STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage Alaska 99501-3192

Re: Request by ARCO ALASKA, INC. ) Conservation Order No. 207
et al to present testimony )
to revoke Conservation Order ) Prudhoe Bay Field
No. 83-C and adopt new rules ) Lisburne Oil Pool
for the Lisburne Oil Pool )
in the Prudhoe Bay Field )
) January 10, 1985

IT APPEARING THAT:

1. ARCO Alaska) Inc., on behalf of itself and Exxon Corporation, requested the Alaska Oil and Gas Conservation Commission to hold a public hearing in order to receive testimony for the revocation of Conservation Order No. 83-C and establishment of new pool rules for the development and depletion of the Lisburne Oil Pool in the Prudhoe Bay Field.

2. Notice of the public hearing was published in the Anchorage Times on October 26, 1984.

3. A public hearing was held at the Municipality of Anchorage Assembly Room, 3500 East Tudor Road, Anchorage, Alaska on November 29, 1984.

4. Members of the staff of ARCO Alaska, Inc. presented testimony on behalf of itself, Exxon Corporation and Sohio Alaska Petroleum Company. Exxon Corporation presented a statement in full support of the testimony. The hearing record remained open until 4:30 pm, December 10, 1984. TImely comments were submitted by Sohio Alaska Petroleum Company and Mr. Kelley Everette.

FINDINGS:

1. The Lisburne Group underlies the Sadlerochit Group and consists primarily of shallow marine limestone and dolomite with lesser amounts of shale, silt, sand, and chert.

2. Shaly or silty beds are fairly continuous over a broad area and are useful for correlation.

3. The Lisburne Group is characterized by abundant natural and predominately vertical fractures which allows for fluid movement through the carbonates as well as the thin silty and shaly beds.

4. The Lisburne Group of carbonate sediments was penetrated in it entirety by ARCO Prudhoe Bay State Well #1. The top of the Lisburne Group was encountered at a measured depth of 8,790 feet and the base at 10,440 feet measured depth.

5. The Lisburne Group has been partially or fully penetrated by numerous wells. Oil and gas has been encountered within the Lisburne Group as low as 10,050 feet subsea within the area described by Conservation Order No. 83-C.

6. Evidence indicates that an oil reservoir with an associated gas cap exists and that an oil pool should be defined. The hydrocarbon accumulation may appropriately be defined as the Lisburne Oil Pool.

7. The Lisburne Reservoir is an anticlinal structure that is bounded on the north by the Prudhoe Bay-Niakuk fault complex, by truncation and/or the Mikkelson Bay fault to the east and by dip of 135 feet per mile to the south and west.

8. Evidence is sufficient to establish a definitive gas-oil contact at 8,600 feet subsea. Data are anomalous and insufficient to definitively establish an are-wide planar oil-water contact for the Lisburne Oil Pool.

9. The affected area described in Conservation Order No. 83-C. Appears to be adequate in the eastern portion of the Lisburne Oil Pool but should be expanded westward to reflect the current structural interpretation.

10. A spacing unit of one producing well per governmental quarter section appears adequate to drain the reservoir.

11. Conductor casing set and cemented a minimum of 75 feet below surface should provide adequate anchorage for a diverter system.

12. The effects of permafrost thaw-subsidence and freeze back loadings can be mitigated by setting and cementing surface casing of sufficient strength at least 500 feet below the base of the permafrost but no deeper than 5000 feet true vertical depth.

13. Several casing types and grades that are approved for use as surface casing in the Prudhoe Bay Pool and the Kuparuk River Oil Pool are appropriate for this pool.

14. Perforation of cemented casing or liners, slotted liners, screen wrapped liners, gravel packs and open hole completions appear to be equally effective completion techniques.

15. Significant concentrations of hydrogen sulfide gas were encountered in a production test of the ARCO Pingut State Well No. 1 and smaller amounts of hydrogen sulfide gas have been reported from other wells.

16. Installation of automatic surface shut-in valves is appropriate to prevent an uncontrolled flow of oil or gas.

17. Installation of automatic down hole shut-in valves in the tubing below the permafrost is appropriate to prevent an uncontrolled flow of oil or gas.

18. The flaring of a limited amount of gas will be necessary for the safety purposes and for operational necessities.

19. To aid in the evaluation of the effectiveness of the reservoir depletion, the reservoir pressure and the gas-oil ration of wells should be monitored on a regular and continuous basis.

20. Current studies indicate that a daily oil rate of 160,000 barrels will not be detrimental to the ultimate hydrocarbon recovery. However, pool withdrawal rates in excess of 160,000 barrels of oil per day may affect ultimate recovery.

21. Conservation Order No. 83-C is out-of-date and should be replaced.

22. Evidence is insufficient to determine the prudency of state of art method for enhancement of recovery from the Lisburne Oil Pool. Pilot filed projects are necessary to develop data for determination of the applicability of methods for recovery enhancement.

23. Evidence indicates that the injection of produced gas into the gas cap will retard the rate of decline in reservoir pressure.

24. The average initial reservoir pressure for the Lisburne Oil Pool is 4,490 pounds per square inch at an 8,900 foot subsea datum. Reservoir temperature approximates 183 deg Fahrenheit at the datum.

25. The Lisburne Oil Pool contains in excess of 3 billion barrels of Original Oil in Place (OOIP). Primary depletion may recover no more than 7 percent on the OOIP.

26. It appears that most if not all of the Lisburne Oil Pool lies within the current boundary of the Prudhoe Bay Unit. However, it is possible that the pool limits may extend beyond the Prudhoe Bay Unit boundary.

27. Terms of the Prudhoe Bay Unit Agreement provide for the expansion of the Prudhoe Bay UNit boundary and for the establishment and expansion of an initial participating area for the Lisburne Oil Pool.

28. Management of the Lisburne Oil Pool under terms of the Prudhoe Bay Unit Agreement will effectively protect correlative rights, prevent waste and insure the maximum hydrocarbon recovery.

NOW, THEREFORE, IT IS ORDERED THAT the rules hereinafter set forth apply to the following described area and is referred to in the order as the affected area:

UMIAT MERIDIAN

T10N, R13E Sections 1, 2, 3, 10, 11, and 12.
T10N, R14E Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14, 15, 16, 17, 18, 19, 20,
21, 22, 23, 24, 25, 26, 35, and 36.
T10N, R15E All.
T10N, R16E All.
T10N, R17E Sections 3, 4, 5, 6, 7, 8, 9, 10, 15, 16, 17,
18, 19, 20, 21, 22, 27, 28, 29, 30,
31, 32, 33, and 34.
T11N, R13E Sections 1, 2, 3, 4, 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 18, 19, 20, 21, 22,
23, 24, 25, 26, 27, 28, 29, 30, 31,
32, 33, 34, 35, and 36.
T11N, R14E All.
T11N, R15E All.
T11N, R16E All.
T11N, R17E Sections 3, 4, 5, 6, 7, 8, 9, 10, 13, 14, 15,
16, 17, 18, 19, 20, 21, 22, 23, 24,
25, 26, 27, 28, 29, 30, 31, 32, 33,
34, 35, and 36.
T12N, R13E Sections 35 and 36.
T12N, R14E Sections 13, 14, 15, 16, 21, 22, 23, 24, 25,
26, 27, 28, 31, 32, 33, 34, 35, and
36.
T12N R15E Sections 13, 14, 15, 16, 17, 18, 19, 20, 21,
22, 23, 24, 25, 26, 27, 28, 29, 30,
31, 32, 33, 34, 35, and 36.
T12N, R16E Sections 25, 26, 27, 28, 29, 30, 31, 32, 33,
34, 35, and 36.

Rule 1. FIELD AND POOL NAME

The field is the Prudhoe Bay Field and the pool is the Lisburne Oil Pool.

Rule 2. POOL DEFINITION

The Lisburne Oil Pool is defined as the accumulations of oil and gas which occur in stratigraphic sections which correlate with the stratigraphic section found in the Atlantic Richfield-Humble Prudhoe Bay State No. 1 well between the depths of 8,790 feet measured depth and 10,440 feet measured depth.

Rule 3. WELL SPACING

The well spacing unit shall be one producing well per governmental quarter section. No pay may be opened in a well closer than 1,000 feet to the pay opened in another well or opened in a well which is closer than 500 feet to the boundary of the affected area.

Rule 4. CASING AND CEMENTING

a) A conductor casing shall be set at least 75 feet below the surface an d sufficient cement shall be used to fill the annulus behind the pipe to the surface. Rigid high density polyurethane foam may be used as an alternate to cement, upon approval by the Commission. The Commission may also administratively approve other sealing materials which are supported by sound engineering principles and performance data.

b) Surface casing to provide proper anchorage for equipment to prevent uncontrolled flow, to withstand anticipated interval pressure and to protect the well from the effects of permafrost thaw-subsidence or freeze back loadings shall be set at least 500 feet, measured depth, below the base of the permafrost but not below 5000 feet true vertical depth. Sufficient cement shall be used to fill the annulus behind the casing to the surface.

c) Surface casing types and grades approved for use through the permafrost interval include:

1) 13-3/8 inch, 72 pounds/foot, L-80 Buttress;
2) 13-3/8 inch, 72 pounds/foot, N-80 Buttress;
3) 13-3/8 inch, 68 pounds/foot, MN-80 Buttress.

d) The Commission may administratively approve additional types and grades of surface casing through the permafrost interval upon a showing that the proposed casing and connection can withstand the permafrost thaw-subsidence and freeze back loadings which may be experienced. Evidence submitted to the Commission shall include:

1) full scale tension and compression testing: or
2) finite element model studies: or
3) other types of axial strain data acceptable to the Commission.

e) Alternate casing programs may be administratively approved by the Commission upon application and presentation of data which show the alternatives are appropriate, based upon accepted engineering principles.

Rule 5. 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. The Commission may administratively approve alternate completion methods where appropriate.

Rule 6. HYDROGEN SULFIDE

a) Drilling and production equipment and operations shall be in accordance with:

1) 20 AAC 25.065(c)(1) detection monitoring, (2) contingency and control, and (3) training;
2) 20 AAC 25.065(b) prior to penetration of the top of the Lisburne Group for all step-out wells surrounding the Pingut St. No. 1 well, located 1142' FSL, 1298' FWL, Sec 24, T11E, R15E, UM, or step-outs from any subsequent well with hydrogen sulfide concentrations greater than 25ppm;
3) API RP 55, Conducting Oil and Gas Production Operations Involving Hydrogen Sulfide, First Edition, October, 1981; and
4) API RP 7G, Section 8, Drill Stem Corrosion and Sulfide Stress Cracking, Eighth Edition, April, 1978 when drill pipe utilized has a yield strength greater than 95,000 psi.

Rule 7. AUTOMATIC SHUT-IN EQUIPMENT

a) Any well which is capable of unassisted flow of hydrocarbons must be equipped with

1) a fail-safe automatic surface safety valve (SSV) capable of preventing an uncontrolled flow; and
2) a fail-safe automatic surface controlled subsurface safety valve (SSSV). This valve must be in the tubing string and located below permafrost. The valve must be capable of preventing an uncontrolled flow. For operational necessity the Commission may administratively waive the surface controlled requirement.

b) A representative of the Commission will witness performance tests at times prescribed by the Commission to conform that the SSV, SSSV, and all associated equipment are in proper working condition.

c) When requested by the operator, a representative of the Commission will witness "no-flow tests" to verify that a well is no longer capable of unassisted flow. Upon approval by the Commission, the operator will no longer be required to maintain SSSV's in that well until any subsequent workover or stimulation of the well makes it again capable of unassisted flow. The Commission may require additional "no-flow test" following subsequent well work.

Rule 8. GAS VENTING OR FLARING

a) The venting or flaring of gas is prohibited except for operational necessities and for safety volumes set out in this rule;

b) A daily average volume of 1,000 MCF per day is approved for the safety flare at the Lisburne Production Center;

c) Volumes of gas to provide safety flares for additional facilities may be approved by administrative order upon proper application;

d) The volumes of gas for safety flares may be decreased or increased by administrative order; and

e) Gas flaring may be approved by administrative order during commissioning of new equipment, purging, and start-ups after major repairs or interruptions.

Rule 9. GAS-OIL RATIO TESTS

a) Between 90 and 120 days after regular production commences and each six months thereafter a gas-oil ratio test will be taken on each well for as long as it produces oil;

b) The gas-oil ratio tests will be for a minimum of four hours and shall be taken at the normal producing rate of the well; and

c) The results of the gas-oil ratio tests will be reported on Form 10-409, Gas-Oil Ratio Test and will be submitted in January and July of each year.

Rule 10. PRESSURE SURVEYS.

a) A static bottomhole pressure survey shall be taken prior to production of injection on each well drilled to the pool and results reported on Form 10-412, Reservoir Pressure Report;

b) The pressure datum for the Lisburne Oil Pool is 8,900 feet subsea. The Commission may administratively amend this datum or create an additional datum when more information on the reservoir is available.

c) Prior to July 10, 1987 the operator shall submit to the Commission a program to adequately monitor the reservoir pressure during deletion. Before the above date, any transient pressure surveys taken shall be timely submitted on Form 10-412 to the Commission.

Rule 11. UNITIZATION.

To ensure the protection of correlative rights and to prevent waste, the Lisburne Oil Pool shall be administered in accordance with the Prudhoe Bay Unit Agreement.

Rule 12. PILOT PROJECTS

Upon application, the Commission may administratively approve field pilot projects, well production and injection tests and other filed operations necessary for the purpose of developing a prudent enhanced recovery method and reservoir depletion program.

Rule 13. POOL OFFTAKE RATE

No more than 160,000 barrels of oil per day may be produced from the Lisburne Oil Pool. However when evidence can be presented to the Commission showing that a higher offtake rate will not affect ultimate recovery, the Commission may increase the daily offtake rate by administrative order.

Rule 14. CONSERVATION ORDER NO. 83-C.

Conservation Order No. 83-C is hereby cancelled.

DONE at Anchorage, Alaska and dated January 10, 1985.

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

Harry W. Kugler, Commissioner
Alaska Oil and Gas Conservation Commission

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

Conservation Order Index