STATE OF ALASKA

ALASKA OIL AND GAS CONSERVATION COMMISSION

333 West 7th Avenue, Suite 100

Anchorage Alaska 99501

Re: THE APPLICATION OF ) Disposal Injection Order No. 23
UNOCAL Corporation for disposal )
of Class II oil field wastes by ) Ivan River Field
underground injection in Upper ) Upper Sterling Formation
Sterling Formation, Ivan River Unit )
well IR 14-31, Section 1, T13N, ) August 9, 2001
R9W, S. M. )

IT APPEARING THAT:

1. By correspondence dated May 16, 2001 Unocal requested authorization for a disposal order to allow the underground injection of Class II oil field waste fluids into the Sterling formation of Ivan River Unit well 14-31 ("IRU 14-31") located on the Ivan River production pad in the Ivan River Field, Matanuska-Susitna Borough, Alaska.

2. By correspondence dated April 26, 2001, Unocal applied for a Freshwater Aquifer Exemption, (received May 16, 2001) for all fresh water aquifers within a 1/2 mile radius and below 2500' measured depth (MD) in well IRU 14-31.

3. Additional information supporting the request for Class II disposal in well IRU 14-31 and for the freshwater aquifer exemption was received by correspondence dated June 22, 2001 and by sundry notice and reports dated June 13, 2001.

4. Notice of opportunity for public hearing was published in the Anchorage Daily News and Peninsula Clarion on May 14, 2001 in accordance with 20 AAC 25.540.

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

6. The U.S. Environmental Protection Agency Region 10 did not object to the Aquifer Exemption Order ("AEO") for the Ivan River IRU 14-31 well.

FINDINGS:

1. Unocal is the operator of the Ivan River Field. There are no other operators within a one-half mile radius of the proposed disposal injection well. The State of Alaska is the surface owner.

2. Unocal proposes to conduct disposal operations in well IRU 14-31 between 3145' and 3420' measured depth ("MD").

3. In order to accommodate the current and future Ivan River Field disposal injection operations, Unocal has requested exemption for all freshwater aquifers within a 1/2 mile radius and below 2500' MD in well IRU 14-31.

4. The nearest drinking water wells are two freshwater wells completed at approximately 200' MD on the Ivan River production pad.

5. The proposed disposal interval in IRU 14-31 extends from 2821' to approximately 3040' true vertical depth subsea ("TVDss"). Unocal interprets the sediments above 3100' TVDss in this well as glacial outwash, although noting the distinction is problematic due to the lithologic similarities with Upper Sterling Formation sediments. Upper Sterling Formation is used to identify the disposal zone described in this order.

6. The lithologies in the proposed disposal zone consist of permeable sandstones and conglomerates interbedded with shales and clay-rich sandy siltstones.

7. The salinities of the sands in this interval show a high degree of variability with depth. The interpretation of these salinity variations indicates the sands must be hydraulically isolated from each other.

8. Over 170 net vertical feet of sandstone are present in the proposed disposal interval. Water Pump-In tests have shown these sands to be highly permeable.

9. Twelve (12) vertical net feet of shale and 280 net vertical feet of very low permeability sandy siltstone and clay- rich sandstones confine the proposed disposal zone from the shallowest non-exempt aquifer.

10. The proposed disposal zone is confined below by over 700 net vertical feet of impermeable lithologies.

11. Analysis of wireline logs from nearby well IRU 44-1 indicate that above a depth of 2300' MD, fresh water with salinities less than 3000 parts per million ("ppm") NaCl are present. Wireline log analytical techniques, which comply with EPA recommended methods as described in "Survey of Methods to Determine Total Dissolved Solids Concentrations", (KEDA Project No. 30-956), were used to characterize formation water total dissolved solids content in well IRU 44-1.

12. Well IRU 14-31 was not logged above 2038' MD. Calculated salinity ranges in IRU 14-31 range from 6100 to 9230 ppm NaCl (associated with the interval from 3145' to 3420' MD, respectively) through the proposed injection zone. Wireline log analytical techniques, which comply with EPA recommended methods as described in "Survey of Methods to Determine Total Dissolved Solids Concentrations", (KEDA Project No. 30-956), were used to characterize formation water total dissolved solids content in well IRU 14-31.

13. IRU 14-31 was drilled to a depth of 10,958' MD. The casing design for IRU 14-31 includes the following: 20" from surface to a depth of 401', 10-3/4" from surface to 2018' MD, and 7" casing from surface to 7018". The well was suspended on August 18, 1975. A cement retainer was set at 3225' MD with a cement plug placed from 3350' to 3508' MD. There is also one cement plug in the 5 1/2" liner and two cement plugs in the openhole section of the well, from 7600' to 9927' MD, from 10,100' to 10, 350' MD and from 10,650' to 10,900' MD, respectively. Unocal received sundry approval from the Commission in 1993 to run 2-7/8" tubing to 2982' MD, with an isolation packer positioned at 2903' MD. This change was requested to allow for conversion to disposal service pending approval of disposal injection and aquifer exemption orders.

14. There are five wells in the 1/2 mile radius of well IRU 14-31. The well names, associated wellbore separation at the top of the proposed injection interval to proposed disposal well IRU 14-31 and current well status are listed below:

IRU 13-31, 114' to North, gas producer, Tyonek
IRU 44-36, 342' to North, gas producer, Beluga
IRU 41-1, 665' to South, gas producer. Beluga and Tyonek
IRU 44-1, 1155' to South, gas producer, Tyonek
IRU 23-12, approximately 2600' to Southwest, P&A

15. 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. The composition of the waste stream and constituent volumes will vary depending on drilling, workover, stimulation and maintenance activity.

16. Unocal estimates that the average daily injection volume to be 1,000 barrels per day ("BPD") at a rate of approximately 2.5 barrels per minute ("BPM"). Later, produced water disposal rates are estimated to be in the range of 100 BPD.

17. Unocal estimates maximum surface injection pressure of 3300 pounds per square inch ("psi"), with an average disposal injection pressure of 2800 psi at a rate of 2.5 BPM.

18. The workover/drilling program is estimated to generate a maximum of 30,000 barrels of oilfield waste. In addition, 100,000 barrels of produced water with a salinity ranging from 6,000 to 18,000 ppm may be injected. Unocal states that these volumes would create a waste plume that could range from 80-150 feet surrounding the injection point.

19. Unocal requested a waiver of 20 AAC 25.412(b) to allow more than 200' MD between the packer and the perforations. Commission approval was obtained to perforate interval 3189'-3209' MD (286' MD below the packer) in proposed disposal well IRU 14-31 for the purpose of performing a water injection step rate test. The test results were filed by sundry on June 13, 2001.

20. Two step-rate tests were performed on consecutive days with a total of 750 barrels water injected. In the second test, formation fracture pressure was exceeded at approximately 1.15 BPM, 2000-psi surface pressure and a water gradient. The pressure quickly dropped off after pump shutdown indicating high leak-off and good injectivity.

21. Fracture propagation within the disposal interval is an integral part of the process of placing waste fluids into the rock matrix. 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.

22. Unocal also submitted fracture-modeling results that support the conclusion that injected wastes would not reach or penetrate the confining interval at 2945' MD (2714' TVD). An Aquifer Exemption Order was approved July 23, 2001, exempting aquifers between 2500' and 3420' MD in the area around well IRU 14-31.

23. Both inner and outer annulus pressures were monitored in wells IRU 14-31, IRU 13-31 and IRU 14-36 during the IRU 14-31 step-rate tests. No annulus pressure response was seen in any of these three wells.

24. Unocal indicated that the 7" annulus of proposed disposal well IRU 14-31 was successfully tested to 1500 psi prior to recent perforation operations.

25. The 7", 23 pound per foot ("ppf"), N-80 casing meets the requirements of AAC 252.412.

26. A segmented cement bond log was run in the 7" of Well IRU 14-31 on Jan 31, 1993. This log shows adequate cement to isolate fluids to the proposed injection intervals.

27. For all wells within a 1/2 mile radius of the proposed disposal well, Unocal submitted cementing and mechanical integrity records. These records were reviewed and all affected wells appear to be sufficiently cased and cemented.

28. The injection pump will be continuously manned during actual injection into IRU 14-31. The annulus pressures of all wells within the 1/2 mile radius will be checked and recorded prior to and after each injection cycle. In addition, the existing IRU 13-31 Glycol High Level Alarm will also alarm at the injection pump so that the injection pump operator can immediately shut down the pump in the event that pressure communication develops between IRU 14-31 and IRU 13-31. In that event, injection would not be re-initiated until Commission approval was obtained and it was determined that safe operations could continue.

CONCLUSIONS:

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

2. After review of Unocal's application for aquifer exemption, the Commission issued an AEO on July 23, 2001. The AEO exempts freshwater aquifers lying between 2500' and 3420' MD in Unocal's Ivan River well IRU 14-31 and within a one-half (1/2) mile radius in accordance with 40 CFR 147.102(b)(2)(i) and 20 AAC 25.440(c).

3. Waste fluids authorized for disposal under this order in the IRU 14-31 well will consist exclusively of Class II waste generated from drilling, completion, workover and production operations.

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

5. Periodic fracturing and stimulation will be required to place solids into the disposal interval. Disposal injection operations in the IRU 14-31 well will be conducted at rates and pressures below those estimated to fracture the confining zone.

6. Evaluation of operational performance data and reservoir surveillance data will aid in preventing fracturing of the confining zone.

7. Surveillance of disposal material, daily monitoring of operational parameters, and demonstration of mechanical integrity prior to injection will reasonably assure the waste fluids are contained within the disposal interval.

8. Disposal injection of Class II wastes into well IRU 14-31 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 Upper Sterling Formation between 3145' and 3420' MD in well IRU 14-31.

RULE 2 Authorized Fluids

This authorization is limited only to Class II waste fluids as follows: produced water, drilling, completion and work over fluids, rig wash, drilling mud slurries, NORM scale, tank bottoms, and other Class II fluids generated from drilling, production, workover and completion operations. The Commission may authorize the disposal of additional fluids not identified above on a case-by-case basis if the Commission determines they are suitable for disposal in a Class II well.

RULE 3 Packer Distance From Perforations

The requirement of 20 AAC 25.412(b) stipulating maximum distance between packer and perforations of 200' MD is waived in well IRU 14-31.

RULE 4 Monitoring Program.

Operating parameters including disposal rate, disposal pressure, annulus pressures (for both the disposal well and offsets) and volume of fluids and solids pumped must be monitored and reported according to requirements of 20 AAC 25.432. An initial report of operations must be provided after one month of injection. An annual report evaluating the performance of the disposal operation, including an annual MIT and temperature log must be submitted by July 1 of each year.

RULE 5 Notification of Improper Class II Injection

The operator must immediately notify the Commission if it learns of any improper Class II injection. Additionally, notification requirements of any other State or Federal agency remain the operators' responsibility.

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.

RULE 7 Statewide Requirements

Except where a rule state above substitutes for a statewide requirement, statewide requirements under 20 AAC 25 apply in addition to the above rules.

DONE at Anchorage, Alaska and dated August 9, 2001.

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

Julie M. Heusser, Commissioner
Alaska Oil and Gas Conservation Commission

Disposal Injection Order Index