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Home My WebLink About2007 Prudhoe Oil and Put River Oil PoolsEe BP Exploration (Alaska) Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 99519-6612 (907) 561-5111 March 13, 2008 John Norman, Chairman Alaska Oil & Gas Conservation Commission 333 West 71h Avenue, Suite 100 Anchorage, AK 99501 Re: ANNUAL RESERVOIR SURVEILLANCE REPORT WATER AND MISCIBLE GAS FLOODS PRUDHOE OIL POOL and PUT RIVER OIL POOL - 2007 Dear Chairman Norman, BP Exploration (Alaska) Inc., as the Operator of the Prudhoe Bay Unit, submit herewith a consolidated Surveillance Report for the Prudhoe Bay Waterflood Project, Miscible Gas Project, Gas Cap Water Injection Project, Field Gravity Drainage Area and Put River Oil Pool in accordance with the requirements of Conservation Orders 341C (originally CO 279), 341D and 559. This report covers the time period of January 1 through December 31, 2007. The Operators of the Prudhoe Bay Field reserve the right to alter the content of the analyses contained in this report at any time based upon the most recent surveillance information obtained. Any questions can be directed to the undersigned, or to David Lenig at 564-5301, david.lenig@bp.com. Sincerely, Scott Digert Waterflood Resource Manager Greater Prudhoe Bay 564-4480 Attachments: Exhibits I through 12 Cc: A. Mitchell, BPXA S. Rix, ExxonMobil D. Kruse, CPAI G.P. Forsthoff, Chevron J. Williamson, AOGCC C. Taylor, DNR T. Verseput, BPXA F. Paskvan, BPXA G. Pospisil, BPXA J. Buono, BPXA M. Banks, BPXA D. Lenig, BPXA T. Cahalane, BPXA ANNUAL RESERVOIR SURVEILLANCE REPORT WATER AND MISCIBLE GAS FLOODS PRUDHOE OIL POOL JANUARY THROUGH DECEMBER 2007 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT CONTENTS SECTION PAGE 1.0 INTRODUCTION 4 2.0 OVERVIEW 5 3.0 PRESSURE UPDATE 6 3.1 Pressure Monitoring 6 3.2 Pressure Plan 6 4.0 PROJECT SUMMARIES 7 4.1 Flow Station Two Water / MI Flood Project 7 4.2 Eastern Peripheral Wedge Zone Water / MI Project 8 4.3 Western Peripheral Wedge Zone Water / MI Project 9 4.4 Northwest Fault Block Water / MI Project 10 4.5 Eileen West End Waterflood Project 11 4.6 Gas Cap Water Injection Project 12 4.6.1 Reservoir Pressure 4.6.2 Injector Status 4.6.3 Observation Well RST Surveys and Zonal Conformance 4.6.4 Reservoir Evaluation 4.6.5 2008 Surveillance Plans 4.6.6 Plans for Change in Project Operation 4.7 Put River Pool 15 5.0 GAS MOVEMENT SURVEILLANCE 16 5.1 Gas Movement Summary 16 Page 2 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT LIST OF EXHIBITS 1-A Prudhoe Bay Unit Field Schematic 1-B PBU Well Statistics 1-C PBU Production / Injection Statistics 1-D PBU Pressure Map 1-E Areally Weighted Average Pressure Plot 1-F Areally Weighted Pressure Data 1-G Average Monthly CGF MI Rates and Compositions 2 Fieldwide Reservoir Balance 3-A FS-2 Base Flood Map 3-B FS-2 Reservoir Balance 3-C FS-2 Areal Average Reservoir Pressure 3-D FS-2 Daily Average RMI 4-A EPWZ Base Flood Map 4-B EPWZ Reservoir Balance 4-C EPWZ Areal Average Reservoir Pressure 4-D EPWZ Daily Average RMI 5-A WPWZ Water/MI Flood Base Map 5-B WPWZ Reservoir Balance 5-C WPWZ Areal Average Reservoir Pressure 5-D WPWZ Daily Average RMI 6-A NWFB Base Flood Map 6-B NWFB Reservoir Balance 6-C NWFB Areal Average Reservoir Pressure 6-D NWFB Daily Average RMI 7-A EWE Base Flood Map 7-B EWE Reservoir Balance 7-C EWE Daily Average RMI 8 Wells Surveyed for Gas Movement 9 Pressure Surveys 10 SI Well List 11-1 Prudhoe Bay Pressure History-GD 11-2 Flood Front and Well Locator Map 11-3 Water Bank Cross-section Interpretation - 2007 11-4 Comparison of Water Bank Extent via Different Methodologies 12 Put River Lobe Map Page 3 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 1.0 INTRODUCTION As required by Conservation Orders 341C (Approved June 12th, 1997), 341D (Approved November 301h, 2001) and 559 (Approved November 22, 2005) this report provides a consolidated waterflood and gas oil contact report summary of the surveillance activities for the Waterflood Project, Miscible Gas and Gas Cap injection projects, and the Gravity Drainage Area within the Prudhoe Oil Pool plus a section for the Put River Pool. The time period covered is January through December of 2007. In keeping with the requirements of the Conservation Order the report format provides information for each of the five major flood projects and the gravity drainage project in the field, where applicable, as follows: • Analysis of reservoir pressure surveys and trends • Progress of the enhanced recovery projects, including the gas cap water injection project • Voidage balance by month of produced and injected fluids • Data on Minimum Miscibility Pressure (MMP) of injected miscible gas • Summary of Returned Miscible Injectant (RMI) volumes • Results of gas movement and gas -oil contact surveillance efforts. • Results of pressure monitoring efforts • Table of wells shut-in during 2007 calendar year Separate sections are provided for the five major flood areas: Flow Station 2 (FS-2), Eastern Peripheral Wedge Zone (EPWZ), Western Peripheral Wedge Zone (WPWZ), North West Fault Block (NWFB), and Eileen West End (EWE) along with information on the GCWI in the Gravity Drainage region and the Put River Pool. Water and miscible gas floods are described in each section. A separate section has been provided with detailed information on gas -oil contact surveillance. As agreed in 2004 with the Commission, the discussion of Gas Production Mechanisms was not included in the report. Page 4 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 2.0 OVERVIEW Exhibit IA identifies the five flood areas and gravity drainage areas in the Prudhoe Oil Pool as follows: FS-2, EPWZ, WPWZ, NWFB, EWE, and GD. The Waterflood Project encompasses all five flood areas. The Prudhoe Bay Miscible Gas Project (PBMGP) is currently active throughout the waterflood areas. The Eileen West End waterflood pilot concluded in March 1999, after successfully establishing EWE injection potential. EWE information since waterflood startup in September 2001 is included in this report. Exhibits 1-B and 1-C provide well, production, and injection statistics for the major project areas included in this report. As in last years' report, wells do not share project boundaries, but belong to a single project area. The well counts therefore reflect the total number of wells actually contributing to production and injection. Similar to last year, only wells that actually produced or injected during the year are included. During the report period of January through December 2007, field production averaged 262 MBOD, 7408 MMSCFD (GOR 28,272 SCF/STB), and 906 MBWD (water -cut 78%). Waterflood project injection during this period averaged 878 MBWD with 196 MMSCFD of miscible gas injection. Cumulative water injection in the five major projects from waterflood startup through December 2007 was 10,149 MMSTB, while cumulative MI injection was 2,793 BCF. Cumulative production since waterflood startup was 2,696 MMSTB oil, 9,132 BCF gas, and 6,643 MMSTB water. As of December 31, 2007, cumulative production exceeded injection by 4,547 MMRB compared to 4,184 MMRB at the end of 2006. Similar to last year, production and injection values have been calculated based upon the waterflood start-up dates for the project areas rather than for each injection pattern. Exhibit 1-D provides analysis of pressure static, buildup, and falloff data that was collected during 2007 at a datum of 8,800 ft, subsea for the Full Field Dominant Zone. As in the past, abnormal pressures, such as pressures taken in fault compartments and in the Sag Formation have been removed. As shown in Exhibit lE, the historic pressure decline appears to have stabilized due to gas -cap water injection with half of the repeat pressure surveys increasing in the past year. For 2007, average pressure in the PBMGP project areas was calculated to be 3,310 psia by areal weighting, as compared to 3,293 in 2006 (Exhibit 1F). The GD area also showed a slight pressure increase from 3,233 psia in 2006 to 3,243 in 2007. This subtle pressure increase is within the expected statistical variation with a different annual pressure sampling data set. Review of repeat well pressures in both 2005 and 2006 reporting periods found nearly two thirds of their 2007 pressure measurements increasing. The methodology for calculation of the average pressure is explained on page 7. Confirmed MI breakthrough has occurred in 150 wells during the reporting period. RMI production is an indicator of FOR pattern performance and the presence of RMI is determined by gas sample analyses that show a separator gas composition richer in intermediate range hydrocarbon components. MI breakthrough in a well is considered to have occurred when the average RMI rate over the number of producing days in a well exceeds 200 mcf/d. The previous year showed MI breakthrough in 141 wells. Most of the increase in RMI can be attributed to higher MI injection in the PBMGP area due to MIST ant UZI applications. Page 5 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT Exhibit 1-G shows the 2007 average monthly CGF MI rates and compositions for the field. 3.0 PRESSURE UPDATE 3.1 Pressure Monitoring Exhibit 9 provides pressure, buildup, and falloff data collected in 2007 at a datum of 8,800 ft, subsea used for the Full Field Dominant Zone. For this report, as in the past, pressures taken in fault compartments, the Sag River Formation, and in Zone 1 of the G-Pad LPA (Low Pressure Area), which don't appear to be in good communication with the rest of the reservoir, have been excluded from Exhibit 1-D. Also excluded were wells shut-in less than a week that obviously had not stabilized as compared to offsetting statics. Other wells completed in Zone 1 and Zone 4B, which are in poor communication with the rest of the reservoir and therefore have lower pressures, were still included in the map and calculations if their shut-in times were deemed long enough. The excluded pressure measurements are listed separately in Exhibit 9 along with the reason for exclusion. Unless otherwise noted, all pressure calculations are areally weighted, bound by the main field original 50' LOC contour, and are referenced to a pressure datum of 8,800' SS. It was agreed with the commission that the polygon pressures would be calculated differently starting with the 2005 than it had in past reports. The new methodology would be to utilize only the pressure gathered during the reporting period. Exhibit 1-D illustrates the 2007 pressure map using only 2007 data points. This methodology will introduce more fluctuation in year-to-year average pressure due to the reduction in the number of data points utilized in producing the map and in the statistical variation expected with different annual pressure sampling data set. However, the product is more reliable than the past methodology of trending past pressure trends due to the influence of gas -cap water injection. 3.2 Pressure Plan Per C. O. 341 C, Rule 6b, a pressure plan containing the number of proposed surveys for the next calendar year is required to be filed with this report. Prudhoe Bay reservoir depletion strategies are defined, and the goal of the pressure program is to optimize areal coverage and provide sufficient data for well safety. The proposed plan for 2008 calls for collection of 90 pressure surveys fieldwide. The number of surveys proposed is equal to last year. Per administrative approval 341C.01, dated June 22, 1999, a summary of pressure surveys run during 2007 is presented in Exhibit 9. Page 6 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.0 PROJECT SUMMARIES 4.1 Flow Station Two Water / MI Flood Project The Flow Station Two area (FS-2), which comprises the eastern third of the Eastern Operating Area, is shown in Exhibit 3-A. The locations of production and injection wells are shown with the FOR injection patterns identified. There were 110 producing wells and 62 injection wells that contributed to production/injection during 2007 within the FS-2 flood area. Production/injection data was calculated with the polygon boundaries as in last year's report. The FS-2 waterflood area oil production averaged 32 MBOD for 2007 compared to 29 MBOD in 2006. Cumulative production since waterflood start-up through the end of 2007 is 1,013 MMSTB of oil, 4,083 BCF of gas, and 3,386 MMSTB of water. Injection rates averaged 476 MBWD and 85 MMSCFD in 2007. Since 12/31/06, the waterflood imbalance has increased from a cumulative under injection of 1,475 MMRB to 1,618 MMRB under injected. During the report period, production exceeded injection by 144 MMRB. Under - injection is related to production of free gas influxing from the gravity drainage region which should not be replaced so as to maintain a steady declining gas contact. Waterflood strategy is to replace voidage on a zonal basis after accounting for the free gas influx. Cumulative water injection since waterflood start-up through the end of 2007 is 5,302 MMSTB. The flood area's GOR increased from an average of 18,155 SCF/STB in 2006 to an average of 18,355 SCF/STB in 2007. Gas influx continues along the FS-2/GD GDWFI area, and in the high permeability conglomerates in the Updip Victor area. Water -cut increased slightly to 93% in 2007. A breakdown of the production and injection data is provided in Exhibit 3-13 for the report period. See Exhibit 1-C for a comparison of the cumulative figures with last year's AOGCC report. Exhibit 3-C presents the areal average waterflood pressure decline over time. The pressure in the FS-2 area was 3,357 psia in 2007. This is a increase of 53 psi over the 2006 pressure. This variation in pressure was likely caused by the 2006 data point for 04-29AL1 which had a relatively low bottom -hole pressure value of 3,184. Exhibit 3-D is a presentation of 2007 average returned MI (RMI) rates. Miscible gas return has been confirmed in 39 wells by gas compositional analysis (RMI>200 MSCFD). Page 7 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.2 Eastern Peripheral Wedge Zone Water / MI Flood Project The Eastern Peripheral Wedge Zone (EPWZ) water and miscible gas (MI) flood area is shown in Exhibit 4-A. In 2007, oil production averaged 21.6 MBOD with an average 87% water cut and 19,406 SCF/STB Gas Oil Ratio. Injection averaged 150 MBWD and 43 MMSCFD of miscible injectant (MI). There are a total of 63 producers and 30 injectors in the flood area that contributed to production/injection during 2007. Of the 30 injectors, 10 injected miscible gas at some point throughout the year, while the remaining wells injected water only. Production and injection values have been calculated using polygon boundaries as revised in last year's report. Two waterflood start-up dates have been used, 12/30/82 for the DS 13 flood and 8/20/84 for the down -dip sections, rather than the start-up dates of each injection pattern. A total of 593 MMSTB of oil, 2,328 BSCF of gas, and 1,308 MMSTB of water have been produced with 1,807 MMSTB of water and 621 BSCF of miscible gas injected. Exhibit 4-B shows the monthly injected and produced volumes on a reservoir barrel basis during 2007 and provides cumulative volumes since injection began. During the report period, production exceeded injection by 124 MMRB. Exhibit 4-C shows the trend of reservoir pressure decline in the EPWZ flood area with time. The area receives pressure support from pattern injection, some aquifer influx, and GCWI. Faulting and out of conformance injection can impair flood performance in some areas. Areas of low pressure are being addressed by flood management strategies designed to increase voidage replacement. The EPWZ pressure was 3,339 psia in 2007. This is an increase of 43 psi as compared to 2006. Much of the increase in pressure can be attributed to the 2007 data point for 13-30A of 3344 psi which influences a large portion of the area. Exhibit 4-13 shows the 2007 average of estimated RMI rates in producers, as calculated from well tests and from numerous produced gas sample analyses. Miscible gas returns have been confirmed in 32 wells (RMI <200 MSCFD). Page 8 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.3 Western Peripheral Wedge Zone Water / MI Flood Project Exhibit 5-A is a map of the Western Peripheral Wedge Zone (WPWZ) water and miscible gas (MI) flood areas. During the report period oil production averaged 19.1 MBOD at a gas/oil ratio of 10,260 SCF/STB and a watercut of 87%. Injection averaged 134 MBWD of water and 27 MMSCFD of miscible injectant. For the WPWZ project, 37 injectors (9 WAG injectors and 28 water injectors), and 90 producers contributed to the production and injection during 2007. The well counts reflect only the active wells for the year. The waterflood startup date for the WPWZ project area was September 1985, corresponding to the start of injection in the Main Pattern Area (MPA). The production and injection data for the project reflect this startup date. Consistent with last year, production and injection data are calculated on the single area basis. Cumulative water injection from waterflood start-up through December 2007 was 1,475 MMSTB while cumulative MI injection was 542 BSCF. Cumulative production since waterflood start-up is 477 MMSTB oil, 1,362 BSCF gas, and 996 MMSTB water. As of December 31, 2007 cumulative production exceeded injection by 706 MMRB. Exhibit 5-B provides the monthly injection and production data from 01/07 through 12/07. During the report period, production exceeded injection by 59 MMRB. During 2001, WPWZ injection targets were modified to take into account aquifer influx occurring along the GDWFI boundary, and super pattern management of the WPWZ waterflood to stabilize the GOC. The reservoir balance in Exhibit 5-13 doesn't identify support from the aquifer, thereby understating voidage replacement nor does it capture the production of gas -cap -gas which needs not be replaced. During 2006 a produced water tie -line was installed connecting two GC-1 slug catchers to GC-3 produced water tanks. This will allow ideal voidage replacement in the eastern half of the WPWZ area. Exhibit 5-C shows that the pressure in the WPWZ was 3,275 psia in 2007. This is a minor decrease of 1 psi over the pressure reported in 2006 and is well within the variation expected. Exhibit 5-D indicates wells with MI breakthrough and the 12-month averaged returned MI rates. Miscible gas breakthrough has been confirmed in 37 wells by gas compositional analysis. Page 9 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.4 Northwest Fault Block Water / MI Flood Project Exhibit 6-A is a map of the Northwest Fault Block Water (NWFB) and miscible gas (MI) flood areas. During the report period, oil production averaged 12.0 MBOD at a gas/oil ratio of 7,592 SCF/STB and a watercut of 87%. Injection averaged 81.3 MBWD and 18 MMSCFD of miscible inj ectant. For the NWFB project, 29 injectors (5 WAG injectors and 24 water injectors), and 59 producers contributed to the production and injection during 2007. The well counts reflect the number of wells actually contributing to production/injection during the reporting period. Production and injection values have been calculated based upon the start-up date for the project area, 8/13/84. Consistent with last year, production and injection data are calculated on the single area basis. Cumulative water injection from waterflood start-up in August 1984 through December 2007 was 1,503 MMSTB while cumulative MI injection was 662 BCF as detailed in Exhibit 61-C. Cumulative production since waterflood start-up was 575 MMSTB oil, 1,185 BSCF gas, and 876 MMSTB water. As of December 31, 2007 cumulative production exceeded injection by 331 MMRB. Exhibit 6-13 provides the monthly injection and production data from 01/07 through 12/07. During the report period, production exceeded injection by 30 MMRB. However, this does not include support obtained from aquifer influx or gas cap expansion. The areally weighted pressure in the NWFB area was 3,248 psia in 2007. This is a decrease of 48 psi over last year which likely is the influence of a low 2007 pressure point in R06A and the lack of higher 2006 pressure points of S-17C and S-27B along the western boundary. The historical pressure trend can be seen in exhibit 6-C. The increase in 2004 was largely due to the fact that this polygon's boundaries were expanded to the northwest with the presence of aquifer area affecting the overall pressure of the northwest fault block. Exhibit 6-D indicates wells with MI breakthrough and the 12-month average returned MI rates. Miscible gas breakthrough has been confirmed in 32 wells by gas compositional analysis. Page 10 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.5 Eileen West End Waterflood Project Exhibit 7-A is a map of the Eileen West End (EWE) waterflood area and miscible gas (MI) flood area. During the report period, oil production averaged 12.3 MBOD at a gas/oil ratio of 3,796 SCF/STB and water cut of 67%. Injection averaged 36.8 MBWD and 23.7 MMSCFD of gas. For the EWE project, 15 injectors (5 WAG injector, 10 water injectors), and 56 producers contributed to the production and injection during 2007. The well counts reflect only the active wells for the year. Cumulative water injection from waterflood start-up in September 2001 through December 2006 was 62 MMSTB and cumulative MI injection was 47 BCF. Cumulative production since waterflood start-up was 38 MMSTB oil, 175 BCF gas, and 77 MMSTB water. As of December 31, 2007 cumulative production exceeded injection by 154 MMRB. Exhibit 7-13 provides the monthly injection and production data from January 1, 2007 through December 31, 2007. During the report period, production exceeded injection by 7 MMRB. The EWE pressure was 3,618 psia in 2007 representing an average pressure increase of 82 psi for this area from 2006. This increase is attributed to dropping L-02A and Z-30A which had relatively low 2006 pressures of 3428 and 3188 psi, respectively compared to the 2007 interpretation. Pressure values in the heart of the EWE flood are very similar to 2006 values. The three of the five W and Z Pad wells, with pressures in both reporting periods, measured pressure increases. Exhibit 7-D indicates wells with MI breakthrough and the 12-month average returned MI rates. Miscible gas breakthrough has been confirmed in 10 wells by gas compositional analysis. Page 11 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.6 Gas Cap Water Injection Project Details of the Volume of Water Injected during 2007 are detailed below; units in thousands of barrels of seawater injected per month (MBWM): Date PSI-01 PSI-05 PSI-06 PSI-07 PSI-08 PSI-09 PSI-10 Total 01/01/07 2.930 2,589 2,950 2,844 2,792 0 2,896 17,272 02/01/07 2,570 2,586 2,396 2,431 2,515 0 2,613 14,868 03/01/07 2,595 2,341 1,293 1,202 2,462 0 2,585 11,290 04/01/07 3,010 1,151 2,979 2,976 2,927 0 2,349 17,420 05/01/07 2,430 2,965 2,442 2,414 2,382 0 1,326 14,410 06/01 /07 1,442 834 0 700 1,317 0 2,884 5,620 07/01/07 2,902 2,808 2,599 2,861 2,776 2,524 1,539 19,356 08/01 /07 1,822 1,837 1,391 1,908 1,315 1,891 2,495 11,704 09/01/07 1,476 2,477 2,563 2,537 2,552 2,617 1,393 17,675 10/01/07 2,089 1,534 1,634 1,603 1,714 1,671 1,787 11,641 11/01/07 2,845 2,976 2,893 2,844 2,861 2,887 2,428 18,762 12/01/07 2,592 2,401 2,588 2,717 2,686 2,793 3,100 21,967 Totals 29,664 26,396 25,733 27,040 28,302 14,374 27,078 184,216 The 2007 volume of sea water injected was 184 million barrels. The cumulative volume injected at the end of 2007 was 835 million barrels of sea water. 4.6.1 Reservoir Pressure The overall goal of the GCWI project is to slow the Prudhoe field pressure decline. To see this effect, all SBHP's from the gravity drainage areas of the field were pulled and plotted as shown in Exhibit 11-1. Because local waterflood pressures are quite variable, they introduce a wide scatter in the field pressure plot making interpretation of pressure trends difficult. The waterflood SBHPS were not included for this reason. The low pressure area in G Pad was also excluded due to local geological effects. The change in slope at waterflood start up in 1984 is very pronounced, with declines of 80 to 90 psi/year pre-waterflood falling to approximately 35 psi/year after start up. The slope change is apparent only because there are long term stable trends both before and after waterflood start-up. The next obvious slope change occurs shortly after the GCWI project begins injecting in 2002. Although more data is required before reaching definitive conclusion, it appears the GCWI is achieving its goal and has stabilized field pressure decline. No new static bottom hole pressure surveys were taken in the PSI injectors in 2007. 4.6.2 Injector Status All seven of the GCWI injectors are in good mechanical condition and continue daily injection. Pressure -rate plots for each well are routinely monitored and show injectivity is quite healthy. Each of the five original wells is capable of injecting well over 100 MBWPD at injection Page 12 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT pressures between 1,400 psi and 1,800 psi. Erosional velocity limits injection to under 100 MBWPD in each well. 4.6.3 Observation Well RST Surveys and Zonal Conformance The RST surveys run in offset producers are the primary means of monitoring water movement from the Gas Cap Water Injection project. Baseline RST's were run over the Ivishak formation in 11 Lisburne observation wells prior to GCWI start-up. These wells have been logged repeatedly since injection began at intervals of 4-6 months to monitor water movement. By comparing the RST logs with the baseline and previous logs, the presence of water can be readily observed. This procedure has provided a very clear picture of water in the Ivishak formation and allows monitoring how quickly the water column builds. Exhibit 11-2 is the locator map for the GCWI area and shows the PSI injectors along with the observation wells. The information from the RST logging program was used to develop the updated cross section (Exhibit 11-3) showing our interpretation of the surveillance data for the current time period. RST logging in 2007 has shown a slight advancement of the water front to the southwest and south with respect to its position in 2006. Water was logged in Zone 2C in the L2-16 well for the first time in 2007, which is to the west of the L3-11 and L3-08 wells, which logged water in Zone 2C for the first time in 2006. No water is evident below the 24N shale in these wells. This pattern is consistent with previous observations that show the waterfront advancing faster in Zone 2C than in Lower Zone 2 and Zone 1. Exhibit 11-3 is a regional northeast -southwest oriented cross section showing the zonal conformance of the waterflood. This demonstrates that the Zone 2C waterfront is approximately 7000 feet in front of the Lower Zone 2 and Zone 1 waterfronts in the L2-24 area. RST logs in the L2-33 well, which is just to the east of the NGI gas injectors, show no water has reached this area to date. The regional cross section depicts the incremental change in waterfront geometry from 2006 to 2007 (dark blue to light blue). This shows the water column building an additional 60 feet in 2007 in Zone 2C and Zone 3 in the L2-24 well, whereas it rose an additional 20 feet in the L2-28 well in Zone 3. Water appeared in the Upper Zone 2B sand for the first time in L2-28. Water was logged for the first time in Zone 1B and Zone 2A in the LGI-04 well, which is the first surveillance well to the northwest of the PSI injectors. Very few surveillance wells have logged water in Zone 1, which is not surprising given the high level of heterogeneity of sand bodies characteristic of Zone 1 in the field. There have been no deviations from the past RST surveillance which has shown that water first appears on top of a major shale then builds height with time. The 24N shale, which forms the base of Zone 2C, is clearly the most prominent unit controlling the lateral progression of the flood front. There continues to be no indications of water running down thief zones or high perm intervals in the middle of sand units. The flood front continues to maintain a sloped aspect indicating that gravity has a strong influence on the process. Page 13 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT Gravity Survey The results of the 2007 gravity survey placed the water in general agreement with the RST information. Exhibit 11-4 shows the results of the gravity survey. The bulk of the gravity anomaly lies in a downdip (southwest) direction from the PSI injectors. The western boundary of the anomaly agrees with two surveillance logs, the LGI-04 and L2-28 wells, where 30 and 80 feet, respectively, of water were logged. On the southern edge of the waterfront, approximately 28 feet of water was logged in the L3-11 at the time of the 2007 gravity survey. This correlates very well to the southern leading edge of the gravity anomaly. The shape of the gravity anomaly shows a slightly oval -shaped body of water in map view with no evidence of localized fingering in a specific direction. A gravity survey will be repeated in 2008. 4.6.4 Reservoir Evaluation The new Prudhoe Bay full field model is in the process of history matching, and this work includes matching the water movement from the Gas Cap Water Injection project. This is expected to be completed in 2008. Predictive runs will then be made for the area to assess potential models for waterfront behavior and to further optimize the flood. 4.6.5 2008 Surveillance Plans GCWI Injectors Injection pressures, rates, and temperatures are recorded for each well every day. Pressure -rate plots and Hall plots will be routinely monitored for changes in injectivity of the well. Observation Well RST's RST's will be run every 4-6 months in 2008. This program will continue as it has in the past by running RST's every 4-6 months with the final timing and locations determined based on the results to date. Gravity Survey A gravity survey is planned for 2008 and should be completed by mid April. Final processing, modeling, and analysis will be completed in the third quarter. 4.6.6 Plans for Change in Project Operation No changes to the Gas Cap Water Injection plan are expected in 2008. Page 14 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 4.7 Put River Oil Pool On November 22, 2005 the AOGCC ruled in Conservation Order 559 that the Western, Central and Southern Lobes of hydrocarbon bearing Put River sands would be defined as the Put River Pool and that the Northern lobe would be included in the Prudhoe Oil Pool. Exhibit 12 displays all four lobes which are in pressure isolation from each other. Additional technical information was previously supplied with the application which led to Conservation order 559. 2007 Production For the year 2007, all of the production and injection in the Put River Pool occurred in the Southern Lobe. One well produced from the Put River Pool, the 02-23A. This well was on production from 01/01/2007 until 4/30/2007. Production from the Put River Pool was shut in for the remainder of the year for reservoir management due to the lack of water injection caused by the seawater supply line having been found unfit for continued service. Production from the Southern Lobe for 2007 averaged 1.4 MBOPD and 233 Mscf of gas for the months that 02-23A was on production. The 2007 cumulative production for the Put River Oil Pool was 143 MBO and 23.6 MMscf gas. The full life cumulative production for the Put River Oil Pool through December 31, 2007 is 286 MBO and 97 MMscf gas. 2007 Pressures Put River Pressures taken during 2007 are listed in Exhibit 9. The Southern Lobe pressure obtained in 02-23A measured 3690 psi at 8,100' SSTVD, an increase of 78 psi from 2006. 2008 Surveillance Plan Southern Lobe — The injection supply line is scheduled for replacement after which injection will continue in the 01-08Ai at the maximum allowable pressure. Production will commence from the 02-23A at around 1750 BOPD to achieve a voidage replacement ratio of approximately 1.0. Static pressures will be taken periodically through the year to confirm volumetric calculations. Western Lobe - No 2008 production or surveillance planned. Central Lobe - No 2008 production or surveillance planned. Page 15 2007 ANNUAL RESERVOIR SURVEILLANCE REPORT PRUDHOE BAY UNIT 5.0 GAS MOVEMENT SURVEILLANCE The report on gas movement surveillance activities and interpretations provides an overall summary of gas influx movement and summarizes the 2007 gas -monitoring logging program. 5.1 Gas Movement Summary Fieldwide GOC surveillance continues with collection of open -hole and cased -hole logs and monitoring of well performance. In order to mor estimates are made across the field and are based historical well performance. The central portion o exhibits in some areas almost total influx of the essentially absent in the southern peripheral regions the waterflood areas. for gas movement in the reservoir, GOC pon the ongoing monitoring program and the field, the gravity drainage area (GD) �OC (Light Oil Column). Gas influx is as a result of water and WAG injection in It has become difficult in most parts of the field to define a single current GOC as the surface is commonly broken into a series of oil lenses and gas underruns beneath the shales. The reservoir is better characterized by a description of remaining oil targets. The targets within the GD occur within three general regions; the basal Romeo (Zones 1 & 2A) sands, the inter-underrun sands, and oil lenses within the expanded GOC. Production from the Romeo (Zones 1 & 2A) sands has historically been low compared to the more prolific upper zones. This interval has a lower net to gross, lower permeability and more limited sand connectivity than the rest of the reservoir. These factors impede gas expansion into the Romeo. Underruns beneath shales within the Romeo sands are likely to be local. The inter-underrun sands occur throughout the GD and are characterized by one or more underruns or solution gas pockets segmenting the remaining oil pad. Gas underruns are observed beneath the top of the Sadlerochit reservoir, under Zone 4 shales, and the most regional persistent underruns have developed under the mappable floodplain shales of Tango or Zone 2B. Oil within the expanded GOC occurs in lenses above regionally continuous shales. Such lenses have been identified from neutron logs. Many lenses continue to exhibit oil drainage over time, while others appear isolated. Exhibit 8 lists the open and cased -hole neutron logs, as well as RST logs, run in the Prudhoe Bay Unit during the gas -influx reporting period from January 2007 through December 2007. A total of 66 gas -monitoring logs, mostly cased -hole (63) logs were run in the PBU. A similar level of surveillance is planned for 2008. Page 16 2006 AOGCC Report Producers Injectors -WAG -Water Only -Gas 2007 Producers Injectors -WAG -Water Only -Gas Production Well Status in 2007 -Newly Drilled -Sidetracked or Redrilled Gas Injection Well Status in 2007 -Newly Drilled -Sidetracked or Redrilled WAG Injection Well Status in 2007 -Newly Drilled -Sidetracked or Redrilled Water Injection Well Status in 2007 -Newly Drilled -Sidetracked or Redrilled Exhibit 1-13 PBU Well Statistics WELL COUNT BY FIELD AREA WPWZ NWFB EWE FS2 EPWZ GD 99 59 59 120 61 454 36 32 15 67 33 47 5 9 5 9 6 3 31 23 10 58 27 11 0 0 0 0 0 33 90 59 56 110 63 449 40 32 15 68 34 50 9 5 5 8 10 3 28 24 10 54 20 14 0 0 0 0 0 33 0 0 1 0 0 1 2 0 0 2 5 28 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 1 0 0 0 0 1 0 0 0 0 0 0 1 0 0 NOTES: (1) Well count data reflects ONLY those wells which contributed to production/injection during the respective year. (2) Project boundaries were simplified in 1998. Wells no longer share project boundaries, but belong to a single project area. (3) EOA GD and WOA GD have been combined. Exhibit 1-C 2006 PBU Production/Injection Statistics Waterflood Project Area Cumulative Production from WF Start -Up through 12/31/07 Oil (MMSTB) Gas (BCF) Water (MMSTB) Cumulative Injection from WF Start -Up through 12/31/07 Water (MMSTB) MI (BCF) Cumulative Balance from WF Start -Up through 12/31/06 Cum Production (MMRB) Cum Injection (MMRB) Over/Under (MMRB) Cumulative Balance from WF Start -Up through 12/31/07 Cum Production (MMRB) Cum Injection (MMRB) Over/Under (MMRB) MI Breakthrough in Producing Wells > 200 mcfd AVERAGE RATE DATA 2007 Production Oil (MBD) Gas (MMSCFD) Water (MBD) Injection Water (MBD) Gas (MMSCFD) AVERAGE RESERVOIR PRESSURE (Dsial Previous Mid report period 7/06 Mid report period, 7/07 Estimated Annual Change (psi/yr) Waterflood Total WPWZ NWFB FS-2 EPWZ EWE 477 575 1013 593 38 2696 1362 1185 4083 2328 175 9132 996 876 3386 1308 77 6643 1475 1503 5302 1807 62 10149 542 662 921 621 47 2793 2489 2215 7310 3809 223 16046 1842 1884 5836 2225 76 11863 -647 -331 -1475 -1584 -147 -4184 2605 2280 7656 4001 250 16793 1899 1920 6038 2293 96 12246 -706 -361 -1618 -1708 -154 -4547 37 32 39 32 10 150 19.1 12.0 32.1 21.6 12.3 97.1 196.2 91.3 588.0 419.0 46.7 1341.3 126.0 79.7 402.7 142.2 25.0 775.7 133.7 81.3 476.3 149.9 36.8 878.0 26.6 18.0 84.8 43.2 23.7 196.3 GD WPWZ NWFB FS-2 EPWZ EWE PBMGP 3233 3276 3296 3304 3296 3536 3293 3243 3275 3248 3357 3339 3618 3310 11 -1 -48 53 43 82 17 3900 3800 3700 3600 p 3500 S I A 3400 3300 3200 3100 3000 Exhibit 1-E Areal Average Pressure mPBMGP areal avg P =Gravity Drainage al '9,P '91 '91 '96 '99 01 01 01 01 �Y �S �6` �� 6 �9