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September 2007

Vol. 12, No. 36 Week of September 09, 2007

AOGCC reconsidering Burglin well assessment for Jim White

Alan Bailey

Petroleum News

At a Sept. 6 Alaska Oil and Gas Conservation Commission hearing John Norman, AOGCC chairman, said that the commission would reconsider its recommendations on the oil spill response requirements for the Burglin 33-1 well, south of Prudhoe Bay on Alaska’s North Slope (AOGCC provides advice to Alaska Department of Environmental Conservation on how much, if any, oil a particular exploration well may encounter, while DEC determines the oil spill response plan requirements for exploration drilling).

Alaskan Crude, a small oil and gas independent, has been planning to re-enter the 1985 Burglin well to test the Ugnu and West Sak formations. But the company has questioned the need for an oil spill plan for its drilling operations. The company has said that results from the original drilling of the well indicate that no oil will flow to the surface from the well.

The development and maintenance of an oil spill response plan involves significant cost, and the level of that cost depends on the maximum amount of oil that might spill from the well — more potential spilled oil drives a need for more response equipment and personnel to be available.

In April Alaskan Crude asked AOGCC to recommend that the spill response planning standard for the well be reduced to a minimum level.

AOGCC concurred

In June AOGCC concurred with that request, saying that the response planning should be based on a discharge of 15 percent of the DEC response planning standard of 5,500 barrels of oil per day for 15 days, the minimum amount allowed under DEC regulations.

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.”

However, the commission refused to classify the well as a gas exploration well because, it said, there are signs of oil in the well cores, and the Ugnu and West Sak formations “are known to contain movable oil elsewhere on the North Slope.”

Decision appealed

In July Alaskan Crude and Gregory Micallef, an overriding royalty owner, both appealed the AOGCC position. Alaskan Crude argued that the Burglin well should be classified as a gas well and that “unassisted flow of liquid hydrocarbons capable to the surface, in any quantity, is impossible.”

The determination that the Burglin 33-1 well is an oil well “does nothing but foster the continuing unreasonable and unwarranted rancor towards small independent explorers and operators,” said James White, president of Alaskan Crude, in a letter to AOGCC and DEC.

In response to the appeals, AOGCC scheduled the Sept. 6 hearing. And in a letter dated Sept. 5 from DEC to AOGCC, DEC said that Alaskan Crude had originally only requested that the response standard be reduced for the Burglin well, not that the well be classified as a gas well. DEC also said that it had reviewed the regulations relating to reductions in the response planning standard for oil spill response and determined that the 15 percent of 5,500 barrels per day figure need not necessarily be an absolute floor.

However, DEC also said that it did not view reducing the response planning standard to zero as a practical proposition.

In the Sept. 6 AOGCC hearing, Norman noted the change in DEC’s interpretation of the regulations and commented that Alaskan Crude had not presented any new information regarding the case.

“AOGCC will in due course issue its decision on this reconsideration,” Norman said.






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