STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage Alaska 99501-3192

Re: THE APPLICATION OF ARCO ALASKA, ) Conservation Order No. 207A
INC. for an order eliminating the requirement )
for subsurface safety valves in wells drilled to the ) Prudhoe Bay Field
Lisburne Oil Pool ) Lisburne Oil Pool
December 20, 1996

IT APPEARING THAT:

1. ARCO Alaska, Inc., operator of the Lisburne Oil Pool in the Prudhoe Bay Oil Field, submitted an application dated October 28, 1996 requesting a revision to Rule 7 of Conservation Order No. 207. The revision would eliminate the requirement for subsurface safety valves in wells drilled to the Lisburne Oil Pool.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on November 23, 1996 pursuant to 20 AAC 25.540.

3. No protests to the application were received.

FINDINGS:

1. Commission regulation. 20AAC 25.265 requires surface (SSV) and subsurface safety valves (SSSV) in offshore wells capable of unassisted flow of hydrocarbons to the surface. Discretion to require SSV's and SSSV's in other areas is also provided.

2.Wells capable of unassisted flow of hydrocarbons to the surface that are equipped with both a SSV and a SSSV are afforded redundant protection from an uncontrolled flow.

3.Conservation Order 207, Rule 7, requires all wells in the Lisburne Oil Pool capable of unassisted flow of hydrocarbons to the surface to be equipped with a SSV and a SSSV.

4. Previous commission policy was to require multiple safety valves in onshore production wells (for permafrost areas) capable of unassisted flow of hydrocarbons to the surface.

5. The initial requirement for SSSV's was largely related to concern for the loss of well control from casing collapse due to freeze back of the permafrost. The magnitude and extent of freeze back forces and appropriate mitigating well construction techniques, had not been shown through experience to be correctly anticipated and was not well understood when the requirement for SSSV's was imposed.

6.Wells drilled to the Lisburne Oil Pool have been constructed using cement formulated for permafrost conditions, and casing grades and annular fluids capable of preventing appreciable deformation of casing due to permafrost freeze back.

7. The Commission has no record of an SSSV being used in ALaska to prevent uncontrolled flow from a North Slope onshore production well.

8. ARCO intends to use a risk based management system which will include producing rate, potential for environmental damage, corrosion concerns, proximity to facilities and populated areas, and economics as factors in evaluating wells for SSSV removal.

9.SSSV's contribute to higher costs, and increased difficulty and risk for some downhole operations.

10.The Commission has eliminated the requirement for SSSV's in onshore wells in other North Slope oil pools.

CONCLUSIONS:

1. SSSV's may reduce ultimate recovery by contributing to higher operating costs, and may increase the chance of an accidental release of hydrocarbons when conducting certain downhole operations.

2.Extensive experience indicates the potential for casing failures through the permafrost due to freeze back has been greatly reduced by use if appropriate construction techniques in North Slope production wells.

3.SSSV's in the Lisburne Oil Pool productions wells have provided limited benefit to public safety, environmental protection or resource recovery.

4.Eliminating the requirement for SSSV's in Lisburne Oil Pool production wells is not likely to contribute to waste and may improve safety of certain well operations and greater ultimate recovery.

NOW, THEREFORE, IT IS ORDERED Rule 7 of COnservation Order 207 is amended to:

Rule 7. Automatic Shut-in Equipment

(a) Each well shall be equipped with a Commission approved fail-safe automatic surface safety valve system (SVS) capable of preventing uncontrolled flow by shutting off flow at the wellhead.

(b) The SVS shall not be deactivated except during repairs, while engaged in active well work, or if the pad is manned. If the SVS cannot be returned to service within 24 hours, the well must be shut in at the wellhead and at the manifold building.

1) Wells with a deactivated SVS shall be identified by a sign on the wellhead stating that the SVS has been deactivated and the date it was deactivated.
2) A list of wells with SVS deactivated, the dates and reasons for deactivating, and the estimated reactivation dates must be maintained current and available for the Commission on request.

(c)A representative of the Commission will witness operation and performance tests at intervals and times as prescribed by the Commission to confirm that the SVS and all associated equipment are in proper working order.

DONE at Anchorage, Alaska and dated December 20, 1996.

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

Tuckerman Babcock, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index