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Home My WebLink AboutCO 59510 Image Project Order File CovAage 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. CC) V ,5 Order File Identifier Organizing (done) RESCAN Color Items: Greyscale Items: ❑ Poor Quality Originals: ❑ Other: F�Two-sided uuumuuii DIGITAL DATA ❑ Diskettes, No. ❑ Other, No/Type: a,.can Needed iuumiAiiiii OVERSIZED (Scannable) Maps: Other Items Scannable by a Large Scanner OVERSIZED (Non -Scannable) ❑ Logs of various kinds: NOTES: ❑ Other:: BY: Maria Date: /s/ Project Proofing III IIIIi� �IIII I� �I� BY: Maria Date: /s/ Scanning Preparation x 30 = + = TOTAL PAGES / v (Count does not include cover sheet) ��/► BY: Maria Date: (�. /� . / Q /s/ 1 Y 1 Production Scanning Stage 1 Page Count from Scanned File: �� (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: <ES _ BY: Maria Date: / L/J-3/0Q Stage 1 If NO in stage 1, page(s) discrepancies were found: YES BY: Maria Date: Scanning is complete at this point unless rescanning is required. ReScanned BY: Maria Comments about this file: Date: NO /s/ N PNO Ililllillllldlllll Is/ QualityChecked 11111111111111111 ri 10/6/2005 Orders File Cover Page.doc • • INDEX CONSERVATION ORDER NO. 595 Kircher #1 1) Various Submittal Dates Fowler Oil and Gas Request for exceptions for Kircher # 1 well 2) December 7, 2007 Notice of Hearing, affidavit of mailing, a-mail list, bulk mailing list 3) ---------------- Public Comments, Procedural Questions and various requests 4) January 15, 2008 Transcript 5) March 17, 2008 AOGCC letter to Friends of Mat-Su CONSERVATION ORDER NO. 595 • The Sunday, January 27, 2008 ADN article "all sides agree that methane demands law adjustments" inaccurately portrays the AOGCC position on this very important issue. The AOGCC currently has no plans and sees no need to make major revisions to its regulations to address coalbed methane. The existing regulations and the process by which the AOGCC considers exceptions to those regulations work as well for coalbed methane as they do for any other hydrocarbon extraction process currently in operation in Alaska. Regarding coalbed methane operations, a major concern to both the AOGCC and the public is protection of fresh groundwater sources. There has never, in the five decades that the AOGCC has been enforcing its regulations, been any reported case in Alaska of an oil and gas operation contaminating a fresh ground water source. In relation to the downhole mechanics and the operations regulated by the AOGCC, coal bed methane is no different than any other hydrocarbon target. The coal seams are simply earth strata, as are the sandstones, limestones, and other rock layers that hold oil and gas. The coal beds tend to be shallow, but often sandstones containing either oil or gas are shallow, too. And the methane produced from coal seams is no different from the methane produced from other gas wells throughout the state. Coal bed methane development will NOT encounter freshwater aquifers in ways different from the ways that other drilling, production, and injection operations encounter such aquifers. All wells, no matter how deep they are drilled, must start at the surface and penetrate the shallow strata on their way to their final target. Existing AOGCC regulations are designed to protect fresh water strata from contamination during the drilling process and also to prevent migration of fluids from one stratum to any other during production and injection operations as well as after well abandonment. ALL wells, no matter what their targeted depth, must be drilled, cased, and completed in ways strictly controlled by existing AOGCC rules to ensure that there is no contamination of the fresh water strata and no migration of any fluids across any strata. The AOGCC regulations are designed to cover a wide variety of operations and applications. Occasionally an operator will assert that a particular well or set of wells cannot or should not be drilled using these state-wide regulations. In these cases the AOGCC will consider granting an exception to a particular regulation or regulations. Such exception requests are quite common in oil and gas drilling operations throughout the State -although each request is typically different than the last one. And when these exceptions are granted, the alternate operations must provide protection equal to or greater than the operations required by regulations and statutes. When such exceptions apply to a single well, they are best handled through the exception process. This is the process that the AOGCC is using to consider Fowler's requests. If granted, this permit will only allow Fowler to drill a single well through the target interval. Sustained production and ANY injection would require additional approvals by the AOGCC. • However if it becomes apparent that the same exception will be required for all wells in a pool, then the AOGCC issues special rules for that pool or, if it is an existing pool that already has pool rules, the AOGCC modifies the existing pool rules to address the newly identified concern. Should Fowler make a discovery leading to multi-well development, then the AOGCC will work with industry and other concerned parties to develop pool rules specifically for that development and limited to that pool. These two ways of addressing exceptions to state-wide regulations are very effective in addressing single-well or single-pool issues. Only when an operation is expected routinely to occur in multiple pools will the AOGCC consider modifying or adding to its existing state-wide regulations. Dan T. Seamount, Jr. Chair ._, ; . _ ~ ~ Y .~ ~` ` `°The hu`sband's first name was Brandon ` O'Neil said, a couldn't remember the last name. The m~rked in computers and some- ' ~~ times stopped by for coffee. He had seemed stressed out lately, O'Neil said. Thev were ~rnnri ~ bust federal assistance for an ex- ~ pansion is unusual, according to z shipping industry experts. r iJ.S. shipping :hubs normally ~,.,.~ ao..,i,..,......_~ __--- ... . woavii caCl:U1,1VC5. I~'OWII "It's rare, :but refreshing;' the grot Bur s id " n on sa of the project. Ports nels. Ta Associated Press ner ship ' have been begging the federal gov- ernment for similar funding." move pa coal seas art s most end another But critics of earmarks say that. surface,: even if a project is th wor while, they should compete equally for fees. Fowle funds rather than relying on the law inch art director we've-been seniority and influence wielded by members of Congress , preventic target with . The e: See Page A-S, PORT i .handful of ~asina in i y' j • • ja311 pob WO-0-998- L Anchorage Daily News Sunday January 27, 2008 •Drilleis wantasterpermits; others raise water concerns METHANE. f Continued from A-3 geologist mAlaska w frbe well' dvised to create said.. That's because of the po ,,to drill. The ba "' requires The commission must de ,, ` , ^' cline's based tental. risk to aquifers posed#x • � viler to perk o thly:wa cide on Fowlers application er's methane opera t>on : fs t A watchdog,a y dt1� i;, v%, pfi �y ethane. tee tests on wells``x�tnthui `rt rie within 30 days. The water in - like conventional ;.gas drilling, state laws ne d: eyampmg o on „ - 3f s` �p ,in a Low. by relatively shallow oil a radius, Ehm`sa>d t, t jection proposal comes under a Fowler president` -Arlen Ehm streamline the ermittx►g pro; er 8; pies b e�s Mimi wells, as opposed to deeper' testified ' at the commission cess for methane wIls, but Peab alf o�'riends of and gas wells. mg the,eost of testing 41 known separate review ion con - hearing: also to protect water In oth Mat -Su, pra-plaiuung group So you have the opportuni- 'wells at $50,000 a year. For more informat , er states residents have coin that-0nogged Evergreen: ty that we're constantly alert to The company also must se tact the Alaska Oil and Gas Regulations, for example,•. • an interchange where devel- cure permits from the state _ Commission at 793-1221. are "well intended for conven plained about wells sucked dry, The' commission plans toP i. tional gas well spacing where animals sickened by storage start work on' new regulations opment begins to encounter the departments of 'environmental cres but ponds of water pulled from coal Bove the way coal . bed same aquifers that are supply- conservation, transportation, Find Zaz Hollander online at adn.com/ you're draining 640 (a } P et :,' cams and of industrial gas op- methanje�operators monitor via ing freshwater," Norman said. and natural resources as well corrtacyzhollander or cau her in Wasiva at where you're draining, 300 feet s - kind of los`" uneh "°-te ti `rations in their, backyards. ter qu0_1P later this year, coin The Mat -Su Borough in Oc as the U.S. Armdy Corps of Engi- 907 352 6711. W it fled Ehm, a on o pr Oil and gad eounissioners mission member John Norman tuber gave Fowler permission nears, Ehm s CHOICES. . . . . . . .... . Schools .a: . •t mi , _ �. �� F_f` a � � .tc �} - ��1421Ui r�..ss.0 S h., , 4..,tth� N!nv�an 2ev�''+�x Y Continued from A-3' on critical thinking skills, not rote memory. "He loves it tre • • MEMO UPCOMING ADN ARTICLE January 4, 2008 I was called by Zaz Hollander at the Anchorage Daily News who informed me that they are going to run an article next week about a corporate and personal bankruptcy that I went through from 2001 to 2005. The motivation for this article is not known but I suspect that it is prompted by a particular Valley resident who will do anything to discredit me in order to try and stop the coalbed methane drilling. I tried to convince her that I had already been vindicated by all the judges involved in this matter so why bring this up but she said they are still going to publish. And once a newspaper decides to publish it is pointless to pursue it any farther since even President Bush could not convince the New York Times to not publish certain articles. Perhaps it is best atl around if this issue is aired in a somewhat balanced way by ADN instead of ending up in the hands of some sleazy journalist who only publishes one side of the issue. This does not discourage me in any way from continuing with the Fowler Oil & Gas coalbed methane project in Alaska. The background to the bankruptcy is: I was the majority owner and CEO of Government Computer Sales Inc who had a $25 million credit facility with Finova Corporation, a financial institution. Finova filed for bankruptcy and terminated our credit facility. Without this credit we were unable to continue in business. We were unable to replace it with another financial institution or bank since Finova had provided a customized credit facility that no one else wanted to duplicate. I was personally involved since I had to guarantee the credit facility. Finova sued us to collect the debt and we counter-sued Finova. The~made lots of accusations against me that were never upheld by the Federal Court in Washin tgton. The court only issued a civil judgment against the corporation and me personally. We had to dismiss our counter-suit because we ran out of money. We then filed for bankruptcy and allegations were aeain made against me but they were not upheld by the bankruptcy iud~e. The corporate bankruptcy was discharged and mine was not so I am liable for payment to the creditors for whom I signed personal guarantees. Outside of the bankruptcy several organizations have stated that the corporation still owes them money but they never showed up in bankruptcy court to present their claim so their debts were automatically dismissed My intention is to pay the creditors to whom I am personally liable. Regards Bob Fowler CEO Fowler Oil & Gas Corporation • ~ Page 1 of 1 Colombie, Jody J (DOA) From: Hollander, Zaz [ZHollander@adn.com] Sent: Wednesday, January 30, 2008 11:03 AM To: Colombie, Jody J (DOA) Subject: FW: Fowler memo Attachments: MEMO from Fowler.doc 1/30/2008 • ~ STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage, Alaska 99501 Re: THE APPLICATION OF Fowler Oil & Gas, LLC for an order granting approvals, waivers, or variances relating to the following requirements in connection with the drilling and evaluation of the Kircher No. 1 exploratory gas well: primary well control requirements of 20 AAC 25.033; diverter line size requirements of 20 AAC 25.035(c); blowout prevention equipment requirements of 20 AAC 25.035(e); wellbore survey requirements of 20 AAC 25.050(a)(2); gas well spacing requirements of 20 AAC 25.055(a)(2); well site survey requirements of 20 AAC 25.061(a); gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3); and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). Conservation Order No. 595 Kircher No. 1 Exploratory Gas Well February 25, 2008 NOTICE CLOSING DOCKET BY THE COMMISSION: The Commission has the closed the Docket in the above captioned matter. ENTERED AND EFFECTIVE at Anchorage, Alaska and this 25th day of February, 2008. BY DIRECTION OF THE COMMISSION (~ (! 1 f 1. Jo J. Flo ~bie Sp ial Assistant to the Commission STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage, Alaska 99501 Re: THE APPLICATION OF Fowler Oil & Gas, LLC for an order granting approvals, waivers, or variances relating to the following requirements in connection with the drilling and evaluation of the Kircher No. 1 exploratory gas well: primary well control requirements of 20 AAC 25.033; diverter line size requirements of 20 AAC 25.035(c); blowout prevention equipment requirements of 20 AAC 25.035(e); wellbore survey requirements of 20 AAC 25.050(a)(2); gas well spacing requirements of 20 AAC 25.055(a)(2); well site survey requirements of 20 AAC 25.061(a); gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3); and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). IT APPEARING THAT: Conservation Order No. 595 Kircher No. 1 Exploratory Gas Well February 25, 2008 1. Fowler Oil & Gas, LLC (Fowler) by Permit to Drill application dated and received on October 9, 2007, and by letter dated November 21, 2007, and received on November 23, 2007, requests an order from the Alaska Oil and Gas Conservation Commission (Commission) granting approvals, waivers, or variances relating to the following requirements in connection with the drilling and evaluation of the Kircher No. 1 exploratory gas well: the primary well control requirements of 20 AAC 25.033; diverter line size requirements of 20 AAC 25.035(c); blowout prevention equipment requirements of 20 AAC 25.035(e); wellbore survey requirements of 20 AAC 25.050(a)(2); gas well spacing requirements of 20 AAC 25.055(a)(2); well site survey requirements of 20 AAC 25.061(a); gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3); and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). 2. The Commission published notice of opportunity for public hearing in the ANCHORAGE DAILY NEws on December 7, 2007, pursuant to 20 AAC 25.540. 3. Several individuals and the organization Friends of Mat-Su submitted comments and requested that the public hearing be held. 4. A public hearing was held in the Commission's offices at 333 West 7~' Ave., Suite 100, Anchorage, Alaska, at 9 a.m. on January 15, 2008. 5. The Commission left the record open until the close of business on January 25, 2008, to allow for additional comments. Conservation Order 595 February 25, 2008 Page 2 of 7 FINDINGS: 1. Kircher No. 1 is planned to be a vertical, coal bed methane exploratory gas well located off Trunk Road in the Matanuska-Susitna Borough. The well is planned to be drilled from a surface location 1,299 feet from the west line and 965 feet from the south line of Section 26, Township 18 North, Range 1 East, Seward Meridian. 2. The well is planned to be located on an irregularly shaped, approximately 794-acre parcel referred to as the Kircher lease block. The surface and bottom hole locations are planned to be 1,344 feet from the east line of the parcel. 3. The landowners, as that term is defined in AS 31.05.170(7), within 3,000 feet of the well are Lohmann-Olson LLLP, Mr. Dale R. Mizer, Mr. Harry Owens, and Mr. Leonard B. Reid. All were provided notice of Fowler's application for a spacing exception by certified letters, dated November 21, 2007. None of the landowners commented on the application. 4. Fowler is the owner, as that term is defined in AS 31.05.170(10), and operator, as that term is defined in 20 AAC 25.990(46), of the Kircher lease block. There are no other owners or operators within 3,000 feet of the planned well location. 5. 20 AAC 25.033 requires the use of a drilling fluid with sufficient density to overbalance the pressure of the penetrated uncased formations, except 20 AAC 25.033(1) allows the Commission to approve underbalanced drilling operations when such operations can be performed without loss of well control. Fowler seeks approval under 20 AAC 25.033(1) to drill the well with compressed air and has provided a description of the procedures and equipment it plans to use to ensure proper containment of formation and .return fluids. Should compressed air prove insufficient to achieve primary well control, Fowler plans to have on site the equipment and material necessary to convert to a mud-based drilling system. 6. To drill the 12'/4-inch diameter surface hole section of the planned well with a 10-inch diverter line, Fowler seeks a waiver of the diverter line size requirements of 20 AAC 25.035(c), requiring diverter lines to be at least 16 inches in diameter and at least as large as the diameter of the hole to be drilled. 7. To drill the well with only an annular preventer, Fowler seeks a waiver from the blowout prevention equipment (BOPE) requirements of 20 AAC 25.035(e), requiring a BOPE stack comprised of an annular preventer and two sets of rams (one set of pipe rams sized to the drill pipe and a set of blind rams). 8. To drill the well without surveying every 500 feet during drilling operations, Fowler seeks a waiver of the wellbore survey requirements of 20 AAC 25.050(a)(2), requiring a non-deviated well to be surveyed every 500 feet. Fowler proposes to conduct a continuous directional survey upon completion of the drilling operations. Fowler plans to perform the surveys required by 20 AAC 25.050(a)(2) if it converts to drilling with a conventional mud system. Conservation Order 595 • February 25, 2008 Page 3 of 7 9. To drill the planned well at the location 1,344 feet from the property line where the landowner changes, Fowler seeks a waiver from the gas well-spacing requirements of 20 AAC 25.055(a)(2), requiring gas wells to be drilled at least 1,500 feet from a property line where the owner or landowner changes. 10. Fowler seeks a waiver from the well site survey requirements of 20 AAC 25.061(a), requiring a seismic survey for exploratory wells. The purpose of the seismic survey is to identify potential shallow gas sources that could pose drilling hazards. This request is based on the lack of shallow gas in wells in the area and Fowler's plan to utilize a diverter while drilling the surface hole and an annular preventer while drilling the remainder of the wellbore. 11. To drill without mounted hydrogen sulfide sensors, Fowler seeks a variance to the gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3), requiring monitoring for hydrogen sulfide gas. Fowler notes there are few, if any, enclosed spaces that would allow for the accumulation of hydrogen sulfide gas. Fowler plans to utilize individual hydrogen sulfide monitors worn by the rig crew. 12. Fowler seeks a waiver from the collection of drill cuttings requirements of 20 AAC 25.071(b)(2), requiring the collection and submission of washed and dried drill cutting samples for each sample interval. This request is based on Fowler's assertion that drill cutting samples would not add significantly to the geologic knowledge of the area. 13. Five individuals and the organization Friends of Mat-Su provided written comments and/or testimony during the 3anuary 15, 2008, hearing. Several comments were made concerning matters beyond the Commission's jurisdiction. The comments and testimony on the Fowler application that bear on matters within the Commission's authority and jurisdiction can be grouped into the following categories: a. comments regarding the need for regulations specific to coal bed methane operations; b. comments regarding the adequacy of the Commission's bonding requirement of $100,000 for an individual well or $200,000 for all of an operator's wells within the state; c. concerns about potential injection operations; d. concerns about possible adverse impacts to water wells and fresh water aquifers in the area; e. comments regarding how subsequent horizontal wellbores off the main wellbore would be permitted; f. concerns about possible violations of correlative relative rights and wellbore collisions as a result of waiving the wellbore survey requirements of 20 AAC 25.050(a)(2) for the planned well; and g. opposition to granting waivers of any kind. Conservation Order 595 February 25, 2008 Page 4 of 7 CONCLUSIONS: 1. 20 AAC 25.033(1) authorizes the Commission to approve underbalanced drilling operations and associated equipment changes upon a determination that such operations can be performed without the loss of well control. Fowler's request includes a description of the equipment and procedures necessary to ensure proper containment of the formation and return fluids. The Commission has previously authorized the drilling of shallow gas wells with compressed air, finding this practice safe and reliable. Fowler's plan to have on site the equipment and material necessary to convert to a mud- based drilling system is a prudent contingency plan. 2. 20 AAC 25.035(c)(1)(A) authorizes the Commission to approve a diverter line size of less than 16 inches to account for smaller hole size. The surface hole is planned to be 12'/4 inches, which justifies reducing the size of the diverter line below the default 16- inch line. 3. 20 AAC 25.035(c)(1)(B) requires that a diverter line be at least as large as the hole being drilled unless a pilot hole no larger than the size of the diverter line is drilled first. The regulation requires that the Commission waive this requirement if drilling experience in the near vicinity demonstrates that drilling the pilot hole would not be necessary for safety. Fowler plans to employ a 10" diverter line while drilling a 12-1/4" hole. While wells have been drilled in the area, the Commission does not consider a well more than 3 miles from the planned well to be in the near vicinity. Therefore, a pilot hole of 10 inches or less in diameter must be drilled or a diverter line of at least 12'/4 inches must be used. 4. 20 AAC 25.035(h)(1) allows the Commission to approve a variance to the BOPE requirements of 20 AAC 25.035(e) if the variance provides at least an equally effective means of well control. Based on the Commission's evaluation of the Permit to Drill application, which is confidential, the Commission concludes that the method of well control proposed by Fowler would provide at least an equally effective means of well control. 5. 20 AAC 25.050(h) allows the Commission to waive all or part of the directional survey requirements of 20 AAC 25.050 if the variance at least equally ensures accurate surveying of the wellbore to prevent well intersection, comply with the well spacing requirements, and protect correlative rights. Conducting inclination surveys every 500 feet while drilling with air would be unnecessarily burdensome because it would require shutting down drilling operations and pulling the drill string from the hole in order to run the survey. There are no other wellbores in the area that could present a collision risk with the planned well, and a spacing exception is being requested that takes into account the concerns related to well spacing and protection of correlative rights. Therefore, conducting a complete wellbore directional survey after the well reaches total depth would provide assurances at least equal to those that would be achieved by conducting inclination surveys every 500 feet while drilling; it would also provide the required information regarding the well path to prevent well intersections, to comply with spacing requirements, and to ensure protection of correlative rights. 6. 20 AAC 25.055 and 20 AAC 25.505(b) allow the Commission to approve exceptions to the standard well spacing requirements. Fowler submitted a spacing exception Conservation Order 595 February 25, 2008 Page 5 of 7 application that complies with 20 AAC 25.055(d). None of the landowners within 3,000 feet objected to Fowler's request for a spacing exception. Granting Fowler's request would not result in waste or harm correlative rights. 7. 20 AAC 25.061(c) allows the Commission to grant a waiver to the well site survey requirements of section 20 AAC 25.061 if the operator can identify, by other equally effective means, the likelihood of encountering potential shallow gas hazards, or if other information substantiates the presence or absence of shallow gas hazards. Deep wells drilled in the area of the planned well have not encountered any significant accumulations of shallow gas. Should shallow gas be detected, Fowler plans to be able to effectively divert the gas. Therefore, conducting a well site survey for the planned Kircher No. 1 well is not necessary. 8. 20 AAC 25.066(d)(3) allows the Commission to approve a variance to the hydrogen sulfide detection requirements of 20 AAC 25.066 if the variance provides at least an equally effective means of gas detection. 20 AAC 25.505(b) allows the Commission to issue orders in conformance with 20 AAC 25.540 that prevail over the requirements of 20 AAC 25.065(c)(1), requiring that three manual hydrogen sulfide detectors be available on location. The type of rig proposed for drilling the Kircher No. 1 well has few, if any, spaces where hydrogen sulfide gas could accumulate. Therefore, the use of personal hydrogen sulfide detectors by the rig crew would provide a superior means of hydrogen sulfide detection than the use of rig mounted detectors and eliminates the need for manual detectors. 9. 20 AAC 25.071(c) allows the Commission to waive the drill cuttings sample collection requirements if the samples would not significantly add to the geologic knowledge of the area given the information that is available from other wells in the area. The geology of this area of the state is well understood and drill cutting samples from the planned well would not significantly add to this understanding. The cuttings collection that the Commission requires is for scientific purposes; only a very small volume is collected: approximately 1/a cup or 3 ounces of cuttings per sample interval. Section 20 AAC 25.071(b)(2) does not address the disposal of the drill cuttings generated during drilling. Cuttings disposal is regulated by the Alaska Department of Environmental Conservation through a solid waste disposal permit. 10. Responses to written comments and testimony: a. The Commission's regulations provide an effective means for dealing with the coal bed methane operations. Establishing regulations specific to coal bed methane operations is unnecessary given the adequacy of the current regulatory framework with respect to preventing waste, ensuring ultimate recovery, protecting correlative rights, protecting the environment, and ensuring safety and given the current lack of a viable coal bed methane industry in Alaska. b. AS 31.05.030(d)(4) authorizes the Commission to require bonding sufficient to cover the cost of abandoning or repairing a well. The Commission has no statutory authority to require bonding for any other purpose. The adequacy of the bonding for the planned well is outside the scope of this application. It will be evaluated in the context of the Permit to Drill application. c. This application does not relate to any injection operations. Any such operations would require an order from the Commission. To obtain such an order, Fowler must submit an application in accordance with 20 AAC 25.252. Conservation Order 595 February 25, 2008 Page 6 of 7 Such an application would require, among other things, the identification of suitable disposal and confining zones and would be subject to public comment and hearing. d. None of Fowler's requests raise issues regarding the protection of freshwater. Moreover, the Commission considers the protection of freshwater in many contexts, including in the context of Permit to Drill applications. With respect to nonconventional gas, including coal bed methane wells, AS 31.05.030(j) requires that wells be drilled and operated in a manner that will not adversely affect an aquifer that serves as a source of water for human consumption or agricultural purposes. AS 31.05.030(j) specifically provides that as a condition of approval of a Permit to Drill a well for the regular production of coal bed methane, the operator must design and implement a water well testing program that provides baseline data on water quality and quantity. e. The Commission's regulations consider each individual horizontal lateral as a separate wellbore requiring its own Permit to Drill application, and unless a drilling unit or pool is established, any requests for approvals, variances or waivers would be subject to the same regulatory review process as the subject application. Should a drilling unit or pool be requested, that application would also be subject to public notice and opportunity for public comment and hearing. f. The issues raised in the public comments related to waiving the wellbore survey requirements of 20 AAC 25.050(a)(2) for the planned well are addressed in Conclusion 5 above. g. The Commission's authority for granting each approval, variance, or waiver requested in the subject application is identified above. NOW, THEREFORE, IT IS ORDERED: 1. The requested approvals, waivers, or variances relating to the following requirements in connection with the drilling and evaluation of the Kircher No.l exploratory gas well are hereby granted: primary well control requirements of 20 AAC 25.033; diverter line size requirements of 20 AAC 25.035(c)(1)(A); blowout prevention equipment requirements of 20 AAC 25.035(e); wellbore survey requirements of 20 AAC 25.050(a)(2); gas well spacing requirements of 20 AAC 25.055(a)(2); well site survey requirements of 20 AAC 25.061(a); gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3); and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). 2. The requested waiver to the requirement to drill a pilot hole with a diameter no larger than the diverter line is hereby denied. The operator must comply with the provisions of 20 AAC 25.035(c)(1)(B). 3. Granting of these waivers and variances does not constitute approval of the Permit to Drill application for the subject well. 4. To the extent not inconsistent with this order the operator must adhere to the operations and alternative compliance measures included in an approved Permit to Drill application. 5. Except to the extent expressly modified by this order, the operator must adhere to the regulations of 20 AAC 25. Conservation Order 595 • February 25, 2008 Page 7 of 7 6. The Kircher No. 1 well may not be hydraulically fractured or tested for production without separate approval from the Commission. ENTERED at Anchorase, Alaska, and dated February 25, 2008. RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order, or such further time as the Commission grants for good cause shown, a person affected by it may file with the Commission an application for reconsideration of the matter determined by the order. If the notice was mailed, then the period of time shall be 23 days. The application for reconsideration must set out the re- spect in which the order is believed to be erroneous. The Commission shall grant or refuse the applica- tion for reconsideration in whole or in part within 10 days after it is filed. The failure to act on it within the 10-day period is a denial of it. If the Commission denies an application for reconsideration by order or inaction, upon denial, this order and the order denying reconsideration or inaction become FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the Commission mails, OR 30 days if the Commission otherwise distributes, the order denying reconsideration, UNLESS the denial results from inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration is filed. If the Commission grants an application for reconsideration, this order does not become final. Rather, the order on recon- sideration will be the FINAL order of the Commission, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the Commission mails, OR 30 days if the Commission otherwise distributes, the order on reconsideration. As provided in AS 31.05.080(b), "[t]he questions reviewed on appeal are limited to the questions presented to the commission by the application for reconsideration." In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. at y P. oerster, Commissioner Alaska it and Gas Conservation Commission • Mary Jones David McCaleb Cindi Walker XTO Energy, Inc. INS Energy Group Tesoro Refining and Marketing Co. Cartography GEPS Supply & Distribution 810 Houston Street, Ste 2000 5333 Westheimer, Ste 100 300 Concord Plaza Drive Ft. Worth, TX 76102-6298 Houston, TX 77056 San Antonio, TX 78216 George Vaught, Jr. Jerry Hodgden Richard Neahring PO Box 13557 Hodgden Oil Company NRG Associates Denver, CO 80201-3557 408 18th Street President Golden, CO 80401-2433 PO Box 1655 Colorado Springs, CO 80901 John Levorsen Michael Parks Mark Wedman 200 North 3rd Street, #1202 Marple's Business Newsletter Halliburton Boise, ID 83702 117 West Mercer St, Ste 200 6900 Arctic Blvd. Seattle, WA 98119-3960 Anchorage, AK 99502 Baker Oil Tools Schlumberger Ciri 4730 Business Park Blvd., #44 Drilling and Measurements Land Department Anchorage, AK 99503 2525 Gambell Street #400 PO Box 93330 Anchorage, AK 99503 Anchorage, AK 99503 Ivan Gillian Jill Schneider Gordon Severson 9649 Musket Bell Cr.#5 US Geological Survey 3201 Westmar Cr. Anchorage, AK 99507 4200 University Dr. Anchorage, AK 99508-4336 Anchorage, AK 99508 Jack Hakki{a Darwin Waldsmith James Gibbs PO Box 190083 PO Box 39309 PO Box 1597 Anchorage, AK 99519 Ninilchick, AK 99639 Soldotna, AK 99669 Kenai National Wildlife Refuge Penny Vadla Richard Wagner Refuge Manager 399 West Riverview Avenue PO Box 60868 PO Box 2139 Soldotna, AK 99669-7714 Fairbanks, AK 99706 Soldotna, AK 99669-2139 Cliff Burglin Bernie Karl North Slope Borough PO Box 70131 K&K Recycling Inc. PO Box 69 Fairbanks, AK 99707 PO Box 58055 Barrow, AK 99723 Fairbanks, AK 99711 Williams Thomas Arctic Slope Regional Corporation Land Department PO Box 129 Barrow, AK 99723 ~q~ ~ O U ~' Page 1 of 1 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Monday, February 25, 2008 4:46 PM Subject: co595 Kircher #1 Mat-Su Attachments: co595.pdf BCC:Cynthia B Mciver (bren.mciver@alaska.gov); 't4two@mtaonline.net'; 'foms2@mtaonline.net'; 'candy99645@yahoo.com'; 'mrtko@mtaonline.net'; 'whitevan@mtaonline.net'; 'zhollander@adn.com'; 'harrybrod@gci.net; 'robert@fowleroilandgas.com'; 'Alan Birnbaum <""Alan J Birnbaum "> (alan.birnbaum@alaska.gov)'; 'Aleutians East Borough'; 'Anna Raff; Arion, Teri A (DNR); 'Arthur Copoulos'; 'Barbara F Fullmer'; 'bbritch'; 'Bill Walker'; 'Brad McKim'; 'Brandon Gagnon'; 'Brian Gillespie'; 'Brian Havelock'; 'Brit Lively'; 'Bruce Webb'; 'buonoje'; 'Cammy Taylor'; 'Cande.Brandow'; 'carol smyth'; 'Cary Carrigan'; caunderwood@marathonoil.com; 'Charles O'Donnell'; 'Chris Gay'; 'Christian Gou-Leonhardt'; 'Cliff Posey'; 'Dan Bross'; 'dapa'; 'Daryl J. Kleppin'; 'David Brown'; 'David Hall'; 'David L Boelens'; 'David Steingreaber'; 'ddonkel'; 'Deanna Gamble'; 'Deborah J. Jones'; 'doug_schultze'; 'Evan Harness'; 'eyancy'; 'Francis S. Sommer'; 'Fred Steece'; 'Garland Robinson'; 'Gary Laughlin'; 'Gary Rogers'; 'Gary Schultz'; 'ghammons'; 'Gordon Pospisil'; 'Gregg Nady'; 'gregory micallef; 'gspfoff; 'Hank Alford'; 'Harry Engel'; 'jah'; 'James Scherr'; 'Janet D. Platt'; 'jdarlington'; 'jejones'; 'Jerry McCutcheon'; 'Jim White'; 'Jim Winegarner'; 'Joe Nicks'; 'John Garing'; 'John S. Haworth'; 'John Spain'; 'John Tower'; 'John W Katz'; johnny.aiken@north-slope.org; 'Jon Goltz'; 'Julie Houle'; 'Kari Moriarty'; 'Kaynell Zeman'; 'Keith Wiles ; knelson@petroleumnews.com; 'Kristin Dirks'; 'Laura Silliphant'; 'Lois'; 'Lynnda Kahn'; 'mail=akpratts@acsalaska.net'; 'mail=Crockett@aoga.org'; 'mail=fours@mtaonline.net'; 'Mark Dalton'; 'Mark Hanley'; 'Mark Kovac ; 'Mark P. Worcester'; 'Marquerite kremer'; 'marty ; 'Matt Rader'; 'mckay'; 'Meghan Powell'; 'Mike Bill'; 'Mike Mason'; 'Mikel Schultz'; 'Mindy Lewis'; 'MJ Loveland'; 'mjnelson'; 'mkm7200'; 'Nick W. Glover'; NSK Problem Well Supv; NSU, ADW Well Integrity Engineer; 'Patty Alfaro'; 'Paul Decker'; Pierce, Sandra M (DNR); 'Randall Kanady'; 'Randy L. Skillern'; 'rcrotty'; Rice, Cody J (DNR); 'rmclean'; 'Rob McWhorter '; rob.g.dragnich@exxonmobil.com; 'Robert Campbell'; 'Robert Province'; 'Roger Belman'; 'Rudy Brueggeman'; 'Scott Cranswick'; 'Shannon Donnelly'; 'Sharmaine Copeland'; 'Sondra Stewman'; 'Sonja Frankllin'; 'Stan Porhola'; 'stanekj ; 'Steve Lambert'; 'Steve Moothart'; 'Steven R. Rossberg'; 'tablerk'; 'Tamera Sheffield'; 'Temple Davidson'; 'Terrie Hubble'; 'Tim Lawlor'; 'Todd Durkee'; Tony Hopfinger; 'trmjrl'; 'Walter Featherly'; 'Walter Quay'; 'Wayne Rancier'; 'Arthur C Saltmarsh ; 'Catherine P Foerster'; 'Charles M Scheve ; 'Chasity R Smith'; 'Christine R Mahnken'; 'Cynthia B Mciver'; 'Daniel T Seamount JR'; 'Elaine M Johnson'; 'Howard D Okland'; 'James B Regg'; 'Jeffery B. Jones'; 'John H Crisp'; 'John K. Norman'; Latham, Tanya M (DOA); 'Louis R Grimaldi'; 'mail=Linda_laasch@admin.state.ak.us'; 'Maria Pasqual'; 'Robert C Noble JR'; 'Robert J Fleckenstein'; Roby, David S (DOA); 'Stephen E Mcmains'; 'Stephen F Davies'; 'Thomas E Maunder'; 'Tracie Paladijczuk (tracie~aladijczuk@admin.state.ak.us)'; Williamson, Mary J (DOA) Attachments: co595.pdf; Jody Colombie Special Assistant Alaska Oil & Gas Conservation Commission Direct: 907-793-1221 Fax: 907-276-7542 *Note new email address 2/25/2008 ~~ ~~TT~~++ -~,~ ®ld-7~~~~~®1~ ~® s7s7~®li Marchl7, 2008 Mimi Peabody Projects Coordinator Friends of Mat-Su P.O. Box 1 l6 Palmer, Alaska 9964 Dear Ms. Peabody, • SARAH PALIN, GOVERNOR 333 W 7th AVENUE, SUITE 100 ANCHORAGE, ALASKA 99501-3539 PHONE (907) 279-1433 FAX (907) 276-7542 Your letter, dated February 21, 2008, expresses the concern of Friends of Mat-Su (FoMS) that regulations specific to coal bed methane exploration and development are needed because of the potential for the emergence of a viable coal bed methane industry in Alaska. The Commission recently addressed this concern in Conservation Order No. 595 (CO 59~), issued on February 25, 2008, which responds to the application of Fowler Oil & Gas, LLC (Fowler) for an order granting certain approvals, waivers, and variances relating to various requirements in connection with the drilling and evaluation of the Kircher No. 1 exploratory gas well. In CO 595, in response to written comments and testimony by FoMS, among others, regarding the Fowler application, the Commission noted that, especially given the absence of a viable coal bed methane industry in Alaska, the existing regulations effectively deal with coal bed methane operations, and therefore, at this time, specific coal bed methane regulations would not increase the protection of, among other things, groundwater. Nonetheless, agreeing with FoMS that there is the possibility that coal bed methane operations will become prevalent in Alaska, the Commission is reviewing other states' coal bed methane regulations and will (if necessary) reevaluate the need for such regulations. Moreover, the Commission will consider any specific regulations that FoMS believes are now needed to address planned coal bed methane projects in the Mat-Su Valley. Thank you for your comments, and if you have any other comments or questions please contact me. Sincerely, Daniel T. Seamount, Chair Alaska Oil and Gas Conservation Commission . '~ • enmmUn~t}' PjArynJng ~-'r .~ ~h1-'~ Friends of Mat-Sty • community building ~~ ~~ ~: . <..,~ FED ~ s. G {~~_ ~I~ck~ Ail l~ has c,= .,_ ~ ~_ : 1r ~ncharp~ Dan Seamount, John Norman, Cathy Foerster February 21, 2008 Alaska Oil and Gas Conservation Commission 333 W. 7~' Ave, Ste 100 Anchorage, AK 99501 RE: Coal Bed Methane Regulations Dear Commissioners, Thank you for the opportunity to provide comments on Fowler Oil and Gas's application to drill for coal bed methane in the Mat-Su Valley during the public hearing on January 15, 2008. We appreciate the efforts that you have made to accommodate public opinion and respect the openness of your public process and willingness to answer questions. Friends of Mat-Su (FoMS) still has concerns regarding the potential impact that the CBM industry could have in the Mat-Su Valley. We understand your hesitation in creating statewide regulations governing this new gas industry in Alaska. However, we believe some standards should be in place in case industry exploration demonstrates the potential for a viable market. We have closely followed the problems that CBM has caused in other areas of the country, especially concerning ground water. For this reason alone, it seems worthwhile that you devote some staff time to researching the impacts of CBM in areas like, Wyoming, Montana, and Colorado and look at ways that specific regulations would mitigate those problems so that Alaska will not face the disaster that other states have dealt with as a result of poor regulations. We feel it is very important that our great state is prepared to handle the shallow gas. drilling industry, particularly because Stormcat Energy still holds leases on Mental Health Trust Land, and is planning to conduct testing on an exploratory well in the Big Lake area this year. Storm Cat Energy is an independent oil and gas company focused on the exploration, production and development of large unconventional gas reserves from fractured shales, coal beds and tight sand formations and, secondarily, from conventional formations. They are only one of many companies that could potentially be developing CBM in the borough and the state. This is of concern to our organization and many residents in the Mat-Su. Being ready. for this type of resource extraction instead of reacting and playing catch. up after the fact seems prudent and the responsible thing to do. P.O. Box 116, Palmer, AK 99645 • Ph: 907-746-0130 • Fx: 907-746-0142 • fomsC~mtaonline.net • www.foms.net ~ ~ M • • Thank you for the work you are doing to ensure that the oil and gas industry be held to high standards by protecting our fresh ground water supplies; as well as the other areas that you actively regulate. Thank you also for your availability and willingness to explain your decision making process and how you function as a regulatory body. We look forward to corresponding with you in the future. Respectfully, Mimi Peabody ,_ f Projects Coordinator Friends of Mat-Su CC: Sarah Palin, Governor Tom Irwin, Department of Natural Resources Commissioner Robert Swenson, Director Division of Oil and Gas Curt Menard, Matanuska-Susitna Borough Mayor John Duffy, Matanuska-Susitna Borough Manager Mark Mayo, Matanuska-Susitna Borough Planning Director Matanuska-Susitna Borough Assembly P.O. Box 116, Palmer, AK 99645 • Ph: 907-746-0130 • Fx: 907-746-0142 • fours@mtaonline.net • www.foms.net #4 1 ALASKA OIL AND GAS CONSERVATION COMMISSION 2 Before Commissioners: John K. Norman, Chairman Daniel T. Seamount 3 Cathy Foerster 4 In the Matter of the Application ) of FOWLER OIL & GAS for Various ) 5 Waivers and Exceptions for ) Kircher No. 1 and subsequent Kircher ) 6 Block CMB Wells, Mat-Su Area, Alaska ) 7 ALASKA OIL and GAS CONSERVATION COMMISSION 8 Anchorage, Alaska 9 January 15, 2008 9:00 o'clock a.m. 10 VOLUME I 11 PUBLIC HEARING 12 BEFORE: John K. Norman, Chairman Dan Seamount, Commissioner 13 Cathy Foerster, Commissioner 14 15 16 17 18 19 ~, 20 ti1~~ ~? 7(lfl~ 21 ~lask,~ ail ~~; ~ ~ ~ ~~~ . ure~rc~ission 2 2 ._. _ ~~iL~ar(i~P~ 23 24 25 R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • ~ TABLE OF CONTENTS Opening remarks by Chairman Norman Testimony by Arlen Ehm R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 03 17 • • 1 2 Tape 1 3 0050 4 5 6 71 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S (On record - 9:00 a.m.) CHAIRMAN NORMAN: Good morning to all of you. I'll call this hearing to order. This is a hearing being held before the Alaska Oil and Gas Conservation Commission on the morning of Tuesday, January 15th, 2008. The time is approximately 9:00 o'clock a.m. These proceedings are being conducted at the Commission's offices at 333 West 7th Avenue, Anchorage, Alaska. I will introduce the members of the Commission. To my right is Commissioner Dan Seamount, the geology commissioner of the AOGCC, to my left Cathy Foerster, the engineering commissioner and my name is John Norman. The Commission attempts to comply fully with the provisions of the Americans With Disabilities Act and if there are any persons present today who may have a disability such as difficulty in hearing, seeing or otherwise participating in the proceedings, please, let us know. I would ask you to see the Commission's special assistant, Jody Colombie, who is seated at the table in the front and we will do our very best to accommodate you and allow you to participate fully in the hearing. We also have arranged for persons who may wish to participate by phone to call in and at the appropriate time R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 3 • • 1 2 3 4 5 61I 7I 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they can testify or comment according to their wishes. I will explain at the outset that the Commission does have this year a plan for a new system and in the meantime I do apologize for the number of wires and phones around. We're somewhat outdated in our audio system, but it does the job and we will make sure that everyone gets to testify. R and R Court Reporting will be preparing a transcript of these proceedings as is the case with all Commission hearings and anyone who desires to obtain a copy of the transcript of the hearing can do so by contacting R & R Court Reporting or by contacting the Commission's special assistant, Jody Colombie and she will assist you in facilitating your obtaining a copy of the transcript of this morning's hearing. I want to remind all that are speaking, there are two microphones on the tables and persons who wish to testify, present testimony, will be asked to come forward. You will need to speak into both microphones. One microphone is for purposes of amplification to be sure that those in the rear of the room can hear, the other is to ensure that we obtain a clear recording for the transcript of this hearing. This hearing comes before the Commission based upon a letter application filed by Fowler Oil & Gas dated October 9th, 2007 and supplemented by a letter dated November 21st, 2007 wherein Fowler has requested various waivers and exemptions related to the proposed drilling of a coal bed methane well in R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 4 ~ ~ 1 2 3 4I 5 6, 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Valley. Fowler Oil & Gas proposes to drill the Kircher No. 1 on private lands, fee lands near the Trunk Road for the purpose of exploring for coal bed methane. Along with the Application for Permit to Drill as indicated there have been made request for waivers and the Commission is considering these in accordance with our normal procedures under Title 20 of the Alaska Administrative Code Chapter 25. I'll review briefly the waivers that have been requested in connection with this particular application. First an exemption from the provisions of 20 AAC 25.033 (b) which requires a drilling fluid of sufficient weight to maintain the well in an overbalanced condition so that they can drill with air in an under-balanced condition on this particular well. Secondly an exemption from the provisions of .035 -- and all the regulations I~ve referring to our found within Chapter 25 of Title 20 of the Alaska Administrative Code. An exemption under Section .035(c) which requires a diverter line to be as large as the whole section being drilled. And exemption under .035 (e) which requires certain ram type blowout prevention equipment to be used for drilling below the surface casing so they can drill the 7 inch production hole to a total depth with only the annular, preventer and diverter to facilitate drilling with air. An exemption from .050(a)(2) which requires inclination R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 5 • • 1 2 3 4 5, 6 7' 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 surveys to be run every 500 feet in wells planned with vertical holes. The operator stated reason for requesting this particular waiver is that the process of air drilling precludes the running of inclination surveys. The operator states that if they do convert from air drilling to drilling with a mud system then as one of their contingencies they will run inclination surveys as required by the regulations. Next, the operator requests a waiver from gas well spacing requirements found in .055(a)(2) which prohibit gas wells be drilled within 1,500 feet of a property line without AOGCC approval. In this case the planned well would be drilled within 1,320 of the nearest property line, a difference from our regulations of 180 feet requiring this particular exception. A waiver under .061(a) which requires seismic analysis for exploratory wells to identify potential shallow drilling hazards. .061(c) allows the AOGCC to grant a waiver of this requirement if the operator demonstrates the presence or lack of shallow drilling hazards and if this can be done and demonstrated through an effective -- and the presence of shallow drilling hazards can be identified and demonstrated through an equivalent, effective means. An exemption from .065 which requires conformance with the American Petroleum Institute Rule 49 under Recommended Practices for Safe Drilling of Wells Containing Hydrogen R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 6 • • lj 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ~ Sulfide. This is a rule that is embodied in the Commission's own regulations and requires certain measures to be taken where hydrogen sulfide is either present or its presence is unknown. The operator has requested the exemption because the rig they're using has little, if any, enclosed space where hydrogen sulfide can accumulate and the operator also will be required and the rig crew to wear personal hydrogen sulfide detectors. Finally an exemption from the requirements of .070 (sic) (b)(1) and (2) which require mud logging and collection and submission of drill cuttings. This particular section allows the AOGCC to waive these requirements if they would not significantly add to the geologic knowledge of the area. The operator has stated that this type of information has been already collected from nearby wells and that therefore collecting and submitting this information for the Kircher No. 1 well would not significantly add to the knowledge of information -- the body of geologic information for this area. Notice of the hearing, as I mentioned, was published in the Anchorage Daily News. There are affidavits of publication in the file for any persons wishing to see them. The notice was published on December 7th, 2007. Additionally notice was published in the Frontiersmen on December 9th, 2007, was published on the State of Alaska's on-line public notice system and has been on-line on the AOGCC's website. The Commission has received a number of concerns expressed R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572lFax 274-8982 ANCHORAGE, ALASKA 99501 7 ~ • 1 2 3 4 5 6 7~ 8 9 10 11 12 13 14 15 16 17 18 19 20 21 I 22 I 23 24 25 by -- generally by persons living in the area, as well as other comments and the Commission will allow time for those who wish to address the Commission to also supplement their written comments. And the time we have allotted is 10 minutes following the presentation by the operator for comments and then we will leave the record open for a period of time for any persons who may wish to present any additional comments following the hearing. COMMISSIONER SEAMOUNT: That's 10 minutes per person, correct? CHAIRMAN NORMAN: Ten minutes per person. Thank you, Commissioner Seamount. CHAIRMAN NORMAN: In order that persons can gauge their time I want to briefly discuss what the Alaska Oil and Gas Conservation Commission does because there are certain areas that are not within our jurisdiction or oversight and are outside our ability to regulate. And we will listen to what you have to say, but time can be best spent in addressing those things that are within the purview and jurisdiction of the Commission. The Alaska Oil and Gas Commission is one of the oldest regulatory agencies in the State of Alaska. It's an independent, quasi judicial agency of the State and was established under the Alaska Oil and Gas Conservation Act. Our regulatory authority is found in Title 20, Chapter 25 of the R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 8 • • 1 2 3 4 5 6 7 81 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Administrative Code and I recently cited that in connection with the various waivers and exemptions that have been sought in connection with the drilling -- the proposed drilling of this particular well. The Commission is principally concerned with below ground operations within oil and gas field and I think that's an important thing to keep in mind. The Commission oversees oil and gas drilling, development and production, reservoir depletion and metering operations and we do this on all lands within the State that are subject to the State's police powers, meaning not just State owned land, but lands that may be owned by the Federal Government, by other entities such as the Alaska Mental Health Lands Trust, Alaska's Native Corporations and private fee owned land, so in short the jurisdiction of the AOGCC does run statewide. I want to underscore, however, that our authority over surface uses and our ability to dictate or control surface uses is very constrained by our statutory mandate. In particular we have very little ability to control or regulate air quality issues which falls under the purview of other agencies and on some of the other concerns that I'm going to go through in a moment. Also, we have things such as road traffic, for example, are not within the purview of this agency. The Commission does act to prevent waste and that is the historic, primary reason for the existence of this Commission R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 9 • s 1 2 3 4 5~ 6 7 8 9~ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as well as similar Commissions in other states. We also act to protect correlative rights, correlative rights being the rights of adjacent owners to recover their fair share of the resource. We oversee operations with a view toward improving greater ultimate recovery of valuable hydrocarbon resources within the State of Alaska. And finally, and I think of relevance certainly to this matter today, one of the Commission's responsibilities, one we take very seriously is the protection of underground sources of fresh water. In that context the Commission administers the Federal Underground Injection Control Program and we oversee underground injections that are done for purposes of enhanced oil recovery and underground disposal of oil field waste in the State of Alaska. The Commission serves also as an adjudicatory forum for resolving any oil and gas disputes between -- well, I will say not any, but those oil and gas disputes that fall within the Commission's jurisdiction that may arise between owners and an owner includes the State of Alaska. The law specifically says the State of Alaska as a landowner has no greater or less standing than any private party in appearing before this Commission. The Commission also carries out certain other statutory mandates consistent with our authority for the protection of R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 10 • • 1 2 3~ 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 health, safety and environment. The Commission does have the authority to rule upon all of the requested waivers and exemptions that have been requested by Fowler, those being the ones that I identified and read into the record. The Commission does not have the authority over the surface placement or location of directionally drilled wells. Only the location of the production offtake, the subsurface offtake is within the purview of the Commission. The Commission also has no authority over air emissions, for example. There are other state agencies, as well as federal agencies, the DEC, the EPA that have jurisdiction over these matters. Noise is a matter that the Commission does not have any regulatory authority. We do not have authority to resolve land ownership issues. Those have to be resolved in another forum. And additionally there are other issues such as road traffic, pipelines outside of oil fields, these are not within our ability or our legal authority to address or resolve. I think for purposes of this proceeding our most important mandate is the protection of underground sources of fresh water. It's apparent that Alaskans as related to this a number of citizens have expressed concerns and so it's important to underscore the Commission takes this responsibility and the concerns expressed very seriously and it's one of our highest R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 11 • • 1 2 3 4 5 6 7 8 9~ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or very highest priorities to ensure that this resource will be and is protected by enforcing the regulations for safe construction of wellbores. I would add that within the records of the Commission we have never had any documented case of damage to an underground, fresh water source resulting from oil field operations. And, as I mentioned, the Commission is one of, if not the oldest regulatory commissions in the State of Alaska going back and predating statehood. That said we are ever alert to it. We watch it, we regulate it continuously throughout the State and that should be understood. I will briefly summarize, and that is all I'm going to do just to help those who are in attendance today to follow this and focus their remarks, a few of the concerns that the file reflects. In reviewing the file there is a concern about what I would characterize as unconventional drilling methods and a concern about the possible lack of experience by the operator as to this particular operation. Of course, the AOGCC oversees these operations and this is nothing new to us. It's what we're here for. We serve the citizens of the State of Alaska and so as to that particular operation I hope it will become clear in the course of these proceedings that the AOGCC will exercise careful oversight over these operations as we do over the thousands of other wells drilled throughout the State of Alaska. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 12 1 2 3 4 5 61 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • • There is a concern expressed about the volumes of produced water from dewatering processes, a concern about dewatering in areas adjacent to private residences and residential subdivisions, a concern about adverse affect on drinking water and the water table, a concern about the adequacy of the bond which is required by law to be filed with the AOGCC, a concern about gas leaks from pipelines, a concern about the reinjection of produced water and the possible contamination of the water table, underground source of fresh water. There were some general concerns about environmental impacts resulting from drilling. There were concerns about potential movement of arsenic or toxic gases into the groundwater by the dewatering process. There was concern about the high seismicity of the area and that potential that it could damage water tables after reinjection of produced water. I wanted to summarize those and persons testifying will be welcomed to elaborate them on those, but as you do so, please, bear in mind the jurisdiction of this agency and use your time as effectively as possible because we're very interested in listening to your comments, but you must try to direct your comments to those things that we have oversight on and other matters will have to be addressed in other fora such as the other environmental agencies that I referenced. As we begin I'm going to ask at this point if either Commissioner Seamount or Foerster have any additional remarks R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 13 w r 1 2 3 4 5 6, 7 81 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 I 25 to add to what I've said. Commissioner Seamount. COMMISSIONER SEAMOUNT: I have nothing at this time. CHAIRMAN NORMAN: Commissioner Foerster. COMMISSIONER FOERSTER: Nor do I. CHAIRMAN NORMAN: Very well. Then we will begin first with a commentary and presentation by the operator to address the eight waivers and exceptions that have been requested. And, Mr. Ehm, you are here to represent the operator? MR. EHM: That's correct. CHAIRMAN NORMAN: Then what I will do, are you ready to proceed now? MR. EHM: I am. CHAIRMAN NORMAN: Very well. Would you raise your right hand, please? (Oath administered) MR. EHM: I do. CHAIRMAN NORMAN: Very well. Please state your full name and your affiliation and who you represent? MR. EHM: Arlen Ehm. I'm the president of Fowler Oil & Gas. CHAIRMAN NORMAN: And you will be..... COURT REPORTER: Excuse me, Mr. Chair. Could you turn your microphone on, please? There's a little button on there on the first -- the one that is by your left hand. MR. EHM: This one? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 14 • • 1 2 3 I 4 5' 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COURT REPORTER: Yeah, just if you would, that's for the amplification here in the room. I want to make sure people can hear you. Thank you, it's on. CHAIRMAN NORMAN: Thank you. Mr. Ehm, if you would -- if I could ask you, please, to go ahead just to be sure that we got your name on the record and your affiliation. MR. EHM: My name is Arlen Ehm. I'm the president of Fowler Oil & Gas. CHAIRMAN NORMAN: And, Mr. Ehm, you will be testifying as an expert witness additionally in addition to a representative of the operator? MR. EHM: I will. CHAIRMAN NORMAN: Then may I ask, please, that you state your qualifications, your background and your experience in the area that you'll be speaking to? MR. EHM: I have a Bachelor's and Master's Degree in Geology from Wichita State University and I've been working in Alaska for 42 years. I have been in the oil business for 52. I have never testified as an expert witness before this body, but I have been an expert witness on six court cases including one where the DNR was my client, two where the IRS was my client and one where Judge Thomas Beech Stewart (ph), the late Judge Thomas Stewart in Juneau appointed me as a Special Master in a lease condemnation suit. CHAIRMAN NORMAN: Commissioner Seamount, questions on..... R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 i • t COMMISSIONER SEAMOUNT: I have no questions. Sounds like an expert to me. CHAIRMAN NORMAN: Commissioner Foerster. COMMISSIONER FOERSTER: No. CHAIRMAN NORMAN: Mr. Ehm, your experience in this particular area with the geology of this area, could you elaborate on that a bit? I think the Commission could -- is aware that you have been present and have worked throughout Alaska, but in this particular area could you elaborate on either your experience or what you have done to familiarize yourself with the geology of this area? MR. EHM: My first experience started in 1965 when I was working with Shell, although we were primarily interested in the larger structures down in mostly in the water of Cook Inlet. We did go out elsewhere and map elsewhere and I've continued to map this area for a considerable time. I was briefly involved with the very first coal bed methane operation in the Valley several years ago. CHAIRMAN NORMAN: And in what capacity was that when you say you were briefly involved? MR. EHM: I was out on the well site for Lappi. CHAIRMAN NORMAN: As -- as..... MR. EHM: As a geologist. CHAIRMAN NORMAN: And working as a private consulting geologist? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 16 • • 1 2 3 4 5~ 6~ 7 8 9 10' 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: That's correct. I've been a private consultant for 31 years. CHAIRMAN NORMAN: And finally you're appearing today not as a private consulting geologist though, but as the president of Fowler? MR. EHM: That is correct. I represent Fowler. CHAIRMAN NORMAN: Okay. Very well, your credentials as an expert witness are accepted by this Commission and you may proceed. TESTIMONY OF ARLEN ELM MR. EHM: Up until yesterday I tended to focus my comments on protection of the aquifer and then the exceptions or the waivers that we had asked for. With respect to the waivers I have very little additional to add other than what was filed with this Commission on October the 9th. But late yesterday it became -- I received a phone call asking me to go back and expand a little more on what Fowler's program was here and in thinking of that further I thought well, it would be -- it would behove me to go even further back and give a very brief history of the exploration and development of coal bed industry. And with your permission I would like to do that and I think that would bring us up to speed on where we are right here now in the Valley. CHAIRMAN NORMAN: Please proceed. MR. EHM: Coal bed methane started out in pretty much what R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 17 • • 1 2 3, 4 5 6 7 8 9 10 11 12 13 14 I 15 16 17 18 19 20 21 22 23 24 25 you call -- the industry started out in pretty much what you'd call flyover country where people didn't -- weren't concerned that much about the environment. As a result it was on 10 acre spacing and there were a lot of wells, there was a plethora of wells, wellheads, roads, pipelines and everything that left an ugly scene, but they got the gas out. The coal bed methane industry generally concurs that the drainage is to a coal bed methane well is about 300 feet so you would come away from that with a radius of 300 feet and that would just define your circle. Ten acre spacing would just almost take all of that, but the -- as you know the conventional rules here for gas is one well per 640. The Borough allowed two for 640, but they were AOGCC regulations trumped that so there's one per 640, but if you do the math on that, that's about one percent of that 640 acre track. The Lower 48 industry in several of their areas have started horizontal drilling where they drill a multiple of different types of patterns in order to get more exposure to the coal seams. So if we drill four laterals out of one coal bed and we can go 2,500 feet we now have 10,000 feet of exposure. If we drill that same 10 foot coal bed in a vertical manner we have 10 feet so we increase our attempt of drainage area by 1,000 fold and that is what is driving coal bed methane in the Lower 48. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 18 • • 1 2 3 4 I 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 However, in Alaska there's another big concern and that is you don't have nearly that many wellheads. You would have one wellhead with a tremendous number of laterals all draining and it cuts the unsightly nature down. It cuts everything down that has to do with the operation of a well. That is what is going on now, but it's never been done up here. We have one of the most prestigious directional drilling contractors that is going to do the drilling for us. To the protection of the aquifer -- well, let me back up just a minute. I think there's a misconception out there at large that operators can come up here and do what they want to and leave and leave the surface however they want to. I'm not going to say whether that's happened or not, but we are operating under nine different permits. We have a Borough permit. We have a Federal Corps of Engineers permit. We have two with DNR. Three with the DEC. One with AOGCC. And one with the DOT coming off a State road so we have to change everything and make that driveway into a commercial driveway. They all have regulations that have to be followed and they all require applications. Those regulations are all public. Most of them, if not all, are on their websites. Our applications are all public, too, as soon as they're filed so I find it difficult when people said they can't find anything about our operation. No one has ever contacted me. I R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 19 • • 1 2 3 4 5i 6 7' 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would be more than happy to talk to them, but they haven't. With respect to the surface water issue..... CHAIRMAN NORMAN: Where would they contact you, Mr..... MR. EHM: Pardon? CHAIRMAN NORMAN: Where would they contact you if there are persons present or on the line that have some unanswered questions? MR. EHM: My name and phone number is in every one of the permits. And I'm sure if they called Mr. Fowler's office he would tell 'em how to -- where I was that day and how to get a hold of me. COMMISSIONER FOERSTER: It wouldn't take more than a few seconds for you to give a phone number into the record if you wouldn't mind. MR. EHM: My Anchorage business phone number unless and until we get active enough I have to then move to Palmer is 907-333-8880. COMMISSIONER FOERSTER: Thank you. MR. EHM: My other contact is Arlenehm, one word, at GCI.net. COMMISSIONER FOERSTER: A-r-1-e-n-e-h-m? MR. EHM: That's correct. CHAIRMAN NORMAN: Thank you, Mr. Ehm. MR. EHM: You're welcome. The Borough in allowing our permit, but, of course we knew this in advance, requires that R& R C O U R T R E P O R T E R S 811 G STREET (907)277-05721Fax 274-8982 ANCHORAGE, ALASKA 99501 20 • ~ 1 2 3~ 4i 5 6 71 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we take water samples every month from all the wells within one mile radius of our operation. And I'll read into the record here what their permit says. October 2nd, 2007. Matanuska-Susitna Borough Planning Commission Resolution 07-34, whereas the Planning Commission has conducted the required Public Hearing and considered the information required by code and hereby fines, item number three is the permittee shall provide MSB with records of monthly water monitoring reports conducted by an independent groundwater testing professional as required by MSB 17.62-.160. Pursuant to that and I have that -- their regulation here, pursuant to that I identified all of the owners of water rights within the one -- what we considered to be a one mile radius. And this was difficult to do because of the inaccuracy of the data at DNR. It's not really their fault. When the water well drillers turn it in they'll put it in by a quarter quarter (ph) which may be out in the middle of a 40 acre space and that might not be where the water well is, but we have to find it now. I've identified 41 wells there that are so situated within that circle and we have Imtrix (ph) who will do the actual sampling, it's a third party, and Elizabeth Wrench (ph) will do the water lab analysis and those results will go to us as well as the Borough was well and they will automatically be public. That is not an inexpensive operation. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 21 • • 1 2 3 4 5; 6i 7 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I estimated that cost $50,000 a year to sample that water. And this map may need some adjusting. The Borough is now working on it to try and help me on some of these locations to see just exactly where they are. I have all the..... COMMISSIONER SEAMOUNT: Are you doing a baseline study before you drill? MR. EHM: We will have one to start with. We have to have one pre spud analysis. CHAIRMAN NORMAN: Mr. Ehm, of those 41 wells what's the deepest well that is drilled for purposes of encountering fresh water? MR. EHM: Right in the quarter section where we are the deepest well is 123 feet. But if you're familiar with the topography out there it is rolling and it's -- obviously the deeper wells start on the higher elevations. There are some as shallow as 86 and as you get over closer to Wasilla Creek go down to 30 feet, but that's an (indiscernible) number. But in our general area here they're 42, 65, 60. CHAIRMAN NORMAN: And is that -- is that of all 41 wells the deepest is 123 feet? MR. EHM: No, the deepest is 226,..... CHAIRMAN NORMAN: 226, okay. MR. EHM: .....that's almost outside of the circle on the northwest quadrant. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 22 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIRMAN NORMAN: Okay. COMMISSIONER SEAMOUNT: Do you have an estimate of the depth of the base of the fresh water? MR. EHM: We have no way to do that. COMMISSIONER SEAMOUNT: Not from deeper exploration tests within a few miles? MR. EHM: The exploration at the..... COMMISSIONER SEAMOUNT: The exploration wells. MR. EHM: .....base of what, fresh water? COMMISSIONER SEAMOUNT: Base of the fresh water. MR. EHM: I have not tried to do that, but assuming that's going to be at the bedrock. We plan to drive 13 and 3/8ths casing, drive -- drive it to 88 or more feet or wherever the point of refusal is. When we get to that point we will not have contaminated the surface aquifer in any way by putting anything in or taking it out. That comment was expressed at our hearing, at the Mat-Su Borough hearing, that we were going to be messing with the aquifer. We never will. We'll drive past it dry then we will rig up and drill dry to 500 feet, run casing and cement, but when we start out from under the surface conductor -- the conductor rather, not surface, but we'll be below the aquifer. COMMISSIONER SEAMOUNT: Are you going to run any electric (ph) logs up through -- how high are you going to go with the electric logs, what depths? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-05721Fax 274-8982 ANCHORAGE, ALASKA 99501 23 • • 1 2 3 4, 5i 6I 7 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: We'll probably stop at 500 feet where the surface casing is. COMMISSIONER SEAMOUNT: Okay. MR. EHM: Pardon? COMMISSIONER SEAMOUNT: Okay. Thank you. MR. EHM: The schematic that I've turned in for the casing detail on October the 9th showed 13 3/8ths to 88 feet plus or minus, that's just two joints basically, but it will be to refusal. Then it called for 500 foot of 9 and 5/8ths drilled and cemented and then 7 inch to total depth, but the 7 inch was going to come up as a liner and overlap 100 feet in the bottom of the 9 and 5/8ths, but there were such concerns at the Borough Hearing that I changed that and that 7 inches is no longer a liner, it's a casing now and it comes to the surface. So you have this, you have -- through what we think will be the aquifer if we drive through the bedrock you're going to have three sets of casing, one dry, two drilled and cemented in. And from that point to 500 feet you'll have two sets of casing drilled and cemented in and from there to TD we'll have one set drilled and cemented in. COMMISSIONER SEAMOUNT: Okay. So you're pretty sure that you will isolate the aquifer by two sleeves of cas- -- of cement, correct? MR. EHM: Do what? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572lFax 274-8982 ANCHORAGE, ALASKA 99501 24 • ~ 1 2 3 4 5 6i 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER SEAMOUNT: By two layers of cement we'll be separating the aquifer from the wellbore? MR. EHM: The only thing that wouldn't allow for that would be a poor cement job. COMMISSIONER SEAMOUNT: Right. MR. EHM: I have compared casing detail of nearby wells. All of them -- even the latest, the Evergreen CBM and our program is superior to that, any of 'em. In one case Evergreen also had that same number of springs (ph), but they're very close to each other and it doesn't really do that much good. So we feel we'll have the aquifer totally isolated. While I'm on this point I also want to discuss the dewatering. Dewatering does not come from the aquifer as is commonly held. Dewatering comes from the coal bed space and we will not be examining any coal beds shallower than 1,000 feet. We made that promise to the Borough. So we will be working from there down. And if we get our approval from the AOGCC on this, which has not yet been filed, we will not bring that water to surface. The EPA likes to drop it right there and the hang-up actually is how do you measure that amount of water, but the water measurements -- this will all come up later after we drill the trunk (ph) well, but water measurement is due to the fact that it's considered an injection system. This isn't injection, it's just pure disposal. We don't really care how R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 25 • ~ 11 2' 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 much we're pumping in if we can get rid of it in an aquifer and we will have sufficient rat hole to do that. Once we stop encountering coal seams as we're drilling we'll play it by ear and go a ways, but probably won't end up at 3,500 feet, but there will be some aquifer down there we'll have to recognize that we want to go target for injection. COMMISSIONER SEAMOUNT: And I think we'll be constrained to including that in our UIC Program by the EPA. I think that -- well, they will be involved in whether we -- how we measure this and where it goes and that kind of stuff. I think our hands are tied on that. MR. EHM: Right. The dilemma is do we bring it up so we can measure it and then take it back down or what do we do? Keep it down there and never bring it to the surface, but that's for hearings down the road. Once we drill this well we're going to (ph) park it, cement it up and then set about to get the Class 2 injection well permit and the departure into the set (ph) coal beds with the laterals, 'cause we will not know at that time what coal seams are over the potential injection zone limits (ph). Although one party wrote into the Mat-Su Borough wanting us to identify the injection zone before we got there to see how much water it would take. You just simply can't do that. So we would like to dispel, if we can, the fears that the people have about us interfering with their aquifer. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 26 • s 1 2 3 4 5' 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 1 22 I 23 24 25 I would like to touch just now briefly on the waivers that we've requested. I'll say beforehand none of these waivers are those that have never been allowed before. These have been allowed in some form or other and..... COMMISSIONER SEAMOUNT: Well, excuse me, Mr. Ehm, I just want to make -- I want to make sure I've got this clear. You will not perforate above 1,000 feet which will keep you quite a ways below the base of the aquifer and you plan to dispose of the water, what, at TD or in some zone below 1,000 feet? MR. EHM: Close to -- let me go back up and Correct something that you said, if I may, and that is we're not going to be perforating anything up that shallow. We will have composite strings of pipe and they're (ph) about 120 or so feet above our coal bed and that will our departure zone simply because it's much easier to go through a composite than it is steel. (Indiscernible) grind all day (ph). COMMISSIONER SEAMOUNT: Okay. MR. EHM: And the composite specs will be acceptable..... COMMISSIONER SEAMOUNT: Okay, thank you. MR. EHM: .....subject to Mr. Maunder's approval and gave him the specs this morning. Does that answer it, sir? COMMISSIONER SEAMOUNT: Yes, thank you. MR. EHM: Okay. All of these -- as I stated, all of these waivers have been granted in other cases and we think we've made a strong case on all of these. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 27 • • 1 2 3 4 5 6 7 8 9' 10 11 12 13 14 15 16 17 18 I 19 20 21 22 23 24 25 Primary well control has been granted before, but we're going to have a spherical preventer on there under the 13 and 3j8ths and the diverter there and there have been no gas encountered around there (indiscernible) 500 feet. It would be exceptional if we ran into gas at that (indiscernible) depth, but we'll be prepared for it. Our layout calls for dual system. We'll have a tank filled with sufficient water to fill the entire wellbore and we're renting grind mud from Bayroid (ph). We'll have it on location. We will have mud pumps, mixers and if we get into trouble we will set the well in, mud it up and convert to a mud drilling system. Thereafter everything will be mud. We don't really want to do that because we want to have the hole drilled with air. It's less reactive with coal and for other reasons. Mud is also harder to dispose of when you're done. CHAIRMAN NORMAN: Could you expand a little bit on what you mean in your mind by get into trouble? What would you encounter, what events that would cause you to shift over to mud up? MR. EHM: I'm sorry, I slid over that, but two events. One would be gas that we weren't anticipating or high pressure water for emission (ph) water above what we could handle with the..... COMMISSIONER FOERSTER: So for the lay people in the audience as you drill typically you have a fluid that's heavier R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 28 • • 1 2~ 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 than the pressures that you would encounter in a formation and that keeps the well from what we call blowing out or coming in on our -- or starting to flow, but in your situation you intend to manage those pressures by surface pressure on the air and maintaining a lower pressure than the anticipated so that you don't do any damage to the reservoir, but if you encounter something that causes you to start to have a flow into the well then you will use your blowout preventers if you need to or your diverter if you need to, but you will also immediately then switch to a mud system so that you can control the pressures, is that what you're saying? MR. EHM: Correct. COMMISSIONER FOERSTER: Okay. And I want to ask you to remember that for the purposes of this hearing today speak not only to our knowledge level, but to the level of the people behind you that are concerned. MR. EHM: I apologize for that. You..... COMMISSIONER FOERSTER: Well, and it's a hard thing to remember to do..... MR. EHM: Right. COMMISSIONER FOERSTER: .....'cause you're used to this, but remember those people behind you that you can't see that want a simpler explanation. MR. EHM: You did a good job of interpreting my remarks. To back up a little more if you control any formation pressures R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 29 • 1 2 I 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 I 22 23 24 25 with weighted mud that's primary well control and if you have to get away from that than you go to the mechanical, the blowout preventers and so forth and that's the secondary control. We will have a form of primary control on it all the time and that's this spherical preventer, but other wells have been drilled in the last few years out there, notably the two Evergreen wells and they drilled with air and they did not have any problems. We might go a little bit deeper than they do, but it depends. If we run out of the Tyonek formation and run out of coals (ph) we won't go to 3,500 feet. We have no reason to. COMMISSIONER FOERSTER: And again for the purpose of informing the audience, when you say get into trouble, you don't mean that you'll get into trouble, that a catastrophe will occur. MR. EHM: No, no. COMMISSIONER FOERSTER: You mean that you'll have to change your plans and do something different. MR. EHM: Bad choice of words there. No, but if we get either air or fluid pressure -- water pressure, formation water pressure that's going to give us problems with our drilling we will stop and convert. COMMISSIONER FOERSTER: Get into trouble simply means have to change your plans. It doesn't mean..... R& R C O U R T R E P O R T E R S 811 G STREET (907)277-6572/Fax 274-8982 ANCHORAGE, ALASKA 99501 30 ~ • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I MR. EHM: Right. COMMISSIONER FOERSTER: .....all hell breaks loose. MR. EHM: Right. At (ph) the primary, the diverter line size has been given a waiver before and it just seems a little bit excessive. We've got a water well rig out there to have such a huge size diverter line and..... COMMISSIONER FOERSTER: Mr. Ehm, typically we like the diverter to be the same size or a little bigger than the hole size. Is it not possible to get a 12 or 13 inch diverter line? MR. EHM: It could be, but then we'd have to get a bigger spool for coming off the diverter. Diverter line size, we could probably try to get around that, but this is bigger than some others that have been approved out there (ph) And we're requesting a smaller damage adverter (ph). Double gate preventer, for the audience this is another one of the secondary control measures. Double gate simply means that in cellar you have in addition to the spherical preventer, under you have either. one or two solid gate preventers that close completely. Usually one goes around the drill pipe and one that is blind so that if the hole is empty, but these are reserved mostly for high pressure areas. We never encountered that out there and we don't think that is needed. If this were a wildcat well, strictly wildcat we probably would not be asking for these things, but we're certainly not R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 31 • i 1 2 3 4 5 6 7 I gi, 9~~ 10 ~' i 11 ', 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the first ones drilled out there under these conditions to that depth without a problem. And the well bore surveys, it is difficult to run a survey when you're drilling with air. When you're drilling with mud you allow a sound (ph) to go down the well and it's based off in the pipe so it's centered and it's based on inclination survey, but by and large drilling with a air hammer produces straighter holes than one with the mud and a track home (ph) bit. However, also plan to run a gyro-survey into the well which should tell you the same thing, but that is after the fact and then you don't know 500 feet to 500 feet so we're requesting a waiver from that and that the gyro-survey be allowed instead. COMMISSIONER FOERSTER: For the audience the purpose of the inclination survey and the gyro-survey is to? MR. EHM: Several reasons. One is you don't want to hole with a lot of dog-legs or crooks in it if you're going to be running casing in it or working in that hole later, but we don't think we will have that. Our problem could be that we may end up closer to that other property line. We're already closer than we should be, but we don't want to get very much closer. We like to drill a straight hole. COMMISSIONER FOERSTER: So the inclination survey tells you where your path goes as it goes underground? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 32 • • 1 2 3 4 5 6 7 8 9 I 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: The single shot does not. It just tells you if you're getting crooked. A gyro tells you which way you went and how far. COMMISSIONER FOERSTER: So you will have the data that..... MR. EHM: I'm sorry. COMMISSIONER FOERSTER: You'll have the da- -- if you run the gyro you'll have the data that we're..... MR. EHM: Yes, that --..... COMMISSIONER FOERSTER: .....looking for as to where the bottom hole location is and..... MR. EHM: .....that's after the fact and the other is conducted in real time incrementally. COMMISSIONER FOERSTER: So the one you can correct from and the other one your vein (ph)? MR. EHM: That is correct, but you also have a run -- run an oriented one to know which way you went if you are off critical (ph) . COMMISSIONER FOERSTER: Thank you. MR. EHM: Gas well spacing is the biggest issue and it is the only one of these waivers that actually requires a hearing and it's so the offsetting people don't get drained. It is well intended for conventional gas well spacing where you're draining 640, but where you're draining 300 feet it kind of loses its punch. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572JFax 274-8482 ANCHORAGE, ALASKA 99501 33 • • 1 2 3 4 5 6i 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2 5 However, we went through the (indiscernible), put out the notification to the nearby people which was a little difficult. We had to find the owners. It's not like when you're waiting for the Federal Government, State Government or something like that, you've got to go find out where the owners were and we went through the system. Sent them all notifications of the hearing and I brought in and filed an affidavit to that effect here and it's my understanding that none of those four people responded. So as far as adverse possession or drainage it, sort of, makes that situation moot. H2S detection, we actually believe that the hand-held ones are better in this case because they're right on the man (ph) where you should know it. COMMISSIONER FOERSTER: Let's go back and do H2S 101, okay? MR. EHM: Hydrogen sulfide is something you're not going to encounter in wells. And I was on the only well on the North Slope or in Alaska for that matter that ever really had hydrogen sulfide and it's a killer. You need to detect it early and you need to detect it where hydrogen sulfide might accumulate which is under the rig floor, around the drillers drill works, in the dog house and places like that, but none of these are there on a water well rig. The dog house is sitting off to the side. It's not even associated with the drilling of the well that closely. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 34 A ~ 1 2 3 4 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In the back of the water well rig which I'm sure you've all seen it's very open. It won't trap any gas so by the men carrying their own individual detectors they will actually be safer than if we had 'em on the rig because they're not going to register right on the rig, but they will on the people. COMMISSIONER SEAMOUNT: Well, Mr. Ehm, does -- has hydrogen sulfide ever been encountered in the Cook Inlet Basin? MR. EHM: Not to my knowledge. I was on the Endicott wells, if I might go back there a little bit, and mud loggers coming up from California always ask have you ever had any H2OS, nope, we never have it. We got it on that well and it was a mess. Geologic data and logs, there a lot of wells that have been drilled around there. A certain amount of useful information has come from some of 'em especially the last two Evergreen wells where they cored 'em. You get pretty good well logs, but we don't think that that necessarily needs another set of samples for here. That is all that I planned to speak about. If you'd like for me to expound on anything else or expand on something I said, I'd be happy to do it. CHAIRMAN NORMAN: Commissioner Foerster. COMMISSIONER FOERSTER: I just have one question, you mentioned that you had nine permits that you had to get from various agencies what is the total dollar value of any bonding R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 35 ~ • 1 2 3 4, 5I 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that you have to do? I know you have to get a bond from us. Is there anyone else that you have to get bonding from and what's the total value of your bonding requirements? MR. EHM: The Borough, I believe therr's is 30,000. COMMISSIONER FOERSTER: Three thousand? MR. EHM: Thirty. COMMISSIONER FOERSTER: So 30,000 from the Borough and 100,000 from us. MR. EHM: Yes. COMMISSIONER FOERSTER: COMMISSIONER SEAMOUNT: Okay, thank you. That's 100,000 for one well. COMMISSIONER FOERSTER: For one well. MR. EHM: Yeah. 200,000 for continuous wells -- or more than one and you drill your second one you've paid the 200,000 anyway. COMMISSIONER FOERSTER: Okay. MR. EHM: I might just mention those permits by name. Of course there's this, AOGCC permit here which is Permit to Drill. Then there's the Department of Environmental Conservation and Air Permit that's still being -- it's pending. Department of Environmental Conservation C-Plan, which the C is contingency plan for oil spills and there's never been any oil spills in that part of the Cook Inlet Basin north of the -- where the water itself south of the Castle Mountain Fault east of Lewis River and west of Knik River, but we have to go R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 36 • • 1 2 3 4 5i 6 7 8 9i 10 11 12 13 14 15 16 17 18 I 19 20 21 22 23 24 25 through that request every time. DEC Solid Waste also and so that one is still pending, what we do with our products. Then there's the Department of Natural Resources -- rather the Division of Mining, Land and Water where get our water usage permit. And then we have the Department of Transportation where as I mentioned once we put a commercial vehicle on that farmer's farm road it becomes a commercial road and so we have to go back and bring it up to the DOT code. Blacktop it 30 feet in from the fog line and all of that. We're going to bury a power line from MEA power pole there out to the well site and we'll also have to get a permit for that, but that's not a drilling permit. The Department of Natural Resources, the State Historical Preservation Office we have to get one of those to show that we're not on any artifacts. And we have the Mat-Su Borough permit and we have the U. S. Corps of Engineers permit that says we're not in any wetlands. And those are the permits that we had to file. COMMISSIONER FOERSTER: Thank you. COMMISSIONER SEAMOUNT: I'd like to ask about your plans beyond this initial wellbore. I understand you're going to -- you may go to a -- what's it call, a fishbone pattern or what is it called? MR. EHM: That hasn't been determined yet. Fishbone is R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 37 • • 1 2 3 4 5 6 7 8' 9i 10 I 11 12 13 14 15 16 17 18 19 20 21 22 23 24 I 25 I more expensive because it takes more time. You have to pull back, stop and turn. COMMISSIONER SEAMOUNT: Um-hum. MR. EHM: The pitchfork is more continuous, less shoulders. We're talking about the patterns of drilling these lateral wells. If you were to look down on it what do the patterns look like. If you come out of the main wellbore up the side and you depart you don't want to spend a lot of time backing up and turning, backing up and turning 'cause time is money so you try to go as far as you can without backing up. Well, the pitchfork probably lends itself best to that. So as you come out and go out the two sides and down and then back up a little bit and then go down the two middle ones, all from the same departure out of the wellbore. Now these -- I'll have a plan for you when we come in for that, but we're going to drill that with air as well if we can. Four inch hole. Put 2 and 7/8ths tubing in it, one of two types. Either predrilled steel or predrilled poly. And at one time I decided the poly wouldn't be economically feasible because you would spend so much time fusing each of those joints. But some other people say you can fuse those ahead of time, lay it out there in a big circle in the yard and then let her all down at once. That's considerably cheaper if you can do that. Those will be brought over to the wellbore and then will be cutoff and they will not be connected live into the R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 38 • ~ 1 2 3~ 4~ 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I wellbore. Now, someone mentioned that we were going to allow the methane to percolate to the surface, that's not correct. It's coming up through the casing it's not percolating anywhere and it's all controlled. COMMISSIONER SEAMOUNT: So you might do a pitchfork type of project in a coal seam and you could encounter up to two dozen coal seams in 3,500 feet. Do you plan to do that a number of times off of the same mother bore? MR. EHM: Yes, but the nearby wells don't say we have a dozen coal seams. I think that's optimistic. COMMISSIONER SEAMOUNT: Okay. But you certainly have more than one? MR. EHM: Yes. If we're getting so much gas out we can't get anymore out it would behove us to drill another well I suspect. COMMISSIONER SEAMOUNT: That's all I have. 3200 Tape 2 0050 CHAIRMAN NORMAN: Commissioner Foerster. COMMISSIONER FOERSTER: Mr. Ehm, what -- you know, this sounds really foreign to some people here, is there other experience in other places within the State of Alaska of doing these multi-lateral type wells? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 39 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: Scientific Drilling, Incorporated who is going to be our directional driller has done thousands of those in the Lower 48. COMMISSIONER FOERSTER: Okay. And that was my next question is in the Lower 48. MR. EHM: Yeah. COMMISSIONER FOERSTER: So the person -- or the company that's going to be doing this Complicated process has lots..... MR. EHM: Yeah. COMMISSIONER FOERSTER: .....of experience. And how much of that experience is in coal bed methane? MR. EHM: I think -- well, several thousand wells are all in coal bed methane. COMMISSIONER FOERSTER: They're all. So the operator..... MR. EHM: I'm sure they do it elsewhere like they do on the Slope, but there's..... COMMISSIONER FOERSTER: Okay. MR. EHM: .....a lot it in coal bed methane. COMMISSIONER FOERSTER: So for the sake of the audience, the State of Alaska has lots of experience with multi-lateral drilling. This agency sees it all the time and it's not a foreign operation,..... MR. EHM: That's correct. COMMISSIONER FOERSTER: .....but the operator -- the drilling company that you're going to use has lots of R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 40 • ~ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 experience doing this in other applications, does it not (ph)? MR. EHM: Right. Multiple laterals in coal bed seams in Alaska is new only to the coal bed seams. In fact, on the Slope I understand that a lot technology that's being used worldwide was developed up there. COMMISSIONER FOERSTER: And one more question. You mentioned that in the Lower 48 they started out doing things differently because they were in places that were remote and, you know -- but I think for some of the concerns of the audience and this agency a big question I have is what experience has the Lower 48 had in coal bed methane production as far as threats to the fresh groundwater? Are you aware of any operations that have had contaminations of fresh groundwater? What have those been? Why have they been and what are you doing differently to make sure that doesn't happen? MR. EHM: I don't have any comment on that, but I know that they were drawing so much water out of the coal seams on BLM land in the Rockies that BLM made them quit. They were selling it to the farmers 'cause it was that fresh they could use it, but they were drawing down the water so much that BLM said that's a little bit too much. COMMISSIONER FOERSTER: But you guys aren't expecting your water to be potable, are you? MR. EHM: That's correct. The Lappi well was -- although R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 41 ~ • 1 2, 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 I 22 23 24 25 reports I saw and conferences said it was fresh, I tasted it and it wasn't. COMMISSIONER FOERSTER: Didn't your mother ever tell you not to taste anything that came out of an oil well? MR. EHM: Four of us walked up to this wellbore that was flowing. You could tell who the land man was, he stood there and watched the three geologists taste the water. COMMISSIONER FOERSTER: That's all I have. Thank you, Mr. Ehm. CHAIRMAN NORMAN: Commissioner Seamount, anything else? COMMISSIONER SEAMOUNT: I have nothing more. CHAIRMAN NORMAN: Mr. Ehm, I have a couple of questions that get a bit downstream, but for produced water reinjected relatively deep, what is the confining barrier that would prevent that water from migrating upward into the water table and affecting shallower sources of fresh water? MR. EHM: Well, the Tyonek formation has numerous barriers throughout it that would preclude that, mud stones and shales, even soap stones, but it would be probably the most porous one we could try to find. CHAIRMAN NORMAN: And those will be -- that's the type of thing that's looked at by this Commission in..... MR. EHM: Correct. CHAIRMAN NORMAN: .....approving an order, but --..... MR. EHM: Correct. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 42 • • 1 2 3 4 5 6 7~ 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIRMAN NORMAN: .....so I'm getting a little bit ahead of it. And also looking again way down the road, if you are successful in making a good commercial discovery how far are you away from a pipeline for selling the gas? MR. EHM: Assuming you had your illustrations there..... CHAIRMAN NORMAN: I do, I have a plat right in front..... MR. EHM: .....it's on there around 1,100 feet. COMMISSIONER SEAMOUNT: It goes to a high school I think. COMMISSIONER FOERSTER: So there is an existing gas line there? MR. EHM: You can see the purple (ph) line that comes off of the location. It has one dogleg and it enters the black line down just above East Colony School Drive..... CHAIRMAN NORMAN: Ah, yes, I see. MR. EHM: .....on figure 3? CHAIRMAN NORMAN: Um-hum. (Affirmative) MR. EHM: And that is -- if you go with the circles is between 1,320 and 1,500 'cause that's the radius of those two circles. CHAIRMAN NORMAN: Okay. I see it, good, thank you. MR. EHM: Um-hum. (Affirmative) CHAIRMAN NORMAN: I don't believe there are any more questions at this time from the Commission. Do you have any final remarks you'd like to make? We appreciate your presentation and answering patiently our questions. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 43 ~ • 1 2 3 4 5 6 7 8 9~ 10' 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: We realize that because of the certain past history in the Valley on CBM that we're being scrutinized a little greater. All the state agencies are looking at -- looking down their nose a little at me now. We'll ultimately get it, but it's harder than it was. I'm not -- I've got no problem with that. COMMISSIONER FOERSTER: Mr. Ehm, I'd like to say that I don't -- that this agency isn't looking down its nose at you, we -- but we do want to be very, very careful and we want to assure the public that the concerns that are within our jurisdiction are adequately addressed and..... CHAIRMAN NORMAN: A poor choice of words again on my part. COMMISSIONER FOERSTER: But we are definitely not looking down our noses at you. We don't --..... MR. EHM: I didn't mean it that way. COMMISSIONER FOERSTER: .....we don't do that to anyone. MR. EHM: More scrutiny. CHAIRMAN NORMAN: Okay. Mr. Ehm, we thank you for the testimony and I would ask to the extent that you could possibly do so that you remain until we conclude. Something might come up that we would want to recall you and have you clarify. So I'll now ask if there are other persons that wish to offer testimony? Did I see a hand -- please, sir. MR. SIMS: Could we ask questions of Mr. Ehm? CHAIRMAN NORMAN: You may come forward and state your R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572lFax 274-8982 ANCHORAGE, ALASKA 99501 44 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 questions, yes. And then what -- the reason we will do it that way is the Commission may have some other questions and so we like to collect them all, but if you'll come forward, state your name and then you can present whatever questions you have. And if the Commission feels that they were not previously addressed then we will do our very best to get answers. COMMISSIONER FOERSTER: And be related..... CHAIRMAN NORMAN: Why don't you come forward. COMMISSIONER FOERSTER: And your questions need to relate to the things that we have jurisdiction over. CHAIRMAN NORMAN: Could you please state your name for the record, sir? MR. SIMS: Steve Sims. CHAIRMAN NORMAN: It that Stephen with a V or a P or..... MR. SIMS: P-h. CHAIRMAN NORMAN: P-h, okay, Stephen Sims, all right. MR. SIMS: S-i-m-s. CHAIRMAN NORMAN: All right. And your address, please? MR. SIMS: 1769 Wickersham, Anchorage. CHAIRMAN NORMAN: Anchorage. All right, sir. MR. SIMS: I see from -- that they're going to -- that they want a waiver of the permit to collect drill cuttings and I was wondering what they're going to do with those drill cuttings if you're drilling down to 3,500 feet in a circumstance of -- you bring up quite a few cuttings and if you R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 45 • ~ 1 2 3 4 5'' 6 711 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2 5 ', spread them on the surface you've ruined the topsoil forever or at least for the foreseeable future. I happen to own a farm out at Point MacKenzie and they're also -- Fowler's out there collecting signatures from farmers because these are 300 and 600 acre parcels so that they don't have to go to so many people. And on my land out there I have a 6,500 foot gas well that was put in, in 1965 or '66 by the company that Mr. Fowler used to work for, Shell. And, in fact, I've got the drill log from that. And I know that from looking at my land out there that nothing will grow where the casings were spread or the drilling mud or betinite or whatever it was that -- in that scenario those farms out there have 18 inches of topsoil to two feet of topsoil, good loess laid down by the winds and so forth and here we are 30, 40 years later and nothing will grow in that area of the farm where this stuff was spread. I see that they are asking for a waiver of drill cutting requirements and I'm not sure what those drill requirements are, but I would like to know what provisions Mr. Fowler is making. And I don't know who is going to do the drilling for him or for Fowler Oil & Gas, but what they're going to do with those drill cuttings because that can present permanent damage to the surface rights of people that live in the area and for the citizens of Alaska in perpetuity. R& R C O U R T R E P O R TER S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 46 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 i 25 CHAIRMAN NORMAN: Sure. No, that's a very understandable question and we'll note it. And do you have -- what we want to do is collect the questions and then we will either get them or in follow-up we'll get them. Your next question? MR. SIMS: That's it basically. CHAIRMAN NORMAN: Very well. COMMISSIONER SEAMOUNT: Could I make a comment on..... CHAIRMAN NORMAN: Yes. COMMISSIONER SEAMOUNT: Where we're concerned with drill cuttings is for scientific purposes. What Fowler is looking for is being exempted from just less than a fistful per every 30 feet I believe it is and it doesn't address where the majority of the cuttings are going to be going. COMMISSIONER FOERSTER: It only addresses collecting some samples for our scientific evaluation for gaining a better understanding of the geology in the area. But DEC is..... COMMISSIONER SEAMOUNT: I believe the DEC or the Borough would have jurisdiction over what to do with the majority of the cuttings. MR. SIMS: And when does the DEC permitting going to go forward? MR. EHM: DEC Solid Waste handles that. We have an application in there to process those cuttings, but the amount we're talking about here is representative in cuttings is probably less than one percent of what the wellbore produces. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 47 • • 1 2 3 4 51 I 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER FOERSTER: For this for what we..... MR. EHM: For this..... COMMISSIONER FOERSTER: Right. MR. EHM: .....sampling here that you're talking about. COMMISSIONER FOERSTER: Right. I don't -- I think your concern is better addressed by the DEC. MR. SIMS: Okay. Well, I would just like to be made aware of when those hearings are going to be so that they can be addressed at that point in time. CHAIRMAN NORMAN: We have -- your question is how will the drill cuttings be disposed of and so we -- we've noted that and what we'll..... MR. SIMS: Thank you. CHAIRMAN NORMAN: .....do is try to collect all the questions and Mr. Ehm then you'll have the opportunity to respond or we can ask follow-up, but, thank you, Mr. Sims. Are there any other persons that wish to address the Commission or wish to pose questions of the operator? Yes, Ma'am. MS. SIMS: Yes, sir? CHAIRMAN NORMAN: Would COMMISSIONER FOERSTER: we're got a lady on the line she thought you were talking CHAIRMAN NORMAN: Oh, f~ R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 you please state your name..... Wait, wait, wait, we've got -- who wants to talk also and I think to her. ~r the person that's on the line we 48 1 2 3~ 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • will take you next..... MS. SIMS: Okay. CHAIRMAN NORMAN: .....so if you can just stand-by for a moment. MS. SIMS: Sure. CHAIRMAN NORMAN: Yes, Ma'am. MS. PEABODY: My name is Mimi Peabody and I'm here today to represent Friends of Mat-Su a local non-profit organization in the Mat-Su Valley. And first I'd like to thank you all for giving us the opportunity to come before you and provide testimony and to make this a more open and honest process. Four years ago when Evergreen came to the Valley our organization played a major role in educating the public about what coal bed methane was and what it does. We also worked with the Mat-Su Borough and with DNR on coal bed methane issues and regulations when Evergreen was here. Today we're concerned because it seems like the AOGCC still has not streamlined many regulations to deal specifically with coal bed methane development which is why it seems like developers must apply for permits with many exceptions. I understand that you all will be doing your best today to look through the applications and the waivers and protect what you can and what is under your purview. We still feel like it might be beneficial if the AOGCC was able to create some very R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 49 • • 1 2 3 4 5I 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 specific guidelines based on what's happened in the Lower 48 and with all of the problems that coal bed methane development has had in the past. We do feel like the Borough's permitting process is very stringent, but again it only covers a certain portion of the development. We feel like the technical expertise that the AOGCC offers and the protections it can offer are equally important during this process. And, again, most of our members are concerned with the fresh drinking water and the impacts that coal bed methane potentially has on that and the wastewater that will be produced whether it's produced and then whether it stays in the ground or not is still an issue and our members are very concerned about that. So we just urge you to weigh each of the exceptions with equal weight. Look at them, make sure that when Fowler Oil & Gas goes to develop coal bed methane in our Valley that they do it well like they're expressing that they will and that it°s as safe and clean as possible under your jurisdiction. And we also want to thank Fowler Oil & Gas for being very honest and open with providing us the information that we asked and we talk to them regularly and for being good members to our community as far as being very accessible so we would just like to offer that thanks as well. Thank you for your time. CHAIRMAN NORMAN: Thank you, very much, Ms. Peabody. Let R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 50 • • 1 2 3 4 5j 6i 7' 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 I 23 I 24 25 me see if the Commissioners have any questions. Commissioner Seamount. COMMISSIONER SEAMOUNT: Well, I have a comment and a question. MS. PEABODY: Um-hum. COMMISSIONER SEAMOUNT: Any time that you want to get some information feel free to call our Staff. They're very accessible or they want to be very accessible. And the question I have for you is Friends of Mat-Su, is that the same organization that Mr. Chris Whittington Evans (ph) works in? MS. PEABODY: He's one of our members. COMMISSIONER SEAMOUNT: Okay. MS. PEABODY: Um-hum. COMMISSIONER SEAMOUNT: He's submitted this by e-mail this morning that he..... CHAIRMAN NORMAN: Yes. COMMISSIONER SEAMOUNT: .....wants to put into the record so we don't want to forget about that and thank you, Ms. Peabody. CHAIRMAN NORMAN: Thank -- thank vou. MS. PEABODY: You're welcome. CHAIRMAN NORMAN: And if there is no objection we will put this in the record. Mr. Ehm, have you had an opportunity to see these comments? R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 51 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EHM: No. CHAIRMAN NORMAN: Then let me ask the Commission's special assistant to make a copy for you and before we put it in the record we'll give you an opportunity to review it. COMMISSIONER FOERSTER: Here, just give him that copy. CHAIRMAN NORMAN: Good. And you can take -- we won't put it in at the moment, but ordinarily we will receive into the record all comments. The only reason I'm giving you this opportunity is this one came in just this morning. Are there any other persons present who have either comments or concerns or questions that they would like to place into the record? MS. SIMS: Yes, I do. CHAIRMAN NORMAN: Oh, yes, Ma'am. We'll go now to the person on the phone. And may I ask you, please, to state your name and your address? MS. SIMS: Yes, my name is Candy Sims. I live at 4305 Oakwood Drive, Palmer and I'm one of the 1,300 homeowners in the targeted area affected by the (indiscernible) drilling. Can you hear me? CHAIRMAN NORMAN: Yes, for --..... MS. SIMS: I had difficulty hearing most..... CHAIRMAN NORMAN: .....excuse me, Ms. Sims..... MS. SIMS: .....of the previous testimony so I'm wondering if probably (indiscernible) if when I'm through giving you my R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 52 • • 1 2 3 4i 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 I 23 24 25 questions if I could possibly get a copy of the transcript so that I can actually know what I was actually hearing? CHAIRMAN NORMAN: Yes, Ma'am, if you will contact the Commission's special assistant, Jody Colombie she'll assist you. MS. SIMS: I've talked to Jody, um-hum. CHAIRMAN NORMAN: Sure and she will assist you in obtaining a transcript following the conclusion of this hearing. Could I ask you, please, again to state your address? I didn't catch it all. MS. SIMS: Yes, it is 4305 Oakwood Drive, Palmer, Alaska, 99645. CHAIRMAN NORMAN: Did you say Homer, Alaska? MS. SIMS: Palmer, P-a-1-m-e-r. CHAIRMAN NORMAN: Okay, all right. MS. SIMS: Are you ready? CHAIRMAN NORMAN: Yes, please. MS. SIMS: Oh, okay, it's just -- it's difficult to hear. I have several concerns and I do appreciate the opportunity to speak today. Most of my concerns actually are questions and I did manage to hear the part where you said you wanted to gather all the questions first so why don't I just read to you my questions and then I'll wait to hear from you folks. The first question deals with the issue of water. I sent you folks a letter on October 17th explaining our particular R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 53 • ~ 1 2 I 3I 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ~ situation with our well water where we're located. We have problems with our well water. And as I explained in my letter I was concerned what action will be taken to protect the existing homeowners wells from being affected by Mr. Fowler's drilling process? I'd like to know where the water that is pumped out is going to, who will test it for contaminates before it is released back into the ground surface and most importantly what's to keep Mr. Fowler's process from running our well dry. And obviously who would pay for (indiscernible) if that indeed occurred? We need water for survival as well as for keeping up our investment in our home. If our well water is affected or goes dry who does the homeowner sue for damages? Would it be the State for allowing the experimental process? Would it be Fowler Oil & Gas Company which could eventually claim bankruptcy from these kinds of lawsuits since there's approximately 1,300 homeowners in the targeted area or would it be the Mat-Su Borough which relies on our property taxes to continue business as usual, the same Borough that required only a $50,000 bond of Mr. Fowler's company to experiment in our area. Exactly who will be accountable for any and all damage Mr. Fowler's experimental drilling process might create? Each and every homeowner needs that answer should something go wrong and R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 54 JAN-29-2008 07:38 AM 1 2 3 4 5 6 7 8 9 10 11 ~.z 1 13 14 15 16 17 18 19 20 21 22 ~3 24 z5 need far a lawsuit result. • P. 02 My second question, the second question of (indiscernible) h s to do with the various waivers dir. Fowler is asking of the A asks OiJ. and Gas Commission. Those rules are Currently in p ace to protect the land and the environment. Tt appears Mr. F wler is using his experimental process as a reason to ask for c ange.s in those rules. The problem with such a request is that if the Commission allows for those waiverq a precedent will be made and any fl~ture company could use that precedent to bypass the current system and rules that are in place, a company that. might drill i~ a different way and be even mare damaging to the existing residential neighborhood and environment, By' granting these waivers the Commission takes away any accountability to the current homeowners and again we are faced with the question who to sue should something go wrong. T do have a suggestion to encourage good faith business practice, that would be to up the bond money Mr. Fowler or a.ny other Company is required to pay. personally as our home is our only real financial asset I would request that the band be set at the full amount of the assessed value of each and every property in the targeted area. If Mr. Fowler is so sure of his product and the value of the Coal methane he might receive (ph) fxom drilling th.a.s larger amount £or accountability purposes could and would alleviate the average homeowner's fear of R 8 R COURT REPORTERS B11 G STREET (907)277.0572/Fax 274-8982 ANCHORAflE, ALASKA 99501 55 JAN-29-2008 07:38 AM ~ P.03 III 1 2 3 5 6 7 8 9 ~. 0 11 12 13 14 15 Z6 17 18 '19 20 zi 22 23 2~ 25 1 losing property va~.ve from his exper~.menta,l process . Again, a X50,000 bas,d does nothing to alleviate that fear ~ and hold this company accountable, It's not even enough for { one homeowner's property lawsuit claim, Multiply that by 1,300 j ', and it still doesn't match the tax assessed value of our combined properties, My third question, a question that regards zoning, As I stated, in my letter we live in a residential neighborhood known ~ far its bedroom Community and good schools. How will the j zoning of our targeted area be affected if, indeed, Mr. Fowler is allowed to drib. for industrial business purposes? I Again, this Cau~.d affect the property vaJ,ue of our I I original investment. And we purchased this home -- we actually ~ had it built 12 years ago. We picked the land and had we know that there was going to be a potential £ar drilling in this area we never would have had our home built. here. M fourth uestion has to do with dama e control and Y q g i emergency response. It is still not clear how the coal methane i gas will be diverted to Ensi~ar for t~iem to distribute. If I ~~ there is a resu~.tant break in the line and possibly explosion or other immediate negative impact to the surrounding area does j the Mat-Su Borough h.as a system in place to properly handle I i ~ such a disaster and what portion of that system is ~nstar's responsibility and what portion is Mr. Fowlex~'s responsibility? j Obviously a system needs to be in place before axzy xisk R & R COURT RE._PO.R_TERS 811 C STREET (907)x77-0572/Fax 274-8982 ANCHORAGE, ALASKA 995D1 56 • • 1 2 3 4 5 6 7 8' 9, 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 taking actions are taken to assure those of us in the targeted area that we would be safe and protection, especially the nearby schools housing thousands of children weekly. My fifth and final question is what is to keep Mr. Fowler from setting up shop, drilling, perhaps damaging the land in the process and then when problems arise either claiming bankruptcy or selling to another company to continue with damage control or not. Will the Commission set a time allotment to accommodate the homeowners fear that once damage is created by a business, the business cannot just (indiscernible) and leave us with the burden of picking up the pieces. Four homeowners who have given Mr. Fowler the power to drill on their property are not representative of the other 1,300 homeowners in the targeted area that do not own their mineral rights. If Mr. Fowler is so sure of his product why doesn't he purchase one of the properties and experiment on his own property proving accountability to all homeowners in the affected area. Finally I urge you to treat our land as you would a human body receiving surgery using the lease possible evasive methods required. And that's basically what my questions are and my concerns. CHAIRMAN NORMAN: Thank you, Ms. Sims. I have noted here on our list of questions -- and, Mr. Ehm, when we get them R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 57 1 2 3i 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • • collected then should you care to do so on behalf of the operator you may address them. You had indicated here a concern about protection of fresh water and there's been prior testimony on that. Questions by I the Commission itself. And additionally you have indicated a concern regarding if the Commission would grant waivers or exceptions. On that I would simply observe that the regulations are set up. They're somewhat devote regulations. They apply statewide, but they do recognize that there are situations and circumstances where waivers might be appropriate upon a proper showing and the Commission does throughout the State of Alaska on all of the thousands of wells following hearings like this and proper showing we do grant waivers. So as far as any precedential value is concerned it's already built into the regulations and the law the opportunity for a waiv- -- seeking a waiver. On the zoning, damage control upon sale to Enstar and so forth, those are areas that are outside what can be addressed or accommodated by this Commission. However, if, Mr. Ehm, you want to respond in this forum you can do so, but I want to flag those as being matters that are outside our condition. And then finally I do note your expressed concern about the size of the bond. Ordinarily on one well generally without exception our amount is $100,000 as is provided in the regulations, so -- but I'll note that. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 58 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And I'll ask now if Commissioner Seamount has any questions or comments? COMMISSIONER SEAMOUNT: No, I guess I don't at this time other than welcoming you to call our Staff any time. Some of those -- some of your questions aren't under our purview, some of them are and we're more than willing to talk to you. And I'd just like to thank you for your testimony. MS. SIMS: Well, thank you very much, sir. CHAIRMAN NORMAN: I'll ask now if Commissioner Cathy Foerster has any questions? COMMISSIONER FOERSTER: Well, I want to echo what Commission Seamount said about feeling free to call any of our Staff and I'd say that you can also call me any time you'd like. A lot of the variances or waivers that they're requesting have to do with the drilling activity. We have a very qualified, experienced drilling engineer who can answer your questions. I'm an engineer and either one of us will be happy to take your call any time you have any concerns. MS. SIMS: That would be great. I can barely hear you so I'm assuming that will be noted in the testimonial that I receive. CHAIRMAN NORMAN: It will, but just to repeat it, Ms. Sims, Commissioner Foerster thanked you for some very well delivered testimony, appreciated your interest and she R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 59 • • 1 2 3 4, 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2 5 ~, indicated she is the official engineering commissioner on this three commissioner body and she stated that she would be pleased and your calls would be welcomed at any time directly to her. Commissioner Foerster, would you care to give your phone number for the record? COMMISSIONER FOERSTER: Certainly. My phone number here at the AOGCC -- the best way to get me is to call the main number, 793-1221 and that will ring directly to our special assistant and she can find me and get you transferred directly to me. MS. SIMS: Was that 793-1221? COMMISSIONER FOERSTER: Yes, Ma'am. CHAIRMAN NORMAN: All right. Thank you very much, Ms. Sims and at the end of gathering questions then we will ask Mr. Ehm to respond to the extent the operator cares or is able to do so on these points. Thank you very much for your testimony. Are there any other persons present offer any testimony? I think we've been at this about an think in order for efficiency so that we make the best use of everyone's time I'm if there's no objection that we take a 1~ Commission will review the questions and now who would like to hour and a half and I don't replicate, we going to suggest now ~ minute recess. The try to collect them, R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 60 • • 1 2 3 4 5 6 7 8i 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I as well as any remaining questions the Commission might have for the operator and applicant and then we will come back on the record in 10 minutes and following that I think we can wrap up. Without objection we'll have a recess for 10 minutes. (Off record - 10:34 a.m.) (On record - 10:46 a.m.) CHAIRMAN NORMAN: I'll call this hearing back to order. The time is approximately 10:46 a.m. on the morning of January 15th. The Commission has taken a brief recess to collect comments and try to eliminate duplication in any final questions. Ms. Sims, are you still on the line with us? MS. SIMS: Yes, I am. CHAIRMAN NORMAN: Right. If you at any point have difficulty hearing anyone speaking just say so and then we can place this phone so that you can hear better. I had said at the out-..... MS. SIMS: Well, I appreciate that, thank you. CHAIRMAN NORMAN: You're welcome. Mr. Ehm, we have one question for you and that would be to ask you if you would, even though it's not directly within the purview of this Commission, if you could elaborate a bit on the disposal of cuttings? Commission Seamount explained that the waiver of cuttings R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 61 • • 1 2 3 4 5 6 7' 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 insofar as this Commission is concerned relates to providing samples at various intervals as a well is drilled down to depth. And through this process in drilling thousands of wells in the State of Alaska we learn more and more about the subsurface geology so it mainly is a scientific requirement for the State of Alaska, the people of Alaska to benefit from the drilling. And a slightly different concern was expressed, although a very understandable one about if there are the cutting how would they be disposed of and to the extent that you can and would care to do so I think it might be helpful now for you to address that and where you are in your permitting with DEC? MR. EHM: Are you talking about the bulk of the cuttings or the sampling for..... CHAIRMAN NORMAN: Yes. The..... MR. EHM: .....the library (ph)? CHAIRMAN NORMAN: .....bulk of the cuttings. MR. EHM: The bulk of the cuttings. The current plans call for us to get two, probably three of the mud tanks from Rain for Rent (ph) and we go through the same process they do. The tanks are sealed when they're closed and we will allow the water to drain off through their vents that are there. And the cuttings will become solidified and this won't be real time as we're drilling. We'll get enough to store them all until the well is done and then they will be sampled again by Imtrix (ph) R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 62 • • 1 2 3 4 5 6 7 8 9' 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and if they're free and clear then they would be taken to the Palmer landfill. CHAIRMAN NORMAN: So the final disposition of all cuttings will go to the Palmer landfill..... MR. EHM: Yes. CHAIRMAN NORMAN: Very well. MR. EHM: $50 a ton they will charge for that. CHAIRMAN NORMAN: All right. COMMISSIONER SEAMOUNT: Will the landfill use them for any beneficial purpose? MR. EHM: I don't know, but told me would take them. CHAIRMAN NORMAN: Okay. Then additionally another area of concern and questioning was understandably overprotection of fresh water and that very much is a concern of this Commission, also. And I wanted to review for several of those that made comments there -- there was a fairly good amount -- has been a fairly good amount of testimony and information put forth about how sources of -- underground sources of fresh water will be protected in the drilling of the well through the casing, cementing and so forth and I won't try to summarize all of that. Additional a disposal of produced water or other substances underground will be the subject of an entirely separate proceeding and that will fall under the Alaska Oil and R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 63 • • 1 2 3 4~, 5 6, 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Gas Conservation Commission's responsibilities administering the Federal Underground Injection Control Program. There's a whole body of regulations and requirements in place to ensure that whatever is put into the ground and disposed of at a location where it did not originate is done under, I would say, a high level of oversight. The end result of that will be the Commission entering, if we're satisfied with the presentation of the application, an Area Injection Order allowing injection and putting conditions and limitations on that. That would be done pursuant to a Public Notice that an application has been made for injection for injection order. There will be an opportunity to comment again before this Commission and that really is not yet ripe, but I do want to identify that this will not be the only opportunity for persons that do have that concern to express themselves and the Commission at that time will also inquire much more heavily into some of the points that we have addressed. A third point that I want to make concerning fresh water relates to the requirements of Alaska law and I'll specifically cite it so that those of you who have expressed some understandable concerns about protection of water would have it in mind. That relates to the provisions of Alaska Statute 31.05.035 and that is subsection (j)(1)(d) and I'll read it. As a condition to approval of a permit to drill a well for R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 64 • • 1 2 3 4 5 6' 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 production of coal bed methane, and here I'm paraphrasing, the AOGCC will require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity. The Commission shall make the results of the water well testing program available to the public. So, again, that is something that will be done at such time as there is an application for a permit to drill a well and that before that well can be allowed to produce the Commission will require the study under the law that I cited to you. I cite that also to you to assure you, again, that this is not the end of the Commission's inquiry or oversight. Indeed, the Commission's oversight will go on for the life of this well and any penetrations into this reservoir. That's part of our responsibilities, but there will be an opportunity to comment. The operator did indicate that there is right now a well identification and monitoring and gathering of baseline data that may well satisfy the Commission's own requirements or it may not. We will have to see at that time whether that does, but the important thing is that the Commission must be satisfied that the fresh water of Alaskans is protected and the Commission intends to discharge its responsibility in that regard. At that point -- at this point I'm going to see if -- I'll see if there are any final comments by the operator and then if R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 65 • • 1 2 3 4 5 6 7 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Commission Seamount or Foerster have any questions and then it will be appropriate to adjourn. It will be our intention to leave the record open for one week. I -- let me ask right now on the record, perhaps, 10 days so that persons desiring to obtain a transcript would have an opportunity to review it and something they see in the transcript might trigger a desire to supplement the record. Is that agreeable, Commissioner Seamount? COMMISSIONER SEAMOUNT: Agreed. CHAIRMAN NORMAN: Commissioner Foerster. COMMISSIONER FOERSTER: That's fine. CHAIRMAN NORMAN: All right, very well. So we will leave the record open for 10 days or until close of business on Friday, January 25th for additional comments and those may be -- any additional comments by the operator or any other persons interested in offering comments or raising points that they want the Commission to consider. Mr. Sims, you've asked to be recognized? MR. SIMS: Yes. CHAIRMAN NORMAN: Will you come forward again, please? MR. SIMS: Yes, I only have one other question and that is why isn't the Commission or the State of Alaska requiring more insurance or bonding? Anyone can form an LLC for $100 filing fee. You are then granted immunity, legal immunity and you get all of the benefits. You can run around and create any kind of R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 66 • • 1 2 3 4 5 6 7 81 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 entity you want and if you can find participants and you can do what you do and then when things go array you can -- you have no personal liability and the entity itself is of -- has -- it's just a corpse that there's nothing to be gotten from. And a $100,000 doesn't even begin to cover the clean-up costs or the risks involved with this sort of thing. I'm just wondering why the State of Alaska isn't requiring insurance, you know, which costs a small amount for a premium on a large project and -- or a bond or something or other where there can be millions of dollars of coverage for people that have concerns if they're impacted by this 'cause the State of Alaska isn't going to bail these individuals out nor is Fowler who is an LLC and for -- you know, for all we know they have no -- no assets other than being a paper LLC. So that's my question. It's more of the Chairman and the Commissioners so why this is so in Alaska if they've set up all of these rules and regs to protect us the citizens of the State of Alaska. CHAIRMAN NORMAN: Sure. I'll direct your attention, Mr. Sims, to 20 AAC 25.025 and in there it does specify that the standard bond is $100,000 for a single well, 200,000 and then depending upon landowner there's the option for requiring additional bonding or I believe in this instance there's a Borough bond, but that is the standard bond throughout the State of Alaska for drilling wells. MR. SIMS: That doesn't answer the question though. R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 67 1 2 3 4 5 6'I 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIRMAN NORMAN: Well, I mean, I understand your question and I'm doing my best to answer it. Your concern as expressed is that you believe that that is inadequate and I'm telling you we understand what you're saying, but I'm citing you to the law. MR. SIMS: What's the citation? CHAIRMAN NORMAN: The citation is 20 AAC 25.025. MS. SIMS: That's 25.025? CHAIRMAN NORMAN: Yes, Ma'am. MR. SIMS: Well, that's an AAC. In other words, this Commission sets those rules and those regulations. CHAIRMAN NORMAN: That's right. MR. SIMS: And so this Commission has the power to set rules and regulations at any rate as long as they have authority through statutory enablement. If the Commission is enabled to set a bond, then they're enabled to set it at what is a reasonable amount, so I rest that power with this Commission and I would, you know, challenge this Commission to revisit that since you're going to be allowing this sort of endeavor in a populated area where there's -- you know, where there's a number of homes at risk. The State of Alaska isn't going to go anything. If you're the Chairman you know as well as I do that $100,000 doesn't even begin to buy you an attorney to defend these things much less to -- you know, much less to compensate anybody. And if R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 68 ~ • 1 2 3 4 5 6 7 8 9', 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there's risk it's a very small cost of the project to fund proper insurance or bonding. CHAIRMAN NORMAN: Yes. Well, thank you, I think you've done a very good job of stating your concern and we understand it. MR. SIMS: Thank you. MS. SIMS: May I say -- just say kudos, that I absolutely agree. Also if..... CHAIRMAN NORMAN: Please, Ms. Sims, state your name..... MS. SIMS: .....you think about it..... CHAIRMAN NORMAN: .....for the record, please? MS. SIMS: .....liability insurance for your single car you know how much you have to pay every month for your car insurance and how much coverage that covers. If something like that could be put in place at the State level covering the -- the well process so homeowners can be protected it would be a lot easier for us to breath safely and..... CHAIRMAN NORMAN: Yes, we have that concern noted and I think you've done a good job of identifying it. Would you please -- at the end of your remark though, please, again state your name for the record? MS. SIMS: Oh, this is Candy Sims. CHAIRMAN NORMAN: Good, all right. Mr. Ehm, do you have any final comments? It's not necessary that you make any. I think the record is clear. Your applications are in the file. R& R C O U R T R E P O R TER S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 69 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'm just giving you a final opportunity if you wish to say anything. MR. EHM: No, the only thing that would be germane to what we're doing would be the water and I think I've covered that well enough. CHAIRMAN NORMAN: Very well. Right. The Chair then will ask one last time are there any persons present representing any landowners, anyone else that wish to say something and feel you did not have the opportunity? All right. For the record the Chair sees no one asking to be recognized. And, therefore, without opposition we'll stand adjourned at 11:05. 1600 (Recessed - 11:05 a.m.) R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 70 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 C E R T I F I C A T E UNITED STATES OF AMERICA ) ss. STATE OF ALASKA ) I, Suzan Kay Olson, Notary Public in and for the State of Alaska, residing at Anchorage, Alaska, and Reporter for R & R Court Reporters, Inc., do hereby certify: THAT the annexed and foregoing Public Hearing In the Matter of the Application by FOWLER OIL & GAS for Various Waivers and Exceptions for Kircher No. 1 and subsequent Kircher Block CMB Wells, Mat-Su Area, Alaska, was taken by Suzan Olson on the 15th day of January, 2008, commencing at the hour of 9:00 a.m., at the Alaska Oil and Gas Conservation Commission, Anchorage, Alaska; THAT this Hearing Transcript, as heretofore annexed, is a true and correct transcription of the proceedings taken and transcribed by Suzan Olson; IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal this 22nd day of January, 2008. Notary lic i and fo Alaska My Commission E pires: 08 01/07 R& R C O U R T R E P O R T E R S 811 G STREET 1907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 s r STATE OF ALASKA OIL AND GAS CONSERVATION COMMISSION Fowler Oil and Gas Kircher #1 and Subsequent Kircher Block CBM Wells January 15, 2008 at 9:00 am NAME -AFFILIATION (PLEASE PRINT) ADDRESS/PHONE NUMBER TESTIFY (Yes or No) ~~ ~~~ ~,l(/t~T, /y~GZS,~- (~1j' ~ir~i f ~4, t~K9~`s~! G3z-l./y~ ~~~~ `~~ - ~~ ~ a r~~ 6~ Iti1 ~ rn~ ~ oa'c~u~ L ~ ~` ~UC' ~ ~~~.~'~., CtJ ~1 ~T"l.~ ~~~ ~~.5 ~..,S2S C S S'. ~.S°~ ~ ~ ~ ~ ! ~ ~ZoZ I'U~ i KE~r J~6w,~$, ra2i w• `l-~L ~~s . ~~ Z~ Wt~c~IEYZAG.E l~k- ~~ ~~~C LlDJ ~ ~(~ ~ ESN ~.~L ~- ~o ~ • Continuation Page NAME -AFFILIATION ADDRESS/PHONE NUMBER TESTIFY (Yes or No) (PLEASE PRINT) /,~. ~ ~ ~~.Y€,~.S1~i~~ ~~ I ~~ ~'i2 it /~c9- i i is -_ >~~ .i /_ ~- ~i~~ Page 1 of 1 Colombie, Jody J (DOA) From: Norman, John K (DOA) Sent: Friday, January 25, 2008 4:26 PM To: Colombie, Jody J (DOA) Subject: RE: coal methane transcript Yes, it is an obvious error. Make the change and let her know that at her request we will have the tr. corrected to accurately reflect what she said. I do recall her saying "full amount... "etc. Be sure to keep a copy of this email in the file to document why this change was made. John From: Colombie, Jody J (DOA) Sent: Friday, January 25, 2008 12:36 PM To: Norman, John K (DOA) Subject: FW: coal methane transcript Should I have the transcript changed? From: Candy Sims [mailto:candy99645@yahoo.com] Sent: Friday, January 25, 2008 12:26 PM To: Zaz Hollander; Colombie, Jody J (DOA) Subject: coal methane transcript Dear Zaz and Jody: First, thank you, Jody for sending me a copy of the transcript. Just wanted you both to know there is one correction to be made regarding my testimony. On page 55 at number (21) it states "set at half the assessed value of each and every property.........", and what I actually said and suggested is that the bond be "set at the full amount of the assessed value of each and every property.........." Not sure if this will be of any significance in the immediate future, but I did want to note the correction. Again, I appreciate the opportunity to speak regarding my concerns about the coal methane drilling during the public testimony period and will be looking forward to hearing -the results the commission comes up with. I did write to Lt. Governor Sean Parnell and ask that he please read my testimony and make the Governor aware of this citizen's concerns. I do not know if he has had an opportunity to do that yet. Sincerely, Candy Sims home 745-4834 or ce11775-3949. Never miss a thing. Make Yahoo your h~mepage. 1/28/2008 • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a need for a lawsuit result. My second question, the second question of (ind'scernible) has to do with the various waivers Mr. Fowler is sking of the Alaska Oil and Gas Commission. Those rules a currently in place to protect the land and the environm t. It appears Mr. Fowler is using his experi ntal proces as a reason to ask for changes in those rules. The problem with suc a reque t is that if the Commission allows for those waivers a p ec ent will be made and any future company could s h t precedent to bypass the current system and rules t a e place, a company that might drill in a different wa even more damaging to the existing residential ne.~ghbo o d and environment. By granting these aivers t lmm's n takes away any accountability to the current own r and again we are faced with the question who to su 1 s ething go wrong. .r hav a suggestion to encourage good faith business a practi e, t would be to up the bond money Mr. Fowler or any other com ny is required to pay. Personally as our home is our only real financial asset I would request that the bond be set a half the assessed value of each and every property in the argeted area. If Mr. Fowler is so sure of his product and th value of the coal methane he might receive (ph) from rilling this larger amount for accountability purposes could and would alleviate the average homeowner's fear of losing R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 55 ~ • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 property valve from his experimental process. Again, a $50,000 bond does nothing to alleviate that fear and hold this company accountable. It's not even eno gh for one homeowner's property lawsuit claim. Multiply at by 1,300 and it still doesn't match the tax assessed valu of our combined properties. My third question, a question that reg rds zoning. As I stated in my letter we live i a resident'al neighborhood known for its bedroom community an od sch ls. How will the zoning of our targeted area e f c ed if, indeed, Mr. Fowler is allowed to drill for in r'al usiness purposes? Again, this could a~fe property value of our on final i vestment. nd w rchased this home -- we actually ha it built 12 year e picked the land and had we know th t there w s to b a potential for drilling in this area we nev wo h had our home built here. My ~ ur~ q n has to do with damage control and emergency~`re~ on e. It is still not clear how the coal methane gas will be dive ed to Enstar for them to distribute. If there is a res tant break in the line and possibly explosion or other imm fate negative impact to the surrounding area does the Mat-Su orough has a system in place to properly handle such a di aster and what portion of that system is Enstar's respons' ility and what portion is Mr. Fowler's responsibility? viously a system needs to be in place before any risk R& R C O U R T R E P O R T E R S 811 G STREET (907)277-0572/Fax 274-8982 ANCHORAGE, ALASKA 99501 56 Page 1 of 1 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, January 23, 2008 10:33 AM Subject: Hearing Transcript Fowler Oil and Gas Attachments: Fowler Oil and Gas Transcript.pdf BCC:'zhollander@adn.com'; 'candy99645@yahoo.com'; 'harrybrod@gci.net' Attachments:Fowler Oil and Gas Transcript.pdf; Attached is transcript for Fowler Oil and Gas, Kircher #1 exceptions hearing. Jody Colombie 1/23/2008 ~3 • • Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, February 13, 2008 1:12 PM To: Tea Cups Subject: RE: Fowler Coal Bed Methane? Mr. Robb, AOGCC staff is still reviewing Fowler Oil and Gas's application and have made no recommendations to the Commissioners. Jody Colombie Special Assistant Alaska Oil & Gas Conservation Commission Direct: 907-793-1221 Fax: 907-276-7542 *Note new email address -----Original Message----- From: Tea Cups [mailto:t4two@mtaonline.net] Sent: Wednesday, February 13, 2008 11:50 AM To: Colombie, Jody J (DOA) Subject: Fowler Coal Bed Methane? Dear Oil and Gas Commission, I was wondering what the status of the Fowler Coal Bed Methane project was at the present time? I'm Scott Robb and live right across from the proposed second well at the Alaska State Fair Grounds. I sent you a written e-mail comment a few weeks ago about my concerns with the project. When I spoke to Cathy P. Foerster several weeks ago on the phone I told her I was worried about the POOR BOY approach that Fowler seemed to be taking towards the projects. When I read about the Head Geologist for Fowler had quit because he hadn't been paid for his services. That kind of confirmed what I had suspected. I was also concerned by one of the comments a commissioner had made saying that in nearly 5 decades of drilling in Alaska no water aquifers have ever been polluted. If you are referring to wells on the North Slope or wells that are thousands of feet deeper then you have missed the point entirely. The wells Fowler plan to drill are at a depth that do pose a danger to the local Aquifer. Again one of Palmer's City water wells is at a depth of 600+ feet. Most wells that are drilled at those depth are meant for extraction of water not the injection of contaminated fluids. So where is the data that you referee to when you say no aquifers have been polluted from wells within these depths? I have water rights on file at the Borough like many local friends and neighbors and we want our rights protected. Thanks for your time Scott Robb. ~ • Colombie, Jody J (DOA) From: Tea Cups [t4two@mtaonline.net] Sent: Friday, January 25, 2008 1:37 PM To: Colombie, Jody J (DOA) Subject: Fowler Drilling Exceptions? To the Oil and Gas Commission, I'm Scott Robb, me and my family live at 12201 Drift Lane Palmer. We also own and operate a greenhouse business nearby at 12430 Drift Lane. Both properties are right across the Glenn Highway near the Alaska State Fair grounds where the second well may be drilled. My main concern is water well/ground water cross contamination. I worked on the North Slope drilling oil wells for 20 plus years. I have seen injection wells that we were pumping down come back to the surface and I've seen communication between the well we were injecting down and the well we were drilling. I'm sure you are aware of such instances. Those injection wells are much deeper than what Fowler proposes. We were injecting below , an impermeable layer of shale at around 6000 feet. Fowler's plan is to inject the waste water into a sandstone formation below the coal bed. There is no impermeable layer above the producing zone and no guarantee there is a porous enough layer of sandstone if any below the coal bed to inject into. The injected fluid will take the path of least resistance and eventually it may come back to the surface. One of Palmer's city water wells draws water at a rate of 500 gallons a minute at a depth of 624 feet. There are many private and community water wells all around the proposed well sites. It just doesn't make sense to me to take a chance and mess up the local water supply that sustains life in the entire area for the profit of a few. He is also asking that he doesn't need to provide down hole directional data. I'm not sure what he is doing here? If he is planning on drilling a vertical hole I guess he wouldn't need to run a MWD tool while drilling. Only a single shot now and then will do. If he plans on drilling horizontally then he needs an MWD down hole while he drills. Other wise he may end up where he doesn't want to be. As far as the collection and disposal of the cuttings go, again I'm not sure what sort of variance he is asking for but he needs to do it properly. I'm asking the Commissioners to please carefully consider the possibility of ground water contamination and the very long and expensive effects such a contamination would have on everyone that needs the water to survive. Lots of valley residents have water rights on file with the Borough and we want our rights protected. Thanks for your time Scott A Robb. 1 Page 1 of 1 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Monday, January 14, 2008 3:40 PM To: 'Projects Coordinator' Subject: RE: Public Notice Kircher #1 Ms. Peabody, A representative of Fowler Oil and Gas will be expected testify. The AOGCC may ask questions of anyone who chooses to testify. No decision will likely be made tomorrow. Jody Colombie From: Projects Coordinator [mailto:foms2@mtaonline.net] Sent: Monday, January 14, 2008 2:15 PM To: Colombie, Jody J (DOA) Subject: Re: Public Notice Kircher #1 Hi Jody, Do you know what the format is for public hearing? Will there be an opportunity for Bob Fowler to speak? Does the AOGCC ask questions of the public and are decisions made tomorrow? Thanks. Mimi Peabody ----- Original Message ----- From: Colombie, Jody J (DOA To: undisclosed-recipients:. Sent: Thursday, December 06, 2007 11:28 AM Subject: Public Notice Kircher #1 1/14/2008 • . Page 1 of 2 Colo~nbie, Jody J (DOA) From: Candy Sims [candy99645@yahoo.com] Sent: Monday, January 14, 2008 11:51 AM To: Colombie, Jody J (DOA) Subject: trying sending another way Dear Mr. John Norman: After reading Zaz Hollander's article published Wednesday, October 3, 2007, in the Anchorage Daily News regarding the Mat-Su Borough approving the permit process for Mr. Bob Fowler of Fowler Oil and Gas Corporation to drill for coal methane near our property, I began making calls to see where and to whom I should ask for assistance at this time. After speaking with Zaz it appears the next stage of development for Mr. Fowler is to go to your organization for a state permit. I declined Mr. Fowler's request to drill on our property. We, my husband and myself, had our home built almost twelve years ago moving from Anchorage to Palmer. We specifically picked the location of our home for it's residential neighborhood and nearby public schools. Our son attended both Colony Middle School and Colony High School, graduating at the same time our daughter attended Pioneer Peak Elementary School. After attending Pioneer Peak from kindergarten through fifth grade, our daughter moved on to Colony Middle School and is now attending Colony High School. She's now a sophomore and continues her honor student status, something this parent is particularly proud to claim. At the time our home was built we discovered problems with the water well. We went back and forth with the developer regarding the water quality and actually had our attorney, who is now a judge, Morgan Christen, advise us not to sign the release form the developer tried to offer in return for a soft water system that he claimed would alter the high magnesium and rust deposits in our water. The release form would have absolved the developer from any further problems or complications we would have with the well water. Morgan advised us at that time to sue the developer. However, as fate would have it, I was also diagnosed with ovarian cancer at that time and had to go to the Mayo Clinic for surgery and treatment. When I returned the thought of a lawsuit regarding the way our well was drilled was not a priority or within our financial means. Since the beginning of our home being built until now, current day, we rely on a water filtration system to help ease the magnesium and rust deposits that continue to plague us, our pipes, and our appliances. Although Mr. Fowler's experimental coal methane drilling process is not supposed to affect the water of the nearby residential wells of homeowners and the local schools, we do have our doubts. Since the Mat-Su Borough approved the permit for him to drill I researched the bond process he needed to obtain that permit. The Mat-Su Borough only required a $50,000 bond of Fowler Oil and Gas Corporation. Not much should a homeowner discover later during the drilling process that our water or land was affected negatively by the search for coal methane beneath the ground. I urge the members of the Alaska Oil and Gas Conservation Commission to require a much higher bond amount at the state level while considering Mr. Fowler's permit request. I have shared this concern with both the reporter following this story, Zaz Hollander, who is also a local resident, and with Mr. Gerry Guay of Anchorage Environmental Control. I've also requested from several legislators I have had the opportunity to work with in the past, including our current Lt. Governor Sean Parnell, to please watch and help me protect my home and the property it's built on from any and all environmental pollutants. It is my understanding at this time that if your members approve a drilling permit, should a homeowner discover problems from the coal drilling process a private attorney would have to be hired and a civil lawsuit would have to be pursued to retain the dollar amount of damages created. And, it is because of this process that I ask that a very high dollar amount be applied towards the bond for Mr. Fowler's or any other company's drilling permit in our residential neighborhood, as it is the bond amount that is the homeowner's only safeguard towards protecting our property. Water is essential to our survival. We've already had to compromise our level of drinking water since moving to Palmer. I still have the original attorney file with Morgan Christen's advice. Now that she is a judge, I've thought of writing to her to see if she has any further advice for us, and just what the statute of limitations is regarding the well drilling process. Meantime, I hope you and the other members of the Alaska Oil and Gas Conservation Commission will keep in mind that we would never have built our home in this residential neighborhood had we known the potential for coal methane drilling would affect our property. Unlike the four or five people Mr. Fowler received permission to drill those property owners own their mineral rights. Like the over 1300 other homeowners in the targeted area, we do not own our 1/14/2008 Page 2 of 2 mineral rights. We have nothing to ga~and very much to fear should the drill process hit a snag and ultimately pollute~`the area. It is also not clear exactly how the coal methane will be generated to the local gas company, Enstar, and what safeguards will be taken to protect the community from a possible leak and explosion. Something that could not only affect the local homeowners, but also each and every student attending the three public schools in the targeted drilling area. Raising a teenager and worrying about her safety at school is something I do daily. Please consider the added burden of worrying about a possible leak or explosion, that could have been avoided had the drilling not been located so close to the public. high school she attends. I very much appreciate you and the other board members taking these thoughts into consideration as you weigh the consequences of the permit Mr. Fowler is seeking. Sincerely, Candy Sims Be a better friend, newshound, and know-it-all with Yahoo! Mobile. Try_t now., 1114!2008 r~ Alaska Oil & Gas Conservation. Commission 333 West 7`~ Avenue, Ste. 100 Anchorage, Alaska 99501 Re: Kircher #1 waiver r~uests Dear Commissioners Foerster, Norman & Seamount, Thank you for the opportunity to comment. on this application. :7 14 3anuary, 2008 Public concern regarding shallow gas exploration and. development in the residential areas of the Mat Su Valley is well founded. The dependence of homeowners and agricultural enterprises upon clean and abundant water resources is complete. Public safety, whether from increased truck traffic or potential gas seepage in faulted and g~logically active locations is paramount. For many, a gas well-regardless of the restrictions placed upon it has no place in or near a neighborhood or schoolyard. Kircher # l , if drilled, will be the first proclaimed coal-bed methane exploration well in the Valley since Evergreen departed here in 2004. If it proves successful, it likely will not be the last. Considering the proximity of significant risk averse public and private assets to the well site, including several subdivisions, two schools, an anadromous fish stream and valuable undeveloped land, it is in the public interest that every regulatory precaution be taken. 1. Horizontal Wells--This well is that it is not simply a perforated, vertical casing but includes multiple branching horizontal bores, each capable of reaching under streams, lakes, roadways and to within a few feet of homes and water wells. Unlike with the drilling of vertical. wells, there seems to be little regulation of or public input regarding the placement and potential impacts of lateral branch lines. Again, given the substantial adjacent interests, if there is a question as to whether horizontal bores should be considered individual wells and be regulated as such; the answer is, "definitely." 2. Produced Water--The applicant's down hole water separator and reinjection scheme complicates the na~surement of groundwater being developed and reinjected within the well(s). This data can be used in conjunction with water well monitoring to ensure protection of surface and drinking water. Knowing the quantity and quality of produt~d water is useful to this and. future we11s. If AOGCC does not already, it is preferred that the driller be required to separately measure and provide data an water and gas developed from each horizontal branch as coal is dewatered. :7 3. CBM Specific Regs-While the risks associated with shallow gas drilling are different than those of conventional wells, there seem few state regulations governing this activity. It is difficult to measure the merit of a permit. request. when agencies and the public are working without an applicable yardstick. It would be useful. and prudent far both. the public and the applicant if the state undertook. to craft such regulations. In the event Kircher #1 'proves up' it appears the protection of correlative rights would truer nearby mineral right owners, including the state to become involved in leasing and developing their interests. At such time, state leases would be competitively bid and could be explored upon and developed. The area would become a unitized gas field. Public understanding about pooling, unitization, etc. is, in general, grossly incomplete. Neither the driller nor the Mat-Su Borough have helped to provide a better understanding and awareness of how a gas field development scenario could affect. public resources, private investments or alter the quality of life in the area While it is understood to not be your role or in your jurisdiction to educate the public, I ask that you take in consideration the fu11 public interest and exercise sensitivity toward the residential nature of the locale as you interpret and apply regulations to Kircher #1. Sincerely, c~„" -~- Chris Whittington-Evans 536 East Fireweed Palmer, AK 99645 • • Theodore D.M. Bartko P.O. Box 4206 Palmer., Alaska 99645 January 3, 2008 A.O.G.C.C. 333 West 7th Avenue Anchorage, Alaska 99501 Attn: Jody Colombie To Whom it may concern, I oppose any permitting exemptions being given or issued, to Fowler Oil and Gas Co., for any coal bed methane exploration or drilling operations or drilling procedures or water impacts or subsurface water source impacts, here in the Matanuska-Susitna Valley and especially in the Eastern section of the Matanuska Valley, where I live. Attached are my comments, opposing Fowler Oil and Gas Company's, C.B.M. drilling operations, I sent to the Matanuska-Susitna Borough. Thank you for your time and this opportunity to comment. May the good Lord God bless you and those you love, with a safe, healthy and happy new year, for the year of our Lord, 2008. Respectfully submitted: Thursday, January 3, 2008 at 4:23 p.m. Sincerely and respectfully, Theodore D.M Bartko Page 1 of 1 Colombie, Jody J (DOA) From: Lazy Mountain Farms [mrtko@mtaonline.net] Sent: Thursday, January 03, 2008 4:19 PM To: Colombie, Jody J (DOA) Subject: No Permit Exemptions for Fowler Oil and Gas Co., Please! Attachments: No Permit Exemptions for Fowler Oil and Gas Co. Please!.doc 1/3/2008 N Colombie, Jody J (DOA) From: Foerster, Catherine P (DOA) Sent: Thursday, November 15, 2007 3:36 PM To: Projects Coordinator Subject: RE: CBM Drilling Permit Public Hearing Page 1 of 1 Until such time as Fowler has submitted a complete application to us, it is premature to schedule a hearing. Once we have a complete application, we will schedule and notice a public hearing. Typically when we notice a hearing, if no one requests that the hearing be held AND if the commission feels that it has adequate information to make a ruling without a hearing, then we vacate the hearing and make our ruling without a hearing. However in the case of the Fowler application, the commission has already decided that there is enough public interest that a hearing is appropriate. And now we also have your request that the hearing be held; so I can assure you that, once we have all the necessary information for a complete application, we will schedule and notice a hearing AND there will be a hearing. From: Projects Coordinator [mailto:foms2@mtaonline.net] Sent: Thursday, November 15, 2007 2:41 PM To: Foerster, Catherine P (DOA) Subject: CBM Drilling Permit Public Hearing Hello Ms. Foerster, I work with Friends of Mat-Su and one of our members has expressed interest in requesting a public hearing regarding Fowler Oil and Gas's application to drill a CBM well. What is the policy for public hearings with the AOGCC. Friends of Mat-Su would like to officially request a public hearing unless one is already scheduled. Thanks for your help with this. Mimi Peabody Projects Coordinator Friends of Mat-Su phone: (907) 746-0128 fax: (907) 746-0142 www.foms.net 11/15/2007 N Colombie, Jody J (DOA) From: Foerster, Catherine P (DOA) Sent: Thursday, November 15, 2007 3:36 PM To: Projects Coordinator Subject: RE: CBM Drilling Permit Public Hearing Page 1 of 1 Until such time as Fowler has submitted a complete application to us, it is premature to schedule a hearing. Once we have a complete application, we will schedule and notice a public hearing. Typically when we notice a hearing, if no one requests that the hearing be held AND if the commission feels that it has adequate information to make a ruling without a hearing, then we vacate the hearing and make our ruling without a hearing. However in the case of the Fowler application, the commission has already decided that there is enough public interest that a hearing is appropriate. And now we also have your request that the hearing be held; so I can assure you that, once we have all the necessary information for a complete application, we will schedule and notice a hearing AND there will be a hearing. From: Projects Coordinator [mailto:foms2@mtaonline.net] Sent: Thursday, November 15, 2007 2:41 PM To: Foerster, Catherine P (DOA) Subject: CBM Drilling Permit Public Hearing Hello Ms. Foerster, I work with Friends of Mat-Su and one of our members has expressed interest in requesting a public hearing regarding Fowler Oil and Gas's application to drill a CBM well. What is the policy for public hearings with the AOGCC. Friends of Mat-Su would like to officially request a public hearing unless one is already scheduled. Thanks for your help with this. Mimi Peabody Projects Coordinator Friends of Mat-Su phone: (907) 746-0128 fax: (907) 746-0142 www.foms.net 11/15/2007 ~: N Colombie, Jody J (DOA) From: Foerster, Catherine P (DOA) Sent: Tuesday, November 13, 2007 8:53 AM To: Norman, John K (DOA); Seamount, Dan T (DOA); Birnbaum, Alan J (LAW) Cc: Colombie, Jody J (DOA) Subject: FW: Fowler permit FYI. Jody, please add this correspondence to the Fowler file. -----Original Message----- From: Foerster, Catherine P (DOA) Sent: Tuesday, November 13, 2007 8:52 AM To: 'Chris Whittington-Evans' Subject: RE: Fowler permit Chris, Since we will have a public hearing to make any and all decisions that need to be made concerning this permit, it is inappropriate and probably illegal for me to discuss these matters with you or any other party off the public record. I encourage you to attend the hearing to ensure that your concerns are addressed. Thank you. -----Original Message----- From: Chris Whittington-Evans [mailto:whitevan@mtaonline.net] Sent: Thursday, November 01, 2007 8:41 PM To: Foerster, Catherine P (DOA) Subject: Re: Fowler permit Thank you, Ms. Forester, for that clarification of AOGCCs role and jurisdiction. Correct me if I'm wrong in understanding that your agency also works to prevent degradation of groundwater resources as a consequence of drilling and dewatering activities, of particular concern for residents with nearby wells. I recall reading recently that there are some peculiarities regarding this permit in so far as it entails multiple branching horizontal bores, each of which could be considered a separate well. It was also brought to my attention, I believe from the MSB consultant, that the applicant's "proprietary" downhole water separator and reinjection plan complicates the measurement of groundwater being developed and reinjected within the well(s). Will AOGCC require the permittee to separately measure and provide reporting on water developed from each branch as they dewater the seams? While difficult to hypothesize about, is it true that in the event a well 'proves up' AOGCCs conservation of hydrocarbons and protecting correlative rights roles would include working with DNR to offer shallow gas leases of state subsurface nearby? In other words, if Fowler or another driller succeeds and gas starts flowing doesn't the state work to protect it's own gas resources by encouraging development of them? Thanks for your clarifications on and helpfulness regarding this matter. Chris Whittington-Evans On Nov 1, 2007, at 10:20 AM, Foerster, Catherine P (DOA) wrote: > Mr. Whittington-Evans, > Our authority is primarily over such subsurface issues as the > prevention of hydrocarbon waste, the protection of correlative rights, > and the administration of EPA's Class II injection program. We do not > have authority over most surface issues. The Mat-Su Borough and other 1 >~agencies have issued or are~i~'~Ehe process of issuing separ e ermits > for items under their authority. We hold our hearings; other agencies > hold theirs, should any be required of them. In our hearing we will > be considering simply whether or not to issue a permit or permits to > drill a well or wells, and we will consider only those issues under > our authority. And if any of Fowler's plans require exception to our > normal procedural requirements, we will consider those exceptions, > too. Of course, our permits are contingent upon the necessary > approvals of other agencies such as Mat-Su Borough, DEC, Corps of > Engineers, etc. Should Fowler's well be successful, we will then > entertain pool rules for development of the subsurface hydrocarbon > resource to encourage greater > ultimate hydrocarbon recovery and to prevent hydrocarbon waste. > Again, > our concerns are primarily with subsurface issues. Most surface > issues fall under other authorities. Our main surface concern is > ensuring site clean-up after a well has been abandoned. > I hope this explanation helps clarify our role in the complex > evaluation and development of coal bed methane resources for the good > of the State of Alaska. > > Our hearings are publicly noted at least 30 days in advance in the > Anchorage Daily News and any pertinent local paper. In this case the > notice will be in the Mat-Su Frontiersman. We also have a long e-mail > list of people who have requested to be notified of all of our > hearings. > We will e-mail them a copy of the public notice. And, since you have > expressed an interest in this one, you, too, will be receiving that > e-mail. > -----Original Message----- > From: Chris Whittington-Evans [mailto:whitevan@mtaonline.net] > Sent: Wednesday, October 31, 2007 10:29 PM > To: Foerster, Catherine P (DOA) > Subject: Re: Fowler permit > Thank you for your assistance. > Please inform me whether the AOGCC or the Mat-Su Borough will hold the > hearing, if there will be any information offered by your agency > concerning the permit and planned for well, and what the public > notification will be. > Thank you, > Chris Whittington-Evans > On Oct 31, 2007, at 10:43 AM, Foerster, Catherine P (DOA) wrote: > » I have forwarded your request to Howard Okland, who will be » contacting you to help you acquire that portion of the data that you » have requested which is publicly available. » I have also forwarded your request for a hearing to Jody Colombie, » the AOGCC special assistant, who will schedule a hearing. She will » also respond to you with the date and time of the hearing so that you » may attend. » Howard, Jody, please assist with this. » -----Original Message----- » From: Chris Whittington-Evans [mailto:whitevan@mtaonline.net] » Sent: Wednesday, October 31, 2007 4:07 AM » To: Foerster, Catherine P (DOA) » Subject: Fowler permit » Hello, 2 » I am an interested party in the Palmer area who would like to request » that a public hearing be conducted on the Fowler CBM permit. It is my » understanding that the type of well planned is unconventional and » will require many horizontal off shoots, each of which will be used » to dewater significant areas adjacent to private residences in order » to allow methane to percolate to the surface. This sort of activity » so close to public amenities and private homes makes many residents » understandably very nervous. Particularly given the applicant has so » little experience in the field of shallow gas, it seems prudent to » err on the side of caution. » I also would like to ask whether the stratigraphic logs from the » Evergreen core tests done in 2004/5 are available to the public. If » so, how might one obtain those? » Thank you for your response on this matter. » Chris Whittington-Evans 3 ~~ Page 1 of 2 Colombie, Jody J (DOA) From: Roby, David S (DOA) Sent: Wednesday, October 31, 2007 3:55 PM To: arlenehm@gci.net Cc: Saltmarsh, Arthur C (DOA); Maunder, Thomas E (DOA); Regg, James B (DOA) Subject: Kircher No. 1 waiver requests Arlen, During our meeting a few weeks ago we brought up the possibility of establishing a drilling unit for Fowler's Kircher block so that the waivers you are requesting could be dealt with one time instead of on multiple occasions. Unfortunately we have determined that we can not establish a drilling unit prior to a discovery on the affected lands. This means that we will have to deal with your requested waivers at least twice. First we will have to deal with them for the PTD you submitted on October 9th and then, assuming this well makes a "discovery", we can proceed down the path that will lead to establishing a drilling unit and then we shouldn't have to address these waiver requests for future activities on the Kircher block. We are proceeding along the path towards granting Fowler's waiver requests, this includes scheduling a public hearing and publish a notification of the hearing. Unfortunately we will need a more complete spacing exception request from Fowler before we can proceed with scheduling a hearing. Specifically the spacing exception application requirements in 20 AAC 25.055(d) need to be fulfilled. These are: 20 AAC 25.055(d) The commission will review an application for an exception to the provisions of this section in accordance with 20 AAC 25.540.. The applicant for an exception shall send notice of the application by certified mail to the owners, landowners, and operators described in (1) of this subsection and shall furnish the commission with a copy of the notice, the date of mailing, and the addresses to which the notice was sent. The application must include (1) the names of all owners, landowners, and operators of all properties within 1,000 feet of a well drilling for oil or within 3,000 feet of a well drilling for gas for which an exception is sought; (2) a plat drawn to a scale of one inch equaling 2,640 feet or larger, showing the location of the well for which the exception is sought, all other completed and drilling wells on the property, and all adjoining properties and wells; and (3) an affidavit by a person acquainted with the facts, verifying that all facts are true and that the plat correctly portrays pertinent and required data. When we receive this required information we will proceed with scheduling a public hearing for this and the other waivers you have requested. If you have any questions feel free to give me a call at the number listed below. Thank you, Dave Roby Reservoir Engineer Alaska Oil and Gas Conservation Commission 10/31 /2007 ~~ Page 2 of 2 Phone:907-793-1232 Fax: 907-276-7542 email: dave.roby@alaska.gov_ 10/31 /2007 ~~ ~~ Colombie, Jody J (DOA) From: Foerster, Catherine P (DOA) Sent: Wednesday, October 31, 2007 11:37 AM To: Maunder, Thomas E (DOA); Roby, David S (DOA) Cc: Colombie, Jody J (DOA); Okland, Howard D (DOA); Saltmarsh, Arthur C (DOA); Regg, James B (DOA) Subject: RE: Fowler permit I'm not suggesting that we hold a hearing on the design of the well but rather that we hold our usual hearing on the exception issues. Our concerned citizen is, of course, welcome to bring up any relevant issues of concern during the hearing. -----Original Message----- From: Maunder, Thomas E (DOA) Sent: Wednesday, October 31, 2007 11:14 AM To: Foerster, Catherine P (DOA); Roby, David S (DOA) Cc: Colombie, Jody J (DOA); Okland, Howard D (DOA); Saltmarsh, Arthur C (DOA); Regg, James B (DOA) Subject: RE: Fowler permit That I know of we have not done a hearing on a permit to drill. We do on the issues as Dave pointed out. This would be the first that I am aware of where the actual well design would be discussed. Always a first for everything. Tom -----Original Message----- From: Foerster, Catherine P (DOA) Sent: Wednesday, October 31, 2007 11:11 AM To: Roby, David S (DOA) Cc: Colombie, Jody J (DOA); Okland, Howard D (DOA); Saltmarsh, Arthur C (DOA); Maunder, Thomas E (DOA); Regg, James B (DOA) Subject: RE: Fowler permit Tom tells me that we have received a permit to drill. This is the permit for which there will be a hearing. -----Original Message----- From: Roby, David S (DOA) Sent: Wednesday, October 31, 2007 11:01 AM To: Foerster, Catherine P (DOA) Cc: Colombie, Jody J (DOA); Okland, Howard D (DOA); Saltmarsh, Arthur C (DOA); Maunder, Thomas E (DOA); Regg, James B (DOA) Subject: RE: Fowler permit I'm not sure what CBM permit they are asking for a hearing on, we haven't issued one yet. The only one issued so far is the land use permit issued by the Mat-Su borough, which I am pretty sure we would not be able to hold a hearing on. In Fowler's PTD application they asked for several waivers of Commission regulations, including a spacing exception (they're less than 1500' from the property boundary), gas detection (open drill rig with no place for gas to accumulate), etc... these waivers are going to require a public hearing that will be scheduled in the near future. Additionally, we are investigating the possibility of establishing a drilling unit for the Kircher block that would address other issues such as spacing within the block and offset from the property boundary. If we can do this will also require a public hearing, or it . is possible we may roll everything into one hearing and address all of these issues at once. Finally, Fowler will also need a disposal order for there water injection activities which is yet another opportunity for a public hearing. So in short I don't know what this person is asking for a hearing on and there will be ample opportunity for public hearing(s) in the near future, so I don't know that we need to schedule one special for this person at this time. 1 •• •• Dave Roby Phone: 907-793-1232 email: dave.roby@alaska.gov -----Original Message----- From: Foerster, Catherine P (DOA) Sent: Wednesday, October 31, 2007 10:43 AM To: Chris Whittington-Evans Subject: RE: Fowler permit I have forwarded your request to Howard Okland, who will be contacting you to help you acquire that portion of the data that you have requested which is publicly available. I have also forwarded your request for a hearing to Jody Colombie, the AOGCC special assistant, who will schedule a hearing. She will also respond to you with the date and time of the hearing so that you may attend. Howard, Jody, please assist with this. -----Original Message----- From: Chris Whittington-Evans [mailto:whitevan@mtaonline.net] Sent: Wednesday, October 31, 2007 4:07 AM To: Foerster, Catherine P (DOA) Subject: Fowler permit Hello, I am an interested party in the Palmer area who would like to request that a public hearing be conducted on the Fowler CBM permit. It is my understanding that the type of well planned is unconventional and will require many horizontal off shoots, each of which will be used to dewater significant areas adjacent to private residences in order to allow methane to percolate to the surface. This sort of activity so close to public amenities and private homes makes many residents understandably very nervous. Particularly given the applicant has so little experience in the field of shallow gas, it seems prudent to err on the side of caution. I also would like to ask whether the stratigraphic logs from the Evergreen core tests done in 2004/5 are available to the public. If so, how might one obtain those? Thank you for your response on this matter. Chris Whittington-Evans 2 H ~• Colombie, Jody J (DOA) From: Foerster, Catherine P (DOA) Sent: Wednesday, October 31, 2007 10:43 AM To: Chris Whittington-Evans Subject: RE: Fowler permit I have forwarded your request to Howard Okland, who will be contacting you to help you acquire that portion of the data that you have requested which is publicly available. I have also forwarded your request for a hearing to Jody Colombie, the AOGCC special assistant, who will schedule a hearing. She will also respond to you with the date and time of the hearing so that you may attend. Howard, Jody, please assist with this. -- --Original Message----- Fr m: Chris Whittington-Evans [mailto:whitevan@mtaonline.net] Se t: Wednesday, October 31, 2007 4:07 AM To Foerster, Catherine P (DOA) Su ject: Fowler permit Hello, I m an interested party in the Palmer area who would like to request that a public he ring be conducted on the Fowler CBM permit. It is my understanding that the type of we 1 planned is unconventional and will require many horizontal off shoots, each of which wi 1 be used to dewater significant areas adjacent to private residences in order to allow me bane to percolate to the surface. This sort of activity so close to public amenities an private homes makes many residents understandably very nervous. Particularly given the ap licant has so little experience in the field of shallow gas, it seems prudent to err on th side of caution. I lso would like to ask whether the stratigraphic logs from the Evergreen core tests done in 2004/5 are available to the public. If so, how might one obtain those? Th~nk you for your response on this matter. -is Whittington-Evans 1 ~„~ ,.- ~ ~ 6 R~i..r~ a c ~ 1 s 2007 A{HSka Oil & Gas Cons. Corr~nission Anchorage Alaska Oil and Gas Conservation Commission Mr. John Norman, Chairman 333 W. 7`'' Avenue Anchorage, Alaska 99501 Dear Mr. John Norman: • Candy Sims 4305 Oakwood Drive Palmer, Alaska 99645 Home (907) 745-4834 Cell & Voice Mail (907)775-3949 Email: candy99645(a~yahoo.com October 17, 2007 After reading Zaz Hollander's article published Wednesday, October 3, 2007, in the Anchorage Daily News regarding the Mat-Su Borough approving the permit process for Mr. Bob Fowler of Fowler Oil and Gas Corporation to drill for coal methane near our property, I began making calls to see where and to whom I should ask for assistance at this time. After speaking with Zaz it appears the next stage of development for Mr. Fowler is to go to your organization for a state permit. I declined Mr. Fowler's request to drill on our property. We, my husband and myself, had our home built almost twelve years ago moving from Anchorage to Palmer. We specifically picked the location of our home for it's residential neighborhood and nearby public schools. Our son attended both Colony Middle School and Colony High School, graduating at the same time our daughter attended Pioneer Peak Elementary School. After attending Pioneer Peak from kindergarten through fifth grade, our daughter moved on to Colony Middle School and is now attending Colony High School. She's now a sophomore and continues her honor student status, something this parent is particularly proud to claim. At the time our home was built we discovered problems with the water well. We went back and forth with the developer regarding the water quality and actually had our attorney, who is now a judge, Morgan Christen, advise us not to sign the release form the developer tried to offer in return for a soft water system that he claimed would alter the high magnesium and rust deposits in our water. The release form would have absolved the developer from any further problems or complications we would have with the well water. Morgan advised us at that time to sue the developer. However, as fate would have it, I was also diagnosed with ovarian cancer at that time and had to go to the Mayo Clinic for surgery and treatment. When I returned the thought of a lawsuit regarding the way our well was drilled was not a priority or within our financial means. Since the beginning of our home being built until now, current day, we rely on a water filtration system to help ease the magnesium and rust deposits that continue to plague us, our pipes, and our appliances. Although Mr. Fowler's experimental coal methane drilling process is not supposed to affect the • • water of the nearby residential wells of homeowners and the local schools, we do have our doubts. Since the Mat-Su Borough approved the permit for him to drill I researched the bond process he needed to obtain that permit. The Mat-Su Borough only required a $50,000 bond of Fowler Oil and Gas Corporation. Not much should a homeowner discover later during the drilling process that our water or land was affected negatively by the search for coal methane beneath the ground. I urge the members of the Alaska Oil and Gas Conservation Commission to require a much higher bond amount at the state level while considering Mr. Fowler's permit request. I have shared this concern with both the reporter following this story, Zaz Hollander, who is also a local resident, and with Mr. Gerry Guay of Anchorage Environmental Control. I've also requested from several legislators I have had the opportunity to work with in the past, including our current Lt. Governor Sean Parnell, to please watch and help me protect my home and the property it's built on from any and all environmental pollutants. It is my understanding at this time that if your members approve a drilling permit, should a homeowner discover problems from the coal drilling process a private attorney would have to be hired and a civil lawsuit would have to be pursued to retain the dollar amount of damages created. And, it is because of this process that I ask that a very high dollar amount be applied towards the bond for Mr. Fowler's or any other company's drilling permit in our residential neighborhood, as it is the bond amount that is the homeowner's only safeguard towards protecting our property. Water is essential to our survival. We've already had to compromise our level of drinking water since moving to Palmer. I still have the original attorney file with Morgan Christen's advice. Now that she is a judge, I've thought of writing to her to see if she has any further advice for us, and just what the statute of limitations is regarding the well drilling process. Meantime, I hope you and the other members of the Alaska Oil and Gas Conservation Commission will keep in mind that we would never have built our home in this residential neighborhood had we known the potential for coal methane drilling would affect our property. Unlike the four or five people Mr. Fowler received permission to drill those property owners awn their mineral rights. Like the over 1300 other homeowners in the targeted area, we do not own our mineral rights. We have nothing to gain, and very much to fear should the drilling process hit a snag and ultimately pollute the area. It is also not clear exactly how the coal methane will be generated to the local gas company, Enstar, and what safeguards will be taken to protect the community from a possible leak and explosion. Something that could not only affect the local homeowners, but also each and every student attending the three public schools in the targeted drilling area. Raising a teenager and worrying about her safety at school is something I do daily. Please consider the added burden of worrying about a possible leak or explosion, that could have been avoided had the drilling nat been located so close to the public high school she attends. I very much appreciate you and the other board members taking these thoughts into consideration as you weigh the consequences of the permit Mr. Fowler is seeking. Sinc rely, Candy Sims Ce//~9o7~775-.3 g5~9 ho~~ C~o7~ 7y5- yS3~ e~i .' ~az~~ 996yse~c~. ~ • • Theodore D.M. Bartko P.O. Box 4206 Palmer, Alaska 99645 August 23, 2007 Matanuska-Susitna Borough 350 East Dahlia Avenue Palmer, Alaska 99645 COMMENT II To whom it may concern, Regarding my firm opposition, to Coal Bed Methane drilling and dewatering operations, at the Palmer State Fair Grounds and or the Kircher Farm or within 8 miles of any Water Right holder, or Borough resident, who gets their drinking water, from a safe, clean and satisfactory drinking water source, that are opposed to the Coal Bed Methane drilling and extraction operations, planned by Fowler Oil and Gas Corporation or any other invasive or reckless Coal Bed Methane drilling company, that is determined to disregard Mat-Su Valley drinking water sources, which hold legal and practical precedence, over any proposed, experimental, Coal Bed Methane drilling operations or proposals or speculative plans, in my opinion. Matt Rader, from the State Division of Oil and Gas, spoke to me, over the phone, August 16, 2007 and said that "dewatering" procedures, by Coal Bed Methane operations are "significant". Matt was not certain if Fowler's Company would be required to get a commercial water use permit, for their operations. I said, that I believed, that they should be required to get a commercial water permit, because of the incredible volumes of water, by which, they will, dewater, the subterranean water sources, which will be a massive, dewatering process, as I understand. To my knowledge, at one well sight alone, excluding directional drilling impacts, C.B.M. dewatering processes, pump 12,000 to 21,000 gallons, of various subterranean water sources, per day. Matt and I agreed, that Mr. Fowler's plans, drilling multi-directional and or horizontal holes, up to 1 mile in four directions, will be a "significant" impact, and a significant area impacted, regarding, dewatering procedures. • • A Marathon Oil employee, on the K.T.U.U /documentary, stated that the Coal Bed Methane dewatering operations, "can impact the water", a procedure, that is a serious, damaging and un-repairable threat to Matanuska-Susitna Valley residences, who value our clean and precious, drinking water sources, in my opinion. I believe, that the Marathon Oil spokesperson's quote was that, "we can impact the water". No thank you, to Fowler Oil and Gas Corporation. The Estate of Margaret Bartko, has a precious, low-pressure artesian spring, drinking water source, located, not that far, from the Palmer State Fair grounds, in respect to, the deep and long reaching, multi- directional, drilling operations, that Mr. Fowler has audaciously planned. Since clean drinking water sources, perhaps as deep as 3000 feet, where Mr. Fowler, plans to re-inject produced water, or what ever geological layer, is most convenient for him, in this extremely unique geological area, regarding subterranean hydrological sources; and since a gentleman I spoke to, at the U.S. Environmental Protection Agency, told me, over the phone, that any effect, on the water aquifer pressure, that our artesian well is drawn from, that Coal Bed Methane operations would impact, could most certainly affect and I believe, easily stop or deplete or discontinue, our artesian drinking water source; and since the Estate of Margaret Bartko, on Lower Lazy Mountain, in the Matanuska River Water shed, in the Coastal Management District, where I live; as I understand, is one of the senior Water Right holders. I believe I must, therefore, take a stand, in firm opposition, to the Coal Bed Methane Company's, serious and devastating rural water source, dewatering plans, operations, and unwanted, experimental drilling procedures, here, in the Matanuska-Susitna River Valley. Also, regarding Coal Bed Methane or shallow gas drilling operations, in Alaska, that U.S. Senator Stevens has written to me about, stating that the Academy of Sciences, was to evaluate the impacts of shallow gas drilling in Alaska and since they have not even been evaluated, yet, to my knowledge; I will therefore oppose any potentially devastating C.B.M., dewatering and drilling impacts, in Alaska. I will reject, to the best of my ability, Mr. Fowlers, experimental, C.B.M. drilling and dewatering operations, especially, within 8 miles, of where I live and where our priceless, artesian spring water well source is located, here, in the Matanuska-Susitna River Valley, where drinking water aquifers, at various, and often unknown depths, flow rates and flowing distances, perhaps up to 10 miles, unlike the Fowler Oil and Gas Company's, deceptive or misleading? "Water management", water table cartoon, portrays, in my opinion, in his (pd fl file, drilling permit application plans, display. • w Matt Rader, at the Division of Oil and Gas, implied that, the only protection, available, that he knows of, for Borough residents, (if the Borough, does not take a subterranean drinking water source protection stand, opposing Mr. Fowler's reckless plans), is for Borough water right holders, within the Borough, potentially threatened by the C.B.M. dewatering plans, by Fowler Oil and Gas Co., is to, as a group, confront, the dewatering procedures and impacts, that threaten, Mat-Su Valley residents, by Mr. Fowlers, C.B.M./ Anti-Water Machine. I believe, that if the Borough ordinances and or permitting processes; leave Mat-Su Valley residences that vulnerable, to F.O.G. Co.'s, invasive and devastating, experimental plans, myself and many other Borough residents, "putting it lightly", will not be pleased. Natural Gas. Org; states that, "the process of getting natural gas from underground to the end user has the potential for being environmentally destructive" and that "the exploration and production of natural gas can have significant impact on the environment." These serious and devastating impacts, by Coal Bed Methane drilling and dewatering procedures, include, but are not limited to, what the Environmental Protection Agency's, (pdfl file, regarding source water assessment says; that "contamination of water supplies may be responsible for more human sickness than any other anthropogenic activity." "Since limited water resources are increasingly shared by competing consumers," (such as Coal Bed Methane Co. drillers and their dewatering operations), "there is growing concern about the quality of source waters." I believe, that the severity of impacts, due to Coal Bed Methane Co., dewatering operations, such as Fowler Oil and Gas Co., will interfere with ground water discharge or recharge zones, that will affect human and ecosystem health and will interfere with the ground water surface water interaction zones, here in the Matanuska-Susitna River Valley area. Due to the Environmental Protection Agency's, ground water and ecosystem restoration research, regarding the issues of arsenic geochemistry, which I have found relevant, to the C.B.M. drilling and dewatering procedures. I believe, that the Coal Bed Methane drilling operations and dewatering procedures, will create transportation of arsenic, within the groundwater aquifers, because C.B.M. drilling operations and dewatering procedures, will interfere with the "biogeochemical cycling of iron, sulfur and carbon", which control the transport of arsenic. A serious and damaging natural pollutant, which, I believe, would be induced, by C.B.M. drilling operations and dewatering • • procedures, including multi-directional and or horizontal, subsurface drilling procedures, if permitted by Borough officials, knowingly or unknowingly, which would be, unnecessarily polluting, Mat-Su Borough ground water and unconfined and confined, aquifer drinking water sources, in my opinion. Therefore, I believe, that with the numerous multi-directional, subsurface, C.B.M. drilling procedures and operations, there will be a certainty of inducement of natural toxins, such as arsenic, into Mat-Su Borough aquifer systems and groundwater discharge and recharge zones, where thousands of Mat-Su Borough residents have chosen to draw their clean and natural drinking water from. I believe, that Mr. Fowler, can not disprove my findings, and beliefs, regarding his companies adverse and harmful, dewatering and drilling impacts, because, his drilling and dewatering application plans are all, experimental, here in the geologically sensitive, Mat-Su Borough area. I also believe, that seismic activity here, in the Mat-Su Valley River areas, which occurs daily, at various Modified Mercalli Intensity Scale and Richter Magnitude Scale intensities, can and will induce, even more serious, natural contamination and cross contamination and pollution, of water aquifer and subterranean drinking water sources, due to F.O.G. Co.'s, Coal Bed Methane drilling and dewatering operations and procedures, which I refuse to permit, to occur, according to my ability; and it is my reasonable hope, that Mat-Su Borough officials, will prudently and wisely, refuse to permit, also, especially due to the spirit and intention and letter, of Mat-Su Borough codes, Alaska Statutes, and the Safe Drinking Water Act, regarding protection of drinking water sources, here in the Mat-Su Borough, which is a primary responsibility of Borough officials, to insure the protection and preservation of public health and safety and the lives and lifestyles, of Mat-Su Borough residents and local fellow Alaskans, against the dangers and threats and adverse impacts of Coal Bed Methane Co., drilling and dewatering procedures, and operations, that do not belong, in established communities and areas, where residents, receive their grateful blessings, of clean and safe and sometimes limited, drinking water supplies, which cannot withstand, the negative and adverse impacts, of C.B.M. company, dewatering procedures, which pump an unacceptable volume, of 12,000 to 21, 000 gallons of water, per day, with the current information, that I have. Coal Bed Methane Companies know, that many Mat-Su Borough residents, drinking water wells, may also draw their precious drinking water sources, in or near coal seam zones, and they could care less than less, in my opinion, if they impact our drinking water sources, or they would not even think about their audacious and invasive plans, to invade, Mat-Su Borough water aquifer zones, with their, improvised dewatering devices, (I.D.D's) and their unnecessary, C.B.M. drilling procedures and operations. I would like to mention, in closing, that, as I understand, Mr. Fowler's Company, is not an "Alaskan" company or a "local" company, to my knowledge, it was incorporated outside Alaska, and is headquartered in Las Vegas, Nevada, and perhaps his company changed their name, to appear more neighborly, but it appears that just another Coal Bed Methane drilling, dewatering, corporate bully and stockholder owned, company, intending to manipulate and intimidate Mat-Su Borough residents, is presently in the Borough permitting process and his experimental and hazardous, C.B.M. drilling and dewatering operations, are not welcomed and will remain, not welcomed, by me, a "Mat-Su Valley resident" since about 1970, or by many other informed Mat-Su Borough residents, opposed to being bullied, by an outside corporate special interest group, such as Fowler Oil and Gas Corporation. I hope that my comments will be helpful, to Mat-Su Borough officials, regarding their decision-making processes. Thank you for this opportunity to comment. Respectfully submitted August 24, 2007, 5:12 p.m. Sincerely and respectfully, Theodore D.M. Bartko Copy sent to: / A.O.G.C.C. 333 West 7~ Avenue Anchorage, Alaska 99501 Colombie; Jody J (DOA) From: Lazy Mountain Farms [mrtko@mtaonline.net] Sent: Friday, January 04, 2008 2:35 AM To: Colombie, Jody J (DOA) Subject: Firm Opposition to Borough Permits Being issued to the Coal Bed Methane, Anti-Water Machine! Attachments: Firm Opposition to Borough Permits Being issued to the Coal Bed Methane, Anti-Water Machine.doc Page 1 of 1 1 /412008 • • Theodore D.M. Bartko P.O. Box 4206 Palmer, Alaska 99645 August 8, 2007 Matanuska-Susitna Borough 350 East Dahlia Avenue Palmer, Alaska 99645 COMMENT To whom it may concern, I will not support any coal bed methane drilling operations, in the Matanuska-Susitna Borough, within 8 miles of any Mat-Su Borough residence, or private property owners, or water right holders, opposed to any coal bed methane drilling companies, drilling plans or operations. A number one contradiction, of the coal bed methane company rhetoric, in my opinion, is that they will not interfere with the drinking water sources, in the water table. But they will re-inject water sources, under a deep layer of shale, or whatever layer is convenient for them. Subsurface water sources, to be re-injected, come from a water table source, between a layer, of the earth; so they will interfere with, at least one or many water tables, to carelessly get to their coal bed methane gas source, in my opinion, contradicting their operations plan, rhetoric. Dewatering of subsurface water, in order to re-inject it, deeper in the earth, where people live and share, clean drinking water aquifers, which can flow, apparently, up to 10 miles and where people, garden and farm, is an unacceptable procedure, to me. I believe, in water aquifer and subsurface water source protection and preservation and prevention, of dewatering, of subterranean and surface water and drinking water contamination. Coal bed methane drilling procedures and operations, are a conflict of interest to me, as a Mat-Su Valley resident, who has chosen to defend and uphold, the law and the spirit of the law, regarding Alaska Statutes, such as Sec.37.14.820 (A) (5) Protection and treatment of surface and groundwater. Sec. 41.23.400 (3): Measures to alleviate potential adverse effects on water quality. Solid pipe, used to run through a confined water aquifer, is not sufficient protection, for drinking • • water aquifer protection, in my opinion. There are also unconfined water aquifers and drilling procedures cannot prevent seepage of toxic gases, such as hydrogen sulfide, nitrogen or the odorless, concentrated, deadly and explosive, methane gas itself, in my opinion. Public health and safety hazards, created by coal bed methane drilling procedures and operations, are far too dangerous, to permit, in areas, local Mat-Su Valley residents, live and work, in my opinion. Other Alaska Statutes are Sec. 41.45.350, regarding development projects, Give equal consideration to: (D): The preservation of other aspects of environmental quality. (F) Water supply. (G}: The interest of Alaska residents and landowners. Sec.46.15.145, Reservation of water. (4) ;3anitary and water quality purposes. I do not believe, that the coal bed methane drilling procedures, can fully prevent, cross contamination, by natural toxins, into aquifers, such as lead, iron, sulfur, arsenic, increased nitrates or other dangerous or harmful levels of minerals. There is no urgency or pressing need or necessity, for Borough officials, to permit any coal bed methane drilling operations, experimental or othf°rwise, at this present time, in my opinion, and it is a dangerous garrie to play, with the public and with the clean and safe, drinking water aquifer sources, which I believe, are beyond economic value and are exponentially more important to me, than coal bed methane, or the methane fever, of some audacious, reckless, or irresponsible, coal bed methane company C.E.O. or its employees, in my humble opinion. I would like to encourage the Borough officials, to reject the unfounded rhetoric, of any coal bed methane company, planning to exploit, any individuals or Mat-Su Valley residences or landowners, with their experimental or reckless plans, to industrialize, the Mat-Su Valley, with coal. bed methane drilling procedures, operations, and or facilities. I believe, that coal bed methane drilling company, plans, procedures and operations, do not mix, with most, informed, Mat-Su Valley people, and our local culture, our space and home-life, any more than, oil mixes with water. I will remain, firmly opposed, to coal bed methane drilling operations, within 8 miles of any Mat-Su Valley resident, or landowner, or water right holder, opposed to their environmentally hazardous and exploitive drilling, plans, procedures or unnecessary operations. I believe, that Mat-Su Valley residents, civil rights and community rights, far outweigh, the rights or plans, of a local or distant, corporate special interest, especially, when their interests, are conflicting with, or • • hazardous to, their neighboring Mat-Su Valley residents, our drinking water sources and supplies, our quality of life, or even our peace of mind. Another important adverse environmental impact, and reason, which is primarily social, that I will always oppose, invasive and environmentally hazardous industrial operations, near Valley residents, or mixed in with, the local people and our homes or lives, such as the coal bed methane drilling operations, is because of the tension and conflicts and conflicts of interest, it creates, with people. One individual may say, I care and I am concerned, and therefore I oppose their drilling operations, and another person may say, I do not care and it is worth the risks and I am not concerned about potentially hazardous side effects, so, drill your fill. The peace and harmony, that exists, between Mat-Su Valley neighbors, gets lost. The peace, which is essential, for quality of life and happiness, a primary reason, we each have chosen to live, garden, farm, attend school, recreate, find peace, or work, in the beautiful Matanuska-Susitna Valley. Thank you for this opportunity to comment and thank you for your time and your thoughtful considerations. Respectfully submitted August 9, 2007 / 1:53 a.m. Sincerely and respectfully, Theodore D.M. Bartko Copy sent to: A.O.G.C.C. 333 West 7~ Avenue Anchorage, Alaska 99501 . ~ ~ Page 1 of 1 Colombie, Jody J (DOA) From: Lazy Mountain Farms [mrtko@mtaonline.net] Sent: Friday, January 04, 2008 2:30 AM To: Colombie, Jody J (DOA) Subject: Drinking Water Source Protection Takes Precedence Over Coal Bed Methane Drilling Operations! Attachments: Drinking Water Source Protection Takes Precedence Over Coal Bed Methane Drilling Operations.doc 1/4/2008 ~~ •~ ~~ STATE OF ALASKA ADVERTISING ORDER NO. NOTICE TO PUBLISHER ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED A O_02814028 ORDER AFFIDAVIT OF PUBLICATION (PART2 OF THIS FORM) WITH ATTACHED COPY OF I`1 ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS F ADGCC AGENCY CONTACT DATE OF A.O. R 333 W 7th Ave, Ste 100 Jod Colombie December 6 2007 ° Anchorage, AK 99501 PHONE PCN M 907-793-1238 DATES ADVERTISEMENT REQUIRED: o Anchorage Daily News December 7 2007 , PO Box 149001 Anchora e AK 99514 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN g ~ ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Advertisement to be published was e-mailed Type of Advertisement Legal® ^ Display Classified ^Other (Specify) SEE ATTACHED ND INVOICE IN TRIPLICATE ADGCC, 333 W. 7th Ave., Suite 100 TO Anchora e AK 99501 REF TYPE NUMBER AMOUNT 1 VEN s Axle 02910 FIN AMOUNT SY CC PGM ~ 08 02140100 2 F- DATE PAGE 1 OF TOTAL OF 2 PAGES ALL PAGES$ COMMENTS LC ACCT FY NMR DIST 73451 DIVISION APPROVAL: Publisher/Original Copies: Department Fiscal, Department, Receiving AO.FRM • Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Application by Fowler Oil & Gas for waiver of the primary well control requirements of 20 AAC 25.033, divert line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.061(a), gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2) for drilling of the Kircher No. 1. Fowler Oil & Gas ("Fowler"), by letter dated November 21, 2007, and received by the Alaska Oil and Gas Conservation Commission ("Commission") has applied for an exception to the gas well spacing requirements of 20 AAC 25.055(a)(2) to allow drilling, completion, and regular production from their proposed Kircher No. 1 Coal Bed Methane ("Kircher No. 1 ") well within 1,500 feet of a property line. The well is located off Trunk Road in the Matanuska-Susitna Borough, 965 feet from the south line and 1,299 feet from the west line of Section 26, Township 18 North and Range 1 East, Seward Meridian. The proposed well location is 1,344 feet from the eastern boundary of the Kircher lease block, an irregularly shaped lease that encompasses approximately 794 acres. Additionally, Fowler has applied to the Commission for a permit to drill the Kircher No. 1 well that includes requests for waivers from: primary well control requirements of 20 AAC 25.033, divert line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.061(a), gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). On October 31, 2007, a member of the public requested the Commission hold a hearing on Fowler's proposed drilling activities. Therefore, the Commission has scheduled a public hearing on this application for January 15, 2008 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. In addition, a person may submit written protest or written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. Written protests or comments must be received no later than the conclusion of the January 15, 2008 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at 793-1221 by January 8, 2008. ~; Cathy P. Foerster Commissioner Anchorage Daily News '~~ x/2007 Affidavit of Publication ]001 Northway Drive, Anchorage, AK 99508 PRICE OTHER OTHER THER OTHER OTHER GRAND AD # DATE PO ACCOUNT PER DAY CHARGES CHARGES #2 CHARGES #3 CHARGES #4 CHARGES #5 TOTAL 392182 12/07/2007 02814028 STOF0330 $252.32 $252.32 $0.00 $0.00 $0.00 $0.00 $0.00 $252.32 STATE OF ALASKA THIRD JUDICIAL DISTRICT Angelina Benjamin, being first duly sworn on oath deposes and says that she is an advertising representative of the Anchorage Daily News, a daily newspaper. 'T'hat 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. .` ^. r' Signed ~ ~~I Subscribed and sworn m before this date: // Notary Public in and for the State of Alaska. Third Division. Anchorage, Alaska ~ / MY /~t(~t~~ ..~~ , ~~~``a`rVCy~4~~~A ~' ~~Prr~ y ~~~.. ~: '°1B1.1C :: 1 J'JJ •dR' ~11.7~~~b~,,1 J~ _~, ,11 J) J>~Jrpire )1 ~~1 Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Application by Fowler Oil & Gas for waiver of the primary well control requirements of 20 AAC 25.033, divert line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), weltbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well sitesurvey requirements of 20'AAC 25.061(a), gas detection regwrements of 20 AAC 25.065 and 20 AAC 25.056(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2) for drilling of the Kircher No. 1. Fowler Oil & Gas ("Fowler"), by letter dated November 21, 2007, and received by the Alaska Oil and Gas Conservation Commission ("Commission") ` has applied for an exception to the gds well sppacing requirements of 20 AAC 25.055(a)(2) to allow tlrilling, completion, and regular production from. their : proposed Kircher No. 1.COaI Bed Methane ("Kircher No. 1") well within 1,500 feet of a property line. The '' well is located off Trunk .Road in the .Matanuska-Susitna Borough, 965'feet from the south line and 1,299 feet from the west line of Section 26, ; Township 18 North and Range 1 East, Seward ;, Meridian. The proposed well location is f,344 feet '. from the eastern boundary of the Kircher lease block,. '' an irregularly shaped lease that encompasses ;. approximately 794 acres. Additionally, Fowler has. applied to the Commission for a permit to drill the Kircher No. 1 well that includes requests for waivers `, from: primary wellcontrol requirements of 20 AAC '; 25.033, divert line size regwrements of 20 AAC ; 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.061(a), gas detection requirements of 20 AAC 25.065 and 20 AAC '. 25.066(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). On October 31, 2007, a member of the. public requested the Commission hold a hearing on Fowler's proposed drilling activities. Therefore, the Commission has scheduled a public hearing on this application for January 15, 2008 at 9:00 am at the offices of the Alaska Oil and Gas Conservation. ; Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. In addition, a person may submit written protest or written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 9950E Wrltfeh protests or comments must be received no later than the conclusion of the January '. 15, 2008 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public bearing, please Contact Jody Colombie at 793-1221 by January 8, 2008. Cathy P. Foerster commissioner AO-02814028 Publish: December 7, 2007 ii ~ r ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED /~ 0 02814028 ORDER AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF _ I`1 ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS F AOGCC AGENCY CONTACT DATE OF A.O. R 333 West 7~' Avenue. Suite 100 ° AnchnraLle_ AK 9951 PHONE PCN M 907-793-1238 DATES ADVERTISEMENT REQUIRED: a Anchorage Daily News December 7 2007 , PO Box 149001 Anchora e AK 99514 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN g ~ ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Account # STOF0330 AFFIDAVIT OF PUBLICATION United states of America REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A GERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HERE. 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 2007, and thereafter for consecutive days, the last publication appearing on the day of , 2007, 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 2007, Notary public for state of My commission expires ~i •~ STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED A O_02814029 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF M ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS F AOGCC R 333 W 7th Ave, Ste 100 ° Anchorage, AK 99501 M 907-793-1238 T Frontiersman 0 Palmer, AK AGENCY CONTACT DATE of A.o. Jod Colombie December PHONE PCN DATES ADVERTISEMENT REQUIRED: December 7, 2007 THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: Advertisement to be published was e-mailed Type of Advertisement Legal® ^ Display Classified ^Other (Specify) SEE ATTACHED SEND INVOICE IN TRIPLICATE AOGCC, 333 W. 7th Ave., Suite 100 TO Anchora e AK 99501 REF TYPE NUMBER AMOUNT 1 VEN 2 Axn 02910 FIN AMOUNT SY CC PGM ~ 08 02140100 PAGE 1 OF I TOTAL OF 2 PAGES l ALL PAGE' LC ACCT FY NMR DIST 73451 DIVISION APPROVAL: 02-902 (Rev. 3~24a~ Publisher/Original Copies: Department Fiscal, Department, Receiving AO.FRM Notice of Public Hearing STATE OF ALASKA. Alaska Oil and Gas Conservation Commission Re: Application by Fowler Oil & Gas for waiver of the primary well control requirements of 20 AAC 25.033, divert line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.061(a), gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2) for drilling of the Kircher No. 1. Fowler Oil & Gas ("Fowler"), by letter dated November 21, 2007, and received by the Alaska Oil and Gas Conservation Commission ("Commission") has applied for an exception to the gas well spacing requirements of 20 AAC 25.055(a)(2) to allow drilling, completion, and regular production from their proposed Kircher No. 1 Coal Bed Methane ("Kircher No. 1 ") well within 1,500 feet of a property line. The well is located off Trunk Road in the Matanuska-Susitna Borough, 965 feet from the south line and 1,299 feet from the west line of Section 26, Township 18 North and Range 1 East, Seward Meridian. The proposed well location is 1,344 feet from the eastern boundary of the Kircher lease block, an irregularly shaped lease that encompasses approximately 794 acres. Additionally, Fowler has applied to the Commission for a permit to drill the Kircher No. 1 well that includes requests for waivers from: primary well control requirements of 20 AAC 25.033, divert line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e}, wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.061(a), gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3), and collection of drill cuttings requirements of 20 AAC 25.071(b)(2). On October 31, 2007, a member of the public requested the Commission hold a hearing on Fowler's proposed drilling activities. Therefore, the Commission has scheduled a public hearing on this application for January 15, 2008 at 9:00 am at the offices of the Alaska Oil and Gas Conservation Commission at 333 West 7`h Avenue, Suite 100, Anchorage, Alaska 99501. In addition, a person may submit written protest or written comments regarding this application to the Alaska Oil and Gas Conservation Commission at 333 West 7"' Avenue, Suite 100, Anchorage, Alaska 99501. Written protests or comments must be received no later than the conclusion of the 3anuary 15, 2008 hearing. If you are a person with a disability who may need special accommodations in order to comment or to attend the public hearing, please contact Jody Colombie at 793-1221 by January 8, 2008. . Cathy P. Foerster Commissioner 01/14/.2008 16; 55 907352 FRONTIERSMAN • PAGE 01 F/1X Cover Sheet N~~t-su Valley F~~rntlersman 5~~i1 Mayflower Ct, 11Vrrilla, Alaska 99654 tr-e: 907352-22f 3 Fad: 90~-352-227 Send to: From: Attention: dffice IaCatlon: ! Wasilla, Alask~~ dffice loot' n: I]ate: i Fax number: Ul _ ._ email: URGENT reply hleasa ~ plear~~ ~ For your asap Comment revleNi information Total pages, including cover: C''nmmonic• 01/14/2008 16:55 907352 FRONTIERSMAN • PAGE 02 ~'rant_ersrr#~n Growing with fhe Va!!ey Since i9.4~' 5751 East Mayflower Court Wasilla, AK 9965a (9~7) 352-2250 (907) G94-6318 (907) 352-2277 E=ax AFFIDAVIT QF PUBI-.1CATIC~~1 UNITED STATES OF AMERICA, STATE dF ALASKA, TI~II'~lC] DIVISION BEFORE ME, THE UNDERSIGNED, A NOTARY F~UBLIC, h'"HIS DAY I PERSONALLY APPEARED BEFORE SUZANNE ICKES'NYHQ, BEING 1=1RST i DULY SWORN, ACCORDING TO LAW, SAYS THAT SH~'IS THE LEGAL AD CLERK OF THE FRONTIERSMAN PUELISHE~ AT WASILLA, IN SAID DIVISION THREE AND STATE QF AL~-SKA AND THAT THE AbVERTiSEMENT, OF WHICH THE ANNEX~~ iS A TRUE COPY, WAS PUBLISHED (~N TM1= FOLLOWING C?AYS: December 9, 2p07 AND THAT THE RATE CHARGED THEREIN IS NOT IN 1=~(CESS OF THE RATE CHARGED RRIVATE INDIVIDUALS. ~7 SUBSCRI~D AND ~WQRN TO BEFORI` ME THIS 10~,,'"~AY dF DECEMBER 07. /~' ~ '! NOTARY PU FOR .STATE OF ALASKA SdA FR# 97aa "~~y OFFICIAL SEAL ,~; TP~1CY I4Nf~l^ RI. ~Sl.C6 1JOTAAY pUel.lo-b'(a7E of At.A9KA My cmnm. F~reo Mwu~h 23, 2011 01/14/2008 16:55 907352 FRONTIERSMAN ~ PAGE 03 ~~~ Flaaurlr~ BTAIOE OF A Aiaalps p!! sntl ~%0 Comml~~ Re: by Fowler O (~ wafvsr mf the PNrrn~ ~Ilts ~ntrol ro of 2p 25,0$3, wort lrne roq~raments of p AAC 23.435(c), bJ °~ ProvanNon eq~. ment~C Irements mf wellborn a ~s` , quiremerlts. ~p ro" ~s.o5a, ear wash ap~~. Ing -equl-is~ Of $0.. AAC ~s.os$, ,eau ~ sunrey +m4Wrerne-rts ~ ~ regUr s,ae~(a)(a), and co11~~ of drrh a~f 20 $ re`wulrerr1ents for ~ ~ ~ ~t(b)~ . Kf+cher Np, 1. Fowl®r d, Qas (,~,°~~)oN by latter ~ d a vemller p1 the Alasl~ ill ~ sion ervation ~m1s- ('~mfss has $PPiled for en ~ cepibn tp the well spacing requk+aments at 20 AAC zs.osQ(a)(a) to allow tlrflRng, Dorn pteuvn, a„d Produc~n fmm'e$ular Proposed K1rCher oe~r ("Ki~her8 No. A1A")t ~ si within 1,500 feet of a A P-operty line. 'The Well dt is located Dn TNnk 9 Road in ~e ~~- toe Husks-3usl~a Bow mu °u6dh, !~6 feet frarn ~~, south flee and 1.2p~ sfo off BeGtlon pg shfP 18 North an R~f7e 7 East, BewaM Meridian, The Pro- Posed well location Is 1,344 fe9t front the eastern boundary of the K1~h®r lases block, (ease~tllat~ shaped PaBses ~~- ~ aCreaPPtbmc ~t~- allY, Fowler has applied to the C~nmisslort for Kftrhe~No.~ drill the lndu[Iss wsM that requests ~r A well ~ ~: Primary ~ manta I mquire- 26.033, divert ~ AAC line size 'e9uirernants of ~ '~ 25.o8a(c), blow- out p,eyentton equip- fbr merit roquiroments of ry z0 AAC 28,o35(e), weJlbaro survey rs- AAG qulrements of 20 AAC s+~e 2a.oao, tea wail ePa~ 0 ing r'~ul-oments of 20 ow= AAC 2t3.a5s, welt site survey ~l-ements of ~ AAC 25.08t(®), gas tlefeClipfi ~W^s-nents of 20 AAC 2a.pg5 end PA MC 2s.086(4)(9)~ ~d ~~~ ~ drill nrAltJnps nsgWrBments pf 2G AAC ~.Q71rou~). ~ October 91, a0a~ a ~°~ber of the pul~fic quested the Commie. slon'~ld a hearfnp ~ Fowter'a P-oPosed drffl- lnp aclhgtles Tl~eris. ~~ ihs Canm-salon ~~ fhb p~~ 4~ atrl.OO am of the gNioos of tlfa ql~~ Of! °~ Oas ConservatJ~ ~~ At 333 mat 7th Avenue, 8ufts 10p. Mchorage ea6ot in aaldNNat, a l~tson 'nalW aWNhlt carmen pro-, teat pr wrlnan cpm. mew rogarding this AIA 11 and ~ ~sr'v~stlon Commis. on ilt 933 West 7'tli 8uha lap, An~ orb, AIAS~ ~~ ~ ~TPrnm ~ B ~~ ~+hred na ~ ~ ~ cokyu_ eittiuarY t3, f'iwrWtg• d~ ~ .. Rwrrron whh a n~ who n,ay modatiot~, tern` order Coto ~ ewnd Plaa.eP hotA ~ , Cotanbis ' ~.1Q21 by Janus ' },. Catf~y P C~lssi ' ' Fp#874q aa~h~ .' d r B, z _ ~ ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED C /L O_02814029 I`1 ORDER AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTA HED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS F A~GCC AGENCY CONTACT DATE OF A.O. R 333 West 7`" Avenue. Suite 100 ° Anch~raLle_ AK 9951 PHONE PCN M 907-793-1238 DATES ADVERTISEMENT REQUIRED: o Frontiersman December 7 2007 , Palm r AK THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN e ~ ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: AFFIDAVIT OF PUBLICATION United states of America REMINDER State of ss INVOICE MUST BE IN TRIPLICATE AND MUST REFERENCE THE ADVERTISING ORDER NUMBER. division. A CERTIFIED COPY OF THIS AFFIDAVIT OF PUBLICATION MUST BE SUBMITTED WITH THE INVOICE. Before me, the undersigned, a notary public this day personally appeared ATTACH PROOF OF PUBLICATION HERE. 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 2007, and thereafter for consecutive days, the last publication appearing on the day of , 2007, 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 2007, Notary public for state of My commission expires Page 1 of 1 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, December 06, 2007 11:28 AM Subject: Public Notice Kircher #1 Attachments: Kircher#1 Public Hearing Notice.pdf BCC:McIver, C (DOA); 'foms2@mtaonline.net ; 'Alan Birnbaum <" "Alan J Birnbaum "> (alan.birnbaum@alaska.gov)'; 'Aleutians East Borough'; 'Anna Raff ; Arion, Teri A (DNR); 'Arthur C Saltmarsh'; 'Arthur Copoulos'; 'Barbara F Fullmer'; 'bbritch'; 'Bill Walker'; 'Brad McKim'; 'Brandon Gagnon'; 'Brian Gillespie'; 'Brian Havelock'; 'Brit Lively'; 'Bruce Webb'; 'buonoje'; 'Cammy Taylor'; 'carol smyth'; 'Cary Carrigan'; 'Catherine P Foerster'; caunderwood@marathonoil.com; 'Charles O'Donnell'; 'Chris Gay'; 'Christian Gou-Leonhardt ; 'Cliff Posey ; 'Dan Bross'; 'dapa'; 'Daryl J. Kleppin'; 'David L Boelens'; 'David Steingreaber'; 'ddonkel'; 'Deanna Gamble'; 'Deborah J. 3ones'; 'doug_schultze'; 'Evan Harness'; 'eyancy'; 'Francis S. Sommer'; 'Fred Steece'; 'Garland Robinson'; 'Gary Laughlin'; 'Gary Rogers'; 'Gary Schultz'; 'ghammons'; 'Gordon Pospisil'; 'Gregg Nady'; 'gregory micallef; 'gspfoff; 'Hank Alford'; 'Harry Engel'; 'jah'; 'James B Regg'; 'James M. Ruud'; 'James Scherr'; 'Janet D. Platt'; 'jdarlington'; 'jejones ; 'Jerry McCutcheon ; 'Jim White'; 'Jim Winegarner'; 'Joe Nicks'; 'John Gating'; 'John S. Haworth'; 'John Spain'; 'John Tower'; 'John W Katz'; johnny.aiken@north-slope.org; 'Jon Goltz'; 'Julie Houle'; 'Kati Moriarty'; 'Kaynell Zeman'; 'Keith Wiles'; keelson@petroleumnews.com; 'Kristin Dirks'; 'Laura Silliphant'; 'Lois'; 'Lynnda Kahn'; 'mail=akpratts@acsalaska.net'; 'mail=Crockett@aoga.org'; 'mail=fours@mtaonline.net'; 'Mark Dalton'; 'Mark Hanley'; 'Mark Kovac'; 'Mark P. Worcester'; 'Marquerite kremer'; 'many'; 'Matt Rader'; 'mckay'; 'Meghan Powell'; 'Mike Bill'; 'Mike Mason'; 'Mikel Schultz'; 'Mindy Lewis'; 'MJ Loveland'; 'mjnelson'; 'mkm7200'; 'Nick W. Glover'; NSU, ADW Well Integrity Engineer; 'Patty Alfaro'; 'Paul Decker'; 'Paul Winslow'; Pierce, Sandra M (DNR); 'Randall Kanady'; 'Randy L. Skillern'; 'rcrotty'; Rice, Cody J (DNR); 'rmclean ; rob.g.dragnich@exxonmobil.com; 'Robert Campbell'; 'Robert Province'; 'Roger Belman'; 'Rudy Brueggeman'; 'Scott Cranswick'; 'Shannon Donnelly'; 'Sharmaine Copeland'; 'Sondra Stewman'; 'Sonja Frankllin'; 'stanekj'; 'Stephen F Davies'; 'Steve Lambert'; 'Steve Moothart'; 'Steven R. Rossberg'; 'tablerk'; 'Tamera Sheffield'; 'Temple Davidson'; 'Terrie Hubble'; 'Thomas E Maunder'; 'Tim Lawlor'; 'Todd Durkee'; 'trmjrl ; 'Walter Featherly'; 'Walter Quay'; 'Wayne Rancier' Attachments:Kircher#1 Public Hearing Notice.pdf; 12/6/2007 Page 1 of 1 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, December 06, 2007 11:14 AM To: 'contact@frontiersman.com' Subject: Public Notice Attachments: Kircher_Public Hearing Notice.doc; Ad Order Frontiersman form.doc Please publish on Sunday December 9, 2007. Jody Colombie 12/6/2007 • Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, December 06, 2007 11:12 AM To: 'Ads, Legal' Subject: Public Notice Attachments: Ad Order ADN form.doc; Kircher Public Hearing Notice.doc Page 1 of 1 12/6/2007 ~# 1 • • ~~ :; ~: -~ -~ FOWLER OIL & GAS ~~~ ~~~~` T Z11~7 December 29, 2007 1~sir~ nil ~ ., ~ ~ ,, Mr. John Norman, Chairman s ~ , , Alaska Oil & Gas Conservation Commission 333 West 7th Ave., Suite 100 Anchorage, AK. 99501 Re: Hearing on Application for Permit to Drill Fowler Oil and Gas Kircher No. 1 Dear Commissioner Norman: On October 9, Fowler Oil and Gas i:tled an Application for a Permit to Drill the captioned well, That application asked for nine exceptions to the existing regulations. The cover letter to that applica#ion contained this statement: "It should be noted that numerous exceptions are being requested. This is primarily because the existing AOGCC regulations contain no references strictly applicable to CBM exploration and production. The existing regulations were developed and promulgated long before CBM came into existence and are designed solely for exploration and production of conventional gas resources." We still believe that statement to be true. Of the nine exceptions that were requested, eight can be acted upon by the commission without conducting a hearing according the existing regulations. The request for a spacing exception for a gas well, however, requires a hearing. 1 am preparing material to show that we will not be draining methane gas from adjacent subsurface property owners with this well. On December 9, 2007, the Alaska Oil and Gas Conversation Commission posted a "Notice of Public Hearing" IN THE Anchorage Daily news that contained the following statement: Application by Fowler Oil & Gas for waiver of the primary well control requirements of 20 AAC 25.033, divert(er) line size requirements of 20 AAC 25.035(c), blowout prevention equipment requirements of 20 AAC 25.035(e), wellbore survey requirements of 20 AAC 25.050, gas well spacing requirements of 20 AAC 25.055, well site survey requirements of 20 AAC 25.06(a), gas detection requirements of 20 AAC 25.065 and 20 AAC 25.066(a)(3}, and collection of drill cuttings requirements of 20 AAC 25.071(b)(2) for drilling of the Kircher No. 1. 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net Mr. John Norman December 29 Page Two Additionally, a resident of Chickaloon, some 12 miles from the proposed well, has requested a hearing on the "Fowler CBM Permit". His statement is as follows, in part "It is my understanding that the type ofi well planned is unconventional and will require many horizontal off shoots, each of which will be used to dewater significant areas adjacent to private residences in order to allow methane to percolate to the surface." I am preparing material that will, among other things, show that the dewatering of the coal beds by subsequent lateral wells will not remove water from the aquifer used by the nearby residents. However, I am at a loss to determine how to prepare for the other eight requested exceptions. We have no new data to present nor do we have any new interpretations to propose. The proposed activities were the subject of a Matanuska-Susitna Borough application and a hearing before the Matanuska-Susitna Borough Planning Commission on October 1, 2007. At that time the permit was approved unanimously. Since that time we have received no requests for information regarding our proposal from nearby residents or nearby concerned parties. Nor have we received any communication from the Alaska Oil and Gas Conversation Commission regarding our proposed plans. I would appreciate guidance from the AOGCC as to how to prepare for this hearing. If you have any questions or require additional information, please contact me on my cell phone at 230-8144 or by email at arlenehm@gci.net. Sincerely, Arlen Ehm President Fowler Oil and Gas 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230.8144 C arlenehm@gci.net FOWLER OIL & GAS December 13, 2007 Mr. John Norman, Chairman Alaska Oil & Gas Conservation Commission 333 West 7"' Ave., Suite 100 Anchorage, AK. 99501 Re: Application for Exception 20 AAC 25.055(a) (2) & (4) Gas Well Spacing Fowler Oil and Gas Kircher No. 1 Dear Mr. Norman: • .~ aF;i~ ~ ~ ~~~7 ~,laslt~a t.li3 ~ Oas C~n~. ~~~-~,ni~cio A~ch~r~~ _. Pursuant to the Fowler Oil and Gas request for a spacing exception, a mail aut was made to the four involved subsurface mineral estate owners on November 21, 2007. Those letters were certified and included a "Return Receipt Requested" form. All of those receipts have been returned and are attached hereto. The names of the property owners are as follows: Lohmann-Olson LLLP C/o Mr. Bob Cribbs 1622 W. Mt. Vernon Road Mt. Vernon, IA 52314 Mr. Dale R. Mizer P.O. Box 230270 Anchorage, AK 99523 Mr. Hany Owens P.O. Box 7107 Bend, OR 97708 Mr. Leonard B. Reid 20207 Paul Revere Circle Eagle River, AK 99577 Mr. John Norman November 21, 2007 Page Three 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net ~ ~ Mr. John Norman December 13, 2007 Page Two If you have any questions or require additional information, please contact me on my cell phone at 230-8144 or by email at arlenehm(c~gci.net. Sincerely, ,~,~ Arlen Ehm President Fowler Oil and Gas 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net ^ Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. ^ Print your name and address on the reverse so that we can return the card to you. ^ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: A. S gr ture /~e~ ~~ X Li ,24 Agent ^ Addressee 8. RLes~ ~ y,{Pr/nt erne) C. Dat of Delivery D. Is delivery address different from ftem 1 ~ ^ Y6s If YES, enter delivery address below: ^ No Off"?~36r . `; Mr. Harry Owens P.O. Box 7107 ~~~ '~1 .~?' Bend, OR 97708 ~-~~ ~`~ Service Type '\~, ~;' Certified Mail ^ Express Mail ~~Q ^ Registered ^ Return Receipt for Merchandise ^ Insured Mail ^ C.O.D. 4. Restricted Delivery? (ire Fee) r7 Yes 2. Article Number 7 0 p 7 14 9 0 0 0 01 9 4 7 7 2 9 7 2 (Tmrrsfer from service laben PS Form 3811, February 2004 Domestic Return Receipt to2sss-o2-M•f540 ^ Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. ^ -Print your name and address on the reverse so that we can return the card to you. ` ^ Attach this card to the back of the mailpiepe,~' or on the front if space permits. 1. Article Addressed to: Mr. Leonard B. Reid 20207 Paul Revere Circle Eagle River, AK 99577 ~ J ^ Agent _ ^ Addressee R ived by (Prin .D~ o y~c ~~~'~~ ~c ~v/ D. Is delivery address different from item 1? ^ Yes If YES, enter delivery address below: ^ No 3. Ser4ice Type ^ Certified Meli ^ Express Mail ^ Registered D Return Receipt for Merchandise ^ Insured Mail ^ C.O.D. 4. Restricted Delivery? (Extra Fee) ^ Yes 2. Article Number (Transfer from service labs!) 7 (] ~ 7 14 9 0 D D 01 9 4 7 7 2 9 6 5 PS Form 3811, February 2004 Domestic Return Receipt to2sss-02-M-tfi40' ^ Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. ^ Print your name and address on the reverse so that we can return the card to you. ^ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Mr. Bob Cribbs Lohmann-Olson LLLP 1622 W. Mt. Vernon Road Mt. Vernon, IA 52314 A. Signatu ~ X ~~ "~'~' " `~ ^ Agent ^ Addressee Received by (Printed Name) C. Date of Dgiivery vB~ ~.~" ~fZ 116 P~5 / //~9co%' D. Is delivery address different from item 17 ^ Yes If YES, enter delivery address below: ^ No 3. rvice Type Certified Mail ^ Express Mail ^ egistered ^ Return Receipt for Merchandise ^ Insured Mail ^ C.O.D. 4. Restricted Delivery? (Extra Fee) ^ Yes 2. Article Number 7007 149Q 0001 9477 2947, (transfer from senrlce label) PS Form 3811, February 2004 Domestic Retum Receipt 102595.02-M-1540 ^ Complete terns 1, 2, and 3. Also complete item 4 H Restricted Delivery is desired. ^ Print your name and address on the reverse so that we can return the card to you. ^ Attach this card #o the backof the mailpiece, or on the front if space permits. 1. Article Addressed to: Mr. Dale R. Mizer P.O. Box 230270 Anchorage, AK 99523 A. Signet ~ ( ` X ^ Agent ^ Addressee B. eceived by (Pr/nted Na C. Date of Delivery D. Is delvery address different from item 17 ^ Yes If YES, enter delivery address below: ^ No 3. Service Type Certified Mafl ^ Express Mail Registered ^ Return Receipt for Merchandise ^ Insured Mail ^ C.O.D. 4. Restricted Delivery] (Extra Fee) ^ Yes 2. Article Number (transfer from service laben 7 I] Q 7 1, 4 9 0 O Q Q ], 9 4 7 7 2 9 5 8 PS Form 3811, February 2004 Domest~ Return Receipt to2595-o2.M-tsao s •a •• REC~IV~~ Y S. Pw., FOWLER DIL & GAS November 21, 2007 Mr. John Norman, Chairman Alaska Oil & Gas Conservation Commission 333 West 7"' Ave., Suite 100 Anchorage, AK. 99501 Re: Application for Exception 20 AAC 25.055(a) (2) & (4) Gas Well Spacing Fowler Oil and Gas Kircher No. 1 Dear Mr. Norman: Nov ~ ~ 2~b7 Alaska Oil .& Gas Cote. Cammisaion Anchorage On October 9, 2007, Fowler Oil and Gas submitted an application for a Permit to Drill for the captioned well. Because of the constraints imposed by both the AOGCC regulations and the regulations of the Mat-Su Borough, this well could only be located where it is presently staked. The proposed location is as follows: Sec. 26-T18N-R1 E 1,344' FEL (nearest lease line) 965' FSL (nearest section line) 1,299' FWL (nearest section line) LAT: 61 ° 36' 59.37" LONG: -149 ° 13' 53.89" X 1, 774,147.92' Y 2,783,562.27' By being located only 1,344 feet from the nearest lease line this location is in violation of 20 AAC 25.055(a) (2) by 156 feet. Fowler Oil and Gas believes that an exception to this regulation is necessary and that this request can be supported by the following geological and engineering data. The 794-acre Kircher block consists entirely of lands where the property owners hold both the surface estates and the mineral estates. This block is surrounded entirely by lands where the subsurface mineral estate is owned either by the State of Alaska, Bureau of Land Management or by private interests. Various entities own the surface estate which includes farmland, forest and residential subdivisions. Because of overlapping regulations by the AOGCC and the Mat-Su Borough, it was not possible to locate the Kircher No. 1 well so as to not require a spacing exception for one 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net •• •• Mr. John Norman November 21, 2007 Page Two or both agencies. The Mat-Su Borough has a quarter mile (1,320') setback from adjacent properties for any well. Although the Alaska Department of Fish and Game lists 300' as their required setback from Wasilla Creek, the Mat-Su Borough lists 1,320'. By honoring the Mat-Su setback of 1,320', that places the location 1,344' from the eastern property line of Section 26-T18N-R1 E, S.M. Fowler Oil and Gas has completed the pooling of the various owners within the 794 acre Kircher Block of leases. It should be pointed out that the present spacing regulations were instituted when the only hydrocarbon being explored for in the Cook Inlet Basin was oil as there was no market at that time for gas. Conventional gas was included in these regulations although gas did not become a viable commodity in Alaska for several years. However, in the absence of gas production, the spacing for gas wells was considered in the Alaska regulations the same as it was in the lower-48 states and worldwide. Spacing was always on a 640 acre basis. CBM had not yet been considered. This is a Coal Bed Methane (CBM) well and all production will come from the individual coal seams. It is commonly accepted within the CBM industry that gas production from coal seams is restricted to a drainage area of 300± feet from the wellbore. Therefore, CBM production from this wellbore will not occur nearer than 1,188 feet from the nearest lease line. This is well within the limits of drainage of offsetting properties. Enclosed are the following: • A notice of the application which was mailed to the affected mineral owners • A Post Office receipt showing the date of mailing • The names and address to which the notice was sent • Mailing labels for those recipients of the notification who are within 3,000 feet of the subject well • A plat drawn to a scale of one inch equaling 2,640 feet or larger (map is 1° = 1820'), showing the location of the well for which the exception is sought, all other completed and drilling wells on the property, and all adjoining properties and wells • An affidavit by Arlen Ehm who is acquainted with the facts, verifying that all facts are true and that the plat correctly portrays pertinent and required data. It should be noted that there are no other completed or drilling wells on the property, or on the adjoining properties or any wells within five (5) miles of the subject well. Fowler Oil and Gas is, therefore, requesting an exception to 20 AAC 25.055(a) (2). We believe that it is justified. 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net •~ •• Mr. John Norman November 21, 2007 Page Three If you have any questions or require additional information, please contact me on my cell phone at 230-8144 or by email at arlenehm(a~gci.net. Sincerely, ~%~%~~,~ Arlen Ehm President Fowler Oil and Gas Enclosures 2420 Foxhall Drive Anchorage, AK 99504 907-333-8880 T 907-333-3454 F 907-230-8144 C arlenehm@gci.net •• •• MINERAL RIGHTS OWNERS UP TO 3,000' OF KIRCHER NO. 1 All mineral rights originated from federal patents Sec. 26-T18N-R1 E, NE/4 Federal Patent #02743 Lohmann-Olson LLLP Go Mr. Bob Cribbs 1622 W. Mt. Vernon Road Mt. Vernon, IA 52314 ***** Sec. 26-T18N-R1 E, SE/4 Federal Patent #02500 Mr. Dale R. Mizer P.O. Box 230270 Anchorage, AK 99523 ***,~ Sec. 34-T18N-R1 E, S/2 NE/4 Federal Patent #07745 Mr. Harry Owens P.O. Box 7107 Bend, OR 97708 ***** Sec. 35-T18N-R1 E, NE/4 Federal Patent #07517 Mr. Leonard B. Reid 20207 Paul Revere Circle Eagle River, AK 99577 •• ~• ,,~ ~ _ ~,~ 9 ~. ~ ;. :.~ ,~ . .~;3~... `~~~~ FOWLER OIL & GAS November 21, 2007 NOTICE TO REQUEST AN EXCEPTION TO THE REGULATIONS OF THE ALASKA OIL AND GAS CONSERVATION COMISSION TO: ALL MINERAL ESTATE OWNERS WITHIN 3,000' OF THE KIRCHER NO. 1 WELL Section 20 AAC 25.055 of the Alaska Oil and Gas Commission Regulations states: "(a) The commission will, in its discretion, establish drilling units to govern well spacing and prescribe a spacing pattern by pool rules adopted in accordance with 20 AAC 25.520. In the absence of an order by the commission establishing drilling units or prescribing a spacing pattern for a pool, the following statewide spacing requirements apply: (2) for a well drilling for gas, 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; (4) if gas has been discovered, the drilling unit for the pool is a governmental section; 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. Fowler Oil and Gas is hereby requesting an exception to the regulation requiring the siting of the Fowler Oil and Gas Kircher No. 1 well not to be within 1,500 feet of the nearest property line and allow it to be sited 1,344' from the nearest lease line. Arlen Ehm President Fowler Oil and Gas 2420 Foxhall Drive Anchorage, AK 99504 90733-8880 T 907-333.3454 F 907-230-8144 C arlenehm~gci.net •• •• i B.L.M Private Private DNR B.L.M DNR Private Private DNR ..~ j ~- Private 30C Lohmann-Olson LLLP c/o Bob Cribbs Proposed _, , Fowler Kircher No.1 pale R. Mizer Well Location Heirs ~ ~ '1320' KIRCHER~ BLOCK ~A _ - Leonard B. Reid ~\ - ~ Heirs Harry Owens B.L.M ~ ~ Private ^^~'' Y ~.~I Irnf # \V FIGURE 4. (REVISED) Map showing adjacent subsurface mineral estate ownership MULDOON STATION ANCHORAGE, Alaska 9504 73 9 36 0203150532-0098 11/21/2007 (800)275-8777 04:27:23 PM Sales Receipt Product Sale Unit Description Qty Price Final Price EAGLE RIVER AK 99577 $0.97 Zone-1 First-Class Large Env 1.50 oz. Return Rcpt (Green $2.15 Card) Certif ied $2.65 Label #: 70071490000194772965 Issue PVI: $5.77 BEND OR 97708 Zone-7 $0.97 First-Class Large Env 1.50 oz. Return Rcpt (Green $2.15 Card) Certified $2.65 Label #; 700714900001 94772972 Issue PVI: $5.77 MOUNT VERNON IA $0.97 52314 Zone-8 First-Class Large Env 1.60 oz. Return Rcpt (Green $2.15 Card) Certified $2.65 Label #; 70071490000194772941 Issue PVI: $5.77 ANCHORAGE AK 99523 $0.87 Zone-1 First-Class Large Env 1.40 oz. Return Rcpt (Green $2.15 Card) Certified $2.65 Label #: 70071490000 194772958 Issue PUI: $5.77 Total; $23.08 Paid by: Cash $25.10 Change Due: -$2.02 .~ ~ ~ i~ rr. • . ..~ .•. ~ EAGLE KIUE~ AK 9`77 r` ~ postage $ X0.97 4532 Certified Fee I ~2,G5 ~ 45 r~ p Return Receipt Fes.. Postmark ~ (Endorsement RequiYi?d); ~ ~ ~~.1., Here ~ Restricted Deilvery Fee (Endorsement Required) X4.44 0 ~ Total Postage s Fees $ $5.77 11/21/2447 r~ ~ Sent To . -'~~- ~` =-- -- .._`_f~,'/~4 % D f~ ~ -<_~~--~~---• ~ ~Ll? ------------------------ - ~•~ o ~ Street, Apt. No.; or PO Box No. Z~ (J~~~ Lt ! ~~ / _ ~t~77 v_ ~ t<1 ~ L rGG L~ , L ~ ~ i - -° City Slate. IP+4 _ :r. r.. - _ • --- - ~' ~ . ~ NOU~Ii' 1~kN~N I~ 52~1t:~, ~ _ ~ Postage $ X4.97 4J32 Certified Fee ~~ ~ G5 45 ~ > Postmark p Retum Receipt.~~df ~ Here p (Endorsement Require ~ ~t,15 ~ ResMcted Delivery Fee O (Endorsement Required) X4.44 ~ Total Postage a Fees $ $5, 77 11/21/2047 ra Sent TO f`- ~ Street, Apt. No.; ~ or PO Box No. /~ - - n , / `/ pi / , Crry, State, ZlP+4 :rr rr. f1J , - ' E~ENU -QR ~i7 F` Postage $ $4.97 4532 ~ Certified Fee $Z.US ©5 Postmark ~ Return Receipt Fee ~2 ~ lc~ Here ~ (Endorsement Regy red) t ~ Restricted Delivery Fee X4.44 (Endoisemoni Required) ~ X5.77 11/21/2447 ~ Total Postage & Feea r-'~ Sent fir ~ Q Street, Apt. No.; O or PO Box No. ~~ `)_ ~ ~ ~.--`---•-°------"--• -...-•---.._ Fl _..~0. ~._..___'_° ~ City late ZlP+4 ? t1 O~ 1 '_ %) ! :.. ... .~ ~ • .. :. • . •. IT' ~' ANCHE?RAf`iE 95 (` PostagB $ $4.97 4532 ~ . - ~. .. Certiled Fee ~~ f2.65 05 Postmark ~ ~ Fleturri Rec6j~tFee, ~ ~ (Endorsertient Rp~ ed) r': ~Z,1~ Here ~ Restricted Deilvery F9e (Endorsement flequired) $4.44 ~ ~ _'" Total Postage & Fees ,~ $5.77 11/[1/2447 r~ \ pQ ~ Street, Apt. No.; ,. or PO Box No. ______________ f ~ .___ _ _ . City, State, ZIP+4 u. ''~ /A~ ~' :rr ~ ~}- i / q [' ~' J ^ Complete items 1~d complete item 4 if Restricte roery esired. ^ Print your name and address on the reverse I so that we can return the card to you. ~ ^ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Mr. Bob Cribbs Lohmann-Olson LLLP 1622 W. Mt. Vernon Road Mt. Vernon, IA 52314 A. Signature . ^ Agent ~ X ^ Addressee I g. Received by (Printed Name) ~ G. Date of Delivery "" i D. Is delivery address different from item 17 ^ Yes I If YES, enter delivery address below: ^ No l I I I 3. Service Type I ^ Certified Mail ^ Express Mail I ^ Registered ^ Retum Receipt for Merchandise I n i.,~~ ~.~,~ nna~~ n r, n n I 4. Restricted Delivery? (Extra Fee) ^ Yes ~ 2. Article Number I (Transfer from service label) ~ I PS Form 3811, February 2004 Domestic Return Receipt 102595-02-M-1540 i -- ~ • • ~ ~ • , T ' ^ Complete items 1, 2, and 3. Also complete A. Signature ~ ( item 4 if Restricted Delivery is desired. X ^ Agent ~ ^ Print your name and address on the reverse ^ Addressee so that we can return the card to you. g. deceived by (Printed Name) C. Date of Delivery I ~ ^ Attach this card to the back. of the mailpiece, I or on the front if space permits. nt from item 1? s diff I li d d ^ Yes 1 1. Article Addressed to: ere very a dres s e D. If YES, enter delivery address below:. ^ No I Mr. Dale R. Mizer I i P.O. Box 230270 I Anchorage, AK 99523 3. Service Type ^ Certified Mail ^ Express Mall I ^ Registered ^ Retum Receipt for Merchandise ^ Insured Mall ^ C.O.D. 4. Restricted Delivery? (Extra Fee) ^ Yes I 2. Article Number I (Transfer from service Iabe1J I PS Form 3811, February 2004 Domestic Return Receipt io25as-02-M-1640 ~_- ~ • . . . . . ^ Complete items 1, 2, and 3. Also complete A. Signature I ^ Agent item 4 if Restricted Delivery is desired. X I ^ Print your name and address on the reverse ^ Addressee '' so that we can return the card to you. g. Received by (Printed Name) C. Date of Delivery i w Attach this card to the back of the mailpiece, ~ or on the front if space permits. ddress different from Rem 1 ? I d li D ^ Yes 1. Article Addressed to: very a s . e If YES, enter delivery address below: I ^ No I Mr. Leonard B. Reid I I 20207 Paul Revere Circle AK 99577 Eagle River , s. service Type I ^ Certified Mall ^ Express Mall ^ Registered ^ Return Receipt for Merchandise f ^ insured Mail ^ C.O.D. 4. Restricted Delivery? (Extra Feel ^ Yes I 2. Article Number I (Transfer from service label) i PS Form 3811, February 2004 Domestic Return Receipt 102595-02-M-1540 i I •• •• ... ^ Complete items 1, 2, and 3. Aiso complete it 4 if A. Signature ;; .: ~ t " ~ em Flestricted Delivery is desired. ~ t I ~ ~ Age ^ Print your name and address on the reverse n ~" I X d Ada~see so that we can return the card to you. ^ Attach this card to the back of the mail ie B. Received by (Printed Name) C. Date o~ Delwery p ce, or on the front if space permits. I 1. Article addressed In' ^~ D. Is delivery address diNerent From Item 1? ^ Yes I If YES, enter delivery address below: ^ ~o 1 Mr. Harry Owens I P.O. Box 7107 I I Rend, OR 97708 - I 3. Service type O Certified Mall ^ Express Mall I ^ Fleglstered ^ Return Receipt for Merchandise ^ Insured Mail ^ C.O.D. ' . I __ _ __ `_ __ ` _ , 4. Restricted Delivery9 (E~rtrg Fee) ^ Yes ~ _ 2 Article Number (1'rans(er from service label) ~ PS Form 3811, February 2pp~{ Domeslir, Return Receipt 102696-0~~•~li~d ..~.,,si4t I •. r• •• AFFIDAVIT State of Alaska Municipality of Anchorage BEFORE ME, the undersigned Notary, ~ ~ , on this 23"~ day of November, 2007, personally appeared Arlen Ehm known me to be a credible person and of lawful age, who being by me duly sworn, on his oath, deposes and says: 1. A notice of request for spacing exception for the AOGCC has been prepared and mailed to the subsurface mineral owners within 3,000 feet of the Kircher No. 1 well. 2. A map showing the involved subsurface mineral estates in relation to the Kircher No. 1 well has been prepared and mailed to the subsurface mineral owners with mineral estates within 3,000 feet of the Kircher No. 1 well. 3. A list has been compiled showing the names and mailing addresses of the subsurface mineral owners within 3,000 feet of the Kircher No. 1 well 4. Items 1., 2. and 3. have been mailed by certified mail on November 21, 2007. 5. There are no other owners, landowners or operators within 3,000 feet of the Kircher No. 1 well Arlen Ehm President Fowler Oil and Gas 2420 Foxhall Drive Anchorage, AK 99504 Subscribed and sworn to before me, this ~ay of November, 2007. State of ~}~"County of ~r7 ~ Signed before me qn this ~ day "°~ ~" Notary Public ~ exp. )n ' oa o20) C~ ~*~+ 10~0~~0 • ~- _ ;', • FOWLER Oll & GAS REQUEST FOR EXCEPTIONS PR/MARY WELL CONTROL DIVERTER LINE SIZE DOUBLE GATE PREVENTER WELLBORE SURVEYS GAS WELL SPACING WELL SITE SURVEYS HYDROGEN SULFIDE MONITORING GEOLOGIC DATA AND LOGS C-PLAN TO ACCOMPANY PERMIT TO DRILL APPLICATIONS KIRCHER NO. 1 & SUBSEQUENT KIRCHER BLOCK CBM WELLS n MAT-SU AREA V 1 ALASKA OCTOBER 8, 2007 1 ~~ ~~`1 ~ 5~ • • PRIMARY WELL CONTROL Introduction Section 20 AAC 25.033 (a) of the regulations requires: "(a) A drilling operation must be equipped with a drilling fluid system meeting the requirements of this section, unless the commission determines that a drilling fluid system is not necessary for primary well control. The operator shall submit with an application for a Permit to Drill (Form 10-401) a proposed drilling fluid program and a diagram with a list of equipment for a drilling fluid system designed to prevent the loss of primary well control. The drilling fluid system must be designed to maintain the wellbore in overbalanced condition except as otherwise provided under (i) of this section. A drilling operation is also subject to the requirements of 20 AAC 25.527. (b) A drilling fluid program and drilling fluid system intended to maintain the wellbore in overbalanced condition must be designed to provide and maintain (1) a drilling fluid (A) of sufficient density to overbalance the pressure of uncased formations penetrated; and (B) with Theological properties designed to (i) minimize the potential of a hydrostatic pressure surge or swab when the drilling assembly is run into or pulled out of the wellbore; and (ii) enhance the drop-out of solids and the escape of entrained gas; and (2) a volumetric capacity for drilling fluid reserves adequate for the volume of the wellbore, based on known or anticipated drilling conditions to be encountered, rig storage capacity, weather conditions, and estimated time for delivery." 20 AAC 25.033 (c) through (h) further define and clarify these regulations. Discussion Numerous wells have been drilled in this area of the Upper Cook Inlet Basin, all without encountering abnormal formation pressures. There is no reason to believe that this well will encounter abnormal pressures. Additionally, wells have been drilled with compressed air and, again, no difficulties were encountered. The most recent wells were the Evergreen Cook No. 1 well drilled some 9.5 miles west of this proposed location and completed on June 5, 2003, and the Evergreen Little Su No. 1 well drilled some 5.3 miles to the north and completed on April 6. 2004. The operator for the Cook No. 1 and the Little Su No. 1 requested and received waivers from the requirement of drilling in an overbalanced condition for each of these wells. Additionally, they encountered no problems with compressed air drilling. Drilling with compressed air has become the norm for CBM drilling in the lower-48 states. Thousands of wells have now been drilled using compressed air and small portable water well drilling rigs. Fowler Oil and Gas proposes to use a drive and drill hammer to drive the 12-3/4" casing to 88±' for the Kircher No. 1 well. A 12u hole will be drilled to a proposed depth of 500' by drilling with compressed air while a 10" diverter line is in place: After the 10" casing has been run and 2 ~ • cemented, a 9-5/8" hole will be drilled to 3,500 feet with a spherical BOP diverter in place as required by 20 AAC 25.035 (e) (1) (A) (iii). This will consist of an 11" 3,000 psi annular type of preventer. A kill weight mud system will be on location in case it is needed. An operator recently received an exception to this regulation requiring drilling in an overbalanced condition although its annular preventer provided less containment than the diverter being proposed for this well. Request Section 20 AAC 25.033 (i) of the regulations states: "The commission will approve underbalanced drilling operations and associated equipment changes if the commission determines that underbalanced drilling operations can be performed without loss of well control. A request for underbalanced drilling operations must include a description of all equipment and procedures to ensure proper containment of formation and return fluids." Therefore, a waiver of sections Section 20 AAC 25.033 (a) and (b) is hereby requested in order that an underbalanced drilling system be used as allowed for in Section 20 AAC 25.033 (i). • ~ cemented, a 9-5/8" hole will be drilled to 3,500 feet with a spherical BOP diverter in place as required by 20 AAC 25.035 (e) (1) (A) (iii). This will consist of an 11" 3,000 psi annular type of preventer. A kill weight mud system will be on location in case it is needed. An operator recently received an exception to this regulation requiring drilling in an overbalanced condition although its annular preventer provided less containment than the diverter being proposed for this well Request Section 20 AAC 25.033 (i) of the regulations states: "The commission will approve underbalanced drilling operations and associated equipment changes if the commission determines that underbalanced drilling operations can be performed without loss of well control. A request for underbalanced drilling operations must include a description of all equipment and procedures to ensure proper containment of formation and return fluids." Therefore, a waiver of sections Section 20 AAC 25.033 (a) and (b) is hereby requested in order that an underbalanced drilling system be used as allowed for in Section 20 AAC 25.033 (i}. 3 • • Introduction Section 20 AAC 25.035 of the regulations states in part: "(c) Except as provided in (d) and (h) of this section, a high capacity flow diverter system must be installed to provide safety for personnel and equipment before rotary rig drilling is performed below a well's structural or conductor casing, unless the casing is equipped with BOPE conforming with (e) of this section: (1) the diverter system must consist of a remotely operated annular pack-off device, a full-opening vent line valve, and a diverter vent line with a diameter (A) of at least 16n, unless a smaller diameter is approved by the commission to account for smaller hole size, geological conditions, rig layout, or surface facility constraints; and (B) at least as large as the diameter of the hole being drilled, unless a pilot hole with a diameter no larger than that of the vent line is drilled first; the commission will waive the requirement of this paragraph if the operator demonstrates, based on drilling experience in the near vicinity, that drilling a pilot hole would not be necessary for safety;" Discussion Fowler Oil and Gas proposes to drill a 12" hole from the bottom of the conductor at 88"~ to a depth of 500'. Previous wells in the nearby area have shown the absence of shallow gas hazards. Therefore Fowler Oil and Gas proposes to use a 10" diverter line. A 11" 3,000 psi spherical BOP will be used for the remainder of the hole below 500' as required by 20 AAC 25.035 (e) (1) (A) (iii). DIVERTER LINE SIZE There are four wells that could be considered to be nearby to the proposed Kircher No. 1 in Sec. 26-T18N-R1 E. They are: WELL DISTANCE 166-006 169-029 202-180 203-205 529' FNL 8 635' FEL 1,048' FSL & 681' FWL 991' FSL 8~ 888' FEL 1,191' FNL & 605' FWL PERMIT LEGAL DESCRIPTION Austral Needham #1 4.3 mi SW Hill Fishhook #1 4.2 mi N NW Evergreen Cook #1 9.5 mi W Evergreen Little Su #1 5.3 mi N Total depths are as follows: Needham #1 6,004' Fishhook #1 2,384' Cook #1 3,740' Little Su #1 2,125' Request Sec. 7-T17N-R1 E Sec. 3-T18N-R1 E Sec. 30-T18N-R1 W Sec. 35-T19N-R1 E Section 20 AAC 25.035 (c) (1) (B) of the regulations states: "at least as large as the diameter of the hole to be drilled, unless a pilot hole with a diameter no larger than that of the vent line is drilled first; the commission will waive the 4 • • requirement of this paragraph if the operator demonstrates, based on drilling experience in the near vicinity, that drilling a pilot hole would not be necessary for safety; Section 20 AAC 25.035 (h) of the regulations further states: "(h) Upon request of the operator, the commission will, in its discretion, approve a variance (2) from the diverter system requirements in (c) of this section if the variance provides at least equally effective means of diverting flow away from the drill rig or if the drilling experience in the near vicinity indicates that a diverter system is not necessary." Therefore, a waiver of sections 20 AAC 25.035 (c) (1) (A) and 20 AAC 25.035 (c) (1) (B) is hereby requested in order that 10" diverter vent line can be used as allowed for in 20 AAC 25.035(h) (2). • • DOUBLE GATE BOPE STACK Introduction Section 20 AAC 25.035 of the regulations states in part: "(e) A well must be equipped with BOPE meeting the requirements of this subsection from the time that open hole drilling operations begin below the surface casing until the drilled portion has been plugged or the well is completed, except if hydraulic communication to the open hole section is isolated. The following provisions apply to BOPE and other control equipment: (1) in rotary drilling operations, (A} for an operation requiring a BOP stack less than API 5K, BOPE must have at least three preventers, including (i) one equipped with pipe rams that fit the size of drill pipe, tubing, or casing being used, except that pipe rams need not be sized to bottgm-hole assemblies (BHA's) and drill collars; (ii) one with blind rams, except that a subsea BOPE assembly must have blind/shear rams in place of blind rams; and (iii) one annular type; and Discussion Fowler Oil and Gas plans to use an 11" 3,000 psi spherical BOP for the entire well below the driven conductor pipe at ~88'. We do not anticipate encountering free gas that the diverter cannot handle adequately. In fact, based on well records for the surrounding wells, it would be very rare to encounter free gas in these shallow strata. Our proposed diverter provides more containment than other diverters that have been used alone in recent area wells while not having a double gate preventer in place. In the unlikely event that unanticipated formation pressures are encountered, a sufficient quantity of gel and bar will be on location to provide a 10 ppg mud at 3,500 feet of depth. Concurrent with that will be mud pits, a mud mixer and mud pumps all in place ready to be used if needed. Request Section 20 AAC 25.035 (h) of the regulations further states: "(h) Upon request of the operator, the commission will, in its discretion, approve a variance (1) from the BOPE requirements in (e) of this section if the variance provides at least an equally effective means of well control;" Therefore, a waiver of sections 20 AAC 25.035 (e) (1) (A) is hereby requested in order that 10" diverter vent line can be used as allowed for in 20 AAC 25.035(h) (1). 6 that drilling with air produces much straighter notes than oy using me cur-gvernwiiai ~~~uu ~ ~«~~~ with its very heavy bottom le assembly. Drilling with an air hammer re wires much less weight on the bit and, thee, air drilling produces straighter hol~ However, if the proposed well is converted to drilling with a conventional mud system, the surveys will be taken as required. The heavy BHA used for the conventional mud system is necessary to provide the force needed for cutting capability. A complete continuous directional survey will be acquired after the well is complete. Request Section 20 AAC 25.050 (h) states: "Upon application, the commission will, in its discretion, waive all or part of the directional survey requirements of this section or approve alternate means...° Therefore, a waiver of sections 20 AAC 25.050 (a) (1) and (2) and are hereby requested in order that no inclination surveys be required if the proposed well is drilled with air as allowed for in 20 AAC 25.050 (h). 7 ~J WELLBORE SURVEYS Introduction Section 20 AAC 25.050 of the regulations states: • "(a) A well that is not intentionally deviated must be: (1) drilled as close to vertical as possible using conventional drilling techniques, except that deviation is permitted for short intervals to straighten the hole, sidetrack junk, or correct mechanical difficulties: (2) surveyed to determine the inclination from vertical with surveys starting at 500 feet and no more than 500 feet apart to total depth;" Discussion This well is being prepared for drilling with compressed air where the mechanics of air drilling do not allow for the taking of such inclination surveys. Furthermore, it has been well documented that drilling with air produces much straighter holes than by using the conventional mud system with its very heavy bottom hole assembly. Drilling with an air hammer requires much less weight on the bit and, therefore, air drilling produces straighter holes However, if the proposed we11 is converted to drilling with a conventional mud system, the surveys will be taken as required. The heavy BHA used for the conventional mud system is necessary to provide the force needed for cutting capability. A complete continuous directional survey will be acquired after the well is complete. Request Section 20 AAC 25.050 (h) states: "Upon application, the commission will, in its discretion, waive all or part of the directional survey requirements of this section or approve alternate means..." Therefore, a waiver of sections 20 AAC 25.050 (a) (1) and (2) and are hereby requested in order that no inclination surveys be required if the proposed well is drilled with air as allowed for in 20 AAC 25.050 (h). • ~ GAS WELL SPACING Introduction Section 20 AAC 25.055 of the regulations state: "(a) The commission will, in its discretion, establish drilling units to govern well spacing and prescribe a spacing pattern by pool rules adopted in accordance with 20 AAC 25.520. In the absence of an order by the commission establishing drilling units or prescribing a spacing pattern fora pool, the following statewide spacing requirements apply: (2) for a well drilling for gas, 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; (4) if gas has been discovered, the drilling unit for the pool is a govemmental section; 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. (b) A well may not begin regular production of oil from a property that is smaller than the governmental quarter section upon which the well is located or begin regular production of gas from a property that is smaller than the governmental section upon which the well is located, unless the interests of the persons owning the drilling rights in and the right to share in the production from the quarter section or section, respectively, have been pooled under AS 31.05.100. (c) A pooling agreement under AS 31.05.100 must be filed with the commission before regular production from the affected property begins. (d) The commission will review an application for an exception to the provisions of this section in accordance with 20 AAC 25.540. The applicant for an exception shall send notice of the application by certified mail to the owners, landowners, and operators described in (1) of this subsection and shall furnish the commission with a copy of the notice, the date of mailing, and the addresses to which the notice was sent. The application must include (1) the names of all owners, landowners, and operators of all properties within 1,000 feet of a well drilling for oil or within 3,000 feet of a well drilling for gas for which an exception is sought; (2) a plat drawn to a scale of one inch equaling 2,640 feet or larger, showing the location of the well for which the exception is sought, all other completed and drilling wells on the property, and all adjoining properties and wells; and (3) an affidavit by a person acquainted with the facts, verifying that all facts are true and that the plat correctly portrays pertinent and required data. (e) Upon application by the operator, the commission will establish notice requirements different from those of (d) of this section if the operator demonstrates to the • • commission's satisfaction that compliance with the notice requirements in (d) of this section is not feasible because of the complexity of ownership within the notice area." Discussion The 794-acre Kircher block consists entirely of lands where the property owners hold both the surface estates and the mineral estates. This block is surrounded entirely by lands where the subsurface mineral estate is owned either by the State of Alaska, Bureau of Land Management or by private unknown interests. Various entities own the surface estate which includes farmland, forest and residential subdivisions. Because of overlapping regulations by the AGCC and the Mat-Su Borough, it was not possible to locate the Kircher No. 1 well so as to not require a spacing exception for one or both agencies. The Mat-Su Borough has a quarter mile (1,320') setback from adjacent properties for a trunk well. Although the Alaska Department of Fish and Game lists 300' as their required setback for Wasilla Creek, the Mat-Su Borough lists 1,320'. That places the location 1;3~' from the eastern property line of Section 26-T18N-R1 E, S.M. Fowler Oil and Gas has completed the pooling of the various owners in the Kircher Block of leases. Request Section 20 AAC 25.055 (a) states: "The commission will, in its discretion, establish drilling units to govern well spacing and prescribe a spacing pattern by pool rules adopted in accordance with 20 AAC 25.520." It is only "in the absence of an order by the commission establishing drilling units or prescribing a spacing pattem for a pool, the following statewide spacing requirements apply". Fowler Oil and Gas is hereby requesting that the spacing plan be approved as laid out in the attached plat. 9 • • Introduction Section 20 AAC 25.061(a) of the regulations requires: "...for an exploratory or stratigraphic test well, near surface strata to a depth of 2,000 feet in the vicinity of the well must be evaluated seismically by common depth point refraction or reflection profile analysis, or by another method approved by the commission, to identify anomalous velocity variations indicative of potential shallow gas sources. Analysis results must be included with the application for the Permit to Drill (Form 10-401)". Discussion Fowler Oil and Gas does not own any seismic data in the immediate area. However, numerous wells have been drilled in this portion of the Upper Cook Inlet Basin over the past forty years including the recent CBM wells drilled by Ocean Energy and by Evergreen Resources. None of the drilling operations in these forty years has encountered any potential shallow gas sources. WELL SITE SURVEY There are four wells that could be considered to be nearby to the proposed Kircher No. 1 in Sec. 26-T18N-R1 E. They are: WELL DISTANCE 166-006 169-029 202-180 203-205 529' FNL & 635' FEL 1,048' FSL & 681' FWL 991' FSL & 888' FEL 1;191' FNL 8 605' FWL PERMIT LEGAL DESCRIPTION Austral Needham #1 4.3 mi SW Hill Fishhook #1 4.2 mi N NW Evergreen Cook #1 9.5 mi W Evergreen Little Su #1 5.3 mi N Total depths are as follows: Needham #1 6,004' Fishhook #1 2,384' Cook #1 3,740' Little Su #1 2,125' Sec. 7-T17N-R1 E Sec. 3-T18N-R1 E Sec. 30-T18N-R1 W Sec. 35-T19N-R1 E Fowler Oil and Gas proposes to use a diverter line while drilling from 80t feet to the depth of the surface casing at 5001 feet. Annular BOP equipment will be in place from the surface casing point to total depth and during the drilling of the laterals as required by 20 AAC 25..035 (e) (1) (A). Request Section 20 AAC 25.061(c) of the regulations provides: "...upon request by the operator, the commission will, in its discretion, waive the requirements of this section if the operator can identify, by other equally effective means, the likelihood of encountering potential shallow gas or seabed hazards or if the commission already has information that substantiates the presence or absence of shallow gas or seabed hazards°. 10 • • Therefore, a waiver of section 20 AAC 25.061(a) is hereby requested as allowed for in subsection 20 AAC 25.061(c). 11 • • HYDROGEN SULFIDE GAS DETCTION Introduction Section 20 AAC 25.065 of the regulations state, in part: "(b) If a well is to be drilled in an area where a formation to be penetrated is known to contain hydrogen sulfide gas, or if hydrogen sulfide gas is encountered while drilling, the operator shall conform with the API RP 49, Recommended Practices for Saf2 Drilling of Wells Containing Hydrogen Sulfide, 2d edition, April 15, 1987, which is adopted by reference." (c) If the history of drilling in an area is insufficient to know whether hydrogen sulfide gas exists, the commission will specify on the permit to Drill (Form 10-401) that the operator shall comply with the minimum requirements for detection monitoring, contingency and control, and training, as follows... " Section 20 AAC 25.066 (a) (3) requires: "The hydrogen sulfide detection system must have a minimum of three sensing points; one sensing point must be under the substructure near the cellar, one must be near the shale shaker, and one must be above the drill rig floor near the driller's station or above the drilling platform; the commission will require additional sensors as the commission considers necessary for safety, such as at the entrance to living quarters if they are adjacent to the drill rig, or over the mud pits if they are remote from the shale shaker and enclosed; ..." Numerous wells have been drilled throughout the entire Cook Inlet Basin and, in particular, in this part of the Upper Cook Inlet basin all without any no reports of the presence of hydrogen sulfide gas. Request Fowler Oil and Gas requests an exception to those portions of Section 20 AAC 25.065 and 20 AAC 25.066 that relate to the monitoring stations for detection of hydrogen sulfide gas. There will be little if any enclosed spaces on this water well drilling rig. Individual H2S monitors will be worn by the rig crew. We will, however, monitor for the presence of methane gas as given in Section 20 AAC 25.066. 12 • GEOLOGICAL DATA AND LOGS Introduction Section 20AAC 25.071 of the regulations states: "(b) Within 30 days after completion, suspension, or abandonment of a well, whichever occurs first, and within 30 days after completion or plugging of a well branch, if occurring at a different time, the operator shall file with the commission, unless previously filed, (1) a sepia and a reproduced copy of a complete mud log or lithology log consisting of a detailed record and description of a sequence or strata encountered, including g the kind and character of the rock and alt shows of hydrocarbons; an electronic image file in a format acceptable to the commission may be substituted for the sepia; (2) a complete set of washed and dried, legibly identified samples of all drill cuttings, as caught by the operator in accordance with good geological practices, consisting of a minimum of one-quarter cup in volume or three ounces in weight of cuttings for each interval;" There are four wells within 10 miles of this proposed well four of which are within 5± miles of this well. From a geologic standpoint, there is no reason to believe that collecting another set of samples from this well will provide any new or different data to the already large sample collection for the area. It should be noted that this well will be drilled with compressed air and the cuttings will be a much finer size than when drilled with a conventional mud system. These four wells are: Austral Needham #1 Hill Fishhook #1 Evergreen Cook #1 Evergreen Little Su #1 4.3 mi SW 166-006 4.2 mi N NW 169-029 9.5 mi W 202-180 5.3 mi N 203-205 Sec. 7-T17N-R1 E Sec. 3-T18N-R1 E Sec. 30-T18N-R1 W Sec. 35-T19N-R1 E 529' FNL & 635' FEL 1,048' FSL & 681' FWL 991' FSL & 888' FEL 1,191' FNL & 605' FWL Total depths are as follows: Needham #1 6,004' Fishhook #1 2,384' Cook #1 3,740' Little Su #1 2,125' Request Section 20 AAC 25.071 (c) states: "The commission will, in its discretion, waive or modify the requirements of this section for a well if those requirements would not significantly add to the geologic knowledge of the area in light of the information that is available from other wells in the area.fl Since this well is located very close to previous wells where samples have already been collected, a waiver of sections 20 AAC 25.071 (b) (1) and (2) is hereby requested as given in 20 AAC 25.071 (c). 13 • ~ ~c~/~a Arlen Ehm President Fowler Oil and Gas 14 + ` • ~~~~ .IAN 1 5 ~~~$ Alaska Qil & Gas Cons. Co-nmissiort Anchorage FOG FOWLER OlL & GA S K/RCHER NO. 1 NARRATIVE AND CALCULATIONS TO ACCOMPANY PERMIT TO DRILL APPLICATION REVISED DECEMBER 3, 2007 • • INTRODUCTION Fowler Oil and Gas is preparing to commence an onshore coalbed methane (CBM) project near Palmer in the Mat-Su Borough (Figures 1, 2, 3 & 4). The wells are designed to explore for and test the CBM zones of the upper part of the Kenai Group of sediments that have been the target of CBM exploration over the past several years. These CBM target zones are stratigraphically and structurally above the liquid hydrocarbon-bearing zones that are present in the deeper parts of the Cook Inlet Basin. NEARBY WELLS There are four wells that could be considered to be nearby to the proposed Kircher No. 1 in Sec. 26-T18N-R1 E. They are: WELL DISTANCE PERMIT LEGAL DESCRIPTION Austral Needham #1 4.3 mi SW 166-006 Sec. 7-T17N-R1 E 529' FNL & 635' FEL Hitl Fishhook #1 4.2 mi N NW 169-029 Sec. 3-T18N-R1 E 1,048' FSL & 681' FWL Evergreen Cook #1 9.5 mi W 202-180 Sec. 30-T18N-R1 W 991' FSL 8~ 888' FEL Evergreen Little Su #1 5.3 mi N 203-205 Sec. 35-T19N-R1E 1,191' FNL & 605' FWL Total depths are as follows: Needham #1 6,004' Fishhook #1 2,384' Cook #1 3,740' Little Su #1 2,125' WELL PLANS KIRCHER NO. 1 This trunk well bore will be drilled to a maximum depth of 3,500 feet in order to obtain pertinent geologic information regarding the presence, thickness and depth of the various coal seams and, if possible, to obtain coal samples that can be analyzed in the laboratory. However, the well may be terminated at a shallower depth if such a shallower total'depth is determined to be desirable while drilling. An earlier termination to the drilling could be due to the lack of significant coals detected by observing the cuttings or by other factors leading to a decision by the operator to terminate drilling. If any liquid hydrocarbons were to be encountered through some unforeseen geological circumstance, drilling would be terminated immediately. The Kircher No.1 will be drilled using the M-W Drilling, Rig # 20 (M-W 20), with the intent being to create a trunk wellbore from which to subsequently drill lateral wellbores in the coal beds at various horizons, yet to be determined. This trunk well bore has been designed to accommodate the multiple laterals that will be subsequently drilled to dewater the coal beds and to produce the contained gas. The laterals will be cased with slotted liners so that dewatering and gas production can begin immediately. Permit applications will be made to drill the lateral wells and to convert the Kircher No. 1 to a Class II Injection well 2 • • A geologist will be on location at all times and will be monitoring all hydrocarbon shows. However, a request is being made to waive the requirement to create a lithologic log and collect well samples. SUBSEQUENT KIRCHER WELLS WITHIN THIS 794-ACRE BLOCK All of the lands within the Kircher drilling tract are dedicated to what Fowler Oil and Gas calls the Kircher Block. Subsequent lateral wells will be drilled and produced from the Kircher No. 1 trunk wellbore. Fowler Oil and Gas envisions numerous discreet bottom hole locations for the lateral wells assuming multiple coal beds each with several lateral wellbores as provided for in 20 AAC 25.005(e) and 20 AAC 25.015(a)(1). However, there is presently no provision in the AOGCC regulations for drilling laterals specifically within individual coal beds in the search for and production of CBM gas. Fowler OiJ and Gas is requesting that the AOGCC include the trunk well and all of the Kircher Block laterals within this application for permit to drill. Before each lateral would be drilled an Application for Sundry Approvals, Form 10-403, would be filed giving the intended target for that lateral. Such a filing would be in lieu of a complete application for a Permit to Drill, Form 10-401, for each of the lateral wells. This would streamline the processing of the permits for the laterals for the AOGCC as well as for Fowler Oil and Gas and any other subsequent operators. EXCEPTIONS BEING REQUESTED: • An exception is being requested to the requirement of drilling overbalanced and with a drilling fluid system as the means of primary well control as given under 20 AAC 25.033. Paragraphs (a) through (h) define this requirement. A request for an exception to this requirement is attached as provided under 20 AAC 25.033 (i). • An exception is being requested to the requirement for the size of the diverter line as given under 20 AAC 25.035 (c) (1) (A). Paragraph (A) prescribes a diverter "of at least 16" and (B} "at least as large as the hole being drilled". A request for an exception to this requirement is attached as provided under 20 AAC 25.035(c) (1) (B) and under 20 AAC 25.035(h) (2). • An exception is being requested to the requirement for a double gate preventer in addition to the spherical preventer as given under 20 AAC 25.035 (e) (1) (A). That paragraph requires that a double gate preventer be installed and operative in addition to the spherical preventer. A request for an exception to this requirement is attached as provided under 20 AAC 25.035(h) (1). • An exception is being requested to the requirement for wellbore surveys as given in 20 AAC 25.050 (a) (2). That paragraph requires that the well be "surveyed to determine the inclination from vertical with surveys starting at 500 feet and no more than 500 feet apart to total depth;" A request for an exception to this requirement is attached as provided under 20 AAC 25.050(h). • An exception is being requested to the requirement for a gas well and producing zones to be no closer than 1,500 feet from a property line unless the owner and the landowners are the same on both sides of the line as given under 20 AAC 25.055 (a) (2). A request for an exception to this requirement is attached as provided in 20 AAC 25.055 (a). • • • An exception is being requested to the requirement for a well site survey as given under 20 AAC 25.061 (a). That paragraph requires the identifying of "...anomalous velocity variations indicative of potential shallow gas sources. A request for an exception to this requirement is attached as provided under 20 AAC 25.061 (c). • An exception is being requested for the requirement to have a minimum of three hydrogen sulfide sensing points as given under 20 AAC 25.066(A) (3). The requirement for three methane gas detectors will be met, however. A request for an exception to the hydrogen sulfide requirement is attached as discussed under 20 AAC 25.065 (b) and (c). • An exception is being requested for the requirement of submitting a complete mud or lithologic log and samples as given in 20 AAC 25.071 (b) (1) and (2). Four wells are near to this proposed well that were drilled by both compressed air drilling and conventional mud drilling. A request for an exception to the requirement for a lithologic log and samples is being requested. • An exception is being requested for the requirement of a C-Plan has been filed with the DEC Air and Water Quality section and a copy is included herewith. DRILLING PROGRAM USING COMPRESSED AIR: A rotary drill hammer will be used to drive the 13-3/8" conductor dry. Air drilling wilt be utilized for the 12-1/4" diameter hole to be drilled from the base of the conductor to 500'. A 10° diameter diverter line will be in place during the drilling, casing and cementing the 10n surface casing. Air drilling will be utilized for the 8-1/2" diameter hole to be drilled from the shoe of the surface casing at 500' to 3,500'. A 10" diameter diverter line will be in place during the drilling, casing and cementing the 7" production liner. Drilling mud in sacks, mud tanks, mud mixers, mud pumps and all mud handling equipment will be in place and ready to be utilized while drilling the trunk well. Therefore, a conversion to mud for the trunk well will cause little or no delay if primary well control becomes a problem. The casing will be filled with water in order to test the BOP equipment. 1. MIRU M-W Rig # 20. Use drive and drill hammer to drive 13-3/8", 54.5 #/ft, K-55 conductor to ~ 88 feet or refusal. Install 13-3/8", 3M x 11" Slip Lok head. 2. N/U diverter and function test. Exception for diverter size requirement is attached. 3. Drill 12-1/4" hole to 500'. 4. Run 9-5/8" casing to TD. 5. Cement 9-5/8", 36.0 #ft, K-55, buttress surface casing from 500' to surface. Cement will be a single stage 14.5 ppg gas-block type cement slurry. Cement volume will include 35% excess. 4 • • 6. N/D diverter and install 11" 3M x 9-5/8" SOW casing head. 7. N/U 11" 3M annular BOP and 2", 3M choke manifold. 8. R/U accumulator unit 9. Test the annular BOP and surface equipment to 2,500 psi and record test. 10 Fill hole with water and pressure test casing to 1500 psi. 11. P/U bit on drill collars and drill pipe. Drill out cement and drill 20'-50' of new hole while drilling with water. Pull back into shoe and perform a formation integrity test to 11.5 ppg EMW, recording test on chart recorder. 12. Blow down casing and drill 8-1/2" hole to 3,500'. 13. POH and R/U logging tools. 14. Run GR, SP, Res., Den., & gyro tools. 15. R/D logging tools. 16. Run 7" steel and composite liner from surface to TD. 17. Cement 7" liner from surface to TD using 15.8 ppg single stage slurry. 18. Follow cement w /cement plug and pump w /water. 19. Suspend well until program for lateral wells has been approved. 20. Blow down hole. ALTERNATIVE DRILLING PROGRAM USING CONVENTIONAL DRILLING MUD If formation pressure becomes too great to continue drilling with air, the system will be converted to a conventional mud-based system. 1. Mix mud to sufficient weight to control the well which has been calculated to be 10.0 ppg. 2. Continue drilling 8-1/2" hole to 3,500'. 3. POH and RIU logging tools. 4. Run GR, SP, Res., Den., & gyro tools. 5. R/D logging tools. 6. Run 7" steel and composite liner from surface to TD. 7. Cement 7" liner from surface to TD using 15.8 ppg single stage slurry. 5 • • 8. Follow cement w /cement plug and pump w /water. 9. Blow down hole 10. Suspend well until program for lateral wells has been approved. Pressure Considerations: Maximum mud weights in the Austral Needham No. 1 well, 4.3 miles to the southwest, was 10.7 ppg at 2,900', 3,560' and 3,790'. The mud weight at 4,210' had dropped to 10.0 ppg and was 10.5 ppg at 5,960'. This mud weight was sufficient to not only maintain well control, but to keep trip gas suppressed to the point where, in Fowler's evaluation, the indicated actual pore pressures were probably in the range of 8.0 to 8.5 ppg EMW. Fowler's conservative approach assumes that the maximum possible pore pressure to be encountered will be 1,516 psi EMW at 3,500' TD equating to a pressure gradient of 0.433 psi/ft. Maximum Anticipated Surface Pressure: The maximum anticipated surface pressure (HASP) for the 8-1/2" hole section in this well will be the lesser of the formation pore pressure (less a full gas column to the surface) at the 7" casing point (TD) or the formation fracture pressure at the 10" surface casing shoe (less a full gas column to the surface). Based on offset well data, the highest formation pressure expected in this 8-1/2" hole section is 1,516 psi at the section TD of 3,500' TVD (or 0.433 psi/ft). Documented fracture gradient data for this area indicates that the fracture gradient at 500' TVD (the 9-5/8" surface casing shoe) is 0.9 psi/ft. Complete evacuation of the wellbore, except fora 0.1 psi/ft gas gradient, is assumed. 8-1/2" hole section HASP (pore pressure) _ (3,500 ft) (0.433- 0.1) = 1,166 psi HASP (fm breakdown) _ (500 ft) (0.9 - 0.1) = 400 psi Therefore, HASP in the 8-1/2" hole section is 800 psi and the 3,000 psi BOPE system to be used wiN be adequate. Drilling Fluids: The drilling fluids are being furnished by Baroid Drilling Fluids. There will be a mud engineer on site at all times during drilling operation with a mud system. Mud properties will be maintained as follows: Hole Section from 88'± to 500': Alluvium and Tyonek Formation Base Fluid Density PV YP API Filtrate Total Solids Gel & Polyrr Fresh Water 8.6 - 8.9 ppg 6-16 25 - 35 <12 4 -12 ier mud system Hole Section from 500' to 3,500': Tyonek and Chickaloon (?) Formations 6 • • Base Fluid Fresh Water Density 9.0 - 9.5 ppg (based on pore pressure in offset wells) PV 6-15 Yp 15 - 25 API Filtrate < 8 Total Solids 7 - 14 Polymer mud system Drilling Solids Handling System: Shale Shaker, Desilter, PVT monitors Liquid Wastes: Excess or spent drilling mud will be stored temporarily onsite for possible reuse on subsequent welts or it will be removed by Emerald Alaska. Application has been made with the DEC Solid Waste section for a temporary waste storage permit. Solid Wastes: Solid wastes from air drilling will have any included liquids removed and the resultant solidified material will be tested and then delivered to a disposal site that is approved by the ADEC. Solid wastes from mud drilling will be handled as above or removed from the site by Emerald Alaska. Application has been made with the ADEC Solid Waste Section for a temporary waste storage permit. WELLBORE SURVEYS: Since compressed air drilling is used, the well will be surveyed by a complete continuous directional survey after the well is drilled. An exception to this requirement for wellbore surveys while drilling with compressed air is attached. If a conventional mud drilling system is used, wellbore surveys will be obtained at 500' intervals in accordance with the provisions of 20 AAC 25.050 (a) (1) & (2). MUD LOGGING: An exception to the manned mud logging requirements is being requested since this well is located very near to previously drilled wells where samples have already been collected. An exception to sections 20 AAC 25.071 (b) (1) and (2) is hereby requested as given in 20 AAC 25.071 (c). CASING /CEMENTING PROGRAM: All casing is new or used casing in acceptable condition Analysis (below) indicates the casing program as designed provides adequate safety factors for this well. All casing strings, with the exception of the driven 13-3/8" conductor, will be cemented in place. 13-3/8" CONDUCTOR, ANALYSIS AND CEMENTING PROGRAM .A drive shoe will be welded to the bottom joint and it will then be driven into the ground. The second joint will be welded and both joints driven to ~ 88' or refusal to drive. No cementing is required. 9-5/8" SURFACE CASING ANALYSIS AND CEMENTING PROGRAM The 9-518" surface casing will be cemented in fully from the proposed set depth of 500' to surface with a 14.5 ppg Gas-Block type cement system. Cement System Type Cement Weight (ppq) Volume t~ 35 % Excess Primary Gas-Block enhanced 14.5 26 bbls @ 35% OH Where: 7 • • Ucmt = fl/4 x !(12.25"/12")2 - (9.625"/12")21 (412') (1.35) = 26 bbis 5.615 ft~ /bbl Vc,,,t = n/4 x !(13.375"/12")2 -(9.625"/12")21(88') = 7 bbis 5.615 ft /bbl Shoe jt. = 3 bbis 26 bbis + 7 bbls + 3 bbls = 36 bbls Tota{ Volume Cmt Cc~ surface = 36 bbis Actual volumes to be re-calculated at time of running casing due to potential variation in actual depth from planned. The surface cement system will utilize alias-Block type additive to minimize potential for gas entrainment and or channeling. 7" LONG STRING ANALYSIS AND CEMENTING PROGRAM Thee 7" long string will be cemented in fully from proposed set depth of 3,500' to surface. A 15.$ ppg "G" cement system will be used. This program is designed to ensure that all exits from the trunk well bore by lateral wells are isolated with 15.8 ppg "G" cement. Cement System Type Cement Weight (ppg) Volume ~ 35 % Excess Primary "G" 15.8 91 bbis @ 35% OH Where: V~„t = n/4 x f 8,50"/12")2 - (7.0"/12")21(3,000') (1.35) = 91 bbls 5.615 ft~ /bbl Ucmt = Il/4 x ! (9.625"/12")2 - (7.0"/12")21(500') = 21 bblS 5.615 ft3 /bbl Shoe jt. = 1.5 bbls 91 bbis + 21 bbls + 1.5 bbis = 114 bbis Total Cmt Volume =114 bbis Actual volumes to be re-calculated at time of running liner due to potential variation in actual depth from planned. 8 • • Kircher No. 1 Summary of Drilling Hazards THIS NOTICE TO BE POSTED IN DOGHOUSE ~ There is a very low potential for abnormally pressured gas deeper in the well. ~ There is potential for stuck pipe in coals encountered while drilling from surface to TD. Be extra vigilant, keep pipe moving and maintain mud properties as specified. ~ There is little or no H2S risk anticipated for this well. ~ Due to potential for an unexpected gas kick, PVT and gas detection systems must be fully operational and functioning at all times, visual flow checks and pit level monitoring are critical if drilling mud is being used. CONSULT THE "KIRCHER N0.1" DRILLING PROGRAM FOR ADDITIONAL INFORMATION. 9 file:///C:JDocuments%20and%20Settings/Owner/Desktop/FOG/Kirc... » - • ~,...,... , ,_~,.,. .~.,.. . ,.,......,._ . ~,....,,... , o,. ~ C ~~ i Y}, ca tl ~ ~:'~ ~...i'~ct ',~7j '.~.. ~:E3t~.s~~iv s :, i.'i~.=~.nU ,~ {vic: I."~ ~usF. ~~~::iii%~~~ct'~ ~? nc~..°rE;.~u< _-., Public Meeting Schedule Meetings are subject to change. Under the Open Meetings Act (AS 44.62.310), notice is given that the Alaska Oil and Gas Conservation Commission will meet in public meetings on January 30, February 27, March 26, and April 30, 2008 at 9:00 am in the Commission's Hearing Room in Anchorage, Alaska at the address below. ,.~._,_ ~ _-- •-- --__,-•- --_-~._~ ____.._--__-~~ 30 January 2008 ~~ "- _ Public ~learina Schedule Hearings are subject to change. 08 January, 2008, 9:OOa ConocoPhillips Alaska, Inc., by Vetter dated November 7, 2007, and received by the Alaska Oii and Gas Conservation Commission ("Commission") on November 9, 2007, requests the Commission issue an order to allow the operator withdraw up to 3 million cubic feet of gas per day from the Kuparuk River Oil Pool for sale and use in other operations in the area. Gas produced from the pool is currently being re-injected for pressure maintenance in the reservoir or used for lift gas. In the hearing, the Commission will also consider an amendment to CO 432C to allow future Administrative Approvals to the original Conservation Order unless notice and public hearing is otherwise required. 10 January, 2008, 9:OOa Escopeta Oil and Gas Development, by a letter dated November 15, 2007 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on November 16, 2007, has requested an order allowing an exception to the spacing requirements of 20 AAC 25.055 (a)(2) to allow completion and testing of the North Alexander No. 1 gas exploration well within 1,500 feet of a property line. 15 January, 2008, 9:OOa The Alaska Oil and Gas Conservation Commission ("AOGCC") proposes to amend Title 20, Chapter 25, Section 110 of the Alaska Administrative Code, dealing with suspended wells, including the following: The proposed regulations changes referenced above clarify what is expected of operators with respect to the surveillance, maintenance, and reporting requirements for suspended wells throughout the State. 18 January, 2008, 9:OOa Fowler Oil & Gas ("Fowler"), by letter dated November 21, 2007, and received by the Alaska Oil and Gas Conservation Commission ("Commission") has applied for an exception to the gas well spacing requirements of 20 AAC 25.055(a)(2) to allow drilling, completion, and regular production from their proposed Kircher No. 1 Coal Bed Methane ("Kircher No. 1") well within 1,500 feet of a property line. 17 January, 2008, 9:OOa Forest, by letter dated December 7, 2007 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on that same day, requests a permanent spacing exception to the drilling unit and spacing requirements of 20 AAC 25.055 to allow continued operation of the West Foreland #2 gas production well at a location within 1,500 feet of the property line between Federal Lease A-035017 and State Lease ADL-359112, and within the same governmental section as, and less than 3,000 feet from, a well capable of producing from the same gas pool. 24 January, 2008, 9:OOa 1 of 2 1/5/2008 1:50 PM file:///C:/Documents%20and%20Settings/Own~r/Desktop/FOG/Kirc... • • Marathon Oil Company, by a letter dated December 17, 2007 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on December 17, 2007 has requested an order allowing an exception to the spacing requirements of 20 AAC 25.055 (a)(4) to allow drilling, completion, and regular production from a well within 3,000 feet of wells capable of producing from the same pool within the Ninilchik Unit, Grassim Oskolkoff Participating Area. 31 January, 2008, 9:OOa The Alaska Oil and Gas Conservation Commission ("Commission"), on its own motion, proposes to amend the existing rules of area injection orders for the Aurora ar~d Borealis Pools. The proposed amendments will add a requirement addressing injection ~nrell mechanical integrity failures, and clarify requirements for mechanical integrity demonstrations. The purpose of these amendments is to establish rules with uniform language that promoi:e consistent implementation of well integrity requirements for injection wells when pressure communication or leakage is indicated. OS February, 2008, 9:OOa BP Exploration (Alaska}, Inc., by a letter dated December 7, 2007 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on December 13, 2007 has requested an order allowing an exception to the spacing requirements of 20 AAC 25.055 (a)(2) to allow drilling, completion, and regular production of the Point McIntyre P2-45B development oil well within 500 feet of a property line within the Point McIntyre Participating Area. Home Orders Staff Calendar Contact Us Webmaster 2 of 2 l/5/2008 1:50 PM