STATE OF ALASKA

OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage, Alaska 99501-3192
Re:The Application of ARCO Alaska, Inc.          )  Conservation Order No. 348
and BP Exploration (Alaska) Inc. to              )
eliminate the requirement for subsurface         )  Kuparuk River Field
safety valves in wells drilled to the            )  Kuparuk River Oil Pool
Kuparuk River oil pool.                          )
                                                    December 16, 1994
IT APPEARING THAT:

1. By letter dated September 14, 1994, ARCO Alaska, Inc. and BP Exploration (Alaska) Inc., as operators of the Kuparuk and Milne Point Units, requested a revision to Conservation Order 173, Rule 5, by eliminating the requirement for subsurface safety valves in the Kuparuk River oil pool, Kuparuk River Field.

2. Notice of public hearing was published in the Anchorage Daily News on October 11, 1994.

3. The Commission received no protest or request for a hearing regarding the petition.

FINDINGS:

1. Commission regulations, 20 AAC 25.265, require surface and subsurface safety valves only in wells located offshore that are capable of unassisted flow to the surface, but allows Commission discretion for requiring SSV's or SSSV's, or both, on wells in other areas.

2. When equipped with both valves, the SSSV's provides redundant protection against accidental release of hydrocarbons from wells capable of unassisted flow to the surface.

3. Conservation Order 173, Rule 5, requires both SSV's and SSSV's for all wells capable of unassisted flow to the surface in the Kuparuk River oil pool, Kuparuk River Field.

4. Conservation Order 173 was issued May 6, 1981.

5. The Commission first required SSV's and SSSV's for all onshore wells in the Prudhoe Bay Field. The average well rate at field startup in 1977 was 7000 bbl/day oil, with maximum rates as high as 27,000 bbl/day.

6. The requirements for SSV's and SSSV's for all onshore wells was extended to the Kuparuk River Field by C.O. 173 in 1981. Average well rates in the Kuparuk River oil pool exceeded 2000 bbl/day oil at field startup.

7. Average well rate for the Kuparuk River oil pool in 1994 is 800 bbl/day with artificial lift.

8. The majority of wells producing from the Kuparuk River oil pool today require artificial lift.

9. In 1981 development activity and infrastructure in the Kuparuk River Field was limited, today extensive activity and infrastructure exists within the field and adjacent areas.

10. In 1981 casing setting techniques conformed to lower 48 practices and operators had little experience producing through permafrost or under Arctic conditions.

11. Operators today use cement formulated for permafrost conditions, appropriate casing grades, annular fluids to alleviate concerns for casing failure and enclosed well houses.

12. The Commission has no record of an SSSV being used in Alaska to prevent uncontrolled flow to the surface from an onshore well.

13. SSSV's contribute to higher operating costs for the state and operators.

14. SSSV's impede or prohibit some types of completions.

15. Commission requirements for automatic safety valve systems have evolved over time.

CONCLUSIONS:

1. SSSV's may reduce ultimate recovery by contributing to higher costs.

2. SSSV's in onshore wells in Alaska have provided limited benefit to public safety, environmental protection or resource recovery.

3. Experience and new technology have reduced any danger to casing integrity from freeze-back or thaw subsidence effects within permafrost.

4. The probability of early detection and response to an accidental release of hydrocarbons is significantly greater today than in 1981 as a result of full field development and activity.

5. Eliminating the requirement for SSSV's in onshore Kuparuk River oil pool wells will not likely contribute to waste and may contribute to safer well operations and greater ultimate recovery.

6. For wells equipped with artificial lift, the surface safety valve system should be capable of shutting down the lift system if an over pressure of equipment could occur if the artificial lift systems were to remain functioning.

7. It is appropriate to amend Conservation Order 173, Rule 5, to conform with similar surface safety valve system requirements now imposed for other North Slope pools.

NOW, THEREFORE, IT IS ORDERED THAT Rule 5 of C.O. of 173 is amended to read:

Rule 5. 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 and shutting down any artificial lift system where an over pressure of equipment may occur.

b. The safety valve system (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 well head 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 the SVS deactivated, the dates and reasons for deactivating, and the estimated re-activation dates must be maintained current and available for Commission inspection 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 is in proper working condition.

Conservation Order No. 173

DONE at Anchorage, Alaska and dated December 16, 1994.

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

Russell A. Douglass, Commissioner
Alaska Oil and Gas Conservation Commission

Tuckerman Babcock, Commissioner
Alaska Oil and Gas Conservation Commission

Conservation Order Index