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Home My WebLink AboutCO 767CONSERVATION ORDER 767 Docket Number: CO -18-026 1. September 21, 2018 Hilcorp application for a waiver to commingle production within the same wellbore from the Beluga and Tynek Gas Pools in the SCU 13-9 well located in the Swanson River Unit. 2. September 25, 2018 Notice of hearing, affidavit of publication, email distribution, mailings STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC for an order authorizing the downhole commingling of production in the Soldoma Creek Unit 13-09 well (PTD 181-098). IT APPEARING THAT: Docket Number: CO -18-026 Conservation Order No. 767 Swanson River Unit Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska November 19, 2018 By letter dated September 21, 2018, Hilcorp Alaska, LLC (Hilcorp) requested a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for the Soldoma Creek Unit 13-09 (SCU 13-09) well (PTD 181-098) and authorization under 20 AAC 25.215(b) for downhole commingling of production from the Beluga Gas Pool (Beluga) and the Tyonek Gas Pool (Tyonek) in the SCU 13-09 well. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for October 30, 2018. On September 25, 2018, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On September 25, 2018, the AOGCC published the notice in the Anchorage Daily News. 3. No protest to the application or request for hearing was received. 4. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 5. The tentatively scheduled hearing was vacated on October 24, 2018, and the period for public comments closed on October 27, 2018. No public comments were received. FINDINGS: 1. Hilcorp is the operator of the Swanson River Unit (SRU) and the SCU 13-09 well, located onshore in the Kenai Peninsula Borough, Alaska. 2. The SCU 13-09 well was drilled and completed in 1982 as a Hemlock Oil Pool producer and produced from the Hemlock Oil Pool until 2001 and has remained shut in since. ' The Swanson River Field used to be covered by two units, the Swanson River Unit and the Soldoma Creek Unit, but the Soldoma Creek Unit was merged into the Swanson River Unit. So, although the well is named Soldotna Creek Unit 13-09 it is actually a Swanson River Unit well. Conservation Order No. 767 November 19, 2018 Page 2 of 3 Hilcorp would like to add perforations to the Tyonek and Beluga Gas Pools and attempt to produce them commingled in the hopes of having a commercially viable development. 3. The Beluga and Tyonek formations in the Cook Inlet Basin are comprised of many small sand lenses that are not vertically or areally well connected. Hilcorp has identified thin sand sections in the Beluga and Tyonek Gas Pools, one sand and two sands respectively, that may contain small volumes of gas that would likely not be producible on their own and thus would remain stranded if comingling is not authorized. Hilcorp plans to perforate all of these sands to see if, when combined, they can constitute a commercially viable development. 4. If after perforating the well it is capable of flowing, Hilcorp would run a production log to determine which sand sections are contributing to production and to allocate production between the Beluga and Tyonek Gas Pools. Production logs would be run annually thereafter to update the production allocation between the pools. CONCLUSIONS: 1. A waiver of the requirements of 20 AAC 25.210 is not required because authorization to commingle production in the wellbore is addressed by 20 AAC 25.215. 2. Allowing commingling of production from the Beluga and Tyonek Gas Pools would provide the best opportunity for making the SCU 13-09 well economically viable again and thus lead to greater ultimate recovery than if commingling was not authorized. 3. Using initial and annual production logs to allocate production will provide adequate allocation of production between the Beluga and Tyonek Gas Pools. NOW THEREFORE IT IS ORDERED: Pursuant to AS 31.05.030 and 20 AAC 25.215(b), the downhole commingling of production between the Beluga and Tyonek Gas Pools in the SCU 13-09 well is hereby approved with the following conditions: 1. If the well proves capable of sustained production, a production log must be run within 30 days of production stabilizing to determine the production allocation between the Beluga and Tyonek Gas Pools. 2. Thereafter, a production log must be run at least once every 12 months, or as deviations in well performance dictate, to determine a new production allocation factor for the well. 3. Copies of all tests and logs used for determining allocation of production shall be submitted to the AOGCC within 30 days of being run. Conservation Order No. 767 November 19, 2018 Page 3 of 3 Unless notice and public hearing are otherwise required, upon proper application the AOGCC may administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. DONE at Anchorage, Alaska and dated November 19, 2018. Hollis French Chair, Commissioner jDan%iel�.eamount Commissioner TION AND 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 AOGCC grants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC 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 AOGCC mails, OR 30 days if the AOGCC 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 AOGCC 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 AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on 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 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, ) Docket Number: CO -18-026 LLC for an order authorizing the downhole ) Conservation Order No. 767 commingling of production in the Soldotna ) Creek Unit 13-09 well (PTD 181-098). Swanson River Unit Beluga Gas Pool Tyonek Gas Pool Kenai Peninsula Borough, Alaska November 19, 2018 IT APPEARING THAT: By letter dated September 21, 2018, Hilcorp Alaska, LLC (Hilcorp) requested a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for the Soldotna Creek Unit 13-09 (SCU 13-09) well (PTD 181-098) and authorization under 20 AAC 25.215(b) for downhole commingling of production from the Beluga Gas Pool (Beluga) and the Tyonek Gas Pool (Tyonek) in the SCU 13-09 well. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for October 30, 2018. On September 25, 2018, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On September 25, 2018, the AOGCC published the notice in the Anchorage Daily News. 3. No protest to the application or request for hearing was received. 4. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 5. The tentatively scheduled hearing was vacated on October 24, 2018, and the period for public comments closed on October 27, 2018. No public comments were received. FINDINGS: 1. Hilcorp is the operator of the Swanson River Unit (SRU) and the SCU 13-09 well, located onshore in the Kenai Peninsula Borough, Alaska.' 2. The SCU 13-09 well was drilled and completed in 1982 as a Hemlock Oil Pool producer and produced from the Hemlock Oil Pool until 2001 and has remained shut in since. ' The Swanson River Field used to be covered by two units, the Swanson River Unit and the Soldotna Creek Unit, but the Soldotna Creek Unit was merged into the Swanson River Unit. So, although the well is named Soldotna Creek Unit 13-09 it is actually a Swanson River Unit well. Conservation Order No. 767 November 19, 2018 Page 2 of 3 Hilcorp would like to add perforations to the Tyonek and Beluga Gas Pools and attempt to produce them commingled in the hopes of having a commercially viable development. 3. The Beluga and Tyonek formations in the Cook Inlet Basin are comprised of many small sand lenses that are not vertically or areally well connected. Hilcorp has identified thin sand sections in the Beluga and Tyonek Gas Pools, one sand and two sands respectively, that may contain small volumes of gas that would likely not be producible on their own and thus would remain stranded if comingling is not authorized. Hilcorp plans to perforate all of these sands to see if, when combined, they can constitute a commercially viable development. 4. If after perforating the well it is capable of flowing, Hilcorp would run a production log to determine which sand sections are contributing to production and to allocate production between the Beluga and Tyonek Gas Pools. Production logs would be run annually thereafter to update the production allocation between the pools. CONCLUSIONS: 1. A waiver of the requirements of 20 AAC 25.210 is not required because authorization to commingle production in the wellbore is addressed by 20 AAC 25.215. 2. Allowing commingling of production from the Beluga and Tyonek Gas Pools would provide the best opportunity for making the SCU 13-09 well economically viable again and thus lead to greater ultimate recovery than if commingling was not authorized. 3. Using initial and annual production logs to allocate production will provide adequate allocation of production between the Beluga and Tyonek Gas Pools. NOW THEREFORE IT IS ORDERED: Pursuant to AS 31.05.030 and 20 AAC 25.215(b), the downhole commingling of production between the Beluga and Tyonek Gas Pools in the SCU 13-09 well is hereby approved with the following conditions: 1. If the well proves capable of sustained production, a production log must be run within 30 days of production stabilizing to determine the production allocation between the Beluga and Tyonek Gas Pools. 2. Thereafter, a production log must be run at least once every 12 months, or as deviations in well performance dictate, to determine a new production allocation factor for the well. 3. Copies of all tests and logs used for determining allocation of production shall be submitted to the AOGCC within 30 days of being run. Conservation Order No. 767 November 19, 2018 Page 3 of 3 Unless notice and public hearing are otherwise required, upon proper application the AOGCC may administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. DONE at Anchorage, Alaska and dated November 19, 2018. a,mr ,,� //signature on file// //signature on file// //signature on file// Hollis French Daniel T. Seamount Cathy P. Foerster n� Chair, Commissioner Commissioner Commissioner*+,,,,„,.r� AND APPEAL 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 AOGCC grants for good cause shown, a person affected by it may file with the AOGCC 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 AOGCC 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 AOGCC 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 AOGCC mails, OR 30 days if the AOGCC 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 AOGCC 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 AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on 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 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 P -j Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -18-026 Swanson River Unit, Beluga and Tyonek Gas Pools The application of Hilcorp Alaska, LLC (Hilcorp) for an order in accordance with 20 AAC 25.215 authorizing the downhole commingling of production in the wellbore of the Soldotna Creek Unit 13-09 (SCU 13-09) well. Hilcorp, by letter dated September 21, 2018, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order in accordance with 20 AAC 25.215 to authorize the downhole commingling of production from the Beluga and Tyonek Gas Pools in the SCU 13-09 well. The AOGCC has tentatively scheduled a public hearing on this application for October 30, 2018, at 10:00 a.m. at 333 West 7`h Avenue, Anchorage, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on October 14, 2018. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after October 16, 2018. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7' Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on October 27, 2018, except that, if a hearing is held, comments must be received no later than the conclusion of the October 30, 2018 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than October 28, 2018. 4CathyFoerster Commissioner STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTTFU D AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER p AO -I9-009 FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O.AGENCY 924/2018 PHONE: (907 279.1433 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907) 276-7542 TO PUBLISHER: Anchorage Dafly News, LLC SPECIAL INSTRUCTIONS: ' PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: FY -0 LEGAL I— DISPLAY fV_ CLASSIFIED r OTHER (Specify below) DESCRIPTION Pwcl: CO -18-026 Initials of who prepared AO: Alaska Non -Taxable 92-600185 :$UFMIT TNVdtG6$HOWING ADVERTISING: ORPERC6. PEeuCATION:wITaT.IF1EDAPFIDAVITOI±:;:HAT.1'nCHEDCDeYdF: ADVE........... AOGCC 333 Nest 7th Avenue Anchorage, Alaska 99501 Pae 1 of 1 Total of All Pages $ REF Type Number Amm mount Date Coents I PVN VCO21795 2 AO AO -19-009 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FY DIST' LIQ 1 19 A14100 3046 19 2 3 4 5 Pur ..to th a i Purchasing Authority's Signature Telephone Number I. d receiving agYncy name must appear on all invoices and documents relating to this purchase. 2. The she is registered for lax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the stale and not for resale. DIST IBUTION .. ...,. 1. DIVLs4an FiscaVQptgTDalA.Q ... .,. ., .... .... ..,... ... .Copies Publisher (faxg{I) Dtvtston Fiscal, Recewing: Form: 02-901 Revised: 9/24/2018 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 ANCHORAGE DAmy NEWS AFFIDAVIT OF PUBLICATION Account #: 27022 ST OF AWAK OIL AND GAS CONSERVATION COMMISSION 333 WEST 7TH AVE STE 100 ampwnAAGF AK oo5n19510 STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he/she is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on September 25, 2018 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed k Jole t Stenetin If Subscribed and sworn to before me this 25th day of September, 2018 Notary Pulic nand for The State o Alaska. Third Division Anchorage, Alaska Ordain! 000142 Product ADN -Anchorage Daily News Coat $229.10 Placement 0300 Position 0301 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO -18-026 Swanson River Unit, Beluga and Tyonek Gas Pools The application of Hilcorp Alaska, LLC (Hilcorp) for an order in accordance with 20 AAC 25.215 authorizing the downhole commingling of production in the wellbore of the Soldotna Creek Unit 13-09 (SCU 13-09) well. Hilcorp, by letter dated September 21, 2018, requests the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order in accordance with 20 AAC 25.215 to authorize the downhole commingling of production from the Beluga and ryonek Gas Pools in the SCU 13-09 well. The AOGCC has tentatively scheduled a public hearing on this application for October 30, 2018, at 10:00 a.m. at 333 West 7th Avenue, AnchorsBe, Alaska 99501. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 orn. on October 14, 2018. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 after October 16, 2018. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than 4:30 p.m. on October 27, 2018, except that, if a hearing is held, comments must be received no later than the conclusion of the October 30, 2018 hearing. If, because of -a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombia, at (907) 793-1221, no later than October 28, 2018. - //signature on file// Cathy P. Foerster Commissioner Published: Septemb MY COMMISSION 7, E Notary Public A ORITNEY L. THOMPSON State of Alaska My Commission Expires Feb 23, 2019 OCT 1 ??8 0^4 vi V ED nq 3800 Centerpoint Drive CCP 2U1� Suite 1400 Hilcorp Alaska, LLC JC f( �2'018 Anchorage, AK 99503 AOGCC C Fax: 907-777-8301 32 cterrell@hilcorp.com September 21, 2018 Hollis French, Chair Alaska Oil and Gas Conservation Commission 333 West 7`h Avenue, Suite 100 Anchorage, Alaska 99501 _, RE: Request for a waiver to commingle production within the same wellbore from the Beluga and Tyonek Gas Pools in the SCU 13-9 well located in the Swanson River Unit Dear Commissioner French: Hilcorp Alaska, LLC (Hilcorp), as Operator of the Swanson River Unit ("SRU") hereby requests that the Alaska Oil and Gas Conservation Commission ("AOGCC") grant a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for the SCU 13-9 well in the Swanson River Unit for commingling of production within the same wellbore from the Beluga Gas Pool and the Tyonek Gas Pool, pursuant to AS 31.05.030 and 20 AAC 25.215(b). Background The SCU 13-09 was drilled and completed as an oil well in the Hemlock Formation in 1982.' This well was originally perforated in the lower H-10 zone and soon after plugged back thru-tubing and completed in the upper H-10 zone. The upper H-10 zone was plugged back during a 1983 workover and perforated in the H-8 zone. A workover in 1990 cleaned out fill and then ran a gravel pack completion across the H-8 zone and was also completed up -hole in the H-3 zone. A workover in 1995 ran an isolation packer across the H-3 zone and was then perforated in the Tyonek G-1 and G-2 zones. Initial results found oil and gas through production until October 2001. The SCU 13-9 well has not produced since. The well is currently temporarily abandoned in hopes to add perforations in the Beluga and Tyonek formations which may result in adding production in commercial quantities. On December 28, 2017, Hilcorp submitted to the Bureau of Land Management ("BLM") a Sundry Application to add new perforations in the SCU 13-9 well in the Beluga and Tyonek formation. Approval from BLM is still pending. Since this well would be producing outside of both the Beluga and Tyonek PA boundaries, a commingling application between PAs was not required by BLM. On December 28, 2017, Hilcorp submitted to the AOGCC a Sundry Application to add new perforations in the Beluga and Tyonek formation in hopes to bring SCU 13-9 back into commercial production. On August 23, 2018 the AOGCC rejected the application and stated that such work required approval from AOGCC to commingle production between pools. To extend the productive life of this well, Hilcorp now requests that the AOGCC grant a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for commingling of production within the same wellbore from the Beluga Gas Pool and the Tyonek Gas Pool. Hilcorp plans to add by-passed production in the Beluga and Tyonek 'Permit to Drill Number 181-098; API Number 50-133-20343-00-00. SRU 13-9 Commingling Application Page 2 of 4 formations without isolating existing perforations within the Tyonek formation, in order to return SCU 13-9 to production. Discussion In 1995 a workover was done that ran an isolation packer across the H-3 zone and add perforations in the Tyonek G-1 zone from 10,314' MD to 10,342' MD and in the Tyonek G-2 zone from 10,400' MD to 10,416' MD. Initial results found oil and gas production until October 2001. The SCU 13- 9 well has not produced since and has been temporarily abandoned. Hilcorp believes that any remaining intervals of gas in this wellbore are smaller, lower pressure intervals. Hilcorp plans to plug and abandon the Hemlock zones and Tyonek G-1 and G-2 zones, and perforate and test various Beluga and Tyonek zones. While collectively, they may produce some gas, they individually will not be able to overcome any hydrostatic column of liquid in the wellbore. Furthermore, perforating and testing these intervals individually are cost prohibitive. There are a total of two (2) Tyonek intervals and one (1) Beluga interval to be perforated in this well (see table below). Hilcorp proposes to commingle production from all three (3) intervals, which would produce from both the Beluga Gas Pool and Tyonek Gas Pool. The reason is that together, these intervals may produce enough gas to lift the well and return SCU 13-9 to commercial production. If the well flows gas, Hilcorp will run a production log to determine which intervals are producing gas. On an annual basis thereafter, Hilcorp proposes to run a production log across all open perforations within the wellbore. Such data will be used to meet the requirements of 20 AAC 25.215(b)(1) [production from separate pools can be properly allocated]. FORMATIO ZONE TOP MD BTM MD Ton TVD Bottom TVD Amt DATE N Beluga 52-2 ±5,312' ±5,322' ±5,310' ±5,320' 10' Proposed Tyonek 61-0 ±5,976' ±6,028' ±5,973' ±6,025' 52' Proposed Tyonek 77-3 ±7,434' ±7,451' ±7,428' ±7,450' 17' Proposed The proposed perforation in the Beluga formation are located within the boundaries of the SRU Beluga Gas Pool, and outside the boundaries of the SRU Beluga Participating Area ("Beluga PA"). Hilcorp anticipates production from SCU 13-9 to fall completely within the SRU Beluga Gas Pool (see Attachment 1). During the initial testing phase, and thereafter, all production from SCU 13-9 associated with the Beluga formation will be allocated one -hundred percent (100%) to the Beluga Gas Pool, and reported to the AOGCC as such. For royalty reporting to the BLM, all production from the SCU 13-9 well associated with the Beluga formation will be reported and allocated on a tract basis. The proposed perforations in the Tyonek formation are located entirely within the SRU Tyonek Gas Pool, and outside the boundaries of the SRU Tyonek Participating Area ("Tyonek PA") (see Attachment 1). Hilcorp anticipates production from SCU 13-9 associated with the Tyonek formation to fall completely within the SRU Tyonek Gas Pool. Therefore, production from the SRU 13-9 Commingling Application Page 3 of 4 SCU 13-9 well associated with the Tyonek formation will be allocated one -hundred percent (100%) to the Tyonek Gas Pool and reported to the AOGCC as such. For royalty reporting to the BLM, all production from the SCU 13-9 well associated with the Tyonek formation will be reported and allocated on a tract basis. As demonstrated in detail above, Hilcorp's proposal to commingle production from both the Beluga Gas Pool and Tyonek Gas Pool will not lead to a loss of reserves or less ultimate recovery from either formation. Moreover, waste will not occur and proper procedures will be in place to ensure that production from the Beluga Gas Pool and Tyonek Gas Pool are properly allocated, satisfying the requirements of 20 AAC 25.215(b)(1). Upon approval from the AOGCC and issuance of an order providing for commingling of production within the same wellbore from the Beluga Gas Pool and Tyonek Gas Pool, the requirements of 20 AAC 25.215(b)(2) will also be met. Conclusion If the AOGCC does not grant a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for the SCU 13-9 well, Hilcorp will be unable to evaluate potential by-passed Beluga and Tyonek pay in the wellbore. Hilcorp would plug and abandon the SCU 13-9 well and thus reduce the ultimate recovery from the Swanson River Field. Hilcorp respectfully requests that the AOGCC grant a waiver of the requirement to provide complete separation of flow streams from different pools as specified in 20 AAC 25.210 for the SCU 13-9 well in the Swanson River Unit for commingling of production within the same wellbore from the Beluga Gas Pool and the Tyonek Gas Pool, pursuant to AS 31.05.030 and 20 AAC 25.215(b). Hilcorp believes that this application satisfies the requirements of 20 AAC 215(b). If you require additional information regarding this request, please contact Mr. Ted Kramer, Sr. Operations Engineer, at 907-777-8420 or tkramer@hilcorp.com, or the undersigned at 907-777- 8432 or cterrell@hilcorp.com. Sincerely, C��-T-I&WL Cody T. Terrell Landman Hilcorp Alaska, LLC Cc: Jody Colombie, AOGCC Special Assistant (via email) Samantha Carlisle, AOGCC Executive Secretary (via email) Amanda Eagle, BLM Petroleum Engineer (via email) Attachments: 0 Attachment 1: SCU 13-9 Map Overview SRU 13-9 Commingling Application Page 4 of 4 "All 2 onek Perfsi -0 Sand (blue) -3 Sand (black) 3eluga Pert: i2-2 Sand (tred)] 8 r�? • sovaa,ors�ta SCU 13 9 Wellpath a 'C SCU 13-09 Pad �l nl Legend O SM 60andx Oeaioga P e Aty e pIt TYunN Gas Pe,d QPact Loaaimn IF Surtau Waq Lataaons • Bomm Hula Lacalbni Villi Pain Attachment 1 0 750 600 SRU 13-9 Overview Peet SRU 13-9 Commin lin A hcation A Map Stale Smit Zone 1N016 A Ft,lre� �1la.kn. LL,: Commingling pp Map talc: SeAfember 21, 2018