STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage Alaska 99501
Re: THE APPLICATION OF UNION ) Conservation Order No. 231
OIL COMPANY OF CALIFORNIA )
requesting issuance of an ) Kenai Gas Field
order establishing pool ) Beluga Gas Pool,
rules to govern operation ) Upper Tyonek Gas Pool, and
of the Cannery Loop Unit. ) Tyonek "D" Gas Pool
August 3, 1987
IT APPEARING THAT:

1. Union Oil Company of California as operator of the Cannery Loop Unit, requested the Alaska Oil and Gas Conservation Commission by letter dated April 30, 1987 to issue an order establishing pool rules to govern the operation of the Beluga Gas Pool, the Upper Tyonek Gas Pool, and the Tyonek "D" gas pool, all lying beneath the Cannery Loop Unit.

2. Notice of public hearing was published in the Anchorage Daily News on June 2, 1987.

3. A public hearing was held on July 8, 1987 in the conference room of the Commission at 3001 Porcupine Drive, Anchorage, Alaska.

4. Members of the staff of Union Oil Company of California presented testimony including exhibits. The hearing record was closed at the end of the public hearing.

FINDINGS:

1. The Kenai Gas Field was extended to the north beneath the Cannery Loop Unit by the drilling of Cannery Loop Unit #1 (CLU #1) in 1979, and subsequently confirmed by the drilling of Cannery Loop Unit #3 (CLU #3) in 1981.

2. Wells CLU #1 and CLU #3 established the presence of dry gas bearing reservoir strata within three separate and distinct lithologic units.

3. Structural interpretation based upon seismic and well control data indicates that the dry gas accumulation within the shallower lithologic unit, known as the Beluga Formation, results from the updip entrapment of gas against a transverse east-west trending normal fault (the Cannery Loop Fault) within the confines of a down-thrown fault block of the northerly plunging Kenai Gas Field anticline.

4. Structural configuration data are too sparse to determine with certainty whether the Cannery Loop Fault or a southerly plunge of the anticlinal axis into the fault is the feature limiting the southerly extent of the two deeper gas bearing lithologic units.

5. Vertical limits of the three separate and distinct lithologic units may be defined by wireline logs run in CLU #1 and may be designated as separate gas pools.

6. The shallower Beluga Pool is comprised of lenticular nonmarine fluvial reservoir sands. The deeper Upper Tyonek and Tyonek "D" Pools are comprised of both blanket and lenticular reservoir sands.

7. Interpretation of fluid saturation and formation pressure data indicates that the three gas pools north of the Cannery Loop Fault exhibit pressures much higher than the pressures of equivalent gas pools within the developed portion of the Kenai Gas Field to the south of the Cannery Loop Fault.

8. An empirical relationship between well spacing and ultimate gas recovery cannot be established for these pools because of the lenticular nature of the reservior sands.

9. Though not quantifiable, ultimate gas recovery from each of these pools should be enhanced as well density is increased.

10. Gas recovery efficiency and ultimate gas recovery may be jeopardized should high and low pressure sands be in communication within the same well bore.

11. The shallower gas pool is larger in areal extent of the three. It is confined to those portions of the Cannery Loop Unit and of the Kenai Unit which lie north of the Cannery Loop Fault.

12. The Cannery Loop Fault Trace depicted by Exhibit "C" cuts across the northern portion of the affected area set forth by Conservation Order No. 82.

CONCLUSIONS:

1. The area overlying the three gas pools north of the Cannery Loop Fault may be logically considered a northerly extension of the Kenai Gas Field, and may be appropriately defined as the Cannery Loop Extension of the Kenai Gas Field.

2. The Cannery Loop Fault is a sealing fault and establishes the southern boundary of at least the shallowest gas pool encountered.

3. Gas pools encountered north of the Cannery Loop Fault are not pressure connected with the developed gas pools south of the Cannery Loop Fault.

4. Rules set forth for the area affected by Conservation Order No. 82 do not appropriately apply for governing the drilling, development, and production of the three gas pools found north of the Cannery Loop Fault trace.

NOW, THEREFORE, IT IS ORDERED THAT those portions of sections 17, 19 and 20, T5N, R11W, SM, lying to the north of the Cannery Loop Fault trace as depicted on Exhibit "C" of the July 8, 1987 Public Hearing Record, Structure Contours Top Beluga Formation, are excluded from the area described by Conservation Order No. 82 as the affected area.

IT IS FURTHER ORDERED THAT the rules hereinafter set forth apply to the following described area:

T6N, R11W, SM
Sections 32, 33, and 34.

T5N, R11W, SM
Sections 3, 4, 5, 6, 7, 8, 9, 10 and 18.

T5N, R11W, SM
Those portions of sections 16, 17, 19, and 20 lying to the north of the Cannery Loop Fault trace as depicted on Exhibit "C" of the July 8, 1987 Public Hearing Record, Structure Contours Top Beluga Formation.

Rule 1. Designation of Affected Area

The area affected by this Order may be referred to as the Cannery Loop Extension of the Kenai Gas Field.

Rule 2. Definition of Pools

a) The Beluga Gas Pool is defined as the accumulation of gas occurring within the affected area in sands stratigraphically equivalent to the interval between the measured depths of 6081' and 9171' in Cannery Loop Unit Well #1.

b) The Upper Tyonek Gas Pool is defined as the accumulation of gas occurring within the affected area in sands stratigraphically equivalent to the interval between the measured depths of 9171' and 10,831' in Cannery Loop Unit Well #1.

c) The Tyonek "D" Gas Pool is defined as the accumulation of gas occurring within the affected area in sands stratigraphically equivalent to the interval between the measured depths of 10,831' and 11,962' in Cannery Loop Unit Well #1.

Rule 3. Well Spacing

A Drilling Unit for the Beluga, Upper Tyonek, or Tyonek "D" Gas Pools is established as the quarter-quarter subdivision of a governmental section occurring within the affected area.

Rule 4. Offset Limitations

A well bore may not expose for the purposes of regular production any interval of a pool that is located closer than 1,500' to the boundary of the affected area, or closer than 500' to the boundary of the participating area established for that pool.

Rule 5. Reservoir Pressure Surveillance

Within six months of the start of regular production, the operator shall submit for approval an initial plan for monitoring reservoir pressure in each pool.

The initial plan shall include but may not be limited to:

1) Establishing pool datums.

2) Initial reservoir pressure of each pool.

3) Method for determining average reservoir pressure at least once each year.

Rule 6. Administrative Approval

Upon request the Commission may administratively amend this Order so long as the operator demonstrates to the Commission's satisfaction that sound engineering practices are maintained and the amendment will not result in physical waste or the impairment of correlative rights.

DONE at Anchorage, Alaska and dated August 3, 1987.

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

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

W. W. Barnwell, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index