STATE OF ALASKA

OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage, Alaska 99501-3192

Re: AOGCC motion to amend Conservation ) Conservation Order 317A
Order 317 to include an Annual Reservoir )
Surveillance Report ) Pt. McIntyre Oil Field
) Pt. McIntyre Oil Pool
) Stump Island Oil Pool
July 2, 1993 (Rev. Sept. 10, 1993)
Amended April 25, 1996

IT APPEARING THAT:

1. The Alaska Oil and Gas Conservation Commission, acting on its own motion, gave notice of intent to hold a public hearing to require submission of an annual Reservoir Surveillance Report for the Pt. McIntyre Oil Pool.

2. Notice of public hearing to be held on March 11, 1996 was published in the Anchorage Daily News on February 9, 1996.

3. No protests to the intended regulation were received.

FINDINGS:

1. Pool rules were established on July 2, 1993 for the development of the Pt. McIntyre Oil Pool in Conservation Order 317.

2. It is appropriate at this time to require submission of an annual Reservoir Surveillance Report.

CONCLUSIONS:

1. Conservation Order 317 Rule 14 provides the Commission the means to administratively amend the order as long as the change does not promote waste, jeopardize correlative rights, and is based on sound engineering principles.

2. Appropriate reservoir surveillance data will be obtained to plan and optimize primary development, secondary recovery, and reservoir management plans.

3. Annual Reservoir Surveillance reports will enable the Commission to keep pace with development issues and monitor reservoir performance.

4. Periodic reviews of the operator's development plans are appropriate to ensure that operations are being conducted to optimize recovery and prevent waste.

NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth, in addition to state-wide requirements under 20 AAC 25 apply to the following affected area referred to in this order:

Umiat Meridian
T12N R15E Section 18 All.
Section 19 N1/2.
T12N R14E Section 13 All.
Section 14 All.
Section 23 Nl/2 NW1/4, N1/2 NE1/4, SW1/4 NW1/4.
Section 24 Nl/2.
T12N R14E Section 15 All
Section 16 All
Section 21 N1/2 NE1/4.
Section 22 N1/2.
T12N R14E Section 17 NE1/4, N1/2, SE 1/4, E1/2 E1/2 NW1/4, E1/2 NE1/4 SW1/4.
T12N Rl4E Section 3 All.
Section 4 All.
Section 9 All.
Section 10 All.

Those Lands in Block 605 lying northerly of the north boundary of Section 3, T12N, R14E, UM. AK. (Identical with line 4-5 on Block 605) and lying easterly of the west boundary of Sections 2 and 11, T12N, R14E, UM, AK (Identical with line 5-6 on Block 605) and lying northerly of the south boundary of Section 11 and 12, T12N, R14E, UM, AK, and lying northerly of the south boundary of Section 7, Tl2N, Rl5E, UM, AK (Identical with line 6-7 on Block 605). within the offshore three-mile arc lines listed as State Area on the "Supplemental Official O.C.S. Block Diagram," approved 12/9/79, containing 1457.32 hectares.

Rule 1 Plan of Development and Operation

Regular production may not begin until the interests of the working interest and royalty owners are integrated in accordance with the provisions of 20 AAC 25.5 17, and the plan of development and operation has been approved by the Commission under the provisions of AS 31.05.030(d)(9).

Rule 2 Field and Pool Names

The field is the Pt. McIntyre oil field. Hydrocarbons contained within the Kuparuk River and Kalubik formations constitute a single associated gas and oil reservoir called the Pt. McIntyre oil pool. Hydrocarbons contained within the Seabee formation constitute a single associated gas and oil reservoir called the Stump Island oil pool.

Rule 3 Pool Definition

The Pt. McIntyre oil pool is defined as the accumulation of hydrocarbons common to and which correlates with the interval from 9908 to 10665 foot measured depth in the ARCO Pt. McIntyre No. 11 well.

The Stump Island oil pool is defined as the accumulation of hydrocarbons common to and which correlates with the interval from 8759 to 8930 foot measured depth in the ARCO Pt. McIntyre No. 3 well.

Rule 4 Well Spacing

The spacing unit shall be one producing well per 40 acres or quarter-quarter governmental section. No pay shall be opened in a well closer than 500 feet to the boundary of the affected area.

Rule 5 Casing and Cementing

a. A conductor casing shall be set at least 75 feet below the surface and sufficient cement shall be used to fill the annulus behind the pipe. Cement to surface shall be verified by visual inspection. The Commission may administratively waive or approve other conductor setting depths and sealing methods that are supported by sound engineering principles.

b. Surface casing shall be set at least 500 feet MD below the base of the permafrost but not below 5000 feet TVDss. Sufficient cement shall be used to fill the annulus behind the casing to the surface; if complete fill-up is not obtained, a top job will be performed before proceeding with drilling operations.

c. Structural casing is not required.

Rule 6 Completion Practices

Wells completed for production may utilize casing strings or liners cemented through the productive intervals and perforated, slotted liners, screen-wrapped liners, gravel packs or open hole methods, or combinations thereof.

Rule 7 Drilling and Production Equipment

Drilling and production equipment must meet the requirements of API RP 7G, Section, "Drillstem Corrosion and Sulfide Stress Cracking," current edition.

Rule 8 Automatic Shut In Equipment

a. Upon completion. each well which is capable of unassisted flow of hydrocarbons to the surface shall be equipped with:

i. a fail-safe automatic surface safety valve (SSV) capable of preventing uncontrolled flow.

ii. a fail-safe automatic subsurface safety valve (SSSV), unless other types of subsurface valve are approved by the Commission, shall be installed in the tubing string below the base of the permafrost and be capable of preventing uncontrolled flow.

b. A well that is not capable of unassisted flow of hydrocarbons, as determined by a "no flow" performance test witnessed by a Commission representative, is not required to have fail-safe automatic SSSVs.

c. SSSVs may be temporarily removed as part of routine well operations without specific notice to. or authorization by the Commission.

Rule 9 Wellbore Commingling

a. Production from the Pt. McIntyre and Stump Island oil pools may be commingled in the wellbore of the Pt. McIntyre No. 3 well.

i. Allocation to each pool may be determined by production profile surveys or separate zone well tests.

ii. The Commission may require additional production surveillance methods and may administratively accept alternative methods of allocation of wellbore commingled production upon application by the operator.

b. Additional wells may be approved administratively for wellbore commingling on a case-by-case basis upon application to the Commission.

Rule 10 Surface Commingling and Common Facilities

a. Production from the Pt. McIntyre and Stump Island oil pools may be commingled on the surface with production from other pools for processing at the LPC prior to custody transfer.

b. Production from each well will be determined by the following well test allocation methodology. Allocation data and well test data will be supplied to the Commission monthly in both computer file and report formats.

i. Conduct well tests to determine production rates for each well.

ii. Calculate each well's theoretical monthly production (TMP) based on well test rate(s) and actual time on production.

iii. Sum the TMP volume for all wells in all pools.

iv. Determine an allocation factor as the ratio of the metered volume to the TMP for all wells in all pools (i.e., metered/TMP)

v. Calculate each well's actual monthly production (AMP) volume as:

AMP = TMP x Allocation Factor

c. NGLs will be allocated to each pool based on actual gas production volumes and NGL process simulations. Process simulations will be updated at least once per year based on NGL samples and results reported to the Commission.

d. Each producing well will be tested at least twice each month. Wells that have been shut in and cannot meet the twice monthly test frequency must be tested within five days of startup. All available test separator capacity within the constraints imposed by operating conditions must be utilized for well testing.

e. Optimum test duration and stabilization time will be determined on a well by well basis by the operator.

f. Water volumes will be determined by API/MPMS approved methods, or the use of industry proven, on-line water cut measurement devices approved by the Commission..

g. API gravity will be determined for each producing well annually by an API/MPMS approved method.

h. Gas samples will be taken and analyzed for composition from each non gas lifted producing well yearly.

i. Quarterly allocation process reviews will be held with the Commission.

j. This rule may be revised or rewritten after an evaluation period of at least one year.

Rule 11 Production Anomalies

In the event of oil production capacity proration at or from the LPC, all commingled pools produced at the LPC will be prorated by an equivalent percentage of oil production recognizing mechanical limitations and operational constraints.

Rule 12 Reservoir Pressure Monitoring

a. Prior to regular production, a pressure survey shall be taken on each well to determine the reservoir pressure.

b. A minimum of one bottom hole pressure survey per producing governmental section shall be run annually. The surveys in part a. of this rule may be used to fulfill the minimum requirements.

c. The datum for all surveys is 8800' TVDss.

d. Pressure surveys will be either a pressure buildup, pressure falloff, RFT, or static bottom hole pressure after the well has been shut in for an extended period.

e. The pressure surveys will be reported to the Commission quarterly. Commission form 10-412, Reservoir Pressure Report, shall be used to report results from these surveys. All data necessary for complete analysis of each survey need not be submitted with the form 10-412 but must be submitted upon request.

f. Results and data from any special reservoir pressure monitoring techniques. tests, or surveys also shall be submitted in accordance with part 'e' of this rule.

Rule 13 Gas-Oil -Ratio Exemption

Wells producing from the Pt. McIntyre and Stump Island oil pools are exempt from the gas-oil ratio limit set forth in 20 AAC 25.240(b) so long as the provisions of 20 AAC 25.240(c) apply.

Rule 14 Administrative Action

Upon proper application, the Commission may administratively waive the requirements of any rule stated above or administratively amend this order as long as the change does not promote waste, jeopardize correlative rights. and is based on sound engineering principles.

Rule 15 Pt. McIntyre Oil Pool Annual Reservoir Report

An annual Pt. McIntyre Oil Pool surveillance report will be required ~y June 1 of this year-and by April 1 of each subs~quei~t year. The report shall include but is not limited to the following:

a. Progress of enhanced recovery project(s) implementation and reservoir management summary including engineering and geotechnical parameters.

b. Voidage balance by month of produced fluids and injected fluids.

c. Analysis of reservoir pressure surveys within the pool.

d. Results and where appropriate, analysis of production logging surveys, tracer surveys and observation well surveys.

e. Results of any special monitoring.

f. Future development plans.

g. Review of Annual Plan of Operations and Development.

DONE at Anchorage, Alaska and dated April 25, 1996.

David W. Johnston, Chairman
Alaska Oil and Gas Conservation Commission

J. David Norton, P.E. Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index