STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage Alaska 99501
Re: THE APPLICATION OF ARCO ) Conservation Order No. 191
ALASKA, INC. for an order )
permitting a project for ) Kuparuk River Field
the West Sak Sands in the )
Kuparuk River Field to )
determine the optimum tech- ) West Sak Sands Section 35
niques for development of ) Project
the reservoir and to gather )
information for a pool rules )
hearing at a future date. ) September 26, 1983
IT APPEARING THAT:

1. ARCO Alaska, Inc.,by letter dated August 25, 1983, requested the Alaska Oil and Gas Conservation Commission to issue an order to permit conducting a project in the oil-bearing West Sak Sands to determine the optimum techniques for development of the reservoir and to provide vital information for establishing reasonable pool rules.

2. Notice of public hearing was published in the Anchorage Times on September 9, 1983.

3. There were no protests filed to the application.

FINDINGS:

1. A hydrocarbon accumulation occurs in a series of sands that have been called the West Sak Sands and extends over a large area of the Kuparuk River Field.

2. The oil from the West Sak Sands is a viscous at reservoir temperature which materially retards unassisted flow.

3. The evidence indicates that in section 35, T11N, R10E, UM, the West Sak Sands are oil-bearing and of sufficient thickness to conduct an evaluation project.

4. Conventional depletion methods appear to be impractical. Therefore injection of hot, high pressure water or other fluids into the reservoir may provide an adequate oil producing rate.

5. The pattern of producing and injection wells should be closely spaced in order to obtain data within a reasonable time frame.

6. The project contemplates the drilling of less than 20 wells but performance of the project may require the drilling of additional wells to achieve definitive results.

7. The project is within the area covered by the Kuparuk River Unit and Unit Operating Agreements thus insuring a mechanism for protection of correlative rights.

8. This project provides the opportunity to evaluate various drilling, completion and production methods but methods not now envisioned may become appropriate.

9. A safety flare is an operational necessity for the project.

10. The operator will install production, injection, testing, hydrocarbon measuring and shipping facilities for the project.

11. It appears that casing cemented at 80 feet below the surface will provide adequate anchorage for installation of flow diverter equipment.

12. Drilling experience in the Kuparuk River Unit area demonstrates that adequate well control can be maintained using a flow diverter system while drilling to the bottom of the West Sak Sands.

13. Correlation of formation test data shows a normal pressure gradient through the West Sak Sands and commingling in the wellbore will not cause waste.

14. Completion of wells drilled to the base of the West Sak Sands with a single string of casing to the surface is appropriate.

15. The evaluation of the project may take up to five years.

NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth apply to the following described area:

Section 35, T11N, R10E, U.M.

Rule 1. Project Defined.

The project shall be known as the West Sak Sands Section 35 Project and shall be confined to the accumulation of oil that correlates with the accumulation found in the ARCO Alaska Inc. West Sak River State No. 1 well between the depths of 3744 and 4040 feet.

Rule 2. Well Spacing.

There will be no spacing requirements for wells in the project area but no more than 30 wells may be drilled.

Rule 3. Casing and Cementing Requirements.

(a) For proper anchorage and to protect the ice-rich portion of the permafrost, casing shall be set at least 80 feet below the surface and sufficient cement shall be used to fill the annulus to the surface.

(b) Should an intermediate string be utilized -- it shall be cemented to the surface

(c) Production casing may be set immediately above or through the oil reservoir and sufficient cement shall be used to fill the annulus at least 500 feet above the top of the oil accumulation. A non-freezable fluid shall be left in the annular area from 100 feet below the base of the permafrost to the surface unless it is demonstrated to the Commission's satisfaction that the casing to be installed will withstand freezeback forces.

Rule 4. Blowout Prevention Equipment.

a) On all wells a flow diverter system shall be installed on the first string of casing for use in drilling until the next string of casing is set (as required by 20 AAC 25.035(b)).

b) Should an intermediate casing string be utilized, a 3000 psi blowout prevention stack shall be installed as set forth in 20 AAC 25.035(c).

c) A 3000 psi blowout prevention stack, as set forth in 20 AAC 25.035(c), shall be installed on the production casing and used during subsequent drilling or completion operations.

Rule 5. Commingling.

The production from all oil-bearing sands, as defined by Rule No. 1, may be commingled in the wellbore.

Rule 6. Fluid Injection.

The injection of fluids into the West Sak Sands interval is hereby permitted.

Rule 7. Automatic Shut-in Equipment.

A fail-safe automatic surface safety valve (SSV), approved by the Commission, shall be installed on each producing well. A representative of the Commission will witness operational and performance tests at intervals of time prescribed by the Commission to confirm proper working condition.

Rule 8. Logging Requirements.

One well on each drilling pad that penetrates the entire reservoir will be logged from the shoe of the conductor casing to total depth. The remaining wells, whether production or injection wells, need only to be logged over the hydrocarbon bearing portion of the hole.

Rule 9. Flaring of Gas.

The flaring of gas produced from the project is prohibited except that a maximum of 200 MCF per day may be used to maintain a pilot flare to provide for safe conditions in case of an operational upset.

Rule 10. Casing Presssure Tests.

All casing and tubing strings shall be periodically pressure tested and the results reported as prescribed by the Commission. A representative of the Commission may witness these tests at intervals and times prescribed by the Commission.

Rule 11. Reports.

In addition to the reports required by Title 20, Chapter 25 of the Alaska Administrative Code, a report recapitulating the facts and progress of the project will be submitted every three months by the 20th day of the month following the reporting period.

Rule 12. Administrative Relief.

Upon request, the Commission may administratively amend any rule stated above as long as the operator demonstrates to the Commission's satisfaction that sound engineering practices are maintained and waste will not occur.

Rule 13. Conformance.

The project and project operations shall be approved and conducted in conformance with the requirements of the Kuparuk River Unit Agreement and Unit Operating Agreement.

DONE at Anchorage, Alaska and dated September 26, 1983.

C. V. Chatterton, Chairman
Alaska Oil and Gas Conservation Commission

Harry W. Kugler, Commissioner
Alaska Oil and Gas Conservation Commission

Lonnie C. Smith, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index