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Home My WebLink AboutCO 739CONSERVATION ORDER 739 Docket Number: CO -16-019 Northstar Unit Northstar-Kuparuk Oil Pool Beaufort Sea, Alaska 1. October 3, 2016 Hilcorp's request for Pool Rules, Confidential portion held in secure storage 2. October 6 2016 Notice of hearing, affidavit of publication, email distribution, mailings 3. November 15, 2016 Transcript 4. ---------------- entails 5. December 4, 2019 Admin Approval to amend Rule 4 Gas -Oil Ratio exemption (CO 739.001) STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, ) Docket Number: CO -16-019 LLC for an order for classification of a new oil ) Conservation Order 739 pool and to prescribe pool rules for development ) Northstar Unit of the proposed Kuparuk Oil Pool within the ) Northstar-Kuparuk Oil Pool Northstar Unit ) Beaufort Sea, Alaska January 31, 2018 IT APPEARING THAT: 1. By application received October 3, 2016, Hilcorp Alaska, LLC (Hilcorp), as operator and sole working interest owner of the Northstar Unit (NU), requested an order defining a new oil pool, the Kuparuk Oil Pool, within the NU and prescribing rules governing development and operation of that pool. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) scheduled a public hearing for November 15, 2016. On October 5, 2016, the AOGCC published notice of that hearing on the State of Alaska's Online Public Notice website, the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On October 6, 2016, the notice was published in the Alaska Dispatch News. 3. No comments on the application were received. 4. The hearing commenced at 9:00 a.m. on November 15, 2016. Evidence in support of the application was provided by representatives of Hilcorp. 5. The record was held open until December 15, 2016 to allow Hilcorp to respond to AOGCC's requests for additional information, made during the hearing. FINDINGS: 1. Affected Area: The Affected Area lies offshore in the Beaufort Sea, about 12 miles northwest of Prudhoe Bay, within the Northstar Unit. Hilcorp's proposed Northstar Kuparuk Oil Pool (NSKOP) will be developed from the Northstar artificial island drill site, which is located in Section 11, Township (T) 13N, Range (R) 13E, Umiat Meridian (UM). 2. Owners and Landowners: Hilcorp is the operator and 100% working interest owner, and the State of Alaska (State), Department of Natural Resources and the U.S. Government are the landowners, of the Affected Area. Exploration Delineation and Production History: Shell Oil Company (Shell) drilled the discovery well BF 47-1 (PTD #183-074; also known as Seal Island A-1) between June and December 1983 from a surface location in Section I1, T13N, RUE, UM to a bottom hole location in Section 2 in that same township. BF 47-1 encountered oil indicators in the Kuparuk Formation (Kuparuk). Shell confirmed this discovery with three additional exploratory wells: OCS Y-0181 #1 (PTD# 184-017, also known as Seal Island A-2) drilled February to May 1984; BF 57-1 (PTD #184-093, also known as Seal Island A-3) drilled July to November CO 739 January 31, 2018 Page 2 of 11 1984; and OCS Y-0180 #1 (PTD# 184-220, also known as Seal Island A-4) drilled February to July 1985. Amerada Hess drilled additional confirmation wells Northstar 1 (PTD # 185- 085), from October to December 1985, and Northstar 2 (PTD #186-013), from January to March 1986. To date, about 30 wells have been logged across the Kuparuk reservoir within the Northstar Unit. Three-dimensional seismic survey and well log data have been used to determine the geologic structure and reservoir distribution. Well log, conventional and sidewall core, nodal analysis, pressure transient analysis, Repeat Formation Tester, and well test information were used to establish reservoir and fluid properties for the proposed pool. 3. Pool Identification: The proposed NSKOP is the accumulation of hydrocarbons common to, and correlating with, the interval between the measured depths of 12,156 and 12,446 feet on the resistivity well log recorded in development well Northstar (NS) NS -15 (PTD #202-054). 4. Geology: a. Structure: Within the development area, the structure at the top of the proposed NSKOP forms a southeast -trending, four -way -closure anticline that measures about 7 miles by 2 miles and is cut by several southeast- and north -trending, normal faults. The top of the anticline lies at about -8,800 feet TVDSS.' b. Stratigraphy: Within the NU, Cretaceous -aged reservoir sandstones within the Kuparuk are informally divided into two intervals, the Kuparuk C -Sands (C -Sands) and the underlying Kuparuk A -Sands (A -Sands; see Figure 1, below). The Kuparuk C -Sands consist of bioturbated and burrowed glauconitic sandstones, shaley sandstones, siltstones and shales. These sediments were most likely deposited in an offshore shelf setting. The thickness of the C -Sands interval varies across the field: it is thinnest on the crest of the anticline and thickens off structure, a variation that is believed to be the result of syndepositional fault activity. A 10- to 50 -foot thick, laterally continuous interval of shale separates the C -Sands from the underlying A -Sands. The A -Sands consist of three to five upward -coarsening intervals. The overall thickness of the A -Sands is relatively uniform, and it does not appear to be influenced by faulting or the present-day structure. The A -Sands were deposited in an offshore setting. Together, the C- and A -Sands have a combined thickness ranging from 160 to 330 true vertical feet. c. Rock Properties: Porosity ranges from 12% to 27%, averaging 20%. Permeability ranges from 0.5 to 1,400 millidarcies and averages 220 millidarcies. Water saturation estimates for the reservoir sandstones range from 9% to 35 %, with an average of about 29%. d. Faults: The vertical displacement of faults cutting the proposed NSKOP ranges up to 175 feet, but is generally less than 50 feet. Because of the relatively thin -bedded nature of reservoir sands within proposed pool, some faults may act as flow barriers. e. Trap Configuration and Seals: Well log and seismic information indicate that structural dip controls the hydrocarbon accumulation within the A -Sands to the northeast and east. To avoid confusion, when depths presented represent true vertical depth subsea, the footage will be preceded by a minus sign and followed by the acronym TVDSS (e.g., 3,000 feet true vertical subsea will be depicted as -3,000 feet TVDSS). CO 739 January 31, 2018 Page 3 of 11 Faults control the accumulation to the south, southwest, and west. For the accumulation in the C -Sands, a combination of structural dip and faulting define the boundary. MID9111M 500292307300 2020540 BP NORTHSTAR UNIT NS -15 1189 FSL 645 FEL TWP: 13 N - Range: 13 E - Sec. 11 mccomcEM ---2222-- coca .CCmmOF mmmm ------------ 2220121 CCCCCCCCCCCC mccommmmmmOm 2222-------- -----------1 COcommoME MEME000OME r-------2222-� mom CCCCCCCCCCC CCCCCCCCC—�.r-� MES SOME 11300 -8300 8900 - 11400 eaoa 11500 8500 11500 8500 8600 _..._.. 11700 -8500 I�*t`;i 11800 8700 11900 8700 6800 12000 sao0 12100 as00 12200 89oa -9000 12400 9100 82500 9100 i. 9200 12500 -9200 93x3 12700 C A 93M 12800 1 5900 TD=15370 %5i. Resd�R�j OIRT1 F�snMRPh� 0ruvr7 9�sslaas7 C -Sands Shale A3 - Az A-SalInds - AlI_J� -8500 d -9000 d Figure 1. Northstar NS -15, Reference Log for Northstar Kuparuk C -Sands and Northstar Kuparuk A -Sands Oil Pools CO 739 January 31, 2018 Page 4 of 11 The top seal for the proposed NSKOP is formed by about 400 true vertical feet of shale and siltstone assigned to the HRZ shale and the Kalubik Formation, in descending stratigraphic order. f. Reservoir Compartmentalization: At present, the A -Sands appear to be pressure -isolated from the overlying C -Sands: measurements in NS -08 and NS -18 indicate that there is a 700 -psi difference between these reservoir sand intervals, and no production impacts were observed in NS -08 after NS -18 was brought online. 5. Reservoir Fluid Contacts: The Kuparuk A -Sands contain a gas -condensate cap with an oil rim. The overlying Kuparuk C -Sands contain only gas condensate. From Repeat Formation Tester (RFT) measurements, Hilcorp places the gas -oil contact at -9,035 feet TVDSS, the gas - water contact in the Kuparuk C -Sands at -9,075 feet TVDSS, and the oil -water contact in the Kuparuk A -Sands also at -9,075 feet TVDSS. 6. Reservoir Fluid Properties: Hilcorp considers the Kuparuk C- and A -Sands at Northstar to be a gas -condensate reservoir. However, the Kuparuk C- and A -Sands are considered oil reservoirs because the producing gas oil ratio (GOR) is less than 100,000 scf/stb. The API gravity of oil recovered from the proposed NSKOP measures about 380 to 53° and averages 47.60, and viscosity of the gas is 0.012 centipoise. The solution GOR is estimated to be 22,000 to 62,000 standard cubic feet per stock tank barrel, and the dew point pressure is estimated between 4,244 and 4,370 psig. Initial reservoir pressure was 4,425 psi at a datum depth of - 9,000 feet TVDSS, and current reservoir pressure is 3,700 psi at -9,000 feet TVDSS. Reservoir temperature is about 197° F. The oil formation volume factor is estimated at 2.07 reservoir barrels per stock tank barrel of oil, and the gas formation volume factor is estimated at 261.4 standard cubic feet of gas per reservoir cubic foot. The reservoir may have a slight water drive. Production History: Three wells currently produce from the proposed NSKOP: NS -08, NS= 15, and NS -18. NS -08 began producing gas -condensate from the C -Sands in November 2010. NS -18 began producing gas condensate and oil from the A -Sands in August 2016, and commingled production from the A- and C -Sands open within NS -18 began in December 2016. NS -15 began producing from the A -Sands in August 2017, and commingled production from the A- and C -Sands during September 2017. According to the AOGCC's records, cumulative production from the NSKOP through October 2017 is about 3.56 million barrels of oil and 108 billion cubic feet of gas.2 8. In -Place and Recoverable Volume Estimates: Hvdrocarbon Resource Original Gas in Place Original Oil in Place Primary Recovery Primary + Waterflood Estimated Volume 500 to 550 BCF 22 to 25 MMSTB 40% 46% These estimates are calculated using volumetrics supported by material balance calculations that assume some aquifer support. 2 AOGCC Production Database, accessed November 30, 2017 The acronym MMSTB signifies millions of stock tank barrels. The acronym BCF signifies billion cubic feet of gas. CO 739 January 31, 2018 Page 5 of 11 9. Future Development Plans: No new wells are planned. The project is expected to continue until about 2030. 10. Reservoir Continuity: Pressure transient analysis indicates that the Kuparuk C -Sands are laterally continuous with no major flow barriers in the development area, while the Kuparuk A -Sands is less laterally continuous and more compartmentalized. 11. Reserves Distribution: The majority of the reserves in the proposed NSKOP are assigned to the less compartmentalized Kuparuk C -Sands where wells will drain larger areas. 12. Enhanced Recovery Potential: Hilcorp continues to gather data on the Kuparuk C -Sands and is evaluating the potential of implementing a gas reinjection project to improve ultimate recover from the C -Sands. Conversely, the Kuparuk A -Sands do not appear to be a good candidate for an enhanced recovery project due to limited reserves and compartmentalized nature. 13. Requested Waivers: Hilcorp requests exemption from gas/oil ratio regulation 20 AAC 25.240. Hilcorp requests exemption from the requirements of commingling regulation 20 AAC 25.215 to allow effective development of the relatively small accumulation within the A -Sands, which are not in pressure communication with the overlying C -Sands. CONCLUSIONS: Pool Rules are appropriate for Hilcorp's development of the proposed Northstar-Kuparuk Oil Pool within the Northstar Unit. 2., Although the Kuparuk C- and A -Sands are not in communication, the small size of the Kuparuk A -Sand, its proximity to the C- Sand and the commingling of production warrant designating the Kuparuk A- and C- Sands as a single oil pool and will lead to greater ultimate recovery. 3. The Kuparuk A -Sand do not appear to be a good candidate for an enhanced recovery project, but there is potential for an EOR project in the Kuparuk C -Sand. Hilcorp asserts that it needs to continue to collect reservoir performance data in order to make a decision on whether or not an EOR project in the Kuparuk C -Sand will work. While collecting this data the producing GOR could exceed the limit imposed by 20 AAC 25.240, so a temporary waiver of this limit, in accordance with 20 AAC 25.240(b)(3), to collect additional reservoir performance information is appropriate. NOW THEREFORE IT IS ORDERED: Development and operation of the Northstar-Kuparuk Oil Pool is subject to the following rules and the statewide requirements under 20 AAC 25 to the extent not superseded by these rules: CO 739 January 31, 2018 Page 6 of 11 Affected Area: From the definition of the Northstar Hooligan Participating Area effective as of December 1 201 TR -101 That portion of ADL 312798, more particularly described as those lands located easterly of the west boundary of TI 3M, R1 3E, Umiat Meridian (UM) and T14N, RUE, UM, being the north -south line intersecting the north and south boundary of Block 470, within the offshore three-mile arc lines listed as State area of block 470 "Supplemental Official O.C.S. Block Diagram" approved 10/4/79, and those lands in Block 514 easterly of the west boundary of TUN, RI 3E, UM (being identical with Line2-3 of Block 514) and that portion of section 16, T13N, R 13E, UM within the NI/2S1/2 (being easterly of Line 3-4 of Block 514), being a portion of the listed State are of Block 514 on the "Supplemental Official O.C.S. Block Diagram" approved 12/9/79, lying within: T14N, R13E, UM Section 32: E %2 Section 33 T13N, R13E, UM Section 4 Section 5: E''/2 Section 8: NE 1/4 Section 9: N''/2 TR -102 That portion of ADL 312799, more particularly described as those lands located in Block 471 within the offshore three-mile arc lines listed as State area of block 471 "Supplemental Official O.C.S. Block Diagram" approved 10/4/79, and those lans in NI/2, NI/2S1/2 of Block 515 within the offshore three-mile arc lines being a portion of the listed State area on the "Supplemental Official O.C.S. Block Diagram" approved 10/4/79, lying within: T14N, R13E, UM Section 33: S1/2 S1/2 OCS Block 470 Sections 34 and 35 CO 739 January 31, 2018 Page 7 of 11 T13N, R13E, UM Sections 1-4 & 9-15 TR -103 That portion of ADL 312808, more particularly described as those lands located in S1/2S1/2 of Block 514, within sections 16 and 21, TUN, R13E, UM (being those lands lying easterly of Line 3-4 on Block 514), a portion of the State area on the "Supplemental Official O.C.S. Block Diagram" approved 12/9/79, and those lands in S1/2S1/2 of Block 515, being a portion of the State area on the "Supplemental Official O.C.S. Block Diagram, approved 10/4/79, and those lands within Block 558 located in Section 21, TUN, R13E, UM (being the portion easterly of Line 1-2 and northerly of Line 2-3 Block 558), listed as State area on the "Supplemental Official O.C.S. Block Diagram" approved 12/9/79 and those lands in Block 559 lying northerly of the south boundary of sections 21, 22, 23, and 24, T13N RUE, UM (being the northerly portion of Block 559), listed as State area on the "Supplemental Official O.C.S. Block Diagram" approved 10/4/79, lying within: T13N. R13E, UM Sections 13 and 14 Section 15: E 1/2 TR -104 That portion of ADL 312809, more particularly described as those lands located in Block 516 within the three-mile are lines, listed as State area on the "Supplemental Official O.C.S. Block Diagram" approved 10/4/79, and those lands in Block 560 lying northerly of the south boundary of Section 24, TUN, R13E, UM (being identical with Line 4- 5 on Block 560), and lying easterly of the west boundary and northerly of the south boundary of T13N, R14E, UM (being identical with Lines 5-6 and 6-7 on Block 560), within the offshore Three -Mile arc lines, listed as State area on the "Supplemental Official O.C.S. Block Diagram" approved 12/9/79, lying within: T13N. R13E. UM CO 739 January 31, 2018 Page 8 of 11 Section 13: N''/2 S1/2 OCS Block 516 TR -1 That portion of OCS-Y-0179 - more particularly described as that portion of block 470 shown as Federal 8(g} Area B on the Supplemental Official OCS Block Diagram, dated 10/4/79, based on Official Protraction Diagram NR 6-3, Beechey Point, approved April 29, 1975, and lying southerly of line 11 -12 and line 12-13 bisecting block 470. as shown on the Supplemental Diagram ofthe Supplemental Official OCS Block Diagram, dated 6/4/82, based on Official Protraction Diagram NR 6-3, Beechey Point, approved April 29, 1975, and those lands lying between the two lines bisecting block 471 (further described as "disputed area"). containing approximately 611.95 hectares, as shown on the Supplemental Official OCS Block Diagram, dated 10/04/79, based on Official Protraction Diagram NR 6-3, Beechey Point, approved April 29, 1975, and those lands lying northeasterly of the line bisecting block 515, containing approximately 190.97 hectares, as shown on the Supplemental Official OCS Block Diagram. dated 10/4179, based on Official Protraction Diagram NR 6-3, Beechey Point, approved April 29. 1975, lying south of the line commencing at Easting, Northing UTM6 Meters, NAD27 435076.08. 7825840.36 and ending at Easting. Northing UTM6 Meters, NAD27 437600.001 7824000.00, as shown on Exhibit D (dated 9/21/01) - of Block 515, containing approximately 190.97 hectares (471.89 acres). as shown on the Supplemental Official OCS Block Diagram, dated 10/4/79, based on Official Protection Diagram NR 6-3. Beechey Point, approved April 29, 1975: And that portion of Block 471 within S1/2SW1/4 and S1/2SW1/4SE1/4, containing approximately 99.83 hectares (246.68 acres). as shown on the Supplemental Official OCS Block Diagram. dated 10/4/79, based on Official Protraction Diagram NR 6-3, Beechey Point, approved April 29, 1975; CO 739 January 31, 2018 Page 9 of 11 Rule 1 Field and Pool Name The field is the Northstar Field. Hydrocarbons underlying the Affected Area and within the interval identified in Rule 2, below, constitute the Northstar-Kuparuk Oil Pool. Rule 2 Pool Definition The Northstar-Kuparuk Oil Pool is defined as the accumulation of oil and gas common to and correlating with the interval within the Northstar Unit NS -15 well between the measured depths of 12,156 and 12,446 feet on the resistivity well log recorded in development well NS -15. Rule 3 Reservoir Pressure Monitorina a) Prior to placing each well on regular production or injection, an initial pressure survey must be obtained. b) Bottom -hole pressure surveys must be acquired in at least one-half the active wells each year. Bottom -hole surveys in paragraph (a) may fulfill the minimum requirement. c) The reservoir pressure datum shall be -9,000 feet TVDSS. d) Pressure surveys may be stabilized static pressure measurements at bottom -hole or extrapolated from surface (single phase fluid conditions), pressure fall-off, pressure buildup, multi -rate tests, drill stem tests, and open -hole formation tests. e) Data and results from all relevant reservoir pressure surveys must be reported quarterly on Form 10-412, Reservoir Pressure Report. All data necessary for analysis of each survey And that portion of Block 470 lying south of the line commencing at Easting, Northing UTM6 Meters, NAD27 431762.97.7825801 .43 and ending at Easting, Northing UTM6 Meters, NAD27 432800.00, 7825812.71, containing approximately 15.01 hectares (37.09 acres). as shown on the Supplemental Diagram, dated 2/25/88, based on Supplemental Official OCS Block Diagram, dated 10/4/79, based on Official Protraction Diagram. NR 6-3, Beechey Point, approved April 29. 1975. TR -2 That portion of Block 51.6 within NW l /4S W l /4 and SWI /4NW 1/4, containing approximately 267.28 hectares (660.45 acres), as shown on the Supplemental Official OCS Block Diagram, dated 10/4179, based on Official Protraction Diagram NR 6-3, Beecbey Point, approved April 29. 1975, Rule 1 Field and Pool Name The field is the Northstar Field. Hydrocarbons underlying the Affected Area and within the interval identified in Rule 2, below, constitute the Northstar-Kuparuk Oil Pool. Rule 2 Pool Definition The Northstar-Kuparuk Oil Pool is defined as the accumulation of oil and gas common to and correlating with the interval within the Northstar Unit NS -15 well between the measured depths of 12,156 and 12,446 feet on the resistivity well log recorded in development well NS -15. Rule 3 Reservoir Pressure Monitorina a) Prior to placing each well on regular production or injection, an initial pressure survey must be obtained. b) Bottom -hole pressure surveys must be acquired in at least one-half the active wells each year. Bottom -hole surveys in paragraph (a) may fulfill the minimum requirement. c) The reservoir pressure datum shall be -9,000 feet TVDSS. d) Pressure surveys may be stabilized static pressure measurements at bottom -hole or extrapolated from surface (single phase fluid conditions), pressure fall-off, pressure buildup, multi -rate tests, drill stem tests, and open -hole formation tests. e) Data and results from all relevant reservoir pressure surveys must be reported quarterly on Form 10-412, Reservoir Pressure Report. All data necessary for analysis of each survey CO 739 January 31, 2018 Page 10 of 11 need not be submitted with the Form 10-412, but must be available to the AOGCC upon request. f) Results and data from special reservoir pressure monitoring tests or surveys must also be submitted in accordance with paragraph (e) of this rule. Rule 4 Gas -Oil Ratio Exemption Wells producing from the Northstar-Kuparuk Oil Pool are exempt from the GOR limits of 20 AAC 25.240(a) through December 31, 2019, for the purpose of collecting pool performance data to evaluate the viability of enhanced recovery activities. Rule 5 Annual Reservoir Review The first operations and reservoir performance report will be due by April 1, 2018, and shall include a review of all operations since first production from the Northstar-Kuparuk Oil Pool through December 2017. Future reports will be required annually thereafter and cover the previous calendar year. The report shall include, but is not limited to, the following: a. Summary and analysis of reservoir pressure surveys within the pool. b. Results and, where appropriate, analysis of production log surveys, observation well surveys, and any other special monitoring. c. Review of pool production allocation factors and issues over the prior year. d. Future development plans. e. Review of Annual Plan of Operations and Development. Rule 6 Administrative Action Upon proper application, or its own motion, and unless notice and public hearing are otherwise required, the AOGCC my administratively waive the requirements of any rule stated herein or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, is based on sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater aquifers. DONE at Anchorage, Alaska and dated January 31, 2018. Hollis S. French Daniel .SeamJr. Chair, Commissioner Commissioner CO 739 January 31, 2018 Page 11 of 11 As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default atter which the designated period begins to ran is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 996697714 George Vaught, Jr. P.O. Box 13557 Denver. CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 YW/M Carlisle, Samantha J (DOA) From: Carlisle, Samantha J (DOA) Sent: Friday, February 02, 2018 8:35 AM To: 'Ballantine, Tab A (LAW) (tab.ballantine@alaska.gov)'; 'Bender, Makana K (DOA) (makana.bender@alaska.gov)'; 'Bettis, Patricia K (DOA) (patricia.bettis@alaska.gov)'; 'Bixby, Brian D (DOA)'; 'Brooks, Phoebe L (DOA) (phoebe.brooks@alaska.gov)'; Carlisle, Samantha J (DOA); 'Colombie, Jody J (DOA) Qody.colombie@alaska.gov)'; 'Cook, Guy D (DOA)'; 'Davies, Stephen F (DOA) (steve.davies@alaska.gov)'; Earl, Adam G (DOA); Erickson, Tamara K (DOA); 'Foerster, Catherine P (DOA) (cathy.foerster@alaska.gov)'; 'French, Hollis (DOA)'; 'Frystacky, Michal (michal.frystacky@alaska.gov)'; 'Guhl, Meredith (DOA sponsored) (meredith.guhl@alaska.gov)'; Herrera, Matthew F (DOA); 'Jones, Jeffery B (DOA) Oeffjones@alaska.gov)'; Kair, Michael N (DOA); Laubenstein, Lou (DOA); 'Link, Liz M (DOA)'; Loepp, Victoria T (DOA); McPhee, Megan S (DOA); 'Mumm, Joseph (DOA sponsored) Qoseph.mumm@alaska.gov)';'Noble, Robert C (DOA) (bob.noble@alaska.gov)'; 'Paladijczuk, Tracie L (DOA)(tracie.paladijczuk@alaska.gov)'; 'Pasqual, Maria (DOA) (maria.pasqual@alaska.gov)'; 'Begg, James B (DOA) Oim.regg@alaska.gov)';'Roby, David S (DOA)(dave.roby@alaska.gov)';'Scheve, Charles M (DOA) (chuck.scheve@alaska.gov)'; 'Schwartz, Guy L (DOA) (guy.schwartz@alaska.gov)'; 'Seamount, Dan T (DOA) (dan.seamount@alaska.gov)'; 'Wallace, Chris D (DOA) (chris.wallace@alaska.gov)'; 'AK, GWO Projects Well Integrity'; 'AKDCWellIntegrityCoordinator'; 'Alan Bailey'; 'Alex Demarban'; 'Alicia Showalter'; 'Allen Huckabay'; 'Andrew VanderJack'; 'Ann Danielson'; 'Anna Raff'; 'Barbara F Fullmer'; 'bbritch'; 'Becky Bohrer'; 'Ben Boettger'; 'Bill Bredar'; 'Bob'; 'Brandon Viator'; 'Brian Havelock'; 'Bruce Webb';'CalebConrad';'Candi English';'Cocklan-Vendl, MaryE';'Cody Gauer'; 'Cody Terrell'; 'Colleen Miller'; 'Connie Downing'; 'Crandall, Krissell'; 'D Lawrence'; 'Dale Hoffman'; 'Danielle Mercurio';'Darci Horner'; 'Dave Harbour';'David Boelens'; 'David Duffy'; 'David House';'David McCaleb';'David McCraine';'ddonkel@cfl.rr.com'; Diemer, Kenneth J (DNR);'DNROG Units';'Donna Ambruz';'Ed Jones'; 'Elizabeth Harball'; 'Elowe, Kristin'; 'Elwood Brehmer';'Evan Osborne'; 'Evans, John R (LDZX)';'Garrett Brown';'George Pollock'; 'Gordon Pospisil'; Greeley, Destin M (DOR);'Gretchen Stoddard'; 'gspfoff; Hurst, Rona D (DNR); Hyun, James J (DNR); 'Jacki Rose';'Jason Brune'; 'Jdarlington oarlington@gmail.com)'; 'Jeanne McPherren'; 'Jerry Hodgden'; 'Jill Simek'; 'Jim Shine'; 'Jim Watt'; 'Jim White'; 'Jim Young'; 'Joe Lastufka'; 'Joe Nicks'; 'John Burdick'; 'John Easton'; 'John Larsen'; 'John Stuart'; 'Jon Goltz'; 'Josef Chmielowski'; 'Juanita Lovett'; 'Judy Stanek'; 'Kari Moriarty'; 'Kasper Kowalewski'; 'Kazeem Adegbola'; 'Keith Torrance'; 'Keith Wiles';'Kelly Sperback';'Kevin Frank'; Kruse, Rebecca D (DNR); 'Kyla Choquette'; 'Laura Silliphant(laura.gregersen@alaska.gov)';'Leslie Smith';'Lori Nelson';'Luke Keller'; 'Marc Kovak';'Mark Dalton';'Mark Hanley (mark.hanley@anadarko.com)';'Mark Landt';'Mark Wedman';'Michael Bill';'Michael Calkins'; 'Michael Moora';'Michael Quick';'Michael Schoetz';'Mike Morgan';'MJ Loveland'; 'mkm7200'; 'Motteram, Luke A'; Mueller, Marta R (DNR); 'Nathaniel Herz'; 'nelson'; 'Nichole Saunders'; 'Nick Ostrovsky'; 'NSK Problem Well Supv'; 'Patty Alfaro'; 'Paul Craig'; 'Paul Decker (paul.decker@alaska.gov)';'Paul Mazzolini'; Pike, Kevin W (DNR); 'Randall Kanady';'Renan Yanish';'Richard Cool';'Robert Brelsford';'Robert Warthen';'Sara Leverette';'Scott Griffith';'Shahla Farzan';'Shannon Donnelly'; 'Sharon Yarawsky'; Skutca, Joseph E (DNR); Smith, Kyle S (DNR); 'Stephanie Klemmer';'Stephen Hennigan'; 'Sternicki, Oliver R'; 'Steve Moothart (steve.moothart@alaska.gov)'; 'Steve Quinn'; 'Suzanne Gibson'; 'Tamera Sheffield'; 'Tanisha Gleason'; 'Ted Kramer'; 'Teresa Imm'; 'Tim Jones'; 'Tim Mayers'; 'Todd Durkee'; 'Tom Maloney'; 'trmjr1'; 'Tyler Sender'; Umekwe, Maduabuchi P (DNR);'Vinnie Catalano';'Well Integrity'; 'Well Integrity'; 'Weston Nash'; 'Whitney Pettus';'Aaron Gluzman';'Aaron Sorrell';'Ajibola Adeyeye'; THE STATE °fALASKA GOVERNOR MIKE DUNLEAVY Alaska Oil and Gas Conservation Commission ADMINISTRATIVE APPROVAL CONSERVATION ORDER NO. 739.001 Mr. Chris Kanyer Reservoir Engineer Hilcorp Alaska, LLC P.O. Box 244027 Anchorage, AK 99524-4027 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.oloslka.gov Re: Docket Number: CO -19-023 Request for administrative approval to amend Rule 4 Gas -Oil Ratio Exemption Northstar Unit Northstar-Kuparuk Oil Pool Dear Mr. Kanyer: By letter dated December 4, 2019, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) administratively approve an amendment to Rule 4 Gas - Oil Ratio Exemption (GOR) of Conservation Order No. 739 (CO 739) to convert the rule from a temporary exemption based on data gathering to a permanent exemption based on an ongoing enhanced oil recovery (EOR) project. Hilcorp's request is hereby GRANTED. CO 739, issued on January 31, 2018, established pool rules for the development of the Northstar- Kuparuk Oil Pool (NKOP). Rule 4 of this order stated: Wells producing from the Northstar-Kuparuk Oil Pool are exempt from the GOR limits of 20 AAC 25.240(a) through December 31, 2019, for the purpose of collecting pool performance data to evaluate the viability of enhanced recovery activities. Hilcorp completed its evaluation of the viability of conducting an EOR project in the NKOP and applied for an area injection order (AIO) for the NKOP. On November 28, 2018, the AOGCC issued AIO 41 authorizing EOR injection in the NKOP. EOR injection began on January 24, 2019. Due to the presence of an ongoing EOR project in the NKOP a GOR exemption based on data gathering is no longer appropriate and Rule 4 should be amended to indicate that a GOR exemption based on an ongoing EOR project is in effect. CO 739.001 December 10, 2019 Page 2 of 2 In accordance with Rule 6 of CO 739 Rule 4 of CO 739 is hereby amended to read as follows: Rule 4 Gas -Oil Ratio Exemption In accordance with 20 AAC 25.240(b)(1)&(2) wells producing from the Northstar- Kuparuk Oil Pool are exempted from the Gas -oil ratio limits of 20 AAC 25.240(a) so long as an enhanced oil recovery/gas re-injection project remains in place for the Northstar- Kuparuk Oil Pool. .s DONE at Anchorage, Alaska and dated December 10, 2019. /Y1 Jer y . Price aniel T. Se ount, Jr. Je ie L. Chmielowski air, Commissioner Commissioner Coffirnissioner AND APPEAL NOTICE As provided in AS 31.05.050(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. if the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m, on the next day that does not fall on a weekend or state holiday. Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 To: 'Alan Dennis'; 'Andy Bond'; 'Bajsarowicz, Caroline J; 'Bruce Williams'; 'Bruno, Jeff J (DNR)'; 'Casey Sullivan'; 'Corey Munk'; 'Don Shaw'; 'Epple Hogan ';'Eric Lidji'; 'Garrett Haag'; 'Graham Smith'; Heusser, Heather A (DNR); 'Holly Fair'; 'Jamie M. Long'; 'Jason Bergerson'; 'Jesse Chielowski'; 'Jim Magill'; 'Joe Longo'; 'John Martineck'; 'Josh Kindred'; 'Keith Lopez';'Laney Vazquez';'Lois Epstein'; Longan, Sara W (DNR);'Marc Kuck'; 'Marcia Hobson'; 'Marie Steele'; 'Matt Armstrong'; 'Melonnie Amundson'; 'Mike Franger'; 'Morgan, Kirk A (DNR)'; 'Pascal Umekwe'; 'Pat Galvin'; 'Pete Dickinson'; 'Peter Contreras'; 'Rachel Davis'; 'Richard Garrard'; 'Richmond, Diane M'; 'Robert Province'; 'Ryan Daniel'; 'Sandra Lemke'; 'Susan Pollard'; 'Talib Syed'; 'Tina Grovier (tmgrovier@stoel.com)'; 'William Van Dyke' Subject: CO 739, Northstar Unit Attachments: co739 THE APPLICATION OF Hilcorp Alaska, LLC for an order for classification of a new oil pool and to prescribe pool rules for development of the proposed Kuparuk Oil Pool within the Northstar Unit Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7m Avenue Anchorage, AK 99501 (907) 793-1223 CONFIDFN'rIAL1TY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended mcipient(s). it may contain confidential and/or privileged information. The unauthorized revievv, use or disclosure of such information may violate state or federal law. if you are an unintended recipient of this e-mail, please delete it. without first saving or forwarding it.and, so that the AOGCC is aware of the mistake in sending it to you, contact Samantha Carlisle at (907) 793-1 X03 or Samantha.CarlisleOaaska.eoc. 5 Pti L_ ..a m a.,. DEC - 4 2019 11 AO CC Hilcorp Alaska, LLC December 4, 2019 Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7'h Avenue, Suite 100 Anchorage, Alaska 99501 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone: 907/777-8300 Fax: 907/777-8301 RE: Application to Administratively Amend Rule 4, Conservation Order No. 739 Rule 4 for the Northstar Unit, Northstar-Kuparuk Oil Pool Dear Commissioner Price, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Northstar Unit ("Northstar") requests the Alaska Oil and Gas Conservation Commission ("AOGCC") take administrative action to amend Rule 4 of Conservation Order 739 to allow for permanent Gas -Oil Ratio exemption for the Northstar-Kuparuk Oil Pool ("NKOP"). The relevant portion of Rule 4 currently states: "Wells producing from the Northstar-Kuparuk Oil Pool are exempt from the GOR limits of 20 AAC 25.240(a) through December 31, 2019, for the purpose of collecting pool performance data to evaluate the viability of enhanced recovery activities." Following the NKOP approval, the Area Injection Order 41, was established on November 28, 2018. Hilcorp then commenced this enhanced recovery project with lean gas injection into the Northstar NS -18 well on January 24, 2019. The well has shown good initial injectivity at initial rates of-82MMcfd and has increased injection rate to—88MMcfd over the past year, due declining reservoir pressure. Hilcorp began work in August 2019 to expand lean gas reinjection by converting a second well for lean gas injector, NS -17. Hilcorp has completed our reservoir data collection and analysis and have determined that lean gas reinjection is preferred development method for the NKOP. As part of CO 739 Rule 5, regarding Annual Reservoir Review, we have submitted the status of the Northstar- Kuparuk Oil Pool for year 2016, in anticipation of CO 739, and for years 2017 & 2018 as a condition of referenced Rule 5. This report, due annually, provides an update of the prior year's reservoir performance and operations to the AOGCC. Based upon the ongoing injection project, Hilcorp proposes that the current language of CO 739 Rule 4 be repealed and replaced with the following: Wells producing from the Northstar-Kuparuk Oil Pool are permanently exempt from the GOR limits of 20 AAC 25.240(a). Northstar Unit Northstar-Kuparuk Oil Pool — CO 739 Rule 4 December 4, 2019 Page 2 of 2 Hilcorp owns and operates 100% of the Northstar Unit. The Alaska Department of Natural Resources Division of Oil and Gas ('DNR") and the U.S. Department of Interior, Bureau of Safety and Environmental Enforcement ("BSEE") jointly manage the Northstar Unit landownership. Should you have any technical questions, please contact Mr. Chris Kanyer the undersigned Reservoir Engineer, at 777-8377. Sincerely, Chris Kanyer, Reservoir Engineer Hilcorp Alaska, LLC CC: DNR (tom.stokes@alaska.gov); BSEE. (mark.fesmire@bsee.gov); 59 Colombie, Jody J (DOA) From: Davies, Stephen F (DOA) Sent: Monday, December OS, 2016 9:09 AM To: David Duffy Cc: Chris Kanyer; Larry Greenstein; Cody Terrell; Colombie, Jody J (DOA) Subject: RE: Northstar Kuparuk Rules / NS -18 AOGCC 10-403 SUBMITTAL 11-28-2016 David, After returning from vacation last week, all of my time was focused on other action items. I will have the time to work on your request, below, early this week. Please let me know if you have any questions. Regards, Steve Davies Senior Petroleum Geologist Alaska Oil and Gas Conservation Commission (AOGCC) CONFIDENTIALITY NOTICE., This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Steve Davies at 907-793-1224 or steve.daviesPalaska gov. From: David Duffy [mailto:dduffy@hilcorp.com] Sent: Wednesday, November 30, 2016 3:16 PM To: Davies, Stephen F (DOA) <steve.davies@alaska.gov>; Colombie, Jody J (DOA) <jody.colombie@alaska.gov> Cc: Chris Kanyer <ckanyer@hilcorp.com>; Larry Greenstein <Igreenstein@hilcorp.com>; Cody Terrell <cterrell@hilcorp.com> Subject: Northstar Kuparuk Rules/ NS -18 AOGCC 10-403 SUBMITTAL 11-28-2016 Steve, Hilcorp's technical team has prepared a non -confidential geologic report for AOGCC's consideration of our proposed NS Kuparuk Pool Rules. We have also provided a working document (Word version) to answer specific questions regarding geology and reservoir descriptions. We believe these materials are responsive to specific questions raised by the Commissioners during the hearing, and as such, respectfully request AOGCC now close the record and move this matter towards adjudication. Hilcorp's previously submitted confidential reports are requested to remain confidential, or alternatively, be returned to H ilco rp. Hilcorp has also prepared a sundry for the NS -18 well (currently a Kuparuk A producer) to add perfs in the Kuparuk C sands (attached). Under Hilcorp's proposed pool rules, the entire Kuparuk would treated as a single pool, and would thus eliminate commingling. Production would be accounted for under Hilcorp's proposed vertical expansion of the Kuparuk PA (matching base and top of our proposed Kuparuk pool). Spacing would also be governed by the proposed pool rules. Hilcorp would very much like to proceed with the NS -18 pert add during the month of December and requests your consultation regarding procedure, timing and status. Regards, David Duffy, Landman Hilcorp Alaska, LLC Direct: 907-777-8414 Cell: 907-301-2629 dduffv@hilcorp.com This email may contain confidential and / or privileged information and is intended for the recipient(s) only. In the event you receive this message in error, please notify me and delete the message. From: Chris Kanyer Sent: Wednesday, November 30, 2016 2:13 PM To: David Duffy <dduffv@hilcorp.com> Subject: NS -18 AOGCC 10-403 SUBMITTAL 11-28-2016 Please see attached. Chris Kanyer I Reservoir Engineer 11 Ildv. 1, %la.L,,.la.A, ckanyer@hilcorp.com Direct: (907) 777-8377 Mobile: (907) 250-0374 3 I ALASKA OIL AND GAS CONSERVATION COMMISSION 2 3 Before Commissioners: Daniel T. Seamount 4 Hollis French 5 6 In the Matter of Hilcorp Alaska, ) 7 LLC's Application for Pool Rules for ) 8 Northstar Unit, Kuparuk Oil Pool. ) 9 ) 10 Docket No.: CO 16-019 11 12 ALASKA OIL and GAS CONSERVATION COMMISSION 13 Anchorage, Alaska 14 15 November 15, 2016 16 9:00 o'clock a.m. 17 18 19 PUBLIC HEARING 20 21 BEFORE: Dan Seamount, Commissioner 22 Hollis French, Commissioner ON 2 Opening remarks 3 Remarks by Mr. 4 Remarks by Mr. 5 Remarks by Mr. TABLE OF CONTENTS by Commissioner Seamount Duffy Kanyer Yancey 03 09 12 17 1 P R O C E E D I N G S 2 (On record) 3 CHAIR SEAMOUNT: I'd like to call this hearing 4 to order. Today is November 15, 2016, it is 9:03 in 5 the morning. We're with the Alaska -- this is the 6 Alaska Oil and Gas Conservation Commission, we're 7 located at 333 West Seventh Avenue, Anchorage, Alaska. 8 My name is Dan Seamount, I'm one of the Commissioners. 9 To my right is Hollis -- Commissioner Hollis French. 10 And we have two Commissioners here so we have enough -- 11 we have enough Commissioners in order to make a 12 decision. 13 This hearing is in regards to docket number CO 14 16-019, Hilcorp Alaska, LLC, I'll be calling them 15 Hilcorp throughout this hearing, has applied for pool 16 rules for the Northstar field, Northstar Kuparuk oil 17 pool located on the North Slope, Alaska in conformance 18 with 20 AAC 25.520. 19 Computer Matrix, to my left, will be recording 20 the proceedings. You can get a copy of the transcript 21 from Computer Matrix Reporting. 22 I'm looking at the sign -in sheet, it looks to 23 me like there are three people from Hilcorp that would 24 like to testify. Is there anyone else in the room that 25 would like to testify? 26 (No comments) 27 COMMISSIONER SEAMOUNT: Laura doesn't want to 28 testify. Okay. You don't want to talk about the 29 Jurassic? Okay. Okay. I've been distracted, where 30 are we here. Okay. 31 The Commissioners will ask questions during 32 testimony, we may also take a recess to consult with 33 staff to determine whether additional information or 34 clarifying questions are necessary. And I'm almost 35 positive we will take a short recess at least. 36 If a member of the audience has a question that 37 he or she feels should be asked, please submit that 38 question in writing to Jody Colombie or Samantha 39 Carlisle who are sitting in the back. And I hate the 40 term float wave so I'm not going to -- well, I said 41 that, but I shouldn't have said that. But they just 42 waved. If a member of the audience submits that 43 question in writing to Jody or Samantha they will 44 provide the question to the Commissioners, Jody or 45 Samantha will, and if we feel that asking that question 46 will assist us in making our determinations we will ask 47 it. 48 For those testifying please keep in mind that 49 you must speak into the microphone so that those in the 50 audience and the court reporter can hear your 3 I testimony. Also please remember to reference your 2 slides so that someone reading the public record can 3 follow along. For example if your slides are numbered 4 1 through whatever, say the number, if they're not 5 numbered please describe the slide in some way so that 6 it can be identified later. 7 Additionally testimony may not take the form of 8 cross examination. As I said before the Commissioners 9 will be asking the Commission's and again I'd like to 10 repeat that if you have any questions please refer them 11 to Jody or Samantha. 12 Okay. Commissioner French, do you have 13 anything to add? 14 COMMISSIONER FRENCH: No. Thank you. 15 COMMISSIONER SEAMOUNT: Okay. So we have two 16 tables and four chairs so it looks like we have enough 17 room for the three people to testify. Would the 18 testifiers please come forward. 19 Assistant Attorney, do we have to swear 20 everybody in individually or can we do it all at once? 21 MR. BALLANTINE: (Indiscernible - away from 22 microphone)..... 23 COMMISSIONER SEAMOUNT: Okay. Will -- all 24 three, would you please raise your right hand. 25 (Oath administered) 26 MR. DUFFY: I do. 27 MR. YANCEY: I do. 28 MR. KANYER: I do. 29 COMMISSIONER SEAMOUNT: And they all said yes. 30 Who will -- I'm wondering who among you would like to 31 be considered as expert witnesses? Okay. I see two. 32 So who -- the person on the left please state your 33 name, who you represent, what you want to be an expert 34 witness in, what's the subject, what are you 35 qualifications, where you went to school, how much 36 experience you have and then you can proceed with your 37 testimony. 38 Are you guys going to tag team or do it 39 one..... 40 UNIDENTIFIED VOICE: (Indiscernible - away from 41 microphone)..... 42 COMMISSIONER SEAMOUNT: Okay. So both of you 43 guys can do that then. so we'll start with the person 44 on the left. 45 MR. KANYER: Okay. I'm Chris Kanyer, reservoir 46 engineer for -- sorry. I'll start again. I'm Chris 47 Kanyer, I'm a reservoir engineer for Hilcorp. I've 48 been an engineer in practice for five years. I have 49 been in the industry for nine and a half years. My 50 education, I have a bachelor's and master's in E! 1 mathematics and a master's in petroleum engineering. 2 The math degree is from Washington State University, 3 the engineering degree from University of Alaska at 4 Fairbanks. I'm assigned to the Northstar unit as a 5 reservoir engineer and I was going to testify in 6 regards to reservoir engineering data that we present. 7 I've also had experience of presenting the initial pool 8 rules for Ninilchik unit a few years ago. 9 COMMISSIONER SEAMOUNT: Commissioner French, do 10 you have any questions or objections? 11 COMMISSIONER FRENCH: No questions. 12 COMMISSIONER SEAMOUNT: I have no questions or 13 objections. So, Mr. Kanyer, you're considered an 14 expert witness. 15 The person to the right. 16 MR. YANCEY: My name is Daniel Yancey, I'm a 17 geoscientist with Hilcorp Alaska. I've been in the 18 industry 10 years. I worked eight years for BP and the 19 last two for Hilcorp. I went to school at Virginia 20 Tech, I have a bachelor's in geosciences with a minor 21 in mathematics. I have a master's degree in 22 geosciences. I'm also a UAF affiliate faculty member 23 and I've been assigned to the Northstar team. 24 COMMISSIONER SEAMOUNT: Okay. Commissioner 25 Hollis, do you have any questions or objections? 26 COMMISSIONER FRENCH: Mr. Yancey, are you 27 currently working as a reservoir engineer now? 28 MR. YANCEY: Geoscientist. 29 COMMISSIONER FRENCH: Geoscientist. 30 MR. YANCEY: Thank you so much. That's my only 31 question. 32 COMMISSIONER SEAMOUNT: And you would like to 33 be considered an expert witness in geoscience? 34 MR. YANCEY: Yes, sir. 35 COMMISSIONER SEAMOUNT: And when did you go to 36 Virginia Tech? 37 MR. YANCEY: What years? 38 COMMISSIONER SEAMOUNT: Yeah. 39 MR. YANCEY: I finished my bachelor's in '04 40 and my master's in '06. 41 COMMISSIONER SEAMOUNT: Okay. Okay. I have no 42 questions or objections other than that. And so the 43 Commission will consider you an expert witness in 44 geoscience. 45 Who would like to proceed first? 46 MR. DUFFY: I would. 47 COMMISSIONER SEAMOUNT: Okay. And state your 48 name, please. 49 DAVID DUFFY 50 previously sworn, called as a witness on behalf of E 1 Hilcorp Alaska, stated as follows on: 2 DIRECT EXAMINATION 3 MR. DUFFY: Good morning, Commissioners. My 4 name is David Duffy, I'm a land man for Hilcorp Alaska. 5 And to begin with just a bit of housekeeping. 6 The slide deck and materials that we have today are not 7 confidential. So there's no confidentiality issues. 8 On October 3rd of this year Hilcorp submitted 9 its application to establish the pool -- initial pool 10 rules for the Kuparuk reservoir. And -- let's go to 11 the third slide. This is a brief orientation. The 12 North Slope general map is up on the top right and then 13 the Northstar field is detailed in the outside bottom 14 left map. And the -- to begin with and the first 15 orientation is the general area or the affected area 16 that we're looking for for the pool rules. And for 17 these particular or this particular pool, we're asking 18 it to be defined as within the existing unit boundary 19 and specifically the same geographic footprint as the 20 Hooligan PA which is an existing Kuparuk producing area 21 within the unit. 22 A bit of background on the unit itself. It was 23 formed in 1990, it's co -managed by the State and the 24 Federal Bureau of Safety and Environmental Enforcement 25 or BSEE. 26 COMMISSIONER SEAMOUNT: Could you please -- did 27 you identify the last slide? 28 MR. DUFFY: Uh-huh. I..... 29 COMMISSIONER SEAMOUNT: Okay. So..... 30 COMMISSIONER FRENCH: But I have a question 31 just while we're here. 32 MR. DUFFY: Okay. 33 COMMISSIONER FRENCH: As I look at this map in 34 the lower left-hand corner and I'm sorry, slide number 35 3, you got slide number 3, in the lower left-hand 36 corner there's a map with some blues, some greens, some 37 white, which is the Hooligan participating area? 38 MR. DUFFY: It's the cross section area in the 39 center. 40 COMMISSIONER FRENCH: So it's both blue and 41 white, is it bounded by the red? 42 UNIDENTIFIED VOICE: This area, the inside. 43 COMMISSIONER FRENCH: Aw. Okay. So it's got 44 orange..... 45 MR. DUFFY: That's right. Like an orange or 46 yellow cross section. 47 COMMISSIONER FRENCH: Like a crosshatching. I 48 see it. Okay. I can see it now. Thank you. Yep, 49 that was my only question. 50 COMMISSIONER SEAMOUNT: But what..... 0 I MR. DUFFY: And..... 2 COMMISSIONER SEAMOUNT: .....what does the blue 3 represent? 4 MR. DUFFY: The blue represents the overall of 5 the Northstar participating area. 6 COMMISSIONER FRENCH: So that's Northstar and 7 that is Hooligan and underneath..... 8 MR. DUFFY: Right. 9 COMMISSIONER FRENCH: .....Hooligan..... 10 MR. DUFFY: And then..... 11 COMMISSIONER FRENCH: .....to the same 12 footprint will be the proposed pool here? 13 MR. DUFFY: Correct. 14 COMMISSIONER FRENCH: Yeah. 15 MR. DUFFY: And then over to the bottom -- I'm 16 sorry, up to the top right on the map in this -- I can 17 make this work, and in the green area is what's known 18 as the Fido participating area. 19 So overall the unit's comprised of just over 20 20,000 acres. It's a combination of state and federal 21 leases, four state leases, three federal OCS blocks of 22 which 9,800 or so are federal. Of the three 23 participating areas the one in focus today is the 24 Hooligan participating area. And it's comprised of 25 just over 7,600 acres and only 3 percent which are 26 federal. So it's primarily state. 27 And in parallel with Hilcorp's application to 28 establish the Kuparuk pool rules we've also filed an 29 application with the state and with BSEE to do a 30 vertical expansion of the Kuparuk PA. The footprint 31 is..... 32 COMMISSIONER SEAMOUNT: Which slide is this? 33 MR. DUFFY: We're still on the same slide, 34 slide number 4. 35 COMMISSIONER SEAMOUNT: Okay. 36 MR. DUFFY: And so the footprint, the proposed 37 footprint of the PA would not change, it would just be 38 a vertical expansion to include the Kuparuk A and the 39 Kuparuk C sands together. 40 COMMISSIONER FRENCH: Is one of those two sands 41 included now and not the other? 42 MR. DUFFY: Currently just the C sands are 43 included. 44 COMMISSIONER FRENCH: Just the C. So you're 45 expanding it. I get it. Okay. Thank you. 46 CHRIS KANYER 47 previously sworn, called as a witness on behalf of 48 Hilcorp Alaska, stated as follows on: 49 DIRECT EXAMINATION 50 MR. KANYER: So I'll begin. Slide number 5. a 1 Just a overview of..... 2 COMMISSIONER SEAMOUNT: State your name, 3 please. 4 MR. KANYER: What's that? 5 COMMISSIONER SEAMOUNT: State your name, 6 please. 7 MR. KANYER: Oh, Chris Kanyer..... 8 COMMISSIONER SEAMOUNT: Okay. 9 MR. KANYER: ..... Hilcorp. So the field, 10 Northstar field, was discovered in 1983 by the Shell 11 Seal number 1 well. Currently on the island we have 30 12 wells drilled to date including four sidetracks. 13 There's 20 producers, two of which are shut-in today, 14 seven gas injection wells, two disposal wells and one 15 suspended well. Now the majority of those wells are in 16 the Ivishak or the Northstar oil pool or the Northstar 17 PA as described earlier. Cumulative production date is 18 169 million barrels over basically 15 years, we 19 celebrated 15 years last month of production in the 20 field. As you can see the Kuparuk has accumulated 21 roughly 3 million barrels up through September, the 22 Ivishak 166 million barrels. And to further dive into 23 the two shut-in wells we have two wells shut-in for 24 integrity reasons, NS 15 and NS 24. And then we have 25 one suspended well in the field. 26 COMMISSIONER SEAMOUNT: Are those -- are you 27 going to repair those shut-in wells? 28 MR. KANYER: Correct. One of the plans would 29 be to fix NS 15 to produce the Kuparuk in the future. 30 COMMISSIONER SEAMOUNT: Okay. 31 MR. KANYER: NS 24 falls outside of the 32 accumulation for the Kuparuk A so that that well was 33 used to test the Sag formation in 2015 and currently we 34 don't have plans for that in its current location. 35 COMMISSIONER SEAMOUNT: And could you say for 36 the record what the highest initial flow rate was from 37 the Ivishak? 38 MR. KANYER: I don't have that offhand, it's 39 over several thousand barrels a day. 40 COMMISSIONER SEAMOUNT: Okay. That would be a 41 monthly production rate or a..... 42 MR. KANYER: That was -- yes, a monthly 43 production rate, well over thousands of barrels a day. 44 COMMISSIONER SEAMOUNT: Thank you. 45 COMMISSIONER FRENCH: And the disposal -- do 46 you have water injectors or is that what you're calling 47 the disposal wells? 48 MR. KANYER: We have water disposal wells only 49 and they are -- they're disposing in the trigger 50 formation which has no hydrocarbon -- some hydrocarbon E I area. 2 COMMISSIONER FRENCH: So there's no waterflood 3 per se? 4 MR. KANYER: Correct. The Ivishak is a gas 5 injection, reinjection project. That is the main 6 recovery method for it and we're upwards of 60 percent 7 recovery with that EOR project and so all the gas 8 produced on the island is reinjected into the Ivishak 9 today. 10 COMMISSIONER FRENCH: And the crude has no 11 water coming with it when it comes out of the ground? 12 MR. KANYER: It does -- does have water. I'll 13 show on the next slide the correct water rates. 14 COMMISSIONER FRENCH: Okay. 15 MR. KANYER: But that water is disposed of on 16 island through those one of the two..... 17 COMMISSIONER FRENCH: Disposal wells. 18 MR. KANYER: .....disposal wells, one is a 19 backup injector. 20 COMMISSIONER FRENCH: Got it. Thank you. 21 COMMISSIONER SEAMOUNT: And I see 10,000 22 barrels a day if you assume 30,000 or 30 wells, it 23 would be 10,000 barrels a day per well. That ain't bad 24 according to this graph. 25 MR. KANYER: Well, so the initial production 26 was from the Ivishak reservoir. As you can see we 27 started production in October of 2001. You can see the 28 gas reinjection project occurred immediately after all 29 the gas was reinjected minus fuel gas for the facility. 30 And today you can see the decline, this is field 31 monthly production on slide six. And as you can see 32 today our production is somewhere in the 9,000 barrels 33 a day range. 34 COMMISSIONER SEAMOUNT: Oh, is that the green 35 line? 36 MR. KANYER: Correct. 37 COMMISSIONER SEAMOUNT: Oh, okay. 38 MR. KANYER: Our water is..... 39 COMMISSIONER SEAMOUNT: That was my mistake. I 40 was in gas. 41 MR. KANYER: .....our water is the blue line 42 and we're making roughly 18,000 barrels of water a day 43 for reinjection. So we've seen water production 44 increase. There is in the Ivishak reservoir there is a 45 water drive component to it, it's very evident in the 46 Fido prospect, but we're limiting the amount of water 47 production in the main production unit given the 48 reservoir pressure maintenance and gas injection 49 currently. As you can see on this timeline, you can 50 see how the NS 34A was drilled in the Ivishak Fido W 1 participating area, you have the NS 8 Kuparuk C 2 production occurring in August of 2010 and continuing 3 through to today and then recently we've recompleted 4 the NS 18 well into the Kuparuk A sands here in August 5 of 2016. 6 DANIEL YANCEY 7 previously sworn, called as a witness on behalf of 8 Hilcorp Alaska, stated as follows on: 9 DIRECT EXAMINATION 10 I'm Daniel Yancey, we're on slide seven. So 11 just to get us all oriented in terms of the geology 12 picture here, the first picture I want to show you is a 13 very simple map in the upper left-hand corner. And all 14 that's illustrating is warmer colors such as red and 15 yellow are structurally high relative to the blue 16 cooler colors. You can see that the Kuparuk field at 17 Northstar is a faulted anticline, relatively 18 straightforward, but one of the key things that 19 controls some of the hydrocarbon distribution and sand 20 distribution is the faulting which is also highlighted 21 there. 22 At the bottom right, that's just an attribute 23 slice from a 3D seismic data set that we have. And the 24 way we construct all of our maps is integrating all the 25 well data we have with the existing 3D seismic data. 26 And the point of showing that is to highlight some of 27 the map faults that you see in the upper left-hand 28 corner. 29 Some of the other things to take away from kind 30 of the big picture so to speak, the faults in general 31 are trending northwest/southeast. We eventually -- 32 it's off the map that I have here, but you have other 33 fields that this -- these faulting patterns into, I was 34 just trying to set the big picture. 35 Let's go ahead and go to the next slide, we're 36 on slide eight now. A little bit about the 37 stratigraphy. You've heard us mention the Kuparuk C, 38 you've heard us mention the Kuparuk A, these are 39 Cretaceous age sands, present in a lot of areas over 40 the Slope. They're present at KRU, they're present at 41 Milne Point, Point McIntyre, Niakuk and of course here 42 at Northstar. 43 We have proposed from Northstar 15 that the 44 pool rules be defined as listed here with these 45 measured depths with the Kuparuk C being comprised -- 46 get this pointer to work, the top of the C here what 47 you see is a winding upward sequence. In the A sands 48 which you've heard a little bit about are these stacked 49 anywhere from three to five coarsening upward sands. 50 What we're producing from in Northstar 8 right now is 10 1 comprised just of the C and in 18, the last well that 2 Chris mentioned, we're producing from the A sands. 3 Let's go ahead and go to the next slide. This 4 is just a more -- we're on slide nine. This is just a 5 more detailed view of specifically the Kuparuk A sands. 6 And this is a combination of the structure, again 7 integrating seismic and well data, and also net pay for 8 the Kuparuk A. The specific well on this map that we 9 were talking about in terms of current Kuparuk A 10 production is 18 which is right here highlighted. The 11 well that is currently producing from the Kuparuk C is 12 Northstar 8 which is down here. And just for reference 13 this is Northstar Island over here where everything is 14 drilled from. So it kind of becomes obvious that the 15 Ivishak was the main objective and that continues to be 16 the case in -- because, you know, the anticlines are 17 the top of the structure for the Kuparuk, is certainly 18 offset from Northstar Island. 19 COMMISSIONER SEAMOUNT: Now the Ivishak 20 production area is -- is it much larger than what 21 you're showing there? 22 MR. YANCEY: It is. 23 COMMISSIONER SEAMOUNT: Okay. 24 MR. YANCEY: It is, yes. Let's go ahead and go 25 to the next slide. 26 MR. KANYER: Okay. Chris Kanyer again. We're 27 on slide 10. This is an update to the information 28 provided, this is the Northstar 18, Kuparuk 8 29 production to date. I'll walk through this annotated 30 production plot. Initially we tested the Kuparuk Al 31 which we're going to define at that lowest lobe in the 32 NS 15 well. We initially tested that and we shut-in 33 the well for a pressure buildup with down -hole gauges. 34 After that attempt the data quality was very poor and 35 we couldn't get the well to produce fluid, but it was 36 continuing to produce gas at that point. 37 The next annotation here, the Kuparuk Al PVT 38 sample was taken, we perforated a second portion of 39 that -- well, I'll go back to slide 8, we perforated 40 the second lobe from the bottom and we will call this a 41 combination of the Al. We perforated it, the well 42 began to flow in and of itself. Go back to slide 10, 43 and we were able to take a sample of it at that time. 44 Fearing the well would not be able to produce on its 45 own, we added the additional A2 and A3 lobes. Going 46 back to slide 8, we call the X2 lobes A2 and the upper 47 lobe the A3. 48 As you can see we saw production declining, gas 49 declining and about a month after initial production we 50 ran a production log which I'll show here in the next 11 I slide, we ran a down -hole shut-in tool and gauge for a 2 10 day pressure buildup and we returned the well to 3 production and we re -perforated all those same lobes 4 again here in mid October and we're continuing to 5 produce that well. 6 The production log here on 9/11 show here the 7 initial lobes..... 8 COMMISSIONER SEAMOUNT: Mr. Kanyer, excuse me, 9 could you go back to the last slide? I -m having 10 trouble seeing the scales on either the handout or..... 11 MR. KANYER: Sorry. This is a thousand barrels 12 a day..... 13 COMMISSIONER SEAMOUNT: Okay. 14 MR. KANYER: .....so we peaked out roughly 700 15 barrels a day. The well is currently producing 16 somewhere in the 280 barrel a day range. 17 COMMISSIONER SEAMOUNT: And what's the 18 horizontal scale? 19 MR. KANYER: This is days so here's the 15th, 20 here's about a month. So this is about a two and a 21 half month..... 22 COMMISSIONER SEAMOUNT: Okay. 23 MR. KANYER: .....period of time up until the 24 end of October. 25 COMMISSIONER SEAMOUNT: Thank you. 26 MR. KANYER: We have not done anything to the 27 well and we remain relatively flat from this period, we 28 can see that it's declined and flattened out from 29 there. 30 COMMISSIONER SEAMOUNT: And what are the blue 31 curves, is that water? 32 MR. KANYER: The blue curves are water and so 33 that would be 10 barrels. I'll talk about that here in 34 a second. The dots on this are well tests. So we made 35 sure that we did a significant amount of well testing 36 during the initial production phase to ensure that we 37 knew what was going on. The water -- I'll address the 38 water. The water tested out at 2,600 parts per 39 million. Very fresh water. We believe that it's 40 similar to what we see in the Cook Inlet for gas, we 41 see about a barrel to a barrel and a half of water with 42 all the -- per million of gas. And that would be about 43 half a barrel a million for gas. We don't believe that 44 this is the water coming from the sand itself, because 45 it should be much higher in salinity. So relatively 46 water free, you can see tests without water and then 47 tests with water so it kind of -- it's very -- at the 48 limits of testing of any water. The maximum amount of 49 water is probably in the 12 to 15 barrel range out of 50 several hundred barrels of oil. We would call this a 12 1 condensate reservoir and this is very high gravity oil, 2 it's coming in at about 53 API gravity oil at this 3 point. 4 COMMISSIONER SEAMOUNT: Could that water be 5 completion water? 6 MR. KANYER: We don't believe so. There's no 7 indication of water coming except for from when we 8 initially kicked the well off, we saw a very good 9 unload of all the liquid in the immediate time and the 10 liquid was roughly 26,000 parts per million. So it is 11 definitely a different source than our workover 12 fluids. 13 If I move onto the production log we can see -- 14 we saw the decline, we wanted to see how the wells were 15 produced -- how the zones were producing. You can see 16 here on slide 11 the black is gamma ray, the first 17 track, the middle track of the depth track, we see 18 perforations of the zones and on the far track red and 19 blue, we see up and down spinner passes which is the 20 most indicating a flow. As you can see right of -- 21 against the top of the lower liners, it was very 22 difficult to get down. We've been able to get down in 23 the lower liner, but seeing the bottom lobe of the sand 24 and then you can see the second lobe of the sand. We 25 can see the Kuparuk Al is flowing at a very minimal 26 rate here because we should see separation of the red 27 and blue indicating flow. We tested this separately 28 and it was producing up to 350 barrels a day on its own 29 initially. We added the A2 and increased production. 30 We -- what we -- made a well test while -- between runs 31 overnight, we saw a production increase, we also see 32 the spinner separation here indicating some 33 contribution. And then the last lobe, the A3, we can 34 see the most separation, the most production coming 35 from the A3. 36 So we saw this kind of scenario when we did our 37 pressure buildup and this is also an indication of why 38 we re -perforated all the zones. Possibly looking at 39 any kind of possible damage of these zones which may be 40 in part by the fresh water falling back onto the zone. 41 If there's additional, you know, clay, if there's clay 42 content of these is too high we might be swelling those 43 clays if we shut-in the well and water falling back 44 with that very fresh water. 45 To review the Kuparuk A pressure buildup, this 46 10 day buildup, it is a little more difficult. The 47 data quality is a lot better given that we did a down - 48 hole shut-in tool, the summary of this is on slide 12. 49 We do see an interesting buildup of response. Given 50 that there's multiple zones open it makes it a little 13 1 more difficult to analyze the data, but we do believe 2 that given the geology gives it more of a laminated pay 3 affect, we can see that that is affecting the data, but 4 we do see that a bounded model would be best fit for 5 this data giving indication that we have two fault 6 boundaries on -- of this reservoir that we can see 7 during this buildup. And if I flip back to Daniel's 8 map on slide nine, we would say that we could probably 9 see the fault to the north and the south of us that's 10 mapped indicating that we -- we are likely draining an 11 area of part of this structure and not the entire 12 structure. 13 We'll flip forward to slide 13 to discuss the 14 Kuparuk C. 15 MR. YANCEY: This is Daniel Yancey again, we're 16 on slide 13. So everything that Chris had talked about 17 up to this point was specific to the Kuparuk A and the 18 testing that we've done in NS 18. We just wanted, you 19 know, for completeness sake to go through the Kuparuk C 20 and after this Chris is also going to review the 21 results for the Northstar 8 well that's currently 22 producing from the C. 23 The Kuparuk C as you can tell by the map is a 24 larger accumulation and that's due to a couple of 25 things. Number 1, it sits above the Kuparuk A sands 26 which we saw in NS 15, in our well. The other thing 27 that's different about the C than the A is the 28 thickness of the C varies. And that we think is 29 primarily controlled by a lot of the faults that you 30 see so deposition was most likely taking place as these 31 faults were being active. You see pretty significant 32 changes in thicknesses as you move from the crust of 33 the structure essentially almost off in any direction, 34 but especially towards the south and the north. So you 35 end up with a larger volume for the C, but again both 36 the C and the A are still much smaller than the Ivishak 37 in terms of ranking them. 38 And I think the next slide..... 39 COMMISSIONER SEAMOUNT: Mr. Yancey. 40 MR. YANCEY: Yes. 41 COMMISSIONER SEAMOUNT: How do you determine 42 the lateral extent of the reservoir? 43 MR. YANCEY: So it's primarily based off of 44 well control. 45 COMMISSIONER SEAMOUNT: Okay. 46 MR. YANCEY: And we create surfaces from the 47 seismic data that tie our well data. And if the dip 48 goes down to the north like it does here or down to the 49 east or the west, those are the two things that 50 control. 14 1 COMMISSIONER SEAMOUNT: Gotcha. 2 MR. YANCEY: Uh-huh. 3 MR. KANYER: Okay. This is Chris Kanyer again. 4 Moving on to slide 14, this is a pressure buildup that 5 occurred in January of 2006 for the NS 8 well that is 6 solely in the Kuparuk C. We look at the data for this, 7 we actually repeated this data in December of 2015 with 8 the same well, we indicate that there is one boundary 9 affect and then very little boundary -- bounding affect 10 for this well. We use this to improve our knowledge of 11 the map. If we go back to slide 13, the NS 8 well -- 12 yeah, we do see a possible fault boundary to be this 13 here, but very limited boundaries. We can see that 14 based on the thickness of the C sand we see much 15 connectivity across the reservoir. 16 COMMISSIONER FRENCH: Mr. Kanyer, I'm sorry, I 17 don't know what a boundary affect is so you have to 18 walk me through that. 19 MR. KANYER: So in the pressure transient 20 analysis if we see the derivative curve up and like 21 this we can see that basically the well is connected to 22 only a certain size of reservoir. So this indicates 23 within seven, maybe 800 feet away from the well there 24 is a hard boundary sealing of that reservoir. But 25 given the long buildup and the high permeability of 26 this reservoir we don't see any other boundaries for a 27 very long distance in any other direction. So we have 28 basically a one blocked in and a very large open size 29 to us. So given the geology and -- let's looks at 30 slide 13 again, the well is connected to a large arch 31 around us given the thickness and likely there is a 32 boundary to the north/northeast let's say for this 33 well. So that's the importance of the pressure 34 transient analysis on both these is that it gives the 35 ability to see how far the reservoir is connected given 36 a single well. 37 COMMISSIONER FRENCH: Thank you. 38 COMMISSIONER SEAMOUNT: It's always been a 39 mystery to me too. 40 MR. KANYER: Let's move on to some of our 41 proposed rules. This is rule number 3. We're trying 42 to mimic what we see in the Northstar oil pool which is 43 -- governs the Ivishak and the Sag reservoirs. We want 44 to continue to manage this reservoir as much as we do 45 the Ivishak reservoir. So we propose doing our 46 reservoir pressure monitoring exactly the way we do in 47 that pool. 48 Proposed rule number 4 is the gas/oil ratio 49 exemption. Now in the data that we submitted for the 50 pool rules support and the confidential report we 15 1 showed some of the results from our compositional model 2 results. And given the results of that model and 3 different scenarios and given that there are very 4 limited wellbores that we have in -- on the island and 5 the amount of those wells that are dedicated to the 6 ongoing recovery of the Ivishak reservoir, the much 7 larger reservoir, we'd like to propose the exemption of 8 this because any further development of the Kuparuk 9 accelerating or gas reinjection of this reservoir, will 10 exceed the gas/oil ratio rule. And given the fact that 11 we have limited wellbores and we are dedicated to 12 continue the Ivishak EOR project, we only see three, 13 maybe four reservoirs that are available to recover. 14 I'd also go back to what we discussed earlier 15 about the limited drainage area of the Kuparuk A. We 16 have to have more Kuparuk A take points or wells in the 17 reservoir to drain that structure so we need at least 18 two to recover the Kuparuk A reserves and the model 19 scenarios only describe the development of the Kuparuk 20 C. The Kuparuk C is larger than the Kuparuk A, it has 21 the possibility of having inner-well connection and we 22 would continue to study that to ensure that if we do 23 gas reinjection that it would be supporting of 24 individual -- of each other wells. So we would have to 25 look at pressure response between the wells, production 26 impacts between the wells, in order to fully develop 27 how we could produce that. 28 Currently as we -- if we do the do nothing 29 approach and only produce the Kuparuk C, we'll never 30 exceed the gas/oil ratio, but we will not recover as 31 much in the field life, the field life at this point is 32 around 2030. That has been documented by our third 33 party reserve auditors, it's not our internal number. 34 And we'd like to recover the reserves of Kuparuk C, but 35 we would have to dedicate the commingling of each of 36 the wells to fall with these scenarios as well as 37 recover the two part A take points. If we go to 38 Kuparuk A map on slide nine, NS 15 is likely on the 39 south side of this fault and has the possibility of 40 recovering the lower -- the southern section of this 41 reservoir. 42 So our current recovery plans for the Kuparuk A 43 is from the NS 18, NS 15 well and as you can see here, 44 here's the NS 8 well on the fringe of the Kuparuk A. 45 We also propose including the Kuparuk C and both NS 18 46 and NS 15 well so we can drain on slide 13 the Kuparuk 47 C structure and all see inner-well interaction between 48 the three and see if there is the possibility of gas 49 reinjection to improve the recovery of this reservoir. 50 COMMISSIONER FRENCH: Of C? 16 1 MR. KANYER: Of the C. 2 COMMISSIONER FRENCH: And what about A, do you 3 think there will be an EOR project in the A sands? 4 MR. KANYER: Given -- if I move back to slide 5 nine, given the limited wellbore penetrations in the 6 Kuparuk A and the availability of these wells that are 7 currently dedicated to the Ivishak, I see that we 8 likely would have to drain and we probably won't be in 9 connection across these faults given the pressure 10 transient analysis data. The thickness of the sands, 11 the offsetting fault is sealing those from talking to 12 each other so injecting..... 13 COMMISSIONER FRENCH: Is that the boundary 14 affect? 15 MR. KANYER: Yes. Yes. So this -- we saw two 16 boundary affects in the NS 18 well which we would 17 attribute to these two, north -- east/west trending 18 faults. And so if we injected gas as part of an EOR 19 project in the Kuparuk A we weren't -- we're not likely 20 to see any response or enhanced recovery at the NS 18 21 well. 22 COMMISSIONER FRENCH: So, I mean, I guess the 23 short answer's no? 24 MR. KANYER: I would say likely no. If we -- 25 we did inject gas into the Kuparuk A at one of these 26 wells and produce at the other, we probably wouldn't 27 see any added recovery. 28 COMMISSIONER FRENCH: Wouldn't work. Okay. 29 Thank you. 30 MR. KANYER: Moving on to proposed rule five on 31 slide 17. This is the annual reservoir review. We do 32 this currently for the Northstar oil pool or the 33 Ivishak reservoir. We'd like to do exactly the same 34 requirements for that, just mimicking what's in place 35 and providing the same data as we do there. 36 The last rule is the administrative approval 37 rule. We've seen this as a standard way of trying to 38 increase our ability to work with the Commission and 39 also reduce administrative burden on us. We're open to 40 changing this to a more modern version, but we've 41 proposed this in previous pool rules as well. 42 And that concludes our slides unless there's 43 further questions. 44 COMMISSIONER SEAMOUNT: Commissioner French, do 45 you have any questions? 46 COMMISSIONER FRENCH: I'll ask an easy question 47 and I'll let you ask the hard ones. Do you think the 48 two sands are in communication? 49 MR. KANYER: No, I don't believe so. We 50 initially took a -- the pressure in the Kuparuk A sands 17 I in the NS 1S well and NS 8 well as late as June and 2 there is a 700 PSI difference between those two. Also 3 we do not see any production impact currently with the 4 NS 8 well since we brought on the NS 18 well. So the 5 Kuparuk A production has come on at a higher pressure 6 and the NS 8 well is continuing to flow given its 7 reservoir pressure being a different pressure. So the 8 reservoir pressures being different and then no inner - 9 well interactions proves that the -- at least those two 10 wells and those two sands -- sets of sands do not 11 communicate. 12 COMMISSIONER FRENCH: So we're going to call 13 them a pool, but it's not really a pool? 14 MR. KANYER: I'd say that they are -- they are 15 commingled everywhere else on the Slope, they come from 16 the same source, they are a similar type of condensate 17 or volatile oil in some cases in the Kuparuk A as you 18 see in the confidential report. They're going to be 19 produced similarly, it's just the geology is making it 20 so that one is much more connected than the other. One 21 will take more wells than the other. 22 COMMISSIONER FRENCH: Thank you. 23 MR. KANYER: Yeah. 24 COMMISSIONER SEAMOUNT: Well, Commissioner 25 French, you stole my question. So none of these faults 26 provide for communication between the two reservoir or 27 might you find out in the future that they do? 28 MR. KANYER: We haven't -- we haven't seen any 29 to date. We -- since the Kuparuk C has been on 30 production since 2010 we have a very long history of 31 production and pressure data on that well, we would see 32 that the Kuparuk A would have been lower pressure and 33 drained at this point and the NS 18 well given six 34 years of production from the C. So I believe that 35 these two wells are not likely to be in communication. 36 And these sands are not in communication between these 37 two areas. 38 COMMISSIONER SEAMOUNT: What have you been 39 doing with the produced gas and what are you plans? 40 MR. KANYER: Currently produced gas is all 41 being used for fuel and reinjection in the Ivishak. In 42 the past a previous operator used to import gas for the 43 Ivishak EOR project, we're currently maintaining 44 reservoir pressure with the makeup gas from the Kuparuk 45 at this point. Any future gas, we haven't seen any ill 46 effects from the amount of gas we're injecting. We 47 continue to monitor that heavily, we have the same 48 pressure monitoring requirements as we're proposing 49 here that we would see a pressure response. If we get 50 to a scenario where we have too much gas we would IU 1 likely switch one of these in future wells into a gas 2 injector into the Kuparuk C. We don't know where that 3 best location is. We have a compositional model, we do 4 not have a good geological fit model because we don't 5 have any inner -well reaction yet to try to match the 6 geo model. So that is the goals going forward that we 7 would see inner -well interaction, watch pressure as it 8 -- each reservoir's depleted and try to fit a 9 geological model to this data and reinject any excess 10 gas that we're producing from the Kuparuk in an 11 appropriate location, but still the main goal is to 12 maintain the Ivishak EOR project given its size and our 13 desire to continue that. 14 COMMISSIONER SEAMOUNT: So it's too early to 15 plan any kind of EOR project other than gas or 16 reinjection; is that correct? 17 MR. KANYER: Yeah, we have the capacity on the 18 island to do the reinjection, the gas would have to 19 come from these reservoirs for reinjection since we 20 don't have the outside source to give to ourselves. 21 But I believe that it would be more prudent to watch 22 inner -well interaction first and then act on a gas 23 reinjection given we want to have the more ideal place 24 to put gas instead of just one of our three available 25 wells, at least choose the best of those wells. 26 COMMISSIONER SEAMOUNT: Okay. In your initial 27 application you had a section that was labeled 28 confidential. And it looks some of the confidential 29 information you've showed today so it's no longer 30 confidential I assume. Do you know why there's still a 31 lot of confidential information in the original 32 application that you don't want to show today? 33 MR. KANYER: Yeah, I can answer that. We did 34 crop some of our seismic pictures, we did not allude to 35 some of the other data that might be used for 36 exploration activities on the Slope that we feel are 37 key to our understanding of this reservoir. We did 38 provide some of the data for public, but again we want 39 to make sure that the Commission had enough information 40 to make the decision, but also protect our ability to 41 find future oil and gas. 42 COMMISSIONER SEAMOUNT: Okay. So in other 43 words some of this stuff that's in the confidential 44 section you're going to apply to other areas of the 45 North Slope that have not been leased; is that correct? 46 MR. KANYER: Yes, that's a..... 47 COMMISSIONER SEAMOUNT: Okay. 48 MR. KANYER: .....possibility. 49 COMISSIONER SEAMOUNT: At this point I think, 50 unless you have any other questions, we'll take a 15 19 1 minute recess and we'll talk it over with our more 2 intelligent than us two Commissioners and see if 3 there's anything we've missed. And we probably have. 4 So 15 minute break, we'll return at -- 5 hopefully at 10:10. 6 (Off record) 7 (On record) 8 COMMISSIONER SEAMOUNT: Okay. We went off the 9 record at 9:55, it is now 10:12. 10 Normally what we do at the Commission is we 11 have staff here and the applicant will get together 12 with the staff and make sure we have enough 13 information, technical information to make a decision. 14 It doesn't appear that this happened in this case and 15 there is a lot of technical information that we still 16 need for the public to see so that we can make a 17 decision. So that we don't have to spend the rest of 18 the day going through this technical information what 19 we would like to see is for the technical staff at 20 Hilcorp get together with out technical staff who will 21 have a list of questions and that you guys can mull 22 over and decide just what we need to make a decision. 23 If it truly is confidential we need to have in writing 24 why it is confidential and why it should not go out to 25 the public. And we need those reasons in writing. 26 What we're thinking is let's have it all done 27 by December 15th so that we can get this done. And I 28 do recommend that you look at the Northstar pool rules 29 for the Ivishak and see what kind of information we 30 used and was needed to make a decision there. 31 Does that sound acceptable to you guys? 32 MR. KANYER: Yes. 33 COMMISSIONER SEAMOUNT: Okay. Are there any 34 other comments? 35 (No comments) 36 COMMISSIONER SEAMOUNT: Okay. Well, we'll heax 37 back from you by December 15th. And what is it, this 38 hearing's in recess then? 39 COMMISSIONER FRENCH: I think we're adjourned 40 for now, but we can recess if you like. 41 COMMISSIONER SEAMOUNT: We'll recess until..... 42 COMMISSIONER FRENCH: What's our lawyer say, 43 recess or adjourn? The record stays..... 44 COMMISSIONER SEAMOUNT: The record stays..... 45 COMMISSIONER FRENCH: .....hearing is 46 adjourned, the record's open. 47 COMMISSIONER SEAMOUNT: Hearing is adjourned. 48 Thank you very much. 49 (Adjourned) 50 (END OF PROCEEDINGS) 20 1 2 3 4 5 6 7 8 9 10 11 12 13 C E R T I F I C A T E I, Salena A. Hile, Notary Public in and for the state of Alaska and reporter for Computer Matrix Court Reporters, LLC, do hereby certify: THAT the foregoing pages numbered 02 through 39 contain a full, true and correct Transcript of the hearing in Docket No.: CO 16-019 transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. DATE SALENA A. HILE, (Transcriber) 21 STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WHH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER AO-17-009 —009 FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O. 10/05/16 AGENCY PHONE: (907) 279-1433 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907)276-7542 TO PUBLISHER: Alaska Dis atch News SPECIAL INSTRUCTIONS: PO Box 149001 Anchorage, Alaska 99514 TYPE OF ADVERTISEMENT V LEGAL DISPLAY CLASSIFIED OTHER (Specify belovl DESCRIPTION PRICE CO-16-019 Initials of whorepared AO: Alaska Non -Taxable 92-600185 :sit ,Wif*VO lot s.A.OWN G:AOvta:r 11VG- ':;:q_Y,DQµpYV.;CERTIPI�F>,AFF[DAYSIIQF:: ;:gUeiidaYYON iNtitl:ATTkii+eo CtipYQP: .;:A44,ERTISMENT:TO; '' Department of Administration Division Of AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae 1 of 1 Total oIS All Pa REF Type Numher Amount Date Comments l PVN ADN89311 2 AO AO-17-009 3 4 FIN AMOUNT SY Anne Unit 1PGM LGR Oblect FY DIST IJQ t 17 021147717 3046 17 2 3 4 5 Purchasing Authority Name: Title: Purchasing Authority's signature Telephone Number 1. 0. # d r a ency name ust appear on all invoices and documents relating to this purchase. 2. a stat s d ax fr sections under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the resale, exclusive use of the state and not for ©rvrsro tacalfOrlgrnal,$© �: Caples Patilisher (fazedj, DlviBtoin Fiscal Recelvlrig Form: 02-901 Revised: 10/5/2016 2 Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Docket No. CO -16-019. Hilcorp Alaska, LLC (Hilcorp) has applied for Pool Rules for the Northstar Field, Northstar Kuparuk Oil Pool located on the North Slope, Alaska in conformance with 20 AAC 25.520. The non -confidential portions of Hilcorp's application may be reviewed at the offices of the Commission, 333 West 7th Avenue, Anchorage, Alaska, or a copy of the non -confidential portions may be obtained by phoning the Commission at (907) 793-1221. The Commission has scheduled a public hearing on this application for November 15, 2016 at 9:00 a.m. at the Alaska Oil and Gas Conservation Commission, at 333 West 7`h Avenue, Anchorage, Alaska 99501. In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas Conservation Commission, at 333 West 7 1 Avenue, Suite 100, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the November 15, 2016 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the Commission's S ecial Assistant, Jody Colombie, at 793-1221, no later than November 5, 2016. „ p Daniel T. Seamount, Jr. Commissioner 270227 0001393967 $149.42 STATE OF ALASKA RECEIVED OCT 11 2016 AFFIDAVIT OF PUBLICATION THIRD JUDICIAL DISTRICT Emma Dunlap being first duly sworn on oath deposes and says that he/she is a representative of the Alaska Dispatch 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 October 06, 2016 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. Subscribed and sworn to before me this 6th day of October, 2016 Notary Public in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIR S AOGCC Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re: Docket No. CO -16-019. HilcorpAlaska, LLC (Hilcorp) has applied for Pool Rules for the Northstar Field, Northstar KUDparuk Oil Pool located on the North Slope, Alaska in conformance witfl 20 AAC 25.520, The non -confidential portions of Hilcor,.'s application may be reviewed at the offices of the Commission 333 West 7th Avenue, Anchor C%, Alaska, or a copy of the non -confidential portions may be obtained by phoning the Commission at (907) 793-1221. The Commission has scheduled a public hearing on this application for November 15, 2016 at 9:00 a.m. at the Alaska II and Gas Conservation commission, at 333 west 7th Avenue, Anchorage, Alaska 99501. In addition, written comments regarding this application may be submitted to the Alaska Oil and Gas conservation Commission, at 333 West 7th Avenue Suite 100, Anchorage, Alaska 99501. comments must be received no later than the concfrusion of the November 15, 2016 hearing. K, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the Commissions Special Assistant, Jody Colombia, at 793-1221, no later than November 5, 2016. //signature on file// Daniell. Seamount, Jr. Commissioner Published: October 6, 2016 Notay �ubiic SRITNLYL. THOMPSON State of Alas;,,, "'commission Expires Feb 23, 2019,, Jack Hakkila Bennie Karl P.O. Box 190083 K&K Recycling Inc. Anchorage, AK 99519 P.O. Box 58055 Fairbanks, AK 99711 Penny Vadla George Vaught, Jr. 399 W. Riverview Ave. P.O. Box 13557 Soldotna, AK 99669-7714 Denver, CO 80201-3557 Chris Kanyer Richard Wagner Reservoir Engineer P.O. Box 60868 Hilcorp Alaska, LLC Fairbanks, AK 99706 3800 Centerpoint Dr., Ste. 1400 Anchorage, AK 99503 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Colombie, Jody J (DOA) From: Colombie, Jody 1 (DOA) Sent: Wednesday, October 05, 2016 2:07 PM To: Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Bixby, Brian D (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Cook, Guy D (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Foerster, Catherine P (DOA); French, Hollis (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Herrera, Matthew F (DOA); Hill, Johnnie W (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Link, Liz M (DOA); Loepp, Victoria T (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Quick, Michael 1 (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Wallace, Chris D (DOA); AK, GWO Projects Well Integrity; AKDCWelllntegrityCoordinator; Alan Bailey, Alex Demarban; Alexander Bridge; Allen Huckabay; Andrew VanderJack; Ann Danielson; Anna Raff; Barbara F Fullmer; bbritch; bbohrer@ap.org; Bill Bredar; Bob Shavelson; Brian Havelock; Bruce Webb; Caleb Conrad; Candi English; Cocklan-Vendl, Mary E; Colleen Miller, Crandall, Krissell; D Lawrence; Dale Hoffman; Dave Harbour; David Boelens; David Duffy, David House; David McCaleb; David Tetta; ddonkel@cfl.rr.com; DNROG Units (DNR sponsored); Donna Ambruz; Ed Jones; Elizabeth Harball; Elowe, Kristin; Evan Osborne; Evans, John R (LDZX); Gary Oskolkosf, George Pollock; Gordon Pospisil; Greeley, Destin M (DOR); Gregg Nady; Gretchen Stoddard; gspfoff; Hyun, James J (DNR); Jacki Rose; Jdarlington (arlington@gmail.com); Jeanne McPherren; Jerry Hodgden; Jerry McCutcheon; Jim Watt; Jim White; Joe Lastufka; Radio Kenai; Burdick, John D (DNR); Easton, John R (DNR); Jon Goltz; Juanita Lovett; Judy Stanek, Julie Little; Kari Moriarty, Kasper Kowalewski; Kazeem Adegbola; Keith Torrance; Keith Wiles; Kelly Sperback; Kruse, Rebecca D (DNR); Gregersen, Laura S (DNR); Leslie Smith; Lori Nelson; Louisiana Cutler, Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Kremer, Marguerite C (DNR); Mealear Tauch; Michael Bill; Michael Calkins; Michael Moora; MJ Loveland; mkm7200; Munisteri, Islin W M (DNR); knelson@petroleumnews.com; Nichole Saunders; Nikki Martin; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Delbridge, Rena E (LAS); Renan Yanish; Richard Cool; Robert Brelsford; Ryan Tunseth; Sara Leverette; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Sharon Yarawsky; Shellenbaum, Diane P (DNR); Skutca, Joseph E (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Stephanie Klemmer; Stephen Hennigan; Sternicki, Oliver R; Moothart, Steve R (DNR); Steve Quinn; Suzanne Gibson; sheffield@aoga.org; Ted Kramer, Davidson, Temple (DNR); Teresa Imm; Thor Cutler; Tim Jones; Tim Mayers; Todd Durkee; trmjrl; Tyler Senden; Umekwe, Maduabuchi P (DNR); Vinnie Catalano; Weston Nash; Whitney Pettus; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Assmann, Aaron A; Bajsarowicz, Caroline J; Brian Gross; Bruce Williams; Bruno, Jeff 1 (DNR); Casey Sullivan; Catie Quinn; Don Shaw, Eric Lidji; Garrett Haag; Smith, Graham O (DNR); Dickenson, Hak K (DNR); Heusser, Heather A (DNR); Holly Pearen; Jamie M. Long; Jason Bergerson; Jim Magill; Joe Longo; John Martineck, Josh Kindred; Laney Vazquez, Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Franger, James M (DNR); Morgan, Kirk A (DNR); Umekwe, Maduabuchi P (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); Tostevin, Breck C (LAW); Wayne Wooster; William Van Dyke Subject: Northstar Kuparuk Pool Rules Public Notice.docx Attachments: Northstar Kuparuk Pool Rules Public Notice.pdf Please see attached Re: Docket No. CO -16-019. Hilcorp Alaska, LLC (Hilcorp) has applied for Pool Rules for the Northstar Field, Northstar Kuparuk Oil Pool located on the North Slope, Alaska in conformance with 20 AAC 25.520. 1 Hilcorp Alaska, LLC October 3, 2016 Cathy Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501 RE: Northstar Unit/Field Kuparuk Pool Rules Application Dear Commissioner Foerster, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Chris Kanyer, Reservoir Engineer Email: ckannr@hilcory.com Phone: 907/777-8377 OCT 0 3 2016 AlOGG� Hilcorp Alaska, LLC ("Hilcorp"), as the sole Working Interest Owner and Operator of the Northstar Unit/Field, herein requests the Alaska Oil and Gas Conservation Commission ("AOGCC") take action to establish initial pool rules for the proposed Northstar Kuparuk Oil Pool. The Northstar Field is comprised of five federal leases and two federal state leases, together encompassing approximately 20,134 unitized acres. The Unit is jointly managed by the State of Alaska Department of Natural Resources ("DNR") and the federal Bureau of Safety and Environmental Enforcement (`BSSEE"). Copies of the current Northstar Unit exhibits are attached hereto. The affected area of the proposed Northstar Kuparuk Oil Pool falls entirely within the Northstar Unit and precisely matches the legal boundary of the recently established 7,656 acre Hooligan Participating Area (Hooligan PA exhibits also attached). The Northstar Field currently consists of 30 wells, of which 28 are currently online and two are shut-in. Hilcorp is currently producing one unit well (NS -08) from the Kuparuk C sands. Hilcorp is currently producing one unit well (NS -18) from the Kuparuk A sands. During 2016-2017, Hilcorp anticipates performing of approximately two Kuparuk recompletions or workovers. Going forward, Hilcorp anticipates continued focus on additional Kuparuk development in parallel with existing Ivishak enhanced oil recovery ("EOR") project. The proposed order is designed to prevent economic and physical waste and improve the ultimate recovery of remaining hydrocarbons. By eliminating gas -oil ratio rules, Hilcorp will be able to maximize recovery from the Kuparuk reservoir, while allowing for continued production from established Ivishak EOR project and NS -08 Kuparuk development well. Hilcorp Alaska, LLC Proposed Rules for the Kuparuk Oil Pool at Northstar Page 2 of 8 Proposed Rule 1: Pool Rules Area These rules apply to the combined area of the Northstar Unit boundary, and more particularly the Hooligan Participating Area, located offshore from a man-made island located in the Beaufort Sea, 12 miles northwest of Prudhoe Bay and 6 miles offshore on the North Slope, Alaska. Proposed Rule 2: Pool Definition: The Northstar Unit Kuparuk Oil Pool is defined as hydrocarbon bearing intervals common to and correlating with the interval between the measured depths ("MD') of 12,156' and 12,446' in the Northstar Unit NS -15 well. Proposed Rule 3: Reservoir Pressure Monitoring a) Prior to placing each well on regular production or injection, an initial pressure survey must be obtained. b) Bottom -hole pressure surveys must be acquired in at least one-half the active wells each year. Bottom -hole surveys in paragraph (a) may fulfill the minimum requirement. C) The reservoir pressure datum will be -9,000 feet SSTVD. d) Pressure surveys may be stabilized static pressure measurements at bottom -hole or extrapolated from surface (single phase fluid conditions), pressure fall-off, pressure buildup, multi -rate tests, drill stem tests, and open -hole formation tests. e) Data and results from all relevant reservoir pressure surveys must be reported quarterly on Form 10-412, Reservoir Pressure Report. All data necessary for analysis of each survey need not be submitted with the Form 10-412, but must be available to the Commission upon request. f) Results and data from special reservoir pressure monitoring tests or surveys must also be submitted in accordance with paragraph (e) of this rule. Proposed Rule 4: Gas -Oil Ratio Exemption Wells producing from the Kuparuk Oil Pool are exempt from the GOR limits of 20 AAC 25.240(a). Hilcorp Alaska, LLC Proposed Rules for the Kuparuk Oil Pool at Northstar Page 3 of 8 Proposed Rule 5: Annual Reservoir Review The first operations and reservoir performance report will be due April 1, 2017, and annually thereafter, for the previous calendar year. The report shall include, but is not limited to, the following: a) Progress of enhanced recovery project implementation and reservoir management summary including results of reservoir simulation techniques. b) Voidage balance by month of produced fluids and injected fluids and cumulative status for each producing interval. C) Summary and analysis of reservoir pressure surveys within the pool. d) Results and, where appropriate, analysis of production and injection log surveys, tracer surveys, observation well surveys, and any other special monitoring. e) Review of pool production allocation factors and issues over the prior year. f) Future development plans. g) Review of Annual Plan of Operations and Development. Proposed Rule 6: Administrative Approval The Commission may administratively waive the requirements of any rule stated above or administratively amend any rule as long as the change does not promote waste or jeopardize correlative rights, is based upon sound engineering and geoscience principles, and will not result in an increased risk of fluid movement into freshwater. CONCLUSION Hilcorp's proposed rules are designed to prevent waste, protect correlative rights and improve the ultimate recovery of remaining hydrocarbons throughout the Northstar Field. They are also designed to reduce the administrative burdens on both Hilcorp and AOGCC staff, while complementing existing production reporting and ownership issues associated with the Hooligan Participating Area. Hilcorp would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at 777-8377. Hilcorp Alaska, LLC Proposed Rules for the Kuparuk Oil Pool at Northstar Page 4 of 8 Sincerely, t1_1 I Chris K�Reservoir, Engineer Hilcorp Alaska, LLC Non -Confidential Enclosures: • Northstar Unit Exhibit map • Northstar Hooligan Participating Area Exhibits Confidential Enclosures: • Geologic Report re Kuparuk Pool Rules for the Northstar Unit • Reservoir Report re Kuparuk Pool Rules for the Northstar Unit CC: • DNR (temple.davidson@alaska. ov; becky.krusegalaska.gov) • BSEE (kevin.pendergast bsee.gov) • BOEM (david.johnston&boem�) Hilcorp Alaska, LLC Proposed Rules for the Kuparuk Oil Pool at Northstar Page 5 of 8 ENCLOSURE: Northstar Unit and Participating Area Map ---- NGRTHSTAR UNff AND PARTICIPATING AREA Nennfm�unn NbeMabe lease 8oun0ery apt]tmlf NovMyla�LNyB Nump[e (]) Nodbsisr Und tmd Namoar Np W.,%NW,A pMm N 01.n P.I t..1111 Are. fea f*am[mugAna p 6ppp Ipppp i5ppp I -- --! fqR v Nor star Unit Exhibit 8 and D Hilcorp Alaska, LLC Proposed Rules for the Kuparuk Oil Pool at Northstar Page 6 of 8 ENCLOSURE: Northstar Hooligan Participating Area Exhibits EEHIB?C Hooligan Pattcigatitq Area (NHPA) tpRMafM VNi KREEMEM EXcrM UreenDerl. 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