STATE OF ALASKA

0IL AND GAS CONSERVATION COMMISSION
3001 Porcupine Drive
Anchorage, Alaska 99501-3192

Re:The Application of ARCO Alaska, Inc.        )  Conservation Order No. 363
and BP Exploration (Alaska) Inc. to            )
eliminate the requirement for subsurface       )  Prudhoe Bay Field
safety valves in wells drilled to the          )  Prudhoe Bay Unit
Prudhoe Oil Pool.                              )  Prudhoe Oil Pool

                                                  September 29, 1995
IT APPEARING THAT:

1. By letter dated June 30, 1995, ARCO Alaska, Inc. and BP Exploration (Alaska) Inc., as operators of the Prudhoe Bay Unit, requested a revision to Conservation Order 341, Rule 5, to eliminate the requirement for subsurface safety valves in the Prudhoe Oil Pool, Prudhoe Bay Field.

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on July 28, 1995.

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 ("SSSV") only in wells located offshore that are capable of unassisted flow to the surface, but allows Commission discretion for requiring surface safety valves ("SSV") or SSSV's, or both, on wells in other areas.

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

3. Conservation Order 341, Rule 5, requires both SSV's and SSSV's for all wells capable of unassisted flow to the surface in the Prudhoe Oil Pool, Prudhoe Bay Field.

4. Conservation Order 341, issued November 2, 1994, consolidated all previous conservation orders and administrative orders issued by the commission for the Prudhoe Oil Pool.

5. The Commission first required SSV's and SSSV's for all onshore wells in the Prudhoe Bay Field in Conservation Order 145, issued June 1, 1977. 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 majority of wells producing from the Prudhoe Oil Pool today use artificial lift.

7. Extensive activity and infrastructure exists today within the Prudhoe Bay Field and adjacent areas, whereas little or no infrastructure existed on the North Slope in 1977.

8. In 1977 casing setting techniques conformed to lower 48 practices and operators had little experience producing through permafrost or under Arctic conditions.

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

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

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

12.SSSV's impede or prohibit some types of completions, and increase the difficulty and risk of conducting some downhole operations.

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

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. 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 1977 as a result of full field development and activity.

5. Eliminating the requirement for SSSV's in onshore Prudhoe 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 341, Rule 5, to conform with similar surface safety valve system requirements now imposed for other North Slope pools.

NOW, THEREFORE, IT IS ORDERED THATRule 5 of C.O. of 341 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.

d.The SVS must be maintained in working condition at all times unless the well is shut in and secured, or the well is being operated in conformance with other sections of this rule.

e.Upon proper application or its own motion, the Commission may administratively waive or amend the requirements of this rule as long as the change does not promote waste, jeopardize correlative rights or compromise ultimate recovery, and is based on sound engineering principles.

f.Nothing in this rule precludes the installation of a SSSV in wells designated by the operator. If a SSSV is installed, it must be maintained in working order and is subject to performance testing as part of the SVS.

IT IS FURTHER ORDERED THAT C.O. 341 be revised to reflect the change in Rule 5 and its rules reissued under C.O. 341A.

DONE at Anchorage, Alaska and dated September 29, 1995.

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

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

Conservation Order Index