STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re:

A Hearing to Consider a Proposed Rule Governing the Operation of Development Wells in all Pools within the Prudhoe Bay Field with Pressure Communication or Leakage in any Casing, Tubing, or Packer.

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Prudhoe Bay Field

All Pools

June 26, 2003

Conservation Order No. 492

IT APPEARING THAT:

1. On its own motion, the Alaska Oil and Gas Conservation Commission ("Commission" or “AOGCC") proposed to adopt rules regulating sustained annulus pressures in Prudhoe Bay development wells.

2. Notice of opportunity for a public hearing on the proposal was published in the Anchorage Daily News on April 17, 2003.

3. By letter dated May 5, 2003 BP Exploration (Alaska) Inc. (“BPXA”) requested a hearing.

4. A hearing was held in conformance with 20 AAC 25.540 at the Commission's offices, 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501 on May 27, 2003.

FINDINGS:

1. Findings 1, 3, 4, 5, 6, 7, 8, 9, 10, and 11 of Conservation Order No. 483 are incorporated by reference.

2. BPXA, the Prudhoe Bay Field operator, provided written and oral hearing testimony. BPXA's position is that sustained annulus pressures are appropriately addressed by BPXA’s existing well integrity program parameters and that a new rule governing annular pressure in the Prudhoe Bay Field is unnecessary.

3. The Paper, Allied-Industrial, Chemical and Energy Workers International Union Local 8-369, AFL-CIO, submitted written comments endorsing and supporting the proposed Prudhoe Bay Field annular pressure rules, and urged their immediate adoption.

4. The hearing record also incorporated the hearing record relating to Conservation Order No. 483, and the following material: the annular pressure management policies submitted by BPXA, MMS regulation 30 CFR 250.517, Applied Drilling Engineering by Bourgoyne, et al., the Halliburton Cementing Tables, the Commission well files for the wells on BPXA’s “A-B3” status list and on BPXA’s waived well list, an annular pressure simulator developed by the Commission staff as contained in an MS Excel spreadsheet, and the Alberta Energy Utilities Board informational letter 89-19 and Interim Directive 99-3. The Commission also reviewed efforts by the American Petroleum Institute to develop a recommended practice for wells affected by sustained casing pressure.

5. BPXA performs pressure tests of tubulars and completion equipment in Prudhoe Bay Field development wells that are representative of actual well operating conditions, and monitors development wells for sustained annular pressures.

6. BPXA relies on a well pressure limit waiver process to continue operating Prudhoe Bay Field wells that exhibit inner annulus pressure exceeding 2000 psig with two pressure bleeds per week, or outer annulus pressure exceeding 1000 psig with two pressure bleeds per week.

7. Values of “burst pressure rating” and “minimum internal yield pressure” of well tubulars are numerically equal.

8. Pressure in an active Prudhoe Bay Field well not exceeding 45% of the burst pressure rating, or minimum internal yield pressure, of well tubulars is within the range of pressure that will not result in failure of well integrity, uncontrolled release of fluid or pressure, or threat to human safety.

9. Placing a shut-in Prudhoe Bay Field well in service results in well heating that can in turn cause significant increases in annular pressures.

10. BPXA intends to evaluate engineered solutions (controls, pressure relief systems, etc.) as to their applicability in managing annular pressures in Prudhoe Bay Field development wells.

CONCLUSIONS:

1. There is a need for regulatory oversight of the management of Prudhoe Bay Field wells that exceed specific pressure thresholds, by administering rules regulating annular pressures. This methodology is consistent with similarly intended efforts by other regulatory agencies.

2. The objectives of rules regulating sustained annular pressures in Prudhoe Bay Field development wells are to conserve Alaska petroleum resources and protect human safety and the environment, through proper management of annular pressures. Proper annular pressure management aims to prevent failure of well integrity, uncontrolled release of fluid or pressure, or threat to human safety.

3. Prudhoe Bay Field annular pressure rules should recognize the variety of well completions and development well characteristics in the Prudhoe Bay Field.

4. Recently revised BPXA Prudhoe Bay Field annular pressure management policies provide a reasonable starting point for establishing rules regulating annular pressure. However, BPXA's policies should be supplemented by (a) a requirement for AOGCC notification when Prudhoe Bay Field wells exhibit annular pressures that exceed specific thresholds, (b) a mechanism for operator submittal of corrective action proposals for affected wells, (c) a specific annular pressure limit that necessitates corrective action, and (d) operator accounting for annular pressure increases due to well heating during start-up.

5. The development of engineered solutions applicable to new and existing Prudhoe Bay Field development well systems may in the future satisfy some of the objectives of these rules for wells affected by annular pressures.

6. Well heating-induced annular pressure increases must be taken into account before initiating well start-up, to ensure that annular pressures at well operating temperature will not result in failure of well integrity, uncontrolled release of fluid or pressure, or threat to human safety.

NOW, THEREFORE, IT IS ORDERED: that each of the Conservation Orders Nos. 207, 311B, 329A, 341D, 345, 452, 457A, 471, and 484 is amended to add the following rules:

1. The operator shall conduct and document a pressure test of tubulars and completion equipment in each development well at the time of installation or replacement that is sufficient to demonstrate that planned well operations will not result in failure of well integrity, uncontrolled release of fluid or pressure, or threat to human safety.

2. The operator shall monitor each development well daily to check for sustained pressure, except if prevented by extreme weather conditions, emergency situations, or similar unavoidable circumstances. Monitoring results shall be made available for AOGCC inspection.

3. The operator shall notify the AOGCC within three working days after the operator identifies a well as having (a) sustained inner annulus pressure that exceeds 2500 psig for wells processed through the Lisburne Processing Center and 2000 psig for all other development wells, or (b) sustained outer annulus pressure that exceeds 1000 psig.

4. The AOGCC may require the operator to submit in an Application for Sundry Approvals (Form 10-403) a proposal for corrective action or increased surveillance for any development well having sustained pressure that exceeds a limit set out in paragraph 3 of this rule. The AOGCC may approve the operator’s proposal or may require other corrective action or surveillance. The AOGCC may require that corrective action be verified by mechanical integrity testing or other AOGCC approved diagnostic tests. The operator shall give AOGCC sufficient notice of the testing schedule to allow AOGCC to witness the tests.

5. If the operator identifies sustained pressure in the inner annulus of a development well that exceeds 45% of the burst pressure rating of the well’s production casing for inner annulus pressure, or sustained pressure in the outer annulus that exceeds 45% of the burst pressure rating of the well’s surface casing for outer annulus pressure, the operator shall notify the AOGCC within three working days and take corrective action. Unless well conditions require the operator to take emergency corrective action before AOGCC approval can be obtained, the operator shall submit in an Application for Sundry Approvals (Form 10-403) a proposal for corrective action. The AOGCC may approve the operator’s proposal or may require other corrective action. The AOGCC may also require that corrective action be verified by mechanical integrity testing or other AOGCC approved diagnostic tests. The operator shall give AOGCC sufficient notice of the testing schedule to allow AOGCC to witness the tests.

6. Before a shut-in well is placed in service, any annulus pressure must be relieved to a sufficient degree (a) that the inner annulus pressure at operating temperature will be below 2500 psig for wells processed through the Lisburne Production Center and below 2000 psig for all other development wells, and (b) that the outer annulus pressure at operating temperature will be below 1000 psig.

7. For purposes of these rules,

“inner annulus” means the space in a well between tubing and production casing;

“outer annulus” means the space in a well between production casing and surface casing;

“sustained pressure” means pressure that (a) is measurable at the casing head of an annulus, (b) is not caused solely by temperature fluctuations, and (c) is not pressure that has been applied intentionally.

DONE at Anchorage, Alaska and dated June 26, 2003.

Sarah Palin, Chair
Alaska Oil and Gas Conservation Commission

Randy Ruedrich, Commissioner
Alaska Oil and Gas Conservation Commission

Daniel T. Seamount, Jr., Commissioner
Alaska Oil and Gas Conservation Commission


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