Alaska Oil and Gas Conservation Commission: April 2017

• On March 30, the Alaska Oil and Gas Conservation Commission approved (Conservation Order No. 462.007) a request from Hilcorp Alaska LLC to allow for unrestricted well spacing in the Endicott Oil Pool at the Duck Island unit.

A rule in Conservation Order No. 462 allowed for 40-acre spacing at the pool but also gave the commission the authority to change the spacing, within certain limitations.

According to Hilcorp, the upper subzones within the Endicott pool are “particularly discontinuous, unpredictable and drain small areas (less than 40 acres).” Over the past year, the company required spacing exemptions for three new Endicott development wells. The three wells added about 275 barrels of oil per day in production and about 300,000 barrels of reserves to the Endicott pool, which began production in 1987 and peaked soon thereafter. “Due to the maturity of the pool,” according to the recent commission ruling, “future development targets will be small accumulations of bypassed oil that cannot be effectively recovered under a 40-acre spacing requirement.”

The new spacing provision maintains exterior boundaries with neighboring leaseholders.

• On March 30, the AOGCC approved (Docket Number: AIO-17-009) a request from ConocoPhillips Alaska Inc. to change the annual Mechanical Integrity Test date for 97 wells at the Kuparuk River unit and Colville River unit to align with other test dates.

The company has been working with the commission on the consolidation program since late 2015. The goal is to create efficiencies by scheduling multiple tests close together.

• On April 6, the AOGCC approved (Area Injection Order No. 4G.006) a request from BP Exploration (Alaska) Inc. to continue water only injection at the Prudhoe Bay Unit 04-43 well. The company reported potential casing and tubing leaks and, in June 2016, performed diagnostics and a coil tubing cement job at 450 feet, which excludes the dimensions of a well bore required for monitoring under state codes. But subsequent testing convinced the commission of the integrity of the well for health and safety.

• On April 11, the AOGCC upheld an early fine imposed on the Glacier Oil & Gas Corp. subsidiary Cook Inlet Energy LLC for long-term violations of safety valve regulations.

The commission imposed (Other Order 102) penalties of $446,000 against the company in February 2017 and agreed to reconsider the penalty in March, upon request of the company. The company claimed it had acted in good faith and mitigated its violations and argued that the fine was inconsistent with previous actions taken by the AOGCC.

Upon reconsideration, the AOGCC determined that its original ruling was appropriate.

• On April 12, the AOGCC approved (Area Injection Order No. 2B.060 Cancellation) a request from ConocoPhillips Alaska Inc. to cancel Area Injection Order 2B.060.

The commission issued the original area injection order after the Kuparuk River Unit 1B-11 well developed a surface casing leak in March 2011. The order allowed ConocoPhillips to continue water only injections at the well, as long as it honored certain restrictions.

The company repaired the well in February 2017 with a rig workover. The workover accidentally damaged the surface casing, leading to a new seven-inch liner. One result of the workover was that Area Injection Order 2B.060 was no longer applicable to the well.

Instead, also on April 12, the commission approved (Area Injection Order No. 2C.044) a request from the company to continue water alternating gas injections at the well.

• The AOGCC has tentatively scheduled a meeting for May 25 to consider requests from BlueCrest Energy Inc. for spacing exemptions at two planned Cosmopolitan wells.

In a request submitted on April 17, the Texas-based independent asked the commission to waive regulatory spacing requirements for the proposed Hansen H-12 well and associated Hansen H12L1 lateral, which would both be drilled in the same governmental quarter sections as the Hansen 1AL1 and Hansen H-16, Hanson H-14 and Hanson H14L1 wells.

The commission will hold the hearing if it receives a request to do so by May 8.

- ERIC LIDJI