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Home My WebLink AboutCO 041Conservation Order Cover Page XHVZE This page is required for administrative purposes in managing the scanning process. It marks the extent of scanning and identifies certain actions that have been taken. Please insure that it retains it's current location in this file. 0 -~-J- Conservation Order Category Identifier Organizing RESCAN [] Color items: [] Grayscale items: [] Poor Quality Originals: [] Other: NOTES: BY; ROBIN~ Scanning Preparation DIGITAL DATA [] Diskettes, No. [] Other, No/Type OVERSIZED (Scannable with large plotter/scanner) ~ Maps: [~ Other items OVERSIZED (Not suitable for plotter/scanner, may work with 'log' scanner) [] Logs of various kinds [] Other TOTAL PAGES 50 Is~ BY; ROBIN ~ Production Scanning Stage I PAGE COUNT FROM SCANNED DOCUMENT: PAGE COUNT MATCHES NUMBER IN SCANNING PREPARATION: YES NO BY: ~~7..~MAR lA DATE; ~ '~(~ Stage 2 IF NO IN STAGE 1, PAGE(S) DISCREPANCIES WERE FOUND: ~ YES ~ NO BY: ~..~ARIA DATE: ,.~-----~ -(_~ (SCANNING IS COMPLETE AT THIS POINT UNLESS SPECIAL ATTENTION IS REQUIRED ON AN INDIVIDUAL PAGE BASIS DUE TO QUALITY, GRAYSCALE OR COLOR IMAGES) General Notes or Comments about this Document: 5/21/03 ConservOrdCvrPg.wpd STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES BIVISION OF MINES AND MINERALS ALASKA OIL AND GAS CONSERVATION COMMITTEE 3001 Porcupirm Drive Anchorage, Alaska RE: THE APPLICATION OF THE UNION OIL COMPANY ) OF CALIFORNIA for a temporary 80 acme spacing ) order for the Trading Bay Field and for other ) exceptions to Section 2061.1 of the Alaska Oil ) and Gas Conservation Regulations, Title 11, AAC)! Conservation Order #41 June 5, 1967 IT APPEARING THAT: 1. The Union Oil Company of California submitted a request dated May 5, 1967, for a temporary field wide spacing order covering the Trading Bay Field to permit the development of the Upper Hemlock Pool with one oil well onleach 80 acre tract, to eliminate the requirement of a 500 foot standback from governmental section and quarter section lines and to reduce the minimum distance between the oil wells to the same pool to 745 feet. 2. Notice of hearing was published in the Anchorage Daily News on May 11, 1967. 3. Waivers of Personal Service ~'f the notice of public hearing were obtained from all affected parties. 4. A hearing was held in the City Council Chambers of the Z. J. Loussac Library, Anchorage, Alaska, at 9:30 a.m., on May 22, 1967;~ 5. Testimony in support of the application was given by Union Oil Company of Calif- ornia and there were no objections from affected parties. AND IT FURTHER APPEARING that four fault blocks exist in the Hemlock Formation re- sulting in four separate pools. AND IT FURTHER APPEARING that insufficient evidence was presented to warrant the completion of a well closer than 1000 feet to any well drilling to or capable of producing from the same pool. CONSERVATION ORDER #41 Page 2 June 5, 1967 AND IT FURTHER APPEARING that certain exceptions to Section 2061.1 of the Alaska Oil and Gas Conservation Regulations should be granted because of the inherent difficulty of reaching a precise bottom hole location with a directionally deviated hole necessi- tated by the nature of offshore platform development in this area. AND IT FURTHER APPEARING that certain exceptions to Section 2061.1 of the Alaska Oil and Gas Conservation Regulations should be granted because the reservoir characteris- tics and the complicated geologic structure indicate restricted drainage areas not amenable to development by 160 acre spacing. NOW, THEREFORE, IT IS ORDERED that the area affected by this order is described as follows: The Hemlock Formation included in 4 fault block pools listed below: H~loc.k 1 - The fault block penetrated by the Union Oil Company of California #1-A Trading Bay State well, the exact boundaries being unk~ow~. H.e..m.!0~..2 - The fault block penetrated by the Union Oil Company of Cz~.lifornia #A-2 Trading Bay State well, the exact boundaries being unknown. Hemlock 3 - The fault block penetrated by the Union Oil Company of Califomnia #A-4 Trading Bay State well, the exact boundaries being %~nknown. Hemlock 4 - The fault block penetrated by the Texaco, Inc., #1 Trading Bay State well, the exact boundaries being unknown. It is likely that other fault block pools might be delineated in the Hemlock Formation of the Trading Bay Field and the Committee will define these pools pursuant to Section 2061.3 of the Alaska Oil and Gas Conservation Regulations when sufficient evidence is available. The word "Upper" in "Upper Hemlock Pool" as used by the applicant is not meant to imply that the Hemlock formation iR divided into 2 or more vertical pools in the Trading Bay Field. It is used by the applicant to distinguish between the same correlative strata occurring at different sub-sea depths on opposite sides of the Trading Bay Fault Zone as shown on Exhibit "B". The following special rules apply to the aforementioned area: RULE 1 Pool Designation - The vertical limits of the Hemlock Pools are defined as the interval which will correlate with the interval 5380' - 5720' in t he Union Oil Company of California #1-A Trading Bay well. RULE 2 .Spacing Footage - Oil wells may be completed closer than 500 feet to the section line, quarter section line or .quarter quarter section line except that no oil well shall be completed at a distance of less than 500 feet from a lease line where ownership changes. No oil CONSERVATION ORDER #41 Page 3 June 5, 1967 RULE 3 well may be completed closer than 1000 feet to any well drilling to or capable of producing from the same pool. Spacing Acreage - One oil well completion in the Hemlock Pool will be allowed in each 80 acre tract in the affected area. This Order is made pursuant to Section 2061.3 of the Alaska Oil and Gas Conservation Regulations and shall continue in force for a period of not more than eighteen (18) months provided, however, that wells which have been drilled and completed and are being produced in compliance with the provisions of this Order, or any other Order of the Committee, may be produced in compliance with the terms of said Order not- withstanding the fact that such Order may have expired or have been terminated, or that there may be pending a request that said Order be~modified or terminated, until such time as the Committee shall, after notice and hearing, enter an Order establish- ing different rules, requirements, or provisions. The Committee on its own motion, or at the request of any interested party, may at any time during the temporary period set this matter for further hearing for the purpose of determining whether the present Order should be amended or modified. The Committee will, in the absence of a request of an interested party for a hearing at an earlier date, set this matter for hearing for a date which shall be not later than 30 days prior to the date of the expiration of this Order, for the purpose of determining the proper spacing and field rules which should then be applicalbe to this field. DONE at Anchorage and Juneau, Alaska, and dated June 5, 1967. Thomas R. Marshall, Jr., Executive Secretary Alaska Oil and Gas Conservation Committee Concurrence: ~~s A. Williams' aska Oil and Gas Conservation Committee Dale Watlington, Member/'? Alaska Oil and Gas Conservation Co~ittee Karl L. VonderAhe, Member Alaska Oil and Gas Conservation Committee CONSERVATION FILE #41 Alaska Oil and Gas Conservation hearing on an application by Union Oil Company of California for a temporary 80 acre spacing order for the exceptions to Trading Bay Field and other Section 2061. 1. Hearing held in the Council Chambers of the Z.J. Loussac Library, Anchorage, Alaska, May 22, 1967 ~. ~,.. wE)iv, of Mines &Min.. ,~" ~.~m. Inc. wt~h Ihe u~lng Ir'mt It rosy be rsp~ for int~-com~ny u~l only. 10 11 12 14 15 16 17 18 19 20 21 22 23 24 PROCEEDINGS MR. MARSHALL: Gentlemen, it's now 9:30 a.m., on May 22, 1967, Alaska Oil and Conservation Committee will commence a public hearing on the application of Union Oil Company of California for 80 acre spacing in the Upper Hemlock Pool of the Trading Bay Field. Representing the Committee today is Carl Vonder Abe, Petroleum Engineer; myself, Executive Secretary of the Committee, who today, is acting as~Chairman in the absence of Jim Williams; Harry Kugler, Petroleum Geologist; and Easy Gilbreth, Petroleum Engineer, and advising us. Notice of this hearing was published on May 11, in the Anchorage Daily News. Mr. Robertson, are you ready to make your presentatio~ MR. ROBERTSON: Yes, sir; -- my name is Kenneth Rober- I'm Ristrict Land Manager for Union Oil Company. of California. For the purpose of the record, we'd like to read our letter of application for the spacing exception. The letter is dated May the 5th, 1967, addressed to the Executive Secretary of the Conservation Committee, and it regards 80 acre temporary spacing of the Upper Hemlock Pool, Trading B~y Field, Upper Cook Inlet, Alaska. "Dear Sir: Pursuant to sections 2012 and 2061.3 of the State Alaska Oil and Gas Conservation Regulations, dated July 1964, Union Oil of California as an operator and a working .~-- ~ .~v,.~ wlDiv, of Mines &Min.. ,~ ~.~,.~. I ~ Inc. with the undertt~tcllng fft~t it nmy be rtprocluc~cl fo~ inter-company u~ cmly. I R & R COURT REPORTERS 82!'~ WEST EIGHTH AVENUE -- SUITE '~ 277-4713 ANCHORAGE, ALASKA ;son 10 11 12 15 17 18 2O 21 interest owner hereby petitions the Alaska Oil and Gas Con- servation Committee for a temporary field wide spacing order serving th~ Trading Bay Field to permit the development of the Upper Hemlock Pool of said field on an 80 acre spacing for each oil well drilled therein. In order 'to promote conservation and to permit a flexible development program to obtain maximum production, we further ~equest that such order of spacing exception, when issued, include a waiver of the requirement and section 2061 to the effect that, 'Nor shall the subsurface location of any oil well be nearer than 500 feet to any boundry line of such tract, nor nearer than 1000 feet to any well drilled to or capable of p~oducing from the same pool~' The attached report, structural map, and structural cross section details and supports this request for reduction for the.spacing pattern within the Upper Hemlock Pool of the Trading Bay Field to. 80 acres for each well, from the ordinary established 160 acres for each oil'well. We are presently preparing a Development Plan for this field, based on an 80 acre spacing pattern. It will be submitted to the Committee for their consideration and approval~ It is contemplated that further development may indicate the need 'for spacing on less than an 80 acre basis. As future events so indicate, we will make application for a & R COURT REPORTERS WEST EIGHTH AVENUE -- SUITE ~5 277-4713 ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 2O 21 22 24 -3- closer spacing order at that time. The working interest owners of tha Upper Hemlock Pool of the Trading Bay Field as well as all members,~of the Trading Bay Unit have given their approval of this petition. We respectfully request that the committee issue the order of spacing exception including said waiver as hereby petitioned. If any further information is desired in this regard, please let us know" Signed, Union Oil Company, by K. J. Robertson, as attorney-in-fact. The develppment program mentioned in this letter has now been submitted to the Conservation Committee. We have some exhibits that we'll use in our testimony today -- we're calling two expert witnesses -- we'd like to pass out to each member of the committee. Mr. Chairman, our two witnesses will be Mr.. East and Mr. Pedretti. Mr. East will give the geological testimony and Mr. Pedretti will give the engineering testimony. I think they should be sworn, probably at this time. Mr. Marshall: Fine. ~ , · EDWIN EAST and JUAN PEDRETTI under oath having been first duly sworn,/testified as follows: MR. MARSHALL: Mr. Robertson, I'd like to ask you a ..... ~1 ~ ~.~,.~ ~,IDiv. of Mines &Min.. ,~ ~.~.~. I Inc. w~ff~ ff~ uncle~t~cling tt~t it m~y I~ ml~du~d fo~ Inl~t-coml~ny u~ ~y. & R COURT REPORTERS WEST EIGHTH AVENUE -- SUITE ~ 277-4713 ANCHORAGE, ALASKA 10 11 19. 14 15 16 17 18 19 2O 21 22 23 question at this time. You mentioned that you Plan of Development has been submitted to the Committee. This is the fact, it has been received. Do you wish to enter it into the record of the hearing? MR. ROBERTSON: Mr. East, would you like this entered? MR. EAST: Yes, we wish it entered. MR. ROBERTSON: Would you please enter it as part of the record of hearing. MR. MARSHALL: If there are no objections, then, we w~ enter the Plan of Development into .the hearing as Exhibit #1. Will this cause confusion with further exhibits? MR. ROBERTSON: I think .not -- I think it will be proper';. / MR. EAST:. We have Exhibit "E" as the Plan of .Development and spacing plan. MR. MARSHALL: Fine. We'.ll call it Exhibit "A" then, the Plan of Development. MR. ROBERTSON: Was that Exhibit "E"? MR EAST: "E" Tom. MR MARSHALL:' I see Fine Exhibit "E" then it w · · · / I be. MR. ROBERTSON: We' 11 cal'l on Mr. East now to give the geological testimony. R & R COURT REPORTERS 825 WEST EIGHTH AVENUE -- SUITE S 277-4713 ANCHORAGE:. ALASKA 11 11 10 11 12 14 15 16 17 18 19 2O 21 22 2~ -5- MR. EAST: My name is Edwin East. I am the District Development Geologist for Union Oil Company in the Alaska District. I have been employed by the Union Oil Company for the past eleven years. I received a Bachelor of Science degree with a Major in Geology from the University of Washington in 1951. In 1956 I received a Master of Science degree with a Major in Geology from the same institution. I was employed by the Union Oil Company in California in 1956. My first three years with the company was devoted primarily to surface geologic studies in various Rocky Mountain States, the Mid-Continent and in California. In 1959 I was stationed in Denver, Colorado. Here I engag~ed in,'~urface and Sub-surface work in Wyoming and Colorado. in 1962 I was transferred to Anchorage, Alaska. My work these past five years has been concerned primarily with the geology of the Cook Inlet basin, and specifically, during the last three years with the sub-surface geology in the Trading Bay area. I held my present position as District Development Geologist for a little over one year. I shall present the geological data to support the request for a temporary 80 acre spacing order, for waiver of th. ~ ~ .~,~ ~I)iv. of Mines &Min.. ,~ ~.~.~. I Inc. w.h me und~.~ding m~ ~'m~y be r~:~?uccd fo~ In~'.comp~ny u~e ~ly. I R SC R COURT REPO~RTERS 825 WEST EIGHTH AVENUE ~ SUITE 277-47~3 ANC:HORAGE, ALASKA 10 11 14 15 16 17 18 19 20 21 9.2 23 -6- 500 foot stand-off for internal lease quarter sections, and a , 1000 foot minimum distance between well producing intervals in order to develop the Upper Hemlock Pool in the Trading B~y Field. We shall now look' at Exhibits "A" and "B". Exhibit "A", on your left is a structural cross section east/west, . through the Trading Bay ~ield. Exhibit "B", on your right, is a structural contour map drawn'on the top of the Upper Hemlock Pool -- the contour interval is 100 feet,.and the scale is one inch to 500 feet. Tha~ is outline the square mile there. The scale to the cross section is also an inch to 500 feet with no vertical exertion. The Trading Bay Field is an off shore Cook Inlet oil discovery, 63 air miles southwest of Anchorage, Alaska. The discovery well, Union 'Oil Company of California operator, Trading Bay .l-A, was completed in a tertiary Upper Hemlock Pool flowing 1670 barre~s a day from 5390 to 5700 feet on June 25th, 1965. ' Subsequent to the discovery well, three additional wells were drilled from floating vessels to deliniate the field limits. Union drilled the number two and number three wells north and southwest of the discovery well in'.1965 .and found the Upper Hemlock pool wet in both wells. Inc. wlfh the Wing thet # . & R COURT REPORTERS WEST EI(;HTH AVENUE -- SUITE ~ 277-4713 ' ANCHORAGE, ALASKA 10 11 14 16 17 18 20 21 -7- The following year Texaco extended the field to the northeast by completing the Texaco operated Trading Bay State ~1. Development drilling began from a permanent drilling and production platform in October, 1966. Currently, one well, Trading Bay State A-2 is producing 31.9 gravity crude from the Upper Hemlock; Two wells are suspended, A-1 and A-3; One well is testing, A-4; and one well is completing, A-5; in the sands above the Hemlock. The Hemlock is wet in' the A-5 well. Exploratory and development drilling on the Trading Bay anticline has revealed a thick oil and gas column in the sands of the tertiary Kenai group. .The Upper ttemlock'Pool is recognized at the base of the productive sequence. The overlying oil and gas bearing section is undifferentiated Kenai group. The Upper Hemlock Pool in the Trading Bay Field is defined as that part of the Hemlock west of the major fault zone which separates the Trading Bay anticlinal trend from the ~rayling anticlinal trend. ~ The Hemlock on the lower structural Grayling trend is defined as the Lower Hemlock Pool. The Upper Hemlock Pool is a clay to sandy, pebbles to boulder conglomerate with occasional sand-stone stringers. The porosity and permeability is fair to poor in the Upper WEST EIGHTH AVENUE ~ SUITE 277-471'3 ANCHORAGE, ALASKA 1 2 3 5 7 9 10 11 12 13 14 15 17 13 19 2O ~.2 23 24 ~1 " - ~ ..~.,.~ wDiv. Of Mines &Min.. ~ ~.~.. I. Inc. w.h Ihe und~r~ndlng ff~' # m~y be reproduced ~ In~'.,coml:~ny u~l ~ly. I -8- Hemlock Pool. Conventional core analysis from the }~emlock formation in the Trading Bay State A-2 averag~, t~n miilid~rcie: ..Permeability an9 14.~ por0s~ty. At this time we have a core sample from the Trading Bay State A-2 that I would like to have you look at. The Upper Hemlock P°ol is productive' or has tested oil in the l-A, A-2, A-4 and the Texaco Superior Trading Bay State #1 wells. The undifferentiaBed Kenai group overlying the Upper Hemlock Pool is productive or has tested oil and gas in the A-$ A-3 and A-4 wells. Shows have' been encountered in this interval in the A-l, #3, A-5 and the Texaco Trading Bay State %1. The Trading Bay anticline h~s develop'ed'under repeate~ deformation during the tertiary, having experienced growth during Mesozoic time as evidenced by lower jurassic rocks, unconformably underlying the Upper.Hemlock Pool. Seismic evidence iritially deliniated the sharply unwarped and crawling structure. Subsequent drilling has confirmed steep banks, at lease one major unconformity, truncation of section and numerous fault blocks within the field area. A major high angle reverse fault nor%beast 5 was cut by the A-3 well and separates the Upper tlemlock Pool, Trading Bay Field -- and separates the Upper Hemlock Pool in the r & R COURT' REPORTERS 825 WEST EIGHTH AVENUE -- ~UITE · 277-4713 ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 9.9. 23 Trading Bay Field from Lower Hemlock Pool of the Trading Bay Unit Area. The bade of this fault is not known, but its trend is mapped seismically. The high west block is cut by several lesser magnitude faults, possibly intricate slices from this major east boundry fault. Relative movements on these faults is off to the west and down to the east. One such fault designated northeast 4 exists between the A-2 and the A-4' wells because of the low structural position of the A-4 wells on the upper Hemlock pool relative to the A-2 wells in an up-dip easterly direction from the A-2 wells. This' fault was further narrowed down by the A-5 well, which~s apparently in .the A-4 fault block, and low to the Trading Bay #3 well. A second fault, northeast ~3 exists between the i-A and A-2 wells because of the lower structural position of the A-2 wells on the Upper Hemlock Pool relative to the 1-A and by the fact that several sands within the undifferentiated Kenai are productive in the A-2 well, but wet in the 1-A well at a higher structural position. The block on the extreme west of Exhibit A is the 1-A fault block. The directed ~2 well cut the nor%heast 2 fault at 5200 feet measured depth with a loss of several ~'~'..~,.~dred feet of section. Moreover, shallow faulting is indicated separating Inc. wilh ff~ uncl~ln~ ~ I~ m~¥ b~ t~:~,oduc~d for Inl~f-COml~ny u~ only. R & R COURT REPORTERS 825 WEST EIGHTH AVENUE -- SUITE 5 ANCHORAGE, ALASKA 10 11 19. 14 15 16 '17 18 19 20 21 22 23 25 -i0- the A-2 well from the i-A and A-4 since several shallow sands within the undifferentiated Kenai are wet in the A-2 and are oil bearing in the 1-A with the same structural position. This fault or faulted flexure was also crossed at a shallow depth in the A-5 well indicating a northwest/southeast trend. This information is relatively current, the A-5 well having logged just a few days ago, and this information has not been fully interpreted yet. Thus, numerous instances'are seen of ~ault bearier to oil and gas migration from the rapidly accumulating sub- surface data. We go on to Exhibit "C" now. Exhibit "C" is a schema diagram showing current and Proposed 160 acre spaced wells with: the presently known limits of the field. The black cirCles a~e the current wells, and the open circles indicate the propos wells. The green area represents the undrained oil and the clear areas, the calculated area drainage during the estimated twenty year life of the platform. It is evident from this exhibit that much oil would ' be.undrained by 160 acre spacing. This exhibit shows that nine wells can be drilled in the field on 160 acre Spacing. For comparision with the estima drainage area, a 160 acre circle is drawn on the exhibit around each of the wells. ~. ~.,.~ wE)iv, of Mines &Min.. ,~ ~.~. I. Ic~o¢~ I~c. wllh ff~e und~"~dlng ~' I1 m~y b¢~ ~:~:~duc:~d for In~l',,coml:~ny u~ Drily. I & R COURT REPORTERS WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALASKA ic ;ed 10 lI I2 14 15 i6 17 18 19 20 9.1 9.3 O1 ~ ~ .~,~ ~Div. of Mines &Min.. ,~ ~,.~m. {. . -11- We go to Exhibit "D" at this point. Exhibit "D" is also a schematic diagram showing the same calculated radius of the drainage on current and proposed 80 acre spaced wells. Again, the small dark circles are the current wells, A-2, ~4 A-5, and the open circles are proposed wells on 80 acres. This exhibit demonstrates how much more oil that can be drained over the 160 acre spaced wells if the request of spacing is granted. Even on 80 acre spacing much oil would be left in the ground as shown by the dark green areas'representing undrained oil. Fourteen wells can 'be drilled on 80 acre spacing with is plan verses 9 wells on the 160 acre plan. Again, for comparisOn with the estimated drainage are~ an 80 acre circle is drawn on the exhibit surrounding each well Here the 80 is Very close to the calculated radius of drainage over a twenty year period. We go to Exhibit "E" at this point. Exhibit "E" shows a spacing plan on 80 acres. The wells are spaced in the same position as the. previous Exhibit "D". Field development is currently on 160'acre spacing as perscribed in section 2061. State of Alaska Oil and Gas Conservation Regulations and Statues, dated July, 1964. . To reiterate, the structural data gained from the drawing indicates that the. Trading Bay anticline is cut by axial faults up to the west and down to the east trending north- each/southwest. ~ ~ ~ cou~t ~PO~tZ~s WEST EIGHTH AVENUE -- SUITE 277-4713 ANCHORAGE, ALASKA 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 These faults separate the structure into at least five major blocks -- one, two, three, four, five. All blocks appear to be pressure 'separated from each other dua to differen': water tables within the Upper Hemlock Pool and also within oil and gas bearing sands above the Hemlock. Intthe Trading Bay 42 fault block the Upper Hemlock Pool water table is about minus 5553 feet. In the Trading Bay 31 fault block it is below minus 5688 feet. In the Trading 'Bay A-2 and #3 wells fault cross it is below minus 6103 foot and from above minus ~6260 feet, In the Trading Bay A-4 and A-5 fault block it is below minus 6170 feet and above minus 6302 feet and in the Texaco Trading Bay State 31 fault block, it's minus 8600 feet. Moreover, several'wells have different hydrocarbon accumulations in the equavlient sands 'below ~he Hemlock suggesting a fault barrier to migration. It has been further interpreted that the major northeast trending blocks are in turn transversely faulted. Detailed information of this type of faulting is lacking at the present, but these interpretation: are reasonable. Future wel~s have been located to maximize structural advantages and to minimize risks within the major fault block as they are presently .interpreted. Projected Upper Hemlock Pool completion intervals are shown for each w~ll in red. Locations are shown on the Texaco Superior lease ADL 17597 merely to illustrate R & R COURT REPORTERS 02~ WEST EIGHTH AVENUE -- SUITE ~ Z77.~715 ~Div_ Of Mines &Min..,~ ,,~,~. I' inc. with lt~~ng, ltw~t It m~y bi mp4,oduc~ fo~ Inler.<:omp~ny u3m o~ly. I ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 22 23 -13- development of this part of the field if it were to be drilled from the monopod. The development as herein proposed of the Texaco Superior Lease is not p~esently contemplated by the Union Oil Company as operator of the Trading Bay monopod platform. It should be realized that this basic plan represents our current thinking, and each additional well drilled will further modify the structural interpretation of the field, and hence, alter surrounding well locations. Post drilling history has revealed a highly faulted structure within oil producing pools, making it difficult to prognosticate objective tops. Adhemence to the 500 foot standoff and the 1000 foot minimum distance between producing intervals is therefore difficult to maintain and direct the holes necessitated by platform drilling. If the objective horizon is lower than predicted· the spacing moves out further along the well course demonstrated by the A-5 well. Conversely, if the objective comes in higher than predicted the spacing moves in closer. This is demon- strated by the A-4 well. Our experience to date has been that , the objective Hemlock has been consistently lower than predicted In such cases in order to comply with the current quarter section standback and full minimum distance regulations it would be necessary to undertake costly, plug-back and IR & R COURT REPORTERS 825 WEST EIGHTH AVENUE ~1 SUITE 5 277-4713 , ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 22 -14- re-drill operations. In addition, the program's whole angle is oftan difficult to hold in the steeply dipping bads encountered on the Trading Bay structure even if the objective is reached at the anticipated sub-sea elevation. To illustrate some of these points in the A-5 well the objective dropped down from us, and so, in order to ~each it and the prggram location, we have to drop angle; whenever you drop angle the bit wants to turn to the right. That's exaci what happened here. We tried to stay in the quarter section that the well was programmed in by dropping angle and in so doing, it turned strongly to the right and almost out of the quarter section. The high angle of it -- objective penetration on long reach wells and direction of dip greatly stretches out the completion intervalsand furthar complicates adherance to these current stand back and minimum·distance regulations. We'request elimination of the interior lease 500 foot quarter section stand off in order to develop the field along geological and engineering planning rather than have the development be .dictated by governmental quarter sections. We further request reduction of~.~a 1000 foot minimum distance between producing intervals within the.interior of the leases in order to more efficiently plan and react to the complicated geological plot in the Trading Bay Field. & R COURT REPORTERS WEST EIGHTH AVENUE ~I SUITE $ 277-4713 ~ ANCHORAGE, ALASKA ly 10 11 14 15 16 17 18 19 9.0 9.1 9.4 O1 ~, .~u,~ ~])iv. Of Mines &Min. inc. wilh fl'~ ur~l~ncllng ~ It m~y I~ r~oduc~l f~' In~'..com~ny -15- We recommend that this minimum distance be reduced. to a 745 feet equivalent to a 40 acre radius of drainage. As demonstrated by the schematic drainage pattern, Exhibit "D", the ultimate for the field to achieve the most efficient cons'ervation of primary oil eliminating waste in the reservoir is even less than the 80 acres requested. The 40 acre spacing will undoubetly ultimately be needed to drain the ~eservoir. This faulted field res~lting in a to~al unpre- dictability of pay sand horizons, because of structural and stratigraphiC complications, is out of the ~0~ for which this 1000 foot minimum distance regulation was.designated. We feel, further, that each well progr~m'will be influenced by the last field data, and the 745 foot distance is more truly representative of. a minimum distance in a multi-rese::voi~ field which can be adherred to the minimal of administrative action during the drilling of the wells. To summarize, the indicated low'.permeability of the Upper Hemlock Pool coupled with the highly faulted nature of the reservoir and necessary directed wells, dictates less than the 160 acre spacing fOr. field development, waiver of standback and relief of minimum distance between well completion intervals. That ends my testimony. MR. ROBERTSON: We have additional testimony, bu~ m & m COURT ~EPO~TEmS WEST EIGHTH AVENUE ~ SUITE 277-47~3 ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 22 24 25 -16 would ~he members of the Committee like to address questions. to Mr. East at this time? MR. MARSHALL: I would prefer to save all of our questions until after your second witness. MR. ROBERTSON: Fine. We'll call Mr~. Juan Pedretti to give engineering testimony in support of our request. MR. PEDRETTI: Members of the Conservation Committee, State of Alaska, I am Juan Pedretti, professional engineer, registered in the State of California, number 246. Now employed by Union Oil Company as a distric~t engineer in Alaska. I graduated from the University of Texas in June, 1942 as Bachelor of Science in Civil Engineer. In October, 1944, Bachelor of Science in Petroleum Engineering and Geology. I started with the Union Oil Company in April, 1945, initiating my work by completed two years in th~ training program of the 22 years with the Union Oil. Two years was training in foreign operation,'as petroleum engineer in Costa Rica; manager in Guatemala; reservoir engineer in Argentina. Of the 20 years in the States i have worked as a reservoir ~ngineer with Union Oil Company for the last !0 years In projects such as normal depletion and water drive reservoir, .water flooding, ~as sto~age, and steam flood. For the last three years ! have worked on various Alaskan projects, such as engineering study of the Kenai gas R & R COURT R~PORTE~S 82~ WEST EIGHTH AVENUE ~ SUITE 5 277-4713 ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 -17- fields, Swanson River Eields, Trading Bay Fields, ~4cArthur River Fields and Dolly Vanden Fields. And the reservoir simulation computation of the well reservoir using our research department computer program available. In the last two years I have also completed a six month refresher c6urse which was sponsered by the SPE Chapter of the A334E in LosAnge!es on Reservoir Engineering Economics~ The data presented indicates that the Upper Hemlock P~ in the Trading Bay Field has the following characterists. The Hemlock Pool is separated into five individual fault blocks. The Hemlock Pool basra ~Qw(~avera~9.san~d ~e~ervoir porosity of 14.6, which are obtained from core ...... ~, ,,,,, ,, ,,. ..... ~. .....~,,, _ .~ analysis and electrical well calculations. The Hemlock Pool has a calculated effective oil - :. iii ...... ,HI,~, IIII I I III, . II III I ........ ! ' ........ IIII II I II III I IIII '1 II IIII . ,I III _permeability of 10 .miilidarcies from.b_~u~u__~ test. in the Trading Bay State A-2. PVT laboratory studies on the oil obtained from Trading Bay state A-2 indicates a low energy, under saturated 30.1 degree API oil. The current produced gas oil ratio in the Trading Bay State A-2 is.~.42.0' ~b.~c....fe~t..0f.q.~.~.p.~arrel. Under simil reservoir temperature o~ 136 de~rees farenheit and 2740 psi reservoir pressure, oil found in typical California field will produce 600 cubic feet of gas per barrel. The low cubic feet of gaS per barrel of oil produced & R GOU~T ~EPORTERS WEST EIGHTH AVENUE ~ SUITE 277-47~3 ANCHORAGE, ALASKA .r 10 11 12 14 15 16 17 18 19 21 ~.., ~ .~,~ ~Div. Of Mines &Min.. ,~. ~,~.. I. <~t~o.~ Ir~. v~fh the u~ng tt~t It rn~y be mIxoduc~d fo~ inlet-company ule orllyt I -18- in the Upper Hemlock Pool of the Trading Bay Field demonstrates the field to be an undersaturated reservoir. The oil bubble point pressure of the Upper Hemlock Pool is 60 percent of the original reservoir pressure. Con_ sequently, the oil production mechanism at the beginning of the field life is 'strictly by fluid expansion, which is an inefficient mechanism of production causing the pressure of the reservoir to drop in a short period.of time. The net effect of oil production by fluid expansion, will cause the well radiu~ of drainage to be a smaller than by normal depletion, gas expansion or water drive reservoirs. Due to the physical fluid property of the oil present in the Upper Hemlock Pool, a 160 acre well spacing pattern will leave more undrained oil areas in the field than 80 acres well spacing as illustrated by ~xhibit"C" and "D". The radius'of drainage in Exhibit "C" and "D" represent 20 year productions limited by the possible life of the platform estimated by our mechanical engineering department and illustrated in Exhibit "F". The Exhibit "F" is plotted the accumulative oil production vertically versus times in years. It contains three curves -- the one in the middle Corresponds respond for 9 wells drilled on 160 acre per well spacing and the curve below that with the same ~9 wells draining only 80 acres of the 160 acre per well spacing. R & R COURT REPORTERS 82~ WEST EIGHTH AVENUE -- SUITE ~ 277-4713 ANCHORAGE, A~SKA -19- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 This is very possible due to the possible cross faults and lateral faults present in this field. The curve on the top represents 14 wells drilled with a spacing of 80 acres per well. As can be seen from this curve by comparison the curve at the top for the 80 acres spacing, 14 wells minus the 9 wells with 160 acre spacing that there is a potential loss of 2.6 million barrels. Similarly, if we compare the number 2 curve with the 3rd curve, there is another 2.9 million barrel potential of lost oil in the reservoir, making a total of 5 1/2 million barrels. ' It can be seen by this exhibit "F" that there is a potential waste of oil in this pool of 5 1/2 million barrels of oil. For the same reason mentioned above drilling of 160 acres spacing in this geologically complex area'will tend to create economic waste caused by'the high rate of drilling dry holes as dramatically evidenced by Trading Bay State A-5. Drilling on closer spacing will allow the Upper Hemlock pool to be developed in a more orderly manner. Because of the low energy, undem-saturated oil and complex geology of the Upper Hemlock Pool, well spacing closer than 160 acres per well w.iil allow more wells to be drilled in this Pool that can be converted in the future to water or gas injection wells, to maintain the reservoir pressure and recover & R COUF~T REPORTERS WEST EIGHTH AVENUE -- SUITE -~ 277-47~3 ANCHORAGE, ALASKA I0 11 14 I5 i6 I7 i8 19 2O 21 ~ ~.~,.~,Div. of Mines &Min..,~. ~.~'~. I. Inc. with ~h~ unde~t~ndlng ~ It m~y b~ t~uc~d for Int~'.comp~ny u~ ~ly. [ · -20- more oil than by fluid expansion followed by normal depletion mechanisms now known to exist in this pool. In summary, because the Upper Hemlock Pool in the Trading Bay oil field is badly faulted with the low sand porosii:y the low sand permeability, and'lower energy undersaturated oil it is necessary to develop the Upper Hemlock Pool with 80 acre spacing per well, as illustrated by the proposed Plan of Development on Exhibit "E". This exception point by the State to establish the temporary 80 acre spacing to effect the development of the Upper Hemlock Po~l will result in more oil produced without waste in the Trading Bay Field, Cook Inlet, State of Alaska. And that ends this testimony. MR. ROBERTSON: Mr. Chairman, this concludes the testimony portion of our presentation and we invite questions' at this time from the Committee. MR. MARSHALL: Mr. Robertson, I would like to declare a ten minute recess for the Committee to re-examine our exhibit. and formulate questions, and also provide an opportunity for the members of the public here to view the exhibits. [RECESS 10:15I [ RECONVENED ] MR. MARSHALL: Mr. Robertson, for the record, I would like to state that in previous hearings we have approved East's qualifications as an expert.witness, and we would also ~25 'WEST EIGHTH AVENUE ~ SUITE ANC:HORAGE, ALASKA 10 11 13 15 16 17 18 19 20 9.1 22 23 24 -21- like to enter in the record that we approve the qualifications of ~ir. Juan Pedretti as an expert witness. I have a question of a general nature regarding the application. We would like you to clarify the area which will be affected by our order. MR. ROBERTSON: Mr. Chairman, the limits of this field have not been exactly defined at this time, durther drilling will do that and the only limits that we can indicate today are those shown On. the exhibits and squared off along these section lines and quarter section lines. They are not exact and we will be submitting 'subsequently as we gain that information by drilling the limits of the field. MR. MARSHALL: The rather indefinite nature of this area is easily understood after we've heard about the geolo- gical complexities. In writing our order, however, we will be obligated t write about a particular legal subdivision, and I'm wondering if it's your intent that ~he'.order apply to~ those rectangular bloc~ which you've shown on Exhibit "B" insofar as they lie to the west of the major Trading Bay fault zone. MR. ROBERTSON: Yes, sir, it is. With the provision course, that we be able to amend and modify this as drilling exactly defines the' field? MR. ~fARSHALL: Fine, 7 believe we can use the w0~ds that would allow you flexibility on the permanent order should ~ ~ R CouRT ~PO~T~s 825 WI~$T EIGHTH AVENUE -- SUITE 5 277-~713 ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 20 21 22 23 24 -22- there be more or less involved. Since Mr. East gave his geological testimony first, I'll ask Harry Kugler if he has any questions of a geological nature? I~R. KUGLER: Yes, -- and I understand, Mr. East you.~'re applying for 80 acre spacing on the Hemlock zone alone? MR. EAST: That is correct, Harry. What we define as the Upper Hemlock Pool. MR. KUGLER: Would that mean -- how many pools do you think there are in the Trading Bay area? MR. EAST: We think we have determined oil in four blocks. We know we have five fault blocks, but we know from drilling that we have oil in at least four of those blocks -- four pools. ' MR. KUGLER: Four pools? And this would mean then, the other'three pools, excluding the Hemlock then, would still be 160 acres., in effect? MR. EAST: That is right. At this time we are just asking for the 80 acre spacing for the Hemlock Pool itself. M~ KUGLER: One other q~estion: In lieu of the drainage area as you showed on, I think, your Exhibits "E" and MR. EAST: The one in green? MR. KUGLER: Yes, the one in green. Excluding those, do you think that the structure is enough to ask for 80 acre R & R COURT REPORTERS 825 WEST EIGHTH AVENUE -- SUITE $ 277-4713 ANCHORAGE, ALASKA !F"- 10 11 12 13 15 16 17 18 19 20 21 24- spacing? -23- spacing? MR. EAST: Do I think the sturcture is what, Harry? MR. KUGLER: is adequa~ge to request the 80 acre MR. EAST: I -- MR. KUGLER: This is ignoring the drainage patterns. The structure as you have presented it? Is it adequate? MR. EAST: Will 160 drain it, do you mean? MR. KUGLER: Ignoring it?. MR. EAST: If we have no sturcture or no faults -- MR. KUGLER: The structure, as you have presented it? is this enough, by itself, to request 80 acres? Do you think this is adequate? MR. EAST: I think so. MR. KUGLER: Fine. Okay. MR. MARSHALL: Easy~ do you have any questions? MR. GILBRETH: Ed~ as I understand it, You do not believe there is communication across each of these faults. MR. EAST: Yes, I do not believe that there is communication. MR. GILBRETH: Correspondingly, then, is it correct to assume that you're stating that the oil accumulation within each fault block represents a separate pool? MR. EAST: Th&t is correct. MR. GILBRETH: in' the Upper Hemlock? ~.~ ~ .~,~ wDiv. Of Mines &~in.. ~ ~,~o,~. I' Inc. with ~ u.c~t~c~lng t~t it m~y I~ mp~duc~d fo~ Int~-comp~ny u~ o~ly. WEST EIGHTH AVENUE -- SUITE 277-471:~ ANCHORAGE, ALASKA 10 11 12 14 15 16 17 18 19 2O 21 MR. EAST: Yes. MR. GILBRETtI: Are you requesting an order to apply to the entire area, or to each of -- within the fault block itself? MR. EAST: The entire area. MR. GILBRETH: For the entire area? In other words, you're wanting to get spacing exception from the location one fault block to the well location in another fault, block? MR. EAST: On the -- yes -- this -- we have laid them out right now -- this is how we would develop the field as we presently see it. These wells are laid out and try to ade- quately drain each block as a~ now know it. We anticipate that with each well drilled we will be moving some of these location~ around, but the spacing was laid out there to qualified somewhat for a minimum risk admittedly, but laid out to most adequately drain those blocks as if there were pressure connected all the way along. MR. KUGLER: This is Harry Kugler speaking. On your Exhibit "A" -- on the cross section, everything there that you have in rings, is this one pool? MR. EAST: It has been defined as t~e Upper Hemlock Pool, although there are four separate pressure s~parated reservoirs, if you' want to look at it that way? MR. KUGLER: ~ Yes, but it"s -- MR. EAST: It's all -- ~ ~.~.,~Oiv. of Mines &Min. ~ic~.~ Inc. wifl~ ~ ~nding ~ I~m~y b~ m,pmduc~ f~ Inl~'-coml~ny , & R COURT ~EPORTERS WEST EIGHTH AVENUE -- SUITE 277-4713 ANCHORAGE, ALASKA 10 11 12 15 16 17 18 19 20 21 22 23 24 MR. KUGLER: When you talk about the Hemlock Pools, or the Upper Hemlock Pools you're talking.about everything in -25- green? MR. EAST: Yes. MR. MARSHALL: MR. VONDER AHE: I have a question from Carl Vonder Ahe On your -- your A-5 -- the white section where it shows drainage, is that because the well is no to be produced in the Hemlock and the shaded portion there is the area that will not be drained for that reason? MR. EAST: It's unshaded there Carl, because the A-5 found the Hemlock wet here a few days ago, and we have moved the oil -- indicated oil water contact up dip from that w~ MR. VONDER AHE: Because it will not be produced, I mean that well will not be produced, this is the undrained area because of that -- there is no well in there. MR. EAST: Yeah, no well in there -- or no well capable of producing oil MR. MARSHALL: Easy Gilbreth would like to ask a question. MR. GILBRETH: Ed, I'm a little confused here on that pool business. Let me read the definition that we have for a pool and see if I could clarify a point. The definition we're operating under now says "pool" means an underground reservoir containing or appearing to contain a common accumulation of oil or gas. Each zone of a structure which is ~%~,,,.~v,~,Div. Of Mines&Min..,~,~,~. I. ,,o,, ,,,,. ,..,,,, ,,. ,,,,,,.~,,,, ,,,., ,, ,,,., ,,,, ,.,,,o,,,,~ ,,,, ,,,.,..,,,,,,,,.,,,, ,,,. & R COURT REPORTERS WEST EIGHTH AVENUE ~ SUITE ~ 277-4713 ANCHORAGE, ALASKA 11. 10 11 15 16 17 18 19 20 21 23 -26- completely separated from any other zone is the same structure as a pool. Now, when i asked the question i thought you were saying there were four or five pools here, but I understood you to answer Mr. Kugler as one pool? MR. EAST: Well, I'm speaking of there being -- when they ~re separate we have to use the word "pool" maybe somewhat loosely. First of all, we defined the Hemlock as being one pool in the Trading Bay structure as the Upper Hemlock Pool, but I don't want to construe the idea that we have a single common reservoir by using that definition. I want to leave the impression that each one of these blocks are, we believe, to be pressure separated even though we are calling it one single pool. MR. GILBRETH: Do you think for purposes of setting up the rules that the rules should beset up for each of these fault blocks then -- separate pools? MR. EAST: Well, we want. each pool to be treated the same, and we are asking for an exception for the whole field area, and for each individual pool. . MR. GILBRETH: Do you think there is any likelihood that any single well might encounter the Upper Hemlock in two different fault setments here so that the same zone would be open twice in the same well bore? R & R COURT RE~=ORTERS 825WEST EIGHTH AVENUE -- SUITE S 277-4713 ANC:HORAGE, ALASKA 10 11 12 15 16 17 18 19 2O 21 22 24 -27- ~iR. EAST: That's possible with ~he deviated drilling not having these faults precisely narrowed down like this A-5 for example, we show very close to a fault trace, and had that been productive, it's possible that the other block were not as high that we may have gone into a repeated section. I mean, this is possible in field development, but we do not have that situation yet. MR, GILBRETH: That's all I have. MR. MARSHALL: This is Tom Marshall speaking. In other words, Ed, you would ask us to consider the order to apply to the Upper Hemlock Pool which, as you have demonstrated in Exhibit "A", may be discontinous. I don't believe this is really -- I me~n, it'a a'probi~m of putting this down in writing, but I believe we can consider these as a sort of a multiple pool, or order, really,.when we are talking about th. same fOrmation. MR. EAST: We are talking about the same formation, bi we believe it's broken up into various reservoirs. Now, we've called the whole one pool -- the Upper Hemlock Pool. We beliew we have four pressure separated fault blocks, aii called the Upper Hemlock Pool. ~ MR. MARSHALL: Now~ we understand your use of the wore why, it will help us in writing the order. ~re there any questions Or comments from the public? if there are no further questions from the comm£ttee R & R COURT R~PORT~R$ WEST EIGHTH AVENUE -- SUITE 277-4713 ANCHORAGE, ALASKA ,t / / 10 11 lfi 15 17 19 fi0 fil 9.2 -28- we'll declare this hearing closed. ~4R. ROBERTSON: ~4r. Chairman, before you close, we have a closing statement we'd like to make in summarizing this. To conclude the verbal and graphic statements made by Mr. East and Mr. Pedretti -- MR. MARSHAL: I'm sorry to interrupt, but we have a little confusion here on our questions. We do have some questions here of Mr. Pedretti~ it's probably more appropriate before your closing remarks. MR. ROBERTSON: Yes. MR. MARSHALL: Mr. Gi!breth? MR. GILBRETH: Mr. Pedretti, on your exhibits that are colOred~ there, I believe the Exhibit "C" and Exhibit I'D" there are three areas shown, and you stated that this is an undersatura.~ed reservoir. The drainage areas you have shown, do they represent premary depletion only? MR. PEDRETT!: Yes, sir. MR. GILBRETH: Within the frame work of your calculat do your calculations show that the reservoir pressure will drop below the bubble point by the 20 year period that you have shown here? MR. PEDRETTI: Yes, sir. The curve on your left on the blackboard part is more or less --~the end of the curve represents the time that the reservoir will be depleted at & R COURT REPORTERS WEST EIGHTH AVENUE ~ SUITE ~ 277-47~3 ANCHORAGE, ALASKA ,ons 2 10 11 12 14 15 16 17 18 19 20 21 22 24 -29- some economic limit and the curve on the top will recover provided that you can go beyond 20 years, it will deplete itsel~ by 27 years. The curve in the middle or the so called 160 acres per well with 9 wells draining the full 160 acres -- it will 2ake 47 years. Similarly, the Zhird curve on the bottom drains 9nly 80 acres, but still is spaced 160 acres per well, due to tl~e possible cross faults and laterial faults present, it will be depleated in 35 years, but all %hese curves have hhe limita-~ion: of 20 years due the possible life Of the platform. ~iR. GILBRETH: Now, as I understand it, the differenc~ between the lower curve on your exhibit "F" and the middle curve, it is your opinion that due'to cross faulting that m~ch oil will not be recovered. MR. PEDRETTI: This is part of it. I'd like to also . include, beside the lateral and the cross faulting, also, the concept of permeability variation in the reservoir. The fact that it'.s a low perosity, it's a low permeability, it is an undersaturated reservoir. Possibly 80 acre spacing Will be marginal regardless of the fault. MR. GILBRETH: If it becomes necessary to institute a pressure maintenance program it would be necessary to have these additional wells? Would it not? MR. PEDP~TT!: Yes, sir ~- the fact that we do have this limitation in the reservoir of four separate blocks, R & R COURT R~PORTMR$ 82~ WEST EIGHTH AVENUE -- SUITE 5 277-4713 ANCHORAGE, ALASKA 10 11 12 13 14 15 16 17 18 19 2O 21 29. 9,3 -30- and to have it properly drained, each block, we probably have to have a closer spacing than even 80. MR. GILBRETH: i'm not sure whether it was you or Mr. East that testified to this 745 feet that you~e asking between walls, would you elaborate on that? MR. PEDRETTI: 'I'll be glad to, but it was Mr. East who mentioned it, but I think'it's very well known on the 745 -- you see, theoretically, drainage of radius for the 40 acres, and we ask for the 745 because all I know about these fields is -- well, we are learning 'every day -- 40 acres will be the ultimate acre spacing we' have to have to" produce all the oil for the State of Alaska. MR. GILBRETH: This 745 foot figure, I'm sorry, is that a radius? MR. PEDRETTI: Yes, it's -- that's the radius -- yes, it's the drain radius -- it's the theoretical drain radius. MR. GILBRETH: That's all I have, Mr. Marshall. MR. MARSHALL: .Are there any questions or comments from the audience? I believe we are ready for your closing statement, Mr. Robertson. MR. ROBERTSON: To conclude the verbal and graphic statements made by Mr. East and Mr. Pedretti, we'd like ~o emphasize, by repeating]; the facts Which demand that the Upper Hemlock Pool of the Trading Bay Field be developed in less than the customary 160 acres spacing. R & R COU~T REPORTERS ~2~ WEST EIGHTH AVENUE ~ SUITE ~; 277-47~3 I wDiv. of Mines &Min..,~m ~. I do,cumin! m ~cquimd u~d~r~ling fl~' . m~y be reproduced f~ In~'-comp~ny u~ c~ly. i ANCHORAGE, ALASKA 10 11 12 15 16 17 18 19 20 21 -31- Our present information directs us to a spacing of no greater than 80 acres for eack oil well drilled into this pool, if we are to maintain good oil field practice and be obeisant to conservation, which in today's world, is the master of us all, citizen and stat~, stockko!der and corporatio] We do not request this spacing order in doing injury to our neighbor by competitive drilling. This historical danger is negated by the economics involved in drilling in these unique lands submerged with the waters of Cook Inlet. The final demise of this danger is reflected by ~he fact that no working interest owner of this vast pool affected by .our spacing request feels the need or desire to protest. Not to wish for a perverse position, ~entiemen, but the facts lead us to the spacing request. The testing and fluid information derived from our dr: ing experience brings us the repeated message, again and again, low premeability, low energy, the reservoir nature controlled by faults upon faults, structural complications, stratographic variations, steeply dipping beds and unpredictable oil/water contact. These imposing truths, c6upled with the engineering difficulties of deviated wells require and demand the drilling flexibility permitted with closer spacing~ smaller distances between wells and a waiver of the Standard requirement to maintain a 500 foot distance from the boundary of the & ~: COURT ~EPORTE~S WEST EIGHTH AVENUE -- SUITE 277-47~3 ANCHORAGE, ALASKA il- 10 11 19. 15 16 17 18 19 20 21 22 -32- spacing tracts. We are certain that maximm?, primary production can be recovered only by. closer spacing, and such spacing will allow us to plan, initiate and conduct secondary and tertiary oil recovery operations. Help us to efficiently squeeze this oil soaked sponge called the Upper. Hemlock Pool in the Trading Bay Field and pamsess every barrel of oil without waste, thus serving the best interest of the people of the State and their ownership of its natural resources. In the spirit of conservation, we respectfully request and strongly urge you to approve our application. Thank you. ' MR. MARSHALL: Thank you for your presentation.. We will now adjourn at twenty minutes to eleven. MEETING ADJOURNED ~ & R couRT 825 WEST EIGHTI-I AVENUIE -- SUITE 5 277-~,713 ANCHORAGE, ALASKA ~,_.D. JU ~AU DIV. I~7INES & .kiiNERAL$ -==-- M i:~ ~ C' ED. - J LJ i"-.~ ~,'\ U DIV. ~'i~NES & I':iiN£RALS Ju~e 1,2, 1967 Conset~al~ion Order T~ading Bay Fi,eld 80 Acre Sp~tng ~ion Oil ~. of' Caltf.~ Operat~ Hr. Ken ~obertmon Union Oil Company o£ California 2805 Denali Street AnchOrage, Alaska 99,503. Dear Sir: Pleese f,~a enclosed the ~efe~enced C~nservatton Order. Very t~ly yours, Petrole~ Eno lo sure Union Oil Company of California 2805 DE NAL! STREET O ANCHORAGE, ALASKA 99505 May 19, 1967 Mr. Thomas R. Marshall, ~r. Executive Secretary Alaska Oil & Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska PROPOSED PLAN OF DEVELOPMENT 80 ACRE SPACING, UPPER HEMLOCK POOL TRADING BAY FIELD Dear Sir: Union Oil Company of California, as Operator for Union and the Marathon Oil Company, is herein submitting a proposed plan of development on 80 acre spacing for the Upper Hemlock pool in the Trading Bay field. Field development is currently on 160 acre spacing as prescribed in Section 2061.1, State of Alaska Oil and Gas Conservation Regulations and Statutes dated July, 1964. Attached as exhibits are: 1. Well location map, 80 acre spacing 2.. Proposed well production equipment Currently, in the Trading Bay field one well is producing (A-2) from the Upper Hemlock pool, two wells are suspended (A-1 and A-3), one well is testing (A-4) and one well (A-5) is completing. Structural data gained from drilling indicates that the Trading Bay anticline is cut by axial faults up to the west and down to the east trending northeast-soutwest. These faults separate the structure into at least fourmajor blocks. All blocks are pressure separated from each other due to different water tables within the Upper Hemlock pool and also within oil and gas bearing sands above the Hemlock. Moreover, several wells have differ- ent hydrocarbon accumulations in equivalent sands, suggesting fault barrier to migration. It has been further interpreted that the four major northeast trending blocks are in turn transversely faulted. Detailed information on this type cf faulting is lacking at the present time but those interpretations are still reasonable. FORM 401 ANC (REV. 3/66} Mr. Thomas R. Marshall, Ir. Page 2 May 19, 1967 Well Location Map - Exhibit 1 Future wells have been located to maximize structural advantage and to minimize risk within the major fault blocks as they are presently interpreted. Projected Upper Hemlock pool completion intervals are shown for each well. Locations are shown on the Texaco-Superior lease (ADL 17597) merely to illustrate develop- ment of this part of the field if it were to be drilled from the Monopod. Tt~ development, as herein proposed, of the Texaco-Superior lease is not presently contemplated by the Union Oil Company as operator of the Trading Bay Monopod platform. .proposed Well Production Equip.ment - Exhibit 2 A typical completion schematic of an upper Hemlock pool well is shown using techniques and equipment either known or desired as a part of the completion. This typical completion may vary as the particular well information dictates. The Upper Hemlock pool will be separated from the Kenai sands above, by cement behind the production casing. Gas lift mandrels will be placed at intervals in the tubing string above the Upper Hemlock pool. It is~ proposed to cement the production casing above the Upper Hemlock over at least a 1.000' interval from the shoe of the pipe. Cement behind the production casing will also be placed opposite Kenai sands of interest which would be candidates for a later com- pletion. In addition, cement behind the production casing will be lapped across the shoe of the surface pipe. A storm choke will be placed in the tubing string within the area of the surface pipe. The Upper Hemlock pool will be produced through either slots or perforations as the casing design and completion dictates. It should be realized that this development plan represents our current thinking and each additional well drilled will further modify the structural interpretation of the field and hence alter surrounding well locations. Past drilling hi story has revealed a highly faulted structure within all producing pools making it difficult to prognosticate objective tops. Adherence to the 500' quarter section standoff and the 1000' minimum distance between producing intervals is there- fore difficult to maintain in directed holes necessitated by platform drilling. If the objective horizon is lower than predicted, the spacing moves out farther along the well course. Conversely, if the objective comes in higher than pre- dicted, the spacing moves in closer. Our experience to date has been that the objective Hemlock has been consistently lower than predicted. In such cases in order to comply with the current quarter section standback and pool minimum distance regulations, it would be necessary to undertake costly plugback and redrill operations. In addition, the programmed hole angle is often difficult Mr. Thomas R. Marshall, Jr. Page 3 May 19, 1967 to hold in the steeply dipping beds encountered on the Trading Bay structure even if the objective is reached at the anticipated subsea elevation. The high angle of objective penetration on long reach wells in direction of dip greatly stretches out the potential completion interval (Exhibit 1) and further com- plicates adherence to these current standback and minimum distance regulations. We request elimination of the 500' quarter section standoff in order to maximize the efficient drilling and production performance of the field along geological and engineering planning rather than interior land boundaries. We further request reduction of the 1000' minimum distance between producing intervals within the interior of the lease in order to more efficiently plan and react to the complicated geological block faulting within the Trading Bay Field. We recommend that this minimum distance be reduced to 745', a more universal dimension, dictated on the field's realistic .spacing requirements. As seen on the theoretical drainage pattern plats, the ultimate for the field to achieve the most efficient conservation of 'prim'ary' oil and the most efficient secondary program by further elimi'nating waste in the reservoir is on 40 acre spacing. This faulted field, resulting in a total unpredictability of pay sand horizons because of structural and stratigraphic complications, is out of the normal for which this 1000' minimum distance regulation was designed. We feel, further, that each well program will be a reaction to the last field data obtained, and the 745' distance is more truly representative of a minimum distance in the multi-reservoir field, which can be adhered to with a minimum of administrative action during the drilling of the wells. In summation, the submitted plan is based on our current data. The anticipated granting of 80 acre spacing will allow us the flexibility to modify this plan as additional drilling dictates 'in order to .most efficiently drain the reservoir. Very truly yours, encl. UNION OIL CO. OF CALIFORNIA C. W. Dunham District OD~erations Manager E. D. B. L udeman District Exploration Manager CEMENT TO LAP SURFACE PIPE STORM CHOKE ~, SURF. CSG. 1000' 4- VD GAS LIFT MANDREL CEMENT OVER SANDS OF INTEREST GAS LIFT MANDREL CEMENTOVER IOOO' ABOVE HEMLOCK TO ISOLATE PAY.-- UPPER HEMLOCK PRODUCTION PERFORATION PRODUCTION CASING SHOE(~ 6000' + VD. I I GAS LIFT MANDREL UNION OIL COMPANY OF CALIFORNIA ALASKA DISTRICT I':~ROPOS ED WELL PRODUCTION EQUIPMENT UPPER HEMLOCK POOL TRADING BAY FIELD D_~A_T.._E~:...~Z..!. ! L_' _6_7- El',, R.H . N 0 S C/~ L F ~--¢-~--t-~ ~ III · I I II .... f~ ............. EXHIBIT 2 AFFID .VIT OF PUBLI "TION STATE OF ALASKA, ) THIRD JUDICIAL DISTRICT, ) ss. being first duly sworn on oath deposes and says that....s...h..,e. ..... is the...]:..e..g...a...Z._...c...1..e..~.~..., of the Anchorage News, a daily news- paper. That said newspaper has been approved es a legal news- paper by the Third Judicial Court, Anchorage, Alaska, and it is now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and Jt is now and during all of said time was printed Jn an office maintained at the aforesaid place of publication of said news- paper. That the annexed is a true copy of a ..1...e..~.a...]:.....~...o...~.~.?...e... # ? 4 7 as it was published in regular issues (and not in supplemental form) of said newspaper for a period of .... ..o...n..e. ...... insertions, commencing on the ....1._.l..t...~ay of ........ ~.a._y .......... ,19 6...7.., and ending on the .... ..1..1..~..h .... day of of ....... .~.a..;f. ................ ,19...6.].., both dates .inclusive, and that such newspaper was regularly distributed to its subscribers dur- ing all of sa,id period. That the full amount of the fee charged for the foregoing publication is' the sum of $....1..5.......0..0.. .... which amount has been paid in full at the rate of $1.50 per square. Minimum Charge $7.50. One in- sertion legals, $~,00 per square. Subscribed a~_'d sworn to before me thi~ 11 ~,, May ........... ~ of...~ ................ , 19 67~ / .. "~// / " ,,,* // ~:"~' /, '~::' ....... .~.. L ........'.~.-'. ~._ ~.' '. ....... Notary Public in and for the State of Alaska, Third Division, Anchorage, Alaska MY COMMISSION EXPIRES Oct. 16, 1970 ,, :. ,~,, ,. MmB~S : Notice. tS here~ ~Ve~,tbat mS "requested the .:~aska' ~aS Co~se~yaffon.=~ .Co~[te ~po~a~y ..89. e'e~e'. ~em'g ~h~~'~ devgle~ eht..~: ~'~; lhe;. ~per~ ~t:;:.~,, ~....~;~,~i..~',~ lUde .'a. ~al~'~; o~.~the ~equlrement . ~he. 4eJpo~aJY, . e~de~, If allowed, .w~uld. qentl~Ue. ~a ~Oe..~or a ~on~, ~I~er which [ he~ln~'~hall be h~l~ ~t whl~ time the Commt~ Itee'~lll, eonsl~e~ 'sueh .evldenee as ~wlll. ~able ti' ~ determine the ~er. r RECEIVED !.,iAY ! 1967 DIVISION OF MINES & MINFRAL3 ANCHORAGE NOTICE OF PUBLIC HEARING STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF MINES AND MINERALS Oil and Gas Conservation Committee Notice is hereby given that the Union Oil Company of California has requested the Alaska Oil and Gas Conservation Committee to issue an order of exception to Section 2061.1 ~%C, Title II in accordance with procedures described in AAC, Title II, Section 2061.3 establishing temporary 80 acre spacing effecting the development of the Upper Hemlock Pool in the Trading' Bay Field. It is also requested that an order of spacing exception, if issued, include a waiver of the requirement in Section 2061.1 pertaining to the , 500 ft. standback and 1000 ft. between wells provisions. The temporary order, if allowed, would continue in .force for a period of not more than eighteen months, after which a hearing shall be held at which time the Committee will consider such evidence as .-;will enable it , determine the permanent field spacing. A public hearing on this matter will be held at the City Council . Chambers in the basement of the Z. J. Loussac Library,' 5th and F Street, Anchorage, Alaska, at 9:30 a.m., May 22, 1967, at which time the application will be presented and protestants and others may be heard. Thomas R. Marshall, Jr. Executive Secretary Alaska 0il & Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska 99501 Publish May 11, 1967 Union Oil Company of California 2805 DENALI STREET ANCHORAGE. ALASKA 99503 May 9, 1967 Mr. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil & Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska Re' APPLICATION, 80 ACRES TEMPORARY SPACING UPPER HEMLOCK POOL TRADING BAY FIELD, UPPER COOK INLET, ALASKA Dear Sir: Reference is hereby made to our Application for Spaci.ng Exception for the Trading Bay A-4, Trading Bay Field dated May 3, 1967 and our Application for Temporary Spacing, Upper Hemlock Pool, Trading Bay Field dated May 5, 1967. In conjunction with said applications and pursuant to Section 31.05.050 Alaska Statutes, Union Oil Company of California hereby advises that in its opinion the interested parties to both of said applications are as follows: SinG,la.ir Oiil""'II&' GalS,: Company, ~ ~ Ph~i'ltips ~P.et ro, teum ~Comp'any _.~ Standard Oil Comp any, o f,',Ca'l'5 fo mia · ~ Shell Oil Company If any further 5nformation is requSred 5n this regard, please advise. Yours very truly, K JR: j lb UNION OIL COMPANY OF CALIFORNIA Ctt~rney-in-Fact FORM 401 ANC IREV. 3/66J TEMPORARY 80 ACRE SPACING ORDER, TRADING BAY FIELD INTRODUCTION Presented herein is geological and engineering data to substantiate the request for a temporary 80 acre spacing order to develop the Upper Hemlock Pool in the Trading Bay Field. Present field development is on a · standard 160 acre spacing pattern. Trading Bay Field is an offshore Cook Inlet oil discovery 63 air miles southwest of Anchorage, Alaska. The discovery well, Union Oil Company of California, Operator, Trading Bay 1,A, was completed in the Tertiary, Upper Hemlock Pool flowing 1670 B/D from 5390 to 5700 'feet on June 25, 1965. Subsequent to the discovery well, three additional wells were drilled from a floating vessel to delineate the field limits.. Union drilled the ~2 and ~3 wells north and southwest of the discovery well in 1965 and found the Upper Hemlock wet in both wells. The following' year Texaco eXtended the field to the northeast by completing the Trading Bay State 1. Development drilling began from a permanent drilling plat- form in October, 1966, and currently one well (Trading Bay State A-2) is producing 31 .'9 gravity crude from the Upper Hemlock, t~vo wells are sus- pended (A-! and A-3), one well is completing (A-4) and'one well is drilling (A-S). GEOLOGY Strat~igraP: hff Exploratory and development drilling on the Trading Bay anticline has revealed a thick oil and gas column in sands of the Tertiary Kenai Group. The Upper Hemlock Pool is recognized at the base of the productive sequence. The overlying oil and gas bearing section is undifferentiated Kenai Group. The Upper Hemlock Pool is a clayey to sandy, pebble-to-boulder conglomerate with occasional sandstone stringers. Sands above the Upper Hemlock often exhibit graded bedding ranging upward from pebbly to coarse- grained at the base to fine-grained and silty at the top. Some productive beds are sandy conglomerates ranging to conglomeratic sands. Porosity and permeability is fair to excellent in the undifferentiated Kenai Group and fair to poor in the Upper Hemlock Pool. The Upper .Hemlock Pool typically decreases in porosity downward. Oil and Gas Zones The U_pp. er Hemlock Pool is productive of oil in the l-A, A-2, A-4 and Texaco Trading Bay State ~1 wells. The undifferentiated Kenai Group_overlying the Upper Hemlock Pool is productive of oil and 'gas in the A-2, A-3 and A-4 wells. Shows have been encountered in this interval in the following wells: A-1, Texaco Trading Bay State ~1 and the Union ~3. Structure · The Trading Bay anticline has developed under repeated deformation during the Tertiary, having experienced growth dur lng Mesozoic time as evidenced by deformed Jurassic rocks unconformably underlying the Upper HemlockPool.. Seismic evidence 'initially delineated the sharply upwarped and faulted structure. Subsequent drilling has confirmed steep flanks, at least one major unconformity, truncation of section, and numerous fault blocks within the field area (Exhibit B). A major high angle reverse fault (NE-5)cut by the A-3 well, separates the Upper Hemlock Pool in the Trading Bay Field from the Lower Hemlock Pool of the Trading Bay Unit area. The bade of this fault is not' known but its trend is mapped' seismically.. The high west block is cut by several lesser magnitude' faults, possibly J~nbricate slices from this major east boundary fault. Relative movement on these faults is up to the west and down to the east. A fault also exists between the 1-A and wells (NE-3) because of the lower structural position of the A-2 well on the Upper Hemlock Pool relative to the 1-A and by the fact'that several sands within the undifferentiated Kenai are productive in the A-2 well but wet in the 1-A well at a higher structural position. Faulting also exists between the A-2 and A-4 wells (NE-4) because of the low structural position of the A-4 well on the Upper Hemlock .Pool relative to the A-2 well in an updip easterly direction from the A-2 well. 'The' directed ~2 well cut a fault (NE-2) at 5200 feet MD with the. loss of Several hundred feet Cf section. Moreover, shallow faulting is indicated separating the A-2 well from the 1-A and A-4 wells since several shallow sands within the. undiffer- entiated Kenai are wet in the A-2 well but are oil bearing in the 1-A well at the same structural position. Thus, numerous instance s are seen of fault barrier to oil and gas migration from the rapidly accumulating subsurface data. -2- ENGINEERING Reasons for Request of Tempora .r2f 80 acre Spacing 1. To prevent waste (as defined in ASS 31.05.170) Due. to the faulting known to exist in the Trading Bay Field, if wells are drilled on 160 acre spacing there will be fault blocks that will not be.drained by any wells. Drilling on a closer spacing will allow these fault blocks to be drained. On a 160 acre pattern some fault blocks may be drained by only 6ne well. With only one well in a fault block pressure maintenance operations and other secondary recovery pro- jects by gas injection or water injection would be impossible. Drilling on closer spacing to complete t~vo or more wells in in each fault block will allow such pressure maintenance operations to be conducted. Preliminary drawdown tests · conducted in the Upper Hemlock Pool in the A-2 well com- putes effective permeability in the range of 6 to 11 md. The drawdovcn test indicated that the formation is lenMcular in nature. Closer spacing will increase the ultimate recovery of oil because it will allow this reservoir to be more effeo'[ively drained within a fault block and at the same time increase the platform utility which will allow each well to be produced at a lower economic limit. 2. To minimize a number of dry holes Drilling on 160 acre spacing in this geologically Complex area will tend to create economic waste because of the high risk of drilling dry holes. Drilling on closer spacing will allow the Upper Hemlock Pool to be developed in a more orderly manner. This can then be done at a minimum cost of development and at an ensuing higher efficiency--rate of oil production through planned and managed primary and/or secondary oil production operations. -3- Union Oil Company of California 2805 DENAL! STREET ANCHORAGE. ALASKA May 5, 1967 Mr. Thomas R. Marshall, Jr. Executive Secretary Alaska Oil & Gas Conservation Committee 3001 Porcupine Drive Anchorage, Alaska Re' APPLICATION, 80 ACRES TEMPORARY SPACING UPPER HEMLOCK POOL TRADING BAY FIELD, UPPER COOK INLET, ALASKA Dear Sir' Pursuant to Sections 2012 and 2061.3 of the State of Alaska Oil and Gas Conservation Regulations dated July, 1964, Union Oil Company of California as an Operator and a working interest owner hereby petitions the Alaska Oil and~'Gas Conservation Committee for a temporary field wide spacing order covering the Trading Bay Field to permit the development of the Upper Hemlock Pool of said Field on an 80 acre spacing for each oil well drilled therein. In order to promote conservation and permit a flexible develop- ment program to obtain maximum production we further request that such order of spacing exception, when issued, include a waiver of the requirement in Section 206~1 that "nor shall the subsurface location of any oil well be nearer than 500 feet to any boundary line of such tract, nor nearer than 1,000 feet to any well drilled to or capable of producing from the same pool". The attached report, structure map and structural cross-section details and supports this request for a reduction of the spacing pattern within the Upper Hemlock Pool of the Trading Bay Field to 80 acres for each oil well from the ordinarily established 160 for each oil well. We are presently preparing a development plan for this Field based on an 80 acre spaci.ng pattern. It will be submitted to the Committee for their consideration and approval. It is contemplated that further development may indicate the need for spacing on less than an 80 acres basi~. As future events so indicate, we will make applications for a closer spacing order at that time. The working interest owners of the Upper Hemlock Pool of the Trading Bay Field as well as all members of the Trading Bay Unit have given their approval to this petition. FORM 401 ANC (REV. 3/66) Mr. Thomas R. Marsht~_l, Jr. Application, 80 Acre Temporary Spacing Trading Bay Field - 2 - { May 5, 1967 We respectfully request that the Committee issue the order of spacing exception including said waiver as hereby petitioned. If any further information is desired in this regard, please let us know. Yours very truly, K JR: j lb enclosures UNION OIL COMPANY OF CALIFORNIA By ~~~/'it '