STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West 7th Avenue, Suite 100

Anchorage, Alaska 99501

Re: THE REQUEST OF FOREST ) Disposal Injection Order No. 22
OIL CORPORATION for a )
Disposal Injection Order for ) Upper Tyonek Formation
the Redoubt Unit #D1 well, ) Redoubt Unit
Sec.14, T7N, R14W, Seward ) Well Redoubt Unit #D1
Meridian, offshore Cook Inlet. )
August 9, 2001

IT APPEARING THAT:

1. Forest Oil Corporation ("Forest") submitted an application, dated May 9, 2001, requesting that the Alaska Oil and Gas Conservation Commission issue a disposal injection order to allow Class II disposal in the Redoubt Unit #D1 well. Additional information requested by the Commission was received on June 5, June 22 and July 5, 2001. Subsequent to numerous changes, a revised application for disposal injection and aquifer exemption orders was submitted on July 27, 2001.

2. The Commission published notice of an opportunity for a public hearing in the Anchorage Daily News and Peninsula Clarion on May 14, 2001.

3. The Commission submitted a copy of Forests' Aquifer Exemption application to the U.S. Environmental Protection Agency, Region 10, ("EPA Region 10") on May 10, 2001, in accordance with Section 14 of the November 22, 1991 Memorandum of Agreement between EPA Region 10 and the Commission. A copy of the revised application was submitted to EPA Region 10 on July 27, 2001. The Commission also submitted a copy of a proposed aquifer exemption order to EPA Region 10 on July 31, 2001.

4. The Commission did not receive any protest or request for a public hearing.

FINDINGS:

1. In correspondence dated May 8, 2001 Forest requested an order authorizing Class II disposal into the Tyonek Formation in the Redoubt Unit #D1 well. Subsequent to numerous plan changes and data correction efforts, a revised application was submitted on July 27, 2001.

2. The Redoubt Unit ("RU") is located offshore in Cook Inlet, approximately 2 miles east the West Forelands area, and is being developed from the Osprey platform.

3. The RU #D1 well is located approximately 1915' from the south line and 322' from the east line of Section 14, Township 7 North, Range 14 West, Seward Meridian. Forest Oil Corporation (Forest) is the only operator within one-half mile radius of the proposed disposal operation.

4. Forest has provided an affidavit showing that they provided a copy of the application for disposal to the State of Alaska, Department of Natural Resources, the only surface owner within a one-quarter mile radius of the proposed disposal project.

5. Wireline log analytical techniques, which are compliant with EPA recommended methods as described in "Survey of Methods to Determine Total Dissolved Solids Concentrations", (KEDA Project No. 30-956), were used to characterize formation water salinities in the Redoubt Unit.

6. Wireline log analysis from the RU #D1 well show the proposed Class II disposal injection zone contains freshwater with a total dissolved solids (TDS) concentration generally between 3,000 and 10,000 mg/l.

7. Current perforations in the RU #D1 well are between 8216' and 8450' measured depth (MD), within sandstones of the Upper Tyonek Formation. Forest intends to also perforate and inject into another sand interval between 7650' and 7900' MD.

8. In the Redoubt Unit area the Upper Tyonek Formation sandstones are anastomozing fluvial deposits, which tend to be laterally continuous over several miles. Porosities typically range from 20%-30% and permeabilities range to the 100's of millidarcies.

9. The Upper Tyonek Formation contains numerous laterally continuous claystones, siltstones and coals that have been shown to be effective confining zones. In the interval 300 feet above the proposed disposal operations in RU #D-1 these rock types represent approximately 30% of all lithologies. Similar percentages of confining lithologies are present in the underlying Tyonek Formation.

10. In the Redoubt Unit the Upper Tyonek Formation is overlain by approximately 1700 feet of Beluga Formation. The Beluga Formation is composed of approximately 50% confining lithologies.

11. At the top of the proposed disposal zone in the RU #D1 well, the nearest well will be the planned RU #3 well, at a distance of over 3000' away.

12. Forest has requested and received an Aquifer Exemption Order (AEO) for all aquifers below 3749' MD (3650' true vertical depth subsea) and within one-half mile radius of the RU #D1 well, to prepare for the possibility of a need for Class II disposal into intervals at shallower depths than originally anticipated.

13. The proposed disposal interval is overlain and confined by siltstones, coals and shales within the Tyonek and Beluga Formations which will prevent vertical migration of Class II wastes into formation waters with TDS content less than 3000 mg/l.

14. A cement bond log and cement records were reviewed to confirm that the RU #D1 well is cemented adequately to isolate the currently accessible disposal interval.

15. The well is current completed with 36" conductor set at 200' MD, 9 5/8" casing to 2517'MD, and 7 5/8" casing at 8600' MD. A 3 1/2" tubing string and packer were set at 7620' MD.

16. The well passed the initial mechanical integrity test on July 22, 2001.

17. The waste stream will consist of produced water, drilling, completion and workover fluids, rig wash, drilling mud slurries, NORM scale, tank bottoms, and other fluids brought to the surface in connection with oil and gas development activity on the Osprey platform.

18. Forest estimates that the average volume of fluids to be disposed will be approximately 600 barrels per day, with a maximum volume of 1000 barrels per day. The average and maximum density of injected fluids will be 10.0 pounds per gallon (ppg) and 11.5 ppg, respectfully.

19. Forest estimates the surface injection pressure will not exceed 4000 psi at an injection rate of 5 barrels per minute (bpm). Average anticipated surface injection pressure is 3600 psi.

20. Forest provided fracture modeling simulations assuming 23,810 barrels of 10.5 ppg fluid system transporting 5 ppg 100 mesh sand at a rate of 5 bpm. The resulting simulator output data showed the injected fluids to be fully contained within the intervals modeled (at 3784' MD and at 5477' MD). It is reasonable to assume that fluids injected at deeper intervals will also be contained within their respective receiving intervals.

21. Fracture propagation within the disposal interval is an integral part of the process of placing waste slurries into the disposal interval. Fractures will be created as disposal zone porosity and permeability is occluded by the deposition of solids in pore spaces. Fractures provide pathways to transport waste fluids to unfilled areas within the disposal zone.

22. Forest will perform a step rate test to establish optimum injection rates and pressures. The step rate will be incrementally increased to pump rates 100% in excess of the maximum anticipated injection rates for waste disposal. Pressure falloff data will be collected at the end of the step rate test.

23. Reservoir surveillance techniques including but not limited to, step rate injection tests, monitoring operation parameters, and temperature logging will be used for tracking near wellbore fluid movement, estimating dimensions of disposal fracture or disposal storage volume and detecting changes in disposal zone characteristics.

CONCLUSIONS:

1. The application requirements of 20 AAC 25.252 have been met.

2. Those portions of aquifers below 3749' MD (3650' true vertical depth subsea) and within one-half mile radius of the RU #D1 well have been exempted from consideration as freshwater to allow for Class II disposal in the RU #D1 well.

3. Waste fluids authorized for disposal under this order will consist exclusively of the following Class II fluids: produced water, drilling, completion and workover fluids, rig wash, drilling mud slurries, NORM scale, tank bottoms, and other fluids brought to the surface in connection with oil and gas development activity on the Osprey platform.

4. Permeable strata, which can reasonably be expected to contain the total volume of disposal fluid anticipated for this project are present in the Tyonek Formation.

5. Waste fluids will be contained within appropriate receiving intervals by confining lithologies, cement isolation of the wellbore and operating conditions.

6. Disposal injection operations in the RU #D1 well will be conducted at rates and pressures below those estimated to fracture the confining zones.

7. Evaluation of operational performance data and reservoir surveillance data will aid in preventing fracturing of the confining zones.

8. Surveillance of disposal material placement, daily monitoring of operational parameters, and demonstration of mechanical integrity prior to injection and every two years thereafter will reasonably assure the waste fluids are contained within the disposal interval.

9. Disposal injection operations in the RU #D1 well will not cause waste, jeopardize correlative rights, or impair ultimate recovery.

NOW, THEREFORE, IT IS ORDERED

Rule 1 Authorized Injection Strata for Disposal

Class II oil field waste fluids may be injected in conformance with Alaska Administrative Code Title 20, Chapter 25, for disposal into the Upper Tyonek Formation, between the depths of 7650' and 8450' MD in the RU #D1 well.

Rule 2 Authorized Fluids

This authorization is limited to Class II waste fluids as follows: produced water, drilling, completion and workover fluids, rig wash, drilling mud slurries, NORM scale, tank bottoms, and other fluids brought to the surface in connection with oil and gas development activity on the Osprey platform.

Rule 3 Demonstration of Tubing/Casing Annulus Mechanical Integrity

The tubing/casing annulus must be tested every two years for mechanical integrity.

Rule 4 Surveillance

A baseline temperature survey from surface to total depth, initial step rate test to pressures equal or exceeding maximum injection pressure and pressure falloff are required prior to sustained disposal injection. Regular fill depth tags are required at least once annually or as warranted following consultation with the Commission. Operating parameters including disposal rate, disposal pressure, annulus pressures and volume of slurry pumped must be monitored and reported according to the requirements of 20 AAC 25.432. An annual performance report will be required including rate and pressure performance, surveillance logging, fill depth, survey results, and volumetric analysis of the disposal storage volume, estimate of fracture growth, if any, and updates of operational plans. Report submission must be on or before July 1.

Rule 5 Notification

The operator must immediately notify the Commission if it learns of any improper Class II injection. Additionally, notification requirements of any other State or Federal agency remain the operators' responsibility.

Rule 6 Administrative Action

Upon request or its own volition, the Commission may administratively revise and reissue this order or any of its rules upon proper showing that the change is based on sound engineering practices, will not allow waste fluids to escape from the disposal zone, and will not cause waste.

Rule 7 Statewide Requirements

Except where a rule stated above substitutes for a statewide requirement, statewide requirements under 20 AAC 25 apply in addition to the above rules.

DONE at Anchorage, Alaska, and dated August 9, 2001.

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

Julie M. Heusser, Commissioner
Alaska Oil and Gas Conservation Commission

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