HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

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

Vol. 12, No. 42 Week of October 21, 2007

Commission confirms Burglin decision

AOGCC says well cannot be classified as gas well; based on DEC reinterpretation of regulations, reduces likely flow to 600 bpd

By Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has confirmed its determination that the Burglin 33-1 well in the Arctic Fortitude unit on the North Slope cannot be classified as a gas well. Alaskan Crude Corp. plans to re-enter the Burglin 33-1 to test the Ugnu and West Sak formations.

The commission said “neither new information nor compelling arguments were submitted to justify amending the determination.”

However, the commission said, it amended its second recommendation on the amount of oil flow likely from the well “based on a submission of the Alaska Department of Environmental Conservation.”

These decisions relate to spill response requirements: DEC determines spill response requirements for exploration drilling; the commission advises DEC on how much oil, if any, a particular well may encounter and whether a well can be classified as a gas well exempting it from spill planning.

In its Oct. 1 reconsideration order the commission said Gregory Micallef, an overriding royalty owner, and Alaskan Crude, the unit operator, appealed the commission’s June 26 decision, asking that the Burglin 33-1 be classified as a gas well.

Alaskan Crude’s original request had been for an 85 percent reduction in the response planning standard for an oil exploration well.

The commission said in June that because there were signs of oil in cores from the Burglin 33-1 well, drilled in 1985, and the Ugnu and West Sak formations contain moveable oil elsewhere on the North Slope, “it is inappropriate to classify this exploratory well as a gas well.” The commission then applied the Alaskan Crude-requested 85 percent response planning standard, based on DEC’s interpretation of its regulations at that time, and said the portion of the Ugnu and West Sak formations Alaskan Crude proposed to test were unlikely to produce liquid hydrocarbons to the surface in counts greater than 825 barrels per day of oil.

Micallef, Alaskan Crude appeal

In July, Micallef and Alaskan Crude appealed the commission’s decision, asking that the well be classified as a gas well, removing the need to meet a response planning standard for a potential oil spill.

The commission held a hearing on the appeal Sept. 6.

The commission said Oct. 1 that while no parties appeared at the hearing, it received comments from DEC.

DEC noted that Alaskan Crude had not sought a determination that the Burglin 33-1 was a natural gas exploration well, but instead applied for an oil discharge prevention and contingency plan to develop the well as an oil and gas exploration well.

DEC also said it has changed how it interprets the reduction limitation in its regulations. Under the original interpretation the absolute floor for the response planning standard was set at 15 percent of 5,500 barrels per day or 825 bpd.

DEC told the commission that even if the commission determined that the expected flow from a stratum is zero bpd that would not dictate that DEC set the RPS volume at zero bpd.

Under its new interpretation of its regulations, however, DEC said the response planning standard for the Burglin 33-1 would be reduced. Based on DEC’s amended interpretation, the commission said its new determination is that the maximum flow rate for the Burglin well is 600 bpd.

One conclusion incorrect

The commission said it initially determined that there was reasonable certainty that wells to the Ugnu or West Sak “in this area will not encounter liquid hydrocarbon bearing sands” in those formations.

The commission said that on reconsideration, it determined that conclusion to be incorrect.

Under statute, “at issue is not a determination regarding the likelihood that a particular well may encounter hydrocarbon bearing sands, but a determination regarding the likelihood that a well ‘at a natural gas exploration facility’ may penetrate ‘a formation capable of flowing oil to the ground surface.’ The Burglin 33-1 well is neither a natural gas exploration facility; nor could the Commission determine that the evidence demonstrates with reasonable certainty that it will not penetrate a formation capable of flowing oil to the ground surface,” the commission said.

The commission said the Burglin 33-1 well “is not a natural gas exploration facility,” which is defined in statute as a facility “used solely for the exploration for natural gas.” The commission said Alaskan Crude said in its April 26 application that it intended to produce liquid hydrocarbons and that the test zones, based on similar nearby wells, were expected to contain high-viscosity oil. Alaskan Crude did say it assumed that oil would not flow to the surface and would “mobilize equipment to pump or mechanically lift fluids to the surface.”

The commission also said it “could not find that the available evidence demonstrates with reasonable certainty that the Burglin 33-1 well will not penetrate a formation capable of flowing oil to the ground surface.” It said the West Sak formation, “even in the vicinity of the Burglin 33-1 well — is indisputably capable of flowing oil to the ground surface.”






Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.