Providing coverage of Alaska and northern Canada's oil and gas industry
August 2007

Vol. 12, No. 32 Week of August 12, 2007

AOGCC decision on Burglin well appealed

Petroleum News

The Alaska Oil and Gas Conservation Commission has tentatively scheduled a Sept. 6 hearing to reconsider its decision on the Burglin 33-1 well, which is in the North Slope Arctic Fortitude unit south of Prudhoe Bay.

Unit operator Alaskan Crude plans to re-enter the 1985 oil exploration well and test the Ugnu and West Sak formations. The company wants the commission to reclassify the well as a gas well, which would negate the need for Arctic Fortitude to have an approved oil spill plan.

Alaskan Crude officials have said that since the relatively shallow West Sak and Ugnu formations on the North Slope hold viscous oil, which is cold and thick and doesn’t flow to the surface as easily as oil from the main North Slope reservoirs, an oil spill plan is unnecessary. They have also said the Burglin well has potential for gas production, indicating the original driller “encountered gas around the Kuparuk and Saddlerochit.”

Initially Alaskan Crude had asked the commission to recommend that the response planning standard be reduced by 85 percent, the maximum allowed for oil exploration wells, basing the request on drilling and testing results from the well when it was originally drilled — results that did not show any oil capable of flowing to the surface.

The commission did just that, asking the state agency that oversees oil spill plan application to allow the lowest possible response planning standard for the well. In its June 26 letter to the Alaska Department of Environmental Conservation, the commission recommended DEC allow a spill plan for the Burglin re-entry project to be based on 15 percent of the response planning standard. (The default is 5,500 barrels of oil per day for 15 days, unless the commission determines that a lower volume is appropriate. DEC regulations require a minimum of 15 percent for an exploration well.)

The commission told DEC that above 6,196 feet the Ugnu and West Sak formations in the Burglin well were “highly unlikely to produce hydrocarbons to the surface in amounts greater than 825 barrels of oil per day,” which is an 85 percent reduction of the response planning standard of 5,500 bpd. Alaskan Crude has said it only plans to remove the two shallowest plugs in the well to perforate and test the Ugnu and West Sak formations, although it had applied to the commission in early 2006 to drill out additional plugs and test deeper formations.

The commission said the well was extensively tested and evaluated when it was originally drilled, and while there were some shows indicating the presence of oil, based on the test results “the oil is most likely residual oil and is not capable of flowing.” No oil was recovered in drill stem testing, “although some gas-cut mud and formation water were recovered,” the commission said, indicating that the drill stem test “was successful, but did not encounter movable oil.”

Commission: inappropriate to classify as gas well

DEC told Petroleum News Aug. 9 that Alaskan Crude has not yet filed a spill plan.

But Alaskan Crude has asked the commission to reclassify the well as a gas well, which the agency refused to do. The commission said that while it is appropriate to reduce the response planning standard, because there were signs of oil in cores taken from the well in the Ugnu and West Sak formations — and because those formations are known to contain movable oil elsewhere on the North Slope — “it is inappropriate to classify this exploratory well as a gas well.”

Both Gregory Micallef, an overriding royalty owner, and Alaskan Crude, appealed the commission’s decision.

The commission has tentatively scheduled a consolidated hearing on Sept. 6, but said if a request for a hearing is not filed it will consider issuance of an order without a hearing.

Written comments are being accepted through Sept. 4; if the commission holds a hearing, written comments will also be accepted at the hearing.

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