STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West 7th Avenue, Suite 100

Anchorage Alaska 99501

Re: Revision to pool rules governing the Aurora Oil Pool, Prudhoe Bay Field, North Slope, Alaska. )
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Prudhoe Bay Field

Aurora Oil Pool

Conservation Order No. 457A

May 15, 2003

IT APPEARING THAT:

1. The Alaska Oil and Gas Conservation Commission on its own motion proposed to amend Conservation Order No. 457 (“CO 457”) that governs development of the Aurora Oil Pool and to revoke Conservation Order No. 98-A.

2. Rule 10 of CO 457 provides that upon proper application or its own motion, the Commission may administratively waive the requirements of any rule stated in the order or administratively amend the order as long as the change does not promote waste or jeopardize correlative rights, and is based on sound engineering and geosciences principles.

3. On April 4, 2003, notice of public hearing was published in the Anchorage Daily News.

4. BP Exploration (Alaska), Inc. (“BPXA”) as Operator of the Aurora Oil Pool submitted comments upon the Commission’s proposed modifications to CO 457 on April 28, 2003 and stated they are prepared to have the Commission rule on the basis of the record without further hearing.

5. No other comments were received concerning the proposed amendment.

6. The Commission has determined that a hearing is not necessary. The Commission cancelled the scheduled hearing on May 6, 2003.

FINDINGS:

1. The findings of Area Injection Order No. (“AIO”) 22B and CO 457 (with the exception of CO 457 Findings 27, 36, and 42), and Finding 10 of CO 471 are incorporated by reference.

2. CO 98-A issued February 12, 1971, was largely superseded by CO 457 and no longer applies to any producing pool within the Prudhoe Bay Field. The Commission's statewide regulations are appropriate for operations in the remaining area covered by CO 98-A pending future development of any additional pool.

3. CO 457 refers to CO 98-A for the definition of the Aurora Oil Pool ("AOP").

4. The AOP is defined as the accumulation of hydrocarbons common to and correlating with the interval between 6765 feet – 7765 feet measured depth (“MD”) in the Mobil Oil Corporation Mobil-Phillips North Kuparuk State No. 26-12-12 well.

5. Production from the Aurora Oil Pool is processed, along with production from several other pools, within Prudhoe Bay Unit Gathering Center 2. The criteria for allocation of production have been revised for Aurora and all other satellite oil pools within the western portion of the Prudhoe Bay Unit. Commission approval of these changes was provided in Conservation Order No. 471, the pool rules for the Borealis Oil Pool.

6. Area Injection Order No. 22B (“AIO 22B”), dated May 6, 2003, authorized underground injection of miscible injectant (“MI”) for enhanced oil recovery in the AOP, Prudhoe Bay Field, on the North Slope of Alaska.

7. BPXA supplied a plan to acquire reservoir pressure measurements in 2003. The plan provides adequate information to assess the progress of the depletion plan for the coming year.

8. Annual review of the reservoir depletion plan and the status of reservoir repressurization activity within the AOP will help ensure greater ultimate recovery.

CONCLUSIONS:

1. The conclusions of AIO 22B, and CO 457 and Conclusions 9, 10 and 11 of CO 471 are incorporated by reference.

2. CO 98-A should be revoked and the definition of the Aurora Oil Pool should be moved to CO 457 to prevent confusion.

3. Implementation of a miscible gas project will result in greater ultimate recovery from the West and North of Crest Blocks of the AOP so long as average reservoir pressure is maintained above minimum miscibility. Flood performance will dictate whether expansion beyond these blocks is appropriate.

4. Production allocation criteria for the Western Operating Area and satellite pools of the Prudhoe Bay Unit as approved for the Borealis Oil Pool in Conservation Order 471, dated May 29, 2002, should be adopted for the AOP.

5. Annual review of the reservoir depletion plan and the status of reservoir depressurization activity within the AOP will help ensure greater ultimate recovery.

NOW, THEREFORE, IT IS ORDERED THAT:

1. This Conservation Order No. 457A supersedes Conservation Order No. 457 dated September 7, 2001.

2. The AOP is defined as the accumulation of hydrocarbons common to and correlating with the interval between interval between 6765 feet – 7765 feet measured depth (“MD”) in the Mobil Oil Corporation Mobil-Phillips North Kuparuk State No. 26-12-12 well within the affected area.

3. CO 98-A is revoked.

4. The following rules, in addition to statewide requirements under 20 AAC 25 (to the extent not superseded by these rules), apply to the following affected area:

Umiat Meridian
Township Range Sections
T11N R12E N ½ Sec. 3
T12N R12E S ½ Sec 17; SE ¼ Sec 18; E ½ Sec 19; All Sec 20; All Sec 21;W 1/2NW 1/4,S ½ Sec 22; SW ¼ Sec 23; SW ¼ Sec 25; All Sec 26; All Sec 27; All Sec 28; N ½, Se ¼ Sec 29; E ½ Sec 32; AllSec 33; All Sec 34; All Sec 35; N ½, SW ¼ Sec 36

Rule 1 Well Spacing (CO457, 9/7/01)
Spacing units within the pool shall be a minimum of 40 acres. 20 AAC 25.055(a)(1) and (2) shall not apply to property lines within the external boundaries of the Aurora Participating Area.

Rule 2 Casing and Cementing Practices (CO457, 9/7/01)
In addition to the requirements of 20 AAC 25.030, the conductor casing must be set at least 75 feet below the surface.

In addition to the requirements of 20 AAC 25.030, the surface casing must be set at least 500’ tvdss below the permafrost.

Rule 3 Automatic Shut-in Equipment (CO457, 9/7/01)
a) All wells must be equipped with a fail-safe automatic surface safety valve system capable of detecting and preventing an uncontrolled flow.

b) The wells must be equipped with a landing nipple at a depth below permafrost, which is suitable for the future installation of a downhole flow control device to control subsurface flow. The Commission may require such installation by administrative action.

c) Safety Valve Systems must be maintained in good working order at all times and must be tested at maximum six-month intervals or other schedule prescribed by the Commission.

Rule 4 Common Production Facilities and Surface Commingling (Revised this order)
PBU Western Satellite Production Metering Plan, approved by the Commission in CO 471 effective August 1, 2002 governs satellite production within the Western Operating Area of Prudhoe Bay Unit, including the Aurora Oil Pool.

a) The Prudhoe Bay Unit Gathering Center 2 well allocation factor for oil, gas, and water shall be applied to adjust total Aurora Oil Pool production.

b) All wells must be tested a minimum of once per month. All new Aurora wells must be tested a minimum of two times per month during the first three months of production. The Commission may require more frequent or longer tests if the allocation quality deteriorates.

c) Technical process review meetings shall be held quarterly to review progress of the implementation of the plan.

d) The operator shall submit a monthly report and file(s) containing daily allocation data and daily test data for agency surveillance and evaluation.

e) Commission approval of the Prudhoe Bay Unit Western Operating Metering Plan will expire on August 31, 2003. Continued authorization of metering and allocation procedures will be determined at a hearing to be scheduled no later than July 31, 2003.

Rule 5 Reservoir Pressure Monitoring (CO457, 9/7/01)
Prior to regular production or injection, an initial pressure survey must be taken in each well.

a) Prior to regular production or injection, an initial pressure survey must be taken in each well.

b) The minimum number of bottom-hole pressure surveys acquired each year shall equal the number of governmental sections within the Aurora Oil Pool that contain active wells. A minimum of four surveys will be required each year in representative areas of the Aurora Oil Pool. Bottom-hole surveys in paragraph

(a) may fulfill the minimum requirement.

c) The reservoir pressure datum will be 6,700 feet tvdss.

d) Pressure surveys may be stabilized static pressure measurements at bottom-hole or extrapolated from surface (single phase fluid conditions), pressure fall-off, pressure buildup, multi-rate tests, drill stem tests, and open-hole formation tests.

e) Data and results from all relevant reservoir pressure surveys must be reported quarterly on Form 10-412, Reservoir Pressure Report. All data necessary for analysis of each survey need not be submitted with the Form 10-412, but must be available to the Commission upon request.

f) Results and data from special reservoir pressure monitoring tests or surveys shall also be submitted in accordance with paragraph

(e) of this rule.

Rule 6 Gas-Oil Ratio Exemption (CO457, 9/7/01)
Wells producing from the AOP are exempt from the gas-oil-ratio limits of 20 AAC 25.240(a) so long as requirements of 20 AAC25.240 (b) are met.

Rule 7 Enhanced Oil Recovery or Reservoir Pressure Maintenance Operations (Revised this Order)
Water and enriched hydrocarbon gas injection are authorized to enhance oil recovery within the Aurora Oil Pool. Average reservoir pressure must be maintained above minimum miscibility pressure. Expansion of miscible gas injection outside of the North of Crest and West Blocks must be administratively approved prior to long-term injection. Commission approval is required prior to implementing major changes in reservoir depletion strategy.

Rule 8 Reservoir Surveillance Report and Depletion Plan Update (Revised this order)
An annual reservoir surveillance report for the prior calendar year will be required after one year of regular production and annually thereafter. The report shall include, but is not limited to, the following:

a) Progress of enhanced recovery project implementation and reservoir management summary including results of reservoir simulation techniques;

b) Voidage balance by month of produced fluids and injected fluids and cumulative status by major fault blocks;

c) Summary and analysis of reservoir pressure surveys within the pool;

d) Results and, where appropriate, analysis of production and injection log surveys, tracer surveys, observation well surveys, and any other special monitoring;

e) Review of pool production allocation factors and issues over the prior year; and

f) Review of the Annual Plan of Operations and Development including discussion of the reservoir depletion plan and the status of reservoir repressurization activity.

Rule 9 Production Anomalies (CO457, 9/7/01)
In the event of oil production capacity proration at or from the Prudhoe Bay Unit facilities, all commingled reservoirs produced through the Prudhoe Bay Unit facilities will be prorated by an equivalent percentage of oil production, unless this will result in surface or subsurface equipment damage.

Rule 10 Administrative Action (CO457, 9/7/01)
Upon proper application or its own motion, the Commission may administratively waive the requirements of any rule stated above or administratively amend this order as long as the change does not promote waste or jeopardize correlative rights, and is based on sound engineering and geoscience principles.

DONE at Anchorage, Alaska and dated May 15, 2003.

Sarah Palin, Chair
Alaska Oil and Gas Conservation Commission

Randy Ruedrich, Commissioner
Alaska Oil and Gas Conservation Commission

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

Conservation Order Index