STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West Seventh Avenue, Suite 100

Anchorage Alaska 99501

Re: THE APPLICATION OF Union Oil of ) Conservation Order No. 474
California ("UNOCAL") for an order ) Swanson River Field
Allowing well SRU 213-10 to be completed ) Swanson River Undefined Gas Pool
Without a tubing and packer. ) Swanson River Unit Well 213-10
)
) July 17, 2002

IT APPEARING THAT:

1. By application dated June 11, 2002, and received by the Alaska Oil and Gas Conservation Commission ("Commission") on June 11, 2002, Union Oil Company of California ("Unocal") requested an order from the Commission allowing the proposed Swanson River Unit ("SRU") 213-10 well to be completed without a tubing and packer as required by 20 AAC 25.200(d).

2. Notice of opportunity for public hearing was published in the Anchorage Daily News on June 17, 2002 in accordance with 20 AAC 25.540.

3. Unocal submitted additional information concerning the application by letter dated June 25, 2002.

4. The Commission received no comments concerning the application or requests for a public hearing.

5. The Commission decided to issue an order without public hearing.

FINDINGS:

1. Unocal is operator of the Swanson River Field.

2. Unocal proposes to drill the SRU 213-10 well to a depth of approximately 3735 feet TVD (4106' MD), from a surface location 1725 feet from the north line ("FNL") and 628 feet FWL, Section 10, T8N, R9W, SM to a bottom hole location of 3103 feet FNL, 552 feet FWL, Section 10, T8N, R9W, SM.

3. Unocal proposes to drill the well using a slim hole drilling technique, running small diameter casing, and completing the well without a tubing and packer.

4. Commission regulation, 20 AAC 25.200(d), states: "All producing wells capable of unassisted flow must be completed with down hole production equipment consisting of suitable tubing and a packer that effectively isolate the tubing-casing annulus from fluids being produced, unless the commission specifically approves production through the annulus to increase flow rate without jeopardizing ultimate recovery from the well."

5. Commission regulation, 20 AAC 25.990(26), defines fluids as "any material or substance that flows or moves, whether in a semi-solid, liquid, sludge, gaseous, or other form or state."

6. Unocal is drilling the SRU 213-10 in order to produce gas reserves updip from the watered out SRU 212-10 well located on the same pad. The gas reserves developed contain methane with no H2S or CO2 which reduces risk of internal corrosion.

7. Formation pressure of the Beluga formation sands being produced ranges from normal hydrostatic, 8.6 ppg to about 6 ppg equivalent.

8. Producibility and viability of the well will depend on maintaining mechanical integrity of the casing.

9. Unocal proposes to construct the SRU 213-10 well as follows: 133/8 inch conductor casing driven to 80 feet, 7 inch L-80 surface casing run to 1800 feet TVD (1979' MD) and cemented to surface, and 31/2 inch L-80 production casing run to TD and cemented to the surface.

10. The 31/2-inch production casing will be cemented with a two-stage cement job consisting of a low weight lead slurry and conventional tail slurry to isolategas bearing productive zones.

11. The 7-inch production casing will be set just below the maximum depth of fresh water and just above the targeted gas bearing shallow production zones. The anticipated leak off on the 7-inch surface casing shoe is anticipated to be about 15.5 ppg equivalent.

12. Maximum anticipated surface pressure for the targeted depleted gas sands is expected to be around 600 to 800 psi.

13. The small diameter production casing precludes running a tubing and packer. 14. Without a tubing and packer, there are fewer options available for performing cleanouts and remedial work. Mechanical integrity failure could lead to the early abandonment of the well.

CONCLUSIONS:

1. The SRU 213-10 well is targeting dry methane gas reserves and is not expected to encounter liquid hydrocarbons.

2. The targeted gas reserves are capable of unassisted flow to surface, but only after hydrostatic pressure has been removed.

3. An exception to 20 AAC 25.200(d) is necessary to allow the drilling and completion of the SRU 213-10 well without a tubing and packer.

4. Gas produced by the 213-10 Well has no potential for corrosive products.

5. Mechanical integrity may only be tested on the inside of the production casing.

6. Failure of mechanical integrity will cause the well to be abandoned.

7. The drilling and completion of the SRU 213-10 well without a tubing and packer may result in a greater recovery of hydrocarbons, and will not cause waste nor jeopardize correlative rights.

NOW, THEREFORE, IT IS ORDERED THAT:

Unocal's application for an exception to 20 AAC 25.200(d) to allow the drilling and completion of the SRU 213-10 well without tubing and packer is approved subject to the following conditions:

1. A cement quality log must be run from TD to 200 feet into the surface casing prior to perforating the well.

2. A plug seating profile must be provided above the perforations or prospective perforation intervals to accomplish internal integrity tests.

3. Mechanical integrity must be demonstrated annually.

4. Each annuli pressure must be monitored daily and reported to the Commission quarterly.

5. Any pressure noted on the inner or outer annuli must be reported to the Commission on the next working day. The operator must implement corrective action, diagnostic work or increased surveillance as required by the Commission and obtain approval from the Commission to continue production operations at the well.

6. Failure to repair or prove mechanical integrity will result in expedited abandonment of the well.

DONE at Anchorage, Alaska and dated July 17, 2002.

Cammy Oechsli Taylor, Chair
Alaska Oil and Gas Conservation Commission

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

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