STATE OF ALASKA

OIL AND GAS CONSERVATION COMMISSION
3001 Porcupine Drive
Anchorage, Alaska 99501-3192

Re: THE APPLICATION OF PHILLIPS ) Disposal Injection Order No. 17 PETROLEUM COMPANY for an order ) allowing the underground disposal ) North Cook Inlet Unit of Class II fluids in the North ) North Cook Inlet Unit A-12 well Cook Inlet Unit A-12 well. September 29, 1998

IT APPEARING THAT:

1. By letter dated December 10, 1997, Phillips Petroleum Company ("Phillips") requested authorization from the Alaska Oil and Gas Conservation Commission to dispose of Class II oil field waste fluids by underground injection into the North Cook Inlet Unit ("NCIU") A-12 well, located on the Tyonek Platform. Additional information requested by the Commission was received March 10, 1998.

2. The Commission published notice of an opportunity for public hearing in the Anchorage Daily News on December 22, 1997.

3. The Commission received no protest or request for a public hearing.

4. The proposed disposal project requires an aquifer exemption under 20 AAC 25.440. The Commission issued Aquifer Exemption Order #4 on September 29, 1998, after receiving no objection from the U.S. Environmental Protection Agency.

FINDINGS:

1. Phillips is the operator of the NCIU. There are no other operators within a one-quarter mile radius of the proposed disposal injection project. The State of Alaska is the surface owner.

2. Phillips is the only working interest owner within the NCIU.

3. Aquifer Exemption Order #4 exempts the portions of aquifers in North Cook Inlet Field that are common to and correlate with the interval below 2900' MD in the NCIU A-12 well.

4. Fluids to be injected will consist of Class II waste fluids associated with drilling, workover and production operations from the NCIU.

5. The NCIU A-12 well was originally drilled and completed as a producing gas well in 1970. Phillips requests approval to dually complete the well as a combination production and disposal well.

6. The proposed disposal zone in within the Sterling Formation. The Sterling Formation is composed of coarse-grained clastic intervals with interspersed relatively thin carbonaceous mudstones. Lithologic units are correlative throughout the unit.

7. The proposed Class II disposal interval in the A-12 well is located between 3260' and 3380' MD, within highly porous and permeable fluvial sandstones and conglomerates of the Sterling Formation.

8. The proposed disposal interval is overlain and confined by approximately 95( of fine grained sediments, which will confine and prevent vertical migration of Class II fluids into non-exempt aquifers above 2900' MD in the A-12 well.

9. Structural deformation has folded the Sterling Formation, causing at least 250' of relief in the proposed disposal interval.

10.Structural closure and the associated hydrostatic gradient will prevent lateral migration of Class II wastes beyond the NCIU.

11.The NCIU A-12 well was constructed with 20" 133 lb/ft K-55 casing set at 1,990' MD and cemented to surface, and 13 3/8(( 72 lb/ft N-80 casing set at 6,950( MD.

12.Production tubing in the A-12 well consists of 7" 26 lb/ft J-55/L-55 tubing from surface to 3,200' MD and 4 1/2" 10.5 lb/ft J-55 tubing from 3,200' to 5,760' MD. A 2 3/8" 4.7 lb/ft J-55 disposal tubing was run from surface to 3,206' MD. The well is equipped with multiple packers to isolate production zones and a "twin-flow" packer set at 3,200( MD to isolate pressure to the disposal interval.

13.A cement bond log was run on October 30, 1997, to confirm cement isolation of the disposal zone. The cement bond log, received by the Commission on September 8, 1998, shows good quality cement between 1940( and 5700' MD.

14.The NCIU A-12 passed a mechanical integrity test of the casing-tubing annulus on November 9, 1997.

15.The average disposal rate during peak activity is expected to be about 3000 barrels per day. An average of 300 to 500 barrels per day is anticipated to be disposed of throughout the life of the project, but may be higher, depending on level of drilling activity and amount of water produced with the oil and gas.

16.The maximum anticipated surface injection pressure is 2500 psi. The average injection pressure will range between 1500 and 1800 psi.

17.Fracture modeling studies indicate that the proposed disposal will not initiate or propagate fractures though the confining zone at injection rates and pressures.

CONCLUSIONS:

1. The requirements of 20 AAC 25.252 for authorization to dispose of Class II fluids in the NCIU A-12 well have been met.

2. Waste fluids authorized for disposal under this order will consist of Class II waste generated from drilling, production and workover operations in the NCIU.

3. The proposed disposal operations will occur in permeable strata that can be expected to accept fluids at pressures less than the fracture pressure of the confining strata.

4. Waste fluids will be contained within appropriate receiving intervals by confining lithology, cement isolation of the perforated intervals, and operating parameters.

5. Surveillance of disposal rate and pressure, and casing pressure will ensure anomalous performance is observed and diagnosed. Abnormalities in operating conditions may indicate that fluid is not going where intended.

6. There are no aquifers being used as a source of drinking water within or near the NCIU.

7. Disposal into well the NCIU A-12 well will not occur into a non-exempt freshwater aquifer, and will not result in an increased risk of movement of fluids into a freshwater source.

8. The mechanical integrity of this well has been demonstrated in accordance with 20 AAC 25.412.

9. The cement bond log indicated uniform bonding and adequate coverage over the entire logged interval, from 1940-5700' MD.

10.Disposal operations in the NCIU A-12 well will not cause waste or jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED THAT:

Rule 1 Authorized Injection Strata for Disposal

Class II oil field fluids may be injected into the NCIU A-12 well in conformance with 20 AAC 25, for the purpose of disposal into strata between the depths of 3260' - 3380' MD.

Rule 2 Demonstration of Tubing/Casing Annulus Mechanical Integrity

The tubing/casing annulus must be tested for mechanical integrity in accordance with 20 AAC 25.412 prior to initiating injection and at least once every four years. A test surface pressure of 1500 psi or 0.25 psi/ft. multiplied by the vertical depth of the packer, whichever is greater, but not to exceed a hoop stress greater than 70% of the minimum yield strength of the casing is to be used. The test pressure must show stabilizing pressure and a decline of less than 10% in a thirty-minute period. The Commission must be notified at least twenty-four (24) hours in advance to enable a representative to witness pressure tests.

Rule 3 Well Integrity Failure

Whenever disposal rates, operating pressure observations or pressure tests indicate pressure communication or leakage of any casing, tubing or packer, the operator must notify the Commission on the first working day following the observation, and obtain Commission approval of a plan for corrective action and Commission approval to continue injection.

Rule 4 Surveillance

Operating parameters including disposal rate, disposal pressure, annulus pressure and fluid volume must be monitored and reported according to the requirements of 20 AAC 25.432. An annual report evaluating the performance of the disposal operation must be submitted on or about July 1 of each year.

Rule 5 Operational Criteria

Maximum disposal rates shall not exceed 3000 bbls/day. Maximum surface disposal pressure shall not exceed 2500 psi.

Rule 6 Administrative Action

Upon request, the Commission may administratively revise this order upon proper showing that the change is based on sound engineering practices and will not allow waste fluids to escape from the disposal zone.

DONE at Anchorage, Alaska and dated September 29, 1998.

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

Camillé Oechsli, Commissioner
Alaska Oil and Gas Conservation Commission

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