC decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 26, 2004 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at (907) 793-1221 before August 13, 2004. As you may recall, you received a similar notice ITom Forest last year regarding a hearing before the AOGCC regarding the West Foreland #1 gas well ("WF #1"). At that hearing the AOGCC granted Forest a permanent spacing exception for the WF #1 and authorized termination of the escrow account established by Forest into which all royalty proceeds ITom WF #1 production were deposited since the well began production in 2001. The WF #1 was shut-in until April 2001 when Forest, the Bureau of Land Management ("BLM") and the Alaska Department of Natural Resources ("DNR") executed a Compensato!)' Royalty Agreement ("CRA") to allocate production trom the WF #1 between federal lease A-035017 and the State of Alaska lease ADL-359 1 12. The CRA was required by the AOGCC pursuant to Conservation Orders No. 450 and 450-A granting a permanent exception to the spacing requirements of 20 AAC 25.055 to allow production of gas ITom the WF #1 ITom any interval not deeper than 9,527' MD. The terms of the CRA and Conservation Order No. 450B established an allocation of 58% to the federal lease and 42% to the State of Alaska lease for any gas production ITom any interval not deeper than 9,527' MD in the WF #1. Forest is currently awaiting approval ITom the BLM and DNR regarding the valuation of the gas produced so that the funds ITom the escrow account can be disbursed to all parties who have an interest in the gas produced ITom the WF #1. Page 1 of2 .~ ,~ DRAFT Forest's requested exception to the statewide spacing regulations for the WF #2 is necessary to optimize gas recovery ITom the Tyonek formation in the West Foreland Field. The proposed bottomhole location for the WF #2 will be updip ITom the existing WF #1 and near the common lease line separating the State of Alaska and federal leases. The proposed bottomhole location of the WF #2 for projected productive intervals in the 9,200' sand and 9,400' sand will be in Section 21, T08N, RI4W, Seward Meridian and east of the common lease boundary. Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand in the WF #2, since production ITom these sands has already been scrutinized during, and was the subject of, the AOGGCC spacing exception hearings regarding the WF #1 well. Further, these sands are part of the "Reservoir" already the subject of the CRA, entered into to address not only the allocation of production ITom the WF # 1 among the two leases, but also the allocation of such production ITom other wells drilled into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temoorarv spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporal)' spacing exception granted for the WF # 1 well, i.e. place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production arnong the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCc. As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production ITom the WF #1 well already addresses additional wells to be drilled into the Reservoir to be penetrated by the WF #2 by providing the following: "Lessee intends to produce natural gas ITom WF # 1 and potentially ITom additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottomhole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." Forest plans to apply the provisions of the existing CRA to production ITom the Reservoir in the WF #2 as well. The relevant language ITom the CRA is excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas ITom the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas ITom the Reservoir are plugged and abandoned." Forest plans to allocate WF #2 well production ITom the Reservoir as provided for in the CRA and CO 450B and distribute royalties due trom said Reservoir production to the mineral interest and ORRl owners pursuant to the terms of each lease. This means that production trom the WF #2 will be allocated 58% to the federal lease and 42% to the State of Alaska lease and royalties paid ITom WF #2 Subject Gas produced ITom the Reservoir as provided pursuant to the terms of each lease without the need to deposit said production into the escrow account which the AOGCC authorized Forest to terminate in CO 4508. If there is any production ITom any sands other than the Reservoir, Forest plans to place an arnount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to a CRA for said shallow sands, subject to approval of theAOGCc. Forest has established a dedicated email account for you to send any questions you may have regarding Forest's spacing exception application for the WF #2 in accordance with 20 AAC 25.055. That email address is wf2@forestoil.com. Forest will provide responses to any question submitted to that email address to all recipients of this personal notice who send their email address to the wf2@forestoil.com email address. Page 2 of2 .--"", .~ -. ~ Forest Oil Corporation 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258-8600 Fax: (907) 258-8601 DRAFT TO: Attached Distnbution List DATE: August 10, 2004 SUBJECT: Forest Oil Corporation spacing exception application in accordance with 20 AAC 25.055. West Foreland #2 Well; Allocation of Reserves & Production Federal Lease (A-035017); State of Alaska Lease (ADL-359 1 12) Forest Oil Corporation ("Forest") is providing you this letter as a personal notice pursuant to directions received by Forest ITom the Alaska Oil and Gas Conservation Commission ("AOGCC"). This personal notice is to inform you of your opportunity to be heard by the AOGCC at a public hearing tentatively scheduled for August 26, 2004, at 9:00 arn at the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. At this hearing the AOGCC will act upon the request submitted by Forest to approve an exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A- 035017 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet ITom, a well capable of producing ITom the same gas pool. The West Foreland #2 gas well ("WF #2") will be drilled as a deviated well bore with drilling planned to commence in approximately one month. Production ITom the WF #2 is contingent upon approval of a spacing exception issued by the AOGCC, otherwise production ITom the WF #2 well will not be allowed, nor any royalties paid, as it would violate the statewide spacing requirements stated in 20 AAC 25.055. The surface location of the well is 880 feet ITom the south line and 631 feet ITom the east line of Section 21, TO8N, RI4E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet ITom the north line and 1,105 feet ITom the east line of21, TO8N, RI4E, SM. The AOGCC tentatively scheduled the public hearing on this application for August 26, 2004 at 9:00 arn at the offices of the Alaska Oil and Gas Conservation Commission at 333 West -¡ili Avenue, Suite 100, Anchorage, Alaska 99501. The AOGCC public notice, published July 23, 2004, provided that a person may request that the tentatively scheduled hearing be held by filing a written request with the AOGCC no later than 4:30 pm on August 10, 2004. The public notice went on to say that if a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call (907) 793-1221 or check the Commission's hearing calendar at: httD:llwww. state. ak. us/l ocal/ akpagesl AD MINI ogc/hear /hear .htm However, even if a public hearing is not held, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 24,2004 except that if the AOGCC decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 26, 2004 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at (907) 793-1221 before August 13, 2004. As you may recall, you received a similar notice trom Forest last year regarding a hearing before the AOGCC regarding the West Foreland #1 gas well ("WF #1"). At that hearing the AOGCC granted Forest a permanent spacing exception for the WF #1 and authorized termination of the escrow account established by Forest into which all royalty proceeds ITom WF #1 production were deposited since the well began production in 2001. The WF #1 was shut-in until April 2001 when Forest, the Bureau of Land Management ("BLM") and the Alaska Department of Natural Resources ("DNR") executed a Compensato!)' Royalty Agreement ("CRA") to allocate production ITom the WF #1 between federal lease A-035017 and the State of Alaska lease ADL-359 1 12. The CRA was required by the AOGCC pursuant to Conservation Orders No. 450 and 450-A granting a permanent exception to the spacing requirements of20 AAC 25.055 to allow production of gas ITom the WF #1 ITom any interval not deeper than 9,527' MD. The terms of the CRA and Conservation Order No. 450B established an allocation of 58% to the federal lease and 42% to the State of Alaska lease for any gas production ITom any interval not deeper than 9,527' MD in the WF #1. Forest is currently awaiting approval ITom the BLM and DNR regarding the valuation of the gas produced so that the funds ITom the escrow account can be disbursed to all parties who have an interest in the gas produced ITom the WF #1. Page 1 of2 .~--- , --... '" DRAFT Forest's requested exception to the statewide spacing regulations for the WF #2 is necessary to optimize gas recovery trom the Tyonek formation in the West Foreland Field. The proposed bottomhole location for the WF #2 will be updip ITom the existing WF #1 and near the common lease line separating the State of Alaska and federal leases. The proposed bottomhole location of the WF #2 for projected productive intervals in the 9,200' sand and 9,400' sand will be in Section 21, TO8N, RI4W, Seward Meridian and east of the common lease boundary. Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand in the WF #2, since production ITom these sands has already been scrutinized during, and was the subject of, the AOGGCC spacing exception hearings regarding the WF #1 well. Further, these sands are part of the "Reservoir" already the subject of the CRA, entered into to address not only the allocation of production ITom the WF #1 arnong the two leases, but also the allocation of such production ITom other wells drilled into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temporary spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporal)' spacing exception granted for the WF # 1 well, i.e. place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production arnong the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCc. As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production ITom the WF #1 well already addresses additional wells to be drilled into the Reservoir to be penetrated by the WF #2 by providing the following: "Lessee intends to produce natural gas ITom WF # 1 and potentially ITom additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottomhole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." Forest plans to apply the provisions of the existing CRA to production ITom the Reservoir in the WF #2 as well. The relevant language ITom the CRA is excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas ITom the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas ITom the Reservoir are plugged and abandoned." Forest plans to allocate WF #2 well production ITom the Reservoir as provided for in the CRA and CO 450B and distribute royalties due ITom said Reservoir production to the mineral interest and ORRl owners pursuant to the terms of each lease. This means that production trom the WF #2 will be allocated 58% to the federal lease and 42% to the State of Alaska lease and royalties paid ITom WF #2 Subject Gas produced ITom the Reservoir as provided pursuant to the terms of each lease without the need to deposit said production into the escrow account which the AOGCC authorized Forest to terminate in CO 4508. If there is any production ITom any sands other than the Reservoir, Forest plans to place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to a CRA for said shallow sands, subject to approval of theAOGCc. Forest has established a dedicated ernail account for you to send any questions you may have regarding Forest's spacing exception application for the WF #2 in accordance with 20 AAC 25.055. That ernail address is wf2(á)Jorestoil.com. Forest will provide responses to any question submitted to that ernail address to all recipients of this personal notice who send their ernail address to the wf2@forestoiLcom ernail address. Page 2 of2 Re: FW: West Foreland 2 - Path Forward , ; ~-. ~ Subject: Re: FW: West Foreland 2 - Path Forward From: Stephen Davies <steve_davies@admin.state.ak.us> Date: Tue, 10 Aug 2004 13:54:35 -0800 To: Bradley Brice <BWBrice@forestoi1.com>, Daniel Seamount <dan_seamount@admin.state.ak.us> CC: Jim Arlington <JDArlington@forestoi1.com>, Leonard Gurule <LCGurule@forestoi1.com>, Ted Kramer <TEKramer@forestoi1.com>, Marc Simmonds <MSSimmonds@forestoi1.com>, Pat Prout <PLProut@forestoi1.com>, Art Saltmarsh <ACSaltmarsh@forestoi1.com>, Rob Mintz <Robert- Mintz@law.state.ak.us>, Chris Ruff <chris - ruff@dnr.state.ak.us> Bradley, To clarify a mistake I made while writing my last note to Jim Arlington: The Commission desires a TEMPORARY SPACING EXCEPTION ONLY for West Foreland #2 in the stratigraphic equivalent of the current gas reservoir discovered by West Foreland #1 (both the "9400-foot" sand and the "9200-foot" sand) and any shallower gas-bearing sand that may be discovered by West Foreland #2. The Commission does NOT propose a permanent spacing exception for ANY sand in West Foreland #2 at this point in time, My email to Jim should have said: "...a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9527' MD in West Foreland #1" (which is the base of the 9400-foot sand). I did NOT mean to say: "....stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1" (which is the base of the 9200-foot sand). My apologies for any confusion I have caused. Please call me if you have any additional questions. Steve Davies AOGCC Bradley Brice wrote: Dear Steve, Jim Arlington asked that I respond to you. West Foreland #1 perforations are: 9200' Current Producing Sand 9400' Tested & Not Produced Sand 9336-9352'MD (Current Production Perforations) 9502-9527'MD (Tested but not Produced) In order to exclude these two sands from the AOGCC temporary spacing exception, the temporary spacing exception should include all sands equivalent to, or shallower than 9336' MD in West foreland #1. This would permit using the existing spacing exception to produce the stratigraphically equivalent 9200' and 9400' sand in West Foreland #2. Bradley Brice, P.E. Reservoir Engineer Anchorage, AK 907-868-2136 bwbrice@}forestoil.com -----Original Message----- From: Jim Arlington Sent: Tuesday, August 10, 2004 12:19 PM lof7 8/1 0/2004 4:56 PM Re: FW: West Foreland 2 - Path Forward , . ~'--.. ~ To: Bradley Brice; Ted Kramer; Marc Simmonds; Roy Smith Cc: Leonard Gurule; Pat Prout; Art Saltmarsh Subject: FW: West Foreland 2 - Path Forward All, FYI. Please confirm that the depth the AOGCC (Steve Davies) proposes in their approach to grant a temporary spacin2 exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1 I consistent with our plan to produce from the 9,200' and 9,400' sands with a permanent spacing exception. Jim -----Original Message----- From: Stephen Davies [mailto:steve davies@admin.state.ak.us] Sent: Tuesday, August la, 2004 12:04 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz; Chris Ruff (car@dnr.state.ak.us); Steve Martinez (steve martinez@ak.blm.Qov) Subject: Re: West Foreland 2 - Path Forward Jim, Forest Is Not Being Singled Out or Treated Unfairly First of all, you are correct you when you say below" ...Forest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the last hour (planned spud date is now about 30 days away), the Commission has been willing to set aside projects from other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1) lie within a single drilling unit, 2) lie within 1,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each ofthese characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359112 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 31.05.050(b) provides that "the Commission may also give, or require the giving of, additional notice in a proceeding, or class of proceeding, which it considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I 2 of7 8/1 0/2004 4:56 PM ,Re: FW: West Foreland 2 - Path Forward ,,--.."'- ~. personally am aware of two Commission actions where a petitioning party was requested to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359112 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant in the CRA is interested in revisiting allocation between tracts. A public hearing at the end of the temporary spacing exception period will allow the Commission to review all data, review any re-determination of allocation, and act to ensure that the rights of all affected parties are protected. Existing CRA Is Still In Effect The text of the CRA is clear: it is still in effect, and will be for the foreseeable future. Mentioning this in the notice to all affected parties simply increases awareness. Allocating Production Any notice to affected parties must clearly explain Forest's mechanism for determining allocation of production between each lease. The existing CRA provided a means to establish allocation of production from the two known productive intervals ("reservoir") to each of the affected leases. All parties agreed to the current allocation of 58% to lease A-035017 and 42% to lease ADL-359112. You mentioned that, based on a new seismic interpretation, the perceived structure has changed and, accordingly, at least one party to the CRA is interested in revisiting the current allocation percentages. Production from any additional sand outside the known reservoir would fall outside of the CRA, requiring a separate CRA. Your notice must also address this issue. Escrow of Royalty Funds Because of the potential for re-visiting allocation determination and the potential for having West Foreland #2 tap reserves outside of the current reservoir, it seems best to separate the royalty funds from West Foreland #2 from those of West Foreland #1. This would provide a clearer accounting picture for all funding. I hope this is helpful. Please feel free to contact me if you have any further questions or comments. Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission Jim Arlington wrote: Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not 3 of? 8/10/20044:56 PM Re: FW: West Foreland 2 - Path Forward > , ~" --. ~ required by the AOGCC regarding the WF #1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds from the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest owners. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afforded the ORRIs. It appears to me that just the owners, as that term is defined in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an owner or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence of the ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding from our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; Forest is seeking a permanent spacing exception for the 9200" sand and the 9,400' sand, since these sands have already been scrutinized and were the subject of the AOGGCC hearing regarding the WF #1 well and are already the subject of a CRA by and between the mineral interest owners and the operator for allocation of production from other wells into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temporary spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF # 1 well, i.e. place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCC. 2. Forest's position is that the existing CRA is still in effect; As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production from the WF # 1 well does address additional wells to be 4 of? 8/10/20044:56 PM Re: FW: West Foreland 2 - Path Forward . . ~"' . --... ""' drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas from WF #1 and potentially from additional wells drilled into the Reservoir with a bottom hole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF # 1 and by any other well with a bottomholc location in the Reservoir and on the State Lease or the Federal Lease is refened to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had DNR at1ìrmatively state that this is their position as welL 1 believe it is very clear from the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language from the CRA excerpted below: "5. Tenn and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas from the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the tenns of this Agreement; (2) the Federal and the State Leases have tenninated; and (3) all wells producing Subject Gas from the Reservoir are plugged and abandoned." 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and As stated in my response to items # 1 and #2 above, Forest plans to allocate WF #2 well production from the Reservoir as provided for in the CRA and CO 450B and distribute royalties due from said Reservoir production to the mineral interest and ORRI owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to tenninate. The existing CRA was already subject to the scrutiny and review of the AOGCC and all parties with any potential conelative rights in the Reservoir when the AOGCC approved the permanent spacing exception for the WF # 1 well. 4. Royalty monies will be escrowed pending equitable determination. As stated in my response to item #3 above, the obligation for an escrow account established for the WF #1 well was tenninated by the AOGCC and Forest will plan to distribute royalties due from WF #2 Subject Gas produced from the Reservoir as provided pursuant to the tenns of each lease without placing said production into an escrow account. If there is any production from any sands other than the Reservoir, Forest will place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA for said shallow sands, subject to approval of the AOGCC. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRis. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant AG. can review that position and use the definition used by Williams and Meyers, to wit: "The landowner's share of production, free of expenses of production." (Emphasis added). Further, 5 of? 8/1 0/2004 4:56 PM ,Re: FW: ~est Foreland 2 - Path Forward ~-... ~ " in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty owner" refer to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to afford notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCC. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived from a property interest, not from a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. Jim -----Original Message----- From: Stephen Davies rmailto:steve davies@admin.state.ak.us] Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz Subject: West Foreland 2 - Path Forward Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26, 2004 to all royalty owners (including ORRIs) for both Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 7. Forest will allocate production from West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out of the office until after lunch on Monday. Sincerely, Steve Davies 6 of? 8/10/2004 4:56 PM ,Re: FW: West Foreland 2 - Path Forward ,~ ~ " Petroleum Geologist Alaska Oil and Gas Conservation Commission 7 of7 8/10/20044:56 PM FW: West Foreland 2 - Path Forward ", ~ ~ Subject: FW: West Foreland 2 - Path Forward From: Bradley Brice <BWBrice@forestoil.com> Date: Tue, 10 Aug 200415:21:50 -0600 To: "'steve - davies@admin.state.ak.us'" <steve - davies@admin.state.ak.us> CC: Jim Arlington <JDArlington@forestoil.com>, Leonard Gurule <LCGurule@forestoil.com>, Ted Kramer <TEKramer@forestoil.com>, Marc Simmonds <MSSimmonds@forestoil.com>, Pat Prout <PLProut@forestoil.com>, Art Saltmarsh <ACSaltmarsh@forestoil.com> Dear Steve, Jim Arlington asked that I respond to you. West Foreland #1 perforations are: 9200' Current Producing Sand 9400' Tested & Not Produced Sand 9336-9352'MD (Current Production Perforations) 9502-9527'MD (Tested but not Produced) In order to exclude these two sands from the AOGCC temporary spacing exception, the temporary spacing exception should include all sands equivalent to, or shallower than 9336' MD in West foreland #1. This would permit using the existing spacing exception to produce the stratigraphically equivalent 9200' and 9400' sand in West Foreland #2, Bradley Brice, P.E. Reservoir Engineer Anchorage, AK 907-868-2136 bwbrice@forestoil.com -----Original Message----- From: Jim Arlington Sent: Tuesday, August 10, 2004 12:19 PM To: Bradley Brice; Ted Kramer; Marc Simmonds; Roy Smith Cc: Leonard Gurule; Pat Prout; Art Saltmarsh Subject: FW: West Foreland 2 - Path Forward All, FYI. Please confirm that the depth the AOGCC (Steve Davies) proposes in their approach to grant a temporary spacin2 exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1 I consistent with our plan to produce from the 9,200' and 9,400' sands with a permanent spacing exception. Jim -----Original Message----- From: Stephen Davies [mailto:steve_davies@admin.state.ak.us] Sent: Tuesday, August 10, 2004 12:04 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz; Chris Ruff (car@dnr.state.ak.us); Steve Martinez (steve_martinez@ak. blm .gov) Subject: Re: West Foreland 2 - Path Forward Jim, 10f6 8/1 0/2004 4:49 PM FW: West Foreland 2 - Path Forward , , ~. ----- Forest Is Not Being Singled Out or Treated Unfairly First of all, you are correct you when you say below "...Forest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the last hour (planned spud date is now about 30 days away), the Commission has been willing to set aside projects from other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1) lie within a single drilling unit, 2) lie within 1,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each of these characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359112 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 31.05.050(b) provides that "the Commission may also give, or require the giving of, additional notice in a proceeding, or class of proceeding, which it considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I personally am aware of two Commission actions where a petitioning party was requested to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359112 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant in the CRA is interested in revisiting allocation between tracts. A public hearing at the end of the temporary spacing exception period will allow the Commission to review all data, review any re-determination of allocation, and act to ensure that the rights of all affected parties are protected. Existing CRA Is Still In Effect The text of the CRA is clear: it is still in effect, and will be for the foreseeable future. Mentioning this in the notice to all affected parties simply increases awareness. Allocating Production Any notice to affected parties must clearly explain Forest's mechanism for determining allocation of 2 of6 8/10/20044:49 PM ,FW: West ,Foreland 2 - Path Forward ~ ----- production between each lease. The existing CRA provided a means to establish allocation of production from the two known productive intervals ("reservoir") to each of the affected leases. All parties agreed to the current allocation of 58% to lease A-035017 and 42% to lease ADL-359112. You mentioned that, based on a new seismic interpretation, the perceived structure has changed and, accordingly, at least one party to the CRA is interested in revisiting the current allocation percentages. Production from any additional sand outside the known reservoir would fall outside of the CRA, requiring a separate CRA. Your notice must also address this issue. Escrow of Royalty Funds Because of the potential for re-visiting allocation determination and the potential for having West Foreland #2 tap reserves outside of the current reservoir, it seems best to separate the royalty funds from West Foreland #2 from those of West Foreland #1. This would provide a clearer accounting picture for all funding. I hope this is helpful. Please feel free to contact me if you have any further questions or comments. Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission Jim Arlington wrote: Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not required by the AOGCC regarding the WF #1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds from the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest owners. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afforded the ORRIs. It appears to me that just the owners, as that term is defined in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an owner or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence ofthe ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding from our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is 3 of6 8/1 0/2004 4:49 PM .FW: West foreland 2 - Path Forward ~ ,,~ required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; Forest is seeking a permanent spacing exception for the 9,200" sand and the 9.400' sand, since these sands have already been scrutinized and were the subject of the AOGGCC hearing regarding the WF # 1 well and are already the subject of a CRA by and bet\veen the mineral interest owners and the operator for allocation of production from other wells into these producing sands [he "Rcsen oil'" is defined in the CRA as the following: "The two gas-bearing zones as encountered in V"l: #1 at 9502'-9527' and 9~36'-93).? and all gas-bearing strata in communication therewith are Jointly referred to heremafter as "the Reservoir." Forest is seeking a temporary spacing exception for any produCIng sands encountered in the WF #2 well that are shallower than the top of the 9.200' sand. which Forest anticipates will be no shallower than -8.850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF #1 welL i.e. place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCC. 2. Forest's position is that the existing CRA is still in effect; As stated above. the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production from the WF # I well does address additional wells to be drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas from WF #1 and potentially from additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottom hole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had ONR affiID1atively state that this is their position as well, I believe it is very clear from the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language from the CRA excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management). the State of Alaska, and Lessee. and shall apply to all production of Subject Gas from the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas from the Reservoir are plugged and abandoned." 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and As stated in my response to items # I and #2 above, Forest plans to allocate WF #2 well production 4 of6 8/1 0/2004 4:49 PM ,FW: West .Foreland 2 - Path Forward ~ ,~ from the Reservoir as provided for in the CRA and CO 450B and distribute royalties due fì'om said Reservoir production to the mineral interest and ORRI owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to terminate. The existing CRA was already subject to the scrutiny and review of the AOGCC and all parties with any potential correlative rights in the Reservoir when the AOGCC approved the permanent spacing exception for the WF # 1 well. 4. Royalty monies will be escrowed pending equitable determination. As stated in my response to item #3 above, the obligation for an escro\v account established fè)r the WF #1 well was terminated by the AOGCC and Forest wíll plan to distribute royalties due from WF #2 Subject Gas produced from the Reservoir as provided pursuant to the terms of each lease wíthout placing said production ínto an escrow account If there is any production from any sands other than the Reservoir, Forest will place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocatíon of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA for said shallow sands, subject to approval of the AOGCC. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRIs. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant AG. can review that position and use the definition used by Williams and Meyers, to wit: "The landowner's share of production, free of expenses of production." (Emphasis added). Further, in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty owner" refer to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to afford notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCC. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived from a property interest, not from a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. Jim -----Original Message----- From: Stephen Davies rmailto:steve davies@admin.state.ak.us] Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz Subject: West Foreland 2 - Path Forward 5 of6 8/1 0/2004 4:49 PM .FW: West,Foreland 2 - Path Forward ,-.. ,,""", Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26,2004 to all royalty owners (including ORRIs) for both Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 7. Forest will allocate production from West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out of the office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission 6 of6 8/1 0/2004 4:49 PM Re: West Foreland 2 - Path Forward '. ~ ----- Subject: Re: West Foreland 2 - Path Forward From: Stephen Davies <stevc_davies@admin.state.ak.us> Date: Tue, 10 AlIg 2004 12:03:44 -0800 To:~jm'Arli~9n <JDArHf1$tOn@forestoi1.com> , ',' : ' ' , CC:::'¡Qbn Noîi#Ian <john - no~@admin~state.ak.us>.. Owel SeaìÙoui;it:~àn _ß~ount@adrriin,¡state.ak. uS>;" Rob rø:úiti <robeit.:.mintZ@law.statè.ak.us>. "Chris Ru{f(car@dJír:State.altÚ$)" <cl1ris:.:ruff@dnr.state;ttkiius>, ~'Steve ',':: ~artinez (steve_martinez@ak.bIm.gov)" <steve...:.martineZ@ak:blm.gov> '" :,,'.'" "', ':i':,\¡~:<'" , Jim, Forest Is Not Being Singled Out or Treated Unfairly First of all, you are correct you when you say below" ...Forest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the last hour (planned spud date is now about 30 days away), the Commission has been willing to set aside projects from other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1) lie within a single drilling unit, 2) lie within l,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each of these characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359l12 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 3l.05.050(b) provides that "the Commission may also give, or require the giving of, additional notice in a proceeding, or class of proceeding, which it considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I personally am aware of two Commission actions where a petitioning party was requested to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359 1 12 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant in the CRA is interested in revisiting allocation between tracts. A public hearing at the end of the temporary spacing exception period will allow the Commission to review all data, review any re-determination of allocation, and act to ensure that the rights of all affected parties are protected. Existing CRA Is Still In Effect The text of the CRA is clear: it is still in effect, and will be for the foreseeable future. Mentioning this in the notice to all affected parties simply increases awareness. Allocating Production Any notice to affected parties must clearly explain Forest's mechanism for determining allocation of production between each lease. The existing CRA provided a means to establish allocation of production from the two known 10f5 8/1 0/2004 4:48 PM Re: West Foreland 2 - Path Forward /'"""'. ~ productive intervals ("reservoir") to each of the affected leases. All parties agreed to the current allocation of 58% to lease A-O35017 and 42% to lease ADL-359112. You mentioned that, based on a new seismic interpretation, the perceived structure has changed and, accordingly, at least one party to the CRA is interested in revisiting the current allocation percentages. Production from any additional sand outside the known reservoir would fall outside of the CRA, requiring a separate CRA. Your notice must also address this issue. Escrow of Royalty Funds Because of the potential for re-visiting allocation determination and the potential for having West Foreland #2 tap reserves outside ofthe current reservoir, it seems best to separate the royalty funds from West Foreland #2 from those of West Foreland #1. This would provide a clearer accounting picture for all funding. I hope this is helpful. Please feel free to contact me if you have any further questions or comments. Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission Jim Arlington wrote: Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not required by the AOGCC regarding the WF #1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds from the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest 0\\'11ers. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afTorded the ORRIs. It appears to me that just the O\\TIers, as that term is defÌned in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an 0\\'11er or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence of the ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding from our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 2 of5 8/10/20044:48 PM Re: West Foreland 2 - Path Forward ~ ----- Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand, since these sands have already been scmtinized and were the subject of the AOGGCC hearing regarding the WF #1 well and are already the subject of a CRA by and between the mineral interest 0\V11ers and the operator for allocation of production from other wells into these producing sands. The "Reservoir" is defÌned in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temporary spacing exception lor any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF #1 welL i.e. place an amount equal to 17 lí2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production an10ng the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCC. 2. Forest's position is that the existing CRA is still in effect; As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production from the WF #1 well does address additional wells to be drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas from WF # I and potentially from additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottom hole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had DNR affilmatively state that this is their position as well, I believe it is very clear from the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language from the CRA excerpted below: ,,- ). Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas from the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and elIect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have telminated; and (3) all wells producing Subject Gas from the 3 of5 8/10/20044:48 PM Re: West Foreland 2 - Path Forward ~ ----- Reservoir are plugged <md ab,mdoned." 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and As stated in my response to items # 1 and #2 above, Forest plans to allocate WF #2 well production from the Reservoir as provided for in the CRA and CO 450B and distribute royalties due fÌ'om said Reservoir production to the mineral interest and ORRI owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to tenninate. The existing CRA was already subject to the scmtiny and review of the AOGCC and all parties \\lith any potential correlative rights in the Reservoir when the AOGCC approved the permanent spacing exception lor the WF #1 well. 4. Royalty monies will be escrowed pending equitable determination. As stated in my response to item #3 above, the obligation for an escrow account established for the WF #1 well was terminated by the AOGCC and Forest will plan to distribute royalties due from WF #2 Subject Gas produced from the Reservoir as provided pursuant to the terms of each lease without placing said production into an escrow account. If there is any production from any sands other than the Reservoir, Forest will place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA for said shallow sands, subject to approval of the AOGCC. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRIs. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant AG. can review that position and use the defÌnition used by Williams and Meyers, to wit: "The landowner's share of production, fÌ'ee of expenses of production." (Emphasis added). Further, in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty O\\lller" refèr to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to al1ord notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCC. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived fÌ'om a property interest, not fÌ'om a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. 4 of5 8/10/20044:48 PM Re: West Foreland 2 - Path Forward ~ ---- Jim -----Original Message----- From: Stephen Davies rmailto:steve davies@admin.state.ak.us] Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz Subject: West Foreland 2 - Path Forward Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26, 2004 to all royalty owners (including ORRIs) for both Federal lease A-035017 and State lease ADL-359 1 12. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 7. Forest will allocate production from West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out ofthe office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission 5 of5 8/10/20044:48 PM RE: West Foreland 2 - Path Forward ~ ~ Subject: RE: West Foreland 2 - Path Forward From: Jim Arlington <JDArlington@forestoil.com> Date: Mon, 09 Aug 2004 13 :40:05 -0600 To: 'Stephen Davies' <steve - davies@adrnin.state.ak.us> CC: John Norman <john_norman@admin.state.ak.us>, Daniel Seamount <dan_seamount@admin.state.ak.us>, Rob Mintz <robert_mintz@law.state.ak.us>, "Chris Ruff ( car@dnr.state.ak. us)" <chris - rufI@dnr.state.ak.us>, "Steve Martinez (steve _martineZ@ak.bIm.gov)" <steve - martinez@ak.bIm.gov> Steve, While I will get the letter out that you request in your email below, I am surprised that the AOGCC is requiring this type of notification at this time. As you recall, this type of notification was not required by the AOGCC regarding the WF # 1 well until the hearing to approve a final spacing exception and address the issues regarding the final allocation of production and distribution of funds from the escrow account. I thought the path where we were headed with the spacing exception for the WF #2 well was the same path as the one for the WF# 1 well, i.e. a temporary spacing exception, and funds to be deposited into an escrow account until we had sufficient data for the mineral interest owners (DNR & BLM) to determine the proper allocation of production for those sands where there is not a CRA already in place among the mineral interest owners. Does the AOGCC require this same procedure and notice for other applicants for spacing exceptions? I don't see anywhere in the AOGCC regulations, or the statutes, where notice or standing is afforded the ORRIs. It appears to me that just the owners, as that term is defined in AS 31.05.170, are required to be given notice of spacing exception requests or hearings. Since the ORRI is created as a contractual interest and not a mineral interest, it is appropriate that it is not defined as being an owner or a party of interest for spacing exceptions. In fact, had not Forest voluntarily disclosed the existence of the ORRIs during the procedures for the WF #1 spacing exception, I don't believe there would have been any reason for the AOGCC to have been advised of or considered their existence and notice would not have been an issue. Anyway, enough venting; however, I am concerned that Forest is being treated the same as other operators who apply for spacing exceptions. I do have a request for some clarification as to what you want stated in the notice you want me to send. I have stated my question/clarification request under each of your notice items based upon my understanding from our previous meetings and discussions. 1. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand, since these sands have already been scrutinized and were the subject of the AOGGCC hearing regarding the WF #1 well and are already the subject ofa CRA by and between the mineral interest owners and the operator for allocation of production from other wells into these producing sands. The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and lof4 8/9/2004 4:03 PM RE: West Foreland 2 - Path Forward ~ ~ 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temporary spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' TVDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF #1 well, i.e. place an amount equal to 17 1/2% of the total production of WF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA, subject to approval of the AOGCc. 2. Forest's position is that the existing CRA is still in effect; As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production ITom the WF # 1 well does address additional wells to be drilled into this Reservoir by providing the following: "Lessee intends to produce natural gas ITom WF #1 and potentially ITom additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF # 1 and by any other well with a bottom hole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas." (Emphasis added)." This "position" is also held by the BLM. And while I have not had DNR affirmatively state that this is their position as well, I believe it is very clear ITom the plain language of the CRA that the CRA does apply to the WF #2 well as well. Please see the language ITom the CRA excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas ITom the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the terms of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas ITom the Reservoir are plugged and abandoned." 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and As stated in my response to items # 1 and #2 above, Forest plans to allocate WF #2 well production ITom the Reservoir as provided for in the CRA and CO 450B and distribute royalties due ITom said Reservoir production to the mineral interest and ORRI 2 of4 8/9/2004 4:03 PM RE: West Foreland 2 - Path Forward ~ ~ owners as provided pursuant to the terms of each lease without placing said production into the escrow account which the AOGCC authorized Forest to terminate. The existing CRA was already subject to the scrutiny and review of the AOGCC and all parties with any potential correlative rights in the Reservoir when the AOGCC approved the permanent spacing exception for the WF #1 well. 4. Royalty monies will be escrowed pending equitable determination. As stated in my response to item #3 above, the obligation for an escrow account established for the WF #1 well was terminated by the AOGCC and Forest will plan to distribute royalties due from WF #2 Subject Gas produced from the Reservoir as provided pursuant to the terms of each lease without placing said production into an escrow account. Ifthere is any production £Tom any sands other than the Reservoir, Forest will place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the CRA for said shallow sands, subject to approval of the AOGCC. Steve, I know the AOGCC has recently taken the position that royalty owners include ORRIs. However, I believe this position is incorrect. I would hope that the AOGCC commissioners and the Assistant A. G. can review that position and use the definition used by Williams and Meyers, to wit: "The landowner's share of production, free of expenses of production." (Emphasis added). Further, in looking at the terms "overriding royalty", "royalty interest" and "royalty owner" is seems clear that "royalty", "royalty interest" and "royalty owner" refer to a property interest reserved to the lessor by an oil and gas lease. It seems equally clear that overriding royalty, as the term is used today, and the interest created under the leases involved in this spacing exception request, are interests in production carved out of the lessee's working interest, or a contractual right. This is a critical distinction because the only reason to afford notice and an opportunity to be heard to any royalty owner is assist the AOGCC in preventing waste, insuring a greater ultimate recovery of oil and gas, and protecting the correlative rights of persons owning an interest in the tracts of land affected, statutory mandates and obligation of the AOGCc. The AOGCC's obligation to protect correlative rights only extends, however, to the owner of the land. Hence, correlative rights are derived £Tom a property interest, not £Tom a contractual interest (which may, however, convey a right in property). I know you said in your voice message that you would not be available until after lunch today. Please let me know at your earliest convenience if you have concerns or objections as to what I plan to include in the notice the royalty owners indicated above. THANKS. Jim -----Original Message----- From: Stephen Davies [mailto:steve_davies@admin.state.ak.us] Sent: Friday, August 06, 2004 5:33 PM To: Jim Arlington Cc: John Norman; Daniel Seamount; Rob Mintz 3 of4 8/9/2004 4:03 PM RE: West Foreland 2 - Path Forward "...--'" /"""' Subject: West Foreland 2 - Path Forward Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26, 2004 to all royalty owners (Ù1Cluding ORRIs) for both Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment. The notice must clearly state that: 5. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 6. Forest's position is that the existing CRA is still in effect; 7. Forest will allocate production :trom West Foreland 2 based on the existing CRA; and 8. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out ofthe office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission 40f4 8/9/2004 4:03 PM West Foreland 2 - Path Forward ~ ~ Subject: West Foreland 2 - Path Forward From: Stephen Davies <steve_davies@adrnin.state.ak.us> Date: Fri, 06 Aug 2004 17:32:48 -0800 To: Jim Arlington <JDArlington@forestoi1.com> CC: John Norman <john_norman@admin.state.ak.us>, Daniel Seamount <dan_seamount@admin.state.ak.us>, Rob Mintz <Robert - Mintz@law.state.ak.us> Jim, I discussed West Foreland 2 issues with the Commissioners and the Assistant Attorney General this afternoon. The Commission decided that Forest must send a notice of the public hearing scheduled for 9AM on August 26, 2004 to all royalty owners (including ORRis) for both Federal lease A-035017 and State lease ADL-359112. This notice will give all royalty owners the right to participate and provide comment The notice must clearly state that: I. Forest plans to drill West Foreland 2 within the next few weeks, and that a spacing exception is required because the well will violate statewide spacing requirements stated in 20 AAC 25.055; 2. Forest's position is that the existing CRA is still in effect; 3. Forest will allocate production from West Foreland 2 based on the existing CRA; and 4. royalty monies will be escrowed pending equitable determination. A copy of this notice must be sent to each party via certified mail. The Commission requires a copy of the notice, the mailing date, a list of parties to which the notice has been sent, proof of mailing, and an affidavit certifying that all of these steps have been taken. If you have any questions, please call me at 793-1224. I will be out of the office until after lunch on Monday. Sincerely, Steve Davies Petroleum Geologist Alaska Oil and Gas Conservation Commission 1 of I 8/1 0/2004 4:52 PM Re: Application for well spacing exemption - WF #2 gas well ~ -,",-- Subject: Re: Application for well spacing exemption - WF #2 gas well From: Stephen Davies <steve_davies@admin.state.akus> Date: Thu, 08 Jul2004 15:52:46 -0800 To: Jim Arlington <JDArlington@forestoil.com> Jim, Thank you for the additional information. exception. I'll keep you informed as to progress on this Steve Davies AOGCC Jim Arlington wrote: Steve, This email is sent in response to your phone call this afternoon requesting confirmation of the notice I mailed to the landowners and owners of all properties within 3,000 feet of the referenced well, as listed in Exhibit "A" to the "Verification of Facts and Affidavit of Jim Arlington" attached to the referenced application for well spacing exemption dated July 2, 2004. I mailed a copy of the application by certified mail on July 2, 2004 to; (1) DNR, Division of Oil & Gas (2) U.S. Department of the Interior, Bureau of Land Management (3) Cook Inlet Region, Inc. To date I have received two green cards returned from the United States Postal Service indicating that delivery of the application was made to DNR, Division of Oil & Gas and to Cook Inlet Region, Inc., both on July 6, 2004. I have called and left messages with Greg Noble and Steve Martinez at the BLM asking them to confirm that the BLM received the application. I have not received a reply yet. I will fax you copies of the three certified mail receipts and the two green receipt cards I have received to 276-7542. If you need anything further, please let me know. Jim 1 of I 8/10/20044:52 PM Application for well spacing exemption - WF #2 gas well ,r-- /"'-- Subject: Application for well spacing exemption- WF #2 gas well From: Jim Arlington <JDArlington@forestoil.com> Date: Thu, 08 Jul2004 17:45:46 -0600 To: "'Steve - davies@ådMln:.statë.ak.us'" <steve ....:.davies@admin.state,~'US>. Steve, This email is sent in response to your phone call this afternoon requesting confirmation of the notice I mailed to the landowners and owners of all properties within 3,000 feet of the referenced well, as listed in Exhibit "A" to the "Verification of Facts and Affidavit of Jim Arlington" attached to the referenced application for well spacing exemption dated July 2, 2004. I mailed a copy of the application by certified mail on July 2, 2004 to; (1) DNR, Division of Oil & Gas (2) U.S. Department of the Interior, Bureau of Land Management (3) Cook Inlet Region, Inc. To date I have received two green cards returned from the United States Postal Service indicating that delivery of the application was made to DNR, Division of Oil & Gas and to Cook Inlet Region, Inc., both on July 6, 2004. I have called and left messages with Greg Noble and Steve Martinez at the BLM asking them to confirm that the BLM received the application. I have not received a reply yet. I will fax you copies of the three certified mail receipts and the two green receipt cards I have received to 276-7542. If you need anything further, please let me know. Jim 1 of 1 7/8/20043:51 PM #7 ~, ~ ~ Aa".~ #'.~;~~" '~" ::~~~-*;,. I ,:.'~%/::¡ "".,~,"," - " ~,',;;;",','r,\, 1'f7~ H eit "'~"",j. ~ " ",',i:.,'~.:I: ,W.~ :";<'1(,,' .,t:'p\'~ , ../'iÍ!,', -~y.' '..."¡;'" "..;.,R:; ""4'~"~\'!~"'" ...,1' ;,:~~$,,". Supplemental APD Information #2 West Forelands #2 Directional Surveys Forest Oil recently completed running a directional survey in the West Forelands #1 well and ran proximity calculations using it and the well path ofthe proposed West Forelands #2. The proximity calculations resulted in minor modifications to the proposed well path in order to maintain a sufficient separation between the two wells. Attached is the revised directional program for Vv"'F #2 and the calculated proximities between it and the WF #1 wellbore. These directional modifications have also resulted in a slightly different surface location for the well. Please note that the WF #2 will be drilled from surface coordinates of: Grid N: 2475582 Grid E: 190452 Zone: AK-4 886' FSL, 571' FEL, Sec. 21, T8N, R14W, SM BOP Equipment Forest Oil has decided to use a different drilling rig than earlier proposed. Kuukpik Drilling Rig #5 will now be used. Attached is a schematic of Kuukpik Rig #5's BOP equipment layout. RECE'VED AUG 1~ 2004 Alaska OJ, & Gas Cons. Commission Anchorage 8/18/2004 ( 0 p y ~ ~ Forest Oil Corp.,WF#2 West Forelands Pad #1, West Foreland,West Cook Inlet, Alaska PROPOSAL LISTING Page 1 Well bore: West Foreland#2 (8) Well path: WF #2 Verso #8 Date Printed: 17-Aug-2004 _.. BAKER HUGHES INTEQ Well bore Name I Created I Last Revised West Foreland#2 18) I 17-Aua-2004 I 17-Aua-2004 Well Name I Government ID I Last Revised West Foreland#2 I 130-ADr-2004 Slot Name I Grid Northina I Grid Eastinn I Latitude I Lonnitude I North lEast WF#2 12475581.6250 1190452.3700 I N60 45 53.5586 I W151 43 52.3930 I 886.32N 1571.37W Installation Name I Eastina I Northina I Coord System Name I North Alianment West Forelands pad #1 I 191000.2193 I 2474680.5740 I AK-4 on NORTH AMERICAN DATUM 1927 datu~ True Field Name 1 Eastina I Northina I Coord System Name I North Alianment West Foreland I 191000.2193 I 2474680.5740 I AK-4 on NORTH AMERICAN DATUM 1927 datu~ True Created By Comments All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Vertical Section is from O.OON O.OOE on azimuth 349.58 degrees Bottom hole distance is 3092.24 Feet on azimuth 349.42 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ~ ~ Forest Oil Corp., WF#2 'I West Forelands Pad #1, , West Foreland,West Cook Inlet, Alaska PROPOSAL LISTING Page 2 Well bore: West Foreland#2 (8) Wellpath: WF #2 Verso #8 Date Printed: 17-Aug-2004 r,.. BAKER HUGHES INTEQ Wellcath Recort MD[ft] Inc[deg] Azi[deg] TVD[ft] Vertical North[ft] East[ft] Station Station Dogleg Vertical Station Comment Depth SS Position(Grid Position(Grid [deg/10 Section[f North) East) Oftl tl 0.00 0.00 0,00 0,00 -90.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 Tie on 100.00 0.00 0.00 100.00 10.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 20.000in Casino 200.00 0.00 0.00 200.00 110.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 300.00 0.00 0.00 300.00 210,00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 400.00 0.00 0.00 400.00 310.00 O.OON O,OOE 2475581,63 190452.37 0.00 0.00 500.00 0.00 0.00 500.00 410.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 600.00 0.00 0.00 600.00 510.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 700.00 0.00 0.00 700.00 610.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 800.00 0.00 0.00 800.00 710.00 O.OON O,OOE 2475581,63 190452.37 0.00 0.00 900.00 0.00 0.00 900.00 810.00 o.OoN o.oOE 2475581.63 190452,37 0.00 0.00 1000.00 0.00 0.00 1000.00 910.00 O.oON O.OOE 2475581.63 190452,37 0,00 0.00 1100.00 0.00 0.00 1100.00 1010.00 O.OoN O.OOE 2475581.63 190452.37 0.00 0.00 1200.00 0.00 0,00 1200.00 1110.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 1300.00 0.00 0.00 1300.00 1210.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 1400.00 0.00 0.00 1400.00 1310.00 O.OON O,OOE 2475581.63 190452.37 0.00 0.00 1500.00 0.00 0.00 1500.00 1410.00 O.OON O.OOE 2475581,63 190452.37 0.00 0.00 1600.00 0.00 0.00 1600.00 1510.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 1700.00 0.00 0.00 1700.00 1610.00 O.OON O.OOE 2475581,63 190452.37 0.00 0.00 1800.00 0.00 0.00 1800,00 1710.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 1900.00 0.00 0.00 1900.00 1810.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 2000,00 0.00 0.00 2000.00 1910.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 2100.00 0.00 0.00 2100.00 2010.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 2200.00 0.00 0.00 2200.00 2110.00 O.OON O.OOE 2475581,63 190452.37 0.00 0,00 2300.00 0.00 0.00 2300.00 2210.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 2400.00 0.00 0,00 2400.00 2310.00 O.OON O,OOE 2475581.63 190452.37 0.00 0.00 2500.00 0,00 0.00 2500.00 2410.00 O,OON O.OOE 2475581.63 190452.37 0.00 0.00 2600.00 0.00 0.00 2600.00 2510.00 O.OON O.OOE 2475581.63 190452.37 0,00 0,00 2700.00 0.00 0.00 2700.00 2610.00 O.OON O.OOE 2475581.63 190452,37 0.00 0.00 2800.00 0.00 0.00 2800.00 2710,00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 2900.00 0.00 0.00 2900.00 2810.00 O.OON O.OOE 2475581.63 190452.37 0.00 0.00 3000.00 0.00 0.00 3000.00 2910.00 O.OON O.OOE 2475581,63 190452.37 0.00 0.00 Begin Nudge, 10 3/4in Casing. End of Hold 3100.00 2.00 45.00 3099.98 3009,98 1.23N 1,23E 2475582.83 190453.64 2.00 0.99 3200.00 4.00 45.00 3199.84 3109.84 4.93N 4.93E 2475586,43 190457.43 2.00 3.96 3250,00 5.00 45.00 3249.68 3159,68 7.71N 7,71E 2475!iR9.13 190460.28 2.00 6.19 End Nudae End of BuildfTurn 3300.00 5.00 45.00 3299.49 3209.49 10.79N 10.79E 2475592.13 190463.44 0.00 8,66 3350.00 5.00 45.00 3349.30 3259.30 13.87N 13.87E 2475595.13 190466.60 0.00 11.14 Benin DroD. End of Hold 3400.00 4.00 45.00 3399.15 3309.15 16.65N 16.65E 2475597.83 190469.45 2.00 13.36 3500.00 2.00 45.00 3499.01 3409.01 20.35N 20.35E 2475601.43 190473.25 2.00 16.33 3600.00 0.00 0.00 3598.99 3508.99 21.58N 21.58E 2475602.63 190474.51 2.00 17.32 End Dron End of DroDfTurn 3700.00 0.00 0.00 3698.99 3608.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 3800.00 0.00 0.00 3798.99 3708.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 3900.00 0.00 0.00 3898.99 3808.99 21.58N 21.58E 2475602.63 190474,51 0.00 17.32 4000.00 0.00 0.00 3998.99 3908,99 21.58N 21.58E 2475602.63 190474,51 0.00 17.32 4100.00 0.00 0.00 4098.98 4008.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 4200.00 0.00 0.00 4198.98 4108.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 4300.00 0.00 0.00 4298.98 4208.99 21.58N 21.58E 2475602.63 190474,51 0.00 17.32 4400.00 0,00 0.00 4398.98 4308.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 4500.00 0.00 0.00 4498.98 4408.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 4600.00 0.00 0.00 4598.98 4508.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) . Vertical Section is from O.OON O.OOE on azimuth 349.58 degrees Bottom hole distance is 3092.24 Feet on azimuth 349.42 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ~ ~ Forest Oil Corp.,WF#2 West Forelands Pad #1, West Foreland,West Cook Inlet, Alaska PROPOSAL LISTING Page 3 Well bore: West Foreland#2 (8) Well path: WF #2 Verso #8 Date Printed: 17-Aug-2004 r,.. BAKER HUGHES INTEQ WelhJath Report MD[ft] Inc[deg] Azi[deg] TVD[ft] Vertical North[ft] East[ft] Station Station Dogleg Vertical Station Comment Depth SS Position(Grid Position(Grid [deg/10 Section[f North) East) Oft] t1 4700.00 0.00 0.00 4698.98 4608.99 21.58N 21,58E 2475602.63 190474.51 0.00 17.32 4800.00 0.00 0.00 4798.98 4708.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 4900.00 0.00 0.00 4898.98 4808.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 5000.00 0.00 0.00 4998,98 4908.99 21.58N 21,58E 2475602,63 190474,51 0.00 17.32 5100.00 0.00 0.00 5098.98 5008.99 21.58N 21.58E 2475602.63 190474.51 0.00 17.32 5200.00 0.00 0.00 5198.98 5108.99 21.58N 21.58E 2475602.63 190474.51 0,00 17.32 5300.00 0.00 0,00 5298.98 5208,99 21.58N 21.58E 2475602.63 190474.51 n.oo 17.32 KOP 3DJ Kick off Point 5400.00 2.00 348,95 5398.97 5308.96 23,29N 21.25E 2475604.35 190474.22 2.00 19.07 5!100.00 4.00 348.95 5498.82 5408.82 28.43N 20.24E 2475609.51 190473.35 2.00 24.30 5600.00 6,00 348.95 5598.44 5508.44 36.98N 1R.57E 2475618.11 190471.91 2,00 33.02 5700.00 8.00 348.95 5697.69 5607.69 48.94N 16.24E 2475630.12 190469.89 2.00 45.20 5800.0n 10.00 348.95 5796.45 5706.45 64.30N 13,24E 2475645.55 190467.30 2.00 60.84 5900.00 12.00 348.95 5894.61 5804.61 83.02N 9.58E 2475664.37 190464.14 2.00 79.92 6000.00 14.00 348.95 5992.04 5902.04 105.10N 5.27E 2475686.55 190460.41 2,00 102.41 6100.00 16.00 348.95 6088,63 5998.63 130.50N 0.31E 2475712.07 190456.12 2.00 128.29 6200,00 18.00 348.95 6184.25 6094.25 159.19N 5.30W 2475740.90 190451.27 2.00 157.53 6300.00 20.00 348.95 6278.80 6188.80 191,14N 11.54W 2475773.01 190445.88 2.00 190,08 6400.00 22.00 348.95 6372.15 6282.15 226.32N 18.41W 2475808.35 190439.94 2.00 225,91 6500.00 24.00 348.95 6464.20 6374.20 264,66N 25.90W 2475846.88 190433.46 2.00 264.98 6600.00 26.00 348.95 6554.83 6464.83 306,14N 33.99W 2475888.55 190426.46 2.00 307.24 6700.00 28.00 348.95 6643.92 6553,92 350.69N 42.70W 2475933.32 190418.93 2.00 352.63 6800,00 30.00 348.95 6731.38 6641.38 ::!98.27N 51.99W 2475981.13 190410.90 2,00 401.11 6900.00 32.00 348.95 6817.09 6727.09 448.82N 61,86W 2476n31.92 190402.36 2.00 452.61 7000.00 34.00 348.95 6900,95 6810,95 502.27N 72,30W 2476085.63 190393.34 2.00 507.06 7100.00 36.00 348.95 6982.87 6892,87 558,56N 83.29W 2476142.19 190383.83 2.00 564.42 7200.00 38.00 348.95 7062.73 6972.73 617.62N 94.83W 2476201.54 190373.R6 2.00 624.59 7300.00 40.00 348.95 7140.44 7050.44 679.38N 106.89W 2476263.60 190363.43 2.0n 687.51 7400.00 42.00 348.95 7215,90 7125.90 743,77N 119.47W 2476328.29 190352.56 2.00 753.11 7500.00 44,00 348.95 7289.03 7199.03 810.70N 132.54W 2476395,55 190341.25 2.00 821.31 7600.00 46.00 348.95 7359.74 7269.74 880.10N 146.09W 2476465.28 190329.53 2.00 892.01 7627.04 46.54 348.95 7378.43 7288.43 899.28N 149.84W 2476484.55 190326.30 2.00 911.55 EOC End of BuildlTurn 7700.00 46.54 348.95 7428.62 7338.62 951.25N 159.99W 2476536,77 190317.52 0.00 964.50 7800.00 46.54 348.95 7497.40 7407.40 1022.49N 173.90W 2476608.36 190305.49 0,00 1037.08 7900.00 46.54 348.95 7566.19 7476.19 1093.73N 187.81W 2476679.94 190293.46 0,00 1109.67 7978.24 46.54 348.95 7620.00 7530.0n 1149.47N 198.7nw 2476735.94 190284.05 0.00 1166.45 Tat#1 WF#2 8000.00 46.54 348.95 7634.97 7544.97 1164.97N 201.73W 2476751.52 190281.43 0,00 1182.25 8100.00 46.54 348.95 7703,75 7613.75 1236.21N 215.64W 2476823.10 190269.40 0,00 1254.83 8200.00 46.54 348.95 7772.54 7682.54 1307.46N 22Q.55W 2476894.69 190257.37 0.00 1327.41 8300.00 46.54 348.95 7841.32 7751.32 1378.70N 243.47W 2476966.27 190245.34 0.00 1399.99 8400.00 46.54 348.95 7910.10 7820.10 1449,94N 257,38W 2477037.85 190233.31 0.00 1472.58 8500.00 46.54 348.95 7978,89 7888,89 1521.18N 271.29W 2477109.44 190221.28 0.00 1545.16 8600.00 46.54 348.95 8047.67 7957.67 1592.42N 285.21W 2477181.02 1 Q02n9.24 0.00 1617.74 8700.00 46.54 348.95 8116.46 8026.46 1663.66N 299.12W 2477252,60 190197.21 0.00 1690.32 8800.00 46.54 348.95 8185.24 8095.24 1734.90N 313.03W 2477324.19 190185.18 0.00 1762.90 8900.00 46.54 348.95 8254.02 8164.02 1806.14N 326.95W 2477395.77 190173.15 0.00 1835.49 9000.00 46.54 348.95 8322.81 8232.81 1877.38N 340.86W 2477467.35 190161.12 0.00 1908.07 9100.00 46.54 348.95 8391.59 8301.59 1948.62N 354.77W 2477538.94 190149.09 0.00 1980.65 9200.00 46.54 348.95 8460.38 8370.37 2019.86N 368.69W 2477610.52 190137.06 0.00 2053.23 9300.00 46.54 348.95 8529.16 8439.16 2091.10N 382.60W 2477682.10 190125.03 0.00 2125.81 9400.00 46.54 348.95 8597,94 8507.94 2162.34N 396,51W 2477753.68 190113.00 0.00 2198.40 All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Vertical Section is from O.OON O.OOE on azimuth 349.58 degrees Bottom hole distance is 3092.24 Feet on azimuth 349.42 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ~ '---". Forest Oil Corp.,WF#2 West Forelands Pad #1, West Foreland,West Cook Inlet, Alaska PROPOSAL LISTING Page 4 Wellbore: West Foreland#2 (8) Well path: WF #2 Verso #8 Date Printed: 17-Aug-2004 r,.. BAKER HUGHES INTEQ Wellpath Recort MD[ft] Inc[deg] Azi[deg] TVD[ft] Vertical North[ft] East[ft] Station Station Dogleg Vertical Station Comment Depth SS Position(Gríd Position(Grid [deg/10 Section[f North) East) Oft] tl 9500.00 46.54 348.95 8666.73 8576.73 2233.58N 410.43W 2477825.27 190100.97 0.00 2270.98 9516.39 46.54 348,95 8678.00 8588.00 2245.26N 412.71W 2477837.00 190099.00 0.00 2282.87 Anomaly A WF#2. Anomaly A WF#2 2-Jul-04 End of Hold 9600.00 46.54 348.95 8735.51 8645,51 2304.82N 424.34W 2477896.85 190088.94 0.00 2343.56 9700.00 46.54 348.95 8804,29 87142Q ?376.06N 438.26W 2477968.43 1QO076.Q1 0.00 2.41R.14 9800.00 46.54 348.95 8873.08 8783.08 2447.30N 452.17W 2478040.02 190064.88 0.00 248R,72 9900.00 46.54 348.95 8941.86 88!;1.86 2518.54N 466.08W 247R111.60 19005?R5 0.00 2561.31 10000.00 46.54 348,95 9010.65 8920,65 2589.78N 480.00W 247R183.18 190n40.82 n.oo 2633.89 10100,00 46.54 348.95 Q079.4~ 8989.43 2661,03N 49~.91W 2478254.77 19002R,79 0.00 ÚOR.47 10200.00 46,54 348.95 c:J148.21 9058.21 2732.?5N 507.82W 2478325.35 19001"'.76 0.00 2779.05 10300.00 46.54 348.95 9217.00 9127.00 2803.51N 521,74W 2478397.9~ 1QOO04.7~ 0.00 2851.63 10400.00 46.54 3489!> 9285.78 9195.78 2874.75N 53!;.65W 2478469.52 189992.70 0.00 ?9?4.22 10500.00 46.54 348.95 9354.56 9264.56 2945.99N 549,56W 2478541.10 189980.67 0.00 2996.80 10600.00 46.54 3.48.9!; 94'3.35 9333.35 3017.23N 563.48W 2478612.68 189968.64 000 ~069,3B 10631.48 46.54 348,95 9445.00 9355,00 3039.65N 567.86W 2478635.21 189964,85 0.00 3092.23 TD WF#2 7 5/8in Casino. End of Hold All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Vertical Section is from O.OON O.OOE on azimuth 349.58 degrees Bottom hole distance is 3092.24 Feet on azimuth 349.42 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated ....--.. /~ Forest Oil Corp.,WF#2 West Forelands Pad #1, West Foreland,West Cook Inlet, Alaska PROPOSAL LISTING Page 5 Wellbore: West Foreland#2 (8) Wellpath: WF #2 Verso #8 Date Printed: 17-Aug-2004 r,.. BAKER HUGHES INTEQ Comments MDlftl I TVDlftl Eastlftl Northlftl Comment 3000.00 I 3000.00 O,OOE O.OON Beain Nudae 3250.00 I 3249.68 7.71E 7.71N End Nudae 3350.00 I 3349.30 13.87E 13.87N Beain Droo 3600.00 I 3598.99 21.58E 21.58N End Droo 5300.00 I 5298.98 21.58E 21.58N KOP 7627.04 7378.43 149.84W 899.28N EOC 7978.24 7620.00 198.70W 1149.47N Tot#1 WF#2 9516,39 8678.00 412.71W 2245.26N Anomalv A WF#2 10631.48 9445.00 567.86W 3039.65N TO WF#2 I Hole Sections Diameter Start in MD ft 24.000 0.00 143/4 100.00 9 7/8 3000.00 End\nEast[ft] Well bore O.OOE O.OOE 570.60W Casin s Name 20.000in Casin 10 3/4in Casin 7 5/8in Casin Wellbore Taraets Name Northlftl Eastlftl TVDlftl Latitude Lonnitude Eastinn Northina Anomaly A WF#2 2245.26N 412.71W 8678.00 N60 46 15.6687 W151 44 0,7026 190099.00 2477837,00 2-Jul-04 Tgt#1 WF#2 - 1127.48N 238.18W 7620.00 N60 46 4.6614 W151 43 57.1881 190244.00 2476715.00 2-Jul-04 TgtTD WF#2 3056.20N 539.13W 9445.00 N60 46 23.6543 W151 44 3.2488 189994.00 2478651,00 2-Jul-04 All data is in Feet unless otherwise stated Coordinates are from Slot MD's are from Rig and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Vertical Section is from O.OON O.OOE on azimuth 349.58 degrees Bottom hole distance is 3092.24 Feet on azimuth 349.42 degrees from Wellhead Calculation method uses Minimum Curvature method Prepared by Baker Hughes Incorporated /"""'-. /"'"'0 _i. BAKER HUGHES INTEQ Scale 1 em = 10 ft -160 -140 -120 Forest Oil Corp. Location: West Cook Inlet, Alaska Field: West Foreland Installation: West Forelands Pad #1 Slot: WF#2 Well: West Foreland#2 Wellbore: West Foreland#2 (8) -100 -80 -60 East (feet) -> -40 -20 0 20 40 60 @ Created by: Planner Date plotted: 17-Aug-2004 Plot reference is West Foreland#2 (8). Ref well path is WF #2 Verso #8. Coordinates are in feet reference WF#2. True Vertical Depths are reference Rig Datum. Measured Depths are reference Rig Datum. Rig Datum: Datum #1 Rig Datum to Mean Sea Level: 90.00 ft. Plot North Is aligned to TRUE North. 80 100 120 140 ¡ 320 300 280 6500 6200 5900 9200 8300 7400 6800 6200 \ 5600 4700 5600 4100 / 3500 2900 2000 / 3200 ~. 500 ~ 500 260 240 220 200 180 160 !' z 0 140 ;¡ ::r - Cit 120 !. - 100 80 60 40 20 en 0 (') ~ CD (') -20 3 II -' 0 -40 :=> IIi. BAKlR HUGHES INTEQ Seale 1 em = 100 ft -1800 -1600 -1400 -1200 r--. /"'-. Forest Oil Corp. Lcx:ation: West Cook Inlet, Alaska Field: West Foreland Installation: West Forelands Pad #1 Slot: WF#2 Well: West Foreland#2 Wellbore: West Foreland#2 (8) -1000 -600 East (feet) -> -400 )200 0 400 200 -800 , , '~' West Foreland#2 . \ \ 9200 @ Created by : Planner Date plotted: 17-Aug-2004 Plot reference is West Foreland#2 (8). Refwellpath is WF#2 Verso #8. Coordinates are in feet reference WF#2. True Vertical Depths are reference Rig Datum. Measured Depths are reference Rig Datum. Rig Datum: Datum #1 Rig Datum to Mean Sea Level: 90.00 ft. Plot North is aligned to TRUE North. 600 800 1000 1200 1400 ~ 3400 3200 3000 2800 2600 2400 2200 2000 1800 f' z 0 1600 ;:¡. ::r - ø' 1400 ~ - 1200 1000 800 600 400 en C') 200 ~ 0 C') 3 II 8900 8600 8300 8000 7700 7100 6800 6500 ..... 0 0 -200 ;::þ /" ~ ;t:: ~ -500 C\I II E (,) a Q) ¡¡¡ (,) (/) 500 Z' 3500 Q) .e - J: 4000 - C. Q) C 4500 CO CJ 1:: 5000 Q) > Q) 5500 ~ ~ l- I V 6000 Hi. BAKER HUGHES INTEQ jt 20.000in Casing 1000 1500 2000 2500 3000 j l10 3/4in Casing Begin Nudge 4.00 End Nudge Begin Drop End Drop Forest Oil Corp. 1f'~'... ~ Location: West Cook Inlet, Alaska Field: West Foreland Installation: West Forelands Pad #1 Slot: WF#2 Well: West Foreland#2 Well bore: West Foreland#2 (8) Created by: Planner Date plotted: 17-Aug-2004 Plot reference is West Foreland#2 (8). Ref well path is WF #2 Verso #8. Coordinates are in feet reference WF#2. True Vertical Depths are reference Rig Datum. Measured Depths are reference Rig Datum. Rig Datum: Datum #1 Rig Datum to Mean Sea Level: 90.00 ft. Plot North Is aligned to TRUE North. -800 Seale 1 em = 100 ft 0 East (feet) -> -600 -400 -200 TD WF#2 \' Tgt TD WF#2 2-Jul-04 PLOT NORTH IS ALl GNED TO TRUE NORTH Anomaly A WF#2 Anomaly A WF#2 2-Jul-04 Tgt#1 WF#2 - 2-Jul-04 . End Drop Begin Drop End Nudge Begin Nucfge l 10 3/4in Casing 20,OOOin Casing KOP í 200 ~ 3200 3000 2800 2600 2400 2200 2000 1800 ^ I 1600 ä= ::¡. ::r - 1400 cr CD - - 1200 1000 800 600 400 200 en 0 Q ëD 0 0 3 II -200 c:; 0 ~ KOP 4.00 8.00 DLS: 2,00 deg/1 OOft 16.00 20.00 24.00 28.00 32,00 38.00 42.00 46,00 EOC Tgt#1 WF#2 6500 7000 7500 8000 8500 Anomaly A WF#2 2-Jul-04 9000 9500 10000 Anomaly A WF#2 .500 -0 500 1000 1500 2000 2500 3000 3500 Scale 1 em; 250ft Vertical Section (feet) -> Azimuth 349.58 with reference 0.00 N, 0.00 E from WF#2 ~ /"""'-.. Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 1 Date Printed: 17 -Aug-2004 West Foreland, West Cook Inlet, Alaska ,&¡. BAKER HUGHIS INTEQ Ellipse separations are reported ONLY if BOTH wells have uncertainty data Ellipse error terms are CORRELATED across ties between tools of the SAME CLASS Cutoff is calculated on CENTRE to CENTRE distance Summary data uses Closest Approach clearance calculation for all minima Hole size/CasinQs are NOT included Hole size/CasinQs are NOT subtracted from Centre-Centre distance Ellipses scaled to 2.00standard deviations. ClosinQ Factor Confidence limit of 99.80% Errors on Ref start at Slot Permanent Datum (0.00) Report uses Revised: (D-C)/E Factor Calculation Wellbore Name I Created i 17-Aua-2004 I Last Revised ! 17-Aua-2004 I West Foreiand#2 (8\ Well Name I Government ID I Last Revised West Foreland#2 I 130-Aor-2004 510t Name WF#2 Latitude N60 45 53.5586 Lon ¡tude W151 43 52.3930 North 886.32N East 571.37W Installation Name West Forelands Pad #1 Eastin Coord stem Name 2474680.574 AK-4 on NORTH AMERICAN DATUM 1927 datu Field Name I Eastina I Northina I Coord Svstem Name I North Alionment West Foreland I 191000.219J 2474680.574~ AK-4 on NORTH AMERICAN DATUM 1927 daturJ True Clearance Summarv Offset Offset Offset Offset Minimum MD[ft) Diverging Ellipse Ellipse Clearance Clearance WeliName Wellbore Slot Structure Distance From[ft) Separation MD[ft) Factor MD[ft) ftl ftl West West WF#1 West 31.8C 1649.9€ 5700.0C Foreland #1 Foreland #1 Forelands Pad #1 All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (1 D) Casings Included Prepared by Baker Hughes Incorporated ~ ~ Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 2 Date Printed: 17-Aug-2004 West Foreland, West Cook Inlet, Alaska ,&¡. BAKER HUGHIS INTEQ Clearance Data Reference Reference Reference Reference Offset Well Offset Offset Offset Offset Angle Closest Ellipse MD[ft) TVD[ft) North[ft) East[ft) MD[ft) TVD[ft) North[ft) East[ft) From Approach Separation Highside Distance [ft) deal ftl 0.00 0.00 O.OON O.OOE West Foreland 0.09 0.09 1.05S 39.99111 -91.5 38.1 f #1 100.0C 100.0C O.OON O.OOE West Foreland 100.51 100.51 0.59S 39.31111 -90.9 37.48 #1 200.0C 200.0C O.OON O.OOE West Foreland 200.4C 200.3E 0.06N 38.08111 -89.9 37.02 #1 300.0C 300.0C O.OON O.OOE West Foreland 300.2 300.2~ 0.31N 37.16111 -89.5 36.10 #1 400.0C 400.0C O.OON O.OOE West Foreland 400.2~ 400.21 0.43N 36.49111 -89.3 35.43 #1 500.0C 500.0C O.OON O.OOE West Foreland 500.H 500.1 f O.48N 35.92\1'. -89.2 34.88 #1 600.0C 600.0C O.OON O.OOE West Foreland 600.1 ~ 600.1~ 0.46N 35.45\1\ -89.3 34.39 #1 700.0C 700.0C O.OON O.OOE West Foreland 700.1C 700.08 0.41N 35.17\1\ -89.3 34.11 #1 800.0C 800.0C O.OON O.OOE West Foreland 800.1 800.11 0.38N 34.95\1\ -89.4 33.89 #1 900.0C 900.0C O.OON O.OOE West Foreland 900.H 900.1:< 0.63N 34.61\1\ -89.0 33.56 #1 1 OOO.OC 1000.0C O.OON O.OOE West Foreland 1000.1 1000.0E 0.94N 34.26\1\ -88.4 33.21 #1 1100.0C 1100.0C O.OON O.OOE West Foreland 1100.0e 11 OO.O~ 1.19N 34.03\1\i -88.0 32.9E #1 1200.0C 1200.0C O.OON O.OOE West Foreland 1200.1~ 1200.11 1.66N 33.83\1\i -87.2 32.81 #1 1300.0( 1300.0C O.OON O.OOE West Foreland 1300.1E 1300.1€ 2.24N 33.39\1\i -86.2 32.4C #1 1400.0C 1400.0( O.OON O.OOE West Foreland 1400.0 1400.0~ 2.90N 33.01\1\i -85.0 32.0f #1 1500.OC 1500.0( O.OON O.OOE West Foreland 1500.0E 1500.0~ 3.69N 32.81\1\i -83.6 31.95 #1 1600.0C 1600.0C O.OON O.OOE West Foreland 1600.0~ 1600.01 4.53N 32.57\1\i -82.1 31.8:< #1 1649.9€ 1649.9€ O.OON O.OOE West Foreland 1650.0C 1649.9€ 4.96N 32.49\1\i -81.3 31.80 #1 1700.0C 1700.0C O.OON O.OOE West Foreland 1700.0C 1699.9€ 5.43N 32.46111 -80.5 31.85 #1 1800.0C 1800.0C O.OON O.OOE West Foreland 1800.0~ 1799.9~ 6.14N 32.45111 -79.3 31.96 #1 1900.0C 1900.0C O.OON O.OOE West Foreland 1900.0~ 1899.9~ 6.95N 32.31111 -77.9 31.99 #1 2000.0C 2000.0C O.OON O.OOE West Foreland 2000.0 1999.9! 8.15N 32.10111 -75.8 32.05 #1 2100.0C 2100.0C O.OON G.OOE West Foreland 2100.0C 2099.9 9.32N 31.95111 -73.7 32.21 #1 2200.0C 2200.0C O.OON G.OOE West Foreland 2199.9~ 2199.8€ 10.33N 32.00111 -72.1 32.56 #1 2300.0C 2300.0C G.OON G.OOE West Foreland 2299.9C 2299.8 11.54N 32.12111 -7G.2 33.07 #1 2400.0C 2400.0C G.OON G.OOE West Foreland 2400.01 2399.9 12.65N 32.05111 -68.5 33.40 #1 All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (10) Casings Included Prepared by Baker Hughes Incorporated ,r----. ~ ql} ,~J.O~: Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 3 Date Printed: 17-Aug-2004 West Foreland, West Cook Inlet, Alaska ,&¡. BAKER HUGHIS INTEQ Clearance Data Reference Reference Reference Reference Offset Well Offset Offset Offset Offset Angle Closest Ellipse MD[ft) TVD[ft) North[ft) East[ft) MD[ft) TVD[ft) North[ft) East[ft) From Approach Separation Highside Distance [ft) rdeal rftl 2500.0C 2500.0C O.OON O.OOE West Foreland 2499.9 2499.8 13.39N 32.13\1\ -67.4 33.74 #1 2600.0C 2600.0C O.OON O.OOE West Foreland 2600.0 2599.9~ 14.14N 32.17\1\ -66.3 34.08 #1 2700.0C 2700.0C O.OON O.OOE West Foreland 2699.9 2699.8e 14.69N 32.20\1\ -65.5 34.33 #1 2800.0C 2800.0C O.OON O.OOE West Foreland 2800.11 2800.01 15.20N 32.18\1\ -64.7 34.52 #1 2900.0C 2900.0C O.OON O.OOE West Foreland 2900.1! 2900.0! 15.76N 31.87\1\ -63.7 34.49 #1 3000.0C 3000.0C O.OON O.OOE West Foreland 3000.21 3000.11 16.34N 31.30111i -62.4 34.24 #1 31 OO.OC 3099.ge 1.23N 1.23E West Foreland 3100.1 3100.0C 17.07N 30.71111i -108.6 34.93 #1 3200.0C 3199.8~ 4.93N 4.93E West Foreland 3200.11 3200.0C 17.83N 30.14111i -114.8 36.64 #1 3250.0C 3249.68 7.71N 7.71E West Foreland 3249.99 3249.88 18.23N 29.76111i -119.2 38.19 #1 3300.0C 3299.49 10.79N 10.79E West Foreland 3299.79 3299.6 18.69N 29.45W -123.8 40.28 #1 3350.0C 3349.3 13.87N 13.87E West Foreland 3349.59 3349.48 19.13N 29.19111 -128.0 42.6€ #1 3400.0C 3399.1 16.65N 16.65E West Foreland 3399.4~ 3399.3 19.48N 28.98111 -131.4 44.98 #1 3500.0C 3499.01 20.35N 20.35E West Foreland 3499.4~ 3499.3. 20.07N 28.42111 -135.3 48.04 #1 3600.0C 3598.9 21.58N 21.58E West Foreland 3599.39 3599.2€ 20.86N 27.82111 -90.8 48.68 #1 3700.0C 3698.9~ 21.58N 21.58E West Foreland 3699.28 3699.1~ 21.70N 27.44111 -89.9 48.29 #1 3800.0C 3798.9~ 21.58N 21.58E West Foreland 3799.2 3799.01 22.59N 27.21111 -88.8 48.0f #1 3900.0C 3898.9f 21.58N 21.58E West Foreland 3899.09 3898.95 23.53N 27.18111 -87.7 48.0f #1 4000.0C 3998.9f 21.58N 21.58E West Foreland 3999.0 3998.8€ 24.52N 27.34111 -86.6 48.28 #1 4100.0C 4098.9f 21.58N 21.58E West Foreland 4099.0 4098.8 25.54N 27.51111 -85.4 48.52 #1 4200.0C 4198.9f 21.58N 21.58E West Foreland 4199.1 4198.ge 26.36N 27.51111 -84.4 48.59 #1 4300.0C 4298.9~ 21.58N 21.58E West Foreland 4299.04 4298.88 27.48N 27.51111 -83.1 48.71 #1 4400.0C 4398.9~ 21.58N 21.58E West Foreland 4398.99 4398.8~ 28.75N 27.66111 -81.7 49.03 #1 4500.0C 4498.9~ 21.58N 21.58E West Foreland 4499.0€ 4498.8 30.04N 27.71111 -80.3 49.28 #1 4600.0C 4598.9~ 21.58N 21.58E West Foreland 4599.0f 4598.8 31.62N 27.60\1\ -78.5 49.46 #1 4700.0C 4698.9~ 21.58N 21.58E West Foreland 4698.94 4698.74 33.25N 27.64111 -76.7 49.85 #1 4800.0C 4798.9~ 21.58N 21.58E West Foreland 4799.04 4798.8~ 34.71N 27.68111 -75.1 50.25 #1 All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (1 D) Casings Included Prepared by Baker Hughes Incorporated ,r----. ,'-"". Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 4 Date Printed: 17-Aug-2004 West Foreland, West Cook Inlet, Alaska ,&¡. BAKER HUGHIS INTEQ Clearance Data Reference Reference Reference Reference Offset Well Offset Offset Offset Offset Angle Closest Ellipse MD[ft] TVD[ft] North[ft] East[ft] MD[ft] TVD[ft] North[ft] East[ft] From Approach Separation Highside Distance [ft] rdeal [ftl 4900.0( 4898.9~ 21.58N 21.58E West Foreland 4898.9" 4898.7 36.31 N 27.65111 -73.3 50.66 #1 5000.0C 4998.9~ 21.58N 21.58E West Foreland 4998.7 4998.5 37.82N 27.98111 -71.9 51.43 #1 5100.0C 5098.9f 21.58N 21.58E West Foreland 5098.9 5098.7. 38.65N 28.39\1\ -71.1 52.08 #1 5200.0C 5198.9f 21.58N 21.58E West Foreland 5198.91 5198.6f 39.27N 28.72\1\ -70.6 52.59 #1 5300.0C 5298.9f 21.58N 21.58E West Foreland 5299.01 5298.7E 40.02N 29.01\1\ -70.0 53.11 #1 5400.0C 5398.98 23.29N 21.25E West Foreland 5399.0! 5398.8. 40.88N 29.011,' -59.7 52.52 #1 5500.0C 5498.8. 28.43N 20.24E West Foreland 5498.7. 5498.4f 41.82N 29.29\1\ -63.9 50.58 #1 5600.0C 5598.4~ 36.98N 18.57E West Foreland 5598.3 5598.0~ 42.39N 30.02111i -72.6 48.17 #1 5700.0C 5697.69 48.94N 16.24E West Foreland 5697.3 5697.1C 42.76N 31.12111i -86.3 47.03 #1 5800.0C 5796.4< 64.30N 13.24E West Foreland 5796.3 5796.0~ 43.11 N 32.29111i -103.6 49.49 #1 5900.0C 5894.61 83.02N 9.58E West Foreland 5894.6.: 5894.~ 43.63N 33.37W -120.9 57.5E #1 6000.0( 5992.04 105.10N 5.27E West Foreland 5992.5~ 5992.2~ 44.48N 34.44111 -134.9 71.7 #1 61 OO.O( 6088.6 130.50N 0.31E West Foreland 6089.6E 6089.3E 45.51N 35.08111 -145.4 91.~ #1 6200.0C 6184.2 159.19N 5.30W West Foreland 6186.0E 6185.n 46.73N 35.45111 -152.9 115.71 #1 6300.0C 6278.8C 191.141\ 11.54111 West Foreland 6281.01 6280.7~ 48.08N 35.53111 -158.3 144.3~ #1 6400.0C 6372.1 226.321\ 18.41111 West Foreland 6373.8 6373.5~ 49.15N 35.72111 -162.2 177.29 #1 6500.0C 6464.2C 264.661\ 25.90111 West Foreland 6467.2 6466.9 50.09N 36.74111 -164.9 214.1~ #1 6600.0C 6554.8 306.141\ 33.99111 West Foreland 6559.5~ 6559.19 51.48N 37.63111 -166.9 253.99 #1 6700.0C 6643.9 350.691\ 42.70111 West Foreland 6650.2E 6649.89 53.11 N 38.07111 -168.7 296.9~ #1 6800.0C 6731.31 398.271\ 51.99111 West Foreland 6738.6E 6738.2f 54.88N 38.22111 -170.0 343.01 #1 6900.0C 6817.Of 448.821\ 61.86111 West Foreland 6823.64 6823.2~ 56.42N 38.08111 -171.2 392.4~ #1 7000.0C 6900.9! 502.271\ 72.30111 West Foreland 6905.8 6905.4~ 57.46N 37.86111 -172.1 445.4~ #1 71 OO.OC 6982.8 558.561\ 83.29111 West Foreland 6989.5e 6989.H 58.38N 38.05111 -172.8 501.5 #1 7200.0C 7062.7 617.621\ 94.83111 West Foreland 7065.61 7065. H 59.08N 38.45111 -173.3 560.6E #1 7300.0C 7140.4 679.38N 106.89111 West Foreland 7147.4 7147.0 59.51N 38.66111 -173.8 622.9.: #1 7400.0C 7215.9C 743.771\ 119.47111 West Foreland 7230.0 7229.5t 60.86N 38.82111 -174.3 687.0f #1 All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (1 D) Casings Included Prepared by Baker Hughes Incorporated ,r----. '----"'" Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 5 Date Printed: 17-Aug-2004 West Foreland, West Cook Inlet, Alaska mi. BAKER HUGHES INTEQ Clearance Data Reference Reference Reference Reference Offset Well Offset Offset Offset Offset Angle Closest Ellipse MD[ft] TVD[ft] North[ft] East[ft] MD[ft] TVD[ft] North[ft] East[ft] From Approach Separation Highside Distance [ft] I Ideal I Iftl 7500.0( 7289.0 810.70N 132.54111 West Foreland 7302.6f 7302.2! 62.29N 38.96\1\ -174.6 753.6 #1 7600.0C 7359.7~ 880.10N 146.09111 West Foreland 7370.7 7370.2~ 63.39N 38.94\1\ -174.9 823.04 #1 7627.0~ 7378.4. 899.28N 149.84111 West Foreland 7389.6! 7389.19 63.64N 38.90\1\ -175.0 842.3C #1 7700.0C 7428.6. 951.25N 159.99111 West Foreland 7438.5C 7438.0~ 64.20N 38.76\1\ -175.3 894.61 #1 7800.0C 7497.4C 1022.491\ 173.90111 West Foreland 7508.4f 7507.99 54.98N 38.54\1\ -175.7 966.36 #1 7900.0C 7566.1 E 1093.73N 187.81111 West Foreland 7578.6! 7578.18 55.79N 38.45\1\i -176.0 1038.0e #1 8000.0C 7634.91 1164.97N 201.73\1\ West Foreland 7648.4 7647.~ 66.60N 38.52\1\ -176.3 1109.78 #1 8100.0C 7703.n 1236.21N 215.64\1\ West Foreland 7716.18 7715.7C 67.35N 38.67\1\i -176.5 1181.5~ #1 8200.0C 7772.54 1307.46N 229.55\1\ West Foreland 7782.1 7781.68 67.86N 39.15\1\i -176.7 1253.4 #1 8300.0C 7841.3~ 1378.70tl 243.47\1\ West Foreland 7849.11 7848.6. 68.14N 39.95\1\i -176.8 1325.5! #1 8400.0C 7910.1 C 1449.94t1 257.38\1\ West Foreland 7911.8~ 7911.34 68.28N 40.68\1\i -176.9 1397.8 #1 8500.0C 7978.8 1521.18t1 271.29\1\ West Foreland 7970.5 7970.01 68.08N 41.38\1\i -177.0 1470.4 #1 8600.0C 8047.6 1592.42t1 285.211/\ West Foreland 8038.5~ 8038.0 67.52N 42.28111 -177.1 1543.4. #1 8700.0C 8116.4E 1663.66t1 299.121/\ West Foreland 8127.6 8127.11 67.44N . 43.47111 -177.2 1615.8f #1 8800.0C 8185.2 1734.90tl 313.031/\ West Foreland 8210.4C 8209.8 68.23N 44.61111 -177.3 1687.6C #1 8900.0C 8254.0 1806.14t1 326.951/\ West Foreland 8273.9~ 8273.41 68.95N 45.40111 -177.3 1759.2 #1 9000.0( 8322.81 1877.38t1 340.861/\ West Foreland 8335.1 8334.6 69.37N 46.06111 -177.4 1831.2C #1 9100.0( 8391.5~ 1948.62t1 354.771/\ West Foreland 8393.8~ 8393.2f 69.39N 46.73111 -177.5 1903.5! #1 9200.0( 8460.3 2019.86t1 368.691/\ West Foreland 8483.3C 8482.7! 69.61 N 47.97111 -177.5 1975.8 #1 9300.0( 8529. H 2091.10tl 382.601/\ West Foreland 8556.69 8556.1 70.44N 48.88111 -177.6 2047.4! #1 9400.0( 8597.9 2162.34t1 396.511/\ West Foreland 8623.0~ 8622.4E 71.25N 49.10111 -177.7 2119.1 #1 9500.0C 8666.7 2233.58t1 410.431/\ West Foreland 8686.8 8686.2 71.91 N 49.05111 -177.8 2191.0< #1 9516.3~ 8678.0C 2245.26t1 412.711/\ West Foreland 8698.2 8697.6 72.01 N 49.04111 -177.8 2202.8. #1 9600.OC 8735.51 2304.82t1 424.341/\ West Foreland 8750.0C 8749.4 72.40N 48.93111 -177.8 2263.OE #1 9700.OC 8804.2~ 2376.06t1 438.261/\ West Foreland 8818.n 8818.1 72.80N 48.90111 -177.9 2335.2! #1 9800.0C 8873.OE 2447.30tl 452.171/\ West Foreland 8892.n 8892.ÎE 73.31 N 49.05111 -178.0 2407.3. #1 All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (1 D) Casings Included Prepared by Baker Hughes Incorporated ,r----. ,""'" Forest Oil Corp. WF #2 Verso #8, West Foreland#2 (8) WF#2, West Forelands Pad #1 CLEARANCE LISTING Page 6 Date Printed: 17-Aug-2004 West Foreland, West Cook Inlet, Alaska ,&¡. BAKER HUGHIS INTEQ Clearance Data Reference Reference Reference Reference Offset Well Offset Offset Offset Offset Angle Closest Ellipse MD[ft] TVD[ft] North[ft] East[ft] . MD[ft] TVD[ft] North[ft] East[ft] From Approach Separation Highside Distance [ft] Ideal Iftl 9900.0C 8941.8E 2518.541\ 466.08\1\ West Foreland 8955.51 8954.98 73.74N 49.33111 -178.0 2479.31 #1 1 OOOO.OC 9010.6" 2589.781\ 480.001/\ West Foreland 9027.7 9027.2C 74.08N 49.77111 -178.1 2551.5! #1 10100.0C 9079.4 2661.031\ 493.911/\ West Foreland 9116.91 9116.36 74.93N 50.44111 -178.1 2623.3 #1 1 0200.OC 9148.2 2732.261\ 507.821/\ West Foreland 9188.71 9188.1 75.87N 51.13111 -178.2 2694.9 #1 1 0300.0C 9217.0C 2803.511\ 521.741/\ West Foreland 9245.71 9245.11 76.51 N 51.78111 -178.2 2766.61 #1 10400.0 9285.71 2874.75t\ 535.65\1\ West Foreland 9266.0( 9265.3f 76.67N 52.03\1\ -178.2 2838.9C #1 10500.0 9354.5E 2945.991\ 549.561/\ West Foreland 9266.OC 9265.3~ 76.67N 52.03111 -178.2 2912.7f #1 10600.0 9423.3! 3017.231\ 563.481/\ West Foreland 9266.OC 9265.3~ 76.67N 52.03111 -178.2 2988.1~ #1 10631.4 9445.0C 3039.651\ 567.861/\ West Foreland 9266.0C 9265.3f 76.67N 52.03111 -178.2 3012.1 #1 Offset Wellbore Surve Well Wellbore West Foreland #1 West Foreland #1 Error Model Standard All data is in Feet unless otherwise stated Coordinates are from Slot and TVD's are from Rig ( Datum #1 90.0ft above Mean Sea Level) Reference MD's are from Rig, Offset MD's are from Rig Calculation method uses Minimum Curvature method Confidence Limit of 95.45 (1 D) Casings Included Prepared by Baker Hughes Incorporated --... ~ I E. ~ ---.. 13 5/8" Annular ~ 13 5/8" Double Gate , 13 5'8" Mud Cross ~ 13 5/8" Single Gate Kuukpik Drillin.Q Rig 5 13 5/8" 5,000 PSI BOP Stack Drawn By: L Ross Date: 8/13/04 /"'. ~ Choke And Kill Lines and Valve on Kuukpik Rig 5 3" Mud Line from Mud Pumps to Rig Floor I U £2 - 2" 5,000 psi threaded valve C ;:r - 2" 5,000 psi flanged hose KiiI Line Side Choke Line ,Side ~~ 91 = 0 co=r 52 - 31/18" 5,000 psi Manual Valve. co=r ~ 2 1/16" 5,000 psi rated manual valve 2 1/16" 5,000 psi rated manual valve Drilling Spool - 31/18" 5,000 psi Hydraulic Operated Valve 3" Flanged Choke Hose c ::r To Choke Manifold inlet Kuukpik Drilling Rig 5 Choke and Kill Line Layout July, 2003 Drawn By L Ross ".-.. /---.., 2 " 3" To Shaker 3" Panic To Gasbuster 0 3 1/8,,0 0 2 1~" CB --"'(f) CÐ 2 7/16" 8 <r ~=ey' {~~ & 2 1f~ 4> 2 1116" £ io ~ / 0 3 1/8" 0 0 ;;;õ q~cB ~$ CÐ N Manual Choke t Automatic Choke 2 1/16" Inlet Pressure Sensor 3" 3" 5,000 PSI Choke Manifold Kuukpik Drilling Rig 5 RED = 3 1/18" 5,000 PSI VALVES AND LINES Kuukpik Drilling Rig 5 BLUE = 2 1/16" 5,000 PSI VALVES Choke Manifold Drawn By: L Ross Date: 8/1/04 ,r----. 0 Cion 211/4" 2,000 PSI Annular o--¡ Open I I J I í To Accumulator 16" Diverter Line ~ 16" Hydraulic Operated Knife Valve ""'.n()qet 0 211/4" Diverter Spool KuukpikDri';"!R~5 2111"O..rterSyoIom 0...." S"" R... 0...'8113104 ",--.. ~ Jim, Forest Is Not Being Singled Out or Treated Unfairly First of all, you are correct you when you say" ...Forest is being treated the same as other operators who apply for spacing exceptions." The Commission works diligently to follow established protocols and procedures, ensuring protection of rights in all instances, regardless of operating company. Forest is not being singled out for any reason; our approach would have been the same for any other operator. Remember, although this matter was brought to the Commission at the last hour (planned spud date less than 30 days away), the Commission has been willing to set aside projects from other operators that were already in our queue to focus on Forest's issues. Remember also, that the Commission rescheduled the West Foreland hearing and published a second hearing notice at your request, but not at your expense. West Foreland Lease Situation And Well Locations Are Unique West Foreland is unique in that the most favorable locations for the gas development wells apparently: 1) lie within a single drilling unit, 2) lie within 1,500 feet of a property line, and 3) involve separate properties within a governmental section that have not been pooled. Each ofthese characteristics violates a portion of20 AAC 25.055, so a spacing exception will be required for the proposed West Foreland #2 well. Because state lease ADL-359112 and federal lease A-035017 have not been pooled or unitized, the correlative rights of everyone (including ORRIs) will be impacted by the Commission's decisions. AS 31.05.050(b) provides that "the Commission may also give, or require the giving of, additional notice in a proceeding, or class of proceeding, which it considers necessary or desirable." In this case, the Commission believes it best to take the "high" road, and provide notice via certified mail to all affected parties, even if it means some extra effort and minor expense on Forest's part. I personally am aware of two Commission actions where a petitioning party was required to provide notice to each owner of either a working interest or a royalty interest in each affected tract. So, the Commission's request that Forest notify each ORRI has precedent. Temporary Spacing Exception The ideal remedy to this situation would be to pool leases ADL-359112 and A-035017 under AS 31.02.100. Barring this, the next best approach is to grant a temporary spacing exception for drilling and operation of the West Foreland #2 well for all sands stratigraphically equivalent to, or shallower than, 9352' MD in West Foreland #1. This temporary exception will allow drilling, completion, testing, and production for a limited time. Drilling and production data obtained will be integrated with seismic data to produce the best interpretation of the location and volume of any reserves tapped by the well. You mentioned that at lease one participant #6 ~ " /""" ,~ r-' ~ FOREST OIL CORPORATION .j!O o7{è--Yín'el - cYur"tr 700 OÇ{;lrIUJH~rr, OQflaJka c9.9/;O! (.9(!7) ;:/,JS-S6'(;(! . (.9(;7) }'5S-S6,()1 (crfia.r) August 11,2004 Mr. John Norman, Chair Alaska Oil and Gas Conservation Commission 333 W. 7th Avenue, Suite 100 Anchorage, Alaska 99501-3539 Sent Via United States Postal Service Certified Mail Re: Forest Oil Corporation Application for Well Spacing Exemption West Foreland Field; West Foreland #2 gas well ("WF #2") Federal lease A-035019, State of Alaska lease ADL-359 \ 12 Dear Commissioner Norman: Pursuant to the direction I received yesterday from Mr. Steve Davies, Petroleum Geologist for the Alaska Oil and Gas Conservation Commission ("AOGCC"), I hereby transmit with this letter the following attached documents: 1. Personal notice prepared by Jim Arlington for Forest Oil Corporation ("Forest") of the public hearing tentatively scheduled for August 26,2004, at 9:00 am at the Alaska Oil and Gas Conservation Commission offices containing the following information, inter alia; i. Forest's drilling plans for the WF #2 and proposal for allocation of production; 11. Assertion that a spacing exception from the AOGCC is required prior to WF #2 production; 111. Forest's assertion that the CRA for the WF # 1 well is in effect and, as to the parties to said CRA, stipulates how production from the WF #2 is to be allocated; Forest's proposal that allocation of production from the WF # 1 Reservoir encountered in the WF #2 be allocated based on the existing WF #1 CRA, i.e. 58% to the federal lease and 42% to the State of Alaska lease, and paid to the royalty owners without being escrowed; Forest's proposal that royalty monies from productive sands encountered in the WF #2 that are shallower than the WF #1 Reservoir be escrowed pending equitable determination. List of Alaska State Lease ADL 359112 Royalty Owners known to Forest as of August 10, 2004. List of Federal Lease A- 035017 Royalty Owners known to Forest as of August 10, 2004. Proof of mailing to each of the parties named in each royalty owner list identified in documents #3 & #4. Verification of Facts and Affidavit of Jim Arlington, dated August 10,2004, certifying that all the steps required by the AOGCC, as contained in the direction from Mr. Davies, have been taken by Forest a.-'ldJor Jim Arli:1gton on behalf afForl"st IV. r-' v. 2. 3. 4. 5. I will be out of the country and/or out of the state until August 23rd. During my absence, if there are any questions, or should you need additional information concerning this matter, please contact Mr. Bradley Brice in this office at (907) 868- 2126. Sincerely yours, , " 'JG If r-' Enclosures as listed above cc (w/o enclosures): Bradley Brice Leonard Gurule /"'. ,--.., r-' ~ Forest Oi I Corporation 310 K Street, Suite 700 Anchorage, Alaskn 99501 (907) 258-8600 Fax: (907) 258-8601 TO: Known royalty owners of federal lease A-035017 and State of Alaska lease ADL-3591 12 (Distribution list provided to the Alaska Oil and Gas Conservation CoIDnÙssion) DA1E: August 10,2004 SUBJECf: Forest Oil Corporation spacing exception application in accordance with 20 AAC 25.055. West Foreland #2 Well; Allocation of Reserves & Production Federal Lease (A-035017); State of Alaska Lease (ADL-359 I 12) Forest Oil Corporation ("Forest") is providing you this letter as a personal notice pursuant to directions received by Forest from the Alaska Oil and Gas Conservation CoIDnÙssion ("AOOCC"). This personal notice is to infoon you of your opportunity to be heard by the AOGCC at a public hearing tentatively scheduled for August 26, 2004, at 9:00 am at the Alaska Oil and Gas Conservation CoIDnÙssion at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. At this hearing the AOGCC will act upon the request submitted by Forest to approve an exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A- 035017 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet from, a well capable of producing from the same gas pool. r' The West Foreland #2 gas well ("WF #2") will be drilled as a deviated well bore with drilling planned to commence in approximately one month. Production from the WF #2 is contingent upon approval of a spacing exception issued by the AOGCC, otherwise production from the WF #2 well will not be allowed, nor any royalties paid, as it would violate the statewide spacing requirements stated in 20 AAC 25.055. The surface location of the well is 880 feet from the south line and 631 feet from the east line of Section 21, TO8N, R14E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet from the north line and 1,105 feet from the east lineof21, TO8N, R14E, SM. The AOOCC has tentatively scheduled the public hearing on this application for August 26, 2004 at 9:00 am at the offices of the Alaska Oil and Gas Conservation CoIDnÙssion at 333 West 'f' Avenue, Suite 100, Anchorage, Alaska 99501. The AOGCC public notice, published July 23, 2004, provided that a person may request that the tentatively scheduled hearing be held by filing a written request with the AOGCC no later than 4:30 pm on August 10, 2004. The public notice went on to say that if a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the CoIDnÙssion will hold the public hearing, please call (907) 793-1221 or check the CoIDnÙssion's hearing calendar at: http://www.state.ale.uslIocalIakpages!ADMIN/ogdhear/hear.htm However, even if a public hearing is not held, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation CoIDnÙssion at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 24, 2004 except that if the AOGCC decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 26, 2004 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at (907) 793-1221 before August 13, 2004. r' As you may recall, you received a similar notice from Forest last year regarding a hearing before the AOGCC regarding the West Foreland #1 gas well ("WF #1"). At that hearing the AOOCC granted Forest a permanent spacing exception for the WF #1 and authorized termination of the escrow account established by Forest into which all royalty proceeds from WF # I production were deposited since the well began production in 2001. The WF #1 was shut-in until April 2001 when Forest, the Bureau of Land Management ("BLM") and the Alaska Department of Natural Resources ("DNR") executed a Compensatory Royalty Agreement ("CRA") to allocate production from the WF #1 between federal lease A-035017 and the State of Alaska lease ADL-3591 12. The CRA was required by the AOOCC J pursuant to Conservation Orders No. 450 and 450-A granting a permanent exception to the spacing requirements of 20 AAC 25.055 to allow production of gas from the WF #1 from any interval not deeper than 9,527' MD. The terms of the CRA and Conservation Order No. 450B established an allocation of 58% to the federal lease and 42% to the State of Alaska lease for any gas production from any interval not deeper than 9,527' MD in the WF#l. Forest is currently awaiting approval from the BLM and DNR regarding the valuation of the gas produced so that the funds from the escrow account can be disbursed to all parties who have an interest in the gas produced from the WF #1. Page 1 of2 (Over) /"'. ~ ~ Distribution List for Notice Regarding Alaska Oil and Gas Conservation Commission Hearing August 26, 2004 Alaska State Lease ADL 359112 Royalty Owners as of August 10. 2004 Alaska Department of Natural Resources Edgar Boyko Estate Robert Breeze Irrevocable Trust Division of Oil and Gas Georgie Lee Boyko Executor Virgina Breeze Trustee Attention: Mr. Chris Ruff 3020 S. 5th Avenue 800 F Street 550 W. 7th Avenue, Suite 800 Pocatello, ID. 83204 Unit P-6 Anchorage, AK 99501 Juneau AK, 99803 Gregory S. Burgess Jason M. Burgess Jefferey L. Burgess 3 Sh~J.œsfield Close 3346 E. Toronto Drive 4691 N. La Lornita Trendington, Warwickshire Phoenix, AZ 85044 Tucson, AZ 85718-6028 United Kingdom CV36 4ND Keith W. Calderwood Revocable Trust Charles E. Cole Coil Inc. Nadene Calderwood Trustee 406 Cushman Street 5914 124th CT NE P. O. Box 495 Fairbanks, AK 99701 Kirkland, W A 98033 Kenai, AK 99611 Enea Tekna Investments HV A Royalties William Harry McDonald Attn: Mathew Gavora Attention: Harold Van Amem 6640 Jollipan Court PO Box 70021 733 North Ocean Boulevard Anchorage, AK 99506 ~ Fairbanks, AK 99707 Delray Beach, FL 33483 Lab Properties Inc. Limestone Oil & Gas Company John C. McDonald 5919 77th Avenue SE 4501 Nassau 1800 E. A Street Mercer Island, W A 98040 Wichita Falls, TX 76308 Anchorage, AK 9950l-l834 The Medema Family Trust William Harry McDonald Patina Oklahoma Corp. James D. & Mille Medema Trustees 6640 Jollipan Court Attn: Debbie Ahlstrom D, Medema Perry, Co-Trustees Anchorage, AK 99506 1625 Broadway, Suite 2000 P. 0, Box 70109 Denver, CO 80202 Fairbanks, AK 99707-0109 Robert L & Deanna Persons Polaris Fund L. P. Jin K Raee PO Box 403 400 Seaport Court, Suite 250 2233 Birchdale Drive Girdwood, AK 99587 Redwood City, CA 94063 Thousand Oaks, CA 91362-1532 William D. Renfro Estate John K. Garvey Revocable Trust Jack H. & Helen E. Richardson 3940 Arctic Blvd., Suite 103 RH. Garvey Bldg., Suite 1050 3511 A Andree' Drive Anchorage, AK 99503 300 W. Douglas Ave. Anchorage, AK 99517 Wichita, KS 67202-2911 John. M. Robinson Carolyn L. Shogrin SPC LLC 9333 Memorial Drive PO Box 29450 Attn: K. Battley Managing Suite 203 Santa Fe, NM 87592-9450 500 L Street, Suite 302 Houston, TX 77024 Anchorage, AK 99501 William G. Stoecker James L. Thurman & Leta Thurman Richard E. Wagner ~ PO Box 71230 925 Aurora Drive P. O. Box 60868 Fairbanks, AK 99707 Fairbanks, AK 99707 Fairbanks, AK 99706 ~ ~ r-' Distribution List for Notice Regarding Alaska Oil and Gas Conservation Commission Hearing August 26, 2004 Federal Lease A-035017 Royalty Owners as of August 10. 2004 Winton C. Arnold Jr. and Alice Calvert 411 University S1., Suite 1200 Seattle, WA 98104 Paul Dixon Beaulieur 9 bis rue du Pont 41400 Montrichard, FRANCE Richard D. Beaulieu, Jr. Address Unknown Mary T. Brooks 415 Flat Top Sheep Ranch Carey, ID 83320 David R. Cottis 35670 Hummingbird Lane Squaw Valley, CA 93675-9715 C.P. (Jack) Coughlan, Deceased Heirs & Addresses Unknown Barbara Dimock 4093 220th Place S.B. Issaquah, W A 98027 Dippel West Foreland Trust Nola B. Sanders Trustee 359 Gean S1. Mesquite, NV 89027 The Erven Revocable Living Trust Melba C. Erven, Trustee 707 Hillcrest Ave. Roseville, CA 95678 ~ Mary H. Hale 3157 D Road Grand Junction, CO 81504-6181 Gregory C. Taylor, Esq. (representing Harry 1. Hill, Deceased) Jermain, Durmigan & Owens 3000 A 81., Suite 300 Anchorage, AK 99503 L. Warren Hines 4856 Bryn Mahr C1. # 1 Anchorage, AK 99508 Harold Kravik 3020 E. Main S1., # E-44 Mesa, AZ 85213 Kreielsheimer Foundation (representing Leo T. Kreielsheimer, Deceased) 10 Harrison S1., #302 Seattle, W A 98109 Mr. Steve Martinez US Dept of the Interior Bureau of Land Management 222 West 7th Ave. #13 Anchorage, AK 99513 Medema Family Trust James D. & Millie Medema, Trustees P. O. Box 70109 Fairbanks, AK 99707-0109 Oil Investment Trust Address Unkown Mary Pryor Thomas 10800 Hideaway Lake Drive Anchorage, AK 99516 Cook Inlet Region, Inc. Attention Kirk McGee, VP PO Box 93330 Anchorage, AK 99509-3330 Minerals Management Service Royalty Management Program Box 5810 T.A. Lakewood, CO 802 I 7 The Donald and Nola Dippel Trust Nola B. Sanders Trustee 359 Gean S1. Mesquite, NV 89027 ~ ~ 'J r fT1 /~ (\J c:J .., U" ru .., -šiiëëï; c:J or PO c:J ë;¡¡Y:~ ('- y--. ru U" ...D U" , ' CERTIFIED MAIL RECEIPT (Domestic Mail Only; No Insurance c°8'e Provided) Certified Fee ;:t" c:J c:J c:J Return Receipt Fee (Endorsement Required) Restricted Delivery Fee (Endorsement Required) c:J .., U" ru Total Postage & Fees $ Se, The Medema Family Trust James D. & Mille Medema Trustees D, Medema Perry, Co-Trustees P. 0, Box 70109 Fairbanks, AK 99707-0109 on_----"'--- .., c:J c:J ('- -šiñ or! -éi~ ....,-.......- fT1 CO ...D U" U.S. Postal Service CERTIFIED MAIL RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) 47", 'ff'" KENAI, ~K 99611 0- c:J ;:t" fT1 Postage $ Certified Fee ;:t" c:J c:J c:J Return Receipt Fee (Endorsement Required) Restricted Delivery Fee (Endorsement Required) Total Postage & Fees $ 1./ .~ 08/10/04 Sent Tc .., c:J c:J ('- 'š¡r.;;,i; or po/ 'éi¡Y:si Keith W. Calderwood Revocable Trust Nadene Calderwood Trustee p, O. Box 495 Kenai, AK 996l I fT1 .., , ('- U" u.S. Postal Service . CERTIFIED MAIL RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Postage $ n r".: r' " AtðiðRAf3E > fíR ft¡ 0- c:J ;:t" fT1 c. ,J!I: 0502 'u/( poS~J~ I:; ; ,Here \,t' Çj~~QPINP ~~~ Total Postage & Fee.. $ i/-J,t~ O~,~' 'I,) Sent 7 A~a~~a Department of Natural Resources DIvIsIOn of Oil and Gas Attention: Mr. Chris Ruff 550 W. 7th Avenue, Suite 800 Anchorage, AK 99501 Certified Fee ;:t" c:J c:J c:J Return Receipt Fee (Endorsement Required) Restricted Delivery Fee (Endorsement Required) :S::-C IIJcn '<"TI "TIN 0 oo~ ~03 8-;: 3--.1 *~Ø) ",,"0- 0' 0.0 (D~ ~8:o (D°CD -«bn :;'0 CD -01- Q~~' ~ =t( ~ """ 0 ~. ~~ ;::;: cc 0 -', c: t/) ~ - ::;: CD ~ ¡¡; 21, Q. ~(j)Š: -~ !: ~s- ~è' i::~ igll>~ fl>g,~ 0" ~g-;< iii JJ C) CD!;¡ ëiiõ ii! '3 ~~ To Be Completed By ~mer (Please PrÍlr All Entries Must Be in Bal or Typed :t CD «2 :JJ~~ CD CD '!" a ~ ~~ ~. :-J ~~ (.,'1 <:> I ~ To Be Completed By Post Office FROM TIC) Cc =", <ô ~3 c CD CD ~ Y>~ \i CD "lJ () I 0 :T II> *~~ cg CD~' :JJ CD " CD ;¡:' CD 0. L To Be Completed By Customer (Please Print) All Entries Must Be In Ballpoint or Typed To Be Completed By Post Office ~: :JJ CD ~' '!" I ~ ~: CD ~~ ::>:t -..J t r_'1 ~ <:> ..... ~ G FROM TI() c c =", <ô ~3 c CD CD ~ Y>~ ~ "lJ () I 0 :T '" '" II>::J g.ag" CD CD.ð :JJ CD 0 CD ;¡:' CD 0. c:T '< , .. ç.C t: ~. 0 n c: 3'- 0 / CO >-' ::z: ~~~/ ~~~ !l' .. '" <:> ::<;:r\'1 ¡c ;; =: ..." ~ \:.~" ,>-< - 0 :rc'- ..;, ..... if ~ ~ ~¡\'¡IJ . ~ 0; ~ & "i> .' ...... <:> ii'g.",\ :z:(.,1' .,.. 3 S;~"i\ .. -n.-. <:> ~ ~ õ~---_<:>. r'~ / t II ¡¡ (¡ ~ i ..lJ cO a ::r . .. . C'ERTIFIED MAILTM RECEIPT. Domestic Mail Only; No Insurance C, ,ge ProvIded) ( [J"" I"- U" /"'. OJ M a a Return RèClept Fee a (Endorsement Required) a Restricted Delivery Fee U" (Endorsement Required) IT1 M Total postage & Fees $ Certified Fee ::r a a I"- [J"" I"- U" OJ M a a a Return Reciept Fee (Endorsement ReqUired) 0 Restricted Delivery Fee U" (EndolSement Required) IT1 M , . . 2.30 1.75 4.42 Mary Pryor Thomas 10800 Hideaway Lake Drive Anchorage, AK 99516 U.S. Postal ServiceTM CERTIFIED MAILm RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Patina Oklahoma Corp. Attn: Debbie Ahlstrom 1625 Broadway, Suite 2000 Denver, CO 80202 a U" cO IT1 [J"" I"- U" OJ Postage $ M a a Return Reciept Fee a (Endorsement Required) 0 Restricted Delivery Fee ".--.. U" (Endorsement Required) IT1 M Total Postage & Fees $ ::r a a I"- Certified Fee .""---.---"'---,' ...---.-..--....-- U.S. Postal ServiceTM CERTIFIED MAILm RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) IT1 ::r cO IT1 [J"" I"- U" OJ . .. . T.&1. M 0 a Return Reciept Fee a (Endorsement Required) a Restricted Delivery Fee U" (Endorsement Required) IT1 M Total Postage & Fees $ Certified Fee ~~ ~ . Siñ; ~~ City. -. -. SE Jin K Raee 2233 Birchdale Drive Thousand Oaks, CA 91362-1532 ~ I"- ..lJ cO IT1 U.S, Postal ServiceTM CERTI.-D MAILM RECEIPT (Domestic Only; No Insurance Coverage Provided) Postage $ CertIfIed Fee John C. McDonald 1800 E. A Street Anchorage, AK 99501-1834 ~ M cO cO IT1 [J"" I"- U" OJ U.S. Postal Servicem CERTIFIED MAILTM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Postage $ M a a a Return RèClept Fee (Endorsement Required) ~ Restricted Delivery Fee IT1 (Endorsement Required) M Total Postage & Fees $ Certified Fee c1>ostmark , ,.' "'i: Here'. ~") ,-" Cl~~1NPO :{' "'-!. - 8/10/04 ::r ~r, ~t William Harry McDonald 6640 Jollipan Court Anchorage, AK 99506 ~ cO ::r a ::r , , U S Postal ServiceTM . RTIFIED MAILTM RECEIPT ~~estic Mail Only; No Insurance Coverage Provided) ( . . 't [J"" I"- U" OJ M 0 a Return RèClept Fee 0 (Endorsement Required) a Restricted Dellv8fY Fee U" (Endorsement Required) IT1 M Certified Fee "' §c ,~, Postmark "if' Here ,-" Cleá~\¡;¡P1NPO 08/10/04 ::r a a I"- Total postage & Fees $ . Minerals Management Service Royalty Management Program Box 5810 T.A, Lakewood, CO 80217 ~ ~ 'Ir I"'- 'a :I- Ir I"'- ,U' ~ J ..:J a a (E Retum Recfept Fee ndorsement Required) a Restricted Delivery Fee U' (Endorsement Required) fT1 M Total Postage & Fees $ Postage $ Certified Fee 4.42 cPostmark ' ~; Here " I Cl~¿. 1Nr;'Oj~/ "'OM' / ~, 08/10/04 :I- e: e: I" L. Warren Hines 4856 Bryn Mahr Ct. # I Anchorage, AK 99508 .-------------------- .-------------------- :I- a Ir fT1 Ir I"'- U' ru U.S. Postal Service",: CERTIFIED MAIL", RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) .. '. M a a a Retum Reclept Fee (Endorsement Required) ~ ~esIrIcIed Delivery Fee . :ndorsement Required) USE 'WD: 0502, ~,......,'\ ø! ; o:r: PosImæk ' ",Here IJ C" . .1erf:~ gplNPQ~;'1 ,'", / Certified Fee ....... Total Postage & Fees $ Jefferey L. Burgess 4691 N. La Lomita Tucson, AZ 85718-6028 ...- :I- a a I"'- .-=t .-=t Ir fT1 Ir I"'- U' ru U.S. Postal Service"" CERTIFIEþAIL", RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) S&1L~:; ~F ~~1"~ ¡¡ ,0;: -'-.... Postage $ j) ¡ T HI: 0502':'),\ g CertIfIed Fee Il. !~ w7 P .'ç \ a (Endo~~~eæ:ful:;¡ I . f1.5 '~J\ .~ = ) ~ (rr::r:~~~:q~i:;¡.~rk:\QPINPO /'/ .-=t Tn"" Dn"+--- 0 ~--- "" ~. L 08/1Q~ .::J Winton C. Arnold Jr. and Alice Calvert ê 411 University St., Suite 1200 I'" Seattle, WA 98104 -------..--....----- .------------------- .. -... . , U' U' a :s:- U.S. Postal Service"" CERTIFIED MAIL", RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Ir I"'- U' ru .-=t a a a Retum Reciept Fee (Endorsement Required) a Restricted Delivery Fee U' (Endorsement Required) fT1 .-=t RcGI6,6 hG I A l.~'S'E O;3~r: jlNTI ID: 0502 \ It. .".,.¡ L: ' ,... . >M.I\ l fl..!fÇ\ Postage $ CertIfied Fee £,P= '~ Cl~:.f!PlNF'O " -ai" ---:... Total Postage & Fees $ 08/10í04 The Erven Revocable Living Trust Melba C. Erven, Trustee 707 Hillcrest Ave. Roseville, CA 95678 ~ g;¡ a .----------------- I"'- .------------------ , , , <Q Ir <Q fT1 Ir I"'- U' ru U.S. Postal ServiceTM . CER~IFIED MAIL", RECEIPT (DomestIc Mail Onl 'N . , ,.'.' . y, 0 Insurance Coverage Provided) Postage $ Certified Fee M a a a (Endo Retum Reciept Fee rsament Required) ::g Restricted Delivery Fee fT1 (Endorsement Required) M :I- Total Postage & Fees $ p1 Coil Inc. 5914 124th CT NE Kirkland, W A 98033 '--------.-------- '.---------------- ~ ru JJ a :I- U.S, Postal ServiceTM CERTIFIED MAILM RECEIPT (DOm~stic Mail Only; No Insurance Coverage Provided) Ir I"'- U' ru AQRli8i. 1£3" Â L .-SE., Postage $ 0.37 M 0 a Certified Fee a 2.30 «' a Retum Recfept Fee ,~~:~ (Endorsement Required) 1.75 a Restricted Delivery Fee 'Y..., U' (Endorsement Required) Clert:r QPINPO fT1 M Total Postage & Fees $ 4,42 08/10/04 :s:- a a I"'- Mr. Steve Martinez US Dept of the Interior Bureau of Land Management 222 West 7th Ave. #13 Anchorage, AK 99513 ---..------------- ---------------- Postage $ 0.37 ,...:¡ I:J Certified Fee 2.:50 c:J c:J Relum Rec/epl Fee 1.75 (Endorsement Required) I:J Restricted Delively Fee Lr (Endorsement Required) m ,...:¡ Total Postage & Fees $ 4.42 Dippel West Foreland Trust Nola B. Sanders Trustee 359 Gean St. Mesquite, NY 89027 ~ IT Ell C I A L Postage $ 0.37 ,...:¡ c:J Certified Fee 2.30 c:J c:J Return Reclept Fee 1.75 (Endorsement Required) c:J Restricted Delivery Fee Ll"/ (Endorsement Required) m ,...:¡ $ 4.42 Total Postage & Fees ì '\.,) ", / Cle?j.;::~ ¡;¡PI NPO 08/10/04 Harold Kravik 3020 E. Main St., # E-44 Mesa, AZ 85213 JJaUfiKhsjoC . A L / o,...:l1 /, \ -lJ1 v! \ ¡¿ok < t..... d ).115 '. '~":,,, Here > èÚê~)¡P1NPO; / ~' // 00/10/04 Postage $ Certified Fee ,...:¡ c:J c:J c:J Retum Rec/epl Fee (Endorsement Required) ~ Restricted Delivery Fee m (Endorsement Required) ,...:¡ Total Postage & Fees $ Robert Breeze Irrevocable Trust Virgina Breeze Trustee 800 F Street Unit P-6 Juneau AK, 99803 I, , 'os a ervl "1M CERTIFlEn MAILn~ RECEIPT (Domestic Mai . ; No Insurance Coverage Províded) sQ IkL ,...:¡ c:J c:J c:J Relum Reclepl Fee (Endorsement Required) c:J Resttlcted Delivery Fee U' (Endorsement Required) m ,...:¡ CertifledFee ~ David R. Cottis 35670 Hummingbird Lane Squaw Valley, CA 93675-9715 ~ tr f'"' IJ'\ fÚ Certified Fee r"\ CJ Reciept Fee C) RetU~n\ Required) c::J (eodorSØ t)el\Vecy Fee ....... f\esttict~n\ f\equired) ~ (El'dOrsEI rn I postaQÐ & Fees $ r-'" TotØ: . Medema FamIly Trust ~ \ James D. & Millie Medema, Trustees c::J p. O. Box 70109 r- fairbanks, AK 99707-0l09 ~ ~ ,..::¡ CJ c:J c:J Relum Reclept Fee (Endolsement Required) c:J Restrided Delivery Fee Lr (Endorsement Required) m ,...:¡ Total Postage & Fees $ Barbara Dimock 4093 220th Place S.E. Issaquah, W A 98027 Certified Fee !.;postmark . <\t' Here >~ . ';--...,;'- ~rEi!<;~GF'lNP0" ---,-~ 08/10/04 3 r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restrtcted Dellvety Fee .r--- 11 (Endorsement Required) ,1 r4 Total Postage & Fees $ ~ 0 0 f'- ~ 01 01 f'- ' ~. /'- 0 ru' f'- fT1 Ir f'- Lf) ru I. . . OS a erVlcen" CERTIFIED MAIL,., REiilPT (Domestic Mail Only; No Insurance ~rage PrOvided) r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r4 Total Postage & Fees $ Certified Fee ~ 0 0 f'- Jason M. Burgess 3346 E. Toronto Drive Phoenix, AZ 85044 ~ ...D 0 f'- fT1 Ir f'- Lf) ru U.S. Postal Service"" CERTIFIED MAIL" RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) , ., FQd;Ji. 19& I A l Postage $ Certified Fee William G. Stoecker PO Box 71230 Fairbanks, AK 99707 ~ ~ ru c::J .::r- U.S. Postal Servicem CERTIFIED MAILM RECEIPT (Domestic Mail Only; No Insurance Coveragè PrOvided) , .', Ir f'- Lf) ru r4 c::J c::J c::J Return Recíept Fee (EndoISemeot Required) 5: Restricted DeI!verY Fee fT1 (Endorsement Required) r-'I ., '. Postage $ Certified Fee -'...... ToteJ Postege& Fees $ Oa/10/04 The Donald and Nola Dippel Trust Nola B. Sanders Trustee 359 Gean St. Mesquite, NV 89027 ..------------.--- --.------------ f'- /T1 f'- fT1 Ir f'- Lf) ru U.S. Postal ServiceTM CERTIF~ MAILn~ RECEIPT (Domestic M_ly; No Insurance Coverage Provided) i:'~.\ ¥ ., ~ ,., "'. ""'. ".., ~",:¡ :::~ r',: Postage $ r4 0 0 0 Return Reclepl Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) /T1 r-'I ToteJ Postage & Fees $ Certified Fee ~ 0 c::J f'- Charles E. Cole 406 Cushman Street Fairbanks, AK 99701 ~ fT1 .r4 f'- fT1 Ir f'- Lf) ru U.S. Postal Servicem . . CERTIFIED MAILM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) , ,. . . , pDEln, fñl laG I A L oaT¡ ,.,' ~2 /)~ Postage $ r-'I 0 0 , F 0 Return ReCtepl ee (Endorsement Required) 0 Restricted DerlVery Fee Lf) (Endorsement Required) fT1 r-'I Certified Fee ToteJ Postage & Fees $ Edgar Boyko Estate Georgie Lee Boyko Executor 3020 S. 5th Ave., Pocatello, Id. 83204 ~~ ~ ši or ëi ~ 0 c.J 0 ~ U.S. Postal ServiceTM CERTIFIED MAILm RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) ~ 0 0 f'- .~ Ir f'- Lf) ru r4 0 0 Return Rèclept Fee 0 (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r-'I Total Postage & Fees $ Certified Fee .Gregory C. Taylor, Esq. (representing Harry 1. Hill, Deceased) Jennain, Dunnigan & Owens 3000 A St., Suite 300 Anchorage, AK 99503 ~ '. . . os a ervi - TM CERTIFIED MAILm RECEIp-T Domestic Mail Only; No Insurance Cove Provided) èQ ...D , f'- ( fT1 Ir f'- . Lf) ~ j L:J 0 0 Return Rèclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) /T1 r-'I Total Postage & Fees $ Certified Fee ~ ~I r-'I fT1 0 ( ~ . -,. -, -TM " . C'ERTIFIED MAIL,., RECEIPT Domestic Mail Onl ,Insurance Coverage Provided) Ir f'- Lf) ru r4 0 :s Return Reciept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r-'I Certified Fee ~ ~l 0 ----------------- f'- .~__._---_n____- TotalPostaae&Fees $ 4.42 Cook Inlet Region, Inc. Attention Kirk McGee, VP PO Box 93330 Anchorage, AK 99509-3330 ~-_..---_..---. --," .---------------- , William Harry McDonald 6640 Jollipan Court Anchorage, AK 99506 U.S. Postal ServiceTM CERTIFIED MAILw RECEIPT Domestic Mail Only; No Insurance Coverage Provided) ru oQ f'- ( fT1 Ir f'- Lf) ru postage $ r4 0 0 Return Reclept Fee 0 (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) ,....--.T ~ I Total Postage & Fees $ CertifIed Fee ~l John K. Garvey Revocable Trust R.H. Garvey Bldg., Suite 1050 300 W. Douglas Ave. Wichita, KS 67202-2911 ---.----___--__n ----------------- .::r- ~ f'- fT1 Ir f'- Lf) ru U.S. Postal Servicen~ CERTIFIED MAllrM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) r-'I 0 0 0 Return Rèclept Fee (Endorsement Required) ~ Restricted Delivery Fee fT1 (Endorsement Required) r-'I Total Postage & Fees $ CertifIed Fee .::r- ~~ ~}~ II.. HV A Royalties Attention: Harold Van Amem 733 North Ocean Boulevard Defray Beach, FL 33483 ~ U.S. Postal ServiceTM CERTIFIED MAIL", RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Ul f'- f'- fT1 Ir f'- Lf) ru Postage $ M 0 c::J 0 Return Reclept Fee (Endorsement Required) c::J Restricted DerlV8ry Fee Ul (Endorsement Required) fT1 r-'I Total Postage & Fees $ .::r- ~h ~ Certified Fee ~ Polaris Fund L. P. 400 Seaport Court, Suite 250 Redwood City, CA 94063 U.S. Postal ServiceTM CERTIFIED MAILM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) r-'I Lf) f'- ITI Ir f'- Lf) ru r-'I 0 0 0 Return Reclept Fee (Endorsement Required) 0 Resbicted Delivery Fee Ul (Endorsement Required) /T1 r-'I Total Postage & Fees $ Certified Fee .::r- c::J 0 f'- Limestone Oil & Gas Company 4501 Nassau Wichita Falls, TX 76308 ---------------... ..----------..--- ...D ['- ...D Lr/ 8. . -. . -, - CERTIFIED MAIL RECE'RT (Domestic Mail Only; No Insurance _age Provided) FAIRBANKS, At< r--- 0- c:J ::r fTl Postage $ Certified Fee ::r Return Receipt Fee 0 (Endorsement Required) c:J Restricted DelivefY Fee c:J (Endorsement Required) c:J Total Pmrt"oe & Fees ~ .-=I U1 Sen ru Enea Tekna Investments .-=I 'sin, Attn: Mathew Gavora c:J or F PO Box 70021 c:J 'Bi; ['- Fairbanks, AK 99707 _,m"h"" ----"m,m ...D f'- ...D fT1 Ir f'- Lf) ru U.S. Postal ServiceTM . '. CERTIFIED MAIL", RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) , " . .,.'-- ,,~ . " . ;':rbi':'..A:~:,. ~'~L postage $ "-'" r4 0 0 0 Return Rèclept Fee (Endorsement Required) 5: Restricted Delivery Fee /T1 (Endorsement Required) r-r-'I Total Postage & Fees $ Certified Fee 08/10/04 William D. Renfro Estate 3940 Arctic Blvd" Suite 103 Anchorage, AK 99503 3 ru r-'I co m Ir f'- Lf) ru U.S. Postal ServiceTM CERTIFIED MAILTM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) '" . . ~.4.~J;;;. .",~ 6c).t,'::-: :1 , fn.Qf.t,Itr'.:¡, !'!A,. ~ ",,(IX, " ~\ :;~..~.,;¡;~,~,'F,~~.')'",,;~,~",'~,~",.,., '<,' ,'" :1 ,~ f~ . ~mar1< 1 , ~}ïJHere ' ~ Clerk': QP1Nf'O? / "'" .. Postage $ 08/10/0lf r4 0 :s Return Reclept Fee (Endorsement Required) c:::J Restricted Delivery Fee Lf) (Endorsement Required) m r4 Tnlal postaoe & Fees !Ii Certified Fee ~h /'- ~ ~ Richard E. Wagner P. O. Box 60868 Fairbanks, AK 99706 I.. "OS a ,',. CERTIFIED MAIL RECEIPT (Domestic Mai.; No Insurance Coverage Provided) 0- ...D ...D U1 98040 ~~1 'J . fIJ 116 / 0- C1 ::r fTl Postage $ 08/10/04 .--.w.""--'" .....m.------'" U.S. Postal ServiceTM CERTIFIED MAIL,., RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) -, -. ...----------.--- ....------------ U.S. Postal ServiceTM CERTIFIED MAILn~ RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) ~~ ~ ~. Cil James L. Thurman & Leta Thurman 925 Aurora Drive Fairbanks, AK 99707 AQRli&.19G I A l USE 0;,'1 UNIT y:'.:ÔSO~:.9 95'(/'" ~z1(; /~, ,~'\ " '!/5 " Postmark ~j I ¡ . !j, '\' Here 'hj (/;- \ (!) , ", Q Clerk(QP1NPO' ~'(, ;¡" OS/10/Õ4./ Certified Fee ::r C1 C) C1 Return Receipt Fee (Endorsement Required) Restricted Delivery Fee (Endorsement Required) C1 .-=I Lf) ru Total Postage & Fees $ .-=I C1 C1 ['- Lab Properties Inc. 5919 77th Avenue SE Mercer Island, W A 98040 Ir ru co fT1 Ir f'- Lf) ru Postage $ r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r4 Totai Postage & Fees $ CertIfied Fee .:r 0, 0 f'- SPC LLC Attn: K, Batt1ey Managing 500 L Street, Suite 302 Anchorage, AK 99501 Lf) 0 co fT1 Ir f'- Lf) ru Postage $ r-'I 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r-'I Total Postaae & Fees !Ii Certified Fee rù ..::r- a- fT1 IT" f'- Lf) ru ..' TM CERTIFIED MAILw RJ;CEIPT (Domestic Mail Only; No Insura . verage Provided) . - , , , ., -, -. mQ 6cmJ C tl5A L USE Postage $ UNIT I~,.: 0502'~"" (~,.(~,,~,.. ':~ () Postmark ff' <1, i Here .) Cler~Ct;Q.,\P1NPO " "\: A~~ 08/10/0'4_5 ,~ r-'I 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee ~ (Endorsement Required) r-'I l.J, Certified Fee Total Postage & Fees $ .::r- 0 0 f'- Mary H. Hale 3157 D Road Grand Junction, CO ~ ~ 8'lSal}-- ~I~ U.S. Postal Servicem CERTIFIED MAILTM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) fT1 c:[ ...D fT1 a- f'- Lf) ru r- r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r4 Total postage & Fees $ Certified Fee Robert L & Deanna Persons PO Box 403 Girdwood, AK 99587 0 IT" ...D fT1 IT" f'- Lf) ru U.S. Postal ServiceTM CERTIFIED MAILm RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) Postage $ r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r4 Total Postage & Fees $ Certified Fee 08/10/04 a- a- f'- fT1 a- f'- Lf) ru . . CERTIFI~D MAILM RECEIPT (Domesti . Only; No Insurance Coverage Provided) ., '. USE Postage $ UNIT ID: 0502 r4 0 0 0 Return RecJept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r4 Total Postage & Fees $ Certified Fee .::r- 0 0 f'- Carolyn L. Shogrin PO Box 29450 Santa Fe, NM 87592-9450 ---------..-----' ____n____------- f'- r-'I 0 .::r- PS Form 3800, June 2002 r a, a See Reverse fa, In~"lIct;""s U.S. Postal Servicen" CERTIFIED MAILm RECEIPT (Domestic Mail Only; No Insurance Coverage Provided ~ ., '. , a- f'- Lf) ru r4 0 0 0 Return RecJept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r-'I Total Postage & Fees $ sOLf E j¡1~ I A L Postage $ Certified Fee .::r- 0 0 f'- Kreielsheimer Foundation (representing Leo T. Kreielsheimer Deceased) , 10 Harrison S1., #302 Seattle, W A ~.. Cff/ðí ~ ...D fT1 c:[ fT1 a- f'- Lf) ru U.S. Postal Servicen-, CERTIFIED MAIL,., RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) r-'I 0 0 0 Return Reclept Fee (Endorsement Required) 0 Resbicted Delivery Fee Lf) (Endorsement Required) fT1 r-'I Total Postage & Fees $ Certified Fee ~ ~ O~ ~§ñ orl ëñj John. M. Robinson 9333 Memorial Drive Suite 203 Houston, TX 77024 ==1 ~~ ~~ Jack H. & Helen E. Richardson 3511 A Andree' Drive Anchorage, AK 99517 ~. ~ /"- r'- I:(] ru Ir fT1 Ir f'- Lf) ru U.S. Postal ServiceTM CERTIFIED MAILM RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) r4 0 0 0 Return Reclept Fee (Endorsement Required) 0 Restricted Delivery Fee Lf) (Endorsement Required) fT1 r-'I OFFICIAl/~SE . 31 ~// J. . ~() ( . - " -, ' Postmar1< /. ? ':;, ~~,~ (~ Here , /y.,. '~L Postage $ Certified Fee -', " ~ :3[ f'-¡ ( ¡ Total Postaae & Fees $ Mary T. Brooks 415 FlatTop Sheep Ranch Carey, Id 33328 13320 ---_-_nn'----- ---------------- ~ ~ /'- /' '" ",--, TO THE ALASKA OIL AND GAS CONSERVATION COMMISSION Before the Alaska Oil and Gas Conservation Commission In the Matter of the Application of Forest Oil Corporation for a well spacing exemption And exception to the provisions pertaining to Drilling Units and Well Spacing pursuant to 20 AAC 25.055 ) ) ) ) ) ) ) VERIFICATION OF FACTS AND AFFIDAVIT OF JIM ARLINGTON Jim Arlington, being first duly sworn, upon oath, deposes and states as follows: 1. My name is JIM ARLINGTON. I am over 21 years old and have personal knowledge of the matters set forth herein. 2. I am the Land Manager for the operator, Forest Oil Corporation (Forest). 3. I am knowledgeable and fully informed concerning the facts associated with the application of Forest Oil Corporation for a well spacing exemption and exception to the provisions pertaining to drilling units and well spacing pursuant to 20 AAC 25,055 as they pertain to the proposed drilling ofthe West Foreland #2 gas well ("WF #2"). 4. I have assisted in preparing and did submit to the Alaska Oil and Gas Conservation Commission ("AOGCC") on behalf of Forest Oil Corporation the completed application requesting an exemption from the provisions of 20 AAC 25,055 for the drilling of the West Foreland #2 gas well in the West Foreland Field and hereby assert that all the facts contained therein are true to the best of my knowledge. 5. I have prepared, at the direction of the AOGCC, a personal notice of the public hearing scheduled to be held at 9:00 am on August 26, 2004 by the AOGCC concerning Forest's application for a well spacing exemption for the WF #2 which also contains Forest's drilling plans and proposal for allocation of production from said well. 6. I assert that I supervised the preparation of two separate lists of royalty owners known by Forest as of August 10,2004; one list for federal lease A-035017 and one list for State of Alaska lease ADL-359112, both of which are attached hereto. 7. On or about August 10, 2004, I caused a copy ofthe attached personal notice regarding Forest's application for an exemption from the provisions of 20 AAC 25.055 for the WF #2 to be to be mailed via United States certified mail to the names of all royalty owners contained on the two lists attached to this affidavit. I further assert that a copy of said notice, both lists and proof of mailing each personal notice to all parties on both lists was also mailed by United States certified mail to the AOGCC on or about the same date. ) ) THIRD JUDICIAL DISTRICT ) On this / rday of August 2004, before me, the undersigned, a Notary Public duly commissioned and sworn, appeared Jim Arlington, personally known to me, to be the person whose name is subscribed to within the Verification of Facts and Affidavit. ,\\\\\~W~:t/~ Witness my hand and official seal. :!~~~~R7J~ ~~ .:::: <. 0 ~ O. ~::;. = :::t:. .. ~ . ~= Notary Public, State of Alaska :::::e.)'~'fII" '.0:: ~~ Þ\J6V-;Jf!: ~..., . . . . ~~ ~ ..- rc* ~ 8ìATE 0 ~~ IIIIIIII"'\\\\~ ,~ Subscribed and sworn to on August 10, 2004. STATE OF ALASKA ~ ~~~~ Jim Arlington ss. My Commission Expires: /..:/ - J - \:) y #5 ...--' ,.-- ."--""" @ Forest Oil Corporation 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258-8600 Fax: (907) 258-8601 f)~ - D RAFf TO: Attached Distribution List DATE: August 10,2004 SUBJECT: Forest Oil Corporation spacing exception application in accordance with 20 AAC 25.055, West Foreland #2 Well; Allocation of Reserves & Production Federal Lease (A-035017); State of Alaska Lease (ADL-359 1 12) Forest Oil Corporation ("Forest") is providing you this letter as a personal notice pursuant to directions received by Forest ITom the Alaska Oil and Gas Conservation Commission ("AOGCC"). This personal notice is to inform you of your opportunity to be heard by the AOGCC at a public hearing tentatively scheduled for August 26, 2004, at 9:00 am at the Alaska Oil and Gas Conservation Commission at 333 West 'f' Avenue, Suite 100, Anchorage, Alaska 99501. At this hearing the AOGCC will act upon the request submitted by Forest to approve an exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A- 035017 and State Lease ADL-359 1 12, and within the same governmental section as, and less than 3,000 feet ITom, a well capable of producing ITom the same gas pool. The West Foreland #2 gas well ("WF #2") will be drilled as a deviated well bore with drilling planned to commence in approximately one month. Production ITom the WF #2 is contingent upon approval of a spacing exception issued by the AOGCC, otherwise production ITom the WF #2 well will not be allowed, nor any royalties paid, as it would violate the statewide spacing requirements stated in 20 AAC 25.055. The sUIÍace location of the well is 880 feet ITom the south line and 631 feet ITom the east line of Section 21, TO8N, RI4E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet ITom the north line and 1,105 feet ftom the east line of21, T08N, RI4E, SM. The AOGCC tentatively scheduled the public hearing on this application for August 26,2004 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 'f' Avenue, Suite 100, Anchorage, Alaska 99501. The AOGCC public notice, published July 23, 2004, provided that a person may request that the tentatively scheduled hearing be held by filing a written request with the AOGCC no later than 4:30 pm on August 10, 2004. The public notice went on to say that if a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call (907) 793-1221 or check the Commission's hearing calendar at: http://www.state.ale.us/1ocal1akoages/ADMIN/ogc/hear/hear.htm However, even if a public hearing is not held, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 24,2004 except that if the AOGCC decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 26, 2004 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at (907) 793-1221 before August 13, 2004, As you may recall, you received a similar notice ITom Forest last year regarding a hearing before the AOGCC regarding the West Foreland #1 gas well ("WF #1"). At that hearing the AOGCC granted Forest a permanent spacing exception for the WF #1 and authorized tennination of the escrow account established by Forest into which all royalty proceeds ITom WF #1 production were deposited since the well began production in 2001, The WF #1 was shut-in until April 2001 when Forest, the Bureau of Land Management ("BLM") and the Alaska Department of Natural Resources ("DNR") executed a Compensatory Royalty Agreement ("CRA") to allocate production ITom the WF #1 between federal lease A-035017 and the State of Alaska lease ADL-359 1 12. The CRA was required by the AOGCC pursuant to Conservation Orders No. 450 and 450-A granting a permanent exception to the spacing requirements of 20 AAC 25.055 to allow production of gas ITom the WF #1 ITom any interval not deeper than 9,527' MD. The terms of the CRA and Conservation Order No, 450B established an allocation of 58% to the federal lease and 42% to the State of Alaska lease for any gas production ITom any interval not deeper than 9,527' MD in the WF #1. Forest is currently awaiting approval ITom the BLM and DNR regarding the valuation of the gas produced so that the funds ITom the escrow account can be disbursed to all parties who have an interest in the gas produced ITom the WF #1. Page I 0£2 /""'~ /'"'. /""' D RAFf Forest's requested exception to the statewide spacing regulations for the WF #2 is necessary to optimize gas recovery ftom the Tyonek formation in the West Foreland Field. The proposed bottomhole location for the WF #2 will be updip ftom the existing WF #1 and near the common lease line separating the State of Alaska and federalleases. The proposed bottomhole location of the WF #2 for projected productive intervals in the 9,200' sand and 9,400' sand will be in Section 21, T08N, RI4W, Seward Meridian and east of the common lease boundary. Forest is seeking a permanent spacing exception for the 9,200" sand and the 9,400' sand in the WF #2, since production ftom these sands has already been scrutinized during, and was the subject of, the AOGGCC spacing exception hearings regarding the WF #1 well, Further, these sands are part of the "Reservoir" already the subject of the CRA, entered into to address not only the allocation of production ftom the WF # 1 among the two leases, but also the allocation of such production ftom other wells drilled into these producing sands, The "Reservoir" is defined in the CRA as the following; "The two gas-bearing zones as encountered in WF #1 at 9502'-9527' and 9336'-9352' and all gas-bearing strata in communication therewith are jointly referred to hereinafter as "the Reservoir." Forest is seeking a temoorarv spacing exception for any producing sands encountered in the WF #2 well that are shallower than the top of the 9,200' sand, which Forest anticipates will be no shallower than -8,850' 1VDss. Forest would expect the AOGCC to prescribe a procedure similar to that prescribed for the temporary spacing exception granted for the WF #1 well, i.e. place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to the eRA, subject to approval of the AOGCc. As stated above, the CRA that was entered into by and between the mineral interest owners and the operator for allocation of production ftom the WF #1 well already addresses additional wells to be drilled into the Reservoir to be penetrated by the WF #2 by providing the following: "Lessee intends to produce natural gas ftom WF # 1 and potentially ftom additional wells drilled into the Reservoir with a bottomhole location on the Federal Lease or the State Lease. Gas and associated hydrocarbon liquids produced by WF #1 and by any other well with a bottomhole location in the Reservoir and on the State Lease or the Federal Lease is referred to herein as "Subject Gas," Forest plans to apply the provisions of the existing CRA to production ftom the Reservoir in the WF #2 as well. The relevant language ftom the CRA is excerpted below: "5. Term and Modification of Final Allocation. This Agreement shall become effective when it is fully executed by the United States (in a manner binding the Bureau of Land Management), the State of Alaska, and Lessee, and shall apply to all production of Subject Gas ftom the State Lease and the Federal Lease beginning on the Effective Date. This Agreement shall continue in full force and effect until: (1) all Escrowed Funds have been paid out of the Escrow Account pursuant to the Final Allocation and the tenns of this Agreement; (2) the Federal and the State Leases have terminated; and (3) all wells producing Subject Gas ftom the Reservoir are plugged and abandoned." Forest plans to allocate WF #2 well production ftom the Reservoir as provided for in the CRA and CO 450B and distribute royalties due ftom said Reservoir production to the mineral interest and ORRI owners pursuant to the tenns of each lease. This means that production ftom the WF #2 will be allocated 58% to the federal lease and 42% to the State of Alaska lease and royalties paid ftom WF #2 Subject Gas produced ftom the Reservoir as provided pursuant to the terms of each lease without the need to deposit said production into the escrow account which the AOGCC authorized Forest to terminate in CO 450B, If there is any production ftom any sands other than the Reservoir, Forest plans to place an amount equal to 17 1/2% of the total production ofWF #2 shallow sands for the Production Month, multiplied by the prevailing value for Cook Inlet gas into an escrow account until a CRA is entered into and a final allocation of production among the two leases is agreed to by and between the royalty owners or the parties to a CRA for said shallow sands, subject to approval of the AOGCC. Forest has established a dedicated email account for you to send any questions you may have regarding Forest's spacing exception application for the WF #2 in accordance with 20 AAC 25.055. That email address is wf2@.forestoil.com. Forest will provide responses to any question submitted to that email address to all recipients of this personal notice who send their email address to the wf2(å2forestoil.com email address, Page 2 0£2 z 0 ~ 0:: "'" ~ 0 ~ '<Ò n ~ ~ u.. J:-..... "'. 0:: ~ ~ 0 ,',", ~,', " '", u ðð~ ....J 's,' cJ - ~, 0 .~ ~,' L... u~ ~" r Tj; "" U) .'-.Y , W ~~ rY CJ ~ u.. ~~ (" ~ () L.. . ~~ ~ ~ fT1 Æ~~ Ir a ~ IT' l~ ~ f'- Lf) ru ~ ~ r4 ~~ I 0 c::J 0 0 Lf) fT1 r4 ~ ';<C'O~ a \-1 t'O 0 f'- '- .. - - - .- - '- - - - - - - - - - 1:1'0 ...:. ,..:. ..,) :1* .,.., c. 1,':' IT! I~" #4 STATE OF ALASKA ~- NOTICE TO PUBLISHER ~ ADVERTISING ORDER NO. ADVERTISING INVO JST BE IN TRIPLICATE SHOWING ADVERTISING ORDER N '. . ;ERTIFIED AO-O2514004 AFFILAvlr OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED i.;OPY OF ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE F AOGCC AGENCY CONTACT DATE OF A.O. R 333 W 7th Ave, Ste 100 Jodv Colombie July 21. 2004 0 Anchorage, AK 99501 PHONE PCN M - «)O7) 7<)1 -1 221 DATES ADVERTISEMENT REQUIRED: T Anchorage Daily News July 23, 2004 0 POBox 149001 Anchorage, AK 99514 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: STOF0330 Advertisement to be published was e-mailed Type of Advertisement X Legal 0 Display 0 Classified DOther (Specify) SEE ATTACHED ~~CE;ß\lTRI~ICATE ,I AOGCC, 333 \\:.7th Ave., Suite 100 PAGE 1 OF TOTAL OF ¡I . . TO ... . ,. ' ", Anchorage AK 99501 2 PAGES ALL PAGES$ REF TYPE NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARD 02910 3 4 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST LID 1 05 02140100 73451 2 3 /: 4 ./~""""""~-. ;' \ /v I ') REQUISITIONED BY: \ ~(( !\/('~lj\ ,\ /~_... DIVISION APPROVAL: \ /' I - - vv '-.... : ! I / ~ 02-902 (Rev. 3/94) Publisher/Original Copies: Department Fiscal, Department, Receiving AO.FRM /'-. - Anchorage Daily News Affidavit of Publication 7/23/2.004 1001 Northway Drive, Anchorage, AK 99508 PRICE OTHER OTHER OTHER OTHER OTHER GRAND AD# DATE PO ACCOUNT PER DAY CHARGES CHARGES#2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 238381 07/23/2004 02514004 STOFO330 $213.16 $213.16 $0.00 $0.00 $0.00 $0.00 $0.00 $213.16 Signed ~~£oJ NotIce of Public Hearing STATE OF ALASKA Alaska Oil ci/ld.G~ ,conser.votlan CØI'IU11I$$lon . : Re: The application of Far,st Olçarporatlon , ("Foresf") for a spacing exception' to allow the drlllhig and operation of the west Foreland t2 las production well bore In accordance with the drill- IIID ùnlt and spacing requirements Of 2Ø AAC 25.055. Forest, bY letter dllted JulY 21, 200~ and re. ' calved bY the Alaska 011 and Gas Con.ervatlon CommIssion ("Commltllon") 01\ tilit ÞMI day. requests the Comrnlss1t1l to r.schlGullthl public hearing concornln, tM ¡lQtlnt tlltøt"" for the propOsed West Forfland t2 gas well tr'omAugusl 17, 200~ toAugUst~; 2004. This hearlI'll concerns Forest's r"I!IJest '01' !l1I!'eptlon fo thlt.drlll¡ng unit and spadnt ,eoulremfnts of 20 AA'C 25.055 to al- low drllll"g and aPèratlan of the West Farelol'd 112 gas Pl'Odilctlon wetl I)orll. to a locatlan within '1,500 feet ofthé"roPérty IItle between Federal Lea.. A-035017 ond Slate Leos, APL,359112. ondwlthln the $(lIne gov,rnrné1ita'l ,section 01, and leIs than 3,000 feet from; a wall capable of producing from the SO"" gas POOl, Wllst'Foreland t2 w'til be drilled as a devi- ated well bore. The lurface location of Ihe well II 880 feet from the south line and 631 feet from the ealfllne Of s.ctlon2Ji T08N, RJ~e, sewurd Merld- Ian ("5M"),' Tile PÍ"ollosèd bottom holll'location of tb.e.\M.!,U,,¡.äuøttl;þm the north Imfand 1,105 feet .from .(lIe iiQï.lllnè,o, 21, ~08N" Rl~.e, SM. The {;ommlslion has tellt(ltlvely resc!heduled lhe ~11tW1Ør1" 0II11I1s application fOr Auoust 26, 2004 at """"'-.m at the offices of thè Alesko 011 and 333 7th Av- . ~'",r. t1wl . led II r'1IQu..t .' th tþl ,pmo1i;:~Df'I1t.. STATE OF ALASKA THIRD JUDICIAL DISTRICT Teresita Peralta, 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 said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 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 foregoing publication is not in excess of the rate charged private individuals. Subscribed and sworn to me before this date: t<~ r23, {)j}o~J ~~< ;~~f:Ji1W~1;gll.j In addltlcw, a Pllrson may submit written commants r",~ I.bI.oPPIl~tlon lollle Alaska Oil and Gas COlISllrya~. n,cÞrn"'.." 1Sf,I.DII at 3:q.... Well , 7th Avenue, Su11..JOOfAflcl*lt,", .Þ,lollko.P950J. Wrltt.n corn",en'. mil" lie receiveð nbloter lheln ~:30 pm on Aullu.' 24, 200~ ut.epl that If the C.om- milslolt decides liD nClld a publIC haorlAg, written protest at. comman.. mult be r_lved no loler than ,he conclusion of the AUliust 26, 2d04 hearing. If.yoll are a per'"11 with ad.llObllllY who may needsPllclál uccClm~otions In- order to com- ~~~tJ ~~~qC~=l ~~ t";'t~.~~ "rt'"~ro~e p l'uC::I ~3: 2004.' . .. Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska MY COMMISSION EXPIRIJS' 0 0/11 ~\~ ~ {([" r fr ¡¿ . Y..¡J J/'j}; -...\\\.\.~:.:¡i';';,~'i;.j;~...."'4.:" "r~';:'. .111 / t/ '" '.""~ ..., '. >".., / .' I::"'~>' "0 '.::'. '- . .- .... .'~ '-. . .' ""'. / ~~: ~ § " - , /';::.':':: .'.+.~~~~~<' /J J ')l;'" Is/: John K. Norman, Chair Commissioner ADN ACt 0251«104 Publish: July 23, 2004 ,,--.-. ~ Anchorage Daily News Affidavit of Publication 1001 Northway Drive. Anchorage, AK 99508 PRICE OTHER OTHER OTHER OTHER OTHER GRAND AD# DATE PO ACCOUNT PERDAY CHARGES CHARGES #2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 223684 07 /12/2004 02514002 STOF0330 $192.72 $192.72 $0.00 $0.00 $0.00 $0.00 $0.00 $192.72 That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 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 foregoing publication is not in excess of the rate charged private individuals. Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re:-ìnãQpPJrcafion,ïífTórest Olt'corp'Oratlon ("Forest") for a spa'clng excePtion to allow the dtllllnll and operlltlan oU/!t ,West Foreland 12 gas production well bóre In 'QCCordllnCe with the drill- i1Ig unit and spaclllll,requirements 0120 AAC 25.055. Forest, by letter,dqted JulY 2, 2004 IInd received by the Alaska all and Gas Conservation Commis- sion ("Commlssian") on that some dllY. requests exception to the drllllngllnit and spacing require- ments of 20 AAC 25,055 to allow drUil1lll and opera- tion onhe West Foreland 12 gas production well bore to alO(1ltlol1 within 1.500 feet of the property line between Federal Lease A'035017 and State Lease ADL-359112. and within tile some govern- merifal section as, and less than 3.000 feet from. a well capable of producing from the some gas ÞOaI. STATE OF ALASKA THIRD JUDICIAL DISTRICT Teresita Peralta, being first duly sworn on oath deposes and says that she is an advertising representative of the Anchorage Daily News, a daily newspaper. Signed ~~L West Foreland 12 will be drilled as a deviated well bore. The surface location of the well Is 880 feet from the south line and 631 feet from the east line of Section 2),TO8N.RI4E. S8\Nqrd MerIdian ("SM"). The øro~ bottoM hole ,lOCatIOn of the well is 1.365 feet from the north line and 1.105 feet fro,m, th.e. pa¥ li!)e of 21, T08N, RI4E;. SM, The Commission has tentativelY scheduled a pub- lic /!taring on this application fQr August 17. 2004 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commlsslol1 at 333 West 7th Avenue. Suite 100. Anchorage. Alaska 99$C11.' A person may request that the tentativelY scheduled hearing be ,'held by filing a written request witt! the Commls- I slon no later than 4:30 pm an July 29, 2004. ' , If a request for a hearing Is not timely filed, the Commlsalon may consider the Issuance'of on.or- : dèr wIthOut a heClrlng. To learn If the Commission Will hold tile public heorlnél please call"793-1221. 111 addition. a person may submit written com- ments regarding this application to the Alaska all and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alsaska 99501. W~It-. "ØII'I' ØfI AUgust U. 2004 exC:êlWflltlrlf the Commls. sian decides to hold a pubHc heorll1g, written pro- test or comments'must be r.ecelved no later than. the conclusion of the August ;7;)0,0;4 "*:'Í'lnl. If YOU are a persó'n with a cØsability who may need special accommodat n order to com- ment or to attend the publi aring.please con- tòCtJOdYColømble ót193-1 before AUllustf2, 20001. . , John K. Normon. Chair Commissioner Subscribed and sworn to me before this date: lll~ ILl. î{)OC¡ Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska ADN AOiI 02514002 Publish: JUly 12. 2004 \\\((({({(ffl'. \,\\~~~~~ :". k,";;, \: "....'.~~ . . or:. ... ~ :'~OTA,,~.~=. ..... ~..... .- .... . ^. . - ::: . ""l.;"'~!e . ~ -~'.ft '(¡,:Ò,-' .~..... -- . ", . .... -::.~^ -". 1!J". ;;::- ... . T~ ~':-" ~' :'. CFA~".o-':\' ¿., '.,,' \" //,1, r:-~p!rl<;s"~\\ ,1)J}m))))ì ~ I..'" t ~ 0 v 0.. J!! t Q) U æ'g u. .= ~g ~': ë E~gE ~~ H a: 0 "' '0 ~ £& ro ~ " Q) ":'_.c_.._~----.- ~hO~ ~25E 5000 05~E 200L . Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. . Print your name and address on the reverse so that we can return the card to you. . Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: ¡:e/ør ¿)/~~ . ø Jl / Il þ)y;)I .L¡J R cL l:heL /l1CJ9fJ I 3. Service Type ~ertified Mail q Express Mail 0 Registered 0 Return Receipt for Merchandise 0 Insured Mail 0 C.O.D. 4. Restricted Delivery? (Extra Fee) 0 Yes 2. Article Nu~"^' If"'^_" ,-^~ M-"^^ ,-"-" 7002 3150 0005 3521 1058 PS Form 3811 , July 1999 .-------- Domestic Retu;-;;~~~~--- ,- - . 102595.00.M.O952 .:Iï....,."".,. ...,.. . Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. . Print your name and address on the reverse so that we can return the card to you. . Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Mark Myers, Director State of Alaska Oivision'ofOil and Gas 550 West 7th Avenue, Ste 800 Anchorage, AK 99503-3510 2. I'-+;^'^ ""~"^_If"'^^,, ,-^- M^"_^ '-"^II A. Received b'f'fPlease Print Clearly) C C. . Signatuf"'.(~ X ~.. 0 Agent 0 Addressee D. Is delivery address different from item 1? 0 Yes If YES, enter delivery address below: 0 No 3. Service Type 0 Certified Mail 0 Registered 0 Insured Mail 0 Express Mail 0 Return Receipt for Merchandise 0 C.O.D. 4. Restricted Delivery? (Extra Fee) 0 Yes 7002 3150 0005 3521 1041 102595-00-M-O952 ----"'-'------ Domestic Return Receipt -.. - . PS Form 3811, July 1999 ""- ~ Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of Forest Oil Corporation ("Forest") for a spacing exception to allow the drilling and operation of the West Foreland #2 gas production well bore in accordance with the drilling unit and spacing requirements of20 AAC 25.055. Forest, by letter dated July 21, 2004 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on that same day, requests the Commission to reschedule the public hearing concerning the spacing exception for the proposed West Foreland #2 gas well from August 17,2004 to August 26, 2004. This hearing concerns Forest's request for exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A-0350l7 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet from, a well capable of producing from the same gas pool. West Foreland #2 will be drilled as a deviated well bore. The surface location of the well is 880 feet from the south line and 631 feet from the east line of Section 21, T08N, R14E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet from the north line and 1,105 feet from the east line of2l, T08N, R14E, SM. The Commission has tentatively rescheduled the public hearing on this application for August 26, 2004 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission no later than 4:30 pm on August 10, 2004. If a request for a hearing is not timely filed, the Commission may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call 793-1221. In addition, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 24, 2004 except that if the Commission decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 26, 2004 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at 793-1221 before August 13, 2004. Q~ ~John K. Norman, Chair Commissioner Published Date: July 23, 2004 ADN AO# 02514004 RE: Notice ~ ......, Subject: RE: Notice From: legalads <legalads@adn.com> Date: Thu,22Ju12Q04 14:46:59 -0800 To: Jody Colombie <jody - colombie@admin.state.ak.us> Hi Jody: Following is the confirmation information on your legal notice. Please let me know if you have any questions or need additional information. Account Number: STOF 0330 Legal Ad Number: 238381 Publication Date(s): July 23, 2004 Your Reference or PO#: 02514004 Cost of Legal Notice: $213.16 Additional Charges Web link: E-Mail Link: Bolding: Total Cost to Place Legal Notice: $213.16 Ad Will Appear on the web, www.adn.com: XXXX Ad Will Not Appear on the web, www.adn.com: Thank You, Kim Kirby Anchorage Daily News Legal Classified Representative E-Mail: legalads@adn.com Phone: (907) 257-4296 Fax: (907) 279-8170 ---------- From: Jody Colombie Sent: Thursday, July 22, 2004 12:03 PM To: legalads Subject: Notice «File: Ad Order form.doc»«File: 2nd- Notice West Foreland 2 .doc» Please publish on Friday. 1 of 1 7/22/20043:00 PM ~ ~ STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COpy OF ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE i'; .:t:~:~. F~1ItVOIŒ ~'.. :.:!~; F AOGCC R 333 West 7th Avenue, Suite 100 0 Anchorage, AK 99501 M 907- 793-1221 ADVERTISING ORDER NO. AO-O2514004 AGENCY CONTACT DATE OF A.O. T 1 ,.. 1 l' IO(1V l PHONE (qO?) 7qi -1 ?? 1 DATES ADVERTISEMENT REQUIRED: Tnlv ? 1 ?OOd pcf\I T 0 Anchorage Daily News POBox 149001 Anchorage, AK 99514 July 23, 2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRElY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: United states of America AFFIDAVIT OF PUBLICATION REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. A CERTIFIED COpy OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. ATTACH PROOF OF PUBLICATION HERE. division. Before me, the undersigned, a notary public this day personally appeared who, being first duly sworn, according to law, says that he/she is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2004, and thereafter for - consecutive days, the last publication appearing on the - day of . 2004, and that the rate charged thereon is not in excess of the rate charged private individuals. Subscribed and sworn to before me This - day of 2004, Notary public for state of My commission expires 02-901 (Rev. 3/94) Page 2 AO.FRM PUBLISHER Notice 1 of 1 r--- ~ Subject: Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Thu, 22 Jul2004 12:04:21 -0800 To: Angela W ebb<angie_webb~iti,state.ak.us>, C~a:Q'Mciver <bren....I1tciver@admin.stllte.ak.us>, ..'., ,.' .." . Please publish on website. Jody 7/22/2004 12:04 PM West Foreland #2 ~ ~ Subjed:yY:çstForeland#2 From:.J'odyCo lol11bie<jody _colombie@admin.state.ak.us> Date:Thu, 22 Jul2004 12:03:46 ..0800 Xò: undisc1osed..reêipients:; . .' øqC:R.o . . ,E. .l\1intz <roberJ mín~la\V .state.al4us>; CliristinêHansen ....' fC.fuùt";t!"~f~<?~Ok:.us>::rerfie Hubble <huhblet1@bp:com>,. Sondra' Stewman ~tewmaSI>@BP;ëòiß>, Scott&. Cammy Taylor <staylor@a1~þ.net>,stanekjJ'-; .~, '. .: ===~œttæirl c~òddy'<cbóddY@q!liþelll.~, Mark DaitoÏi:<Iriarkdalton@hdrinc.com>,' Shannon Donnelly <shannon.donriél1j@oonocophillips.com>. "Mark P. Worcestertl' .. ". ..' '. <mark.p. worcester@conocophillips.coItl?-, "Jerry C. DethlefslI'. <jerry,c.4ethlefS@conocöpf:Ullips.côm> ,. .Bob<bob@fuletkeeper.org>, wdy <wdv@dnr.state.ak.us>, tjr <tj~@di'Jx~~~.,iÛC.us>, bbri.~Þ <bt!ritch@a1åska;net>, ntjnels<>n <mjnelson@purving~.com>, <gsp~wer .com>, 'GreggNady <gtegg.~ady@shell.còm> , Fred Steece . " .. ~ff(:d.steece@ståtê;s~?", rcrotty <rcrotty@ch2m.CÇp1>-,jejQnes <jejones@aurorapower.com>, dapa. <dttp~@a1asþ.net> , Jf()~~ck <jroderick@gei.net> ,~cy <eyancy@seal-tite.net>; "James M. ~~~~~t~~;¡i' <suzanJ.bi:. :m~lštate.ak.us>.:tablerk <tablerk@un.'ocå1.cOm.>Brady<brady' . ~"^ga.org> Brian ",-""~~",,,,"'" .....:..':.'.'.... "":'.' ...."'" '--..... ~..., , ßaveïock<bé~@ðnì;~tate.ak.Ûs>, bP9J>p <bpopp@borougltkenåi.ak.us>, JimWhitt~ <»mwhite@Satx.1T.~.;" Johl1{$. Häworth" <john.s.hawortl1@exxonmobil.com>,marty <111årty@r,kindustrial.côm?",ghan1plons,<ghammons@aol.com>, rinclean',.' '. ' <nIlCle~@pobox.alaska.nèþ:J J art1.es Scþ.çrr<j ames~sche.-r@rAA1s.g9.v>, mlcg17200 10f2 7/22/2004 12:04 PM West Foreland #2 2 of2 ~ ~ I" , 2nd- Notice West_Foreland_2_.dOC' Content-Type: apPlicatiOnlmSWOrdl <':~l1tel1t-Encoding: base64 . i .. .......m mm mm I 7/22/200412:04 PM Notice ~ ~ Subject: Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Thu, 22 Jul2004 12:03:02 -0800 To: Legal Ads Anchorage Daily News <legalads@adn.com> Please publish on Friday. !HHH' ""HH 'HHH' ......... .... "HHH.::m¡¡ ,I Content-Type: apphcatlOnlmsword.1 I~~~~~~~m~~r~.~~~ I~~~t~~t~~~~~~~~:?~~?~ . . ¡ I , 2nd- Notice Content-Type: applicationlmsword Content-Encoding: base64 1 of! 7/22/200412:04 PM Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 /" -' " " Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 John Levorsen 200 North 3rd Street, #1202 Boise, ID 83702 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 Schlumberger Drilling and Measurements 3940 Arctic Blvd., Ste 300 Anchorage, AK 99503 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 North Slope Borough PO Box 69 Barrow, AK 99723 4t/ /eeL /~ ¥/3ß-V #3 "~~ .;;T~'¿! Aó.ð~ Cj~ ~~ ~ ~ðÝ~~~~ & d41cc- ~ d- ~ --f/-~-1'; 2dO¿/ ;£ ~ ~~r <L~~ I'-~ ¿j,F~,Z~ z/ ~~-?ðo¿{ ~ /~/ " - ¥r ~=-r ~~¿£~~~~ a/ ff ~ ,:2// ~ ~r ~~~ðY~ RECEI\/ED JUL 2 1 2004 Alaska 0;1 h #2 STATE OF ALASKA ----- NOTICE TO PUBLISHER ~ ADVERTISING ORDER NO. ADVERTISING INV..., ; MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER '. ., CERTIFIED AO-O2514002 ORDER AFFIDAVIT OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED COpy OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE . ."..' SEE BO1TOMFOI'"~ AQDRES8 ..... .;..,¡ "I .' ".:. :-..~.; F AOGCC AGENCY CONTACT DATE OF A.O. R 333 W 7th Ave, Ste 100 Jodv Colombie Julv 9. 2004 0 Anchorage, AK 99501 PHONE PCN M - I (907) 793 -1221 DATES ADVERTISEMENT REQUIRED: T Anchorage Daily News July 12, 2004 0 POBox 149001 Anchorage,AJ(99514 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRElY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: STOF0330 Advertisement to be published was e-mailed Type of Advertisement X Legal D Display D Classified DOther (Specify) SEE ATTACHED ~~~D :IN~~~~:~~ AOGCC, 333 W. 7th Ave., Suite 100 PAGE 1 OF TOTAL OF ,I Anchoragc AK 99501 2 PAGES ALL PAGES$ REF TYPE NUMBER AMOUNT DATE COMMENTS 1 YEN 2 ARD 02910 3 4 FIN AMOUNT Sy CC PGM LC ACCT FY NMR DIST LlQ 1 05 02140100 73540 2 3 ~ po- ' ~ ( ~QUISITIONED~ :( J ~j """ , IDIVISION APPROVAL: "I" ~ .. ~_..,. ~ .II L....¡j ' JÂA ./1 / J \. ~ ,.,. ..~ ...... - r / 02-~ev.3/94) Publisher/Ori inal Copies: De artment Fiscal, Department, Receiving AO.FRM g p RE: Notice '.r- . Subject: RE: Notice From: legalads <legalads@adn.com> Date: Fri, 09 Jul2004 14:57:57 ~0800 To: J94y:'eól~l1lbie <jody ~ç()tombie@admin.state;ak.us> Hi Jody: Following is the confirmation information on your legal notice. Please let me know if you have any questions or need additional information. Account Number: STOF 0330 Legal Ad Number: 223684 Publication Date(s): July 12, 2004 Your Reference or PO#: 02514002 Cost of Legal Notice: $192.72 Additional Charges Web link: E-Mail Link: Bolding: Total Cost to Place Legal Notice: $192.72 Ad Will Appear on the web, www.adn.com: XXXX Ad Will Not Appear on the web, www.adn.com: Thank You, Kim Kirby Anchorage Daily News Legal Classified Representative E-Mail: legalads@adn.com Phone: (907) 257-4296 Fax: (907) 279-8170 ---------- From: Jody Colombie Sent: Friday, July 9, 2004 2:32 PM To: legalads Subject: Notice «File: Ad Order form.doc»«File: West Foreland 2 Notice of Public HearinQ.doc» Please publish on Monday. 1 of 1 7/9/20044:16 PM STATE OF ALASKA ADVERTISING ORDER .¡ '8E£" 'FOIt.JINOICE ADDRESS . '. '. :~'::;'-'.:'. . . .- NOTICE TO PUBLISHER ~ ADVERTISING ORDER NO. INVv,..;E MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AO-O2514002 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COpy OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE . . F AOGCC R 333 West 7th Avenue, Suite 100 0 Anchorage, AK 99501 M 907-793-1221 AGENCY CONTACT DATE OF A.O. Indv r 1 l' PHONE (qO?) 7qi -1 n 1 DATES ADVERTISEMENT REQUIRED: Tn h, Q ')OOd pcf\I T 0 Anchorage Daily News POBox 149001 Anchorage, AK 99514 July 12, 2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRElY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: United states of America AFFIDAVIT OF PUBLICATION REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. A CERTIFIED COpy OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. ATTACH PROOF OF PUBLICATION HERE. division. Before me, the undersigned, a notary public this day personally appeared who, being first duly swom, according to law, says that helshe is the of Published at in said division and state of and that the advertisement, of which the annexed is a true copy, was published in said publication on the day of 2004, and thereafter for - consecutive days, the last publication appearing on the - day of , 2004, and that the rate charged thereon is not in excess of the rate charged private individuals, Subscribed and sworn to before me This - day of 2004, Notary public for state of My commission expires 02-901 (Rev. 3/94) Page 2 AO.FRM PUBLISHER ~ ~ Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of Forest Oil Corporation ("Forest") for a spacing exception to allow the drilling and operation of the West Foreland #2 gas production well bore in accordance with the drilling unit and spacing requirements of20 AAC 25.055. Forest, by letter dated July 2,2004 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on that same day, requests exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow drilling and operation of the West Foreland #2 gas production well bore to a location within 1,500 feet of the property line between Federal Lease A-035017 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet from, a well capable of producing from the same gas pool. West Foreland #2 will be drilled as a deviated well bore. The surface location of the well is 880 feet from the south line and 631 feet from the east line of Section 21, T08N, RI4E, Seward Meridian ("SM"). The proposed bottom hole location of the well is 1,365 feet from the north line and 1,105 feet from the east line of2l, T08N, R14E, SM. The Commission has tentatively scheduled a public hearing on this application for August 17,2004 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. A person may request that the tentatively scheduled hearing be held by filing a written request with the Commission no later than 4:30 pm on July 29, 2004. If a request for a hearing is not timely filed, the Commission may consider the issuance of an order without a hearing. To learn if the Commission will hold the public hearing, please call 793-1221. In addition, a person may submit written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on August 13, 2004 except that if the Commission decides to hold a public hearing, written protest or comments must be received no later than the conclusion of the August 17, 2004 hearing. If you are a person with a dis ili comment or to attend the' he . August 12, 2004. 0 may need special accommodations in order to 1 ase contact Jody Colombie at 793-1221 before / Published Date: July 12, 2004 ADN AO# 02514002 Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Mark Wed man Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 James Gibbs PO Box 1597 Soldotna, AK 99669 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 - Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Schlumberger Drilling and Measurements 3940 Arctic Blvd., Ste 300 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Jack Hakkila PO Box 190083 Anchorage, AK 99519 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 North Slope Borough PO Box 69 Barrow, AK 99723 -- David McCaleb IHS Energy Group GEPS 5333 Westheimer, Ste 100 Houston, TX 77056 George Vaught, Jr. PO Box 13557 Denver, CO 80201-3557 John Levorsen 200 North 3rd Street, #1202 Boise, ID 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, WA 98119-3960 David Cusato 200 West 34th PMB 411 Anchorage, AK 99503 Jill Schneider US Geological Survey 4200 University Dr. Anchorage, AK 99508 Darwin Waldsmith PO Box 39309 Ninilchick, AK 99639 Penny Vadla 399 West Riverview Avenue Soldotna, AK 99669-7714 Bernie Karl K&K Recycling Inc. PO Box 58055 Fairbanks, AK 99711 /na#;§q West Foreland #2 Notice /"'- -.. Subject: West Foreland #2 Notice From:.JódyColombie<jödÝlcO lornbie@admîrt. state. ak.us> Ilate:Fri;O9 Jti1200414:34:14 -0800 To: undisclosed-recipients:; BCC: Robert E Mintz <robert_mintz@law.state.ak.us>, Christine Hansen <c.hansen@iogcc.state.ok.us>, Terrie Hubble <hubbletl@bp.com>, Sandra Stewman <StewmaSD@BP.com>, Scott & Cammy Taylor <staylor@alaska.net>, stanekj <stanekj@unocal.com>, ecolaw <ecolaw@trustees.org>, roseragsdale <roseragsdale@gci.net>, trmjr 1 <trmjr 1 @aol.com>, jbriddle <jbriddle@marathonoil.com>, rockhill <rockhill@aoga.org>, shaneg <shan.eg@evergreengas.com>, jdarlington <jdarlington@forestoil.com>, nelson <nelson@gci.net>, cboddy <cboddy@usibelli.com>, Mark Dalton <mark.dalton@hdrinc.com>, Shannon Donnelly <shannon.donnelly@conocophillips.com>, "Mark P. Worcester" <mark.p.worcester@conocophillips.com>, "Jerry C. Dethlefs" <jerry.c.dethlefs@conocophillips.com>, Bob <bob@inletkeeper.org>, wdv <wdv@dnr.state.ak.us>, tjr <tjr@dnr.state.ak.us>, bbritch <bbritch@aIaska.net>, mjnelson <mjnelson@purvingertz.com>, Charles O'Donnell <charles.o'donnell@veco.com>, "Randy L. Skillern" <SkilleRL@BP .com>, "Jeanne H. Dickey" <DickeyJH@BP.com>, "Deborah J. Jones" <JonesD6@BP.com>, "Paul G. Hyatt" <hyattpg@BP.com>, "Steven R. Rossberg" <RossbeRS@BP.com>, Lois <lois@inletkeeper.org>, "Joseph F. Kirchner" <K.irchnJF@BP.com>, Gordon Pospisil <PospisG@BP.com>, "Francis S. Sommer" <SommerFS@BP.com>, Mikel Schultz <MikeI.Schultz@BP.com>, "Nick W. Glover" <GloverNW@BP.com>, "Daryl J. Kleppin" <KleppiDE@BP.com>, "Janet D. Platt" <PlattJD@BP.com>, "Rosanne M. Jacobsen" <JacobsRM@BP.com>, ddonkel <ddonkel@cfl.rr.com>, Collins Mount <collins_mount@revenue.state.ak.us>, mckay <mckay@gci.net>, Barbara F Fullmer <barbara.f.fullmer@conocophillips.com>, bocastwf <bocastwf@bp.com>, Charles Barker <barker@usgs.gov>, doug_schultze <doug_schultze@xtoenergy.com>, Hank Alford <hank.alford@exxonmobil.com>, Mark Kovac <yesno l@gci.net>, gspfoff <gspfoff@aurorapower.com>, Gregg Nady <gregg.nady@shell.com>, Fred Steece <fred.steece@state.sd.us>, rcrotty <rcrotty@ch2m.com>, jejones <jejones@aurorapower.com>, dapa <dapa@alaska.net>, jroderick <jroderick@gci.net>, eyancy <eyancy@seal-tite.net>, "James M. Ruud" <james.m.ruud@conocophillips.com>, Brit Lively <mapalaska@ak.net>, jab <jah@dnr.state.ak.us>, Kurt EDison <kurt_olson@legis.state.ak.us>, buonoje <buonoje@bp.com>, Mark Hanley <mark_hanley@anadarko.com>, loren_leman <loren_leman@gov.state.ak.us>, Julie Houle <julie_houle@dnr.state.ak.us>, John W Katz <jwkatz@sso.org>, Suzan J Hill <suzan_hill@dec.state.ak.us>, tablerk <tablerk@unoca1.com>, Brady <brady@aoga.org>, Brian Havelock <beh@dnr.state.ak.us>, bpopp <bpopp@borough.kenai.ak.us>, Jim White <jimwhite@satx.rr.com>, "John S. Haworth" <john.s.haworth@exxonmobil.com>, marty <marty@rkindustrial.com>, ghammons <ghammons@aol.com>, rmclean <nnc1ean@pobox.alaska.net>, James Scherr <james.scherr@mms.gov>, mkm7200 <mkm7200@aol.com>, Brian Gillespie <ifbmg@uaa.alaska.edu>, David L Boelens <dboelens@aurorapower.com>, Todd Durkee <TDURKEE@KMG.com>, Gary Schultz <gary_schultz@dnr.state.ak.us>, Wayne Rancier <RANCIER@petro-canada.ca>, Bill Miller <Bill- Miller@xtoalaska.com>, Brandon Gagnon <bgagnon@brenalaw.com>, Paul Winslow <pmwinslow@forestoil.com>, Garry Catron <catrongr@bp.com>, Sharmaine Copeland <copelasv@bp.com> 10f2 7/9/2004 2:34 PM West Foreland #2 Notice .--.. ~ .. . ...... ..... , ~rela:~~~tice=of_~U~IiC=Hearing.d oc l~::::::~ ~:~ g: ::~::t ion/ m s word. ............................................... ....... .. I I 2 of2 7/9/2004 2:34 PM Notice p--. ---.., Subject: Notice From: Jody Colombie <jody - colombie@admin.state.ak.us> Date: Fri, 09 Ju12004 14:33:42 -0800 To: undisclosed-recipients:; BCC: Angela Webb <angie_webb@adrnin.state.ak.us>, Cynthia B Mciver <bIen - mciver@admin.state.ak.us> Please publish . . . . . . . Content-Type: applicationlmsword I West_Foreland _2- Notice_of _Public - Hearing.doc: ! . Content-Encoding: base64 ' -.--.-.-.------.---..........-.....-...........---.............-..........-..-.-....... .......-........-.........--....... ..',...c-,.-.......-...------.....-,..........:.-.-.-.....................,.._c_..-:.........::...=c,"'.-.,-,........-.-.....,.......-....... .......-...........-.....i 1 of 1 7/9/20042:34 PM Notice ~'. --'"'. Subject: Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Fri, 09 Jul2004 14:32:57 -0800 l'o:Mr~,.~:~órageDåîlý N CW$' <leg3lád$@åg.n~èøm>:.. Please publish on Monday. .I:~...~~~:~...;~~=.~~.~...I.. .~~~t~~t-~;~~.:............... ............~~~.li~~~i~~~~~~~d...i.¡ I 'I Content-Encoding: base64 d ,........................................................................................'1...................................................................................................................:1 ,. Fe'~_FOre~~tiœ_~~b::e;::r~:::::~:;5:tl~~: wo:1 .--.........-.--....................................-............-..........-............-..........-..-..................---.............-.. .............-. .............--.-.....-.-.........----...........-.......--.-.........-..-..-..--.-...................----...............-....-.1 1 of! 7/9/20042:34 PM #1 ~ ~.\í1 ~ CHECKL.::»T - SPACING EXCEPTION kt ~LlCATION Forest Oil PROPERTY ID/ LEASE 8: ADL 359112 OPERATOR FIELD/POOL WELL NAME West Foreland Field, Undef Pool West Foreland #2 PI/BH: ADL 359112 VERTICAL EXPLORATORY GAS x DEVIATED x DELINEATION OIL DEVELOPMENT x SURFACE LOCATION PRODUCTIVE INTERVALS (Top and Bottom) BOTTOM HOLE Check applicable reason(s) for spacing exception per 20 AAC 25.055(a): (1) to drill a well for oil within 500 feet of a property line where ownership or landownershi chan es, (2) to drill a well for gas within 1500 feet of a property line where ownership or landownershi chan es, (3) to drill and complete more than one oil well in a governmental quarter section; or to drill and complete an oil well closer than 1000' to any well drilling to or capable of producin from the same 001, 4 to drill and com lete more than one as well in a overnmental section; or or to drill and complete a gas well closer than 3000' to any well drilling to or ca able of roducin from the same 001. Does the application contain: X A brief ex lanation for wh the 0 erator has chosen to drill the specified location. A plat drawn to a scale of one inch equaling 2,640 feet or larger, showing the location of the well or portion of the well for which the exception is sought, all other completed and drilling wells on the property, and all adjoining properties and wells within 1,000 feet of a well or portion of the well requiring the spacing exception that is drilling for oil or within 3,000 feet of a well or portion of the well requiring the s acin exce tion that is drillin for as. The names of all owners, landowners, and operators of all properties within 1,000 feet of a well or portion of the well requiring the spacing exception that is drilling for oil or within 3,000 feet of a well or portion of the well requiring the spacing exception that is drillin for as. A copy of the notice sent by certified mail to the owners, landowners and operators described above, the date of mailing, and the addresses to which the notice was sent. An affidavit by a person acquainted with the facts verifying that all facts are true and that the plat correctl ortra s ertinent and re uired data. If the operator requests a variance from the notice requirements of 20AAC25.055(d), sufficient information to demonstrate that it is not feasible to comply with the notice requirements because of the complexity of ownership within the notice area. 880' F8L and 631' FEL, 8.21, T08N, R14W, 8M 1,781' FNL and 1,043' FEL, 8. 21, T08N, R14W, 8M 1,365' FNL and 1,105' FEL, 8. 21, T08N, R14W, 8M X X X X X x x ~ ~ @ FOREST OIL CORPORATION RECE~\/ED JUL 0 2 2004 OÇ1I1CIIOH~7c, OÇ1/rlJka .9.9501 (9f?7) J>.iS-S6'O(J . (9{)7) J>.iS-S6V/ (Q~I) Co:mr;:,~'on .1/0 O/('c'i/IFccl . c?f,u/c 700 ,Alaska Oil ¡~ July 2, 2004 Mr. Robert Crandall Alaska Oil and Gas Conservation Connnission 333 W. 7th Avenue, Suite 100 Anchorage, Alaska 99501-3539 Hand-Delivered Re: Application for Well Spacing Exemption, West Foreland #2 ("WF #2") Well West Foreland Field; A-O35019, ADL-359112 Dear Mr. Crandall: Forest Oil Corporation ("Forest") by this letter hereby submits this application for approval to the Alaska Oil and Gas ConselVation Connnission ("AOGCC") and respectfully requests the AOGCC to issue an order exempting the West Foreland #2 well ("WF #2") from 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 as a straight hole on federal lease A-035017 in Section 21, Township 8 North, Range 14 West, Seward Meridian and completed on March 29, 1962 by Pan American Petrolemn Corporation. The WF #1 is the only well in the West Foreland Field and has a surface location on the federal lease of 879.5' FSL, 670.5' FEL, Section 21, T08N, R14W, 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 committed to the West McArthur River Unit ("WMRU") but has no producing wells located within its boundaries. All WMRU producing wells are oil wells 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 federal 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 surface estate within the boundaries of the federal lease is of mixed ownership between SalamatofNative Association, Inc., Alaska Natives and private individuals. The WF #1 pad is located on land owned by SalamatofNative Association, Inc. Forest has a comprehensive surface use agreement with SalamatofNative Association, Inc. that will allow use of this land to expand the WF #1 well pad, if necessary, to drill the WF #2. The WF #1 was drilled by the Pan American Corporation to a total depth of 13,500' MD & TVD in 1962. During the completion eight intelVals were drill stem tested but only two sands demonstrated productive potential. Both sands are gas sands in the lower Tyonek intelVal; an upper sand, at 9334-50 ft MD (the "9,200' Sand"), and a lower sand, at 9502-22 ft MD (the "9,400' Sand"). In 1984, an extended flow test of the 9,200' Sand produced 52.8 MMSCF of gas. The lower zone was plugged back and currently only the upper zone is open in the WF #1 wellbore. To drill out the bridge plug in order to produce the 9,400' sand from the WF #1 would jeopardize production from the entire WF #1 wellbore. The WF #1 was shut-in until April 2001 when Forest, the BLM and the Alaska Department of Natural Resources ("DNR") executed a Compensatory Royalty Agreement ("CRA") to allocate production from the WF #1 between the federal lease and the State of Alaska lease. The CRA was required by the AOGCC pursuant to ConselVation Orders No. 450 and 450-A granting a pennanent exception to the spacing requirements of20 AAC 25.055 to allow production of gas from the WF #1 from any intelVal not deeper than 9,527' MD. The tenns of the CRA and ConselVation Order No. 450B established an allocation of 58% to the federal lease and 42% to the State of Alaska lease of any gas production from any intelVal not deeper than 9,527' MD in the WF #1. This exception to the statewide spacing regulations is sought because the proposed bottomhole location of the WF #2 may be within 1,500' of a property line with a different landowner (i.e. the federal lease) and within 3,000' of a well capable of producing from the same pool (ie. the WF #1). This exception to the statewide spacing regulations is necessary to optimize gas recovery from the Tyonek formation in the West Foreland Field. The proposed bottomhole location for the WF #2 will Page 1 of2 /"- /""", be updip ttom the existing WF #1 and near the connnon lease line separating the State of Alaska and federal leases. The proposed bottomhole location of the WF #2 for the 9,200' and 9,400' Sands will be in Section 21, T08N, R14W, Seward Meridian and east of the common lease boundary, as indicated on the enclosed maps. Because the WF #2 is proposed to be drilled into and produce ttom both of the lower tertiary productive intervals found in the WF #1, it is expected that the AOGCC will also require a CRA to be entered into and executed by Forest, the BLM and DNR as evidence of a pooling agreement prior to production ttom the WF #2. Forest has had several meetings with the BLM, the DNR and COO to discuss its plans for the WF #2 and its proposal to recommend that allocation of production between the federal lease and the State of Alaska lease ttom the same lower tertiary productive intervals as those found in the WF #1 be in the same percentages for the WF #2 as those established for the WF #1. All parties have indicated agreement to this approach. However, because there is a potential for producing intervals to be encountered in shallower sands, the CRA for the WF #2 will need to be restructured to acconnnodate this possibility and establish a pooling allocation percentage for these shallower sands. Consequently, Forest respectfully requests that the AOGCC grant an exception to the provisions of20 AAC 25.055 for the WF #2 based upon a proposed well path approximately described as follows: Target Depth Feet From Sec 21 N/S Line Y ASP4 Feet From Sec 21 EIW Line MD TVDss X ASP4 WF #2 surface 0 90' 190391 2475578 879.5' FSL 630.5' FEL WF #1 surface location ttom 1961 BLM log report 879.5' FSL 670.5' FEL 7,400' sand 7,540' -7,218' 190285 2476400 1,020' FSL 758' FEL 9,200' Sand 10,083' -8,968' 190047 2478241 1,781' FNL 1,043' FEL 9,400' Sand 10,351' -9,150' 190022 2478435 1,588' FNL 1,074' FEL TD 10,650' -9,355' 189994 2478651 1,365' FNL 1,105' FEL Feet From Lease line 406' West 216' West 242' East 293' East 339' East Pursuant to 20 AAC 25.055, enclosed is a plat showing the location of the WF #2, lease maps indicating well paths, where the proposed well is estimated to encounter productive intervals and all adjoining properties. In addition, a table is enclosed listing the parties entitled to receive notice of this application and an affidavit stating that the undersigned is familiar with the facts stated in this application and that the plat correctly portrays pertinent and required data. The parties listed in the enclosed table have also been mailed certified copies of this application, including all enclosures. If there are any questions or should you need additional information, please contact me at (907) 868-2112. Sincerely yours, FOREST OIL CORPORATION cy~ d~ ~:n Arlington Land Manager Enclosures Cc: COO BLM ADNR Page 2 0£2 r^- ,~, TO THE ALASKA OIL AND GAS CONSERVATION COMMISSION Before the Alaska Oil and Gas Conservation Commission In the Matter of the Application of Forest Oil Corporation for a well spacing exemption And exception to the provisions pertaining to Drilling Units and Well Spacing pursuant to 20 AAC 25.055 ) ) ) ) ) ) ) VERIFICATION OF FACTS AND AFFIDAVIT OF JIM ARLINGTON Jim Arlington, being fIrSt duly sworn, upon oath, deposes and states as follows: L My name is TIM ARLINGTON. I am over 21 years old and have personal knowledge of the matters set forth herein. 2. I am the Land Manager for the operator, Forest Oil Corporation (FOREST), 3. I am knowledgeable and fully infonned concerning the facts associated with the application of Forest Oil Corporation for a well spacing exemption and exception to the provisions pertaining to drilling units and well spacing pursuant to 20 AAC 25,055 as they pertain to the proposed drilling of the West Foreland #2 gas well. 4. I have assisted in preparing and have reviewed the completed application submitted by Forest requesting an exemption from the provisions of20 AAC 25.055 for the drilling of the West Foreland #2 well in the West Foreland Field and hereby assert that all the facts contained therein are true to the best of my knowledge. 5. I have reviewed the plat and maps enclosed with the application and assert that they correctly portray the pertinent and required data. 6. Forest is the only operator of any wells within 3,000 feet of the well for which the exception contained in the application is sought. 7. On or aboutJuly 2,2004, pursuantto 20 AAC 25.055(d), I mailed the required notice of Forest's application for an exemption from the provisions of20 AAC 25.055 by sending a copy of the application by certified mail to the names of all owners, landowners and operators of all properties within 3,001feet of the proposed well location and have attached this list as Exhibit "A" to this affidavit. Subscribed and sworn to on July ~, 2004. STATE OF ALASKA THIRD JUDICIAL DISTRICT ~L~~ " Jim Arlin ) ) ) ss. ~ On this -.a: day of July 2004, before me, the undersigned, a Notary Public duly commissioned and sworn, appeared Jim Arlington, personally known to me, to be the person whose name is subscribed to within the Verification of Facts and Affidavit. \\\\11"111/ ,\\ ~y,. C. Pul.. /// ~ ~. .. .. . .. .. .. <~~ ~"V1t OíAb ..Q- .::::: It ~ 'T J- *oo -=. .... .. - - .. -*- .. :::: - .. .. ..... ~*. <Be/)..\. ..'*:::: - ~It . ~ ~ OOoo It. ~, /// 1. Of þ..\ø.'6, \' //11/11,1\\\ Wiress my hand and official seal. ( G(~.œ Notary Public, State of Alaska My Commission Expires: ,,- . ""', EXHffiIT "A" To VERIFICATION OF FACTS AND AFFIDAVIT OF JIM ARLINGTON In the Matter of the Application of Forest Oil Corporation for a well spacing exemption and exception to the provisions pertaining to drilling units and well spacing pursuant to 20 AAC 25.055. West Foreland #2 well List of names of all owners, landowners and operators of all properties within 3,000 feet Name Attention Address City State Zip DNR, Division of Oil & Gas Chris Ruff 550 West 7th, Ste. 800 Anchorage AK 99501-3560 U. S. DOl, BLM Greg Noble 6881 Abbott Loop Rd. Anchorage AK 99507-2591 Cook Inlet Region, Inc. Kirk McGee 2525 C Street, Ste. 500 Anchorage AK 99509 T9N ,/""-. T8N T7N - ----- t -- .-- -- .-- - - West ADL 359112 FOREST OIL CORPORATION ..~- - 100% r A-035017 ~ I I I I I R14W TRACT 1 ADL 359111 FOREpT OIL CORPORATION 100% Foreland TRACT BOUNDARY - - - UNIT BOUNDARY OIL PA 0 "--" 0 0 1 :72000 1 5000 2 KILOMETERS J 10000 FEET I 2 STATUTE MILES I .~ T9N OIL PA TRACT 2 T8N :;;u T7N R14W FOREST Oil CORPORATION Alaska Business Unit WEST McARTHUR RIVER UNIT and FEDERAL LEASE A-O35017 ~ ,- = 6000' 1- LMS l- I-JUN-2oo4 - NAD2l, ASP 2ONE 4 I I I I 8 20 29 32 ~ West Forelands Area Lease Map T8N, R14W, Seward Meridian W, McArthur River Unit Forest Oil ADL-359111 9 10 15 WMRU Forest Oil ADL-359112 WF-1 21 22 I I I -j ! ! Forest Oil A-035017 28 ~ 2 11 14 23 26 13 24 25 36 12 1" = 1 mile ( ,../ ....// ,/,l/ ¡ ,/ ( / / ... /,/ ,/ ¡"" ;;'¡' ...."" 1 Mile Lease Map - Surface Location .;. WF-2 Surface x= 190,391' y= 2,475,578' 880' From South line 631' From East line 406' West of Lease line ", I-- ¡ ..../ i .... , 2 ,/ ¡ i ¡ / l;j ,/ l~a .... ...- ,/ / ... / ... ,.. f / ....' ,/ .... ,.. .... ,/ ... ,..'" ¡ f ,"" / co Shoreline & Lease Line ( ,/ / / ", // /// / ... / ( ,,/ / /f//' /' I¡.J' ,,// 1 Mile /" ,/ ./ Lease Map - TO location (, 2 , , ,.. ,./ ';,,' ,/ /rar, , / , ,../ , ,/ / "./ ,,/ ,.. / " / /' , .// // ,,/ ,,/ ,/ ,,/ ,/ /- /,/ // .... ,/ / ./ / WF-2 TO Location 10650'md (-9355'sstvd) x= 189,994 y= 2,478,651 1336' From North line 1105' From East line 339' East of Lease line I '5J( Co ~ Shoreline & Lease Line ¡ +- Lease Map - 7400' Sand ,/i/ " " , ,.i'" /,i l/ " .?"'/ ,// ...i ,....i 1// .i",,// .i ' /,i' \. ( WF-2 7400 Sand 7540'md (-7230'sstvd) x= 190,285' y= 2,476,400' 1696' From South line t-' 758' From Eastline - 216' West of Lease line , / // ,,/ / 1 Mile <:< 2 // P' ,.if ,// / ,/":~ ~ .i/ ... /i ... W Fortllnd -1 '='-"!}::_s,=-.: .../,i ./ ,.i/" /'/ ,i// ... // /',/ ,/ ,.../ ,/ ,/ /' , .... /' ,/ <:< //,.:."." / ./ Shoreline & Lease Line ,/ f Lease Map - 9200' Sand I +- 1 Mile ( 2 ( +- ----- I WF-2 9200' Sand 10083'md (-8968'sstvd) x= 190,047' y= 2,478,241' 1748' From North line 1043' From East line 242' East of Lease line WFo18nd-1 Shoreline & -Lease Line Lease Map - 9400' Sand ( ( WF-2~ 9400' Sand 10351'md (~9151'sstvd) x= 190022' y= 2,478,435' 1555' From North line 1074' From East line 293' East of Lease line 1 Mile Shoreline & -lease Line. "-'-, '-'-" '-'-"" /--"'" '-, .,'-'-".,-, I I I '-'-'- '-"" " '-'" '-"'-'" "" "-'-, """ -, r en 0 CD Q) ~ (J) 0 CD ro r - -. -. ::J ::J CD CD QO -:-. "'-'", - + -'" - "'" - , . -"'-" ""', "'" ,;. .,.,.,.,.... "'" """ " " -"'. ", -, '. ""'- '>:;¡,. '-, ,.".,..."..,.,.,_..,. II "-, I r- CD Q) en CD s: Q) I » - - -I Q) ., CD ,...... en """'" " ""'" "'-"'- "- ", -', ""'" "', "'-"" -'-. "'-"" " Feet 249230 ( 248230 j " 247230 f5 r :::; +- 7 I ---r-- it] 17 ---------+ " I I . IJ I ~ I ~ 30 -I 29 \ Lease Map 188700 4 +-- 15 'Y'\ LL 28 27 198700 -2492300 0"", L , . 11 12 ~- [ ----¡ 14 \ 13 -2482300 23 24 ~. 2ti -2472300 'ìr L, :) 07/09/2004 11:25 FAX 907 258~01 FOREST OIL ALASKA ~001 .- @ TO: FAX NUMBER: DATE: FROM: PHONE NUMBER: TIME: FOREST OIL CORPORATION 310 K Street, Suite 700 Anchorage, Alaska 99501 (907) 258-8600 - Office (907) 258-8601 - Fax é:~;7¡:"~~i/~ ;;r~7 ~ ~oo"-l ;JiM- AYhAr~ ~, %-- .2/1;Z J/:'J'ð Total Number of Pages Including Cover Sheet: c COMMENTS: 5lru -e / 4há~/ ~f ;4"e Æ f. ()o..r~/ J;.r<Jr'£-E'- ðcr;, I:r ~ »-~ ~ ., ~r~Ñ¡-- ~ ~~"t!'V ~ -¡¡6 %e 7'ÁYt!"e.. Oc;;..'),ht'rJ / ~/ ~A"rr d.,Þ/~k ...?, Co. ¡;.~ ~ t:t-l ¡fra ¡;r~~.f~e/' <:V~ i";2 d.J4 df 'yd"- n;l" <".s- ¡;. /. ~ RECEiVEC JUL 0 9 ¿lJL,,¡ ""WlGaGœl.(;gIftf'fASil ,,"i ""'í'.~~ ø Ð FOREST OIL CORPORATION .110Q/C67~8~ 700 ~~e~ ~ 9.90701 Mr. Chris Ruff Alaska Department ofN atura] Resources Division of Oil & Gas 550 West 7th, Suite. 800 AnchQt:~g~t ôK. 29~QJ -3560 UNITED STATES POSTAL SERVICE First-Class Mall Postage &: Fees Paid USPS Permit No. G.10 . Sender: Please print your name, address, and ZIP+4 ¡n this box. Forest Oil Corporation Attention: Jim Arlington 310 K Street, Suite 700 Anchorage, AI( 99501 ~ IIIIII 0 ..; "'- 0 <0 "'- N 0 0 ,¡:.. .... -:. 7001 2510 0004 3~0~ 5737 7001 2510 ooa~ 3~0~ S737 ~ S1 g¡: ~:"If~i : °- ~ I: <\)~~ <j i [-~r ~ r-~' -: ,,:!'~ ~ ~ t.!~'~ ! "" ~:~ r ~ !~~.. I> ., ~~ ~ ~\.,. :bt ~~ ~~) I~b Þ, ~rf.~ ~ l' ~ ~iJ-: R\ :'\}. ~ : ~!~ ! ~ I i íiì :c gs il~ D. ~¡¡: U ¡[ U .3.~ =-:11 Sl ::J>-. Xliii 2- f~ l.! !: ii' Ai' ~ >J ~~ ~ ~ .. .. x N C.1I "Ij > H N ',_C.1I QO 2 .... "Ij 0 :;.::I tr:1 {I! ~ 0 .... t""' > f; {I! ~ I } ¡§I 0 0 N ) FOREST OIL CORPORATION 310çf7{'çff~ druü& 700 Qf2Índ~~ ~ 09.9501 Mr. Greg Noble U,S. Department of the Interior Bureau of Land Management 6881 Abbott Loop Road i\ßchorage,AJ( 99507-2591 1111 UNITED STATES POSTAL. SERVICE 7001 2510 0004 3~a~ 57b8 7001 2510 0004 3~O~ 57b8 11 Q[ ~!i!¡ ~ .....;<': .,,~: - -q,. -..,: 0,..: èJ ~ ¡¿: &'~¡~ ..' >< ~:;o..;; ,,(\, :...1 ::!: z¡~. '" '" 0 <:>' ~'~\ . -.:. ., tj,,! ¡~~ ~ 11"" - ¡ i :~. ~!~~ '\ .IS r- ¡-.,.. ¡~ ¡"'~ ~ti ~¡ :,[ ;... ! If\). '" . '~~i ~~! ¡ I ' , i 1 Flrst.Claas Mail Postage & Fees Paid USPS Pe.rmit No. 0-10 . Sender: Please print your name, address, and ZIP+4 in this box. Forest Oil Corporation Attention: Jim Arlington 310 K Street, Suite 700 Anchorage) AK 99501 ~ ... f~ ;9 1~ g¡ It 3~. h ... <II 2 '" e- ~ ;¡jB. ~3 IT "0 ~'" C1 'ii ;'!';' [I; !!!. o "~.a'" '" " I~""'" '!1 i! 0< c.~ :! ~ ' ; ..-" ..., ." '" a ~3! 1: i 'i '.; ~ , . 'J Ii ;, 0 -t " 0 (Ø " N 0 0 oÞ- I-' I-' N 0) ~ > ÞO1 (Ø 0 -t N QI 00 2 ..... ~ 0 ~ tI:I fJ) 0-3 0 ..... t""' > t""' > fJ} ::>:: > ¡§J 0 0 ~ ) FOREST O[L CORPORAT[ON 310 dJ{' 6¡li~~ çff'uife, 700 ~~ QS2Úadca .9.9501 ~ II~II" I I ~ ~ 1111 0 -t "" 0 (0 "" N 0 0 ..... .... .... 7001 ~510 OQa~ 3~O9 5751 7001 2510 0004340' 5751 iJ QJ!¡!Il! co ~¡~if!>....~ I'~ ~¡ 5!I'~i.. '.;-at .""ii! I¡' ~~. !6] ¡r ~~ to: ,.~ . :À:I ¡~ ~~ ~ ~ ~ :t\ ¡ ¿>'; (\.1 :' ~ ~~ ~ !~ ~;~ : I"I.¡) ~~ f' ~ b ¡ ~ ~ ¡ ~j ~¡ j i Mr. Kirk McGee Cook Inlet Region, Inc- 2525 'C' Street, Suite. 500 Anchor3:~e, AK 99509 UNIìED STATES POSTAl SERVICE ~ .. BOC: ~mèn~ ¡¡: :C' I '" "'tI g: ::! 01 ::¡:'TIffJ Q>-'* ::.:m~ §JCw - <P ~3:'" ~-~. °-0 ~~(I): ~ I ::;:0 ' g m I 11:>(") Qm "'- ~'1J Jl-l ."D "1J Ö '" Q f]) ..9, I '1'j 0 ~ trI V> ~ 0 ..... t""' ;:.- t""' ;:.- V> ~ N> Q) ~ ~l]l .¡¡ ,,- Q;g ;; ~~ õ11! 0 3!!.. §~ i ~ð'~:;'. (1 <g ::q=:t]!t ~ "" z':;¡ n~. ~ ð' f'-, ]I- ".~ ~ - c. ~ : .à.ì iî if ~ '1'j ;:.- H (0 0 -: N> <:11 Q) ) .!> .... ð' if!!. ;¡ ~ >!- . .___h_- - ) 1\\111 Fìrst.Class Mal! Postage & Fees Paid USPS Permit No. G-10 . Sender: Please print your name, address, and ZIP+4 in this box. Forest Oil Corporation Attention: Jim Arlington 310 K Street, Suite 700 Anchorage. AX. 99501 ¡§I 0 0 ..... 07/09/2004 11:26 FAX 907 258 ~1 FOREST OIL ALASKA . Complete Items 1, 2, and 3. Also complete Item 4 if Restricted Delivery is desired. . F'rint your name and address on the Æven¡e : so that we can return the card tQ you. , . Attach thiS card to the back of the mailpiece, or on the front if space permits. , ¡ 1. Artlclo Addressed to: : /o/r. ¿Arq X4' N , /l-h .1'...fq,. ~T. d f Ak ~ -/ A'~~.r : ö,.. V"J",)~' oj.p ð.// ,. k.s ; Sf""¿J ~. ?~.4w- ~ 5" rr-.. lI'~ '~O¿dr4fe, A'¿ 9P2/-S.r?ð 3. Service Type '-Certified Mail 0 ExpÆBB Mail 0 ¡;eglstered [J Return Receipt for Merchandise' 0 Insured Mail 0 C.O.O. 4. Restricted Delivery? (ixtra Foe) [j Yes i 2. ArtJc1e Nl.lmber (Transfer from servlce/~el 70 a 1 2510 000 4 340 9 5737 PS Form 3811, August 2001 , Oomeslie Return Receipt .-.., ..- SENDER: COMPLETE THIS SECTION I .1 . Complete items 1, 2, and 3. Also complete I Item 4 IT Restricted Delivery is desired. I . Print your name and address on the reverse , I so that we can return the card to you. '! . Attach this card to the back of the mailpiece, or On the front if space permits. 1. Article Add~ed to: : /II 1"- a ,..t' /fåJ.Í ~ i¿;. $. ~~r;2Íi«~k. rð.f'~i! -.Zk~I"rf'ðl'" I B'~ t-1!"4. ~ .-.-1 ~I-t,¿" ~.-r.'l.~Þr'1(. "f- ;¿;;??I #L4# .,.{~/l :.Rd<~ ~ J41tð-¿ðhtt'!f'J! AK. ??r<J7-~.:r?1' I 2, Article Number ~fs(er 'rom service IsbeQ 102595-OZ.M-Oa35 """",--,~~:,,-":.::-:,,:::,=::,=-~,-, COMPLETE THIS S£:CTlON ON DELIVERY " 3. Service Type . Certified Mall [J Express Mail [J Reg~erad 0 Return Aec9ipt for Merchandise [J Insuted Mail 0 C.O,D. 4. l1estrictÐd Delivery'] (Extra r:-ee) DYes 7001 2510 0004 3409 5768 102595-oZ-M-09$ , ¡ PS Form 381 1 , August 2001 I. __----.m........ j~ . ",. DornÐStic Return Receipt ..'.'-~..............__..__...... SENDER: COMPL¡:;rt; THIS SECTION : . Complete items 1, 2, and 3. Also cOmplete I item 4 If Restricted Delivery is desired. .: . Print your name and address on the reverse : so that we can return the card to you. . Attach this card to the back of the mailplece, Or gn the front If space permits. 1. Article Addressed to: : /If,.. ¡-1,'"It 7If£6--t!'~ , : ~o;f ..z;,Æ.f-~¡ÙA, f..1~- .! ~ s,!l-r 'C' ...r~~f,. $"*. $210 : A~C¿t""~ftr /fI,.,t, 9P3d? , 2, Article Number I (Tnmsfer (rOm service laóeQ ¡ PS Form 381 1. August 2001 , ¡ , , COMÞL£:TE THIS SECTION ON DE~IV¡;;RY . A. Signature x ..' D. Is delivery address different If YES, enter delivery Bc!d~ 3. Service Type air Certified Mall 0 Exp,.asa Mall 0 Registered 0 FletJJm Rcœipt for Merchancliso . 0 Insured Mall 0 C.o.D. 4. Restricted Delivery? (Extra Fee) 0 Yes 7001 2510 0004 3409 5751 10Z595-DZ.M.0835 Domestic Fletur., Receipt ~005 ".:, .' ,', 07/09/2004 11:26 FAX 907 258 ~1 FOREST OIL ALASKA , , u.s. Pas I ervice CERTIFI . MAIL RECEIPT (Oome:sfic Mail OrllYj No Ir1Surdnce Coverage Provided) ("'- m ("'- L1'.I a- D ~ ", Certified Fee ~ Il'h iJ ~ Jo/.J~, \"'~ POStage S 1.06 ~ ~ Q '=I RetUm Ree<lipt Fee ~nd""'ement Required) R~3Irlcted Cellvery Fee (Endoniement AeQUlred) 5.11 ~ Totar Paøta!i'" & Fen $ 'Ul ru _~21"J~_þ£~nAÀð.~..lJ_o.~~------_._----...----- ; CJ~ -~~:~~~:~::ÆlÞ___"k2..--.zi:!nf..,f~___--~--_._."...--. , C/o/. Stale, ZIP+4 ' ("'- 'ð;a- . 'l'7ß/-3"ao <t:I ..D l'" I.n -- ---.-----.--- -----------.----------- U.S. Postal Service CERTIFIED MAIL RECEIPT (Domestiç Maíf Only; No Insurance Coverage Provided) cr CJ ~ ['T' 1.06 l,r'\..~'~'/~"";f"'" , ~>!M I(W;m ,: i'::~' ~" PosL&ee S Certified Fcc 2.30 1.75 l'19turn "'ece/PI Fee ~ (Endorsement Required) C 0 Rcslrictnd Delivery FIJ4 CJ (Endlmement R~ql~red) 5.11 07/02/04 ~ Tatal Pasta!!", & Fees $ ~ -~~~~~u.:Æ:_. 'ÞçJ:T--B.~/!:1.- - m -- - - _no ___on -.......... n n .n_. ~ .~~ Ë:~:? 1.1./.- _1!4Þ.~_tt.._.{,¡oA___R_f?¿ ---no m-- ~ ...I(y, lilate, £.1",.4 ,..- r- 1'1J1¿-¡ðr ,A-~.. '5i:J -.tt2S"'?/ , r-'I 'Lll r-- I.I'J -- "'.------- -------- , U.S. Postal Service . CERTIFIED MAIL RECEIPT (DomeSli<=; M¡;¡íl Only: No IlJsuran<=;~ CoveriJge Provided) """",!"~"~':'ì':"~"~'".'; AfDmAGEt IAI( ~,99509 I .;.'., f' ," ì",1 ",", ,I::", tr' C .::3'" /"I"J 1.06 r-'I C CJ I r- P~;lage $ Cer1rtled Fee 2.30 1.75 R9turn Receipt Fee ~ (en<,orsemem Required) Q FlewiC!ed De~vary Fee C (Etldo~emcnt Required) , , CJ ...... ,--' . . ,. ..., ru Totall'OiIISge & Fcc~ ~006 ~. . , ,'. .,