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Home My WebLink AboutCO 794Conservation Order 794 Beluga River Unit 223-24 1. September 13, 2021 Application for Spacing Exception for (BRU) 223-24 2. September 14, 2021 Notice of Public Hearing, affidavit, email list 3. October 4, 2021 Emails between Hilcorp and AOGCC ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC for a spacing exception to drill, complete, test, and produce the proposed Beluga River Unit 223-24 well in the Beluga River Undefined Gas Pool and the Beluga River Tyonek Undefined Gas Pool within the Beluga River Field. ) ) ) ) ) ) ) ) Docket Number: CO-21-015 Conservation Order 794 Beluga River Unit 223-24 Exploratory Gas Well Kenai Peninsula Borough, Alaska October 22, 2021 IT APPEARING THAT: 1. By letter dated September 13, 2021, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order for an exception to the spacing requirements of 20 AAC 25.055 to drill, complete, test, and produce the proposed Beluga River Unit 223-24 well (BRU 223-24) in the Beluga River Undefined Gas Pool and the Beluga River Tyonek Undefined Gas Pool in the Beluga River Field within 1,500 feet of a property line where the owners and landowners are not the same on both sides of the line, where more than one well will be drilled to and completed in the same pool in the same governmental section, and where a well will be drilled or completed closer than 3,000 feet to any well drilling to or capable of producing from the same pool, pursuant to 20 AAC 25.055(d). 2. Pursuant to 20 AAC 25.540, the AOGCC tentatively scheduled a public hearing for October 20, 2021. On September 14, 2021, the AOGCC published notice of the opportunity for that hearing on the State of Alaska’s Online Public Notice website and on the AOGCC’s website, electronically transmitted the notice to all persons on the AOGCC’s email distribution list and mailed printed copies of the notice to all persons on the AOGCC’s mailing distribution list. On September 15, 2021, the AOGCC published the notice in the Anchorage Daily News. 3. Hilcorp sent, by certified mail, notice of the application to all owners, landowners, and operators of all properties within 3,000 feet of the BRU 223-24 well and provided the notice, addresses to which the notices were delivered, and certified mail receipts to AOGCC. 4. No comments or objections were received by the AOGCC. 5. No request for a public hearing was received. The tentatively scheduled public hearing was vacated on October 13, 2021. 6. Hilcorp’s application provides sufficient information upon which to make an informed decision on its request. PURPOSE AND NEED FOR THIS ORDER: Well spacing regulations protect the oil and gas rights of adjacent landowners and maximize resource recovery by establishing default limits on how close, under the land's surface, oil and gas wells can be to each other and to property lines where ownership changes hands. These limits are set forth in a regulation, 20 AAC 25.055. Operators must abide by the default well spacing limits (referred to as statewide spacing requirements) unless they apply for, and obtain, an exception to those limits. Although exceptions to the default well spacing requirements are not unusual, AOGCC carefully evaluates each application, and typically grants them only when actual geologic conditions demonstrate that the proposed subsurface location of a well is necessary to reach otherwise unreachable oil or gas and that both the rights of adjacent landowners and underground CO 794 October 22, 2021 Page 2 of 3 drinking water can be protected. As a general matter, AOGCC does not have extensive authority over surface impacts such as noise, emissions, or construction. FINDINGS: 1. Hilcorp is the operator for the proposed onshore BRU 223-24 well located within the Kenai Peninsula Borough, Alaska. This well will be directionally drilled toward the southeast from a surface location in Section 23, T13N, R10W, Seward Meridian (S.M.). Surface Location: 2050’ FNL, 35’ FWL, Section 23, T13N, R10W, S.M. Bottom-hole Location: 1740’ FSL, 2016’ FWL, Section 24, T13N, R10W, S.M. 2. BRU 223-24 will lie within Alaska State Lease ADL021128. Hilcorp is the designated operator for that lease. ADL021128 is vertically segmented. According to Hilcorp’s application, lands above the depth of 7,000 feet MD (measured depth) in reference well BRU 224-13 (herein termed the “property line,” which according to Hilcorp is equivalent to about 6,984 feet true vertical depth, or TVD, in BRU 223-24) are designated as Segment 1, and they are jointly owned by Chugach Electric Association, Inc. (CEA) and Hilcorp; lands below that property line are designated as Segment A and owned entirely by CEA. 3. Pool Rules have not been established for Beluga River Field. 4. BRU 223-24 targets unproven gas reserves that cannot be reached by conforming to applicable statewide spacing regulations because of the discontinuous and lenticular nature of the reservoir sands and their most prospective locations on the subsurface structure. 5. All past production from Beluga River Field has been from gas reservoirs within the Tertiary- aged Sterling and Beluga Formations (listed in descending stratigraphic order). This production has been assigned to the Beluga River Undefined Gas Pool (Undefined Gas Pool). 6. As planned, Hilcorp’s BRU 223-24 well will delineate possible untapped reservoirs within the underlying Tyonek Formation. Delineation wells are classified as exploratory wells 7. Regular monthly production is public information. Regular production from Tyonek reservoirs will be assigned to a new pool named the Beluga River Undefined Tyonek Gas Pool (Undefined Tyonek Gas Pool). Regular production from reservoirs in the Sterling and Beluga Formations will be assigned to the existing Undefined Gas Pool. Commingling (mixing) of production from two or more pools within the same wellbore is prohibited without separate AOGCC approval. 8. Ownership changes across the property line separating vertical Segment 1 of lease ADL021128 from underlying vertical Segment A of that same lease. A spacing exception is necessary to open prospective reservoirs in BRU 223-24 within 1,500 vertical feet of that property line (i.e., between 5,484 and 8,484 feet TVD). 9. BRU 223-24 conforms to statewide well spacing requirements for Tyonek reservoirs that lie deeper than 8,484 feet TVD. Those reservoirs may be drilled, tested, completed, and produced without a spacing exception. 10. If Tyonek reservoirs that lie deeper than 8,484 feet TVD do not contain commercial quantities of gas, Hilcorp plans to move up-hole and test additional, shallower, prospective Tyonek, Beluga and Sterling reservoirs. 11. A spacing exception is required to complete, test, and produce reservoirs shallower than 8,484 feet TVD that violate the 1,500-foot setback requirement of 20 AAC 25.055(a)(2). 12. A spacing exception is required to complete, test, and produce reservoirs in the Beluga and Sterling Formations because BRU 223-24 will be the fourth well open to the same Undefined Gas Pool in governmental Section 24, and it will be the fifth well within 3,000 feet of a well producing, or capable of producing, from the same pool. CO 794 October 22, 2021 Page 3 of 3 13. If operated as required, drilling, testing, completion, and regular production of BRU 223-24 will not cause waste or result in an increased risk of fluid movement into freshwater. CONCLUSIONS: 1. An exception to the well spacing provisions of 20 AAC 25.055 is necessary to allow drilling, testing, completion, and regular production of the Beluga River Undefined Gas Pool and the Beluga River Undefined Tyonek Gas Pool in the BRU 223-24 delineation gas well in order to maximize ultimate resource recovery. 2. Granting an exception to the well spacing provisions of 20 AAC 25.055 for BRU 223-24 will not result in 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. NOW THEREFORE IT IS ORDERED: The AOGCC grants Hilcorp’s September 13, 2021, application for an exception to the well spacing provisions of 20 AAC 25.055 to allow drilling, testing, completion, and regular production of the BRU 223-24 delineation gas well within the Beluga River Undefined Gas Pool and the Beluga River Undefined Tyonek Gas Pool. Hilcorp may proceed and must comply with all applicable laws and all other legal requirements. DONE at Anchorage, Alaska and dated October 22, 2021. Jeremy M. Price Daniel T. Seamount, Jr. Jessie L. Chmielowski Chair, Commissioner Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the 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. Dan Seamount Digitally signed by Dan Seamount Date: 2021.10.22 15:06:19 -08'00' Jeremy Price Digitally signed by Jeremy Price Date: 2021.10.22 15:36:08 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2021.10.22 17:37:42 -08'00' From:Carlisle, Samantha J (CED) To:AOGCC_Public_Notices Subject:Conservation Order 794 (Hilcorp, Beluga River Unit) Date:Friday, October 22, 2021 8:46:00 PM Attachments:co794.pdf THE APPLICATION OF Hilcorp Alaska, LLC for a spacing exception to drill, complete, test, and produce the proposed Beluga River Unit 223-24 well in the Beluga River Undefined Gas Pool and the Beluga River Tyonek Undefined Gas Pool within the Beluga River Field. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 INDEXES 1 Davies, Stephen F (CED) From:Cody Terrell <cterrell@hilcorp.com> Sent:Monday, October 4, 2021 4:23 PM To:Davies, Stephen F (CED) Subject:RE: [EXTERNAL] RE: BRU 223-24 Well - Hilcorp Operator at ALL DEPTHS Hi Steve, Per our phone call today, I am reaching out to get some clarification on the status of the PTD for our proposed BRU 223-24 Well and potential spacing issues. In our PTD application we proposed drilling the BRU 223-24 Well with proposed perforations in the deep Tyonek zones below 8,486’ TVD. The proposed perforations are at least 1,500’ below where the property line changes ownership. My understanding is that the proposed PTD for BRU 223-24 does not require a spacing exception. There are no other wells within 3,000’ of BRU 223-24 and no other wells in the same governmental section that are open to or capable of production from the Undefined Tyonek (this is the first well perforating and testing in the Undefined Tyonek). The proposed perforations in our PTD application are not within 1,500’ of a property line where the owners are not the same on both sides. Therefore, I believe we do not need a spacing exception to drill BRU 223-24 targeting the Tyonek zones 8,486’ TVD and below. The spacing exception application I submitted was done so in anticipation to move up hole and test and perf, if needed, within 1,500’ of a property line where owners and landowners are different, and where there are more than one well in a section and within 3000’ of another well open to or capable of production from the Undefined Sterling/Beluga. This was simply done to plan ahead in case the deeper Tyonek zones prove unsuccessful. Our plan is to come back after this spacing exception was approved and permit for perforations up hole if the sands below 8,486’ TVD prove unsuccessful. Can you please talk with the other staff members and let me know if I am missing something? And if we are being denied a permit to drill due to a spacing issue(s), can you please explain what the spacing issue(s) is? I just want to make sure I understand fully what’s going on. I appreciate your time on this Steve. Please let me know if you have any questions I am happy to assist. Regards, Cody T. Terrell Landman Hilcorp Alaska, LLC Direct: 907-777-8432 Cell: 713-870-4532 From: Davies, Stephen F (CED) <steve.davies@alaska.gov> Sent: Wednesday, September 15, 2021 4:35 PM To: Cody Terrell <cterrell@hilcorp.com> Subject: [EXTERNAL] RE: BRU 223‐24 Well ‐ Hilcorp Operator at ALL DEPTHS Thank you Cody. I’ll let you know if I need any additional information. Thanks again and stay safe, 2 Steve Davies 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.davies@alaska.gov. From: Cody Terrell <cterrell@hilcorp.com> Sent: Monday, September 13, 2021 3:31 PM To: Davies, Stephen F (CED) <steve.davies@alaska.gov> Subject: BRU 223‐24 Well ‐ Hilcorp Operator at ALL DEPTHS Steve, See the attached Designation of Operator forms for both BLM and AOGCC. These designate Hilcorp as operator of the Beluga River Unit, in accordance with the Beluga River Unit Agreement. I also attached the Exhibit B of the Beluga River Unit Agreement showing that ALL depths are included in the Beluga River Unit. Please let me know if this is all you need in regards to the proposed BRU 223-24 Well. Regards, Cody T. Terrell | Landman | Hilcorp Alaska, LLC O: 907-777-8432 | C: 713-870-4532 | cterrell@hilcorp.com 3800 Centerpoint Dr., Suite 1400 | Anchorage | Alaska | 99503 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. The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the individual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently delete this message. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening, or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the individual or entity named above. If you are not an intended recipient or if you have received this message in error, you are hereby notified that any dissemination, distribution, or copy of this email is strictly prohibited. If you have received this email in error, please immediately notify us by return email or telephone if the sender's phone number is listed above, then promptly and permanently delete this message. While all reasonable care has been taken to avoid the transmission of viruses, it is the responsibility of the recipient to ensure that the onward transmission, opening, or use of this message and any attachments will not adversely affect its systems or data. No responsibility is accepted by the company in this regard and the recipient should carry out such virus and other checks as it considers appropriate. Notice of Public Hearing and Comment Period STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket No. CO-21-015 The application of Hilcorp Alaska, LLC (Hilcorp) for a spacing exception to drill, complete, test, and produce the proposed Beluga River Unit 223-24 well in the Beluga River Sterling/Beluga Undefined Gas Pool and the Beluga River Tyonek Undefined Gas Pool within the Beluga River Field. By letter dated September 13, 2021, Hilcorp requested the Alaska Oil and Gas Conservation Commission (AOGCC) issue an order for an exception to the spacing requirements of 20 AAC 25.055 to drill, complete, test, and produce the proposed Beluga River Unit 223-24 well in the Beluga River Sterling/Beluga Undefined Gas Pool and the Beluga River Tyonek Undefined Gas Pool in the Beluga River Field within 1,500 feet of a property line where the owners and landowners are not the same on both sides of the line, where more than one well will be drilled to and completed in the same pool in the same governmental section, and where a well will be drilled or completed closer than 3,000 feet to any well drilling to or capable of producing from the same pool, pursuant to 20 AAC 25.055(d). Beluga River Unit 223-24 Surface Location: 2050’ FNL, 35’ FWL, Sec. 23, T13N, R10W, Seward Meridian (S.M.) Top of Productive Horizon: 2329’ FNL, 296’ FWL, Sec. 24, T13N, R10W, S.M. Bottom-hole Location: 1740’ FSL, 2016’ FWL, Sec. 24, T13N, R10W, S.M. This notice does not contain all the information filed by Hilcorp. You may obtain more information about this filing by contacting the AOGCC’s Special Assistant, Grace Salazar, at (907) 793-1221 or grace.salazar@alaska.gov. The AOGCC has tentatively scheduled a public hearing on this matter for Wednesday, October 20, 2021, at 10:00 a.m. in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. Although the hearing will be held in person, the public has the option of participating in the hearing remotely via Microsoft Teams. Anyone who wishes to participate remotely should contact Ms. Salazar at least two business days before the scheduled hearing to request an invitation for the MS Teams meeting. Please note, the hearing will be held if AOGCC receives written request by 4:30 p.m., October 13, 2021, indicating a significant degree of public interest. If a request for a hearing is not timely filed, the AOGCC may consider the issuance of an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1221 or visit the AOGCC Events webpage after October 13, 2021. In addition, written comments regarding this application may be submitted to the AOGCC at the address provided above. Comments must be received no later than the conclusion of the October 20th hearing. Individuals or groups of people with disabilities who require special accommodations to comment or attend the hearing should contact Ms. Salazar no later than October 13, 2021. Jeremy M. Price Chair, Commissioner Jeremy Price Digitally signed by Jeremy Price Date: 2021.09.14 11:43:50 -08'00' ADVERTISING ORDER NUMBER Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: Type PVN AO FIN AMOUNT SY Act. Template PGM LGR Object FY DIST LIQ 22 Purchasing Authority Name: Title:Purchasing Authority's Signature Telephone Number STATE OF ALASKA ADVERTISING AO-08-22-004ORDER FROM:AGENCY CONTACT: Grace Salazar Alaska Oil and Gas Conservation Commission DATE OF A.O. AGENCY PHONE: 333 West 7th Avenue 9/14/2021 (907) 793-1221 Account Number: 100869 ASAP FAX NUMBER: (907) 276-7542 TO PUBLISHER:SPECIAL INSTRUCTIONS: Anchorage Daily News, LLC Please provide proof of publication to AOGCC. PO Box 140147 Send invoice to AOGCC. Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: DESCRIPTION PRICE Docket Number: CO-21-015 Initials of who prepared AO: Alaska Non-Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT TO:Page 1 of 1 Total of All Pages $- AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 REF Number Amount Date Comments 1 VC021795 2 AO-08-22-004 3 4 1 AOGCC 3046 22 2 3 4 5 DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. 1. A.O. # and receiving agency name must appear on all invoices and documents relating to this purchase. 2. The state is registered for tax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for DISPLAY CLASSIFIED OTHER (Specify below)LEGAL Form: 02-901 Revised: 9/14/2021 Grace Salazar, Special Assistant 793-1221 ! ! ! ! ! ! !! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! !! ! ! !! ! ! ! ! ! ! ! ! ! ! ! D $) D BRU 223-24 (8,486' TVD) BRU 223-24_T PH (3,264' T VD) BRU 223-24_SHL BRU 223-24_BHL S013N010W BELUGARIVER UNIT A029657 BRU212-25BHL BRU212-24BHL BRU224-13BHL BRU221-23BHL BRU224-23BHL BRU232-26BHL BRU232-23BHL BRU212-24TBHL BRU224-23TBHL BRU244-23BHL BRU222-24BHL G PAD Pad J PADPad K PAD Pad L PAD Pad M PA D PadADL58831 ADL17599 ADL17658 ADL21127 ADL21128 Sec. 13 Sec. 14 Sec. 24 Sec. 23 Sec. 25Sec. 26 Beluga River U nitBRU 223-24wp02 0 1,300 2,600 Feet Alaska State Plane Zone 4, NAD27 ¯ Legend !Other Surface Well Locations Other Bottom Hole Locations Well Paths Oil and Gas Unit Boundary BRU_223_24_Path2_3000Buffer Map Date: 9/10/2021