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Home My WebLink AboutCO 402 e e Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. ~ 0 lfO ~ Order File Identifier Organizing (done) o Two-sided \1111111I11\\ \ 1\11\ o Rescan Needed 11\ 11111I1111111111 RESCAN DIGITAL DATA OVERSIZED (Scannable) o Maps: o Other Items Scannable by a Large Scanner o Color Items: o Greyscale Items: D Diskettes, No. D Other, No/Type: o Poor Quality Originals: OVERSIZED (Non-Scannable) D Other: D Logs of various kinds: Date ll!aq lOb I Date U I",q!ðb I I o Other:: NOTES: BY: ~ /5/ mf I}IIIIIIIIIII~ 11111 MP &5 Project Proofing BY: ~Mari0 Scanning Preparation BY: Date: + = TOTAL PAGES (Count does not include cover sheet) /5/ Production Scanning 1111111111111111111 Stage 1 Page Count from Scanned File: (P fo (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: V YES @ Datellld-~/lJb If NO in stage 1, page(s) discrepancies were found: YES NO /5/ YV\ f NO BY: Stage 1 BY: Maria Date: /5/ 11111111I1111111111 Scanning is complete at this point unless rescanning is required. ReScanned 11111111I1111111111 BY: Maria Date: /s/ Comments about this file: Quality Checked 1111111111111111111 10/6/2005 Orders File Cover Page. doc . . INDEX CONSERVATION ORDER NO. 402 Badami Oil Field 1. April 28, 1997 2. June 10, 1997 3. June 4, 1997 4. June 12, 1997 5. July 9, 1997 6. July 11, 1997 7. July 16, 1997 8. July 16, 1997 9. July 16, 1997 10. August 1, 1997 11. April 23, 1998 BPXA request for a spacing exception Notice of Hearing and affidavit of publication Ltr from BPXA defIning geographic area Notice of Hearing and affIdavit of publication Draft testimony submitted by BPXA held confIdential Ltr from PetrofIna re: spacing exception BPXA redacted testimony Hearing sign in sheet transcript BPXA ltr of justifIcation for portions of testimony to be held confIdential Meeting w/BPXA Conservation Order 402 . . STATE OF ALASKA ALASKA OIL AND GAS CONSER V A nON COMMISSION 3001 Porcupine Drive Anchorage Alaska 99501-3192 Re: THE APPLICATION OF BP EXPLORA TION (ALASKA) INC. to present testimony for classification of a new pool and for an exemption from spacing requirements for the initial development of the Badami Oil Pool. Conservation Order No. 402 ) ) ) ) ) ) Badami Oil Field Badami Oil Pool August 22, 1997 IT APPEARING THAT: 1. By letter dated April 28, 1997, BP Exploration (Alaska) Inc. (BPX) requested a public hearing to present testimony to define the Badami Oil Pool and establish well spacing requirements for initial reservoir development. 2. Notice of public hearing to be held on July 16, 1997, was published in the Anchorage Daily News on June 12, 1997. 3. A hearing concerning the matter of the applicant's request was convened in conformance with 20 MC 25.540 at the Commission's offices, 3001 Porcupine Drive, Anchorage, Alaska 99501 at 9:00 am on July 16, 1997. 4. BPX requested a portion of the testimony presented on July 16 be classified confidential and not included in the public hearing record. After evaluation of the subject materials, the Commission granted BPX's request and sealed a portion of the hearing record dealing with the confidential information. FINDINGS: 1. BPX is the operator of the Badami Oil Field; working interest owners are BPX and Petrofina Delaware, Incorporated. 2. The Badami Field, which was discovered in 1990, has been delineated to date on the basis of four exploratory wells and several seismic surveys. 3. Development drilling to the Badami Oil Pool is projected to begin in September 1997, and commercial production is expected to begin in October J 998. Initial production rate is anticipated to be about 35,000 bpd (annual average). Conservation Order NO.4. August 22, 1997 . Page 2 4. BPX proposes to establish a participating area for the Badami Unit and seek additional pool rules regarding drilling and completion practices, production practices, reservoir monitoring and other topics, as appropriate, following the completion of initial development wells and prior to commercial production. 5. The vertical limits of the Badami Oil Pool may be defined in the Badami No. I well, which appears to contain a typical and representative stratigraphic section of the reservoir. 6. The Badami Oil Pool occurs in discontinuous sandstones within the Tertiary-aged Canning Formation. 7. The statewide spacing requirements of20 AAC 25.055, which limits drilling one well per government quarter section, may not provide adequate flexibility in well locations to optimally exploit the pool. 8. Lithologic heterogeneity, faulting and sweep efficiency will determine the most efficient well spacing. BPX anticipates that localized conditions may require a well spacing density as small as 20 acres per well. 9. BPX's plans for enhanced oil recovery operations include watertlood and miscible gas injection; the exact well locations are uncertain at this time. CONCLUSIONS: I. The Badami reservoir is incompletely delineated at this time. 2. Techniques to maximize ultimate recovery from the Badami reservoir are currently being evaluated. 3. Unless modified, statewide well spacing requirements may encumber complete delineation and development drilling of the Badami Oil Pool. 4. Defining the Badami Oil Pool and establishing well spacing for initial development is appropriate at this time. NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth, in addition to state-wide requirements under 20 AAC 25 apply to the following affected area referred to in this order. Umiat Meridian T9N Rl9E T9N R20E TION Rl9E TION R20E Section I Sections 2,3,4,5,6, 7, 8,9, 10, II, 14, 15, 16, 17 Sections 24, 25, 36 Sections 19, 29, 30, 31, 32, 33, 34, 35 Conservation Order NO.4. August 22, 1997 . Page 3 Rule 1 Field and Pool Name The field is the Badami Field. Hydrocarbons underlying the affected area and within the herein defined interval of the Canning Formation constitute a single oil and gas reservoir called the Badami Oil Pool. Rule 2 Pool Definition The Badami Oil Pool is defined as the accumulation of hydrocarbons common to and correlating with the interval between the measured depths of9,500 feet and 11,500 feet in the Badami No.1 well. Rule 3 Well Spacing Nominal 20-acre well spacing is established for the pool within the affected area. No well bore may be open to the pool within 500 feet of the external boundary of the affected area, or within 700 feet of another well capable of producing from the same pool. Rule 4 Administrative Action Upon proper application or its own motion, the Commission may administratively waive the requirements of any rule stated above or administratively amend this order as long as the change does not promote waste, jeopardize correlative rights, or compromise ultimate recovery and is based on sound engineering principles. Robert N. Christenson, P.E., Commissioner Alaska Oil and Gas Conservation Commission AS 31.05.080 provides that within 20 days after receipt of written notice of the entry of an order, a person affe¡.1ed by it may file with the Comtnission an application for rehearing. A request for rehearing must be received by 4:30 PM on the 23rd day following the date of the order, or next working day if a holiday or weekend, to be timely filed. The Commission shall grant or refuse the application in whole or in part within 10 days. The Commission can refuse an application by lIot acting on it within the 10-day period. An affected person has 30 days from the date the Commission refuses the application or mails (or otherwise distributes) an order upon rehearing, both being the final order of the Comtnission, to appeal the decision to Superior Court. Where a request for rehearing is denied by nonaction of the Conul1ission, the 30-day period for appeal to Superior Court runs &om the date on which the request is deemed denied (i.e., 10th dav after the avvlication for rehearing was filed). :ffIJ '-j...¿3..-'7Ý " AD&¡~ Ao 6 c.c.. f~ I IV JI- 81 ßr ð;? gp .......... ~r 4úrf~ (-;; r / ~f 7 -- ~ ' / '--/ _ ~.~ ,_./~ / c.-,"'-" '-- l~ q-y l)-J~ I11J"~ ¡?1 oŒ. /YJ h~ g,11 6re/M-- l~cv-- Çk~~,> & C~~~// JJtJùcy rV) AN''\. N l(.¿A/;ve/ h 4""1 ~/ ~~- " ~ ,~ . - ./ ;:/' ,- <h A ,. /¿ <~-) /',;"" - /.-----,., . /~, <~c"L- V· r / L '¿j~ ~~ ~C J~,~ lJó&-¿.(... J-tc; ,. "". ~ - ";¡ol.."" ¡V~C-- IS If ,,~ WI ' -- Badami Project Badami Project Schedule 1997 1998 Actlvl iMU..tone · Fabrication & Aaaembly · Permitting · Pipeline Construction · Sealift & Facility Hookup · Drilling · First au I Commissioning · First Water Injection · First Mllnjection 1999 2000 30 4Q 1Q 20 30 4010 20 30 4Q '1Q 2Q 3Q ·¡u Â - , BADAMI MEETING WITH AOGCC April 23, 1998 9:00am AGENDA Introductions Revised Project Timeline Review Badami specific plans in each discipline: Drilling, Subsurface, Operations/Facilities Determine what modifications or new CO's we need to accomplish prior to start-up Establish new timeline for post-start-up CO's/pool rules that are needed , ~' T\ o , .0 ~~ .0 4: o ~ 4t:1D . . BP EXPLORATION BP Exploration (Alaska) Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 99519-6612 (907) 561-5111 August 1, 1997 David W. Johnnston, Chairman Alaska Oil & Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501 RE: Badami Pool Dear Chairman Johnston: As an aid to the formulation of the requested conservation order for the Badami Oil PooÌ, BP Exploration (Alaska) Inc. ("BPX") would like to provide the Commission with the following information and clarification, some of which was given during the confidential portion of the July 16, 1997 hearing. . Areal definition of the pool. In the course of its testimony, BPX described the geological controls which limit the pool extent and also provided a minimum composite net sand thickness that can be an exploitation target at this time. A map showing the geography that existed during Badami sand deposition was presented. This showed the geological controls that influenced the thickness of composite net sand. The areal extent of the pool is approximated by the green line on Exhibit #6, which can be made public. . Spacing request. A well density commensurate with the inter-well distances associated with 20 acre spacing is requested due to the complex nature of the Badami depositional system. A reduction of spacing from the nominal 80 acre initially calculated may be necessary during field development. Please see the Transcript of Proceedings, pages 29 and 30. · Additional pool rules. Definition of the Badami oil pool and spacing are seen as the first steps in defining comprehensive pool rules. After more well data are acquired, BPX will seek additional pool rules as mentioned in the testimony of J. H. Dickey (cf page 4 of Transcript of Proceedings, lines 3 to 7). With respect to the stratigraphic definition of the pool, the Transcript of Proceedings, (p. 31 lines 1 - 13) describes the interval in the Badami #1 well that the Commission should consider the type log for the purposes of pool definition. Sincerely, ) . , ¡/. ,- , "" ",..,-7 r()..:::," /,¿o' ~ t" ,0' / , , .. ..,~., (., /Àï , ____ ( ¿/.::. - W.L. Bredar Subsurface Manager, Badami RE€ErVED 199'( AlÇì$ka!JU & Gas ,Cons, C9,roroìS$\' -- . ~nç!iqrª,git .:M:q . . C ôß:F-tlj 02.- · 1 2 3 4 In Re: ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING 5 THE APPLICATION OF BP EXPLORATION (ALASKA) INC. TO DEFINE THE BADAMI OIL 6 POOL AND ESTABLISH WELL SPACING FOR DEVELOPMENT. ORIGiNAL 7 8 ~RANSCRIP~ OF PROCEEDINGS 9 10 Anchorage, Alaska July 16, 1997 9:00 o'clock a.m. 11 APPEARANCES: 12 Commissioners: CHAIRMAN DAVID W. JOHNSTON MR. WILLIAM N. CHRISTENSEN 13 · 14 BP Exploration Inc. and Petrofina: 15 16 17 18 19 20 21 22 23 24 25 MS. JEANNE H. DICKEY MR. WILLIAM L. BREDAR MS. KATHRYN HUMPHREY MR. JAMES GILROY R· ··t~r;E. Pvf~D \2. " g~ ' ,JUL 29 1997 Alé:ìsKa Oil & Gas Cons. \"Um, miS5\\i Anchorage · ELITE COURT REPORTING 4051 East 20th Avenue .65 - Anchorage Alaska 99508 907 -333 -0364 . . 2 · 1 PRO C E E DIN G S 2 3 (On record - 9:00 a.m.) CHAIRMAN JOHNSTON: I'd like to call this hearing to 4 order, please. The date is July 16, 1997. We are located in 5 the offices of the Alaska Oil and Gas Conservation Commission 6 which is located at 3001 Porcupine Drive in Anchorage, Alaska. 7 My name is David Johnston, I'm chairman of the commission, and 8 to my right is our newest member, Commissioner Bob Christensen. 9 Laurel Earl of Elite Court Reporting will be making a 10 transcript of these proceedings. If you wish a copy of the 11 hearing, we ask that you contact Elite Court Reporting directly 12 to obtain that transcript. 13 The purpose of this hearing is to define the Badami Oil · 14 Pool and to establish appropriate spacing for initial 15 development. Notice of the hearing was provided in the 16 Anchorage Daily News and that notice was published June 12, 17 1997. We also received a letter from Petrofina, dated July 11, 18 1997, it's from Mr. Egger to myself, and I'd like to enter that into the record and make it a part of these proceedings. I think pretty much everybody understands the rules 19 20 21 that we hold these hearings under, but for those of you that do 22 not, we conduct our hearings in accordance with 20 AAC 25.540. 23 That allows the commission to take sworn statements or unsworn 24 statements. As you can imagine, greater weight will be given 25 to sworn testimony. After you are sworn, we ask that you state · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333-0364 . . 3 · 1 your name and who you represent, and if you wish to be 2 considered an expert in these matters, we would ask that you 3 state your qualifications. The commission will then rule as to 4 whether we would consider you an expert in these matters. 5 Questions from the audience will not be permitted 6 directly to the person testifying. If you do have a question, 7 we ask that you would forward that to the commission. We'll 8 review that question and if we feel it's germane to the topic, 9 we will then ask that question directly to the individual 10 testifying. 11 And I think that pretty well establishes kind of the 12 rules of the game. I believe Ms. Dickey, you're kind of the 13 lead-off hitter..... · 14 MS. DICKEY: Right. CHAIRMAN JOHNSTON: .....for the applicant BP. If 15 16 you'd like to approach the commission and take the front seat, 17 we'll turn it over to you -- the mic to you. 18 MS. DICKEY: Good morning. My name is Jeanne Dickey. 19 I am an attorney with BP Exploration Alaska Inc., the operator 20 of the Badami field. This hearing has been scheduled in 21 accordance with 20 AAC 25.520 and 25.540 in order to establish 22 in order to consider evidence relevant to the establishment 23 of interim rules for the development of the Badami oil Pool. BP plans to begin development drilling for the Badami field in September 1997, and anticipates that production from 24 25 · ELITE COURT REPORTING 4051 East 20th Avenue 1#65 - Anchorage Alaska 99508 907-333·0364 · 6 7 8 9 10 11 12 13 · 14 15 16 · . . 4 1 the field will commence in October 1998. For this reason, BP 2 is presently seeking rules which establish drilling units and 3 well spacing for the Badami Pool. In 1998, prior to start-up 4 but following some initial development drilling, BP will seek 5 additional rules -- pool rules regarding drilling and completion practices, production practices, reservoir monitoring, reporting and other rules, as appropriate. Additionally, during 1998, BP will be seeking to establish a participating area for the Badami Unit, including tract allocation factors, to be approved by the Department of Natural Resources, Division of Oil and Gas. As described in BP's June 4 letter to the commission, BP is requesting an order defining, first, the geographic area of the initial development area; second, the stratigraphic description of the Badami Pool; and third, the spacing rules for Badami development drilling. With regard to spacing, we 17 are seeking the establishment of 20-acre drilling units with 18 authorization to drill into and produce from any bottom-hole 19 location within the area, without regard to section lines or 20 exterior boundaries. 21 Some of the materials to be presented today are 22 confidential, and we request that the public be excluded from 23 hearing this confidential information. We will identify that 24 at the appropriate time. 25 BP is presenting testimony today on behalf of itself, ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907 -333 ·0364 . . 5 · 1 as a working interest owner and unit operator, and Petrofina, 2 the other working interest owner in the Badami unit. The 3 testimony will be divided into three parts: Testimony related 4 to the geology of the Badami field will be presented by 5 Bill Bredar. Then Kate Humphrey will present evidence 6 regarding the reservoir, followed by Jim Gilroy, who will 7 present testimony concerning the planned surface facilities. 8 Each of the witnesses is prepared to respond to questions 9 concerning his or her testimony and related exhibits. 10 And now I would like to turn the microphone over to 11 Bill Bredar. Do you have any questions? 12 CHAIRMAN JOHNSTON: Yes. Before we move to Mr. Bredar, 13 you are saying that it is BP's intent to come back after · 14 additional drilling to request a more complete set of pool 15 rules. Do you anticipate at that time that you will also be 16 submitting to the commission a plan of development and 17 operations for the pool at that time? 18 MS. DICKEY: Yes. 19 CHAIRMAN JOHNSTON: Thank you. And the individuals 20 testifying, I assume they wish to be sworn? 21 MS. DICKEY: Yes, we..... 22 CHAIRMAN JOHNSTON: Good. Thank you. 23 MS. DICKEY: .....want them to be sworn and qualified 24 as experts. 25 CHAIRMAN JOHNSTON: Thank you. · ELITE COURT REPORTING 405l East 20th Avenue 165 - Anchorage Alaska 99508 907·333-0364 . . 6 · 1 2 3 sworn. 4 5 6 7 sworn. 8 regard, 9 MS. DICKEY: Okay. Thank you. MR. BREDAR: My name is Bill Bredar. I wish to be (Oath administered) MR. BREDAR: I do. CHAIRMAN JOHNSTON: Thank you. Consider yourself Mr. Bredar, you wish to be considered an expert in this if you'd state your qualifications? MR. BREDAR: Yes. I'm Subsurface Manager for the 10 Badami Development of BP Exploration, Alaska. I received a 11 bachelor of science degree in geology from Oregon State 12 University in 1975, and a master of science degree in geology 13 from the University of Colorado, Boulder, in 1978. I've been · 14 with BP and its affiliates for the past 19 years. I have been 15 working the subsurface of the North Slope of Alaska for the 16 past nine years, concentrating primarily on the Pt. McIntyre, 17 Niakuk, and most recently Badami developments. My testimony 18 today will include an overview of the Badami field and its 19 geology with respect to our request. 20 CHAIRMAN JOHNSTON: And how many years would you 21 characterize your experience strictly on Badami? 22 MR. BREDAR: Approximately six months directly with 23 Badami. 24 CHAIRMAN JOHNSTON: Do you have any objections in 25 considering him an expert witness in this matter? · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333·0364 . . 7 · 1 COMMISSIONER CHRISTENSEN: No. No objection. CHAIRMAN JOHNSTON: Thank you. The commission will 2 3 accept you as an expert witness, and I also note that you have 4 appeared before us in previous hearings, and we have recognized 5 you as an expert witness in those regards, too. 6 MR. BREDAR: Thank you. CHAIRMAN JOHNSTON: Thank you. Mr. Bredar. MR. BREDAR: We'll be presenting confidential material 7 8 9 in the course of my testimony today, and will request that this 10 be -- this hearing be closed to the public during presentation 11 of that material. 12 CHAIRMAN JOHNSTON: Before we go into that confidential · 13 session we would ask that you would generally describe the 14 material that will be presented in that confidential session so 15 we can establish the nature of the information that will be 16 presented, and what we'd like to do is then rule on that as a 17 commission to see if that is warranted. 18 MR. BREDAR: Okay. General Overview. I might also -- 19 from a logistics standpoint mention, I do have a number of 20 overhead transparencies, eight of them and three larger hard 21 copy documents. It will probably be most convenient if we set 22 up the overhead projector in advance of me showing those. 23 Should we do that now? 24 CHAIRMAN JOHNSTON: Why don't we go ahead and take a small break and that will allow you to set up the projector. 25 · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907 -333 -0364 · 1 2 3 4 5 6 7 8 12 13 · 14 15 16 17 · . . 8 MR. BREDAR: Okay. CHAIRMAN JOHNSTON: We can go off record. (Off record - 9:10 a.m.) (On record - 9:12 a.m.) CHAIRMAN JOHNSTON: Let's bo back on record. MR. BREDAR: Ready to proceed? CHAIRMAN JOHNSTON: Please. MR. BREDAR: Okay. General Overview. The Badami field 9 is located on the Mikkelsen Bay coastline of the Beaufort Sea, 10 within the Prudhoe Uplands area of the Central North Slope, 11 approximately 27 miles east of the Endicott development. Exhibit 1 illustrates the Badami unit location and outline, which is entirely on State of Alaska oil and gas leases. Working interests in each of the leases are held uniformly by BP at 70% and Petrofina at 30%. The field was discovered by Conoco and Petrofina in 1990, when oil was encountered in Paleocene Age sandstones in 18 the Badami #1 well, which flowed at a rate of about 4200 19 barrels of oil per day of 28° API crude. The discovery was 20 offset in early 1992 with the Badami #2 well, located three 21 miles northwest of the discovery well. The Badami #2 had a 22 less developed sand and encountered heavier, 19° API, oil and 23 flowed 200 to 300 barrels of oil per day. 24 In 1993, BP acquired a 70% working interest in Badami 25 from Conoco. BP then acquired a 3-D seismic survey of the ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 . . 9 · 1 Badami area, and in early 1995, in partnership with Fina, 2 drilled the Badami #4 and #5 wells. These wells encountered 3 similar sandstone developments to those found in the Badami #1 4 and 2 wells with variable oil gravities. The sandstone 5 reservoir is interpreted to be a series of turbidites that were 6 deposited within numerous submarine channels in a mud-rich 7 system. The reservoir shows evidence of compartmentalization. 8 The 3-D seismic was reprocessed in 1995 and the 9 reservoir was re-mapped in 1996. In March of 1997, BP and Fina 10 sanctioned a development which includes 35 production/injection 11 wells, two source water wells and one waste disposal well. 12 Development drilling is scheduled to start in September 13 1997, with anticipated first oil in October of 1998. · 14 CHAIRMAN JOHNSTON: Mr. Bredar, could you -- we note 15 that you wish to go into confidential session at this time, but 16 before we do that, would you point out on the map here the 17 locations of the Badami wells? 18 MR. BREDAR: At this scale of map I can point that they 19 are..... 20 CHAIRMAN JOHNSTON: I know it will be difficult, 21 but..... 22 MR. BREDAR: .....within the Badami Unit, and are 23 are spread out roughly with the number 2 up here in the northwest, then the Badami 5, then the Badami 1, and then following over here, about there, the Badami 4. 24 25 · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 · · 14 15 16 17 18 19 20 21 22 23 24 25 · . . 10 1 CHAIRMAN JOHNSTON: Thank you. Again, would you 2 generally describe the nature of the information that you wish 3 to present in confidential session? 4 MR. BREDAR: Yes. I am -- we are now requesting to go 5 to confidential session. What we will be doing in that session 6 is defining the pool from both the stratigraphic and areal 7 standpoint. The sensitive issues are with respect to geologic 8 trends that BP and Fina have mapped within the unit area and 9 their possible extrapolation outside of the unit area to 10 acreage that is held by other parties or is open. 11 CHAIRMAN JOHNSTON: And again for the record would you 12 specify under what statutory authority you wish to request 13 confidentiality? Or perhaps your counsel might do that. MR. BREDAR: Yes, if you would standby one. CHAIRMAN JOHNSTON: Maybe I could perhaps..... MS. DICKEY: 5- -- isn't it 520? CHAIRMAN JOHNSTON: I assume you're making the request under AS 31.05.035? MS. DICKEY: Oh, I'm sorry, I was looking at your regs. CHAIRMAN JOHNSTON: Right. I just wanted to get that on the record, that the request is being made under AS 31.05.035. MS. DICKEY: Yes. CHAIRMAN JOHNSTON: Thank you. Do you have any objections in moving to confidential session? ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907·333-0364 · 10 11 12 13 · 14 15 16 17 18 19 20 21 22 23 24 25 · . . 11 1 COMMISSIONER CHRISTENSEN: No. 2 CHAIRMAN JOHNSTON: Then at this time I'd like to move 3 into confidential session. I will request that the applicant 4 ensure that those that are remaining in the room, that you feel 5 are acceptable. I notice that there are some representatives 6 from the Department of Natural Resources. Do you wish to 7 exclude those individuals as well or do you feel comfortable 8 with having the Department of Natural Resources sitting in in 9 the confidential session? MR. BREDAR: Could we consult for a moment about that? CHAIRMAN JOHNSTON: You may, please, consult. We'll go off record for a few minutes while those people that are obviously members of the public, if they could please leave the room? Thank you. (Off record) (Whereupon the hearing went into confidential session) ELITE COURT REPORTING 4051 East 20th Avenue .65 - Anchorage Alaska 99508 907-333·0364 . . 28 · 1 2 3 4 5 6 7 8 9 10 11 12 13 · 14 15 16 17 18 19 20 21 22 (Whereupon the confidential session was concluded) 23 (On record) 24 CHAIRMAN JOHNSTON: I'd like to go back on record. We 25 have just completed the confidential portion and we heard · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 . . 29 · 1 specifically from Bill Bredar and then Kate Humphrey. During 2 that session we recognized Kate Humphrey as a -- not only a 3 sworn witness but an expert witness. 4 For the benefit of the public members, I would like to 5 ask that Ms. Humphrey restate her qualifications again. 6 MS. HUMPHREY: Well, again, I'm Kate Humphrey. I'm a 7 reservoir engineer for the Badami Development. My 8 qualifications include university study in geological, 9 petroleum, and environmental engineering with both bachelor and 10 master's degrees. With 14 years experience in the oil 11 industry, virtually all with Sohio-BPX, I have held positions 12 in reservoir and production engineering, petrophysics, and 13 internal audit. I joined the Badami group in March of this · 14 year, and while I did not personally conduct all of the work I 15 am about to describe, or did describe, I endorse it and 16 continue to conduct further analysis myself and in conjunction 17 with the same modeling consultant. 18 CHAIRMAN JOHNSTON: And Ms. Humphrey, again for the 19 benefit of the public members here present, would you briefly 20 describe your confidential testimony without divulging any 21 confidential information for us? 22 MS. HUMPHREY: A series of modeling techniques were 23 used to evaluate the development opportunities at Badami. They 24 included one-dimensional and various three-dimensional models. 25 The request to -- for the commission to approve well density as · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333-0364 . . 30 . 1 low as 20 acres will provide flexibility for well sighting in 2 this complex reservoir, and it's not intended to cause an 3 excessive number of wells to penetrate the reservoir. 4 CHAIRMAN JOHNSTON: Right. Now in thinking of this 5 20-acre spacing, you're really talking about a density concept 6 and not necessarily a defined 20-acre parcel. The difficulty 7 that we have with a defined 20-acre parcel, of course, is that 8 we don't know if it's a stand-up or a lay-down parcel, since 20 9 acres -- when you divide a 40-acre in half, which is a square 10 parcel, 20 acres is a rectangle. So that creates always the . 11 problem as to whether it's standing up or laying down. But I 12 don't think that's the way that we should view this type of 13 spacing in Alaska. I think what you're asking is no more than 14 20 or no more well density essentially of one well per 15 generally a 20-acre chunk of property. 16 MS. HUMPHREY: That's correct. 17 CHAIRMAN JOHNSTON: Right. Okay. And then I think, 18 Ms. Humphrey, we're done with you for at least the time being, 19 and then Mr. Bredar, I think you have some unfinished business 20 from the confidential session. And, again, I would ask that 21 you -- the way you address that, if you'd just again briefly 22 summarize for the members of the public here what you talked 23 about in confidential session without divulging any 24 confidential information. 25 MR. BREDAR: Yes. I gave the pool definition in both . ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333·0364 . . 31 · 1 the stratigraphic and areal geographic context. with respect 2 to the stratigraphy, reviewed that the interval is some 3 sandstones in the Canning formation of Tertiary Age, that I 4 also showed a well log cross-section showing the four Badami 5 wells indicating that the Badami reservoir is present in a 6 number of fan systems that BP and Fina have identified. Each 7 of these fan systems has a number of lobes in it, and mentioned 8 that no single well at Badami has encountered all six of the 9 fan systems that have been identified. However, that the 10 Badami #1 well has the most complete section, and that the 11 stratigraphy of the pool can be defined by the interval that 12 correlates and is common to the depths of 9500' measured depth 13 to 11,500' measured depth in the Badami #1 well. · 14 CHAIRMAN JOHNSTON: And so we should consider that the 15 type log for the purposes of pool definition? 16 MR. BREDAR: That's correct. 17 CHAIRMAN JOHNSTON: Thank you. And thank you, 18 Mr. Bredar. I believe we can move on to our next witness. 19 20 21 22 23 record? 24 25 · MR. GILROY: Thank you. CHAIRMAN JOHNSTON: And I assume you wish to be sworn? MR. GILROY: Yes, I'd like to be sworn. CHAIRMAN JOHNSTON: If you would state your name of the CHAIRMAN JOHNSTON: James Gilroy. (Oath administered) ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907 ·333 ·0364 . . 32 · 1 MR. GILROY: I do. 2 CHAIRMAN JOHNSTON: Thank you. And I note that you 3 wish also to be considered an expert witness? 4 MR. GILROY: Yes. 5 CHAIRMAN JOHNSTON: If you'd please state your 6 qualifications. 7 MR. GILROY: Bill stole my cheat sheet. 8 MS. DICKEY: Here's one. 9 MR. GILROY: Thank you, Bill. I've been a BP 10 Exploration Alaska employee, in Alaska since 1976, initially 11 working on the North Slope at the Prudhoe Bay field for 18 12 years as Production Superintendent. I transferred to Anchorage 13 in 1994 as Facility Engineering Manager and have recently moved · 14 into BP's Alaska Exploration and Development group as 15 Operations Manager. I have a chemistry degree from Illinois 16 Institute of Technology, and spent several years in refining 17 and chemicals before coming to Alaska. I've been providing 18 operational support to Badami for approximately one year. 19 My testimony contains a description of the project 20 facilities, the schedule which will enable the reservoir to be 21 produced and managed consistent with the plans described by 22 earlier witnesses. 23 CHAIRMAN JOHNSTON: Thank you. Any objections to 24 considering him an expert witness? 25 COMMISSIONER CHRISTENSEN: No objection. · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907 -333 ·0364 . . 33 · 1 CHAIRMAN JOHNSTON: Thank you. The commission will 2 accept you as an expert witness in this matter. Please 3 proceed, Mr. Gilroy. 4 MR. GILROY: Thank you. As a General Overview, Badami 5 is planned as a remote and stand-alone development with no 6 permanent connecting road to the existing North Slope 7 infrastructure. Operations will be resupplied by ice road 8 during the winter and by barge during the open water season. 9 Year-round transportation of personnel, light equipment and 10 freight will be made via aircraft using the Badami airstrip or · 11 by helicopter. 12 The Badami facilities are designed to provide full 13 process and export capabilities to support a hydrocarbon liquid 14 production rate of 35,000 barrels per day. The facilities are 15 also planned to process 22~ million standard cubic foot per day 16 of produced gas, 13,600 barrels per (sic) water per day of 17 produced water, and 30,000 barrels per day of source water. 18 Facilities have been designed to allow future capacity 19 expansion, if necessary. 20 Production and drilling operations are performed from a 21 single gravel pad, known as the Central Processing unit. Wells 22 and process facilities are co-located on this pad to minimize 23 the gravel footprint. That's the general overview. 24 Next is the Civil Program. During the winter of 1997 approximately 680,000 cubic yards of gravel have been placed at 25 · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333-0364 . . 34 · 1 Badami from a new mine site located at East Badami Creek. A 2 gravel pad for the CPU, well sites, camp, and maintenance shops 3 has been constructed west of the West Badami Creek, near the 4 shoreline. An airstrip, dock and dockhead have been 5 constructed with gravel. A stockpile/storage pad has been 6 constructed near the mine site for storage of drilling supplies 7 and future gravel requirements. Gravel access roads have been 8 constructed that connect the CPU pad, airstrip, dock, the 9 stockpile/storage pad -- and the stockpile/storage pad. The 10 CPU pad and facilities are designed for simultaneously drilling 11 and production operations. 12 A surface facility plat is shown in Exhibit 9. Let me 13 just put that up. There we go. Yeah, the actual mine site is · 14 down here. This was the area next to the East Badami Creek, 15 and then the storage pad is here, and this is the airstrip with 16 the connecting roads out to the dock and then over to the 17 processing plant. And the blue line is the sales pipeline. 18 And next is the Facility Design. Produced well fluids 19 will be processed at the Central Processing unit by separating 20 the hydrocarbon liquids from the water and gas. Hydrocarbon 21 liquids will be processed to meet the export pipeline 22 specifications. Produced gas will be dehydrated, 23 re-compressed, blended with enriched hydrocarbons and injected 24 for enhanced oil recovery. Produced gas that is not 25 re-injected will be consumed for fuel in the unit operations · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907·333·0364 . . 35 · 1 and used for lift gas. After oil-skimming, produced water will 2 be blended with water from source water wells and injected into 3 the reservoir for waterflood. 4 A simplified process flow diagram is included in 5 Exhibit 10. I'll just put this up. It just kind of shows you 6 the process design. And it just walks through three stages of 7 separation, and then gas recompression of those stages; water 8 knockout into a separate water system and then re-injected bacl 9 into the ground. It's fairly basic. 10 CHAIRMAN JOHNSTON: So at this stage you're not 11 envisioning NGLs, that all the gas..... 12 MR. GILROY: At this stage we're not envisioning making 13 NGLs with the Badami..... · 14 CHAIRMAN JOHNSTON: Right. Okay. So basically it will 15 be turned into MI? 16 MR. GILROY: Right. 17 CHAIRMAN JOHNSTON: Thank you. 18 MR. GILROY: Initial production rate is anticipated at 19 35,000 barrels per day, annual average, consistent with the 20 initial facility design capacity. The initial production rate 21 will be managed to maintain facility capacity for as long as 22 practicable, or at the highest sustainable well delivery rate 23 consistent with good reservoir engineering practices. Test 24 separation facilities are provided to periodically monitor well 25 performance. · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 . . 36 · 1 Construction of prefabricated production modules and 2 equipment has commenced at an off-site construction yard. 3 Production equipment is to be transported by shallow-draft 4 barge and/or truck to the Badami site. The major prefabricated 5 process modules include oil separation, gas compression, oil 6 export, water injection, power generation and utilities 7 modules. The smaller modules, well pad manifolds and other 8 equipment will be transported overland from Deadhorse during 9 the winter ice road season. Facility installation is scheduled 10 to be completed to allow production start-up by October of '98. 11 A simplified project schedule is depicted in Exhibit 12 11. Detailed engineering actually commenced -- well, it was 13 going for several years before that, but through 1997 we'll be · 14 doing detailed engineering. A lot of the major materials and 15 equipment have been purchased through Q-2 of '97. The gravel 16 placement, I already mentioned, is completed for this winter 17 portion, and then there was some re-compacting here during the 18 summer. The fabrication and assembly is taking place at the 19 off-site and then will be shipped to the Badami site during the 20 open water season of 1998. Pipeline construction is commenced 21 during the ice road season, between '97 - '98, and will 22 actually do the pipeline, and then the sea-lift pickup and, of 23 course, drilling activities continue. First oil around, as we 24 mentioned, October of '98. 25 COMMISSIONER CHRISTENSEN: Are you on schedule? · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 . . 37 · 1 MR. GILROY: Yes, right now we are on schedule, and of 2 course the logistics drive that in order to take advantage of 3 the open water season. Then we have a window where you have 4 you can't really get heavy equipment there because of the 5 broken ice period prior to an ice road. 6 Next we'll be able to discuss the Enhanced Oil Recovery 7 Facilities. Enhanced Oil Recovery operations are planned to 8 begin as soon as practicable after production startup. A 9 water-alternating-miscible-gas flood is planned. Source water 10 for the water-alternating-gas process is to be derived from two 11 source water wells. And the enriched hydrocarbon gas is to be 12 imported from outside sources, or produced on-site if we don't 13 have the outside source option, and combined with the Badami · 14 re-injection gas for miscible injection. 15 I see next is the Utilities and Support Facilities. A 16 permanent camp for up to 40 operations personnel will be 17 provided at Badami. The camp will include emergency power, 18 water and sewage treatment. A 90 by 120' building will be 19 provided for maintenance shops, warm storage of parts and 20 chemicals. There will also be a diesel storage tank with a 21 fueling station, a slop disposal system and a hazardous waste 22 storage area. 23 Next is Waste Disposal. 24 CHAIRMAN JOHNSTON: Before we move on to waste 25 disposal, I have a question regarding your EOR facilities. You · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907·333-0364 · 7 8 9 10 11 12 13 · 14 15 16 17 · . . 38 1 noted here that you may import your enriched hydrocarbon gas or 2 produce it on-site. At this point you don't have enough 3 information about how much gas you're going to be able to have 4 available for MI? MR. GILROY: Currently the -- we're negotiating with 6 other owners of different fields to supply the -- that miscible 5 injectant, and those negotiations are under question. CHAIRMAN JOHNSTON: But the gas from the reservoir itself may not be adequate to meet your needs in terms of the volume anticipated for MI? MR. BREDAR: I think that's probably best answered by Kate Humphrey. MR. GILROY: Yeah. CHAIRMAN JOHNSTON: Ms. Humphrey, if you'd like to step up to the microphone and potentially answer that question for us? MS. HUMPHREY: The base case for the miscible flood is 18 to use imported NGLs to blend with the produced gas at Badami 19 for the miscible injectant. We are in negotiation and are 20 considering options for on-site creation of the NGLs from 21 Badami fluids, and we are currently evaluating what the impact 22 would be to the development and working through those options 23 right now. 24 CHAIRMAN JOHNSTON: So if you are to import the 25 hydrocarbon gas from outside sources do you envision that that ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907 -333 ·0364 . . 39 · 1 would delay the startup of EOR? 2 MS. HUMPHREY: No. No, that is not one of the impacts 3 of this outcome. 4 COMMISSIONER CHRISTENSEN: So both pipelines are being 5 laid at the same time, both the sales pipeline and the import 6 pipeline? 7 MR. GILROY: Yes. I'll actually discuss a bit on the 8 pipelines as we get a little further. 9 CHAIRMAN JOHNSTON: Thank you. MR. GILROY: And for Waste Disposal, Badami will manage 10 11 its own waste with a Class I disposal well being the first well 12 drilled. Cuttings and fluids from this and subsequent wells 13 will be ground and injected into the disposal well. · 14 Additionally, treated wastes from the camp and production 15 facility will be injected into the well. A permit for a 16 Class II disposal well is also being sought as a contingency. 17 CHAIRMAN JOHNSTON: And can you describe what the 18 status is on that Class I well, the permitting process? 19 MR. GILROY: 20 process is. 21 MR. BREDAR: I'm not exactly sure where that permit The word is that it is out for public 22 notice -- it's in the public notice period. I think we 23 anticipated mid-August,..... 24 CHAIRMAN JOHNSTON: So..... 25 MR. BREDAR: .....the exact date, August the 13th, · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333·0364 . . 40 · 1 15th, issuance of the permit. 2 CHAIRMAN JOHNSTON: At this point then you're 3 optimistic that EPA will be issuing that Class I permit? 4 MR. BREDAR: We are hopeful. 5 MR. GILROY: Yes. 6 CHAIRMAN JOHNSTON: Thank you. 7 MR. GILROY: Next, the Pipeline System. The 8 hydrocarbon liquid transportation system consists of oil 9 shipping pumps, a 12" sales oil line, which will run 10 approximately 26 miles from the Badami facilities to the 11 connection point into the existing 16" Endicott pipeline for 12 the delivery to Trans-Alaska Pipeline system. Additionally, a 13 6" utility line is planned for providing miscible fluids from · 14 Endicott for use in the Badami EOR project, a distance of 15 approximately 35 miles. Prior to EOR startup, the first use 16 for the utility line will be to supply fuel gas from Endicott 17 for the drilling rig. 18 To answer your question, we will add -- the two lines 19 are being constructed simultaneously. We'll actually 20 commission the 6" line early, while the ice is still in so that 21 we can use that for fuel for the drilling rig. And then the 22 sales oil line will be commissioned in the open water season. 23 That's the end of my formal testimony. 24 CHAIRMAN JOHNSTON: I have a question, but it may be 25 more appropriately answered by Ms. Humphrey. If you are · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907 ·333 -0364 . 6 7 8 9 10 11 12 13 . 14 15 16 17 . . . 41 1 planning on using gas from the Endicott field, what does that 2 do to your maintenance or pressure maintenance program for 3 Endicott? 4 MS. HUMPHREY: I would hesitate to answer on behalf of 5 Endicott. Is that what you're asking? CHAIRMAN JOHNSTON: Right. I would like to -- perhaps we'll have to inquire of the Endicott people, invite them in to give us an assessment of what they believe the effect is on Endicott pressure maintenance if gas is being exported from Endicott to Badami. MS. HUMPHREY: We are -- just wanted to assure you that we are in current negotiations with the owners of other fields, but we have been working this issue internally, as BP is the operator of Endicott,..... CHAIRMAN JOHNSTON: Right. MS. HUMPHREY: .....for several months. CHAIRMAN JOHNSTON: Thank you. It looks like we're 18 back to Ms. Dickey. 19 MS. DICKEY: Well,..... 20 CHAIRMAN JOHNSTON: For the final wrap-up, I guess. MS. DICKEY: .....the final wrap-up. That concludes 21 22 our formal presentation for today, and I just wanted to invite 23 questions, see if there are any other issues you would like us 24 to address? 25 CHAIRMAN JOHNSTON: Okay. I think the best way to ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907 ·333 -0364 . . 42 · 1 proceed at this juncture is to take another short break to 2 allow Mr. Christensen and myself to consult with staff to see 3 if we have any questions before we release you folks today. My 4 preference would be to close the hearing today, if at all 5 possible. So I think for the sake of a few minutes here we can 6 consult with staff and get back to you. So we can go off 7 record. 8 (Off record - 10:24 a.m.) 9 (On record - 10:38 a.m.) 10 CHAIRMAN JOHNSTON: I'd like to go back on record, 11 please. And we had just taken a brief session to allow the 12 commission to consult with the staff, and I think we do have a 13 couple of questions that we'd like to ask, I suspect, of maybe · 14 Kate Humphrey or Mr. Gilroy. Go ahead. 15 COMMISSIONER CHRISTENSEN: Mr. Gilroy, this is probably 16 for you. We're curious about what the design capacity of the 17 facility is. You say you're going to produce at 35,000 a day. 18 What's the capacity of the facility? 19 MR. GILROY: The total design capacity for the oil is 20 actually 38,500. 21 COMMISSIONER CHRISTENSEN: And gas is the same as in 22 the normal that you've already stated? 23 MR. GILROY: The gas was the 22 million, correct -- oh, 24 annual average, yeah. 35 was the annual average. 25 COMMISSIONER CHRISTENSEN: The other question that we · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333-0364 . . 43 · 1 came up with is the pipeline, sales pipeline; what is the 2 capacity and the design pressure for that pipeline? 3 MR. GILROY: The design pressure for the sales pipeline 4 itself is 1560 psig, and the capacity, because it is a 12" 5 line, is rated for -- the latest hydraulics show it rated at 6 about 74,000 barrels a day. 7 COMMISSIONER CHRISTENSEN: Thank you very much. 8 CHAIRMAN JOHNSTON: And I have one follow-up question 9 on the areal extent of the accumulation. Probably it will be 10 Mr. Bredar. Given the nature of turbidite accumulations and 11 such is it likely that the areal extent that you've defined may 12 be expanded in time? 13 MR. BREDAR: That's a distinct possibility, yes. · 14 CHAIRMAN JOHNSTON: So that's something that the 15 commission should build into the conservation order is the 16 potential to easily expand this area in the future? 17 MR. BREDAR: Yes. We would appreciate that. CHAIRMAN JOHNSTON: Thank you. At this juncture then, 18 19 I think we have no further questions. 20 COMMISSIONER CHRISTENSEN: I have no further questions. CHAIRMAN JOHNSTON: Then I'd like to then adjourn this 21 22 meeting, and I thank one and all -- oh, before I do, I would like to note that the information that we took today was, as I said in the -- in our notice, was essentially to allow us to 23 24 25 establish spacing rules. Much of the information that you did · ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907-333-0364 · 13 · 14 · . . 44 1 provide goes beyond that, and we appreciate that. We also note 2 that it's probably preliminary in nature, the terms of -- 3 except perhaps the design capacity of the plant. And we would 4 look forward to the point in time when you can come in after 5 additional drilling to update this testimony and give us 6 additional information about this accumulation. So, again, 7 thank you, and we are now adjourned. 8 (Off record - 10:42 a.m.) 9 END OF PROCEEDINGS 10 11 12 15 16 17 18 19 20 21 22 23 24 25 ELITE COURT REPORTING 4051 East 20th Avenue #65 . Anchorage Alaska 99508 907·333·0364 . . · 1 C E R T I F I CAT E 2 UNITED STATES OF AMERICA) )ss. 3 STATE OF ALASKA ) 4 I, Laurel L. Earl, Notary Public in and for the State 5 of Alaska, and Reporter for Elite Court Reporting, do hereby 6 certify: 7 That the foregoing Alaska Oil & Gas Conservation 8 Commission Hearing was taken before me on the 16th day of July 9 1997, commencing at the hour of 9:00 o'clock a.m., at the 10 offices of Alaska Oil & Gas Conservation Commission, 3001 11 Porcupine Street, Anchorage, Alaska; 12 That the Meeting was transcribed by myself to the best 13 of my knowledge and ability. · 14 IN WITNESS WHEREOF, I have hereunto set my hand and 15 affixed my seal this 28th day of July 1997. 16 :ßu.vu..~- leoJ~L Notary Public in and for Alaska 17 18 19 I', OFFICIAL SEAL STATE OF ALASKA NOTARY PUBLIC LAUREL L. EARL My Camm. expires: ...!J.:..È.:..jL__ -~'""".......w___ 20 21 22 23 24 25 · ELITE COURT REPORTING 4051 East 20th Avenue #65 - Anchorage Alaska 99508 907-333-0364 ~s . . ALASKA OIL AND GAS CONSERVATION COMMISSION PUBLIC HEARING BADAMI POOL RULES JULY 16.1997 9:00 AM SIGN IN PLEASE NAME - COMPANY PHONE DO YOU PLAN TO TESTIFY? (PLEASE PRINT) 8/1-1- (ifEJt~ ,?II/P-7tJtf:l K'Í\~Nel~ ?\~ f1I/.>Ke... aws.¡,: ;:) to 9" eo/é.>.- 5,,/1 !;ré/ar- 5'6f-~?81 (!t:(~ol Le~ Â(P9 - g~ ',:S fe-III lelA1 ~'! 5""b1-!'933 ß{ L L -LußJ f) u LL c;-to L{ 4-b ~ 2- ~" M UI>\.P:J Sl,4- - LI/;rc\ Oc.TAV(J ~S:712 /~ J-:6'1- J86 3 -=R...v. ~k-j \ \ej,"y,' ~~~ 6JL~1 :'¡-o ~ "'- J.tcu VI eo. .r Jettv\ 11.E2.. Dick ey :::J;e,Jc ~ t3/~'v WéYkJ>3Ø S¿'Y-55~1 sz,L¡ S"3 J<j -S ''f~ 5 2.ò G YES NO ¿ø :L\f 8 -3(Q &%- m V )( / .............- ~ ~ / v:- / ~ ./ V ~ ¡,.,./ 5 Co <¡... <to S3 '2"17 -Ie¡ ¿ j ~( *1 . . P.1/7 JUL 16 '97 04:08PM BP EXPLORATION .'" h', . ,. 'I ',I 'I~',,;: . ". , ":,"I'~¡,¡,,, ':..~;', :~::'~I fax transmittal BP EXPLORA110N (AlASKA) ¡Ne. 900 E. Ben.rcm /Jlvd., P. o. Box J966J2, Anchorage, AX 995/9--6612 PHONE 907.564-5228 FAX 907-564-5008 To: ~ ~ Fax: 2%· rSt.fz From: ød ~ Daté: -;¡, / to' C¡r ~ ~du/~ot~-k~ Pas-: 1- cc: o Urgent 0 For Review 0 Please Comment 0 Please Reply 0 Please Recycle Notes: OR'6IMAL R~~~\\j\\\) . . . '\ r" \~~1 . c,~.\j' .' \ '0 '""~~..., . ,\\j \.- \¡()}µv' . ~ " \,O\\S. "- . ~ ~a.S. ~~ I\\a.$~ Ç)\\: \N\t.\\Q~ . . . P.2/7 JUL 16 '97 04:09PM BP EXPLORATION REDACTED PORTION OF TESTIMONY FOR BADAMI FIELD RULES ORIGINAL ALASKA OIL AND GAS CONSERVATION COMMISSION JULY 16, 1997 HEARING I. INTRODUCTION (Jeanne Dickey) My name is Jeanne Dickey. I am an attorney for BP Exploration (Alaska) Ino., the operator of the Badami Field. This hearing has been scheduled in accordance with 20 AAC 25.520 and 20 AAC 25.540 in order to consider evidence relevant to the establishment of interim rules for the development of the Badami Oil Pool. BP plans to begin development drilling for the Badami Field in September, 1997, and anticipates that production from the field will commence in October, 1998. For this reason, BP is presently seeking rules which establish drilling units and well spacing for the Badami Pool. In 1998, prior to start-up but following some initial development drilling, BP will seek additional pool rules regarding drilling and completion practices, production practices, reservoir monitoring, reporting, and other rules as appropriate. Additionally, during 1998, BP will be seeking to establish a participating area for the Badami Unit, including tract allocation factors, to be approved by the Department of Natural Resources. As described in BP's June 4th letter to the Commission, BP is requesting an order defining (1) the geographic area of the initial development area, (2) the stratigraphic description of the Badami Pool, and (3) the spacing rules for Badami development drilling. With regard to spacing, we are seeking the establishment of 20 acre drilling units with authorization to drill into and produce from any bottomhole location within the area, without regard to section lines or exterior boundaries. Some of the materials to be presented today are confidential, and we request that the public be excluded from hearing this confidential information. BP is presenting testimony today on behalf of itself, as a working interest owner and unit operator, and Petrofina, the other working interest owner in the Badami Unit. The testimony is divided into three parts. Testimony related to the geology of the Badami Field will be presented by Bill Bredar. Kate Humphrey will present evidence regarding the reservoir. Jim Gilroy will then present testimony concerning the planned surface facilities. Each of the witnesses is prepared to respond to questions concerning his or her testimony and related exhibits. \:.IÛ~ R~~t.\"Ò C· "'fi~ 1 \ì \\ '\ b ,::.I .SS\I. u v - c,O\\\~\: (! c,O{\s.. . . 'l &. Ga.~ . A\as~a 0\ .. rþ.~cMta.<1a JUL 16 '97 04:09PM BP EXPLORATION Badami Field Rules Te.y July 16,1997 Page 2 . P.3/7 II. GEOLOGY (Bill Bredar) Introduction My name is Bill Bredar. I am Subsurface Manager for the Badami Development of BP Exploration (Alaska). I received a Bachelor of Science Degree in Geology from Oregon State University in 1975 and a Master of Science Degree in Geology from the University of Colorado-Boulder in 1978. I have been with BP and its affiliates for the past nineteen years. I have been working the subsurface of the North Slope over the past nine years, concentrating primarily on the Pt. Mcintyre, Niakuk, and most recently Badami developments. My testimony today will include an overview of the Badami field and its geology with respect to our request. I will be presenting confidential material in course of my testimony and will request that this hearing be closed to the public during presentation of that material. General Overview The Badami Field is located on the Mikkelsen Bay coastline of the Beaufort Sea, within the Prudhoe Uplands area of the Central North Slope, approximately 27 miles east of the Endicott development. Exhibit 1 illustrates the Badami Unit location and outline, which is entirely on State of Alaska oil and gas leases. Working interests in each of the leases are held uniformly by BP at 70% and Petrofina at 30%. The field was discovered by Conoco and Petrofina in 1990, when oil was encountered in Paleocene age sandstones in the Badami #1 well, which flowed at a rate of about 4,200 SOPD of 28 degree API crude. The discovery was offset in early 1992 with the Badami #2 well, located three miles north-west of the discovery well. The Badami #2 had a less developed sand and encountered heavier (19 degree API) oil and flowed 200 - 300 BOPD. In 1993 BP acquired a 70% working interest in Badami from Conoco. BP then acquired a 3D seismic survey of the Badami area, and in early 1995 in partnership with Fina, drilled the Badami #4 and #5 wells. These wells encountered similar sandstone developments to those found in the Badami #1 and #2 wells with variable oil gravities. The sandstone reservoir is interpreted to be a series of turbidites that were deposited within numerous submarine channels ín a mud-rich system. The reservoir shows evidence of compartmentalization. , The 3D seismic was reprocessed in 1995 and the reservoir was remapped in 1996. In March of 1997, BP and Fina sanctioned a development which includes 35 production/injection wells, two source water wells and one waste disposal well. RE@BIVED . ; i i ì 1 ç; 97 .) 'j - .'. 19 . , Alaska .Oil & Gas Cons. ComrOls" 'Anchorage JUL 16 '97 04:10PM BP EXPLORATION Badami Field Rules Tese,y July 16,1997 Page 3 . P.4/7 Development drìlling is scheduled to start in September, 1997 with anticipated first oil in October, 1998. StratigraDhy Confidential Pool Boundaries Confidential Well SDacina Confidential III. RESERVOIR ENGINEERING (Kate Humphrey) Introduction My name is Kate Humphrey. I am the reservoir engineer for the Badami Development. My qualifications include university study in geological, petroleum, and environmental engineering with both bachelor and master degrees. With 14 years experience in the oil industry (virtually all with Sohio/BPX), I have held positions in reservoir and production engineering, petrophysics, and internal audit. I joined the Badami group in March of this year, and while I did not personally conduct all of the work I am about to describe, I endorse it and continue to conduct further analysis myself and in conjunction with the same modeling consultant. Reservoir Description Confidential IV. BADAMI FACILITIES (Jim Gilroy) Introduction My name is Jim Gilroy. I've been a BPXA employee in Alaska since 1976, initially working on the North Slope at the Prudhoe Bay Field for 18 years as Production Superintendent. I transferred to Anchorage in 1994 as Facility Engineering Manager and have recently moved into BP's Alaska Exploration and Development group as Operations Manager. I have a chemistry degree from liT and have spent several years in refining and chemicals before coming to Alaska. I have been providing operational support to Badami for approximately one year. JUL 16 '97 04:11PM BP EXPLORATION B~dami Field Rules TeSenYJuty 16,1997 Page 4 . P.5/7 My testimony contains a description of the project facilitíes and schedule, which will enable the reservoir to be produced and managed consistent with the plans described by earlier witnesses. General Overview.. Badami is planned as a remote and standalone development with no permanent connecting road to the existing North Slope infrastructure. Operations will be re- supplied by ice road during the winter and by barge during the open water season. Year-round transportation of personnel, light equipment and freight will be made via aircraft using the Badami airstripþ or helicopter. The Badami facilities are designed to provide full process and export capabilities to support a hydrocarbon liquid production rate of 35,000 bpd. The facilities are also planned to process 22.5 million scfd produced gas, 13,600 bpd produced water, and 30,000 bpd source water. Facilities have been designed to allow future capacity expansion, if necessary, Production and drilling operations are performed from a single gravel pad known as the Central Processing Unit ("CPU") pad. Wells and process facilities are co-located on this pad to minimize the gravel Ufootprint". Badami Civil Proaram During the 1997 winter construction season, approximately 680,000 cubic yards of gravel have been placed at Badami from a new mine site located at East Badami Creek. A gravel pad for the CPU, wellsites, camp, and maintenance shops has been constructed west of West Badami Creek near the shore line. An airstrip, dock and dockhead have been constructed with gravel. A stockpile/storage pad has been constructed near the minesite for storage of drillìng supplies and future gravel requirements. Gravel access roads have been constructed that connect the CPU pad, airstrip, dock and stockpile/storage pad. The CPU pad and facilities are designed for simultaneous drilling and production operations. A surface facility plat is included as Exhibit 9. Facility Design Produced well fluids will be processed at the CPU by separating the hydrocarbon liquids from water and gas. Hydrocarbon liquids will be processed to meet export pipeline specifications. Produced gas will be dehydrated, recompressed, blended with enriched hydrocarbons and injected for EOR recovery. Produced gas that is not reinjected will be consumed for fuel in Unit Operations and used for lift gas. After oil-skimming, RfC?EIVfD ; , ; /. 1" '- 0._ . b 199? Alaska. ,Oil.& Gas Cons.Commlss' 1inchoragø JUL 16 '97 04:11PM BP EXPLORATION B~dami Field Rules TeSenYJUIY 16,1997 Page 5 . P.6/7 produced water will be blended with water from source water wells and injected into the reservoir for waterllood. A simplified process flow diagram is included as Exhibit 10. Initial production rate is anticipated at 35,000 bpd (annual average), consistent with the initial facility design capacity. The initial production rate will managed to maintain facility capacity for as long as practicable, or at the highest sustainable well delivery rate consistent with good reservoir engineering practices. Test separation facilities are provided to periodically monitor well performance. Construction of prefabricated production modules and equipment has commenced at offsite construction yards. Production equipment is to be transported by shallow-draft barge and/or truck to the f3adami site. The major prefabricated process modules include Oil Separation, Gas Compression, Oil Export, Water Injection, Power Generation, and Utilities modules. The smaller modules, well pad manifolds and other equipment will be transported overland from Deadhorse/Prudhoe during the winter ice road season. Facility installation is scheduled to be completed to allow production start- up by October, 1998. A simplified project schedule is depicted in Exhibit 11. EOR Faoilities Enhanced Oil Recovery (ClEOR") operations are planned to begin as soon as practicable after production start-up. A water-altemating-gas ("WAG") miscible gas flood is planned. Source water for the WAG process is to be derived from two source water wells. Enriched hydrocarbon gas is to be imported from outside sources or produced on site and combined with Badami reinjection gas for miscible injection. Utilities and SUPDort Facilities A permanent camp for up to 40 operations personnel will be provided at Badami. The camp will include emergency power, water and ,sewage treatment. A 90x120 foot building will be provided for maintenance shops and warm storage of parts and chemicals. There will also be a diesel storage tank with fueling station, a slop disposal system, and a hazardous waste storage area. Waste Dis~osal Badami will manage its own waste with a Class I disposal well being the first well drilled. Cuttings and fluids from this and subsequent wells will be ground and injected into the disposal well. Additionally, treated waste from the camp and production facility will be injected into this well. A permit for a Class II disposal well is also being sought as a contingency. RE~ErVtD ! ¡¡ 1 {~ 199-7 \,j ...-~ ~ '-.' ~ g Alaska Oil &. Gas Cons. Comíí\\S~ 'Anchorage A< JUL 16 '97 04:12PM BP EXPLORATION B~dami Field Rules Tes4lany July 16,1997 Page 6 . P.7/7 Pipeline System The hydrocarbon liquid transportation system consists of oil shipping pumps and a 12- inch sales oil line which will run approximately 26 miles from the Badami facilities to a connection point into the existing 16-inch Endicott pipeline for delivery to TAPs. Additionally, a 6-inch utility line is planned for providíng miscible fluids from Endicott for use in the Badami EOR project. a distance of approximately 35 miles. Prior to EOR start-up, the first use for the utility line will be to supply fuel gas from Endicott for the drillíng rig. 4J;.{p . . July 11, 1997 PETROfINA DELAWARE, INCORPORATED P. O. Box 62102 Houston, Texas 77205-2102 14950 Heathrow Forest Pkwy. Suite 300 Houston, Texas 77032 (713)986-6000 e Mr. Dave Johnston, Chaiffi1an Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 RE: Badami Development Dear Chaiffi1an Johnston: Fina Oil and Chemical Company, with its partner and operator BP Exploration (Alaska) Inc., has worked diligently to reach the development stage for the Badami project and looks forward to the fruition of this dedicated joint effort. Fina Oil and Chemical Company is in full support of the well spacing and pool rule proposal as submitted by BP Exploration. The June 4, 1997, and July 9, 1997 letters as submitted, reflect the request of Fina Oil and Chemical Company as partner with BP Exploration. Please accept this letter as full support of the effort by BP Exploration to define the Badami Oil Pool and establish well spacing for development. We look forward to your support of the requested Pool Rules by BP Exploration and the development of Badami. If Fina can be of any assistance, please do not hesitate to call me at 281-986-6911. Æince y, ~VI7?~¢/J Rox M. Edg~ Land Manager, Western U. S. Development cc: Octavio Pastrana, BP Exploration (Alaska) Inc. REGEIVED JUL 1 4 1997 Ala.3Ka .Oil & Gas Cons. C.o.mm\s: - Anch.QragEl ~!f' *5 . . DRAFT CONFIDENTIAL TESTMONY :itA- . . Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of BP Exploration (Alaska) Inc. for a public hearing to define the Badami Oil Pool and establish well spacing for development. Notice is hereby given that BP Exploration (Alaska) Inc. has petitioned the Alaska Oil and Gas Conservation Commission under 20 AAC 25.520 to hold a public hearing to present testimony to define the Badami Oil Pool and establish well spacing to facilitate initial development of the reservoir. The proposed development area is located in the vicinity of Mikkelsen Bay on the North Slope of Alaska. A hearing will be held at the Alaska Oil and Gas Conservation Commission, 3001 Porcupine Drive, Anchorage, Alaska 99501, at 9:00 am on July 16, 1997 in conformance with 20 AAC 25.540. This is a change of date previously advertised in the Anchorage Daily News on June 10, 1997. All interested persons and parties are invited to present testimony. If you are a person with a disability who may need a special modification in order to comment or to attend the public hearing, please contact Diana Fleck at 279-1433 no later than July 10, 1997. Published June 12, 1997 ADN AO 02714034 116987 STOF0330 AO-02714034 $56.61 a - AFFIDAVIT OF PUBLICATION ·"'~iot~¡'~,¡.' '".' ..:~,.:' \,JTA. ,.~.'.. ,<¡IIIIier¥. ,',. '., ,1 ,,' ; .....: ~'},Th, '(PI'I~1i\f\' ~x1)fÒrQ~¡on~"1i$I( løpxr fo1' a pUbll'·' . . ~1IIe1l'le8adaml"Qlt POol _ e$tl1Þlish .,11 ~IÖIIIOI', 1Ie\!é10Pftlent. .." ".. ..' .' ~ "\ >L,I . ...... ~ ,,"'., " ~"',.,~,.' ò -''':: Notitei$ ~'1J"" ,1Jíat, OP 'E )(t]/orCltiOll, ·(II.~klllCJ' hd5 'P8tltionéd II'Ie A*ku OJ! and Gas c~~~J!Ie.. '......' C. ~." ìtilSlÍló\I undèt2t .."...""¡;mo",, hOIØQ PUbUt hèari09 10 pr~ em testimony 'h" OaçlQmi ,0 Ò . weU e inltiOl' . r'~I"I.OIr.· i 3\'¿rr:'C~ ~~e 'tile Nøì11.l At\eäl'îlitl. AIOskO .011 tlonCOm'rr'llSS , porcupine )five, ,,10$1(0<19501 ( at JulY 16, 1997 ,In !"'Q/1(;e ,with 20 AAC 25. . '. a \ Chao n ., 01 date. P. r .e.v.. lOUS... I. y Qdvertlsèll1nthe~!)r'OJ . Daily OllJum to, .\991, All i ·->èI'SOns. anI! par ..., . led to ~ésérIf ,test/MOIl'':' '. .'¡ . If'Vou"orea~WI$I\ Ô di$llbilllY' WhO . may ,need " u Spec:iOlocc:ommo<,tQt';~í:Id II'Ie ,.~Q~ton, foct OI(\O , Qt219-1~ no later 1tKrit July 10; 1m. .. /sIDavld W. John.ston Chairman liON 11.0,02714034 ,PJ,Iþ. :.;lI/I1ØJ2, \m STATE OF ALASKA. THIRD JUDICIAL DISTRICf. Eva 11. Kaufmann ................................................... being first duly sworn on oath deposes and says that he/she is an advertising representative of the Anchorage Daily News. a daily newspaper. That said newspaper has been approved by the Third Judicial Court. Anchorage. Alaska. and it now and has been published in the English language continually as a daily newspaper in Anchorage. Alaska. and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on JURe 12, 1997 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. C"" signed(-"--~'--' Subscribed and sworn to efo me this I,f: day of ~~ 19f7 ¡? g:~ ······..··..N=~~:::y the State of Alaska. Third Division. Anchorage. Alaska MY COMMISSION EXPIRES iV<) ~.,;;....".;.,e :;es: 19 .............. 'Pe'bñiàiÿ .g; :i@... .... . ..... *3 . . ~- Eli BP EXPLORATION BP Exploration (Alaska) Inc. 900 East Benson Boulevard PO. Box 196612 Anchorage, Alaska 99519-6612 (907) 561-5111 June 4, 1997 Mr. Dave Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 RE: Badami Development Dear Chairman Johnston: Further to our letter to the Commission dated April 28, 1997, and our meeting with the Commission on May 28, 1997, and pursuant to 20 AAC 25.520, BP Exploration (Alaska) Inc., as Badami Unit Operator, submits this request for an order defining the geographic area of the pool initially contemplated for development, the pool's stratigraphic definition, and the prescription of certain spacing rules governing drilling activities. This request supercedes the request made in our April 28, 1997 letter. The initial geographic area covered by these proposed rules is described as follows and is depicted with a green outline on the enclosed map: Umiat Meridian T9N,R20E Sections 2,3,4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 16, 17 (whole sections) T9N,R19E Section 1 (whole section) T10N, R19E Sections 24,25,36 (whole sections) T10N, R20E Sections 19,29,30,31,32,33,34,35 (whole sections) RE~E'VED i i 1\\\ 5 1991 .. \S$\V Alaska Oil. & ûas Cons. Co.rom . 1\nchøragEì . . These lands are not adjacent to lands covered by oil and gas leases held by parties other than BP and PetroFina Delaware, BP's co-owner of the oil and gas leases covering the above-described lands. All lands contained within the proposed geographic area are uniformly held by BP at 70% and Fina at 30% working interest. The accumulation of oil and gas that comprises the Badami Oil Pool can be stratigraphically defined as sandstones of the Canning Formation of Tertiary Paleocene age in a submarine fan complex. The accumulation will be more fully described via materials to be presented to the Commission. At the present time, BP seeks a Conservation Order establishing the following: 1. Well Spacing. The establishment of 20 acre drilling units within the described area, with authorization to drill into and produce from any bottom hole location without regard to the proximity of said bottom hole location to any section lines within or exterior boundaries of the described area. 2. Administrative Action. The Commission has the authority to administratively waive, upon proper application or its own motion, the requirements of any rule stated above or to administratively amend this order as long as the change does not promote waste, jeopardize correlative rights or compromise ultimate recovery, and is based on sound engineering principles. Enactment of the above proposed rules will enable BP to commence development drilling operations, which are currently scheduled to begin September, 1997. BP requests that public notice be given and a hearing held in accordance with applicable statutes and regulations governing such actions by the Commission. As discussed in our meeting with you May 28, 1997, BP will seek additional pool rules governing pool operations and production practices at a later f e. 0.re;~CWAJ Octavio Pastrana Badami Program Manager cc: Tom Wadsworth, Petrofina Delaware Inc. REG:EIVED ,i ¡m 5 1997 C mm\SS¡" Alaska Oil .& Gas Cons. 0 . 1\nchorag~ :#~ . . Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: The application of BP Exploration (Alaska) Inc. for a public hearing to define the Badami Oil Pool and establish well spacing for development. Notice is hereby given that BP Exploration (Alaska) Inc. has petitioned the Alaska Oil and Gas Conservation Commission under 20 AAC 25.520 to hold a public hearing to present testimony to define the Badami Oil Pool and establish well spacing to facilitate initial development of the reservoir. The proposed development area is located in the vicinity of Mikkelsen Bay on the North Slope of Alaska. A hearing will be held at the Alaska Oil and Gas Conservation Commission, 300 1 Porcupine Drive, Anchorage, Alaska 99501, at 9:00 am on June 25, 1997 in conformance with 20 AAC 25.540. All interested persons and parties are invited to present testimony. If you are a person with a disability who may need a special modification in order to comment or to attend the public hearing, please contact Diana Fleck at 279-1433 no later than June 18, 1997. Published June 10, 1997 ADN AO 02714033 #~¡~O S'tOFQ~3Q AO-02714033 $52.17 AfFIO\ VIT Of PUBLI!nON l1ay 10, 1997 STATE OF ALASKA. ÍHIRD JUDICIAL DISTRICT. Eva H. Kaufmann ................................................... being first duly sworn on oath deposes and says that he/she is an advertising representative of the Anchorage Daily News. a daily newspaper. That said newspaper has been approved by the Third Judicial Court. Anchorage. Alaska. and it now and has been published in the English language continually as a daily newspaper in Anchorage. Alaska. and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 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. Sign~À.-~~·fY\ me this lei.. day of .., 19V~ 4d~ . .... ......~;.f!!,:~;;-~~... the State of Ala~ Third Division. Anchorage. Alaska MY COMMISSION EXPIRES My COI1'..m¡s~lor¡ I. ,pires: February 8, 2000 ........... ..... ......... ................19...... ~1 . . BP EXPLORATION BP Exploration (Alaska) Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 99519-6612 ? (907) 5"~'" ~ '- J,k/ {'~ April 28, 1997 Mr. Dave Johnston, Chairman Alaska Oil & Gas Conservation Commission 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Re: Badami Development Dear Chairman Johnston, As operator of the Badami unit, BP Exploration (Alaska) Inc. hereby requests that the Commission issue a Conservation Order granting BP the ability to commence development drilling, without regard to the spacing requirements and exception procedures detailed in 20 MC 25.055 for the initial development of the Badami Pool. Badami Development drilling is scheduled to begin in September, 1997. The area requested for exemption from the regulation is identified on the enclosed map, which shows preliminary development well locations in the portion of the pool contemplated for development as well as the consistent BPX 70%/Fina 30% lease ownership. BPX anticipates applying to the Commission for Badami Pool Rules in 1998, which rules would supersede the requested Conservation Order. Production from the Badami Pool is scheduled to begin in October, 1998. If necessary, BPX is prepared to meet with the Commission to present any additional justification required for this request. Thank you for your attention. Sincerely, ¡£/~~¿~ W.L. Bredar Subsurface Manager, Badami