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Home My WebLink AboutCO 6350 0 XHVZE Image Project Order File Cover Page This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. C 0 Order File Identifier Organizing (done) RESCAN VrIc"'olor Items: ❑ Greyscale Items: ❑ Poor Quality Originals: ❑ Other: NOTES: BY: Maria _ Project Proofing BY: Maria Scanning Preparation BY: Maria Production Scanning ED Two-sided uuuumiuiuu DIGITAL DATA ❑ Diskettes, No. ❑ Other, No/Type: Date: l v / 16-ll C) Date: l ol'57 r) x30= + Date: 1015110 Re=c.nNeeaea iuiimiuiuuiu OVERSIZED (Scannable) ❑ Maps: ❑ Other Items Scannable by a Large Scanner OVERSIZED (Non -Scannable) ❑ Logs of various kinds: ❑ Other:: /s/ lililllllllillllll MP = TOTAL PAGES 11!�_o (Count does not include cover sheet �� /s/ Stage 1 Page Count from Scanned File: (Count does include cover sheet) Pa a Count Matches Number in Scanning Preparation: --z TES BY: Maria Date: % S7 /a 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/ 'M F NO YIII!IIIIIIIIYIIII /s/ oua„Checked iiiumuuuiuu 10/6/2005 Orders File Cover Page.doc 0 Conservation Order #635 Nicolai #10 1. June 14, 2010 Aurora Gas Application for Well Spacing Exemption 2. July 14, 2010 Location Picture and Drawing 3. June 1, 2001 Notice of Hearing, Affidavit of Publication, E-mail list, Bulk mail list 4.---------------- Emails re: Directional survey for Nicolai #10 Conservation Order #635 0 • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Aurora Gas, LLC for an order granting an exception to the well spacing provisions of 20 AAC 25.055 (a)(4) to provide for the drilling and completion of the proposed Nicolai Creek Unit No. 10 development gas well within the same governmental section and within 3,000 feet of wells that are, or may be capable of, producing from the same pool. BY THE COMMISSION: Docket Number: CO-10-09 Conservation Order No. 635 Nicolai Creek Unit No. 10 Gas Development Well Nicolai Creek North Undefined Gas Pool Nicolai Creek Unit Kenai Peninsula Borough, Alaska September 29, 2010 NOTICE CLOSING DOCKET The Commission has the closed the Docket in the above captioned matter. ENTERED AND EFFECTIVE at Anchorage, Alaska and this 29th day of September, 2010. BY DIRECTION OF THE COMMISSION Assistant to the Commission • STATE OF ALASKA 0 ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Aurora Gas, LLC for an order granting an exception to the well spacing provisions of 20 AAC 25.055 (a)(4) to provide for the drilling and completion of the proposed Nicolai Creek Unit No. 10 development gas well within the same governmental section and within 3,000 feet of wells that are, or may be capable of, producing from the same pool. IT APPEARING THAT: Docket Number: CO-10-09 Conservation Order No. 635 Nicolai Creek Unit No. 10 Gas Development Well Nicolai Creek North Undefined Gas Pool Nicolai Creek Unit Kenai Peninsula Borough, Alaska September 29, 2010 On June 14, 2010, Aurora Gas, LLC (Aurora) requested the Alaska Oil and Gas Conservation Commission (Commission) grant an exception to the spacing provisions of 20 AAC 25.055 (a)(4) to allow drilling and completion of the Nicolai Creek Unit No. 10 (NCU No. 10) development gas well within 3,000 feet of wells that are, or may be capable of producing from, the same pool (the Nicolai Creek North Undefined Gas Pool), in the Kenai Peninsula Borough, Alaska. 2. Pursuant to 20 AAC 25.540, on July 25, 2010 the Commission published in the ALASKA JOURNAL OF COMMERCE notice of the opportunity for a public hearing on September 7, 2010. This notice was also published on the State of Alaska's Online Public Notice website and on the Commission's website. By certified mail, Aurora sent notice of the application to all owners, landowners, and operators of all properties within 3,000 feet of the anticipated NCU No. 10 well. Aurora provided the Commission the notice, date of mailing, addresses to which the notice was sent, and proof of mailing. 4. No protest to the application or request for hearing was received. 5. Because Aurora provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 6. The public hearing was vacated on August 27, 2010. FINDINGS: 1. Aurora is the operator of the Nicolai Creek Unit (NCU) and will be the operator of the proposed NCU No. 10 development gas well located within the Nicolai Creek North Undefined Gas Pool, NCU, Kenai Peninsula Borough, Alaska. 2. The proposed NCU No. 10 well will be an onshore, deviated gas development well with a surface location 1799' from the north line and 1504' from the west line of Section 20, T1IN, R12W, Seward Meridian (S.M.), and a projected bottom -hole location 2140' from the north line and 300' from the east line of Section 19, T11N, R12W, S.M. 0 3. The planned path for NCU No. 10 is based on seismic and nearby well information. 4. State of Alaska oil and gas lease ADL-63279 includes the western half of Section 20, T11N, R12W, S.M. The western half of Section 20, T11N, R12W, S.M also constitutes the Northern Participating Area of the NCU. 5. State of Alaska oil and gas lease ADL-391472 includes the eastern half of Section 19, T11N, R12W, S.M. 6. The surface location of NCU No. 10 and prospective gas sand intervals lies within lease ADL-63279 and the Northern Participating Area. Prospective gas sand intervals and the planned total depth of NCU No. 10 lie within lease ADL-391472. 7. The anticipated bottom -hole location of well NCU No. 10 lies within 3,000 feet of State of Alaska lease ADL-391265. 8. Aurora is the owner and operator of lease ADL-63279, the Northern Participating Area, lease ADL-391472, and lease ADL-391265. The State of Alaska is the landowner for these leases. 9. Gas reservoirs targeted by well NCU No. 10 lie at a structurally more favorable location within 3,000 feet of offset well NCU No. 3, but are not open to that well. 10. Gas reservoirs targeted by well NCU No. 10 are lenticular and discontinuous. 11. NCU No. 10 may be the only gas producing well in Section 19, T11N, R12W, S.M. NCU No. 10 may be the second gas producing well in Section 20, T11N, R12W, S.M. 12. Aurora sent notice of the application for exception to the well spacing requirements of 20 AAC 25.055 for the NCU No. 10 well to all owners, landowners and operators within 3,000 feet of the anticipated gas -bearing section of the NCU No. 10 well. 13. The Commission received no comments, objections or protests in response to the public notice regarding the NCU No. 10 well or to the notification sent by Aurora to all known owners, landowners and operators within 3,000 feet of the NCU No. 10 well. CONCLUSIONS: 1. An exception to 20 AAC 25.055(a)(4) is necessary to allow drilling and completion of the NCU No. 10 development gas well in order to maximize recovery of Nicolai Creek North Unidentified Gas Pool reserves. 2. A spacing exception to allow drilling and completion of the NCU No. 10 well is consistent with sound engineering and geoscience principles and will not result in waste or jeopardize correlative rights of adjoining or nearby owners. 3. The properties affected by this spacing exception lie within and outside of the boundaries of the NCU. Prior to regular production, the NCU and the Northern Participating Area must be expanded, and a means of allocating production must be established. NOW, THEREFORE, IT IS ORDERED: Pursuant to the Commission's authority under AS 31.05.030 and 20 AAC 25.055, the Commission approves Aurora's application for an order granting exception to the well spacing provisions of 20 AAC 25.055(a)(4) to allow drilling and completion of the NCU No. 10 well. Aurora may proceedfGith regular production as long as it comoks with the terms of the NCU agreement, applicable Alaska laws, and all other legal requirements. DONE at Anchorage, Alaska and dated September 29, 2010. 3 �r, Daniel T. Seamou , r. Commissioner, Chair Alaska Oil and Gas Conservation Commission :......... - Cathy . Foerster, Commissioner Alaska Oil and Gas Conservation Commission 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 decision, 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 it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The Commission shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the Commission denies reconsideration, upon denial, this order or decision and the denial of reconsideration are 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 or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the Commission grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision 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 or decision on reconsideration. As provided in AS 31.05.080(b), " [tlhe 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. Mary Jones David McCaleb XTO Energy, Inc. IHS Energy Group George Vaught, Jr. Cartography GEPS P.O. Box 13557 810 Houston Street, Ste 200 5333 Westheimer, Suite 100 Denver, CO 80201-3557 Ft. Worth, TX 76102-6298 Houston, TX 77056 Jerry Hodgden Richard Neahring Mark Wedman Hodgden Oil Company NRG Associates Halliburton 408 18th Street President 6900 Arctic Blvd. Golden, CO 80401-2433 P.O. Box 1655 Anchorage, AK 99502 Colorado Springs, CO 80901 Schlumberger CIRI Drilling and Measurements Land Department Baker Oil hoofs 2525 Gambell St, #400 P.O. Box 93330 795 E. 94 Ct. Anchorage, AK 99515-4295 Anchorage, AK 99503 Anchorage, AK 99503 Jill Schneider Ivan Gillian US Geological Survey Gordon Severson 9649 Musket Bell Cr. #5 3201 Westmar Circle Anchorage, AK 99507 4200 University Drive Anchorage, AK 99508-4336 Anchorage, AK 99508 Jack Hakkila Darwin Waldsmith James Gibbs P.O. Box 190083 P.O. Box 39309 P.O. Box 1597 Anchorage, AK 99519 Ninilchick, AK 99639 Soldotna, AK 99669 Kenai National Wildlife Refuge Penny Vadla Cliff Burglin Refuge Manager 399 West Riverview Avenue 319 Charles Street P.O. Box 2139 Soldotna, AK 99669-7714 Fairbanks, AK 99701 Soldotna, AK 99669-2139 Richard Wagner Bernie Karl North Slope Borough P.O. Box 60868 K&K Recycling Inc. P.O. Box 69 Fairbanks, AK 99706 P.O. Box 58055 Barrow, AK 99723 Fairbanks, AK 99711 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, September 30, 2010 10:06 AM To: Aaron Gluzman; Bettis, Patricia K (DNR); caunderwood@marathonoil.com; Dale Hoffman; David Spann; Fr6d6ric Grenier; Gary Orr; Jason Bergerson; Jerome Eggemeyer; Joe Longo; Marc Kuck; Mary Aschoff; Maurizio Grandi; Ostrovsky, Larry Z (DNR); Richard Garrard; Sandra Lemke; Talib Syed; Tiffany Stebbins; Wayne Wooster; Willem Vollenbrock; William Van Dyke; Woolf, Wendy C (DNR); (foms2@mtaonline.net);(michael.j.nelson@conocophillips.com); (Von. L. Hutchins@conocophillips.com); Alan Dennis; alaska@petrocalc.com; Anna Raff; Barbara F Fullmer; bbritch; Becky Bohrer; Bill Penrose; Bill Walker; Bowen Roberts; Brad McKim; Brady, Jerry L; Brandon Gagnon; Brandow, Cande (ASRC Energy Services); Brian Gillespie; Brian Havelock; Bruce Webb; carol smyth; Charles O'Donnell; Chris Gay; Cliff Posey; Crandall, Krissell; dapa; Daryl J. Kleppin; Dave Matthews; David Boelens; David House; David Spann; David Steingreaber; ddonkel@cfl.rr.com; Deborah J. Jones; Delbridge, Rena E (LAA); Dennis Steffy; Elowe, Kristin; Evan Harness; eyancy; Francis S. Sommer; Fred Steece; Garland Robinson; Gary Laughlin; Gary Rogers; Gary Schultz; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff; Harry Engel; Jdarlington Qarlington@gmail.com); Jeanne McPherren; Jeff Jones; Jeffery B. Jones Qeff.jones@alaska.gov); Jerry McCutcheon; Jim White; Jim Winegarner; Joe Nicks; John Garing; John Katz; John S. Haworth; John Spain; John Tower; Jon Goltz; Judy Stanek; Julie Houle; Kari Moriarty; Kaynell Zeman; Keith Wiles; Kim Cunningham; Larry Ostrovsky; Laura Silliphant; Marilyn Crockett; Mark Dalton; Mark Hanley (mark.hanley@anadarko.com); Mark Kovac; Mark P. Worcester; Marquerite kremer; Michael Dammeyer; Michael Jacobs; Mike Bill; Mike Mason; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; nelson; Nick W. Glover; NSK Problem Well Supv; Patty Alfaro; Paul Decker (paul.decker@alaska.gov); Paul Figel; PORHOLA, STAN T; Rader, Matthew W (DNR); Randall Kanady; Randy L. Skillern; rob. g.dragnich@exxonmobil.com; Robert A. Province (raprovince@marathonoil.com); Robert Brelsford; Robert Campbell; Roberts, Susan M.; Rudy Brueggeman; Ryan Tunseth; Scott Cranswick; Scott Griffith; Scott, David (LAA); Shannon Donnelly; Sharmaine Copeland; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Sondra Stewman; Steve Lambert; Steve Moothart; Steven R. Rossberg; Suzanne Gibson; tablerk; Tamera Sheffield; Taylor, Cammy O (DNR); Temple Davidson; Teresa Imm; Terrie Hubble; Thor Cutler; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Walter Featherly; Will Chinn; Williamson, Mary J (DNR); Winslow, Paul M; Yereth Rosen; Aubert, Winton G (DOA); Ballantine, Tab A (LAW); Brooks, Phoebe; Davies, Stephen F (DOA); Fisher, Samantha J (DOA); Foerster, Catherine P (DOA); Johnson, Elaine M (DOA); Laasch, Linda K (DOA); Maunder, Thomas E (DOA); McIver, Bren (DOA); McMains, Stephen E (DOA); Norman, John K (DOA); Okland, Howard D (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Saltmarsh, Arthur C (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Shartzer, Christine R (DOA) Subject: CO 635 Spacing Exception Nicolai Creek #10 (Nicolai Creek Unit) Attachments: co635. pdf Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 (907)793-1221 (phone) (907)276-7542 (fax) 0 0 Davies, Stephen F (DOA) From: Ed Jones Dejones@aurorapower.com] Sent: Friday, September 10, 2010 10:09 AM To: 'Bruce D Webb'; Davies, Stephen F (DOA) Subject: RE: Nicolai Creek 10 Attachments: NCU3 TO NCU5 CORRELATIONS_2JUN2006.ppt Steve, The attached "old" cross-section done by Andy Clifford tells the story —the location of the #10 on that X-C is not exactly where we'll intersect all those sands with this proposal, but it gives you the concept for the deeper sands —fault separated from the #3 and updip from the #5. And, yes, the deeper sands appear to be wet in both the #3 and the #5. Please let me know if you have other questions. Regards, Ed J. Edward Jones Executive Vice President, Eng. & Ops. Aurora Gas, LLC 6051 North Course Dr., Ste 200 Houston, TX 77072 281-495-9957 (0) 713-899-8103 (C) From: Bruce D Webb [mailto:bwebb@aurorapower.com] Sent: Friday, September 10, 2010 12:11 PM To: 'Edward Jones' Subject: FW: Nicolai Creek 10 Ed, This is a question for you... From: Davies, Stephen F (DOA) [mailto:steve.davies@alaska.gov] Sent: Wednesday, September 08, 2010 4:17 PM To: Bruce D Webb Subject: RE: Nicolai Creek 10 Bruce, The NCU #10 spacing exception application states that the proposed NCU #10 well will target only Beluga Tsuga and Tyonek Carya reservoir sands that are not open to NCU #3. Why is Aurora targeting these sands to the west of NCU #3? Does moving west place the well in a structurally more favorable location? Are the target sands water -wet in NCU #3 or NCU #5? Or is the proposed NCU #10 well location based on some other reason? Thanks, Steve Davies AOGCC No virus found in this incoming message. Checked by AVG - www.avg.com Version: 9.0.851 / Virus Database: 271.1.1/3126 - Release Date: 09/10/10 02:08:00 Davies, Stephen F (DOA) From: Bruce D Webb [bwebb@aurorapower.com] Sent: Wednesday, September 08, 2010 4:39 PM To: Davies, Stephen F (DOA) Subject: RE: Nicolai Creek 10 Steve, Those are very good questions. Ed Jones will be in Anchorage tomorrow evening and in the office on Friday. I will run these questions by him and get his take on it, and get back to you as soon as possible. Regards, -Bruce From: Davies, Stephen F (DOA)[mailto:steve.davies@alaska.gov] Sent: Wednesday, September 08, 2010 4:17 PM To: Bruce D Webb Subject: RE: Nicolai Creek 10 1 The NCU #10 spacing exception application states that the proposed NCU #10 well will target only Beluga Tsuga and Tyonek Carya reservoir sands that are not open to NCU #3. Why is Aurora targeting these sands to the west of NCU #3? Does moving west place the well in a structurally more favorable location? Are the target sands water -wet in NCU #3 or NCU #5? Or is the proposed NCU #10 well location based on some other reason? Thanks, Steve Davies AOGCC From: Bruce D Webb [mailto:bwebb@aurorapower.com] Sent: Tuesday, September 07, 2010 4:49 PM To: Davies, Stephen F (DOA) Subject: RE: Nicolai Creek 10 Steve, We did not do another directional survey of the NCU#10. There was one done the first time around for the well, but the bottom hole location has been moved 41 feet farther to the south and 8 feet closer to the east. I am attaching that survey. I figured we will be submitting the actual survey after it is drilled, along with the actual perforations. If we need a new one, let me know. -Bruce From: Davies, Stephen F (DOA)[mailto:steve.davies@alaska.gov] Sent: Tuesday, September 07, 2010 3:35 PM To: Bruce D Webb Subject: RE: Nicolai Creek 10 Bruce 0 0 Do you or Ed have a directional survey for the No. 10 well? It wasn't included in the application. Could you please email a copy to me? Thanks, Steve Davies AOGCC .t ._#� � �. urora Gas, LLC www.aurorapower.com Alaska Oil and Gas Conservation Commission 333 W 7th Avenue, Suite No. 100 Anchorage, Alaska 99501-3539 Attn: Mr. Steve Davies Petroleum Geologist Gentlemen: May 30, 2006 RE: Spacing Exception Application Application for Permit to Drill NCU No.10 Well ADL-63279 Nicolai Creek Unit JUN 1 5 2006 1 l O':,i Reference is made to the recently submitted Application for Permit to Drill (APD) on behalf of Aurora Gas, LLC (AURORA), as Operator of the captioned proposed development well. This letter respectfully requests the APD be approved with certain limitations placed upon AURORA, as discussed below, and this spacing exception request be granted. The proposed Nicolai Creek Unit, No.10 Well is to be the second well drilled within Section 20, Township 1 I North, Range 12 West, SM and is planned to be drilled directionally attempting to test gas in previously untested sands within the Tyonek Formation between the projected depths of 2,887' MD/2,562' TVD to 3,83 V MD/3,383' TVD. These intervals, namely the Carya 2-3, Carya 2-4 and Carya 2-5 sands, are either not present or water -wet in the Nicolai Creek Unit, No. 3 and No. 5 Wells. The distance between the primary Carya 2-4 interval in the proposed well, which is approximately 217' from the west line of the drillsite lease (ADL-63279) and Section 20. Additional causes for the need for an approved spacing exception are (a) the take point for the proposed well falls within 1,500' from a property line wherein land ownership on both sides of said line is not identical, and (b) the potential completion of a gas well within Section 20 which already has the NCU No. 3 gas well situated in said section, albeit producing from a different Tyonek Formation sands (Carya 2-1 and Carya 2-2 sands). The SL of the proposed well is 1,629' FWL, 1,914' FNL of Section 20, situated on the same drilling pad as the NCU No. 3 Well in the SE/4 NW/4 of said Section, as reflected on the Exhibit "A" attached hereto, and situated on AURORA Lease ADL- 63279. The BHL of the proposed well is 304' FEL, 2,135' FNL of Section 19, and situated on Aurora Lease AA-085789. The proposed well is situated within the confines of the Northern Participating Area of the captioned Unit. Consequently, the captioned well will require a spacing exception location pursuant to 20 AAC 25.540. 1t is anticipated that if the proposed well is commercial a reformation of the Northern Participating Area will be initiated to include a portion of AA-085789. 10333 Richmond Avenue, Suite 710 • Houston, Texas 77042 • (713) 977-5799 • Fax (713) 977-1347 1400 West Benson Blvd., Suite 410 • Anchorage, Alaska 99503 • (907) 277-1003 • Fax (907) 277-1006 0 • Consequently, this letter respectfully requests the AOGCC give favorable consideration to approving AURORA's APD, but prohibiting AURORA's ability to produce said well until the completion of the spacing exception process. This proposal, if approved by the AOGCC, would allow AURORA to commence drilling operations and test the intervals of interest, as identified on Exhibit "A", but not produce hydrocarbons from this Carya 2-4 sand in the proposed well until the spacing exception process has concluded. AURORA's operational, drilling and testing program is briefly discussed below for your benefit. AURORA plans to drill the proposed NCU, No. 10 Well to a sufficient depth to test three Upper Tyonek ("Carya") sands that appear to be potentially productive and is as follows. The surface location of the proposed well is on the same pad as and within 100' of an existing producing gas well, Nicolai Creek Unit, No.3 Well. The gravel area of the No. 3 pad may be expanded from its present extent, but it will remain within the historic limits. Surface casing for the proposed well will be set at about 820', then the well will be kicked off to the west, reaching a measured TD of 4,000' with a TVD of about 3,539' at a point about 1,946' west and slightly south of the surface. location (1,933' west and 221' south). The NCU No. 3 well was drilled as a vertical hole to beyond the depths of this well. The primary objectives of the No. 10 Well are the Carya 2-5 sand at about 3,383' TVD, the Carya 2-4 sand at about 2,789' TVD, and the Carya 2-3 sand at 2,475' TVD (all of the Upper Tyonek Formation), with secondary objectives of several shallow Beluga sands between 850' TVD and 1,150' TVD, which are behind pipe, but not completed in the No. 3 well. The No. 3 well is completed in the Carya 2-1.1, 2-1.2, 2- 2.1, 2-2.2, and 2-2.3 sands between 1,900' to 2,380', which have produced about 1.9 BCF to date, and a Beluga sand at 1,494-1,452'. The Carya 2-2.3 and part of the 2-2.2 sands in No. 3 were cemented off to stop water production in 2003, so the PBTD of the well is now 2,319'. The remaining zones are commingled and producing 400-500 mcfpd. Thus, the objectives of the No. 10 well are not common to the No. 3 well. Aurora is expecting as much as 140' of Carya pay and 130' of shallow Beluga pay in the objective sands in No. 10 well. The deeper Carya sand objectives are based on amplitude anomalies in the 3-D seismic shot over the area by Aurora in 2003, and the Beluga objectives are based on this seismic plus logs of the No. 3 well. The deeper Carya sand objectives in proposed No. 10 well, the 2-5 and 2-4, are productive in the Nicolai Creek Unit, No. 1B Well, about 1-1/2 miles south-southwest of this location (the sands have been tested productive there, but do not have a significant production history, due to mechanic problems in the well bore for which there are plans to remediate this summer by a workover there). The Carya 2-3 sands also appear to be productive in No. I B well, based on log data, and will be completed there in this summer's workover. The plan for the drilling of the proposed well is to: a) drive 80' or so of 13-3/8" conductor, b) drill a 12-1/4" hole to 820' and set 9-5/8" surface casing, c) drill out with an 8-1/2" bit and kickoff directionally to the west, d) drill a directional well to 4,000' MD/3,539' MD, and e) run a full suite of open -hole logs, probably including array induction, formation density, compensated neutron, dipole sonic, formation micro - imager, side -wall cores, and fonnation pressure tests (MDT). Assuming the well contains sufficient apparent pay, 5-1/2" casing will be set at TD, and the well will be perforated —most likely all Carya sands in one set up (2-5 to 2-3), isolated with packer and bridge plug, and tested from bottom up to determine gas and water production rates. Any productive zones will likely be separated by packers and sliding sleeves for optimal production, whether commingled or selectively produced. If a commercial well is attained at this point, the Beluga will likely be left for the future. If, however, the commerciality of the Tyonek sands is questionable, the shallow Beluga sands will also be tested and may be set up as selective completions. If commercial gas production is detennined, the existing No. 3 production facility will be expanded, with a separator and production allocation meter added for the No. 10 well, and the existing compression and dehydration will be de -bottlenecked to provide capacity for this new well. It should be noted there are issues regarding potential injury to the correlative rights of offsetting owners. Attached hereto as Exhibit `B" is a plat of the drillsite lease, (Tract 1-ADL-63279), wherein the landowner is the Department of Natural Resources (DNR), along with surrounding lands/leases. As you can see, the Bureau of Land Management (BLM) is the offsetting landowner of all tracts contiguous to the north, west, south and east of the drillsite lease for the proposed well, such being Tracts 2 through 8, inclusive. All of Tracts 2 through 8, inclusive, comprise a portion of AURORA'S AA-085789 Lease with the mineral owner being the BLM. As reflected on Exhibit `B", only Tracts 2 through 5, inclusive, fall within the 3,000' radius from the projected take point for the proposed well at the Carya 2-4 level. As such, all landowners, including all overriding royalty owners, and operators within said 3,000' radius have been sent a copy of this letter by certified mail. Exhibit "C" identifies all landowners and overriding royalty owners. Exhibit "B" also reveals the SL & BHL of the proposed well for which the spacing exception is sought reflecting one other completed or drilling well on the drillsite lease, Tract 1-ADL-63279, as well as the adjoining lands/leases. Please note Aurora's Wells 1 B, 2 & 9 in the southwesterly portion of Tract 7. Said three wells are in excess of 3,000' from the projected take point for the proposed well and are situated in another section. Exhibit "D" contains the Affidavit of Facts. Please incorporate this request with the APD submittal from Fairweather and give favorable consideration to AURORA'S proposal. If you require additional information regarding this request, please contact Mr. Ed Jones, Vice President, Engineering at the number below or the undersigned. Your prompt attention to this matter is sincerely appreciated. Very Truly Yours, Randall D. Jones, CPL Manager, Land & Negotiations rjones@aurorapower.corrn Enclosures Cc: Mr. William Van Dyke, Director State of Alaska Department of Natural Resources 550 West Seventh Avenue, Suite 800 Anchorage, Alaska 99501 Bureau of Land Management 6822 Abbott Loop Road Anchorage, Alaska 99517 Attn: Mr. Greg Noble, Branch Chief A. Clifford S. PI -Off E. Jones ncu 10 spacing exceptionrequest STATE OF ALASKA l 006 ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Aurora Gas, LLC for an order granting an exception ) Conservation Order No. 576 to the spacing requirements of 20 AAC ) 25.055, allowing drilling, completion, ) Nicolai Creek Unit No. 10 testing and regular production of a gas well } Delineation Gas Well drilled within 1,500 feet of a property line ) October 2 2006 IT APPEARING THAT: Aurora Gas, LLC ("Aurora") by letter dated May 30, 2006 and received by the Alaska Oil and Gas Conservation Commission ("Commission") on June 1, 2006 requested an order granting an exception to the spacing requirements of 20 AAC 25.055 (a)(2) to allow drilling, completion, testing and regular production of the Nicolai Creek Unit No. 10 ("NCU 10") gas delineation well within 1,500 feet of a property line. 2. The Commission published notice of opportunity for public hearing in the Peninsula Clarion on June 23, 2006, and in the Anchorage Daily News on July 2, 2006, pursuant to 20 AAC 25.540. 3. No protests to the application or requests for hearing were received. 4. The public hearing was vacated on August 7, 2006. Additional information was requested from Aurora on that same day, and received on August 8, 2006. FINDINGS: 1. NCU 10 is proposed as deviated, gas delineation well with a surface location 1,504 feet from the west line and 1,799 feet from the north line of Section 20, T11N, R12W, Seward Meridian ("SM") and a bottom hole location 308 feet from the east line and 2,099 feet from the north line of Section 19, TI IN, R12W, SM. 2 State of Alaska oil and gas lease ADL-63279 includes the western half of Section 20. Tl 1N, R12W, SM. The western half of Section 20, T11N, R12W, SM also constitutes the Northern Participating Area of the Nicolai Creek Unit ("NCU"). 3. Federal lease AA-85789 ties west of, and adjacent to. the Northern Participating Area. 4. The planned path for NCU 10 is based on seismic and nearby well information. Conservation Order 576 i October 2, 2006 Page 2 of 3 5. The surface location of NCU 10 and the prospective gas sand intervals lie within the Northern Participating Area. Prospective gas sand intervals and the planned total depth of NCU 10 lie within Federal lease AA-85789. These prospective gas reservoirs lie within 1,500 feet of the boundary between the Northern Participating Area and Federal lease AA-85789. 6. Gas reservoirs targeted by NCU 10 well lie within 3,000 feet of offset well NCU 3.. but are not open to that well. 7. NCU 10 will be the only gas producing well in Section 19, TLIN, R12W, SM. NCU 10 may be the second gas producing well in Section 20, T11N, R12W, SM. 8. Aurora sent notice of the application for exception to the well spacing requirements of 20 AAC 25.055 for the NCU 10 well to all owners, landowners and operators within 3.000 feet of the anticipated gas bearing section of the NCU 10 well. 9. The Commission received no comments, objections or protests in response to the public notice regarding the NCU 10 well or to the notification sent by Aurora to all known owners, landowners and operators within 3,000 feet of the NCU 10 well. CONCLUSIONS: 1. An exception to the well spacing requirements of 20 AAC 25.055 (a)(2) is necessary to allow drilling, completion, and testing of gas in the NCU 10 gas delineation well in order to evaluate gas reservoirs in the Beluga and Tvonek formations within the NCU. 2. Granting a spacing exception to allow drilling, completion, and testing of gas in the NCU 10 gas delineation well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners. 3. The properties affected by this spacing exception lie within and outside of the boundaries of the NCU. Prior to regular production, the NCU and the Northern Participating Area must be expanded, and a means of allocating production must be established. NOW, THEREFORE, IT IS ORDERED: Aurora's application for exception to the spacing requirements of 20 AAC 25.055(a)(2), for the purpose of drilling, completion, and testing of gas in the NCU 10 gas delineation well is granted. Because the properties affected by this spacing exception are not wholly contained within the NCU. Aurora may not proceed with regular production until the NCU and Northern Participating Area have been expanded to include the acreage affected by NCU 10 and a means of allocating production is established. Aurora must inform the Commission on a monthly basis of progress toward these requirements. Conservation Order 576 October 2, 2006 Page 3 of 3 Prior to regular production, Aurora must provide a signed, notarized Affidavit of Facts with supporting evidence to the Commission demonstrating compliance with the terms of the unit agreement, applicable Alaska law and regulations, and applicable Federal law and regulations. Aurora may not place sand intervals common to NCU 10 and nearby NCU 3 on regular production without prior Commission approval. BONE at Anchorage, Alaska and dpye er 2,1 006. J. orm on , Chairman laska O d Gas Conservation Commission Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission AS 31 05.084 YmLrdes that.witHin 20;days after receipt of written notice of the entry of an order; a person affected by it may file with the C3rvttnt�,S�ap- itlittoh. for rehearing. A request for rehearing must be received by 4:30 PNt on the 23' day following the date of the"ordei ornext,working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e., 10`h day after the application for rehearing was filed). IOIBIT "All 0 PROPOSED NICOLAI CREEK UNIT-10 WELL 0 EXHIBIT " B)v PROPOSED NICOLAI CREEK UNIT-10 WELL i Legend State mineralsICIRI surface BLM mineralsAMHT surface BLM mineralsICIRI surface BLM minerals/State surface -r TRAC 3000' TRACT 2 C 2-51.i. I !A NCU 5 + NCU 1 NCU 3 ... .. ...... IB n NCU to R -3 r—1 STATE OF ALASKA ADVERTISING ORDER 11w NOTICE TO PUBLISHER Nw INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE ADVERTISING ORDER NO. A 0-02114005 M SEE BOTTOM FOR INVOICE ADDRESS F R ° M AOGCC 333 W 7th Ave, Ste 100 Anchorage, AK 99501 AGENCY CONTACT Jody Colombie DATE OF A.O. July 19, 2010 PHONE PCN DATES ADVERTISEMENT REQUIRED: ASAP THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. o Alaska Journal of Commerce 301 Arctic Slope Avenue, Suite 350 Anchorage AK 99518 SPECIAL INSTRUCTIONS: Type of Advertisement SEE ATTACHED SEND INVtIC �! TRIPLr4ATE T� AOGCC, 333 W. 7th Ave., Suite 100 Anchorage, AK 99501 PAGE of 2 PAGES TOTAL OF ALL PAGES$ REF TYPE NUMBER AMOUNT DATE COMMENTS 1 VEN 2 ARD 02910 FIN AMOUNT SY CC PGM LC ACCT FY NMR DIST LIQ 1 10 02140100 73451 2 REQUISITIONE BY: , a)-c DIVISION APPROVAL: 02-902 (Rev. 3/94V Publisher/Original Copies: Department Fiscal, Department, Receiving AOTRM Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Docket # CO-10-009. The application of Aurora Gas, LLC for an exception to the spacing requirements of 20 AAC 25.055, for the drilling, completion and regular production of a development gas well within 3000 feet of wells capable of producing from the same interval. Aurora Gas, LLC, by a letter dated and received June 14, 2010 and supplemented with information submitted July 14, 2010, requests the Alaska Oil and Gas Conservation Commission (Commission) issue an order for an exception to the spacing requirements of 20 AAC 25.055 to drill the Nicolai Creek Unit No. 10 development gas well in the Nicolai Creek Unit within 3000 feet of wells capable of, or potentially capable of, producing from the same interval. The proposed surface and bottom -hole locations of the well are as follows: Nicolai Creek Unit No. 10 Surface Location: 1799' from the north line and 1504' from the west line of Section 20, T11N, R12W, Seward Meridian (S.M.). Bottom -hole Location: 2140' from the north line and 300' from the east line of Section 19, T11N, R12W, S.M. The Commission has tentatively scheduled a public hearing on this application for September 7, 2010 at 9:00 a.m. at the Alaska Oil and Gas Conservation Commission, at 333 West 7"' Avenue, Suite 100, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the Commission no later than 4:30 p.m. on August 16, 2010. If a request for a hearing is not timely filed, the Commission may consider the issuance of an order without a hearing. To learn if the Commission will hold the hearing, call 793-1221 after August 20, 2010. In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7te Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on September 1, 2010, except that, if a hearing is held, comments must be received no later than the conclusion of the September 7, 2010 hearing. If, because of a disability, special accommodatio s may be needed to comment or attend the hearing, contact the Commission's S cial A is an , Jody Colombie, at 793-1221, no later than August 30, 2010. RECEIVED ournaLfCommerce Alaska N & Ga. CON. Co mission Alaska Oil & Gas Conservation Commission A7CMJrage Public Notices FILE NO: AO-02114005 Ad#: 10138188 AO-02114005 Ad#10138188 AFFIDAVIT OF PUBLICATION UNITED STATES OF AMERICA, STATE OF ATTACH PROOF OF PUBLICATION HERE ALASKA, THIRD DISTRICT BEFORE ME, THE UNDERSIGNED, A NOTARY PUBLIC THIS Notice of Public. Hearing DAY PERSONALLY APPEARED Lara Bickford WHO, BEING FIRST DULY SWORN, STATE OF ALASKA Alaska Oil and Gas Conservation ACCORDING TO THE LAW, SAYS THAT SHE Commission IS THE Business Manager OF THE ALASKA JOURNAL OF COMMERCE PUBLISHED AT 301 The Docket#COas, LL9. for an excep- tion of Aurora Gas, excea- do ARTIC SLOPE AVENUE, SUITE 350, IN SAID tion to the spacing requirements of 20 equ THIRD DISTRICT AND STATE OF ALASKA AAC 25.055, for the drilling, comple- AND THAT ADVERTISEMENT, OF WHICH THE tion and regular production of a devel- opment gas well within 3000 feet of ANNEXED IS A TRUE COPY, WHICH WAS wells capable of producing from the PUBLISHED IN SAID PUBLICATION same interval. Aurora Gas, LLC, by a letter dated and received June 14, 2010 and supple- 07/25/2010 mented with information submitted 25th DAY OF JULY 2010 July 14, 2010, requests the Alaska Oil and Gas Conservation Commission AND THERE AFTER FOR 1 (Commission) issue an order for an exception to the spacing requirements CONSECUTIVE WEEK S AND THE () of 20 AAC 25.055 to drill the Nicolai LAST PUBLICATION APPEARING ON Creek Unit No. 10 development gas 07/25/2010 well in the Nicolai Creek Unit within 3000 feet of wells capable of, or 25th DAY OF JULY 201 potentially capable of, producing from the same interval. The proposed sur-` face and bottom -hole locations of the, well areas follows: Nicolai Creek Unit No. 10 Surface Location: 1799' from the north line and 1504' from the west line Lara Bickford of Section 20, T11 N, R12W, Seward, Business Manager Meridian (S.M.). SUBSCRIBED AND SWORN BEFORE ME Bottom -hole Location: from the`- north. line and 300' fromm the east line -- THIS 26th DAY OF July 2010 of Section 19, T11N, R12W, S.M. The Commission has tentatively] scheduled a public hearing on this: • application for September 7, 2010 at &&MIL 9:00 a.m. at the Alaska Oil and Gas Conservation Commission, at 333 � NO ARY PUBLIC STATE OF ALAS West 7th Avenue, Suite . 100, MY COMMISSION EXPIRES 6/14/12 Anchorage, Alaska 99501. To request ; that the tentatively scheduled hearing be held, a written request must be filed NOTARY PUBLIC BELINDA CUIV MINGS STATE OF ALASKA My Commission Expires June 14, 2012 • STATE OF ALASKA NOTICE TO PUBLISHER ADVERTISING ORDER NO. ADVERTISING INVOICE MUST BE IN TRIPLICATE SHOWING ADVERTISING ORDER NO., CERTIFIED /� O_02114005 AFFIDAVIT OF PUBLICATION (PART 2 OF THIS FORM) WITH ATTACHED COPY OF A ORDER ADVERTISEMENT MUST BE SUBMITTED WITH INVOICE SEE BOTTOM FOR INVOICE ADDRESS F AOGCC AGENCY CONTACT DATE OF A.O. R 333 West 7t' Avenue. Suite 100 Jody Colombie July 19, 2010 o Anchorage_ AK 99501 PHONE PCN M DATES ADVERTISEMENT REQUIRED: T 0 Alaska Journal of Commerce ASAP 301 Arctic Slope Avenue, Suite 350 Anchorage AK 99518 United states of America State of THE MATERIAL BETWEEN THE DOUBLE LINES MUST BE PRINTED IN ITS ENTIRETY ON THE DATES SHOWN. SPECIAL INSTRUCTIONS: AFFIDAVIT OF PUBLICATION REMINDER 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 2010, and thereafter for consecutive days, the last publication appearing on the day of , 2010, 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 2010, Notary public for state of My commission expires _ Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Monday, July 19, 2010 10:59 AM To: 'Aaron Gluzman'; Bettis, Patricia K (DNR); caunderwood@marathonoil.com; 'Dale Hoffman'; Frederic Grenier; 'Gary Orr'; 'Jason Bergerson'; Jerome Eggemeyer; 'Joe Longo'; Marc Kuck; 'Mary Aschoff'; Maurizio Grandi; Ostrovsky, Larry Z (DNR); Richard Garrard; 'Sandra Lemke'; 'Scott Nash'; Talib Syed; 'Tiffany Stebbins'; 'Wayne Wooster'; 'Willem Vollenbrock'; 'William Van Dyke'; Woolf, Wendy C (DNR); (foms2@mtaonline.net);(michael.j.nelson@conocophillips.com); (Von.L.Hutchins@conocophillips.com); Alan Dennis; alas ka@petrocalc.com; Anna Raff; Barbara F Fullmer; bbritch; Becky Bohrer; Bill Walker; Bowen Roberts; Brad McKim; Brady, Jerry L; Brandon Gagnon; Brandow, Cande (ASRC Energy Services); Brian Gillespie; Brian Havelock; Bruce Webb; carol smyth; Charles O'Donnell; Chris Gay; Cliff Posey; Crandall, Krissell; dapa; Daryl J. Kleppin; David Boelens; David House; David Steingreaber; 'ddonkel@cfl.rr.com'; Deborah J. Jones; Delbridge, Rena E (LAA); 'Dennis Steffy'; doug_schultze; Elowe, Kristin; Evan Harness; eyancy; Francis S. Sommer; Fred Steece; Garland Robinson; Gary Laughlin; Gary Rogers; Gary Schultz; ghammons; Gordon Pospisil; Gorney, David L.; Gregg Nady; gspfoff; Harry Engel; Jdarlington Qarlington@gmail.com); Jeff Jones; Jeffery B. Jones (jeff.jones@alaska.gov); Jerry McCutcheon; Jim White; Jim Winegarner; Joe Nicks; John Garing; John Katz Qohn.katz@alaska.gov); John S. Haworth; John Spain; John Tower; Jon Goltz; Joseph Darrigo; Judy Stanek; Julie Houle; Kari Moriarty; Kaynell Zeman; Keith Wiles; 'Kim Cunningham'; Larry Ostrovsky; Laura Silliphant; Marilyn Crockett; Mark Dalton; Mark Hanley (mark.hanley@anadarko.com); Mark Kovac; Mark P. Worcester; Marquerite kremer; 'Michael Dammeyer'; Michael Jacobs; Mike Bill; Mike Mason; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; nelson; Nick W. Glover; NSK Problem Well Supv; Patty Alfaro; Paul Decker (paul.decker@alaska.gov); PORHOLA, STAN T; Rader, Matthew W (DNR); Raj Nanvaan; Randall Kanady; Randy L. Skillern; rob. g.drag nich@exxonmobil.com; Robert A. Province (raprovince@marathonoil.com); 'Robert Brelsford'; Robert Campbell; Roberts, Susan M.; Rudy Brueggeman; Scott Cranswick; Scott, David (LAA); Shannon Donnelly; Sharmaine Copeland; Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Sondra Stewman; Steve Lambert; Steve Moothart; Steven R. Rossberg; Suzanne Gibson; tablerk; Tamera Sheffield; Taylor, Cammy O (DNR); Temple Davidson; Teresa Imm; Terrie Hubble; Thor Cutler; Tina Grovier; Todd Durkee; Tony Hopfinger; trmjrl; Vicki Irwin; Walter Featherly; Williamson, Mary J (DNR); Winslow, Paul M; Yereth Rosen; Aubert, Winton G (DOA); Ballantine, Tab A (LAW); Brooks, Phoebe; Davies, Stephen F (DOA); Fisher, Samantha J (DOA); Foerster, Catherine P (DOA); Johnson, Elaine M (DOA); Laasch, Linda K (DOA); Mahnken, Christine R (DOA); Maunder, Thomas E (DOA); McIver, Bren (DOA); McMains, Stephen E (DOA); Norman, John K (DOA); Okland, Howard D (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Saltmarsh, Arthur C (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA) Subject: Public Notice Nicolai Creek #10 and Admin Approval co449-002 Eider, Endicott Attachments: Public Notice Nicolai Creek #10.pdf; co449-002.pdf Jody J. Colombie ,Special Assistant Alaska Oil and Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 (907)793-1221 (phone) (907)276-7542 (fax) Mary Jones David McCaleb George Vaught, Jr. XTO Energy, Inc. IHS Energy Group PO Box 13557 Cartography GEPS Denver, CO 80201-3557 810 Houston Street, Ste 2000 5333 Westheimer, Ste 100 Ft. Worth, TX 76102-6298 Houston, TX 77056 Jerry Hodgden Richard Neahring Mark Wedman Hodgden Oil Company NRG Associates Halliburton 408 18th Street President 6900 Arctic Blvd. Golden, CO 80401-2433 PO Box 1655 Anchorage, AK 99502 Colorado Springs, CO 80901 Schlumberger Ciri Baker Oil Tools Drilling and Measurements Land Department 4730 Business Park Blvd., #44 2525 Gambell Street #400 PO Box 93330 Anchorage, AK 99503 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 Hakkila 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 Cliff Burglin Refuge Manager 399 West Riverview Avenue 319 Charles Street PO Box 2139 Soldotna, AK 99669-7714 Fairbanks, AK 99701 Soldotna, AK 99669-2139 Richard Wagner Bernie Karl North Slope Borough PO Box 60868 K&K Recycling Inc. PO Box 69 Fairbanks, AK 99706 PO Box 58055 Barrow, AK 99723 Fairbanks, AK 99711 Davies, Stephen F (DOA) From: Bruce D Webb [bwebb@aurorapower.com] Sent: Wednesday, July 14, 2010 2:02 PM To: Davies, Stephen F (DOA); Aubert, Winton G (DOA) Subject: FW: NCU 10 Proposed Location / Spacing Exception Attachments: Location Pic and Drwg.pdf Steve, Last time we talked you were waiting on a BHL for the NCU #10 Spacing Exception before you could start the public notice and comment period. That has finally been determined. Surface location: T. 11 N., R. 12 W., S.M., Section 20 1,799' FNL, 1,504' FWL X:242963 Y:2571970 Bottom Hole location: T. 11 N., R. 12 W., S.M., Section 19 p4 3; lq?z- 2,140' FNL, 300' FEL p X:241152 Y:2571670 1 144, rn As soon as Ed and Robert come up with the correct TVD and MD, I will pass that along as well. It is currently approximately 4,000' MD / 3,500' TVD, but that will most likely change slightly. Please let me know if there is any additional information you need to start the public notice and review. We are working on the PTD right now. Thanks. Bruce D. Webb Manager, Land and Regulatory Affairs Aurora Gas, LLC 1400 W. Benson Blvd., Suite 410 Anchorage, AK 99503 (907) 277-1003 office (907) 229-8398 cell (970) 277-1006fax From: Ed Jones[mailto:jejones@aurorapower.com] Sent: Wednesday, July 14, 2010 6:08 AM To: 'Chad Helgeson' Cc: 'Bruce D Webb' Subject: RE: NCU 10 Proposed Location These (in Chad's email below) are the correct coordinates, as per the McLanes plat that I sent. It won't matter as far as BHL's are concerned, but will change our MD's at those points. I'll have Robert correct the surface and the MD's. Thanks, Ed J. Edward Jones Executive Vice President, Eng. & Ops. Aurora Gas, LLC 6051 North Course Dr., Ste 200 Houston, TX 77072 281-495-9957 (0) • • 713-899-8103 (C) From: Chad Helgeson [mailto:chelgeson@aurorapower.com] Sent: Tuesday, July 13, 2010 8:22 PM To: 'Ed Jones' Cc: 'Bruce D Webb' Subject: RE: NCU 10 Proposed Location Ed, I was looking at the distance from section lines for Bruce and I have a different surface location that what you sent us. I am not sure if makes any difference with the bottom hole location, but we need to be sure our info matches for the permit to drill for the surface location. The surface location I have is X: 242963 Y: 2571970 am not sure what the right info is, but I think my info is coming from an autocad drawing, but I am not sure if it is Mclane's info or my info I put into the drawing. Chad From: Ed Jones [mailto:jejones@aurorapower.com] Sent: Tuesday, July 13, 2010 2:59 PM To: 'Bruce D Webb' Cc: 'Chad Helgeson' Subject: FW: NCU 10 Proposed Location Bruce, Use the attached to get BHL's for the NCU 10-1 am not sure that I am totally happy with it, but let's get the Spacing Exception and permitting process going. (We haven't filed the APD yet, have we? What more do you need from me?). Thanks, Ed J. Edward Jones Executive Vice President, Eng. & Ops. Aurora Gas, LLC 6051 North Course Dr., Ste 200 Houston, TX 77072 281-495-9957 (0) 713-899-8103 (C) From: Andy Clifford [mailto:acclifford@aurorapower.com] Sent: Saturday, June 26, 2010 10:58 AM To: 'Ed Jones'; G. Scott Pfoff Subject: NCU 10 Proposed Location Ed: Attached is a powerpoint showing the surface and bottom hole location for the new NCU 10 well to be drilled from the same pad as the NCU 3 location. I have enclosed the surface X-Y's, deviation survey, and proposed tops. I am also enclosing key maps. Please let me know if there is anything else needed. Best regards, Robert No virus found in this incoming melge. • Checked by AVG - www.avg.com Version: 9.0.829 / Virus Database: 271.1.1/2962 - Release Date: 06/26/10 01:35:00 No virus found in this incoming message. Checked by AVG - www.avg.com Version: 9.0.830 / Virus Database: 271.1.1/3003 - Release Date: 07/13/10 13:36:00 SECTION 20 T11 N R12W SM NORTH NOTES 1) BASIS OF COORDINATES IS ALASKA STATE PLANE NAD 27 ZONE 4 FROM A DIRECT TIE TO ADL NO. 31270. 2) BASIS OF ELEVATION IS FROM TIDAL OBSERVATION ON 9-22-93, DATUM IS MLLW. ALL ELEVATIONS SHOWN HEREON WERE TAKEN ON GROUND. 3) SECTION LINES SHOWN HEREON ARE BASED ON PROTRACTED VALUES. LEGEND FWND MOND FWND PROPERTY CORNER a —B PGLE d GUIDE—C GUIDE- ® TRANSFORMER o PHDNEPEDESTAL CENTERLINE cur SLOFEG 1-T FILL SLOPE MTLIGNf II-ERGROUNII vHONE ... S- FENCE(INSTALL AS S—) rwvwwvv� TREE WE DETAIL NICOLAI CREEK PAD P 19RB �YDDSPAD GM, S 267.8' 469.3' NICOLAI CREEK 10 AS -STAKED 1504' FWL EXISTIN EXISTING PAD LIMITS G ROAD NICOLAI CREEK NO. 10 WELL PAD ELEV. 249.0' AS -STAKED GRID N:2571969.966 LINER GRID E:242962.661 1 LATITUDE: 61'01'54.994'N z g BLDG. 4' PIPELINE �j0 J, LONGITUDE: 151°26'58.486'W y o C7 w a TANK TANK m e NICOLAI CREEK PAD NICOLAI CREEK NO.3 WELL LINER LINER SCALE GRID N:25718. S 873 3 O� WITH 1978 PHOTO GRIDE:243095.WELL (ABANDONED) 1 inch = 400ft. LATITUDE: 61°01'534TN 0 400 600 800 (see detail) LONGITUDE: 151°2655.711'W 8' DIAM. CMP FLUSH P 7,9 SCALE jB l,7pG`SP 1 inch = 100 ft. 0 100 150 200 C''1✓/T19 50119Uti119 Inc KNEE T.E P saooireax4.seEw aA 18MT,z IRA. BY: MSM :NECKED BY: SAM —1. SCALE: 1'-4OD' TRY. SCALE: NA SHEET: 14 Davies, Stephen F (DOA) From: Bruce D Webb [bwebb@aurorapower.com] Sent: Monday, June 21, 2010 12:05 PM To: Davies, Stephen F (DOA) Subject: RE: Nicolai Creek Unit No. 10 - Need Bottom Hole Location for Published Notice Thanks Steve, I am working on it. I think there has been a bit of a communication gap between Ed Jones and our contract geophysicist. From: Davies, Stephen F (DOA)[mailto:steve.davies@alaska.gov] Sent: Wednesday, June 16, 2010 9:48 AM To: bwebb@aurorapower.com Subject: Nicolai Creek Unit No. 10 - Need Bottom Hole Location for Published Notice Bruce In order to publish the Notice of Public Hearing for the Nicolai Creek Unit No. 10 spacing exception, I will need a bottom hole location for the well. Thanks, Steve Davies AOGCC 907-793-1224 ` r1 -.-�Aurora Gas., LLC www.aurorapower.com Dan Seamount, Chairman June 14, 2010 State of Alaska Oil and Gas Conservation Commission 333 W. 7 b Avenue, Suite 100 Anchorage, AK 99501 RECEIVED Re: Application for Well Spacing Exception J U N 14 2010 Nicolai Creek Unit # 10 Development Gas Well Alaska (ail Fit 094 CW* CORT&Sion Dear Mr. Seamount: AhchfttaO Pursuant to 11 AAC 25.055 (d), Aurora Gas, LLC (Aurora) hereby requests approval to allow the drilling, perforating, completing, testing and production of the Nicolai Creek Unit #10 ("NCU 10") development gas well within 3,000 feet of other existing gas wells in the Nicolai Creek Unit and within 1,500 feet from a section line. The Nicolai Creek Unit is located on the west side of the Cook Inlet. A Permit to Drill (4206-080-0) and Spacing Exception (CO 576), was issued in July and October of 2006, respectively, and has subsequently expired. A new Permit to Drill application will be submitted in the near future. A plat depicting the surface location is attached which shows the surface location being on the expanded Nicolai Creek Unit #3 ("NCU 3") well pad. The NCU 10 will be targeting gas in the Beluga Tsuga and Upper Tyonek Carya sands. These targeted sands are only those not open to production in the NCU 3 well. This well is needed to increase production from the Nicolai Creek Unit by accessing the referenced sands further to the west. The closest well to the proposed NCU 10 is the NCU 3 well approximately 2,000 feet to the west, at the surface. The bottom -hole location of the NCU 10 has not yet been determined. Final engineering design is still being completed and Aurora anticipates drilling the well this summer season. Aurora is the lessee and Unit Operator of the Nicolai Creek Unit and all surrounding oil and gas leases and adjoining governmental sections. The only affected landowners of this application is the State of Alaska, Department of Natural Resources (DNR) and Cook Inlet Region Incorporated (CHU). The Notice required by AOGCC regulation has been sent to the DNR and CIRI Affidavit attesting to this and the other facts contained herein is attached. A copy of the 2006 Spacing Exception and Conservation Order is attached for your reference. The well program will be very similar to that which was approved in 2006, however the bottom -hole location may be slightly adjusted. Should questions arise in connection with this request, please contact me or Ed Jones at the numbers below. Respectfully Submitted By, �W1a ,00 Bruce D. Webb Manager, Land and Regulatory Affairs attachment 1400 West Benson Blvd., Suite 410 • Anchorage, AK 99503 • (907) 277-1003 • Fax: (907) 277-1006 6051 North Course Drive, Suite 200 • Houston, TX 77072 • (281) 495-9957 • Fax. (281) 495-1473 NOTICE OF APPLICATION FOR WELL SPACING EXCEPTION Nicolai Creek #10 Development Gas Well Aurora Gas, LLC has applied for an exception to the well spacing requirements, pursuant to the Alaska Oil and Gas Conservation Commission regulations [I I AAC 25.055(d)]. The proposed well is located in Section 20, Township 11 North, Range 12 West, of the Seward Meridian. It is planned to be drilled from a surface location approximately 1,800 feet from the north section line and 1,504 feet from the east section line, within the Nicolai Creek Unit located on the west side of the Cook Inlet. The nearest well capable of production from the same reservoir is the Nicolai Creek Unit #3, approximately 2,000 feet to the west. Aurora Gas, LLC is the lessee and Unit operator of the Nicolai Creek Unit. The State of Alaska, DNR is the subsurface owner and lessor, Cook Inlet Region Incorporated is the surface owner. Their address of record is: State of Alaska, DNR Division of Oil and Gas 550 W. 7th Avenue, Suite 1100 Anchorage, AK 99501-3560 Attn: Ms. Temple Davidson, Unit Manager Cook Inlet Region Incorporated 2525 C' Street, Suite 500 P.O. Box 93330 Anchorage, AK 99509-3330 Attn: Kim Cunningham, Director of Land and Resources There are no other affected owners, landowners, lessees or operators within 1,500 feet of the proposed Nicolai Creek Unit #10 development gas well. The Application for Exception is attached to this Notice. Dated this 14th day of June, 2010, in Anchorage, Alaska. AFFIDAVIT IN SUPPORT OF THE NOTICE AND APPLICATION FOR WELL SPACING EXCEPTION Nicolai Creek #10 Development Gas Well 1, Bruce D. Webb, Manager of Land and Regulatory Affairs for Aurora Gas, LLC hereby certifies that the required information, data and geographic portrayals contained in the Notice and Application for exception to the well spacing requirements, pursuant to the Alaska Oil and Gas Conservation Commission regulations [ll AAC 25.055(d)], for the above referenced well, dated June 14, 2010, are true and correct, to the best of my knowledge. Further your affiant sayeth not. AURORA GAS, LLC By: w .'e Bruce D. Webb Manager, Land and Regulatory Affairs IN THE UNITED STATES OF AMERICA M3 STATE OF ALASKA Dated �— This certifies that on the 14th day of June, 2010, before me a notary public in and for the State of Alaska, duly commissioned and sworn, personally appeared Bruce D. Webb, to me known and known to me to be the person described in, and who executed the foregoing assignment, who then after being duly sworn according to law, acknowledged to me under oath that he executed the same freely and voluntarily for the uses and purposes therein mentioned. Witness my hand and official seal the day and year first above written. Notary Public MARY NOVOTNY State of Alaska My Commission Expires Sep 17, 2013 Notary Pu c My Commission Expires: September 17, 2013 illillffi 19 1 20 SECTION 20 T11N R12W SM ADL 63279 504.2' NICOLA[ CREEK GRID GRIE SCALE 1 inch = 400 ft. 0 400 600 Boo :1O . NICOLAI CREEK PAD (see detail) NO TH NOTES 1) BASIS OF COORDINATES IS ALASKA STATE PLANE NAD 27 ZONE 4 FROM A DIRECT TIE TO ADL NO. 31270. 2) BASIS OF ELEVATION IS FROM TIDAL OBSERVATION ON 9-22-93. DATUM IS MLLW. ALL ELEVATIONS SHOWN HEREON WERE TAKEN ON GROUND. 3) SECTION LINES SHOWN HEREON ARE BASED ON PROTRACTED VALUES. 267.8' P 469.3' �Y 194.0' 105.307.8' rs F� T �O ST EXISTING p� �J SURFACE LOCATION NICOLAI CREEK NO. 10 GRID N:2571970.000 GRID E:242963.000 LEGEND FOUND MONUMENT 0 FOUND PROPERTY CORNER POWER POLE GUIDE POLE GUIDE ANCHOR ® TRANSFORMER El PHONE PEDESTAL CENTERLINE PROPERTY LINE CUT SLOPE DAYLIGHT FILL SLOPE DAYLIGHT —o.e.e— OVERHEAD ELECTRIC u.".e. UNDERGROUND ELECTRIC — cns UNDERGROUND GAS —U- — UNDERGROUND PHONE s.". SILT FENCE (INSTALL AS SHOWN) /YYYYYYYYYI TREE LINE DETAIL NICOLAI CREEK PAD NICOLAI CREEK NO. 3 WELL GRID N:2571810.830 GRID E:243095.873 LATITUDE: 61 °01'53.457"N LONGITUDE: 151 °26'55.711"W 8' DIAM. CMP FLUSH 254.4' 142.4' 3 Z 12'x12' BLDG. Co M w a TANK TANK mo� PAD ELEV. 249.0' WELL (ABANDONED) SCALE 7y)g 1 inch = 100 ft. 0 100 150 200 9 a 9 0 AURORA GAS, LLC NICOLAI CREEK UNIT #10 NET PAY / VOLUMETRIC RESERVES INTERVAL Proposed NET PAY POROSTY Sw Alt. POROSITY Calc Calc Z TEMP BHP OGIP RF REC GIP GEO DRAIN PRVD PROB ML NuTech in #3 Perfs ft % % Net Pay % Rt Rw Sw deg R psia mcf/ac-ft % mcf/ac-ft CORR AREA RESRVS RESRVS SHOW Perm TVD NT NT NT ft NRMXVcla ohm-m % (measured values are bold) Factor AC MMCF units and Beluga XXI IXX 1717 1732 15 3 20 51 8 17% 25 0.691 63'14, 0.91 539 776 239 85 203 0.77 65 30.472 50.787 30 25 1625 1644 19 16 23.75 42 21% 30 0.779 53% 0.93 529 540 233 85 198 0.77 65 168.379 80 74 1494 1500 6 6 29 44 29% 30 0.784 40% 0.93 529 540 275 85 233 0.77 65 70.093 55 XXI IXX S/T= r 268.945 16 1410 1419 9 5 23.2 47.4 8 23% 23 0.699 52% 0.92 538 637 242 85 206 0.77 65 51.466 30.879 80 49 1311 1316 5 3 21.4 44.7 5 16% 20 0.809 78% 0.92 526 593 223 85 189 0.77 65 28.463 18.969 45 35 1128 1148 20 10 25.2 24% 20 0.716 56% 0.94 536 510 170 85 145 0.77 65 72.330 30 36 XXI IXX S/T= 152.249 1008 1021 13 10 21.1 52.8 18% 23 0.851 69% 0.94 523 456 80 80 64 0.77 65 32.199 20 25 988 1003 15 16 24 47 22% 30 0.724 49% 0.94 535 447 174 80 139 0.77 65 111.422 15 56 944 974 30 30 27 48 27% 30 0.829 45% 0.94 525 427 187 80 150 0.77 65 224.690 10 92 902 944 42 43 21.6 42 21% 60 0.683 34% 0.95 540 408 153 80 123 0.77 65 263.953 5 52 852 879 27 24 25.7 24% 25 0.874 54% 0.95 521 385 134 80 107 0.77 65 128.413 5 39 782 794 12 0 -- 12 22% 50 0.862 41% 0.96 522 353 141 80 113 0.77 65 67.890 10 nc XXI IXX S/T= 760.677 Total Belgua Perfs 213 166 33 BELUGA S/T 1171.870 168.525 MMCF Carya 2-2.1 30 18 21.8 56.1 21.3% 15 0.398 52% 0.932 536 551 174 80 139 0.77 120 231.391 250 27 Carya 2-1 XXI IXX 2125 2130 5 3 26.7 55.7 20.2% 14 0.402 56% 0.88 535 961 279 80 223 0.85 65 36.933 140 19 S/T= 268.324 2035 2040 5 4 20.3 52.7 18.3% 18 0.407 54% 0.89 534 920 253 80 202 0.85 65 44.711 40 16 XXI IXX 25 11 21.9 55.1 20.2% 15 0.407 55% 0.931 534 549 155 80 124 0.77 120 126.048 45 S/T= 170.760 38 36 25.4 50.7 25.5% 17.5 0.413 43% 0.931 533 547 248 80 198 0.77 120 658.996 95 Total Tyonek Perfs 103 72 S/T= 658.996 TYONEK CARYA 2 SIT 1098.080 OPEN in #3 _ ASSUMPTIONS: Rw @120 , 0.45 in Beluga Sw=Sq Rt ((1/POR"1.5 )`(Rw/Rt)) TOTAL WELL 2269.950 168.5 MMCF 0.25 in Tyonek INDICATES PARTIAL DEPLETION Ed Jones 12/21/2009 XXI IXX INDICATES PACKER SEPARATION IN #3 TOTAL VOLUMETRIC RESERVES ABOVE FROM NCU 3 PAY= 1244.908 MMCF CERTIFIED MAILTM Aurora Power 1400 W. Benson 41Ivd., Suite 410 Anchorage, Alaska 99503 (907) 277-1003 • Fax (907) 277-1006 7002 2410 0001 6872 7850 s Ms. Kim Cunningham Cook Inlet Region Incorporated 2525 C' Street, Suite 500 P.O. Box 93330 Anchorage, AK 99509-3330 =Aurora Power 1400 W. Benson Blvd., Suite 410 Anchorage, Alaska 99503 (907) 277-1003 • Fax (907) 277-1006 11 CERTIFIED MAILTM 7005 0390 000a e099 5784 Ms. Temple Davidson State of Alaska, DNR Division of Oil and Gas 550 W. 7th Avenue, Suite 1100 Anchorage, AK 99501-3560 n - 0 ==aurora Gas, LLC www.aurorapower.com Alaska Oil and Gas Conservation Commission 333 W 7th Avenue, Suite No. 100 Anchorage, Alaska 99501-3539 Attn: Mr. Steve Davies Petroleum Geologist Gentlemen: May 30, 2006 RE: Spacing Exception Application Application for Permit to Drill NCU No.10 Well ADL-63279 Nicolai Creek Unit jUN 1 5 2006 WASION OILANDOW Reference is made to the recently submitted Application for Permit to Drill (APD) on behalf of Aurora Gas, LLC (AURORA), as Operator of the captioned proposed development well. This letter respectfully requests the APD be approved with certain limitations placed upon AURORA, as discussed below, and this spacing exception request be granted. The proposed Nicolai Creek Unit, No.10 Well is to be the second well drilled within Section 20, Township 11 North, Range 12 West, SM and is planned to be drilled directionally attempting to test gas in previously untested sands within the Tyonek Formation between the projected depths of 2,887' MD/2,562' TVD to 3,831' MD/3,383' TVD. These intervals, namely the Carya 2-3, Carya 2-4 and Carya 2-5 sands, are either not present or water -wet in the Nicolai Creek Unit, No. 3 and No. 5 Wells. The distance between the primary Carya 2-4 interval in the proposed well, which is approximately 217' from the west line of the drillsite lease (ADL-63279) and Section 20. Additional causes for the need for an approved spacing exception are (a) the take point for the proposed well falls within 1,500' from a property line wherein land ownership on both sides of said line is not identical, and (b) the potential completion of a gas well within Section 20 which already has the NCU No. 3 gas well situated in said section, albeit producing from a different Tyonek Formation sands (Carya 2-1 and Carya 2-2 sands). The SL of the proposed well is 1,629' FWL, 1,914' FNL of Section 20, situated on the same drilling pad as the NCU No. 3 Well in the SE/4 NW/4 of said Section, as reflected on the Exhibit "A" attached hereto, and situated on AURORA Lease ADL- 63279. The BHL of the proposed well is 304' FEL, 2,135' FNL of Section 19, and situated on Aurora Lease AA-085789. The proposed well is situated within the confines of the Northern Participating Area of the captioned Unit. Consequently, the captioned well will require a spacing exception location pursuant to 20 AAC 25,540. It is anticipated that if the proposed well is commercial a reformation of the Northern Participating Area will be initiated to include a portion of AA-085789. 10333 Richmond Avenue, Suite 710 • Houston, Texas 77042 • (713) 977-5799 • Fax (713) 977-1347 1400 West Benson Blvd., Suite 410 • Anchorage, Alaske, 99503 • (907) 277-1003 • Fax (907) 277-1006 Consequently, this letter respectfully requests the AOGCC give favorable consideration to approving AURORA's APD, but prohibiting AURORA's ability to produce said well until the completion of the spacing exception process: This proposal, if approved by the AOGCC, would allow AURORA to commence drilling operations and test the intervals of interest, as identified on Exhibit "A", but not produce hydrocarbons from this Carya 2-4 sand in the proposed well until the spacing exception process has concluded. AURORA's operational, drilling and testing program is briefly discussed below for your benefit. AURORA plans to drill the proposed NCU, No. 10 Well to a sufficient depth to test three Upper Tyonek ("Carya") sands that appear to be potentially productive and is as follows. The surface location of the proposed well is on the same pad as and within 100' of an existing producing gas well, Nicolai Creek Unit, No.3 Well. The gravel area of the No. 3 pad may be expanded from its present extent, but it will remain within the historic limits. Surface casing for the proposed well will be set at about 820', then the well will be kicked off to the west, reaching a measured TD of 4,000' with a TVD of about 3,539' at a point about 1,946' west and slightly south of the surface. location (1,933' west and 22P south). The NCU No. 3 well was drilled as a vertical hole to beyond the depths of this well. The primary objectives of the No. 10 Well are the Carya 2-5 sand at about 3,383' TVD, the Carya 2-4 sand at about 2,789' TVD, and the Carya 2-3 sand at 2,475' TVD (all of the Upper Tyonek Formation), with secondary objectives of several shallow Beluga sands between 850' TVD and 1,150' TVD, which are behind pipe, but not completed in the No. 3 well. The No. 3 well is completed in the Carya 2-1.1, 2-1.2, 2- 2.1, 2-2.2, and 2-2.3 sands between 1,900' to 2,380', which have produced about 1.9 BCF to date, and a Beluga sand at 1,494-1,452'. The Carya 2-2.3 and part of the 2-2.2 sands in No. 3 were cemented off to stop water production in 2003, so the PBTD of the well is now 2,319'. The remaining zones are commingled and producing 400-500 mcfpd. Thus, the objectives of the No. 10 well are not common to the No. 3 well. Aurora is expecting as much as 140' of Carya pay and 130' of shallow Beluga pay in the objective sands in No. 10 well. The deeper Carya sand objectives are based on amplitude anomalies in the 3-D seismic shot over the area by Aurora in 2003, and the Beluga objectives are based on this seismic plus logs of the No. 3 well. The deeper Carya sand objectives in proposed No. 10 well, the 2-5 and 2-4, are productive in the Nicolai Creek Unit, No. 1B Well, about 1-1/2 miles south-southwest of this location (the sands have been tested productive there, but do not have a significant production history, due to mechanic problems in the well bore for which there are plans to remediate this summer by a workover there). The Carya 2-3 sands also appear to be productive in No. 1 B well, based on log data, and will be completed there in this summer's workover. The plan for the drilling of the proposed well is to: a) drive 80' or so of 13-3/8" conductor, b) drill a 12-1/4" hole to 820' and set 9-5/8" surface casing, c) drill out with an 8-1/2" bit and kickoff directionally to the west, d) drill a directional well to 4,000' MD/3,539' MD, and e) run a full suite of open -hole logs, probably including array induction, formation density, compensated neutron, dipole sonic, formation micro - imager, side -wall cores, and formation pressure tests (MDT). Assuming the well contains sufficient apparent pay, 5-1/2" casing will be set at TD, and the well will be perforated —most likely all Carya sands in one set up (2-5 to 2-3), isolated with packer and bridge plug, and tested from bottom up to determine gas and water production rates. Any productive zones will likely be separated by packers and sliding sleeves for optimal production, whether commingled or selectively produced. If a commercial well is attained at this point, the Beluga will likely be left for the future. If, however, the commerciality of the Tyonek sands is questionable, the shallow Beluga sands will also be tested and may be set up as selective completions. If commercial gas production is determined, the existing No. 3 production facility will be expanded, with a separator and production allocation meter added for the No. 10 well, and the existing compression and dehydration will be de -bottlenecked to provide capacity for this new well. It should be noted there are issues regarding potential injury to the correlative rights of offsetting owners. Attached hereto as Exhibit `B" is a plat of the drillsite lease, (Tract 1-ADL-63279), wherein the landowner is the Department of Natural Resources (DNR), along with surrounding lands/leases. As you can see, the Bureau of Land Management (BLM) is the offsetting landowner of all tracts contiguous to the north, west, south and east of the drillsite lease for the proposed well, such being Tracts 2 through 8, inclusive. All of Tracts 2 through 8, inclusive, comprise a portion of AURORA's AA-085789 Lease with the mineral owner being the BLM. As reflected on Exhibit `B", only Tracts 2 through 5, inclusive, fall within the 3,000' radius from the projected take point for the proposed well at the Carya 2-4 level. As such, all landowners, including all overriding royalty owners, and operators within said 3,000' radius have been sent a copy of this letter by certified mail. Exhibit "C" identifies all landowners and overriding royalty owners. Exhibit "B" also reveals the SL & BHL of the proposed well for which the spacing exception is sought reflecting one other completed or drilling well on the drillsite lease, Tract 1-ADL-63279, as well as the adjoining lands/leases. Please note Aurora's Wells 1 B, 2 & 9 in the southwesterly portion of Tract 7. Said three wells are in excess of 3,000' from the projected take point for the proposed well and are situated in another section. Exhibit "D" contains the Affidavit of Facts. Please incorporate this request with the APD submittal from Fairweather and give favorable consideration to AURORA's proposal. If you require additional information regarding this request, please contact Mr. Ed Jones, Vice President, Engineering at the number below or the undersigned. 0 • Your prompt attention to this matter is sincerely appreciated. Very Truly Yours, Ot, *--6� - Randall D. Jones, CPL Manager, Land & Negotiations rjones@aurorapower.com Enclosures Cc: Mr. William Van Dyke, Director State of Alaska Department of Natural Resources 550 West Seventh Avenue, Suite 800 Anchorage, Alaska 99501 Bureau of Land Management 6822 Abbott Loop Road Anchorage, Alaska 99517 Attn: Mr. Greg Noble, Branch Chief A. Clifford S. Pfoff E..Jones ncu 10 spacing exceptionrequest u STATE OF ALASKA 1�00f,' ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Aurora Gas, LLC ) for an order granting an exception ) Conservation Order No. 576 to the spacing requirements of 20 AAC ) 25.055, allowing drilling, completion, ) Nicolai Creek Unit No. 10 testing and regular production of a gas well ) Delineation Gas Well drilled within 1,500 feet of a property line ) October 2, 2006 IT APPEARING THAT: 1. Aurora Gas, LLC ("Aurora") by letter dated May 30, 2006 and received by the Alaska Oil and Gas Conservation Commission ("Co on June 1, 2006 requested an order granting an exception to the spacing requirements of 20 AAC 25.055 (a)(2) to allow drilling, completion, testing and regular production of the Nicolai Creek Unit No. 10 (`NCU 10") gas delineation well within 1,500 feet of a property line. 2. The Commission published notice of opportunity for public hearing in the Peninsula Clarion on June 23, 2006, and in the Anchorage Daily News on July 2, 2006, pursuant to 20 AAC 25.540. ;. No protests to the application or requests for hearing were received. 4. The public hearing was vacated on August 7, 2006, Additional information was requested from Aurora on that same day, and received on August 8, 2006. FINDINGS: 1. NCU 10 is proposed as deviated, gas delineation welt with a surface location 1,504 feet from the west line and 1,799 feet from the north line of Section 20, T1IN, R12W, Seward Meridian ('-SM") and a bottom hole location 308 feet from the east line and 2,099 feet from the north line of Section 19, Tl 1N, R12W, SM. State of Alaska oil and gas lease ADL-63279 includes the western half of Section 20, Tl 1N, R12W, SM. The western half of Section 20, T11N, R12W, SM also constitutes the Northern Participating Area of the Nicolai Creek Unit ( NCU"). ;. Federal Lease AA-85789 ties west of, and adjacent to. the Northern Participating Area. 4. The planned path for NCU 10 is based on seismic and nearby well information. Conservation Order 576 October 2, 2006 Page 2 of 3 5. The surface location of NCU 10 and the prospective gas sand intervals lie within the Northern Participating Area. Prospective gas sand intervals and the planned total depth of NCU 10 lie within Federal lease AA-85789. These prospective gas reservoirs lie within 1,500 feet of the boundary between the Northern Participating Area and Federal lease AA-85789. 6. Gas reservoirs targeted by NCU 10 well lie within 3,000 feet of offset well NCU 3, but are not open to that well. 7. NCU 10 will be the only gas producing well in Section 19, T11N, R12W, SM. NCU 10 may be the second gas producing well in Section 20, T11N, R12W, SM. 8. Aurora sent notice of the application for exception to the well spacing requirements of 20 AAC 25.055 for the NCU 10 well to all owners, landowners and operators within 3.000 feet of the anticipated gas bearing section of the NCU 10 well. 9. The Commission received no comments, objections or protests in response to the public notice regarding the NCU 10 well or to the notification sent by Aurora to all known owners, landowners and operators within 3,000 feet of the NCU 10 well. CONCLUSIONS: 1. An exception to the well spacing requirements of 20 AAC 25.055 (a)(2) is necessary to allow drilling, completion, and testing of gas in the NCU 10 gas delineation well in order to evaluate gas reservoirs in the Beluga and Tyonek formations within the NCU. 2. Granting a spacing exception to allow drilling, completion, and testing of gas in the NCU 10 gas delineation well will not result in waste or jeopardize the correlative rights of adjoining or nearby owners. 3. The properties affected by this spacing exception lie within and outside of the boundaries of the NCU. Prior to regular production, the NCU and the Northern Participating Area must be expanded, and a means of allocating production must be established. NOW, THEREFORE, IT IS ORDERED: Aurora's application for exception to the spacing requirements of 20 AAC 25.055(a)(2), for the purpose of drilling, completion, and testing of gas in the NCU 10 gas delineation well is granted. Because the properties affected by this spacing exception are not wholly contained within the NCU. Aurora may not proceed with regular production until the NCU and Northern Participating Area have been expanded to include the acreage affected by NCU 10 and a means of allocating production is established. Aurora must inform the Commission on a monthly basis of progress toward these requirements. . a Conservation Order 576 October 2, 2006 Page 3 of 3 Prior to regular production, Aurora must provide a signed, notarized Affidavit of Facts with supporting evidence to the Commission demonstrating compliance with the terms of the unit agreement, applicable Alaska law and regulations, and applicable Federal law and regulations. Aurora may not place sand intervals common to NCU 10 and nearby NCU 3 on regular production without prior Commission approval DONE at Anchorage, Alaska and d>ed'�t't�er 2,�006. orm ,Chairman laska O d Gas Conservation Commission Daniel T. Seamount, Jr.. Commissioner Alaska Oil and Gas Conservation Commission AS 31.05.0811roQfdes that,witHir 20.� days after receipt of written notice of the entry of an order, a person affected by it may file with the Ctxoi),tor rehearing. Arequest for rehearing must be received by 3 30 PM on the 23rd day following the date of the brdd.°ornext, working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or inrt pawithin 10 days. The Commission can refuse an application by not acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Commission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Commission, the 30-day period for appeal to Superior Court runs from the date on which the request is deemed denied (i.e.,10`h day after the application for rehearing was filed). IVIBIT "A" 0 PROPOSED NICOLAI CREEK UNIT-10 WELL 0 0 EXHIBIT 14 B)v PROPOSED NICOLAI CREEK UNIT-10 WELL i Legend State mineralsICIRI surface BLM mineralsAMHT surface BLM mineralsICIRI surface BLM minerals/State surface TRAQ moot ITRAC-T NCU 5 + Ncu to NCU 3 F i. Nqj 18 01 NCU to