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Home My WebLink AboutCO 543 ) ) 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 () 5 If ~ :- Order File Identifier Organizing (done) 0 Two-sided 1111111111111111111 ~scan Needed 1111111111111111111 R~AN ~ Color 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) D Other: 0 Logs of various kinds: NOTES: BY: Helen ~) D Other:: ; Date h 05 151 m fJ , '. 1111111111111111111 '1 10 Date: b Or:; /5/ V11T Project Proofing BY: Helen (Maria) Scanning Preparation BY: Helen ~ x 30 = + C~. = ,TO-:;AL PAGES (Count deep r'Jt include cover shiee P Date: I, £? {).s- /5/ . 1111111111111111111 Production Scanning Stage 1 Page Count from Scanned File: 1 () 0 (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: / YI;:S, Helen? Ma~a) Date: I . b . f)S BY: NO 151 ytiP Stage 1 BY: If NO in stage 1, page(s) discrepancies were found: YES NO Helen Maria Date: /5/ Scanning is complete at this point unless rescanning is required. ReScanned 1111111111111111 BY: Helen Maria Date: /5/ Comments about this file: Quality Checked 111I111111111111111 8/24/2004 Orders File Cover Page.doc ) ') INDEX CONSERVATION ORDER #543 1. October 19, 2004 2. October 25,2004 3. ---------------- Happy Valley #11 Unocal's request for a Spacing Exception for Happy Valley #11 Notice of Hearing, e-mail mail list, bulk mailing list affidavit of Publication Maps November 17, 2004 Ltr from AOGCC to Unocal re: Authorization to begin regular production from the Happy Valley 11 gas development well 4. CONSERVATION ORDER #543 Re: ) ':) STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 THE APPLICATION OF Union Oil ) Company of California ("UNOCAL") for) an order granting an exception to the spacing) requirements of20 AAC 25.055(a)(2) and (4)) to provide for the drilling and producing of ) the Happy Valley 11 gas development well ) Conservation Order No. 543 Happy Valley No. 11 Deep Creek Unit Drilling and Producing December 22, 2004 IT APPEARING THAT: 1. 2. 3. UNOCAL by letter dated October 19, 2004 has requested an order allowing a spacing exception to drill and operate the Happy Valley No. 11 well in accordance with 20 AAC 25.055; The Commission published notice of opportunity for public hearing in the Anchorage Daily News on October 25, 2004, pursuant to 20 AAC 25.540; and No protests to the application or requests for hearing were received. FINDINGS: 1. 2. 3. 4. The surface location of this well is 1271 feet from the south line ("FSL") and 1263 feet from the east line ("FEL") of Section 22, T2S, RI3W, Seward Meridian ("S.M."). The projected bottom hole location for this well is 2763 feet FSL, 2934 feet FEL, Section 22, T2S, RI3W, S.M. An exception to the well spacing provisions of 20 AAC 25.055 (a)(2) is necessary for the drilling and production of this well. The anticipated productive interval in the Beluga and Tyonek Formations of the Happy Valley No. 11 gas development well, if successful, will be within 1,500 feet of a property line between two landowners. An exception to the well spacing provisions of20 AAC 25.055 (a)(4) is necessary for the drilling and production of this well. The anticipated productive interval in the Beluga and Tyonek Formations of the Happy Valley No. 11 gas development well, if successful, will be within 3,000 feet and in the same pool as the productive interval in the Happy Valley No.2, 3 and 10 gas development wells. UNOCAL sent notice of the application for spacing exception by certified mail to all offset owners, landowners, and operators of all properties within 3,000 feet of the proposed Happy Valley 11 well. ) ) Conservation Order 543 December 22,2004 Page 2 of2 5. 6. 7. The location of the Happy Valley No. 11 well was selected on the basis of a favorable structural position for recovery of gas reserves from the Beluga and Tyonek Formations that are not believed to recoverable from the Happy Valley No.2, 3 and 10 wells or from a location greater than 1500 feet from a property line between two landowners. Happy Valley Wells No.2, 3, 10 and 11 are located within the Happy Valley Participating Area in the Deep Creek Unit. The anticipated productive interval of the Happy Valley 11 well is more than 1500 feet from the external boundary of the Deep Creek Unit. CONCLUSIONS: 1. 2. An exception to 20 AAC 25.055(a)(2) and (4) is necessary to allow drilling and production of the Happy Valley No. 11 gas development well. Granting a spacing exception to allow drilling and production of the Happy Valley No. 11 well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners. NOW, THEREFORE, IT IS ORDERED: UNOCAL's application for exception to the well spacing provisions of 20 AAC 25.055(a)(2) and (4) for the purpose of drilling and producing the Happy Valley No. 11 gas development well is granted. . / AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affected by it may file with the Commission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the lO-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10th day after the application for rehearing was filed). Orders ) Subject: Orders From: Jody Colombie <jody - colombie@admin.state.ak.us> Date: Thu, 23 Dec 2004 06:52:48 -0900 To: undisclosed-recipients:; BeC: Robert E Mintz <robert_mintz@law.state.ak.us>, Christine Hansen <c.hansen@iogcc.state.ok.us>, Terrie Hubble <hubbletl@bp.com>,Sondra Stewman <Ste\vrnaSD@BP.com>, Scott & Cammy Taylor <staylor@alaska.net>, stanekj <stanekj@unocaLcom>, ecolaw <ecolaw@trustees.org>, roseragsdale <roseragsdale@gci.net>, trmjrl <trmjr l@aol.com>, jbriddle <jbriddle@marathonoil.com>, rockhill <rockhill@aoga.org>, shaneg <shaneg@evergreengas.com>, jdarlington <jdarlington@forestoi1.com>, nelson <knelson@petroleumnews.com>, cboddy <cboddy@.usibelli.com>, Mark Dalton <mark.dalton@hdrinc.com>, Shannon Donnelly <shannon.donnelly@conocophillips.com>, "Mark P. Worcester" <mark.p. worcester@conocophillips.com>, Bob <bob@inletkeeper.org>, wdv <wdv@dnr.state.ak.us>, tjr <tjr@dnr.state.ak.us>, bbritch <bbritch@alaska.net>, mjnelson <mjnelson@purvingertz.com>, Charles O'Donnell <charles.o'donnell@veco.com>, "Randy L. Skillern" <SkilleRL@BP.com>, "Deborah J. Jones" <JonesD6@BP.com>, "Paul G. Hyatt" <hyattpg@BP.com>, "Steven R. Rossberg" <RossbeRS@BP.com>, Lois <Iois@inletkeeper.org>, Dan Bross <kuacne\\'s@kuac.org>, Gordon Pospisil <PospisG@BP.com>, "Francis S. Sommer" <SommerFS@BP.com>, Mikel Schultz <Mikel.Schultz@BP.com>, "Nick W. Glover" <GloverNW@BP.com>, "Daryl 1. Kleppin" <KleppiDE@BP.C0111>, "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 1 @gci.net>, gspfoff <gspfoff@aurorapower.com>, Gregg Nady <gregg.nady@sheU.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>, jah <jah@dnr.state.ak.us>, Kurt E Olson <kurt_olson@legis.state.ak.us>, buonoje <buonoje@bp.com>, Mark Hanley <mark_hanley@anadarko.com>, loren_lernan <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@unocal.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>, 111arty <marty@rkindustrial.com>, ghammons <ghammons@ao1.com>, nnclean <rmclean@pobox.alaska.net>, mkm7200 <mkm7200@ao1.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@forestoiLcom>, Garry Catron <catrongr@bp.com>, Sharmaine Copeland <copelasv@bp.com>, Kristin Dirks <kristin - dirks@dnr.state.ak.us>, Kaynell Zeman <kjzeman@marathonoil.com>, John Tower <John.Tower@eia.doe.gov>, Bill Fowler <Bill_Fowler@anadarko.COM>, Vaughn Swartz <vaughn.swartz@rbccm.com>, Scott Cranswick <scott.cranswick@mms.gov>, Brad McKim <mckimbs@BP.com>, Steve Lambe <lambes@unocal.com>, jack newell <jack.newell@acsalaska.net>, James Scherr <James.Scherr@mms.gov>, david roby 10f2 12/23/20046:53 AM Orders 20f2 ') ) <David.Roby@mms.gov>, Tim Lawlor <Tim_Lawlor@.ak.blm.gov>, Lynnda Kahn <Lynnda - Kahn@fws.gov>, Jerry Dethlefs <Jerry.C.Dethlefs@conocophillips.com>, Jerry Dethlefs <n 161 7@conocophillips.com>, Cynthia B Mciver <bren - mciver@admin.state.ak.us> ,--" ._--~-'"_.._-~,,-.. ~._.""~"-- '-,-, ; Content-Type: applicationlpdf: C0457 A.OO4.pdf ~ ~ . Content-Encoding: base64 _.,----~,,-. ,,--- "" ---,,", --,-"--"- ~ --." ____~~n'" ,---~_. "-~-"." r"--"""--""-------"'- ....---...-..------:-...---. '----. "----., ,------ .~'_-".""--'--,,"u ----'"'''''''~" Content-Type: application/pdf : ,C0543.pdf . : . Content-Encoding: base64 12/23/20046:53 AM Citgo Petroleum Corporation PO Box 3758 Tulsa, OK 74136 Mary Jones XTO Energy, Inc. Cartography 810 Houston Street, Ste 2000 Ft. Worth, TX 76102-6298 Kelly Valadez Tesoro Refining and Marketing Co. Supply & Distribution 300 Concord Plaza Drive San Antonio, TX 78216 Robert Gravely 7681 South Kit Carson Drive Littleton, CO 80122 Jerry Hodgden Hodgden Oil Company 408 18th Street Golden, CO 80401-2433 Richard Neahring NRG Associates President PO Box 1655 Colorado Springs, CO 80901 Kay Munger Munger Oil Information Service, Inc PO Box 45738 Los Angeles, CA 90045-0738 Samuel Van Vactor Economic Insight Inc. 3004 SW First Ave. Portland, OR 97201 Mark Wedman Halliburton 6900 Arctic Blvd. Anchorage, AK 99502 Schlumberger Drilling and Measurements 2525 Gambell Street #400 Anchorage, AK 99503 Baker Oil Tools 4730 Business Park Blvd., #44 Anchorage, AK 99503 Ciri Land Department PO Box 93330 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cr. Anchorage, AK 99508-4336 Jack Hakkila PO Box 190083 Anchorage, AK 99519 James Gibbs PO Box 1597 Soldotna, AK 99669 Kenai National Wildlife Refuge Refuge Manager PO Box 2139 Soldotna, AK 99669-2139 Richard Wagner PO Box 60868 Fairbanks, AK 99706 Cliff Burglin PO Box 70131 Fairbanks, AK 99707 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 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, 10 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 =+t: ~ ) ~~fÆ7Œ ])~ ~~~~!Æ~[~!Æ AI"ASIiA OIL AND GAS CONSERVATION COMMlSSION / í í i I / I / í FRANK H. MURKOWSKI, GOVERNOR 333 W. .".. AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 November 17,2004 Kevin Tabler Unocal PO Box 196247 J\nchorage,AJ( 99519 Re: Authorization to begin regular production from the Happy VaHey 11 gas development well Dear Mr. Tabler: In correspondence dated November 16, 2004 Union Oil Company of California (UNOCAL) requested permission from the Alaska Oil and Gas Conservation Commission (AOGCC) to begin regular production from the Happy Valley 11 gas development well prior to the issuance of an applied for Conservation Order allowing the drilling and production of the Happy Valley 11 well from a location that does not confonn to statewide well spacing rules. The hearing date for the Happy Valley 11 Spacing Exception Conservation Order is December 7, 2004. Unocal has demonstrated the Happy Valley 11 well is located within the Happy Valley Participating Area in the Deep Creek Unit. The Happy Valley Participating Area was approved on November 4, 2004 by the Director of the Division of Oil and Gas in the Alaska Department of Natural Resources. The Participating Area and Unit agreements provide for an equitable allocation of produced substances among the various owners. Therefore, correlative rights are not at issue and the AOGCC hereby approves your request to begin regular production from the Happy Valley 11 subject to the following; 1) The AOGCC will proceed with the scheduled December 7, 2004 hearing on the Happy Valley 7 spacing exception. 2) UNOCAL accepts all liability that may result from producing the Happy Valley 11 well prior to the issuance of a conservation order approving the exception location. J Unocal Alaska ~ Union Oil Company of Cal 909 West 9th Avenue. P.O. )( 196247 Anchorage, Alaska 99519-6247 Telephone (907) 276-7600 Fax (907) 263-7698 UNOCAL8 RECE~VE NOV 1 R 2004 Kevin A. Tabler, Manager Land/Government Affairs Atasks Oil & Gas Cons,Sornmission km;täm~ge November 16,2004 Mr. Bob Crandall Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 DEEP CREEK UNIT Happy Valley #11 Production Start-up Dear Mr. Crandall: Union Oil Company of California (Unocal), Operator of the Deep Creek Unit, herein request permission to place the Deep Creek Unit Happy Valley #11 (DCHV #ll)well on regular production prior to the hearing date of December 7, 2004. As validation that all correlative rights are protected, enclosed is a copy of Unocal' s Happy Valley Participating Area Application and the corresponding Division of Oil and Gas decision letter approving establishment of the Happy Valley Participating Area (HVPA). DCHV # 11 is located within the HVP A and the HVP A boundary is ~ mile from the closest point of the Deep Creek Unit boundary. The approved HVPA protects the economic interests of the working interest owners and royalty owners of a common reservoir and the approved production allocation schedule ensures an equitable allocation of revenue to the lessors commensurate with the value of their leases. Additionally, enclosed is a table of the productive zones in DCHV # 11 which will be opened to production. We ask that the enclosed documents be maintained as confidential by the Alaska Oil and Gas Conservation Commission as they contain sensitive information regarding the competitiveness of the surrounding area. Although the base application and the. decision are public documents the attachments to same are held as confidential by the Division of Oil and Gas. \.Ì .,) If you require additional information regarding this application, please contact Mr. Ed Turner at 263-7960, or the undersigned at 907-263-7600. Sincerely, ~:::a¿~ Enclosures UNOCAL Alaska Inc. Happy Valley #10 Pay Summary ,_--~,.rìi_mil~~~~¡, Zone MD Top MD Base H (MD) TVD (top: TVD (base) H(TVD) TZOI 1 6353 6398 45 5,851 5,895 41 TZOI 2 ~~ 0 6868 6937 69 6,365 6,435 63 TZOl1 6976 7021 45 6,473 6,518 41 TZOl2 T17 7216 7289 73 6,713 6,786 66 TZOI 3 T70 9060 9086 26 8,557 8,583 24 9100 9164 64 8,597 8,661 58 TZOI 4 T80 9391 9419 28 8,887 8,916 25 TZOI 5 T91 71 TZOl6 T105 9572 9650 78 9,069 9,146 r. T130 98719944 73 9,367 9,441.~6 Ty~k Total 501 *~:1tII .~t~'~~~'~~~I~f1:f~2~';-_;;-;,_:,:t;c:,'-'~~:".'.._<-;-'+.~':~;~~:~T:}fY:';.;;:~;~'~:<~_:~\-:- ;:::: :':-:- .'~-'~- : .~ /~ The Happy Valley PA is stratigraphically limited to the Beluga and Tyonek Fonnation Sands from -1,547 feet True Vertical Depth Sub Sea (TVDSS) (2,176 feet Measured Depth) in the Happy Valley Unit No. 31-22 well to -9,368 feet TVDSS (10,678 feet Measured Depth) in the HV-3 well. Unocal mapped the depth of the lowest known gas for each producible interval ' based on seismic and well control and overlaid them on an aliquot part map grid to determine the Happy Valley PA boundary, which is based on 40-acre aliquot parts as dermed by 11 AAC 88.185(11).4 The unit boundary, the Happy Valley PA boundary, and weUlocations are depicted on Figure 1 below. 11 :49 AM 11/16/2004 CaAl 'AvF/DENT/AL CONFIDENTIAL -.) ) -- Findings and Decision of the Director of the Division of Oil and Gas APPROVING THE FORMATION OF THE HAPPY VALLEY P ARTICIP A TING AREA WITHIN THE DEEP CREEK UNIT Under a Delegation of Authority from the Commissioner of the State Of Alaska Department of Natural Resources November 4, 2004 CONFIDENTIAL C . ROENTlAL ~) ~ TABLE OF CONTENTS I. APPLICATION FOR THE FORMATION OF THE HAPPY VALLEY P ARTICIP A TING AREA ........1 II. ANALYSIS OF THE APPLICATION FOR THE FORMATION OF THE HAPPY VALLEY P A...........2 1. PRIOR EXPLORATION AND DEVELOPMENT ACTIVITIES AND THE GEOLOGICAL AND ENGINEERING ClIARACTERISTICS OF THE RESERVOIR.. ............. ...............................".... ............ ........ ..., ...... ......... ....... ... ...". 2 2. THE ApPLICANT'S PLAN OF DEVELOPMENT FOR THE DEEP CREEK UNIT............................................................ 6 3. THE ECONOMIC COSTS AND BENEFITS TO THE STATE ........................................................................................ 6 4. THE ENVIRONMENTAL COSTS AND BENEFITS """"""" .................................. ..................... ..... ................ ...........7 5. OTlIER RELEVANT FACTORS ................. .................. ............. ..... ......................... ............... ...... ................. ...........8 III. FINDINGS......................... ........ ..... ...................... ....... ............. ......... .......... ......... ....................... ......... ... ............. 8 1. PROMOTE THE CONSERVATION OF ALL NATURAL RESOURCES........................................................................... 8 2. PROMOTE THE PREVENTION OF ECONOMIC AND PHYSICAL WASTE.................................................................... 9 3. PROVIDE FOR THE PROTECTION OF ALL PARTIES OF INTEREST, INCLUDING THE STATE...................................... 9 IV. D ECISI ON...... ............. ........... ........ .............. .................... ..... ................................ ...... ............................. .........1 0 Attachment 1. Attachment 2. Attachment 3. Attachment 4. Attachment 5. Attachment 6. Attachment 7. Exhibit A, Unit Tract Description and Ownership Schedule Exhibit B, Map of the Deep Creek Unit Boundary Exhibit C, Happy Valley P A Production Allocation Schedule Exhibit D, Map of the Happy Valley PA Exhibit E, Happy Valley PA Expense Allocation Schedule Exhibit F, Deep Creek Unit Expense Allocation Schedule Exhibit G, Deep Creek Unit First Plan of Development tJ .,) I. Application for the Formation of the Happy Valley Participating Area The Deep Creek Unit is located on the Kenai Peninsula, approximately five miles inland from the nearest communities of Ninilchik and Happy Valley. The State. of Alaska, Department of Natural Resources, Division of Oil and Gas (the State, the DNR, or the Division, as appropriate) and Cook Inlet Region Inc. (CIRl) approved the formation of the Deep Creek Unit and the initial plan of exploration effective December 31, 2001. The unit area encompasses 22,656.90 acres. Approximately 40.37% of the unit area, lies within three State leases and 59.45% of the unit area, lies within five CIRlleases. The remaining .18% of the Deep Creek Unit (39.99 acres)is unleased federal acreage managed by the Bureau of Land Management (BLM). The State and CIRl jointly administer the Deep Creek Unit Agreement (the Agreement). On September 1, 2004, Union Oil Company of California (Unocal), the Deep Creek Unit Operator, applied to form the Happy Valley Participating Area (Happy Valley P A) within the unit area. Unocal submitted the Deep Creek Unit Happy Valley PA Application (the Application) in accordance with 11 AAC 83.351 and Article 9 of the Deep Creek Unit Agreement (the Agreement). The Application included the following exhibits to the Unit Agreement: Exhibit A, a schedule describing the Deep Creek Unit; Exhibit B, a map of the Deep Creek Unit; Exhibit C, a schedule allocating unitized substances within the Happy Valley P A; Exhibit D, a map of the Happy Valley P A; Exhibit E, Happy Valley Allocation of Participating Area Expense; Exhibit F, Allocation of Unit Expense; and Exhibit G, First Unit Plan of Development and Operations (First POD). On September 23, 2004, the Division received a revised First POD that addressed exploration within the unit area and outside of the proposed Happy Valley P A. Unocal originally proposed that the Happy Valley P A include portions of four leases encompassing a total of 1,410 acres. Unocal corrected the legal descriptions and submitted revised Exhibits A and F on September 10, 2004, and revised Exhibits C and E on September 16,. 2004. Unocal reduced the area proposed for inclusion in the Happy Valley PA and submitted revised Exhibits C, D, and E on October 12, 2004. On November 2, 2004, the Division received final version of Exhibits C and E with corrected legal descriptions, tract acreages, and allocation percentages. The final versions of Exhibits A, B, C, D, E, F, and G are Attachments ,I though 7 to this Findings and Decision, respectively. Unocal also provided geological, geophysical, and well data to support the Application. The proposed Happy Valley PAcontains a portion of one State lease, ADL 384380, and portions of three CIRI leases in the north half of the Deep Creek Unit. DNR issued oil and gas lease ADL 384380 following Cook Inlet Sale 78 held on October 31, 1994, on State lease form DOG 9208. With an effective date of January 1, 1995, the seven-year primary term of ADL 384380 expired on December 31, 2001. A portion of ADL 384380 was committed to the Deep Creek Unit as Tract 2, effective December 31, 2001. The lease was severed, the non-unitized portion of the lease expired, and the unitized portion is extended indefinitely by the Agreement. Unocal proposed including portions of the following three COO leases in the Happy Valley P A: C- 061588 (Tract 3); C-061589 (Tract 4); and C-061590 (Tract 5). The primary terms of the all three of these leases expired on December 17, 2003, but the lease terms were extended Deep Creek Unit, Happy Valley P A Findings and Decision Page 1 v J / (.; (t~tT' . ~t¡~:~< . .. . "-'}i:~~V .' ¡ J~oum, NIAdøhlk ¡ ~-',~\:-.,'-, '"."" ,...., , 'l/"U;' "'..'.,. ~':1J""',,,,, ~"""..w.,,jr:,' .', ¡". . '''"'''''<, '\ ¡ n It¡4~'" é ¡ t,...~'=V .' ': ,'<^ i ',' ' 3' / r ' ~~'~i;1(! '.. -- ,r '11, ml1"1ft~:;;J -er/ ii'.__...,' "~il h ok In", :~) ; \"''''.-'''''' r{~i-,~C':-~H" tìt.;/ ,-~";T~G:\ , .:. : Je' ep C{.freðk.'., ~1_~Iß1:)e . ,K ¡ c ¡ -~"- i " ~¡ ->~ c,L .. '<. C..'....ll].,....'.-.'..".'.',.:,'. -"''''\'\'''''.'.-'.''..'...'..'''.','.''",.,--",..' ..' '." -; L ,."".,:iM.. . .." . "'. -.!".... . . ), .', L sed State of AI ka ''t<.., -'; -b .l\.Ci -:'> . i .., CII.. . : ; ea as ¡"".,,-"(,-,,~ " 1/'-1"\.,:;1 "tIC":. ; ['------" ¡ !.! ': /' CI~. 6~S§,~ IIII!*'! ; .-----1 Cook Inlet Region, Inc.~,: ¡ ¡...- "II.o..~ IH, .8.... mi... Y Va.II...'8~ P,.." 1& J, : ,~ ¡-- ~--. t'I!", .. ¡ r [_J Unleased mineral estate i 1 ~' \ ',"~ ", ' Ii AlukaDepartmeatet'NatualReleareel" '-"'. . Ii """. '. .Qò¡f. :.. , . ",..~'" DMIJoaetODAGu ~,j" Ii n ' '" I"t'-"~';'- , ~ 0c:tØer2Ø04 . ,. J ;.'.T~"""'..' I.'.. "...,.,. "'.' - : S ,A , fr"'j I \ ,:1,,; 11..i.. '-,..:- T W" !J' " ~- " - ^""W~a~ ". .. .'... ".',..l. ---..--'''''',,-;'''...1''2'' ,'..'.. ~.'" "."".' .W~. - ¡~;~. t:P;¡!\&11_~, ~ "'", ; '--">:~~RI 61ß~ ~,,-,:- ,-,.t' , .. .'.'.. ....., [I ¡\~. ,,'r'''''''', . {,!" (-' }--,:' ! :'.'...' ~''''" ¡ "'-' "<.>-1'\ ,'" '-', .) TRACr 5 , .-t... ~,. "-', \: ..,'r'~IRr61590 :, . ¡~~,~~:~ J~\" '~-~::':,- ,,' ,.> "'. r'-- L...., ,j' j í; i , - " '1 -.- .."", ---...-..-...-.;."",. .:..,;.~_:;...,.,. ~<;~:~;. -' ,qrJ! "" . , . . -:-~ ~.......,..",-:", -".~:. ~ la,,, "",' '- : , . ' , ~-;,;::"",~,";:"<;Y:j<,J R.'l"~ . {'XfJ; TRACT a CIRl :81591' 'S\ai.þácj,'/ 1. - ...-:--" Well ."""'-.- - --- I; Deep Creek Unit, Happy Valley PA Findings and Decision p.s ~ .J 2. The Applicant's Plan of Development for the Deep Creek Unit Unocal proposed a one-year term for the First POD, September 1, 2004 to August 31, 2005, which supersedes the last quarter of the current Deep Creek Unit Plan of Exploration. The First POD includes plans to develop the reserves underlying the Happy Valley P A and plans to explore the unit area outside of the participating area. Unocal will complete construction of gas handling facilities on the Happy Valley pad and gathering lines that will connect it to the Kenai Peninsula pipeline network. Sustained production from the Happy Valley PAis scheduled for November 2004. Unocal plans to commingle production from multiple zones in the Tyonek and Beluga sandstones, process the hydrocarbon stream in the gas processing facility located on the Happy Valley pad, and ship pipeline quality gas through the pipeline that connects. the Deep Creek Unit to the Kenai-Kachemak Pipeline. Unocal's First POD also includes plans to drill two or more additional development wells in the Deep Creek Unit from the Happy Valley pad. Unocal has approved permits and is currently drilling HV -9 and HV -10. Unocal may establish another pad to develop the reserves in the western portion of the Happy Valley P A. Primary gas treatment facilities may be located on the second development pad and a gathering line installed to ship the gas to the Happy Valley pad where it will be processed for sale. Exploration activities outside of the Happy Valley P A include both exploration drilling and seismic evaluation. Unocal installed the Star pad in the southern end of the Deep Creek Unit in 2004, and drilled the Star # 1 well, which bottom-holed outside of the unit area. A flow test of the Star #1 well produced gas from the Tyonek formation at a rate of 0.5 ~CFPD at 413 psig FTP. Unocal plans to recomplete and test uphole zones in the Star # 1 well during the term of the First POD. Further delineation of this southern accumulation may justify forming another participating area and expanding the unit area. During the term of the First POD, Unocal will process and evaluate the seismic data acquired over the Deep Creek Unit area, which should improve Unocal's understanding of the underlying hydrocarbon accumulations. The Application, along with the First POD, contains sufficient plans and commitments to explore and develop the Deep Creek Unit to support forming the Happy Valley P A. It protects the interests of the public, CIRI, and the State by committing the Applicants to drill delineation and production wells in the Happy Valley Reservoir, and to explore additional prospects outside of the participating area. Therefore, Unocal's plans for development of the Happy Valley Reservoir and exploration of the unit area support approval of the Application under the section .303(b)(4) criteria. 3. The Economic Costs and Benefits to the State Approval of the proposed Happy Valley PA and the First POD will result in both short-term and long-term economic benefits to the State. Happy Valley P A production will generate construction jobs in the short-term and some long-term employment in the Kenai Peninsula Borough. The long-term goal is to maximize the physical and economic recovery of hydrocarbons from the Happy Valley P A. Development and production from the Happy Valley Deep Creek Unit, Happy Valley P A Findings and Decision Page 6 J J P A will provide royalty and tax revenues to the State over the life of the field. The lessees. may reinvest revenues in new exploration and development in the State. Additionally, the Happy Valley P A will deliver new natural gas supplies and help stabilize the local and regional economy. Royalty, tax, and employment benefits derived from production and economic development will far exceed any additional administrative burdens associated with permitting Happy Valley P A facilities, administering the unit leases or collecting royalties on production. In summary, the economic benefits outweigh the costs. The working interest owners made meaningful commitments to explore and develop the unit area and the State will receive taxes, royalties, and increased economic activity. Moreover, the discovery of additional gas reserves in Cook Inlet may help to maintain stable, low cost. energy supplies for the surrounding area. Therefore, DNR's evaluation of the section .303(b)(5) economic criteria supports approval of the Application. 4. The Environmental Costs and Benefits Approval of the Happy Valley PA in itself has no environmental impact. Formation of the Happy Valley PAis an administrative action and does not authorize any on-the-ground activity. State. and federal agencies will analyze the potential effects on the environment when they review applications for permits to conduct exploration and development in the unit area. Unitization allows the unit operator to explore and develop the resources under a single unit plan rather than on a lease-by-Iease basis. The unit operator will consolidate facilities and space gas wells as close together as possible to minimize environmental impacts of development. Future exploration and development will also utilize existing logging roads. Additionally, Unocal expects to develop this proposed participating area in concert with unitized exploration and development of other known and potential natural gas resources on the Kenai Peninsula via a common carrier pipeline, which will allow for further consolidation of facilities and pipelines. Article 8.2 of the Agreement requires that a Unit Plan of Operations must be consistent with the leases, mitigation measures, and lessee advisories developed by DNR for the State's most recent Cook Inlet Areawide lease sale. Cook Inlet 2004 Areawide Mitigation Measures were developed specifically for this region and include habitat and wildlife protection such as stream and waterbody setbacks and seasonal use restrictions to protect sensitive birds and animals. Unitization does not waive or reduce the effectiveness of the mitigating measures that condition the lessee's right to conduct operations on these leases. Exploration and development within the Deep Creek Unit is subject to these provisions, if proposed operations involve State surface or subsurface. When the unit operator submits a Unit Plan of Operations for approval, the Division will apply the current mitigation measures uniformly across the unit, ensuring environmental protections that might not otherwise occur on private lands. However, for operations solely on CIRI lands, the Division does not have the authority to approve a plan of operations or impose the State's mitigation measures. The Deep Creek Unit is within the Alaska Coastal Zone, and therefore it is subject to the Alaska Coastal Management Program (ACMP), whether the activity is on State or CIRI land. The appropriate federal, State, and local agencies must determine if the Unit Operator's exploration Deep Creek Unit, Happy Valley P A Findings and Decision Page 7 ') -- J or development plan .is consistent with ACMP, and the lessees may not commence drilling or development operations until all agencies have granted the required permits. Unocal will develop the Happy Valley PA from a gravel pad and an existing road on private surface lands. The Unit Operator designed the Happy Valley pad to minimize impacts to the surrounding natural environment, specifically wetlands and riparian habitat, and no wetlands fill or fish stream permits were necessary. Unocal acquired the necessary air emission and drilling waste disposal permits. The benefits of consolidated exploration and development, application of the State's Areawide mitigation measures, and the use of existing roads, balance the potential costs to the surrounding environment. Forming the Happy Valley P A minimizes the environmental impacts and costs of exploration and development of the unit area supports approval of the Application under the section .303(b)(1) criteria. 5. Other Relevant Factors The Agreement requires joint approval of the Application by the DNR and CIRI because the Happy Valley Reservoir lies within both State and CIRI leases. The Happy Valley P A will be the first participating area jointly managed by the DNR and CIRI. Unocal constructed the Happy Valley pad on CIRI acreage and directionally drilled to the adjacent State lease. The Division and CIRI.agreed to Unocal's proposal to allocate production from the Happy Valley PA based on surface acreage. With joint management of the Happy Valley P A, the State and CIRI will review Unocal's plans to delineate and develop the reservoir. The Deep Creek Unit Plans of Development must be consistent with State regulations and include plans to explore the area outside of the Happy Valley P A. Although the majority of production from the Happy Valley P A will be allocated to the CIRI leases, the Division will have an equal say in the approval of those plans. Reaching agreement on an acceptable development plan and an equitable allocation of production required the cooperation of all parties. Joint management of the Deep Creek Unit and the Happy Valley PA provides for development of State and private lands under a unified plan that reduces environmental. impacts, conserves resources, and protects the interests of all parties. Joint management of the Happy Valley PA supports approval of the Application under 11 AAC 83 .303(b)( 6). ffi. Findings 1. Promote the Conservation of all Natural Resources The Happy Valley P A will promote the conservation of both surface and subsurface resources through unitized (rather than lease-by-Iease) development. Approval of the Application will reduce both the number of facilities required to explore for and develop reserves and the aerial extent or the footprint required to accommodate those facilities. The formation of oil and gas units, as well as the formation of participating areas within units, Deep Creek Unit, Happy Valley P A Findings and Decision Page 8 .J J generally conserves hydrocarbons. Formation of the Happy Valley P A will provide for efficient, integrated development of the Tyonek and Beluga reservoirs within the Deep Creek Unit. A comprehensive operating agreement and plan of development governing the area will help avoid duplicative development efforts on and beneath the surface. There will be environmental impacts associated with reservoir development. However, all unit development must proceed according to an approved plan of development. Additionally, before undertaking any specific operations on State land, the Division must approve a Unit Plan of Operations. DNR may condition its approval of a Unit Plan of Operations and other permits on performance of the mitigation measures developed for the most recent Cook Inlet Areawide lease sale in addition to those in the leases. Compliance with mitigation measures will minimize, reduce or avoid adverse environmental impacts. Creating the Happy Valley PA will help maximize oil and gas recovery, while minimizing negative impacts on other natural resources. This reduction in environmental impacts and conservation of hydrocarbon resources is in the public interest. 2. Promote the Prevention of Economic and Physical Waste Forming a participating area prevents economic. and physical waste by eliminating redundant expenditures for a given level of production, and by avoiding loss of ultimate recovery with the adoption of a unified reservoir management plan. Marginally economic reserves, which otherwise would not be produced on a lease-by-lease basis, can be produced &om the Happy Valley PAin combination with more productive leases. Facility consolidation lowers capital costs and promotes optimal reservoir management. Pressure maintenance and secondary recovery procedures are easier to design and achieve through joint, unitized efforts than would otherwise be possible. In combination, these factors allow the unit operator to develop and produce less profitable areas of a reservoir in the interest of all parties, including the State. Reducing costs and environmental impacts through unitized operations will expedite development of reserves and will promote greater ultimate recovery of oil and gas &om the unit area. This may increase and extend the State's income stream &om production taxes and royalties. Formation of the Happy Valley PA will facilitate the equitable division of costs and allocation of the hydrocarbon shares, and provide for a diligent development plan that helps to maximize hydrocarbon recovery from the reservoir. Further, the formation of a participating area, which enables commingled production, facility sharing opportunities, and adoption of a unified reservoir management strategy, may allow for the development of economically marginal hydrocarbon accumulations. 3. Provide for the Protection of all Parties of Interest, Including the State Because hydrocarbon recovery will more likely be maximized under a unified plan, the Happy Valley P A protects the economic interests of the State, CIRI, and the overriding royalty interest owners. Formation of the Happy Valley P A advances the efficient evaluation and development of the hydrocarbon resources while minimizing impacts to the area's cultural, biological, and Deep Creek Unit, Happy Valley P A Findings and Decision Page 9 .J J environmental resources. . Formation of the Happy Valley P A protects the economic interests of the working interest owners and royalty owners of a common reservoir. The approved production allocation schedule ensures an equitable allocation of revenue to the lessors commensurate with the value of their leases. The Happy Valley P A will not diminish access to public and navigable waters beyond those limitations imposed by law or already contained in the oil and gas leases covered by the Agreement. The Agreement provides for future expansions and contractions of the participating area, as warranted by data obtained by exploration or otherwise. The Happy Valley P A and the Agreement thereby protect the public interest, the rights of the parties, and the correlative rights of adjacent landowners. IV. Decision The Division reviewed the statutes, oil and gas unitization regulations, the Deep Creek Unit Agreement, and materials supplied by Unocal in support of the Application. I find that formation of the Happy Valley P A within the Deep Creek Unit will promote the conservation of all natural resources, promote the prevention of economic and physical waste, and provide for the protection of all parties in interest including the State, as discussed above. The Application adequately and equitably protects the public interest, is in the State's best interest, and it meets the requirements of AS 38.05.180(p) and 11 MC 83.303. Therefore, I approve the Application under 11 AAC 83.351(b). Unocal requested that approval of the Happy Valley P A be effective September 1, 2004, which is consistent with the proposed term of the First POD. "The Proper Authority will establish the effective date of the initial Participating Area. That effective date shall be no later than the date of the first Sustained Unit Production."s Subject to concurrent approval by CIRI, the effective date of the Happy Valley PA will be September 1,2004, and Unocal may commence production. The Happy Valley PA is limited to the 1,239.99 acres described in Exhibit C and depicted in Exhibit D. The Happy Valley PA encompasses approximately 5.5% of the Deep Creek Unit, including a portion of one State lease, and portions of three CIRI leases. The Happy Valley P A encompasses all unitized substances in the Beluga and Tyonek Formation Sands from -1,547 feet TVDSS to -9,368 feet TVDSS within the boundary of the approved participating area. DNR accepts Exhibits A, B, C, D, E, F, and G to be true and correct as submitted; those exhibits are attached hereto as Attachments 1 through 7, respectively. I approve the allocations of production and costs for the tracts within the Happy Valley P A shown on Exhibits C and E dated November 1,2004. DNR assigned Accounting Code "DCHV" to the Happy Valley PA for royalty accounting purposes, which Unocal shall reference on monthly operator and royalty reports. I approve the First POD set forth in Exhibit G for the period from September 1, 2004 through 5 Article 9.5 of the Agreement Deep Creek Unit, Happy Valley P A Findings and Decision Page 10 .,; ') ~ August 31, 2005. In accordance with Artiç;le 8.1.1 of the Agreement and State regulation 11 AAC 83.343, the unit operator must submit a Second Plan of Development (Second POD) to the Commissioner and the President at least 90 days before the First POD expires, by June 2, 2005. Before submitting its proposed Second POD, Unocal shall schedule a meeting with the Division and CIRI to present its current interpretation of the reservoirs underlying the Deep Creek Unit. A person affected by this decision may appeal it, in accordance with 11 AAC 02. Any appeal must be received within 20 calendar days after the date of "issuance" of this decision, as defined in 11 AAC 02.040 (c) and (d), and may be mailed or delivered to Thomas E. Irwin, Commissioner, Department of Natural Resources, 550 W. 7th Avenue, Suite 1400, Anchorage, Alaska 99501; faxed to 1-907-269-8918; or sent by electronic mail to dnr appeals@dnr.state.ak.us. This decision takes effect immediately. Ifno appeal is filed by the appeal deadline, this decision becomes a final administrative order and decision of the department on the 31 st day after issuance. An eligible person must first appeal this decision in accordance with 11 AAC 02 before appealing this decision to Superior Court. A copy of 11 AAC 02 may be obtained from any regional information office of the Department of Natural Resources. Original signed bv Mark D. Mvers, Director Mark D Myers Division of Oil and Gas November 4. 2004 Date cc: Thomas E. Irwin, DNR Commissioner Kirk McGee, CIRI John Norman, Chairman AOGCC Jeff Landry, Assistant Attorney General Attachments: Attachment 1. Attachment 2. Attachment 3. Attachment 4. Attachment 5. Attachment 6. Attachment 7. Exhibit A, Unit Tract Description and Ownership Schedule Exhibit B, Map of the Deep Creek Unit Boundary Exhibit C, Happy Valley P A Production Allocation Schedule Exhibit D, Map of the Happy Valley PA Exhibit E, Happy Valley P A Expense Allocation Schedule Exhibit F, Deep Creek Unit Expense Allocation Schedule Exhibit G, Deep Creek Unit First Plan of Development Deep Creek Unit, Happy Valley PA Findings and Decision Page 11 HVPA Decision Attachment 1 ,................."'"..........,..~..,(~,,.... ""''''m.<n''m.'..~m...~. 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OAAl Perctltt Working lntert-st Owuer$f¡ip Uniim ()ìlCoo!prmy j)f t::¡}li(øn;ía tlt)ÍOI:I OUCOt»~)' {¡f t'alifòrnit H~ t!"ÎouOiI çvnlpalt}' of CalífoulÍ.u íE)1!ŒtMlED1 U\S SEP 1 Q 26Q4 ~~,~ D1VISION OF OIL AND GAS Worldng Interest OWnf.\f % 100,00% i (j(). OO%- ¡ UO 6<1% Cjagç! 00 _....,v..""""~",;.;",,,.'...'<"'...~' /~s /~ m~.~,..n..~~'_~"">m"''''''m''''''''''''.¡Uto!~>.......,.".--.~..~>"............"">~,,.» Tritd 'rrnd L~g.1 Jj~!!ripUön U4 -:n)~"mhjp 2 South, Rmge .13 W~,Stw#l'd ~kfRiiQn, Atask3 S"~tiM W,AU, &dudü~g 1'!w.-{$ A¡¡nd B nf A$L$ ~~-'12. Í!~~M?~; 8(:($k'\IJ ZJ; An. ~U~; SCctJcn29, AH.64U ftì.~ $.~dQß 30: All, 621.44 oem, Towl\thiþ 2 SOOtb, RMße.D'W~$t, ~~ Mtrldkm, A~- Sc<¡äoo 22; AU.Exclud~ Loti J !IDd 4 {f~{I~Jly k:m>W~1.1\~ ~Þt 2) oW$$ 9469, 4~O;!).¡¡~<:i; S~gll2J: .Mt.MO¡w~;. $Ç{;{.joo 2'; NI, Mn~e$~ StttiOn 28: AU, {)4lhiCtC$; S~Ü(UI H: .~,, M¡)~; !,'I(j, 1h~1!!lhip lSt».lili, ~~ 14 Wcst, 8e\\'ltttl Mi;;îdiftl\. 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TI r:-"-,,. ~~ '~, Wørkiug Inh:rest Ow"~rship . UulœOi! (~àílY (It" Ödilhmía 1~~.1~ I}ni9l~ <itl COffif);\II)' <of C¡¡jf~b¡3 IOO,OÓ% HH09% ~ òfAt~ka, Dçpjut..j\l;.~t Wi'tOO% 389,226 ~tNqtJ~1Il R~ut~ .'..'w.''''''''','''.''''''''.',.-...'''.,'',',',.,'''','',''''"^'..'''.."."""'''''''"''''''..'''"....'",',',''''',.,.-.w,,,,,''.. W3090$ Slfttcn.t( ¡.\11I$k1L, f1l::çal1ßtiml ¡OOJ)()% 389225 ofN!Ïtumt R~lfm J8.~ {~noi»l'híiHps AllISka, 1.$0% lIte ¡ KtM¡% e(}n~ß¡'ûiliïp$ AI~1I. t .SlY'h tni. n.sl>% C(m¡j",}P!IìUip$ Ala$~, UfI".4 tnt. q,5(J%. t.\mw::t:iPI}Hhl$ r\IMk~. Ui}% luC, Wørking InterQt Owner % 100.OO"A UnWn QiJ Cø¡npimy 01' Çæ~fumi¡¡, I {JI)Q!)'>/.. Ij"fun <},il ç{tmpam' ()f" (:i1tttooli. .. w_,ww,--- lI}{Ü)W/~ p~>;: 2 (If} [R{~~~n;::[Q; DIVISION OF ~,'-""M""':""~"'V''':<'''''-.. ~._. .~ l-'- Traçt Trod ~t Dc$t.ripttoll (ì& røwn$hip 3 ~1(b.R..1¥g.Ç !3 \V~f ~"'f\Ud 1'>1ltlidioo, .A!a$im S~tkn1 5: L~$ t fl)<! i.fldt1$h~\ !.Htl. N1J2, ;$1!.J!.(SWI/4; Scç;lon $: AI!; Sc>;tk¡O [$: AU: T'{)wu$ltlp 3 SClJtn, R~ J'¡ West Scw3-ul MiriðiM StctiU1! 14.: All; íJ? TQWn~hìp Z 8~\ua¡, ~'Ul!W t J W"-'$t Sf.waro tfknd¡:;i1. Ai~k:t $pççjol Sumy; U.K &ltH}' 9469. tQ! L >1t9'9lWr~ !Xl:p Ö(ef¡; Unit ExbHlil A t1l.St U¡xtate: 911/2004 Trnrt Açr~agt' L~a~ It 4546,{)Q 39,99 VOC iI CIl~.I # unl¡;¡¡i¡~d Miuend OwUe;T Mhtèi'a' btfcr~:d J!J193% toot ttilet R~gi(m, me C.ì.~(}¡ $91 ~!t!\<I R.~dty PcrCli:nt !(j(HìQ% l'ö~1 Unit A(Dl1I~ 12:656.9U OUR( Owner [.$.t}1fY<. COO<No)f'bmij}~'>\la$1\a, 1. 50% int. muu Perç'ltl Wn.rking. 1Bttrt:,$t Ownen¡hip Union Oil çomp3l\} of CJ1f¡(òmia \Vørkiu= fll.èt~st Own,r Uo;,'onu:níwù UniOn Oil Cnmpa:ny \")H:nli~m¡# Net A,,'u:$ l1ní~ % 39.99 n.6l69J }.l8% 99..$.2% DfvætON OF oiL AND GAS WorJdug tutçrf$C Owntr % I fJ{~. 00% f)a.ßc 3 t)(:~ J "',,"YV''lO/VV..-WfVIIV,\A ml.fII#..-rW\., ,,!< -.--.~.~~ - ,- ,-.;":"1,; - - 1"'''''''('«1(((( '''I''''':ai'(mm1 6 UNOCAL Cook Inlet Deep Creek Unit ElbibitB 2 ,:::J \~::;:~,.. ',: (1,O~1,5n~ ¡ , 'j ~ "",,,.-.....,,,,,,.,,,Lu,^,,.. 8;:: .~ 1Ir,.1I" It. Jj1¡¡fi\ - ..\11'" tJl HVPA D~i~n l \ IA'. .1 . ...,t'hment2 ~t ~ "~.¡4..,.;.;.",-:,l'.\\,,W.w.w.w.æ-'f';(t'(i"';"f(<< . f;:(}t)i 0;1 1 " 1:!t''II:.i'_\\Y.\WI . , ;. ''-'''\\1''''1 ~ ~ .... X((j' 1!'I\1,'t-.NhWr..\W'W'\ If{' N. !. "".'''.'''''''''.''...Ju~~.^,... ~.- ----rAe- ~---.'.W(ÀvIIWj(Ij-"" - J IJn,t't!N1> !... ,~-l\-- -¥....;;J,.'(¡,WYi.~V(,,"-'« C:=:::'^:~::l~~ Åe~~ , : G1~. t~\'Ui~ , \."\'''m.\..,,~~~~Y~'"''(r'.\' , . -fl\NmN--lIr"v'''v'\'V K\ . ---- :~ I ¡ , í i I $ ~ j ;~ ~ ~. ¡ ë ! ~ j~ r ~ ¡ ê ! ~ II' ~ I I :: ¡ # m:lt'lWii Revised September 1, 2004 Scale: t;10a,OOp ~it~<:@;x~~ .~':x. ~~-".'-W-.~-"" ~,~ .' . . '" .. ,-,-.' \:;;;==í'UU,.C"', .'w.. . HVPA Decision { (Attachment 3. ' -""^'^~ .. X"'..--. . ",,,..-..... Tf~U,'1 Tract lqàJ J)~~riI1tìutl !ì2 l"'øwushJþ :2 Soom, RÄt.SC,13 West. S.......v;ud M~dûí@. Àit\$}¡,'3 ~~¡ ~'t!rv~'$; \bat I'QttWIl ~(1)$, Smw:y W!>9.1,p{$ J &. 4 widlÎ.ij $s::øwil 22, Wt!Z'3n,i.h}¡e WWNEJf4, toot;JÎtûng 14.u~ ¡lC1~, i~ . ,.-~".;¡;':')IoI:--X~i(~^"*"",,M'¡,((.. ,(::;-T'" 1\;(1 a n _I Tt'act A~ì'cagÇ 14$,£4 Lease it troc If WðOOO:ì ^1)1,~ JS4339 I)eep Creek Unit Exhibit C Happy V aUeyParticipating Area Eftèctivc911f2004 Traçt Mìn~rat Pereenti.ge Owu<w Mineral .Inttf~$t; ..A'\...U .H.:... ~~-..:::~:~::,Jr.NI::r:Tll/(.:?C 1ì.7:6NQ{f.4 St~l?fAI~, Oq,unJt1Cl1t t)fN~m-a! RC$.(I\I~ÇS' too,OW¡" . J>:-;:._)..".'-::.WI'-"~'-t ).K R~yalf:r P'm:cnt 12;~)14 (}RRl ()w~r oiuu rt'f~ç.ßt CIRI Pr~~~km C~')< C(ìn{!~oI'bíllitu AJI14;<I, bte. }.S{¡% ,5fJ"A; I) r~wmjiiv 2~u1!1. RMgt U W~, Sc:~wd MC(tdiItJ!, ¡\Ja5,]œ HlG,{)('¡t~ $~jQn t5: 51W4SWl14 4tU)(} ",W",,,,,,,,,W,".W""''''''',,,,,,,~^,~'''''''''''''''''''''''''''''h'.v.,,.....=..,.,..,.,............w.~,.~.' . 360,00 0$ lQ\\'n5bip 1: Söli'h, R;t~~ U W~¡ StW3fd ~fid¡al1; Ali.t~lá S«tkm21: :W~NßIl4.. 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Happy Vllik:r Pafcif~¡jti6j¡ Area . !h:tûMI C L~I Updm;t: I VU4~ fi94.15 Tobtl VA Aèff;ag~ 1.1$9,99 (Joe 4 W~~39; (JRJ ~ C.9{>15~ $.~,98.0.}ou% took lnlç{ Rcgitm, 1m;, ¡ OQ.!h1'}<j. Tot311'tad Prrœntagc. IWJlOOOO)% . .,.".",,,,,,,,,,,.,,,,,,.,-v.,..,._._....._.~._w.,'-""""''''''-V'w."""."","."""",,,,,,.",, I $,~KJQI}% í 8 J)f)OOt'", . ,,,,,,,.".W.W""",,',,"'W""',",",,,,."."".""'-',-.",'''''''','''' WorkJn.g 11UcI'Cst Own~rstt¡p .LO._.. ... 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'----. .. ~._-." ~ ~ I 12 ! f I I ~ ',,-\ !tttt..~ ~ '''~n(~I.,.,t,: ... i (- -.. ..'~ ~9~,-,""": :~lt(~4It««(f',~(IJ~~ N C~$1e , 'I.:r i~.r¡ i \ ~f -. ~ ¿L~-1 4 ,-I '-'",. .,' (if}Q~tOO~ - ~/%</~ .". -. -. ..-. -,. ,<-¡:r' '5 ~-~'H ..."'0,,, '4CVlO' ..'t, 'Y.<l:t -<,(' .m 6, ~ .8::'!i 'fj191,: - 11J..\-\itß!)',:¡j'~IJ ,~-,~J U"" ;- ~<o:.~ . / P.awf V~~' Pa~1kìp-¡ì~~ !'4Ç;;¡ ~~ ~tf; clm ùfð~$ "".'-~~~~-_. } r VVj'VII+tj~W'~~_fI«.""JU. s I j ¡ i ~ 1 .. ",'..... ,,'.W, " .._",..~;,l ,-,'.W.""", ..:.;.AU.-:XA..W..W'NI('a"~'-Y '.. . '<I.. . !:1.. ~ff"-"f(- UNOCAL8 Effective September 11 2004 Scafe: 1 :100,000 ~~œ~rD,' J ~ OCT 1 2 2004 ~ DIVISION OF OfL AND GAS .w.... 'W~. ~,;~'-;'~'~:;~"':}~~~'.:.:':~~:~:«:<::.»:~~:~:}:;';':':';':;:~- ; ..._~ . HVPA Decision Attachment 5 , ....;. .,.. .,. u . .. ,----_.......-l /~ Triìd 1'ràèt l&g:d Des(tiptwß J)2 TO\1,~ 2 South. ~ J3 W~1, Sç~1II"(f Mcrldúm. .t1.tad:. TJ'3Ct Aèreagc 145,$" 4<1.0.0 """'''''''''--'''',^'''''''''''~N''W'',yy,..~."">M'O<''''W''''_-''',_-,^,'",,W.''W-'''''"'''''-':-;..,.'.''''''''''''', !~..... SpœW$U~.dtßpør~ofU..s.< Survey 9469.1Þú 3 &4. wìtt,¡n Scctloo 22. \\'In:.n4!tw Wt/2NtHM.trontáming !4S,S4.ai;m$. Deén Creek U.nit ExhibitE JI.appy Valley Allocation of l>articipating An~a Exl>ens.e Effective 91112004 Lt~# Tract I\Ullorat )~er«nÍ&ge ~'uf:t Mhlcrlil Inte:rost . .rXI1-:S';'\);,\\.:.KL',L".., ,., , HOC; Hi~9902 H.1614UW" Sl1\œ(JfA" AÐL#U4}OO ~tmntofNt\tri RC$QU~ . lC(IJXPA. 03 ..^... -"««<*"'-»'''''.''''''-'~'''~'''--''''''''~'''''''''~'''''''-'''''.''''''''''''=''NA.",^",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,W,^,,,~,,,,W,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,'''W''''''''.....,.....,.,......,.......".,.........._-,_...W'.'~.'..,-,,-,......._......-,,,"N,,","":-:«.:-:_...~'.... 1.2258Otm C~ fuf;:¡ Rca¡ù.I1,W:. lOOJXI% T~íþ 2~,.a... 1;3 W~M. S~~~rM~idia1t, AJ~ S~^ÛQn 1'; $lW45W¡N 94 To\\mhip 2 Sooth, ~tIf~ n W~I. ~d MÙidiim,f~l~ ~Çt¡òn 2L fHl2'N~lU4, $\Vll~ll4, ~)l1SWU4..SHiì.t 3~,OO 110(;# 1019393 emu C.!)6I5.S$ R)}'ått)' PttfCQnl Qmu ()WQ~" B~.4 t,,1R.I1'lOduaioní:ompøn)' C~ßÓOOPh¡I1iJl$ AI~, Inc, ",..~"N'",,<-.., s.aOOÓ% . "Moy.-.-.-----....................,.".".........e<.;,.,,,,.............--.. t~Ql1QÇoPbUUp$ ~ tl!ç, ORlU r.èl'~n. 3,s0% 150% ~Wofkjng Inter~t Ownçrsblp \:;;::::,K'....... "....... ...,...,..,... lInJoo. on CQmpit!1Y QrC~U(oOli!\. Working InierC$t Owner % J,Q(J.OO% t ,S()% . "'__-"-"''''''''''''''''W'''''''''''''''''''''''''''''''''''''-'''''''","."":......_...~.~""...,.......".._..,...,,,;-~,----,..,<"^,'~,""""",,",,,~- IQQ,OO% lK.ìClf 1029394 :2'9.1)31500% Cook fu!<t ~!n, 1m:, tQl)llt)% coo C (~...()6U$? ... ,... 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Afl ~10 tff:1C¡!;; $!:akln'ì9; AU~ 44(} ~~; SttCl.1OO 3ô; ,.\[t, .(iU .44 m¡~, /'0$ T~p:2 SÐUth, R:a~ 13 Wcs!..1kwarrl Þ-ktidhm. M1:¡kq $è«ùm ;tt: AJI, n~ct~í~'!g W)b: ). Mil 4 {f~t<d¡.kf~~ ~ t(tt 1)¡,tfUS$9i1~9, 4f!f).(M ~¡ ~km 33; A1f,MO ¡wtCli; S~1t 21; An~ M(¡ 3?f~~ ~iQlJ ì4.; AU. 64(hwf'(:$; ~iiön 34; AU, 64(} 3\~~: .--....."..........w.................w..............-...-.......,'",'.".""',... q4. Tgw~h¡.) } Soulb. Rtl.ogc.14 W"l, ~'''''fd Mc.riùi<m. A~b ~ t StU\~}'C4. All. $<1 1,94 fil:t~; ~ 2:S¡t~4. 1\,1, 94Ø.i().ìt~<$: ~'n 3; $In'~, All, 64{t1M ~~; ~"t.ì"fI to: $iln'~. An. (i4().() Qtfe~ Sa{ÌQn t t ~Y,*W, AJl, 64!t.O a.; ~~UQt¡ 12; SUIYC;:"!:IÍ. ,\If, 641).ØIl.tt~;. ScCdOA t:1~ $Uf!,~~d, AH,.MfMJIlC.iet; SeóttÓD 14: SUf\'tJed. An. eXdu4ittj! UK ~I!f\'~}< 471,. 6J7.26 a.~~; S~km IS: SUY0'~, MI,q'~looillg U$. SUtVi:y41n.6J1.Î4M.'M; 1 S~SU~~$; tts. $U(\'(;)' 4111, $.{m¡K~:;; . ffl T(>\\mh~3 SOOfh. ¡bm$~ n W~~t ~MI t<ttridial\, AlAAk~ ~tiw, (~ SUtvt,\')OO, Alt (.:!J..22 ¡!.\";æ~; $<~litm Î. SI¡r\tÇ}~d; All, 624.* lI.ç~\m, D~ Ci"k Vltit Exhibit r L¡¡,'U: Up..t'Ùe: 9!l(2Oti<! Tract A~n:age I.ease #. U3U:; 3iHJ.)J);! 5:;62.68 L2.5íU2 Mtnern1 OWJ1U HOC # GIRl ø u}~9~ (À** tfllt! r~~. .!.IIC, C'06l5~9 tJO(: # 1029395" (~~ Inlet l~egR»t. tn.:, emf /$ C.()6i S9U .........=,...~"".¥<.y,,,',.... uoc# AD, # LIII!!. ^ Y'"V,""'~' M¡lÛf~tI Intemt IßØ.OO"h 100,00% I03f.WOO SlU\t of AIj¡¡¡Ska" fJt:plttlJ1¡lInl im¡;~}o/" 3$9226 øfNatltfa.l R9.~I~S ooe # j{!309<i$ f.jhlkH~ A~~ br.partnwm WIJ.~'Î\ .,\Dl ¡; JS9221: ()fN3tur~ .Rìi$\JUf~ ,».{...hM;«¡;"...,................,(>....~n".'" ltoy~dty V.er(èllt ()RRf Owner {XL- xr: . tl. -r -... .. j~.oo% .C~PbilhþsAI~ki!, 1.5.6% t~ ! U\'}% Cooo~P.M¡¡îps t-\¡~kà, ¡ 5wrZ. It!\~. tl.$(Y¡{. ("Æ»1w(fb!Uios AI3i<I.æ. LS6% I.1w ' ORat Per"n' Workittg tntert.$t Ownenbip WQrking htltrt$~ c)wner *A, 100.000/. IWM/6% H)tM)Ø% ~2,5{J,* t:mlí'\1Qt'hmiY.i AfMkIt, !.50% ¡t)ç. 1O(i,oo% <0 .tt";"':',,,,,«h~L.....~.:r.....)... tifli~ Oíl ÇOI)t¡~~y of CalifhmïQ liniQn ()if CQIDmfl)! t'>f (:¡¡lífM¡iI) UniUfi Œl (;oif1p3ný of Ca}j(Qrnia txoon Oil Cumr¡niy üf . CI\I¡f<voi. ~~~:~l!d) DiVISiON Of Oil AND GAS PJ,i¡,!$: l \if j -""""''''''''''''-~'>:>'.''''''-''.;o Tract 'frae! .Leg.! .I.)~cripd()u :'t'-- \ LnX¡J¡tJ. us Tòwnsbip J Smt~. ita!1J,C 13 W~ Se:~\'iud Idmidí1Jtl, Mü,~â . S('<{;íoo S; t~ t ti)4¡.nçbJ.;¡k~ sm NIt::!, SElf4,$Wft4; . SC~ÌQi¡~; AU; &.~k»1 l~; Ati~ ,~ fOW1...~b¡p ;; ~.th. itMj!C 14 We$t, Sewar4 Mtridian $t¡;tìu,n .24: All; '.'.,"""^~'^'.-W'_'_""-~""~'..W-'_'_'_~'.""..._..W_"~......_~._~W,~"',~"~'."'...w.''''''''-'-~'''.''.''-'.. '..W. ... (19 T(."Itn.~íVZ $Qmh. R¡!¡~W 13 Wm. Sew¡U4 M!:ffdlan.. AIMh ~~td Smw:~~ l.US, 5Ilrvçy94$9, t.ot " .3~,W:¡mtà TraCt Ae~g~ I~(a$è it Z,54c6,Oa J9.W Tøtai Uoit A~"~ge 22-<",,,(.:91.) tJlJit Ii:x¡)~u$~ - Uuwnoa Corormn:r ()f C3Ufomia t(!Í)<}~ /.-, i)eqt CrW\ I}m.t E1diiti! f' LØ$i Updmg; ~ tllOO4 ~)OC j) COO it' .... '.'M'''~'-'~~~.' .'.''''~'_...,...... '..'.".~'."-,,~'w-~W . . \lntcMc.d Mi~u¡ Owner GZ9W<> C\1,,¡k fn!ctReginn, fn~. C:'061S9i ..........................~'~..~..-................ UtM "".""",..~'"''''''''m'''''''''<>.,,'''.~~'-'.''''''''''' M:jlJ~nd fnf~rt:st IOO~i RI)~U,. Perceut I_f. f . ¡I;'it1mlp"T" ÔlUU OWMt .:,-), "',"'.'"''m''''''''''~''--'''-'-'-''"''''' !$.{,\!W¡} ÇooO'<;~'1NÜtlÏÞ's Alml\, ¡ $0% hw,. QRRt P~rcel1t Working Juttrest OwnersJdp Union oaemn~¡¡y (It' (;nUfurl}iu ¡,Qi SEP 1 0 200.4 ŒVJSiON OF OiL AND GAS Wurking tnt~f'C$t Owner % H)O,~¡,¡ ....,.,..-..,.,.....".."....,...,.., 1~;I;;f.3 .. ~1. -". ..: H, ., VP A-'Deci~ion .....~ , ~nø~I~}a$ka_~. . ~ I ~~;; 'i;~'"l:~~~r ~c:"~::"1 ¡ Attachment 7 ,-,' î~::f~~:2~~):~~ãgi,~iç~" 7 c, ..'''- . --",,,, UNOCAL Kévin'A,Tab~ri liimnagêr t$(KÎ!t3(~nrn~!1tAb¡f$ September 23. 2004 Æ~~~~ ðtP :61 ,lJtJ~ ::!J DIVISION OF OIL AND GAS M-r~ Tom trwin~ Cornmi$sioner Alaska Department of Natural Resaurc.es Division of Oil 'and :Gas ' ~50 W. 7t)\ 'Av$nuê, 'Suite 800 Anchofa~e, Alaska, 99501';:3'5~O Mr. Cart Marrs~ President Cook Inlet R~9,¡on Inc. 252'5:C,Streèt, Suite.,500 , Anchorage¡ Alaska 995Ö9-3330 DEep CREEK UNI'T Statè of Alaska "'.\Jf,'~IM._\ " A.,.\t",,,,,,,",--W_\_~--:t(f''''''''Wf. First Unit Pia" of Development and Operation Revised 9..23~4 Gentlemen: tn accord~noElwith ArticleS of the Deep. Creek UnttAgreementand11AAC 83:343~ Union Oil Company of Califom,ia(Unocal)~as Unit Operator, r~:spectfuHysubmits th~ follpwing., Reviseci' Plan '{Jf Dèvelöþmen~and Operations. Thi$ Plan contains revisions to the First Unit Plan of Development subn1itted to you on August 31.2004, per the request of Department of Natural Resources (DNR) per.$onnel. t pE;J3I'QP This Plan shall cover the per rod -from September 1, 2004 to August 31" 2005. First Planaf Developme $eptembèr23,2004 Page 2 II. DB11.irJ~ßJREME,DJALfRQ<GR8M A~ B. Plan of Exploration .Review 1. Remedial\¡Vork - The NNA #1 weltbore.was tested in additional intervals with no œmmfJrciaI gas tests. Operations to convert the NNA #'1 to a disposal welt were completed. suchas'performÎnga M1T~ 2. During the Exploration plan. nine (9) wells were 'driUed tn th.e Deep Creek Unit. a, HV~1 -Drilled in 2003 ~o 10~812} MD ¡ 9.700' TV£). Cornpleted in the Tyonek formation. Test rate was 4.1 MMCFGPD at 1,122 psig FTP: . .' . '. . b, HV..2 - Drilled in 2003 to 1°*225' MD 19,.812'TVO. Comple'ted in the: Tyonekformatiöfl. Test ratewäs 2J3 MtJlCFGPD at695 p1jig FTP~ c. HV..:3 - Drilled in 2004 to 11.345' MD I 10¡112' TVO. No. test rate estabUs.heø at this time. d. HV-4- Drilled in 2004 to10J>.2S¡ t,AD ¡ 10t5t5t TVD. Notest rate estabUshêd at this timEt e, HV..6 - UnsuèœssruJly driUedin2004 toobjêCth¡e~ Not~st rate established at this time. f. HV.6 - Drilled in 2004 to 11~798t MD 1101400f T\lD. Notest rate estabUshed at this time. g. HV-7 -- DriUed in 2004 to 9i118 MD ¡ 7~ 140' TVD. No tést rate .eståblishedat this Ume. h. HV..8 - Drmed in 2004 to 8,,900 MD /6..734' TVD. T~$ted in the TyonekformationatO.6 MMCFGPD at902 psig FTP. ~ Tested in. the aelugaformation .at1.2 MMCFGPDat 865 psig FTP. i. Sœr#1 -Drilled i02004 to ~,130>' MD /6,640' TVD. Tesiedin the Tyonekformation at 0.5 MMCFGPD at 413psi;g FTP First Plan Potential Work 1. Orin two (2) development weUs in the: Deep.Creek Unit. s. Two '(2) or more development wens io the Happy Valley Devéloprnentarea depending on œ$ul~s, First Plan of Developm September:23. 2004 Page 3 evised b. Additional d~'elopment wens: may be drilled in the Star Development are,a d(ðpehding on the results. of the recompletiof-1 work and uphole zone testing in thø S.tar.#1 welL The Star Wen was drilled :frorna surfac~'ocation within the Unitboundary to I' location outside of the southern portion .of the Unit-If t~$t¡ng is '$uCCE!S$ful and additionalv.ìeli$' arê d"med to dèlirieate a new :éccumulation~ the UnitwiU be e.xpanded.~ if neœssaryf to: encompass thearêaJ eXtent .of the newly defined r$$ervoirand.a ParticIpating Area. wm be established. 2.Workovør of the ~xisting wells. a, Star#1 - Recomplete and test upholezones. b. 'Possible recompl~t¡on candidates will be identified from the e.xisting Happy Valle.y DevelQþmentarea as necessary. 3. As' requined under th~ P~aoófExþ'lorat¡onl Unocal ácquired approximately 105 mUe$ of 2D seismic data over the Unit area. About half ofthedatacoUectedwQs Qver the Happy Valley PAsTes and v,¡m be the firat dataworke.d by our staff. The balance of seismic data over the southern are-a of the Unit has now beenproœsæd ~nd\^IiU ~e evaluâted over the planpèfi.Qd. All required Sundries'a.nd Permits win be obtained for this 'Nork m.. QP~B8IJ.N&1-t?R;QPUCIN~ ,fßQ§ßhM A. Plan of Exploration Review 1. No Production occurred during the Exploration Plan as the facilities $nd. pipelines were not in oparatiøn. 2. During the Exploration Plan - an Aquìfer Exemption and Disposal Injection Application were submitted to the AOGCC for the NNA#1 weUboreWith¡n the Deep Creek Unit. Pending approval of these apptications~ the NNA#1 will be utilized asa water disposal ¡cuttings djsp()sal~Nén, B. Potential Work 1. An application for a BeJuga I Tyonek Participatìng area is baing submitted for the Happy Valley Portion of the Deep Creek Unit. 2, Production is estimat~d to commence during November~ 2004. ."~",i'" First Plan of Davelðpm Révised September2312004 Page 4 c. Well Production Summary 1? No' prod uctløn occurred during the Exþloratiôn Plan. tV, SURFACE AND,FAC:ILfTYOÞERATION$ I;,.,~_,., -'(.VIf-'((ffi'fff''V'" . ----,,-.'-:-,fWlltlfttflfW_" -... '~'mn~<,fffll- ,~"'" A. Plan of Exploration Review 1. Doring thè Exploratiön Plan a gas pipeline im~taUation commenced connecting the Happy Valley Pad to the KKPL line. This io~tallation is o;ngoing ',and is 'scheduled to be cømpleted by Növémber~2004:. 2. InsÍ:f}ltationofa gas prö,œ$sing facility oommencedon the main Happy Valley pad. Gas will be sold via the newly installed pip:~tinð cúnnectingttre' D~~p Creek Unit fóKKPl, FaciliÞ¡ $œrt up is sch~duledfor Novåmber¡ with minor. fuel gas use ¡nOctober to I1Jn generators prior to start up~ Potential VVork s, 1, A new pad may be e$tabli~hed in '. the ~ep CreekUnít This pad will beappröximàtely 41OOO~féet W&$t of the existing math Happy Valley pad. An required perrnits will be secured pri'or to construction of this new pad~ 2~ Primary 9a$ treatìng ,may occur .00 the new pad with finaL gas processing for sales occurring on themaln Happy Van~y pad. ' 3. A water di~pQsa' facility m~y be estabti$hedadj~oent to the NNA#:1 weUbore. 4. Installation of ,gas'compression facilities may.occur at the main Haþpy Valley Pad. The Unit Operator rés,péctfully requesísapprovðlof the förego)ng First Plan of Development aodOperations for the Deep Creek Unit ' UnocaJ, reserves the. right to propose modifications to this P'anshouldconditions so vvarrant; however, no modificé}tions wmbe, made without first ,obtaining permissiòn from the appropriate 'governmentatagencies. First Plan of Developm t Revis.ed September'23¡ 2004. Page 5 please direct-any -questions regarding this plan to Ralph Afflnito¡ Reservoir Engineer, at 263",7947 or t~ark Lynch,. Geologist at 263';7851. cc: Alaska Oil and GS$ Conservation Commission. Sincerely ~ UNION. OIL COMPANY OF CALIFORNIA Unit Operidof^ . By .....J~~ ...-... ..... Á. - ~.. r'~"-_- - evìn A. Tabler .,) Unocal Alaska. .. Union Oil Company of Ca 'Ð 909 West 9th Avenue, P.~ 196247 Anchorage, Alaska 9951 ~ Telephone (907) 276-7600 Fax (907) 263-7698 UNOCAL8 CIJ;f!1ì ø!ìv~ //1/ /;;~ Kevin A. Tabler, Manager Land/Government Affairs August 31, 2004 to;Ýfll?¡; .~.4?7J/ ~..~ Mr. Tom Irwin, Commissioner Director, Division of Oil and Gas Alaska Department of Natural Resources 550 W. 7th Avenue, Suite 800 Anchorage, AK 99501-3560 ...., l!/jj/Vir1 I . ~UbIVOJ Mr. Carl Marrs, President Cook Inlet Region Inc. 2525 C Street, Suite 500 Anchorage, Alaska 99509-3330 RE: Deep Creek Unit Happy Valley PA Application Cook Inlet Area State of Alaska Gentlemen: Union Oil Company of California (Unocal),.as operator of the Deep Creek Unit (DCU), hereby applies for the designation and establishment of the Happy Valley (HV) Participating Area (PA) effective September 1, 2004, pursuant to 11 MC 83.351 (Participating Area) and Article 9 of the Deep Creek Unit Agreement (Participating Area). Enclosed with this application is a Geologic & Engineering Report supporting the formation of the PA. Additionally, enclosed pursuant to Article 9 of the DCU Agreement, and included as part of this application, are Exhibits C, 0, E, F and G to be incorporated as part of the DCU Agreement. CDN t::J ï VI /!1¡:~í 7"-/ " ! L./ÍJj/¡/¡¡ I Itl( Deep Creek Unit P A.J DNRlCIRI ., August 31,2004 Page: 2 .,) -. The proposed PA includes one (1) State of Alaska (DNR) tract and three (3) Cook Inlet Region Inc. (CIRI) Tracts, for a total of four (4) tracts comprising 1410 acres of land reasonably known to be underlain by Unitized Substances and known or reasonably estimated through use of geological, geophysical, engineering data and actual well performance, to be capable of producing or contributing to production of Unitized Substances in Paying Quantities. Both Unitized Substances and Paying Quantities are defined by statute. Unocal, over the last three (3) years, has conducted an aggressive exploration drilling program far in excess of that required by the initial Plan of Exploration. As a result of our drilling and delineation efforts, the DCU is ~oised to begin customer deliveries and sales of natural gas in the fourth (4t ) quarter 2004, upon the completion of a Kenai Kachemak Pipeline (KKPL) company pipeline extension to the Happy Valley pad complex. The enclosed structure maps, well data, geological and geophysical information submitted with this application, varies slightly from the maps and information discussed and reviewed at the August 19,2004, pre-application meeting. New well data and structural interpretation, particularly in the Beluga interval, has necessitated the revisions provided in this application as the "lowest known gas" is larger in areal extent and involves both DNR and CIRI tracts. Given the complexity and low rate of production from each individual reservoir and the lenticular and discontinuous nature of the sands, the only economically viable approach to development of these reservoirs will be to commingle production and combine the Lower and Upper Tyonek and Beluga Reservoirs into one participating area. The combination of these reservoirs facilitates the seasonal deliverability of gas in the winter and storage of gas in the summer, significantly increasing the economic viability of the DCU. Establishing the HV PA as proposed, will provide for the earliest production of gas reserves underlying the DNR tract and CIRI tracts while, at the same time, protecting the correlative rights of the DNRand CIRI, as royalty owners, and ConocoPhillips Alaska, Inc. and CIRI Production Company, as overriding royalty interest owners. The proposed HV PA is in the best interest of the State of Alaska and CIRI, and is consistent with the authority and criteria for DNR and CIRI approval. As operator of the unit, Unocal respectfully requests DNR and CIRI approval of this application to form the proposed HV P A. In support of this application, we request that all geologic, engineering and well data be kept confidential. . Deep Creek Unit PJ.'Â-,) DNR/CIRI .. August 31,2004 Page: 3 -.,) . As time is of the essence, we respectfully request your expedited review of this application. Should you have any questions, please do not hesitate to contact the undersigned at (907) 263-7600. Sincerely, Union Oil Company of California '- evin A. Tabler Its Attorney-in-Fact Enclosures cc: AOGCC Tract Tract Legal Description 01 Township 2 South, Range 13 West. Seward Meridian, Alaska r Sec. 1: All, 647.08 acres; Sec. 2: All, 642.88 acres; Sec. 11: All, 640 acres; Sec. 12: All, 640 acres. 02 Township 2 South, Range 13 West, Seward Meridian, Alaska Section 16: Surveyed, W1I2 NE1I4 NW1I4, NW1I4 NWl/4, 60 acres; Section 31: Surveyed. All, 623.72 acres; Section 32: Surveyed, All, 640 acres; Section 33: Surveyed, All, 640 acres; Special Surveys: U.S. Survey 9469, Lots 3 and 4 (fonnerly known as Lot 2), 159.96 acres Alaska State Land Surveys: A.S.LS. 80-72, Tracts A and B, 9.99 acres; ~ Township 2 South, Range 13 West, Seward Meridian, Alaska Section 10: All, Excluding Lot 1 of U.S. Survey 9469, 600.01 acres; Section 13: WY2, 320 acres; Section 14: All, 640 acres; Section 15: All, 640 acres; Section 16: NEY4, EY2NEY4NW\4, SY2NWY4, SY2, 580 acres; Deep Creek Unit Exhibit A Last Update: 9/1/2004 Deep Creek Unit Exhibit A Working Tract Mineral Mineral Royalty ORRI ORRI Interest Acreage Lease # Owner Interest Percent Owner Percent Ownership 2,569.96 UOC# 1029392 Cook Inlet Region, Inc. 100.00% 18.00% ConocoPhillips Alaska, 1.500000% Union Oil Company of COO # C-061587 Inc. California 2,133.67 UOC# ADL# 2,780.01 UOC# COO # Working Interest Owner % 100.00% 1030902 State of Alaska, Department 100.00% 384380 of Natural Resources 12.50% COO Production Company ConocoPhillips Alaska, 1.500000% Inc. 3.500000% Union Oil Company of California 100.00% 1029393 Cook Inlet Region, Inc. C-061588 18.00% ConocoPhillips Alaska, 1.500000% Union Oil Company of Inc. California 100.00% 100.00% Page 1 of3 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner 0/0 04 Township 2 South, Range 13 West, Seward 2,534.43 UOC# 1029394 Cook Inlet Region, Inc. 100.00% 18.00% ConocoPhillips Alaska, 1.500000% Union Oil Company of 100.00% Meridian, Alaska COO # C-û61589 Inc. California Section 20: All, Excluding Tracts A and B of ASLS 80-72, 632.99 acres; Section 21: All, 640 acres; Section 29: All, 640 acres; Section 30: All, 621.44 acres, 05 Township 2 South, Range 13 West, Seward 3,040.04 UOC# 1029395 Cook Inlet Region, Inc. 100.00% 18.00% ConocoPhillips Alaska, 1.500000% Union Oil Company of 100.00% r Meridian, Alaska COO # C-06l590 Inc. California Section 22: AU, Excluding Lots 3 and 4 (formerly known as Lot 2) ofUSS 9469, 480.04 acres; Section 23: All, 640 acres; Section 27: All, 640 acres; Section 28: All, 640 acres; Section 34: All, 640 acres; 06 Township 3 South, Range 14 West, Seward 5,762.68 UOC# 1030906 State of Alaska, Department 100.00% 12.50% ConocoPhillips Alaska, 1.500000% Union Oil Company of 100.00% Meridian, Alaska ADL# 389226 of Natural Resources Inc. California Section 1: Surveyed, All, 641.94 acres; Section 2: Surveyed, All, 640.70 acres; Section 3: Surveyed, All, 640.04 acres; Section 10: Surveyed, All, 640.0 acres; Section 11: Surveyed, All, 640.0 acres; Section 12: Surveyed, All, 640.0 acres; fA Section 13: Surveyed, All, 640.0 acres; Section 14: Surveyed, All, excluding U.S. Survey 4717, 637.26 acres; Section 15: Surveyed, All, excluding U.S. Survey 4717, 637.74 acres; Special Surveys: U.S. Survey 4717, 5.00 acres; 07 Township 3 South, Range 13 West, Seward 1,250.12 UOC# 1030905 State of Alaska, Department 100.00% 12.50% ConocoPhiilips Alaska, 1.500000% Union Oil Company of 100.00% Meridian, Alaska ADL# 389225 of Natural Resources Inc. California Section 6: Surveyed, All, 625.22 acres; Section 7: Surveyed, All, 624.90 acres; Deep Creek Unit Exhibit A Page 2 of3 Last Update: 9/1/2004 Tract Tract Legal Description 08 Township 3 South, Range 13 West, Seward Meridian, Alaska Section 5: Lots 1 to 4 inclusive, S1I2 Nl/2, SE1I4, SWl/4; Section 8: All; Section 18: All; Township 3 South, Range 14 West, Seward Meridian r Section 24: All; 09 Township 2 South, Range 13 West, Seward Meridian, Alaska Special Survey: U.S. Survey 9469, Lot 1, 39.99 acres t Deep Creek Unit Exhibit A Last Update: 9/112004 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 2,546.00 UOC# 1029396 Cook Inlet Region, Inc. 100.00% 18.00% ConocoPhiltips Alaska, 1.500000% Union Oil Company of 100.00% COO # C-061591 Inc. California 39.99 unleased BLM Total Unit Working Interest Net Acres Unit % Acreage Owner 22,656.90 Uncommited 39.99 0.18% Union Oil Company 22,616.91 99.82% of California Page 3 of3 c -- ~ --'~ -' ~J-,.'; _v ~ -.;, ,- Z Tract Tract Legal Description Q ,~' ;.:.0 '-~.j " Cf:: ~ .:.., :--...: -- '-- -- þ -- 02 Township 2 South, Range 13 West. --c:: (J) Seward Meridian, Alaska ,. 0 "0 - -" tI .:",J ~~ ..,:). '~ :.....~ \ ~ Special Surveys; that portion of U.S. '< ~- <- Survey 9469, Lots 3 & 4 within Section 22, WII2 and the WII2NEI/4. containing 145.84 acres. !\.) :::;. GJ .p.. (0 IV '~ i0 C11 Q (;1 2ò. .03 Township 2 South, Range 13 West, ~g IT C.;) ø Seward Meridian, Alaska (l¡ ~ NJ I\:) ~ ~ ~ en G1 ~~ Section IS: SE1I4SW1I4 ....... C;j þ::;' (,) n tTI~ " ~o:.: 0 t.D r ~ = 04 Township 2 South; Range 13 West, w n = -- - CJ:I =- Seward Meridian, Alaska ¡;". Þ01 ~ w .,.. ~ =- ~ -- 0 ~ ~' - W U1 I\J .,.. ~ = Section21: E II2NE 1/4, w """'" ~ SWI/4NEI/4" EII2SW1I4, SE1I4. !,\) 0= ...... ~ ~ """'" 05 Township 2 South, Range 13 West, = .,.. Seward Meridian, Alaska (0 - (;) ~ w Section 22: WII2 and NW1I4NEl/4 excluding Lots 3 and 4 of U.S. r Survey 9469, 254.15 acres; -.-- :t: Section 27: NWlI4NWI/4, 40 acres; -' Section 28: NEI/4. NE1I4NW1I4, (J):D (') CD SI12NWI/4, NII2SW1I4, Ø) < ëi) (ñ' NWI/4SEI/4. 400 acres; containing .. CD 694.15 acres. --.0- 0 CJ c c -~ 1') N ~(J) ",J.. ~ Ii i: S: OJ OCD it ¡; g tD 0"'0 ¡; 0 - CD !}¡ 0 c: m ~ 83 (1) iii Q. '" (1) III (f; '" -< Ocr 0 CD GJ C-.) 1'-.) 0 ""'I 1'0 0) 01 '.Ñ --. en I\) !.::; 0 --J. 0 -' ¿: .þ. -- Happy Valley Parcipation Area - Exhibit C Last Update: 111112004 1 Tnct Tract Legal Description A( 02 Township 2 South, Range 13 West, Seward Meridian, Alaska Special Surveys; that portion of U.S. r Survey 9469, Lots 3 &. 4 within Section 22, WII2 and the WlflNE1I4, containing 145.84 acres. . 03 Township 2 South, Range 13 West, Seward Meridian, Alaska Section IS: SEl/4SWI/4 04 Township 2 South, Range 13 West, Seward Meridian, Alaska Section 21: EII2NE1/4, SW1I4NEl/4, EI12SW1/4, SE1/4. 05 Township 2 South, Range 13 West, Seward Meridian, Alaska Section 22: WII2 and NW1I4NE1/4 excluding Lots 3 and 4 of U.S. Survey 9469, 254.15 acres; ~ Section 27: NWl/4NW1/4, 40 acres; Section 28: NEl/4, NEl/4NW1/4, S 112NW 1/4, Nl/2SW1I4, NWl/4SE1/4, 400 acres; containing 694.15 acres. Tc A I, c Z Q " Þ ... ~ u>m 0= s»co -(') co- .. <' ...a.<D :"¡'U> OCt> 0"0 ~ - oco 03 Ocr co ~ ...a. Happy Vå1ley parcipation Area - Exhibit E Last Update: 111112004 N 0 0 ~ ~-- ~ ~ -~-- ~~t~~ ¡;~~~i g¡ m ~ ~ § IX * ~ t/I g- ." -< ~ õ' -S' ~ .ð ~ s» G) -'- g ~" Ch"--'-'--------~"~:Þ- 0 0 r ~m I.D - N ~ -- --, .,j--~ .Ä- _A ~ ]~ ~ ~g ~O) (J1 ..~ ~œ .~. --'- ------ ':Ú ~-D -- ..---.---..----.., ---- . - -.. --,,-,-,,'~"- - --- ......¡ :Þ 0 r (.;) æ tV 'i-' Ü1 ~ C) .c ,:11 » <'0 a~ ï w 'W'. co_-- J;::. w co 0 I\) F:~ (Jl 1"," -- ., ~ c:¡ G . ~....; ,.¿::: (~ CD ~0 ;,) ~ ~ t5 t\) _.~~"."....~~~. :....01.......,......:".:..,........".'."...'.".'..','....".-.'........ß.'.'..'.J....'. .~\m ~-: "... ..K....--~, i ~o ""i:JS.X 0 ~ (J1 ¡ . ì ~,\. ¿;:; ð; ¡ ¡ ..J.~ , ~ i _.--"" 'co.' 0:J .þ. (;) (Ji -.þ. 0J (J) cc~ "<.J .þ. = = ~ ~ ~ < ~ ~ (þ ;- .,.¡ (þ ~ l"".J ~ ~~(l = .. "1 - 0- (þ r-¡ ..(þ :......~ o. ~ d 1 = ...... .. .. .... = ~ > "1 (þ = Tract Tract Legal Description r t 01 Township 2 South, Range 13 West. Seward Meridian, Alaska Sec. 1: All. 647.08 acres; Sec. 2: All. 642.88 acres; Sec. 11: All. 640 acres; Sec. 12: All. 640 acres. 02 Township 2 South, Range 13 West. Seward Meridian, Alaska Section 16: Surveyed, WII2 NE1I4 NWI/4, NWl/4 NWI/4, 60 acres; Section 31: Surveyed. All, 623.72 acres; Scction 32: Surveyed, AU. 640 acres; Secti?n 33: Surveyed, AU, 640 acres; Spccial Surveys: U.S. Survey 9469, Lots 3 and 4 (formerly known as Lot 2). 159.96 acres Alaska State Land Surveys: AS.LS. 80-72. Tracts A and B, 9.99 acres; Township 2 South, Range 13 West, Seward Meridian, Alaska Section 10: A1l, Excluding Lot 1 of U.S. Survey 9469.600.01 acres; Section 13: WYz, 320 acres; Section 14: Al~ 640 acres; Section 15: All, 640 acres; Section 16: NE~, BY2NE~NW'A, SY2NW~, SYz, 580 acres; Deep Creek Unit Exhibit F Last Update: 9/112004 Deep Creek Unit Exhibit F Allocation of Unit Exnense Tract Acreage Lease # 2.569.96 2,133.67 2,780.01 Mineral Owner Mineral Interest UOC # 1029392 Cook Inlet Region. Inc. CIRI# C-061 587 100.00% UOC # 1030902 State of Alaska, Department 100.00% ADL # 384380 of Natural Resources UOC # 1029393 Cook Inlet Region, Inc. CIRI# C-061 588 100.00% Royalty Percent ORRI Owner ORRI Percent 18.00% ConocoPhillips Alaska, 1.SOOA Inc. 12.S()o~ ConocoPbillips Alaska, l.S00~ Inc. CIRI Production Company 3.S00~ 18.00% ConocoPhillips Alaska, 1.50% Inc. Working Interest Ownership Union on Company of California Union Oil Company of California Union Oil Company of California ï5)\!@!\MEí)) ~ SEt' 1 0 2004 DIVISION OF OIL AND GAS Working Interest Owner % 100.00% 100.00% 100.00% Page 1 of 3 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 04 Township 2 South, Range 13 West, Seward 2,534.43 UOC# 1029394 Cook Inlet Region, Inc. 100.00% 18.00% ConocoPhillips Alaska, l.S001o Union Oil Company of 100.00% Meridian, Alaska CIRI # C-061589 Inc. California Section 20: All, Excluding Tracts A and B of ASLS 80-72, 632.99 acres; Section 21: All. 640 acres; Section 29: All. 640 acres; Section 30: All, 621.44 acres, OS Township 2 South. Range 13 West, Seward 3,040.04 UOCf# 1029395 Cook Inlet Region, Inc. lOO.OOOA. 18.00% ConocoPbillips Alaska, 1.500A. Union Oil Company of 100.00% ~ Meridian, Alaska CIRI # C-Ð61S90 Inc. California Section 22: All. Excluding Lots 3 and 4 (formerly known as Lot 2) ofUSS 9469, 480.04 acres; Section 23: All. 640 acres; Section 27: All. 640 acres; Section 28: All, 640 acres; Section 34: All, 640 acres; 06 Township 3 South. Range 14 West, Seward 5,762.68 UOC f# 1030906 State of Alaska, Department 100.00% 12.500A, ConocoPhiUips Alaska, 1.50% Union Oil Company of 100.00% Meridian, Alaska ADLf# 389226 of Natural Resources Inc. California Section 1: Surveyed, All. 641.94 acres; Section 2: Surveyed, All. 640.70 acres; Section 3: Surveyed, All, 640.04 acres; Section 10: Surveyed, All, 640.0 acres; Section 11: Surveyed, All, 640.0 acres; Section 12: Surveyed, All, 640.0 acres; Section 13: Surveyed, All. 640.0 acres; ~ Section 14: Surveyed, All, excluding U.S. Survey 4717,637.26 acres; Section IS: Surveyed, All, excluding U.S. Survey 4717, 637.74 acres; Special Surveys: U.S. Survey 4717,5.00 acres; 07 Township 3 South, Range 13 West, Seward 1,250.12 UOCf# 1030905 State of Alaska, Department 100.00% 12.50% ConocoPhillips Alaska, 1.50% Union Oil Company of 100.00% Meridian, Alaska ADL# 389225 of Natural Resources Inc. California Section 6: Surveyed, All, 625.22 acres; 'D~~~"U' Section 7: Surveyed, All, 624.90 acres; ~ ':v SE.P 1 0 2004 Deep Creek Unit Exhibit F D'VISION OF Page 2 of 3 Last Update: 9/112004 OIL AND GAS Tract Tract Legal Description 08 Township 3 South. Range 13 West, Seward Meridian. Alaska Section 5: Lots 1 to 4 inclusive, SI/2 NlIl. SBl/4, SW1I4; Section 8: All; Section 18: All; Township 3 South. Range 14 West, Seward Meridian ~ Section ~4: All; Township 2 South, Range 13 West, Seward Meridian. Alaska Special Swvey: u.s. Survey 9469, Lot 1,39.99 acres Working Working Tract Mineral Mineral Royalty. ORRl ORRI Interest Interest Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 2,546.00 UOC# 1029396 Cook Inlet Region, Inc. 100.00% 18.000.4 ConocoPhillips Alaska, l.Soolct Union Oil Company of 100.00% CIRI # C-061S91 Inc. California 39.99 unleased BLM Total Unit Acreage 22,656.90 Unit Expense - Union Oil Company of California 100% t Deep Creek Unit Exhibit F Last Update: 9/1/2004 ~~~¡1v DIVISION OF OIL AND GAS Page 3 of 3 ~ ~ ~ EXHIBIT G DEEP CREEK ÙNIT State of Alaska Revised First Unit Plan of Development and Operation In accordance with Article 8 of the Deep Creek Unit Agreement and 11AAC 83.343, Union Oil Company of California (Unocal), as Unit Operator, respectfully submits the following Revised Plan of Development and Operations. This Plan contains revisions to the First Unit Plan of Development submitted to you on August 31, 2.004, per the request of Department of Natural Resources (DNR) personnel. I. PERIOD This Plan shall cover the period from September 1,2004 to August 31,2005. II. DRilliNG/REMEDIAL PROGRAM A. Plan of Exploration Review 1. Remedial Work - The NNA #1 wellbore was tested in additional intervals with no commercial gas tests. Operations to convert the NNA #1 to a disposal well were completed such as performing a MIT. 2. During the Exploration plan, nine (9) wells were drilled in the Deep Creek Unit. . a. HV-1 - Drilled in 2003 to 10,872' MD / 9,700' TVD. Completed in the Tyonek formation. Test rate was 4.1 MMCFGPD at 1,122 psig FTP. b. HV-2 - Drilled in 2003 to 10,225' MD /9,812' TVD. Completed in the Tyonek formation. Test rate was 2.6 MMCFGPD at 695 psig FTP. c. HV-3 - Drilled in 2004 to 11,345' MD /10,772' TVD. No test rate established at this time. d. HV-4 - Drilled in 2004 to 10,625' MD / 10,515' TVD. No test rate established at this time. e. HV -6 - Unsuccessfully drilled in 2004 to objective. No test rate established at this time. f. HV-6 - Drilled in 2004 to 11,798' MD / 10,400' TVD. No test rate established at this time. g. HV-7 - Drilled in 2004 to 9,118 MD /7,140' TVD. No test rate established at this time. h. HV-8 - Drilled in 2004 to 8,900 MD 16,734' TVD. Tested in the Tyonek formation at 0.6 MMCFGPD at 902 psig FTP. . Tested in the Beluga formation at 1.2 MMCFGPD "at 865 psig FTP. Revised First Plan of D""'~pment September23,2004 Page 2 III. t.,) i. Star #1 - Drilled in 2004 to 9,130' MD I 8,640' TVD. Tested in the Tyonek formation at 0.5 MMCFGPD at 413 psig FTP B. First Plan Potential Work 1. Drill two (2) development wells in the Deep Creek Unit. a. Two (2) or more development wells in the Happy Valley Development area depending on results. b. Additional development wells may be. drilled in the Star Development area depending on the results of the recompletion work and uphole zone testing in the Star #1 well. The Star Well was drilled from a suñace location within the Unit boundary to a location outside of the southern portion of the Unit. If testing is successful and additional wells are drilled to delineate a new accumulation, the Unit will be expanded, if necessary, to encompass the areal exte.nt of the newly defined reservoir and a Participating Area will be established. 2. Workover of the existing wells. a. Star #1 - Recomplete and test uphole zones. b. Possible recompletion candidates will be identified from the existing Happy Valley Development area as necessary. 3. As required under the Plan of Exploration, Unocal acquired approximately 105 miles of 20 seismic data over the Unit area. About half of the data collected was over the Happy Valley P A area and will be the first data worked by our staff. The balance of seismic data over the southern area of the Unit has now been processed and will be evaluated over the plan period. All required Sundries and Permits will be obtained for this work OPERATING-PRODUCING PROGRAM A. Plan of Exploration Review 1. No Production occurred during the Exploration Plan as the facilities and pipelines were not in operation. 2. During the Exploration Plan - an Aquifer Exemption and Disposal Injection Application were submitted to the AOGCC for the NNA#1 wellbore within the Deep Creek Unit. Pending approval of these applications, the NNA #1 will be utilized as a water disposal I cuttings disposal well. Revised First Plan of De~?pment . September 23, 2004 Page 3 '-') B. Potential Work 1. An application for a Beluga I Tyonek Participating area is being submitted for the Happy Valley Portion of the Deep Creek Unit. 2. Production is estimated to commence during November, 2004. c. Well Production Summary 1. No production occurred during the Exploration Plan. IV. SURFACE AND FACILITY OPERATIONS A. Plan of Exploration Review 1. During the Exploration Plan a gas pipeline installation commenced connecting the Happy Valley Pad to the KKPL line. This installation is ongoing and is scheduled to be completed by November, 2004. 2. Installation of a gas processing facility commenced on the main Happy Valley pad. Gas will be sold via the newly installed pipeline connecting the Deep Creek Unit to KKPL. Facility Start up is scheduled for November, with minor fuel gas use in October to run generators prior to start up. B. Potential Work 1. A new pad may be established in the Deep Creek Unit. This pad will be approximately 4,000 feet west of the existing main Happy Valley pad. All required permits will be secured prior to construction of this new pad. 2. Primary gas treating may occur on the new pad with final gas processing for sales occurring on the main Happy Valley pad. 3. A water disposal facility may be established adjacent to the NNA#1 wellbore. 4. Installation of gas compression facilities may occur at the main Happy Valley Pad. The Unit Operator respectfully requests approval of the foregoing First Plan of Development and Operations for the Deep Creek Unit. ) Revised First Plan of Detlropment September 23, 2Q04 Page 4 ~ Unocal, reserves the right to propose modifications to this Plan should conditions so warrant; however, no modifications will be made without first obtaining permission from the appropriate governmental agencies. Please direct any questions regarding this plan to Ralph Affinito, Reservoir Engineer, at 263-7947 or Mark Lynch, Geologist at 263-7851. cc: Alaska Oil and Gas Conservation Commission Sincerely, UNION OIL COMPANY OF CALIFORNIA Unit Operator By !. JtlolL ~abler ) " ..,; EXHIBIT G DEEP CREEK UNIT State of Alaska First Unit Plan of Development and Operation In accordance with Article 8 of the Deep Creek Unit Agreement and 11AAC 83.343, Union Oil Company of California (Unocal), as Unit Operator, respectfully submits the following Plan of Development and Operations. I. PERIOD This Plan shall cover the period from September 1, 2004 to August 31, 2005. II. DRILLING/REMEDIAL PROGRAM A. Plan of Exploration Review 1. Remedial Work - The NNA #1 wellbore was tested in additional intervals with no commercial gas tests. Operations to convert the NNA #1 to a disposal well were completed such as performing a MIT. 2. During the Exploration plan, nine (9) wells were drilled in the Deep Creek Unit. a. HV-1 - Drilled in 2003 to 10,872' MD / 9,700' TVD. Completed in the Tyonek formation. Test rate was 4.1 MMCFGPD at 1,122 psig FTP. b. HV-2 - Drilled in 2003 to 10,225' MD / 9,812' TVD. Completed in the Tyonek formation. Test rate was 2.6 MMCFGPD at 695 psig FTP. c. HV-3 - Drilled in 2004 to 11,345' MD / 10,772' TVD. No test rate established at this time. First Plan of Developrr~ August 31, 2004 ., Page 2 J! d. HV-4 - Drilled in 2004 to 10,625' MD / 10,515' TVD. No test rate established at this time. e. HV-5 - Unsuccessfully drilled in 2004 to objective. No test rate established at this time. f. HV-6 - Drilled in 2004 to 11,798' MD /10,400' TVD. Notest rate established at this time. g. HV-7 - Drilled in 2004 to 9,118 MD /7,140'. TVD. No test rate established at this time. h. HV-8 - Drilled in 2004 to 8,900 MD / 6,734' TVD. Tested in the Tyonek formation at 0.6 MMCFGPD at 902 psig FTP. . Tested in the Beluga formation at 1.2 MMCFGPD at 865 psig FTP. i. Star #1 - Drilled in 2004 to 9,130' MD / 8,640' TVD. Tested in the Tyonek formation at 0.5 MMCFGPD at 413 psig FTP B. First Plan Potential Work 1. Drill two (2) development wells in the Deep Creek Unit. a. Two (2) or more development wells in the Happy Valley Development area depending on results. 1 b. Additional development wells may be drilled in the Star Development area depending on the results of . the recompletion work and uphole zone testing in the Star #1 well. 2. Workover of the existing wells. a. Star #1 - Recomplete and test uphole zones. . .' b. Possible recompletion candidates will be identified from the existing Happy Valley Development area as necessary. All. required Sundries and Permits will be obtained for this work III. OPERATING-PRODUCING PROGRAM A. Plan of Exploration Review 1. No Production occurred during the Exploration Plan as the facilities and pipelines were not in operation. 2. During the Exploration Plan - an Aquifer Exemption and Disposal Injection Application were submitted to the AOGCC for the NNA#1 wellbore within the Deep Creek Unit. Pending approval of these applications, the NNA #1 will be utilized as a water disposal I cuttings disposal well. . First Plan of Develop~..... ) August 31, 2004 ., Page 3 t.~ B. Potential Work 1. An application for a Beluga I Tyonek Participating area is being submitted for the Happy Valley Portion of the Deep Creek Unit. 2. Production is estimated to commence during November, 2004. C. Well Production Summary 1. No production occurred during the Exploration Plan. IV. SURFACE AND FACILITY OPERATIONS A. Plan of Exploration Review 1. During the Exploration Plan a gas pipeline installation commenced connecting the Happy Valley Pad to the KKPL line. This installation is ongoing and is scheduled to be completed by November, 2004. 2. Installation of a gas processing facility commenced on the main ¡Happy Valley pad. Gas will be sold via ¡the newly installed pipeline connecting the Deep Creek Unit to KKPL. Facility Start up is scheduled for November, with minor fuel gas use in October to. run generators prior to start up. B. Potential Work 1. A new pad may be established in the Deep Creek Unit. This pad will be approximately 4,000 feet west of the existing main Happy Valley pad. All required permits will be secured prior to construction of this new pad. . 2. Primary gas treating may occur on the new pad with final gas processing for sales occurring on the main Happy Valley pad. 3. A water disposal facility may be established adjacent to the NNA#1 wellbore. 4. Installation of gas compression facilities may occur at the main Happy Valley Pad. The Unit Operator respectfully requests approval of the foregoing First Plan of Development and Operations for the Deep Creek Unit. Unocal, reserves the right to propose modifications to this Plan should conditions so warrant; however, no modifications will be made without first obtaining permission from the appropriate governmental agencies. . .. First Plan of Develop",..... ) August 31, 2004 .,- Page 4 .,)¡ Please direct any questions regarding this plan to Ralph Affinito, Reservoir Engineer, at 263-7947 or Mark Lynch, Geologist at 263-7851. Sincerely, UNION OIL COMPANY OF CALIFORNIA Unit Operator By Kevin A. Tabler cc: Alaska Oil and Gas Conservation Commission .;; J Page 1 of 8 GEOLOGIC AND ENGINEERING REPORT TO ACCOMPANY APPLICATION FOR APPROVAL OF THE INITIAL HAPPY VALLEY PARTICIPATING AREA OF THE DEEP CREEK UNIT, KENAI PENINSULA BOROUGH 5T ATE OF ALASKA Mark Lynch - Geologist, Unocal Alaska Jeff Sauve - Geophysicist, Unocal Alaska Submitted to State of Alaska Department of Natural Resources Division of Oil and Gas September 1, 2004 CONTENTS 1. INTRODUCTION 2. EXPLORATION HISTORY 3. STRATIGRAPHY AND HYDROCARBON GENERATION 4. STRUCTURE AND TRAPPING 5. DISTRIBUTION OF NATURAL GAS WITHIN THE UNIT 6. PRODUCTION OF GAS FROM THE UNIT 7. LIST OF ATTACHED FIGURES O:\Happy Vàlley\P A_Application_Aug04\DCU_P A- Geo&EngrRpt.doc 09/01/04 12:15 PM MTl .,) .,)' Page 2 of 8 INTRODUCTION This geologic and engineering report is submitted by Union Oil Company of California (UNOCAL) in support of its application for the designation and establishment of the initial Happy Valley Participating Area in the Deep Creek Unit on the Kenai Peninsula. The Deep Creek Unit (DCU) is located approximately 15 miles south of the town of Ninilchik on the Kenai Peninsula. Elevations in the unit area are generally less than 1000 feet above mean sea level. The topography dips gently to the northwest. The DCU is drained by numerous small creeks, the largest of which are Deep Creek, Clam Creek and Stariski Creek. The nearest gas field currently producing from Tyonek and Beluga reservoirs is the Ninilchik Unit, located approximately 12 miles to the north. The Happy Valley field is located in the northern part of the DCU, and is comprised of an asymmetric anticline that is bounded on the. east-southeast by a high-angle reserve fault. One noticeable transverse normal fault bisects the north end of the feature, effectively forming a lateral seal within the reservoir section. To date, no hydrocarbons have been found on the downthrown (north) side of that normal fault. The Happy Valley Participating Area, as designated in this report, is limited to the areal extent of known gas accumulations within the Happy Valley field structure in the northern part of the DCU. Maps of each of the principle reservoirs and the known . limits of gas pay within them are included at the end of this report. EXPLORATION HISTORY Exploration for oil and gas on the Kenai Peninsula began in the late 1950s and continued sporadically through the early 1970s. Although significant gas reserves were discovered at the Kenai Gas Field, no commercial discoveries were made on the southern Peninsula, and existing well control is sparse. (Prior to 2000, fewer than 20 wells had been drilled on the southern Kenai Peninsula since 1958). Most of the exploratory wells were drilled to test for Hemlock oil potential on the structures that parallel the west coast of the Peninsula. Very few wells have been drilled in the interior of the Peninsula. Gas shows were noted within the Beluga and Tyonek formations in many of the wells, but none were completed due to the lack of access to available markets. The first two wells drilled within the DCU were the Standard Oil Company of California Deep Creek Unit #1 and the Superior Oil Company Happy Valley Unit #31-22. O:\Happy Valley\PA_Application_Aug04\DCU_PA_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL J J Page 3 of 8 The Deep Creek Unit #1 well was drilled to a total depth of 14,221 ft in 1958 by Standard Oil Company of California, in Sec. 15, T2S, R13W. The well was drill stem tested (DST) in two different intervals, one in the Tyonek and one in the Hemlock. No oil or gas production was found and the well was abandoned as a dry hole. Superior Oil Company drilled the Happy Valley Unit #31-22 well to a total depth of 13,550 ft in 1963 in Sec 22, T2S, R13W, approximately one mile south of the Deep Creek Unit #1 well. No zones were tested, and this well was plugged and abandoned as a dry hole. No other exploratory wells had been drilled in the DCU area until 2001 , when UNOCAL drilled the NNA #1 well in Sec. 11-T2S-R13W to a depth of 10,590 in an effort to establish Tyonek gas production from the Unit. That well was tested and found to be wet or tight in numerous intervals, and was not completed as a gas well. UNOCAL returned to the Happy Valley structure in June, 2003, and drilled the Happy Valley #1 discovery well in Sec. 22-T2S-R13W to a total measured depth of 10,871 feet. The well tested gas from two different Lower Tyonek reservoirs. The Happy Valley field discovery was confirmed by the Happy Valley #2 well drilled in July, 2003. This well flowed gas from two other Lower Tyonek reservoirs not seen in Happy Valley #1. Since 2003, UNOCAL has drilled six (6) additional delineation wells and acquired approximately 65 line miles of new 2D seismic data over the Happy Valley field in an attempt to delineate the structure and reservoir distribution within the field. Information on the 11 wells currently extant within the Happy Valley field area is contained in Table 1, below. O:\Happy Valley\PA_Application_Aug04\DCU_PA_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL Table 1. Wells Within the Happy Valley Field Area, Deep Creek Unit Perforated Perforated Interval Interval MD SSTVD N/A N/A Well Standard Oil Deep Creek Unit #1 Superior Oil Happy Valley #31-22 Unocal NNA #1 Unocal Happy Valley #1 Unocal Happy Valley #2 Unocal Happy Valley #3 Unocal Happy Valley #4 Unocal Happy Valley #5 Unocal Happy Valley #6 Unocal Happy Valley #7 Unocal Happy Valley #8 ) 6. 6..,) Spud Date 3/19/1958 9/9/1963 N/A N/A 12/17/2001 6182' - 9647' 5495' - 8954' 6/17/2003 7978' - 10730' 6374' - 8826' 7/15/2003 6784' - 10052' 5673' - 8907' 2/3/2004 9228' - 10678' 7922' - 9365' 2/6/2004 9277' - 9888' 8474' - 9070' 2/8/2004 N/A N/A 4/7/2004 10854'-10882' 8728' - 8756' 6/17/2004 9998-10018' 7999' -8018' 7/20/2004 5235' -- 8581' 2738' - 5697' STRATIGRAPHY AND HYDROCARBON GENERATION Page 4 of 8 Current Status Plugged and abandoned Plugged and abandoned Class II disposal candidate Awaiting gas pipeline Awaiting gas pipeline Awaiting gas pipeline Awaiting gas pipeline Suspended Awaiting gas pipeline Suspended Awaiting gas pipeline The non-marine strata of the Tertiary Tyonek and Beluga formations comprise over 8,000 ft of gross section in the DCU area. Innumerable channel sandstone bodies are interbedded with coal seams of variable thickness and lateral extent in both the Tyonek and Beluga formations. Individual sandstone bodies are lenticular and discontinuous in nature, and are not always correlative between adjacent wells, but collectively may comprise a meander belt or braid plain deposit that may extend for many miles in any given direction. These stratal geometries are demonstrated on the Geologic Cross Sections that were provided to the Division of Oil and Gas at the pre-application meeting in the DOG office in Anchorage on August 19, 2004. It is generally accepted that the Tyonek and Beluga formations are part of a self- sourcing natural gas petroleum system-that is, the substantial Tertiary coal measures of the Tyonek and Beluga formations generate dry methane gas that migrates into, and is trapped within, adjacent sandstone reservoirs. Examination of drill cuttings, core, wireline log and mudlog data from the wells within the Happy Valley field area indicates a substantial coal volume with promising coal maturity and gas content over the proposed PA. It is likewise widely held, and supported by all existing well data within the Happy Valley field area, that the coals and associated clastic rocks of the Tyonek and Beluga formations are not capable of sourcing liquid (oil) hydrocarbons. None of O:\Happy Valley\P A_Application_Aug04\DCU_PA- Geo&EngrRpt.doc 09/01/04 12:15 PM MTL "') ~ Page 5 of 8 the Happy Valley wells drilled by UNOCAL have found any traces of liquid hyd rocarbons. STRUCTURE AND TRAPPING The Happy Valley field is situated on the northernmost anticlinal feature within the DCU. This simple, southwest-northeast trending, doubly-plunging domal closure is bounded on the southeast flank by a high angle reverse fault, and is bisected by a single down-to-the-north- normal fault; these faults are labeled Fault "A" and Fault "B" respectively, on each of the structure maps in the figures that accompany this report. Examples of this faulting can be readily observed on the proprietary and confidential 20 seismic panels that UNOCAL provided to DOG in the 19-August meeting in Anchorage. To date, most of the exploratory drilling and all of the successful gas tests have occurred within the fault block that is to the south of Fault "B" (on the upthrown side). Unocal has successfully tested gas from various Lower Tyonek sands in the Happy Valley #1, Happy Valley #2 and Happy Valley #3 wells; both Upper Tyonek and Beluga sands have been found productive upthrown to Fault "B", in the Happy Valley #8 well. No successful tests of gas have occurred downthrown to Fault "B" in either the NNA #1, Happy Valley #7 and/or Deep Creek Unit #1 wells. While the channelized nature of the Beluga and Tyonek reservoirs allows for the possibility of stratigraphic traps, and also for sand pinchouts in an unpredictable fashion within the area that might be expected to contain gas, such occurrences are difficult-if not impossible-to predict given the sparse well control and fair-to- poor quality 20 seismic data. Therefore, it is recommended that the Happy Valley PA be established on the simple principles of structural control on gas accumulation, by using the lowest known occurrence of gas on structure as observed in any given well. That is the procedure which UNOCAL followed in making the maps that accompany this report. The figures that accompany this report show the Happy Valley field structure at a . variety of reservoir levels, including Lower and Upper Tyonek and Beluga sands. On each map is depicted the lowest known extent of the gas accumulation (LKG) for that reservoir, given the available well data. (No attempt has been made to use the existing 20 seismic to further delineate individual reservoirs, as the data is simply not of high enough quality to allow it to be used in such a manner.) It will be recognized that the different Tyonek and Beluga reservoirs appear to have different areas of gas accumulation, based on the current state of mapping in the field. The lower Tyonek reservoirs are currently thought to have the . smallest areal extent, due in large part to the decreasing size of the structure with O:\Happy Valley\PA_Application_Aug04\DCU_P A_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL J J Page 6 of 8 depth. The Upper Tyonek and Beluga reservoirs seem cover much more area, due in part to the gentle structural dip present at these depths. It is anticipated that the proven size of any given reservoir may change with time and the acquisition of additional well control; therefore, UNOCAL has proposed that the minimum number of leases be included in the initial PA, such as would be necessary to completely account for the currently mapped limits of the field. DISTRIBUTION OF NATURAL GAS WITHIN THE UNIT Current maps suggest that Tyonek and Beluga gas pay is present underneath all or parts of sections 15, 21,22,27 and 28 in T2S-R13W, an area which includes parts of three CIRlleases (C061588, C061589, C061590) and one State lease (ADL 384380). In determining the areal distribution of pay within the Unit area, UNOCAL followed the common industry practice of assigning reserve potential only to that reservoir volume that can be demonstrated to be updip of the lowest known occurrence of gas (LKG) within any given reservoir. The majority of the productive area for all reservoirs is on the CI Rlleases, however, all or part of the 160 acre State Lease ADL 384380 should be included in the Initial Happy Valley Participating Area as it contains acreage that falls within the lowest known limits of the gas accumulation in each of five proven Tyonek reservoirs and the two proven Beluga reservoirs. These reservoirs, which are depicted in the accompanying figures, include: 1) TyonekT120 Reservoir - This reservoir encompasses roughly 505 acres down to the LKG at -8749 ft observed in the Happy Valley #1 well. The T120 Reservoir was encountered only in the Happy Valley #1 well; thus, it's actual extent and continuity can not be determined from existing data. The T120 Reservoir is not observed in the Happy Valley # 31-22 well, within ADL 384380. 2) Tyonek T80 Reservoir - Approximately 375 acres are contained within the area encompassed by the LKG of the T80 reservoir. Although it hasn't been tested on the State lease, the T80 Reservoir is present on ADL 384380 as indicated by the Happy Valley #31-22 well, where it appears to be gas-bearing on the basis of well log character that is analogous to the successful TaO test in Happy Valley #2. 3) Tyonek T70 Reservoir - Approximately 482 AC are encompassed by the LKG of the T70 reservoir. This reservoir appears to have a strong stratigraphic trap component, as it is not present in every well. It is impossible do determine where the sand will be present; thus, it should be attributed the potential for reserves on both the State and CIRlleases. O:\Happy Valley\PA_Application_Aug04\DCU_PA_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL 6.) f..,.) Page 7 of 8 4) Tyonek T1 0 Reservoir - The probable extent of gas pay within the T10 reservoir includes 836 acres updip of an apparent gas-water contact at -5700' TVDSS. Gas pay is seen in multiple wells, including Happy Valley #31-22 and Happy Valley #3, both of which penetrate the sand on ADL 384380, and Happy Valley #1 and #2, which penetrate the T10 reservoir on CIRllands. 5) Tyonek T1 Reservoir - The T1 reservoir appears to be gas-bearing on the State and CIRlleases as indicated by the well logs obtained in the Happy Valley #31-22 and Happy Valley #3 well on ADL 384380, and in Happy Valley #1 and #2 on CIRllands. As of the date of this application, two Beluga reservoirs have been successfully tested in the Happy Valley #8 well. Unocal has been actively remapping the Beluga structure concurrent to testing these reservoirs, and the maps presented with this report differ slightly from those shown at the pre-application meeting on 19-August. In the current interpretation, the probable productive area of these reservoirs-as delimited by the LKG of each reservoir as seen in the Happy Valley #8 well-is larger than previously depicted, and now includes both CIRI and State leases. The two proven Beluga reservoirs are: 1) Beluga BLG-50 Reservoir - The probable producing area of this reservoir includes 565 AC in the area delimited by the LKG observed at -3520' TVDSS in Happy Valley #8 well. 2) Beluga BLG-40 Reservoir- Approximately 980 acres, including both State and CI RI lands, are likely to be productive in the within the area defined by the LKG seen at ~2801' TVDSS in the Happy Valley #8 well. PRODUCTION OF GAS FROM THE UNIT UNOCAL is currently building natural gas production facilities on the Happy Valley pad, with an anticipated start-up date of November 1,2004. Due to the expected low rates from individual reservoirs, it will be necessary for UNOCAL to commingle production from Lower and Upper Tyonek and Beluga reservoirs whenever practical and where reservoir pressures are similar enough to prevent subsurface cross-flow and the potential redistribution of reserves. With that in mind, UNOCAL proposes that a single Participating Area be established to encompass all of the currently identified Beluga and Tyonek reservoirs within the field, and also any future new reservoirs of the same age that might be found within the mapped limits of the Happy Valley field structure. O:\Happy Valley\PA_Application_Aug04\DCU_PA_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL ~ ~ Page 8 of 8 LIST OF INCLUDED FIGURES FIGURE 1: Stratigraphic column for Cook Inlet basin FIGURE 2: Structure map of the T120 sand FIGURE 3:. Structure map of the T80 sand FIGURE 4: Structure map of the T70 sand FIGURE 5: Structure map of the T10 sand FIGURE 6: Structure map of the T1 sand FIGURE 7: Structure map of the BLG-50sand FIGURE 8: Structure map of the BLG-4 sand FIGURE 9 Proposed Happy Valley PA outline NOTES 1) Structural cross sections depicting the general attitude of the Tyonek and Beluga strata in the Happy Valley field were provided to DNR-DOG at the pre-application meeting on August 19, 2004 and are therefore not duplicated in this report. 2) Copies of all newly-acquired, UNOCAL proprietary and confidential 2D seismic lines were provided to DNR-DOG at the August 19 pre-meeting, and are not duplicated with this report. SECURITY OF INFORMATION The applicant requests that this Geologic and Engineering Report and Figures be considered confidential and that the contents of this Report and its accompanying Figures be disclosed only to those persons who are required to review the application for the designation of this proposed Unit. O:\Happy Valley\P A_Application_Aug04\DCU_P A_Geo&EngrRpt.doc 09/01/04 12:15 PM MTL J J MAPS AND FIGURES TO ACCOMPANY APPLICATION FOR APPROVAL OF THE INITIAL HAPPY VALLEY PARTICIPATING AREA OF THE DEEP CREEK UNIT, KENAI PENINSULA BOROUGH STATE OF ALASKA Submitted to State of Alaska Department of Natural Resources Division of Oil and Gas September 1, 2004 M. Lynch - Geologist, Unocal Alaska J. Sauve, Geophysicist, Unocal Alaska , (I) Q. ~ III ,::) en æ 0 > w œ f1J () CJ -. ... ..C :)- 0 A. :) (.) 0 - >- 0 a: a: N t( CJ 0 - Z I- - w a: cC (.) au Z 'to- W ~ .) FORMATION THICKNESS ALLUVIUM AND GLACIAL DEPOSITS STERLING FORMATION 0' .. 11,000' BELUGA FORMATION 0' - 6000' TVONEK FORMATION 4000' - 7700' .J DESCRIPTION ~~ U~~E:L STAGE A.S, ZONES I - PLEISTOCENE ------- ----~ PLIOCENE MASSIVE SANDSTONE AID CONGLOMERA TE BEDS WITH OCCASIBIIAL THIN LIGNITE BED i). II - - --- CLAYSTONE. SILTSTONE. AID THill SANDSTONE BEDS. THIN -J)- SUBBITUMINOUS COAL BEDS - - - -.. I . - '" i)- - - ~ -- MIOCENE SANDSTONE. CLAYSTONE AND SilTSTONE ..TERBEDS AND IV MASSIVE SUBBITUMINOUS COAl p.- BEDS . --------- . HEMLO~~, ~~~t'A TION SANDSTONE AIIDCONGlOMERATE . WEST FORELAND FORMATION 300' -1000' v OLIGOCENE "- - - ...... -. - - ----- TUFFACEOUS SIL T8TOIE AND VI CLAYSTONE, SCATTERED . ' SAIOSTDlEANDCOIGlOMERATE VII BEDS .......,..,.,-- ."........,-,-'''~ ~''''''., "'" -...,-."....---- - ".--'._"'-' ,._~"""""."" .~- ~ . EOCENE RESTS UNCONFORMABLY ON OLDER TERTIARY, CRETACEOUS AND JURASSIC ROCKS. STRATIGRAPHIC NOMENCLATURE FOR KENAI GROUP, COOK INLET BASIN AND UNOCAL PAL YNOGICAL ZONES. (Aner Calderwood and Fackler, 1912 and R.A. 8allog - Unoc.1 Westem Region Paleo Lab., July, 198~) FIGURE 1: Stratigraphic Column, Cook Inlet basin .,) J 0 0 0' t"II- 0\ .... . t"II . 0 . 0 0 ' 0- ~. t"II . \ go) o' eo- eo .... t"II ' c c C !:Po . 0, 0, 0 '0- eo .... t"II .... 0 JOO 1000 lJOO 2000ft ~ CONFIDENTIAL 1 ~279J FIlIII Surf*t.~ nllm~ H.:IID"DV V.:II Uev T 1 '.0 fm CO"DV of HVto"D T7( Lln.k tf~1t nee"D Creek U :t1;t K @l1.:11; Pe:t1;'t1~1 1.:11 t'l?nolWr oIn~ ~.. 100 1:22795 LI~r nllm~ .D'M: Ivnchmt 08/1712004 FIGURE 2: TYONEK 1120 RESERVOIR T120 RESERVOIR LKG -8749 in HV1 Area to LKG = 505 AC "J ~) .,w .... . '0 -QO 10 . 10 .10 . W .... . '0 -""" 10 . 10 10 . W .... . '0 _W 10 . 10 .10 10 . 10 10 . 10 ~. t"'II . , 10 . g. 00- ~j ~ 10 . g. '0- 00 - t"'II 0 JOO 1000 1.500 2000& Ii::8t:::::IIII CONFIDENTIAL 1 ~279' F~II/ :iwf*'rf. ndmrf. H~n'Dv V ~ l1¡1:av T80 fm CO'DV of HVton T7O~ Lln,læ ~rrf.1t nee'D Creek U l1;t K ¡l:aJ:1..:'; Pe:t'l;"'.;'11~ t'åloIWr ..." Sc:* 100 1:22795 LllI!r ndmrf. DIM! Ivnclunt 08/1612004 FIGURE 3: TYONEK T80 RESERVOIR T80 RESERVOIR LKG -7939 in HV2 Area to LKG = 375 AC ) .. ) " " '~'~~8 I , Z:-~~~ ~ '-SODD 00 . 00 00 . 00- ~. n. I 00./ g. iI!Q- ~. n. 00 . g. ~- iI!Q - n ~ 0 '00 1000 UOO 2000ft ~ CONFIDENTIAL 1 ~279J F~1tI StIrf*'~ ndm~ H~'D'DV V ~ l1¡11v HVto'D TïO..,....ll ;~119Û4 .nA T ~& ~. n~U~'D Creek U :D;t J(' ¡IIn;e; P@:D;'I'I~1 b r",iIIWr"'~ St- IDD 1:22195 L1:t1!r ndm~ ~ Ivnc:hmt 08/1612004 FIGURE 4: TYONEK 170 RESERVOIR 170 RESERVOIR LKG -7936 in HV1 Area to LKG = 482 AC ..; .,) 0, 0, 0 n- ~. .... n' . 81.) - . ~ -OQO 0 . 0 ,0 0 ' 0, 0 ~- ~ , .... n . ~ J z: -56561'- 0, 0 0 . o. ~ .... ' n, 0 JOO 1000 UOO 2000ft Ii::IIIII:::::I / CONFIDENTIAL , 81.) - " ~ "'.0 0 \ :8 _:81.) - , oQO .oQO Q ~ :8 /~ , oQO .Q 0 - UNOCAL8 Q A' d."'. (f '\ " , Q, 0 L 0' ~ 00- .. 00 ....' . n' ~ 0, 0, 0 ~- 00 .... n 110 RESERVOIR GWC -5700' in HV1, HV2, HV3 Area to GWC = 836 AC Fltt:1tI SurJ'*:.~ nllm~ H.=.'D'DV V.=.l1êv TIO fm CO'DV ofGcntr.s-to'D~ Lfntlo! tin=1t nê@'D Creek U lI;t K êll'='; P@II;'t1Ç111.=. [Clnj!ur ¡.~ s.::dak 100 1:22795 Lf~r nllm~ ~ Ivnchmt 08/1712004 FIGURE 5: TYONEK T10 RESERVOIR ':J""~- ,., ...1- o. 0 ~~ ~1 M¡ 1000 2000 3000 ~OOO~ ~ 0 1 :2j209 FilM SuIfrtIt"~ ndmll! .H:.'D'DV V:.ll~v Tl fm CO'DV of TO'DTY -'7...61 Lln.\e tin:1t DQQ'D C:t'QQk U:t1H K ~n:.; PQrI;"'~11:. ['!ØnA:)ur .hE: &dIk 50 1 :25209 LI~r ndm~ ~ IVIIChmt 08f.3112004 FIGURE 6: TYONEK 11 RESERVOIR T1 RESERVOIR LKG -5124' in HV8 Area to LKG = 517 AC .J 0 1000 2000 3000 +OOOft ..... CONFIDENTIAL 1 ~U209 Surf*:~ ndrn~ BT .G~O fm CO'DV of MTT.4 r tfn:!d: K .:row.; Pev;l'I.;t, h Sc:IÜ! 1 :25209 Lltl:r ndrn~ ~ Ivndmd 0813112004 FIGURE 7: BELUGA BLG.50 RESERVOIR FM.III H~'D'DV V ~ l1.:rov Lln,k . nee'D Creek U vH ['œ.ll:1ur .he: 50 BLG-50 RESERVOIR LKG -3520' in HV8 Area to LKG = 565 AC ) ~ ~ 0 3000 .000:8- ..... 1000 2000 1 :2:i209 BLG-40 RESERVOIR LKG -2801' in HV8 Area to LKG = 980 AC CONFIDENTIAL UNOCAL8 . A.iI.t.. ~t. nllmt. RJ.G40 fm Conv ofMTJ.7 ( t4~d: K ~WI; Perl;'I'I.;'I11.:. Sc:- 1 :25209 Dsw 0813112004 FIGURE 8: BELUGA BLG-40 RESERVOIR FIt.III H;¡nnv V ;¡ l1~v UnA! neen Creek U rlH ["Ii)n,aøur ..u~: 50 UtI!r nllmt. Ivndunt 0, 0 0 ' co- 0\ , .... ('18 , 0, 0 0 ' '0- 0\ , .... ('18 , g, 0 ' ...... I .' ~, ('18 , o. 0 Co ' ('18- 0. , .... ('18' 0, i ~ f;J 'V 0, Co 0 ' co- CO , .... '" ' g, O' '0- CO . .... ",' 0 , g, ...- CO , .... '" J "') ~,) 218000 220000 222000 224000 226000 228000 230000 232000 ~... .,'. ...'.,...'..... ~l..' . .~:'.j'. ..~... .. -.~NNA:oi.. . I -4rDCl-Ol . ~ I . tõ -~ .g . 0 ~....I.... --..... --' Outline of proposed Initial Happy Valley Participating Area ¡ ¡ ----'--t--_._--, --""'-- --------t-_.- ¡ i ¡ I ---"1---'-'--- --'-- ----r---- I ,~ - . '() -~ ,0 0 , 0 -_._~-._-,.._-~ J r I I , 'I&"" .~ . .... , '() -~ 0 , 0 , 0 ,~ - , '() -~ ,0 ,g ,~ - , '() -0 ,0 0 . 0 ~ , "'11.. '... ~ - , ~ -~ ,0 0 , 0 ~ '- , ~ -~ 0 '0 . 0 C061590 ;J .~ - . ~ -~ ,0 0 , 0 1- 0 1000 2000 3000 .000ft ..... CONFIDENTIAL UNOCAL8 '- A'II''''11 FItl.1t4 H':'D'DV V.:. Uev Lln,k ntete'D CNtek U !'I;t t'åI.BI:1ur .e: SvIf*.~ ntbn~ 1 :U209 tln=1t K Q!'I':'; PQ!'I;'I'I~' 1.:. sr:.w 1 :25209 ~ 0813112004 FIGURE 9: PROPOSED HAPPY VALLEY PA Productive Areas to LKG of All Reservoirs TYONEK RESERVOIRS BELUGA RESERVOIRS LI~.. ntbn~ Ivnc:hmt ::t:t: lJ.,) ) ') Cook Inlet Deep Creek Unit Happy Valley PA and Wells , .., ) 5 I Unit Boundary I Unit Tracts I State Leases I CIRI Leases r//////1 HappyValleyPA UNOCAL~ Revised November 16, 2004 Scale: 1 :30,000 '') ') Cook Inlet. k U mt I Deep Cree d ctive Interva #llWell Pro u Happy Valley UNOCAL~ 16 2004 . d November, Revise. 377 Scale: 1.4, , ì UNOCAL Alaska Inc. Happy Valley #11 Pay Summary .-JfQ-~ .a~h~*SI~Q'-I:f'JI"Ð.è"T~itt~.' Zone TZOl1 TZOl2 TZOJ 1 TZOJ2 TZOl3 TZOJ4 TZOI 5 TZOl6 TZOl7 Tyonek Total T1 T10 MD Top MD Base H (MD) TVD (top: TVD (base) H (TVD) 6353 6398 45 5,851 . 5,895 41 6868 6937 69 6,365 6,435 63 6976 7021 45 6,473 6,518 41 7216 7289 73' 6~713 6,786 66 9060 9086 26 8,557 8,583 . 24 9100 9164 64 8,597 8,661 58 9391 9419 28 8,887 8,916 25. 9572 9650 78 9,069 9,146' 71 9871. 9944 73 9,367 9,441 -'. 66 501 - T17 T70 T80 T91 T105 T130 The Happy Valley PA is stratigraphically limited to the Beluga and Tyonek Fonnation Sands from '-1,547 feet True Vertical Depth Sub Sea (TVDSS) (2,176 feet Measured Depth) in the Happy Valley Unit No. 31-22 well to -9,368 feet TVDSS (10,678 feet Measured Depth) in the HV -3. well. Unocal mapped the depth of the lowest known gas for each producible interval based on seismic and well control and overlaid them on an aliquot part map grid to detennme the Happy Valley PA boùndary, which is based on 40-acre aliquot parts as defmed by 11 AAC 88.185(11)" . . . . " .¡. .. CO' ,.~\IC~f'r:~JTi.IA/:\ ! . " h ß;J ~ t ,\\ ~ ;Ì: _:~ <...,,; .' '.. i \1 aiL,:,"..." U '1 . t . . 1 :43 PM 11/16/2004 =+t:: tV STATE OF ALASKA NOTICE TO PUBLISHER ) ADVERTISING ORDER NO. ADVERTISING ORDER SEE BOTTOM FOR INVOICE ADDRESS INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE AO-02514020 F AOGCC R 333 W 7th Ave, Ste 100 0 Anchorage, AK 99501 AGENCY CONTACT DATE OF A.O. Jody Colombie PHONE October 22, 2004 PCN M (907) 793 -1 ??1 DATES ADVERTISEMENT REQUIRED: ~ Anchorage Daily News PO Box 149001 Anchorage, AK 99514 October 25,2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Type of Advertisement X Legal D Display Advertisement to be published was e-mailed D Classified DOther (Specify) SEE ATTACHED SEND INVOICE IN TRIPLICATE AOGCC, 333 W. 7th Ave., Suite 100 . TO Anchorage, AK 99501 REF TYPE NUMBER AMOUNT 1 VEN DATE TOTAL OF PAGE 1 OF ALL PAGES$ 2 PAGES COMMENTS 2 ARD 3 4 02910 FIN AMOUNT Sy CC PGM LC ACCT FY NMR DIST LlQ 05 02140100 73451 2 3 R;QUISITIONED By ~ ~\\t J DIVISION APPROVAL: // ) Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of Union Oil of California ("UNOCAL") for a spacing exception to allow the drilling and production of the Happy V alley 11 gas development well in accordance with 20 AAC 25.055. UNOCAL by letter dated October 19,2004 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on October 19, 2004, has requested the Commission to issue an order in conformance with 20 AAC 25.055 (a) (2) and (4) allowing regular production of the Happy Valley 11 gas development well, which if productive may be open to regular production within 1,500 feet of a property line and within 3,000 feet of another well capable of producing from the same pool. The surface location of the proposed well is 1271 feet from the south line and 1263 feet from the east line of Section 22, T2S, RI3W, SM. The proposed bottomhole location is 2763 feet from the south line and 2934 feet from the east line of Section 22, T2S, RI3W, SM. The Commission has tentatively set a public hearing on this application for December 7, 2004 at 9:00 am at 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 November 12, 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 ih Avenue, Suite 100, Anchorage, Alaska 99501. Written comments must be received no later than 4:30 pm on November 26, 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 December 7, 2004 hearing. Published Date: October 25, 2004 ADN AO# 02514020 \ Anchorage Daily News Affidavit of Publication 1001 Northway Drive, Anchorage, AK 99508 ') PRICE OTHER OTHER OTHER OTHER OTHER GRAND AD# DATE PO ACCOUNT PER DAY CHARGES ŒARGES#2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 326023 10/25/2004 02514020 STOF0330 $186;88 $186.88 $0.00 $0.00 $0.00 $0.00 $0.00 $186.88 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. Signed Y¡,/1~j~ Subscribed and sworn to me before this date: Ocfob~ ~. () 00 c¡ Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska MY COMMISSION EXPIRES..: Or:¡ J/ß) fflVt. C!r"f.' ;¿ . /. ~~\ ~.LY .4. . ~/I",;- .. .'. '7. \.\.~'tb~ . '. ' ,. . '~'.~ ~. /. \: ~_. "'",...... ..~,... ~brJu jl)!~~. . f~"~~:~~~.o:~ ¡y - 0 þ, ''''0 ,f;. 0 - ::: ~ . ..." '0.. ",...'.' 0 ~:::: _/",.~ .,.""''''' ..ð" {ti.J"" ~~g ',~),,.. ~:~~f~ -:;.. .?~: ,~ a= ~\~. .' ~~:\' "'~J ~ 6.(~~~t . ~ ~ ; , .. .~ ('^:/Jrlt? ,\ ,/j 1;'; Ea;þk.:Y.),"" \)\ )" lj j ) j ) ) ) } ) , Notice of Public He'aring STATE OF ALASKA Alaska Qiland .Gas Conservation C:ômmission Re: The b~plicdfiC)n ofLJr1iònOiI.brCaHfornid (IIUNOCAL") fora spacing exception to plio"" the drillin~,al)d production of, the Happy ..' V~IIeY 11 gas developmentwelJ inaccordcmce with 20 AAC25.055. ':JNOCALby Jetter datedqctober 19. 2004 and r~- celved by the Alaska Oil and Go'õ Con'õe-rvotion C()mmisSion(UÇornrnissipnU) on October 19, 200..\. has reque'õted the Commission to Issue on order in , conformonce with 20 AAC 25.055 (0) (2) ond (..) 01- lowing regularproçluction oftþe HaRPY Valley 11 90S development well. Which if productivemoy be open to regulor prodl.lction within 1.500 tee-t of a propert)' line ond within 3.000 feet of onother well cOPoble of. produc ing from the some pool. The sur- foce 10catlol1 of the proposed \Nell is 1271 feet from ~hl? o;,(\uth 1'l1e and 1:161 I,:...., irOm the 1::.0sl linE:' of ~"'(I'l)r', ;'~' T2S ~ Ij\N 5M TneprQPoSed.bottom- t',(.¡.,. 1",:01,01', ,;, ,"63 I,,~I Ir,.nl the so.uth line. and 't!l~~~e:~trPrT1 the eqst I ine of Section 22, 1;2S, The ComlT1issionhostentotivelY~et a P~blicheo;- ,ng on this opplication for December 7. 200J at 9:00 o~ o.t The Aloska Oil and Gas Conservotion Com- rTIl'õs,on ot 333 West 7th Allenue, Suite 100. AnChor. age. A.JOSko 99501. A per'õon may request thot The' te~torrv.:-Iy scheduled heoring be held by filing 0 .\,\,~,.tt€n r.,.a".,.."i \A ,th Ih.,. Commi'õsion no loter than J .II! r:.rY'o (on r W" .,.rnb.;>r 1;'2004. .. ... I ! If.a re~l)~$,t forahear.ing is not timel~filed. ttie I Com~lsslon maY.!=onslder the i'õsuonce of on or- d~r without 0 heorrng. To learn ii the Commission WIll hold the public hearing. pleose coli 793-122l. I " I I nadditi()n, a p.~ts()nrnaysubmitwrittencom" ments regarding this application to the Alaska Oll and Ga~ CO,nservqtion. Commissiðn at 333West 7th i Avenue, SUite 100, Anchorage, Alaska?950l.Writ. ten coromen!s must be received nolaterthan<4'30. PtyI o.n Nove!11ber 26, 2004 except that ,if the c:'ot". mission decides to hold a public hearing, vjtritten protest or comments must be receivednQIPter !han the conclusion of the December 7, 2ÔO~ hear- rng. ;':1 ' If YO.u are a per$on ..yith a disability whom.6J'l1eed special accommodations in order to comment 'or to ?;;:;~i~ ~~e7~~~J~~ .hearing,PleaSe contact Jodv Co. John K. Norman Chairman ADN AO# 02514020 Publish: October 25, 2004 02-902 (Rev. 3/94) Publisher. )ginal Copies: Department Fiscal, Departme ~~eceiving AO.FRM STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER ADVERTISING ORDER NO. INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AO-02514020 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE B.OTTOM FOR INVOICE ADDRESS F AOGCC R 333 West ih Avenue, Suite 100 0 Anchorage,AJ( 99501 M 907-793-1221 AGENCY CONTACT DATE OF A.O. lody Colombie PHOI'JE (907) 793 -1 ??1 DATES ADVERTISEMENT REQUIRED: October ??, ?004 PCN T 0 Anchorage Daily News PO Box 149001 Anchorage, AJ( 99514 October 25, 2004 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY 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) AO.FRM RE: Public Notice ) ) Subject: RE: Public Notice From: legalads <legalads@adn.com> Date: Fri, 22 Oct 2004 16:07:22 -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: 326023 Publication Date(s): October 25, 2004 Your Reference or PO#: 02514020 Cost of Legal Notice: $186.88 Additional Charges Web Link: E-Mail Link: Bolding: Total Cost to Place Legal Notice: $186.88 Your Legal Notice Will Appear On The Web: www.adn.com: XXXX Your Legal Notice 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, October 22, 2004 3:26 PM To: legalads Subject: Public Notice «File: Ad Order form.doc»«File: HappyValley11.doc» Please publish on Monday. 1 of 1 10/22/20044:15 PM Notice ) Subject: Notice From: Jody Colombie <jody - colombie@admin.state.ak.us> Date: Fri, 22 Oct 2004 15 :25 :00 -0800 To: undisclosed-recipients:; Bec: Cynthia B Mciver <bren_mciver@admin.state.ak.us>, Robert E Mintz <robert_mintz@law.state.ak.us>, Christine Hansen <c.hansen@iogcc.state.ok.us>, Terrie Hubble <hubbletl@bp.com>, Sondra Stewman <StewmaSD@BP .com>, Scott & Cammy Taylor <staylor@alaska.net>, stanekj <stanekj@unoca1.com>, ecolaw <ecolaw@trustees.org>, roseragsdale <roseragsdale@gci.net>, trmjrl <trmjrl@ao1.com>, jbriddle <jbriddle@marathonoi1.com>, rockhill <rockhill@aoga.org>, shaneg <shaneg@evergreengas.com>, jdarlington <jdarlington@forestoi1.com>, nelson <knelson@petroleumnews.com>, 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@alaska.net>, mjnelson <mjnelson@purvingertz.com>, Charles O'Donnell <charles.o'donnell@veco.com>, "Randy L. Skillern" <SkilleRL@BP.com>, "Deborah J. Jones" <JonesD6@BP.com>, "Paul G. Hyatt" <hyattpg@BP.com>, "Steven R. Rossberg" <RossbeRS@BP.com>, Lois <lois@inletkeeper.org>, Dan Bross <kuacnews@kuac.org>, Gordon Pospisil <PospisG@BP.com>, "Francis S. Sommer" <SommerFS@BP.com>, Mikel Schultz <Mikel.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 <yesnol@gci.net>, gspfoff <gspfoff@aurorapower.com>, Gregg N ady <gregg.nady@shell.com>, Fred S teece <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 E Olson <kurt_olson@legis.state.ak.us>, buonoje <buonoje@bp.com>, Mark Hanley <mark_hanley@anadarko.com>, loren_ternan <loren_Ieman@gov.state.ak.us>, Julie Houle <julie_houle@dnr.state.ak.us>, John W Katz <jwkatz@sso.org>, Suzan J Hill <suzan_hil1@dec.state.ak.us>, tablerk <tablerk@unocal.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@rkindustria1.com>, ghammons <ghammons@aol.com>, rmclean <nnclean@pobox.alaska.net>, mkm 7200 <mkm 7200@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@forestoiI.com>, Garry Catron <catrongr@bp.com>, Sharmaine Copeland <copelasv@bp.com>" Kristin Dirks <kristin_dirks@dnr.state.ak.us>, Kaynell Zeman <kjzeman@marathonoil.com>, John Tower <John.Tower@eia.doe.gov>, Bill Fowler <Bill_Fowler@anadarko.COM>, Vaughn Swartz <vaughn.swartz@rbccm.com>, Scott Cranswick <scott.cranswick@mms.gov>, Brad McKim 1 0£2 10/22/2004 3 :26 PM Notice 20f2 . ) <mckimbs@BP .com> . --- ~- --~ -~ -~-, ~--~ ") '" -.- --.---- ~~- Content-Type: applicationlmsword HappyVaUeyl1.doc Content-Encoding: base64 -,,- --'- .L_~ ~--'.' ",.-- .1 1 0/22/2004 3 :26 PM Public Notice ) Subject: Public Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Fri, 22 Oct 2004 15:25:35 -0800 To: Angela Webb <angie_webb@admin.state.ak.us> Please publish on-line. Jody Content-Type: application/msword Content-Encoding: base64 1 of 1 10/22/2004 3 :26 PM Public Notice ) ) Subject: Public Notice From: Jody Colombie <jody_colombie@admin.state.ak.us> Date: Fri, 22 Oct 2004 15:26:14 -0800 To: Legal Ads Anchorage Daily News <legalads@adn.com> Please publish on Monday. Content-Type: application/msword Content-Encoding: base64 Content-Type: application/msword Content-Encoding: base64 1 of 1 10/22/20043:26 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 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 2525 Gambell Street #400 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, I D 83702 Michael Parks Marple's Business Newsletter 117 West Mercer St, Ste 200 Seattle, W A 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 .t~;i =+t:: ~ ') Unocal Alaska '\ Union Oil Company of Calih".,(¡a 909 West 9th Avenue, P.O. Box 196247 Anchorage, Alaska 99519-6247 Telephone (907) 276-7600 Fax (907) 263-7698 UNOCAL8 RE EIV D OCT 1 92004, Alaska Oil &, Gas Cons. Commission Anchor~ge Kevin A. Tabler, Manager Land/Government Affairs October 19,2004 Mr. Bob Crandall Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 APPLICATION FOR SPACING EXCEPTION Happy Valley # 11 well Unocal Lease # C-061588, C-061589, C-061590, ADL 384380 Dear Mr. Crandall: Union Oil Company of California (Unocal) hereby submits this Application for Spacing Exception to drill the referenced "Happy Valley # 11 " well in the Deep Creek Unit. Our anticipated spud date is late October, 2004. In accordance with 20 AAC 25.005 (a), a Permit to Drill and associated filing fees are filed herewith. The Happy Valley # 11 well and prospective productive interval is situated in governmental Section 22, Township 2S - Range 13W S.M. requiring a spacing exception in accordance with 20 AAC 25.055 (a) (2) and (4), and if the results of the Happy Valley #11 well are successful, will be within 1,500' of a property line with a different landowner and 3000' of a well capable of producing from the same pool. The applicable regulations provide in pertinent part, "a wellbore may be open to test or regular production within 1,500 feet of a property line only if the owner is the same and the landowner is the same on both sides of the line" and "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." This well location is structurally high on the formation and is a crestal withdrawal based on seismic, dip meter and subsurface data available to Unocal. OR\G\NAl ) ') Additionally, the correlative rights of all affected owners, landowners and operators will be protected by exception approval. At the date of this mailing, in accordance with 20 AAC 25.055 (d)(1), notice of our intent to drill has been sent by certified mail to all owners, landowners, and operators of all outlying properties within 3,000 feet of the Happy Valley #11 well. A copy of this application (landowner notice) along with a certified mailing receipt has been attached to this application. Additionally, the owner and operator (Unocal) and the landowner (Cook Inlet Region, Inc.) are within 3000' of lands owned by DNR. Pursuant to 20 AAC 25.055 (d)(2), enclosed is a plat, identified as Exhibit "A", which shows the location of the well for which the exception is sought and all adj oining properties. Also enclosed, Exhibit "A -1" identifies the owners, landowners and operators associated with the affected tract. Pursuant to 20 AAC 25.055 (d)(3), an affidavit is enclosed stating the undersigned is acquainted with the facts and verifying that all facts are true. . It is requested that the Commission approve an exception to the statewide spacing regulation for the drilling of the proposed Happy Valley # 11 well. If you require additional information regarding the Happy Valley # 1 0 drill site, please contact Mr. Steven Lambe, drilling engineer at 263-7637, or you may contact the undersigned at 907-263-7600. incerely, t 9~ ..~ G I ~, ' Kevin A. Tabler Enclosures cc: CIRI DNR ) VERIFICA TION OF APPLICATION FOR SPACING EXCEPTION COOK INLET, ALASKA C-061590, C-061588, C-061589, ADL 384380 Happy Valley # 11 well I, KEVIN A. TABLER, Manager, Land and Government Affairs, Union Oil Company of California, do hereby verify the following: I am acquainted with the application submitted for the drilling of the Happy Valley # 11 well in the Deep Creek Unit. I have reviewed the application submitted for the exception to 20 AAC 25.055 (a)(2) and (4) and all facts therein are true. I have reviewed the plat attached to said application, and it correctly portrays pertinent and required data. DATED at Anchorage, Alaska this 15th day of October, 2004. ~:~rX~ Mgr., Land & Govt. Affairs STATE OF ALASKA ) ) ss ) THIRD JUDICIAL DISTRICT SUBSCRIBED TO AND SWORN before me this 15th day of October, 2004. ~\\\\\UIIUIII!!1¡1t1 #~~..~'..,§:/:¡~ ~.S),,"~f{\tSS¡orl ~'" 2~~ ~ ~...~v .~ "~:¡" ~ § J.~. ~ . ~ i3 f NOTARY \ ~ == ~ ' : == ~.\PUB1JC/ .. ~ .n'. ,(:: , ", .' - i!f ~ u ~ "'~{) 14 'l.Q~~" ~' ;§ ~ ~l::"""'" ~C:; ~ ~ J.~ OF ~\. ~ rJ!¡IIIIIIIÎ m\\\\~ ~-ß-r4 ~~ IÕTAR¥pæLIC IN AND FOR THE STATE OF ALASKA My Commission expires: a -/'/-0 b 22 I 11 (TD) .\ ' -'f- SURFACE LOCATION UNOCALfJ) ADL384380 DEEP CREEK UNIT HAPPY VALLEY 11 32 EXHIBIT A 33 34 N A 0.5 0.25 0 0.5 I I Miles C-061591 3 Alaska State Plane Zone 4, NAD27 ) 8 9 17 28 27 590 ) 2 C-061587 11 12 23 24 26 25 ) ) EXHIBIT "A-I" LEASE LANDOWNER OWNER OPERATOR ADL-384380 DNR Unocal Unocal (Section. 22 portion) Division of Oil and Gas T2S-RI3W 550 West ih Avenue, Suite 800 Anchorage, Alaska 99501-3560 Attn: Carol Lee C-061588 Cook Inlet Region, Inc. U nocal Unocal (Sections 15,16) 2525 C Street, Suite 500 T2S-RI3W Anchorage, Ak 99509 Attn: Kirk McGee C-061589 Cook Inlet Region, Inc. Unocal U nocal (Section 21) 2525 C Street, Suite 500 T2S-RI3W Anchorage, Ak 99509 Attn: Kirk McGee C-061590 Cook Inlet Region, Inc. Unocal U nocal (Section 22) 2525 C Street, Suite 500 T2S-RI3W Anchorage, Ak 99509 Attn: Kirk McGee ,,---3 Name and Adc¡r¡:!ss of S~nder Ch. e. c~óf mail or service.:.. Affix Stamp Here UnOcal Ala k ' . (If issued as a 909 W s a i:y(;ertitied CJ, Recor ed Delivery (International) certificate.a.f mailing, . 9th Ave.; P.O. Box 1 962 [] COD [J Istered or f~r addlt/~na~ Anch . 47 CI Delivery Co~firmation... Return Receipt for ~erchandise copies of this bill) orage, AK 99519-6247 [] Express Mall [j Signature Confirmation Postmark and -'-~-----'-----'-----_-__h'--'--'-'---" ..... . ------h______---_..--- [J .._!~.~L.J~~~-_.__.._---_.__._._._--_._..--._--_...__._._---.-.-'------- Date ..9L8.~..Ç~~~èjÏiñg-"-Ãëtüal Value Un. -- -.- -__~A<tic~N~""," - - - ---- Add~""""a~._s',,~ ""_d~~",,"" Postage F~+~2'.... If Reg;"e"" -~-JroitEy i~5lJß£iili&L-__----------_._--- (Ý{J 1.~------------- Kirk M;cGee J. --'---'-----'-'h-------Vicc r ros;i<;tQ:tft,::l1éal [state"--- CcO'kl'nlet. .;'1'On, Inc. P.O.8ik.3130 Ar chot:!Ø!!;Je, AK66'S09-3330 -1-~šï.;;j-Õues'eñëïër-'-öC"'sc'"'' SH----'RO-T "RR'-' _Y~~!_--___i!_90D___£!I.!- ._~.~- _Y~~_u£~~ - Fee ------------- ._--------_____.T2:] 2 ,-. -'----'-_.~._'--'U -.------- ~_._.--.._-_.__._---------_.. -"----_._._'--~-'---'--_.'''---'---'- ... .~..._,- -- - '---'-'---------------------------'-'-..---.--- ---'._____4 ~..~-- ---_.._--_._...~._..__..__.- . -'------"'--'----'---'- ......j...... i 4 -.--- --'--------'----"~~-------~'-'-'-'-'--------~----'--- ----.----..---'- --"-'--------"--~--'-'---'_._---"-"._" 5 --'--------'--'--'~-----""'-'---~-'-"--_...--_._------_.-------------~----_._._- ---~._._~. _.__._._~.-.-"""--,.:._---_.--- ---~-_.._------ --------.-----....-----..--.-- 6 -.------....---...------. --------'------------"--""--'---'--~'--- ~-------- 'lid) .~ "--'--""'-- ~-.. 1;- --.-- . ~J .~_.._-_.._~'h- _..._._-~-~~--_. -.~~T.\YO 'hi! 8 7 l.t~t) L_t1v?Jl~9:J~ro&f1w~-_..__._--_. . Ms. Carol Lee P~tfoJeum teind .Manager DNR, . Division of Oil ,&Gàs 55Q VI 7'h Avenue, Ste. 800 -.---.--.--- AncM.9rage, AK 9:9501 -----'~----~---'---'-"'--"----'-_. -----"-'-.------ -----~-'.~_._------ 9 ~- _.-._-~.._~._---~-_._- --..-..-----..- - .~-.~----- 10 ----,--,------,---'-". - ._--.__.._--~- .._~._--_._'.-.._- - 11 -.------.-------- --_._.~._----.~._--.- ..-.--,.-..--- -- ---"-----' ,-12 ---------~--------_._--_..__.-._---.--_.- Total Number of Pieces Listed by Sender Total Number of Pieces Received at Post Office AAGÌ! .. \>{J . '-:1 _. ..:f:)' a: ~ -"-.-'-.---------...-...----' '<.- ~ -p -----------"---- - ,~ ~ -~~~:Y.i:--~~~ - ~~'~:Oõ~..~"o,,,.e;. ~q"'ed on. ~~.~" aM Inœ;M~,~:œ'ed m.n. The ma';~.m Ind.mnl~~.,..i~<fuO reconstruction ot nonnegotiable documents under Express Mail document reconstruction insurance is $500 per piece subject to additional limitations tor multiple pieces lost or damages in a single catastrophic occurrence. The maximum indemnity payable on Express Mail merchandise insurance is $500, but optional Express Mail Service merchandise insurance is available for up to $5,000 to some, but not all countries. The maximum indemnity payable Is $25,000 tor registered mail. See Domestic Mail Manua/R900. S913. and S921 tor limitations IQf coverage on insured and COD mall. See International Mail Manualfor limitations of coverage on international mall. Special han,dling charges apply only to Standard Mail (A) and Standard Mail (B) parcels. Complete by Typewriter, Ink, or Ball Point Pen ------.--.---. I 13! _.~.' .~---~~-.---'------.---_._.._-----------_._--_._---.-----_._...-.----._-_.-.----~ -----.-.------.------------- ---'-----'---.---- 14 ----_._~.._---_.__._._-_.__._-_._----_.._----- 15 ~s Form 3877, August 2000 . t ) ) '...U.S...Postal$erviceii..'.......' ...'..'..'...'.,.... .,-.'..,..',"......"..>;'i..."."'.,.'..'..",...ii':ii;¡ C ~~IlfIF[),I\JIAI L'ß t=9t:=lpor\,\.' ',:i_..i/ :{PO'!'7:StiCN/~irgfllr;,~o.}fls~~an~,e..,.ç~~~r~~èf'{ov" ï.~!gJ,,<:... 0- m ~ I 0- -'..M~ ~.,<:i<i),Jjf:- 'Ä æ c.rt;:;': $ (1Ié<,v ~ ' ^IT ~~. ~ ostmark U1 Return Receipt Feel ( d' () Here C (Endorsement Required) \ C \ ~::r: a Restricted Delivery Fee \ U )~\ ~ (ì'¡ C (Endorsement Required) \:~š\"""--- ~Y7 C "'"".,,~".L~/" ,,~,' ru Total Postage & Fees $"., ; .... i; m,';;: ¡ If C Sent To Ms. Carol Lee .q,. /01 --- -------------------get-roJeum -l..andc,Maf1á~r---- --- ---- --- ---- ------ r-=I Street, Apt. No.; .' ...":' ~ ~;/ C or PO Box No, DNR, Division 'of...:l;JtI-ot,Gas ~ '-ëitÿ,-S{ãtë,-Z1P+4--55Õ-W'--71Jii\vë-ñüe~-Stë~-8ÖO------------------ -... -..:t:... ... ..10111[01.:1 U.S.-,-',.', '... ,.-, '. '". .. - "... .... ..,.,. .,',. ... .../.',. ..,. '.'...'.'...':.' ,.,.,'.....,.......",..i.i1 C ERTIFIEDIVIJ.\I L.RECEI RT.',...,..". ....".fi' {~()l11esNc^1aï.~ ()fl/~;...NOJnsLJrance. CqverageprO\(idedJ,'..' ru ru ~ 0- ~ c:o .:0 U1 Postage $ Certified Fee U1 Return Receipt Fee CJ (Endorsement Required) CJ Restricted Delivery Fee CJ (Endorsement Required) : II - 101.'01111'"1 Happy Valley 11 Spacing Exception Information. ') ") Subject: Happy Valley 11 Spacing Exception Infonnation. From: "Lambe, Steven S" <lambes@Unoca1.com> Date: Wed, 20 Oct 2004 11 :42:49 -0800 , T fi:' "Crandall, Robert P -AOGCÇ" <bob -"ocrandall@admin.state.ak.us>', '/, ' , :' ' ' , , , " :, CC: tfAffinito, Ralph Jtf <affmitor@unocãLcoIIl>' n~randenburg, Tim t",<braß,deIiburgt@uno~aLcöm>, "Tåbler, ,KevIn A" <tablerk@1,JnocaLcom>, "Turner, Ed"<eturner@~nocé;\L~<Jm>' ,,":" " " «HV _Lse_Map.ppt» «HappyValley11-SpacingException.pdf» Bob- Attached above is the color version of Exhibit "A" as previously submitted. I am submitting Exhibit "B" that details the wells drilled to date wrt to lease lines and proximity. Happy Valley #1 has been shot in the T-25, T-40, T-70, and T-120 sands. A PL (production Log) shows the T-25 and T-40 were not contributing. The T-120 is currently below a plug. Happy Valley #2 has been shot in the T-10, T-17, T-80, and T-91 sands. The T-10 & T-17 were not contributing on a PL. The T -80 was Frac'd and a water interval is now contributing in the T -80 interval. Happy Valley #3, 4, 6, and 7 are non commercial and are not planned to be connected to the system. Redrills are being evaluated. Happy Valley #5 will be re-permitted as a Class II injection well. The 010 will be submitted shortly. Happy Valley # 8, 9, and 10 are all targeting the Beluga and Upper Tyonek intervals. Evaluation is currently on going. Happy Valley #11 is being drilled to target the T-80 sand in close proximity (250' North) of the existing HV #2 well bore. Winter deliverability from the T -80 sand is in question in HV #2 with respect to the water production and HV #11 is intended to produce this interval. Pending sustained well flowing data, the T -80 interval in HV #2 may be isolated and HV #11 will be the local take point for the T-80 sand. The POA is in for review with anticipated approval prior to November 1 st. The Pool Rules will be submitted by November 15th, 2004 as per your conversations with Kevin Tabler and Ralph Affinito. The cuttings from HV #11 will be injected into the annulus of NNA #1. The 010 hearing for Class II injection in NNA #1 is scheduled for November 9th, with an earliest approval expected the 19th of November. HV #11 will be completed before NNA #1 is converted in status to a Class II injection well. If you have any questions or need clarification, please contact me directly at 263-7637. All the best, Steven Lambe Content-Description: HV - Lse - Map.ppt ,HV - Lse - Map.ppt Content-Type: application/vnd.ms-powerpoint Content-Encoding: base64 lof2 10/20/2004 3 :43 PM Happy Valley 11 Spacing Exception Information. ) . Content-Description: HappyV alleyl1-SpacingException.pdf, . HappyV alleyll-SpacingException.pdf i Content-Type: application/octet-stream . Content-Encoding: base64 20f2 10/20/2004 3 :43 PM NNA11 - !~8~'~~ DEEP CRh U 1 f if .- 8 1 1 7: t f 1 5 C-061588 H'v7 !¡. 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C-061590 2"7 I I i- I I J 4 ~ 23 -----..- .~ UNOCAL ALASKA DEEP CREEK UNIT Happy Valley Well Basemap EXHIBIT B I ' ,. I \ I I I ) I ----'----7~~~------'----_!_-----'