STATE OF ALASKA

OIL AND GAS CONSERVATION COMMISSION

3001 Porcupine Drive

Anchorage, Alaska 99501-3192

Re: The APPLICATION OF Union Oil Company of ) Disposal Injection Order No. 19
California ("Unocal") for disposal of Class )
II oil field wastes by underground injection ) Granite Point State 17587 #3 well
in the Granite Point State 17587 #3 well. ) Granite Point Field
) July 6, 1999

IT APPEARING THAT:

1. By correspondence dated February 10, 1999, Unocal requested authorization from the Alaska Oil and Gas Conservation Commission ("Commission") to dispose of Class II oil field waste fluids by underground injection into the Granite Point State 17587 #3 well, located on the Bruce Platform in the Granite Point Field.

2. Unocal submitted additional information supporting the application on February 17, 1999.

3. The Commission published notice of opportunity for public hearing in the Anchorage Daily News on February 19, 1999.

4. The Commission did not receive any protest or a request for a public hearing.

FINDINGS:

1. Unocal is the operator of the Granite Point Field. There are no other operators within a one-quarter mile radius of the proposed disposal injection well.

2. The portion of freshwater aquifers beneath Cook Inlet described by a one-quarter mile area beyond and lying directly below the Granite Point Field are exempt aquifers under 40 CFR 147.102(b)(2)(i) and 20 AAC 25.440(c).

3. Unocal proposes to conduct disposal operations into the Lower Tyonek Formation between 9,240 feet and 10,715 feet measured depth ("MD") in the Granite Point State 17587 #3 well. At this depth, there are no other wells within one-quarter mile radius of the Granite Point State 17587 #3 well.

4. The Granite Point State 17587 #3 well is perforated between 9,240 feet and 10,715 feet MD in the C-2, C-2X, C-3, C-5, and C-7 sandstone horizons of the Granite Point Middle Kenai Oil Pool.

5. The Granite Point State 17587 #3 well was drilled to the northern portion of the Granite Point Field, an area with relatively low recovery factors due to the generally poor reservoir characteristics of the Lower Tyonek Formation at this location.

6. The Granite Point State 17587 #3 well has been shut-in since February of 1987 because of uneconomic performance.

7. The proposed disposal zone in the Granite Point State 17587 #3 well is overlain by more than 5,000 feet of Upper Tyonek Formation.

8. The Upper Tyonek Formation is dominated by impermeable lithologies, consisting primarily of interbedded siltstone, mudstone, and coal. Some lenticular sandstones are present, but they are volumetrically unimportant.

9. Evaluation of cased hole logs and cement records indicates the Granite Point State 17587 #3 well is cemented adequately to isolate the proposed disposal interval.

10.The well is completed with 20 inch conductor set at 589 feet MD, 133/8 inch surface casing set at 2,092 feet MD and cemented to surface, a long string of 95/8 inch production casing set at 8,178 feet MD and cemented back into the surface casing, and a 7 inch liner from 7,925 feet to 10,999 feet MD.

11.The well is equipped with 3 inch tubing string to 7,869 feet MD and 8.6 inch packer set at 7,824 feet MD.

12.The Granite Point State 17587 #3 well was completed initially as an oil producer. It produced from March 1967 until June 1972; cumulative oil production was 1.3 million barrels. It was converted to an injection well in July 1972; cumulative water injection was 4.25 million barrels through January 1987. The well has not been used since that date.

13.The waste stream will consist of produced water, drilling, completion and workover fluids, rig wash, drilling mud slurries, NORM scale, tank bottoms; and other Class II fluids generated from drilling, production, workover and completion operations. Constituent volumes will vary depending on drilling, workover, stimulation and maintenance activity.

14.Unocal estimates that the maximum daily volume to be injected will not exceed 3,000 barrels per day.

15.Unocal estimates the average injection pressure will be about 2,500 psi, with a maximum daily injection pressure of 3,000 psi, at an injection rate of three barrels per minute.

16.Unocal expects to maintain injectivity by occasionally stimulating the disposal interval. Stimulation activity will entail pumping solid free fluid to disperse solids, chemically treating the well, and elevating pressure to breakdown the disposal interval.

17.Fracture propagation within the disposal interval is an integral part of the process of placing waste fluids into the disposal interval. Fractures will be created as the disposal zone begins to plug. Fractures (or disaggregation of the clogged pores and rock matrix) provide pathways to transport waste fluids to undamaged storage volume within the disposal zone.

18.Unocal will conduct periodic surveillance of disposal operations through temperature surveys, pressure transient tests, step rate tests, thermal decay time logs, disposal rate and pressure monitoring, mechanical integrity tests and tagging effective depth to determine fill buildup.

19.Reservoir surveillance techniques will also be used for tracking near wellbore fluid movement, estimating dimensions of disposal fracture or disposal storage volume and detecting changes in disposal zone characteristics.

20.Evaluation of operation performance and reservoir surveillance will aid in preventing fracturing of the confining zones.

CONCLUSIONS:

1. The requirements of 20 AAC 25.252(c) have been met.

2. All underground sources of drinking water in the Granite Point field have been exempted for Class II injection activities.

3. Waste fluids authorized for disposal under this order in the Granite Point State 17587 #3 well will consist exclusively of Class II waste generated from drilling, completion, workover and production operations.

4. Permeable strata, which reasonably can be expected to contain the total volume of disposal fluids anticipated for this project, are present in the Lower Tyonek Formation.

5. Waste fluids will be contained within appropriate receiving intervals by confining lithologies in the Upper Tyonek Formation, cement isolation of the wellbore and operating conditions.

6. Disposal injection of Class II wastes into the Granite Point Middle Kenai Oil Pool in the Granite Point State 17587 #3 well will not cause waste because the well no longer has utility as a production well or as an injection well for enhanced oil recovery.

7. Disposal injection operations in the Granite Point State 17587 #3 well will be conducted at rates and pressures below those required to fracture the confining zones.

8. Periodic fracturing and stimulation will be required to place solids into the disposal interval. Fracture growth can be contained within the disposal interval by controlling the rate and volume of injection.

9. Surveillance of disposal material movement, monitoring of operating parameters and demonstration of mechanical integrity every four years will ensure the waste fluids are contained within the disposal interval. Changes in baseline data may be an indication that fluid is escaping beyond the designated confining zone.

10.The mechanical integrity of the tubing, packer and production casing in the Granite Point State 17587 #3 well must be demonstrated in accordance with 20 AAC 25.412 prior to commencing injection operations.

11.Disposal injection operations in the Granite Point State 17587 #3 well will not cause waste, jeopardize correlative rights, or impair ultimate recovery.

NOW, THEREFORE, IT IS ORDERED THAT:

Rule 1 Authorized Injection Strata for Disposal.

Class II oil field fluids may be injected in conformance with Alaska Administrative Code Title 20, Chapter 25, for disposal into the Lower Tyonek Formation from 9,240 feet to 10,715 feet MD in the Granite Point State 17587 #3 well.

Rule 2 Authorized Fluids

This authorization is limited only to Class II fluids. The Commission must be notified immediately if any non-Class II fluids are injected into the well.

Rule 3 Demonstration of Tubing/Casing Annulus Mechanical Integrity

A schedule must be developed and coordinated with the Commission that ensures the tubing-casing annulus is pressure tested prior to initiating disposal and at least once every four years thereafter. The casing must be tested at a surface pressure of 1500 psi or 0.25 psi/ft multiplied by the true vertical depth of the packer, whichever is greater, but may not be subjected to a hoop stress greater than 70% of the minimum yield strength of the casing. The test pressure must show stabilizing pressure and may not decline more than 10% within thirty minutes. The Commission must be notified at least twenty-four (24) hours in advance to enable a representative to witness pressure tests.

Rule 4 Well Integrity Failure

Whenever disposal rates and/or operating pressure observations or pressure tests indicate pressure communication or leakage of any casing, tubing or packer, the operator must notify the Commission on the first working day following the observation, obtain Commission approval of a plan for corrective action and obtain Commission approval to continue injection.

Rule 5 Surveillance

Operating parameters including disposal rate, disposal pressure, annulus pressures and volume of fluids and solids pumped must be monitored and reported according to requirements of 20 AAC 25.432. An annual report evaluating the performance of the disposal operation must be submitted by July 1 of each year.

Rule 6 Administrative Action

Upon request, the Commission may administratively revise and reissue this order or any of its rules upon proper showing that the change is based on sound engineering practices, will not allow waste fluids to escape from the disposal zone, and will not cause waste.

DONE at Anchorage, Alaska and dated July 6, 1999.

Robert N. Christenson, P.E., Chairman

Camillé Oechsli, Commissioner

Disposal Order Index