Alaska Oil and Gas Conservation Commission report: June 2017

• On June 2, the Alaska Oil and Gas Conservation Commission approved (Conservation Order No. 732) a request from Furie Alaska Operating Alaska LLC to drill the Kitchen Lights Unit A-4 development well within the same governmental section as an existing well capable of producing from the same pool, namely the KLU-3 and KLU A-2A wells.

• On June 6, the AOGCC approved (Conservation Order No. 733) a request from BlueCrest Alaska Operating LLC to drill the Hansen H-12 development well within the same governmental section as an existing well capable of producing from the same pool, namely the Hansen H-14 and Hansen H-16 development wells and Hansen 1AL1, Hansen H-14L1 and Hansen H-16L1 laterals from those development wells. The same day, the AOGCC also approved (Conservation Order No. 734) a request from BlueCrest to drill the Hansen H-12L1 development well within the same governmental section.

• The AOGCC held a workshop on June 6 to discuss changes to bonding practices (R-17-002). The changes would repeal and readopt the requirements under 20 AAC 25.025.

• On June 9, the three AOGCC commissioners jointly sent a letter to Gov. Bill Walker, Senate President Pete Kelly and Speaker of the House Bryce Edgmon to describe “some of the consequences” if lawmakers fail to approve a budget by the July 1 deadline.

“If the AOGCC is forced to shut down its operations on July 1, the most immediate negative impact to the state will be the cessation of our permitting work,” the three commissioners wrote. “Exploration well permits, development well permits, injection well permits and well-repair work permits would stop being issued. Since drilling and wellwork are essential to stave off the natural decline in production, cessation of this permitting would have a significant and potentially long-term financial impact.”

Beyond that immediate impact, the commissioners also expressed concern and uncertainty about whether they could allow continued operation from existing wells without regular inspections. The commissioners said they have been encouraging companies to accelerate their permitting schedules to lessen the impact of a shutdown.

A last-minute budget deal prevented the shutdown.

• The AOGCC held a workshop on June 13 to discuss the need (OTH-17-010) for possible changes to the regulations for idle wells. Topics under discussion included a proposal to make idle well reporting requirements more frequent, to protect the state against liabilities arising from idle wells, to create regulations to improve the safety of idle wells, and the timeline for requiring suspension or plugging a currently idle well.

• On June 14, the AOGCC approved (Area Injection Order No. 18C.012) a request from ConocoPhillips Alaska Inc. to continue water injections in the Colville River Unit CD2-18 well. The company reported a potential Tubing x Inner Annulus pressure communication on March 11 while the well was on miscible gas injection. But a subsequent non-state witnessed Mechanical Integrity Test of the Inner Annulus and a 30-day water-alternating-gas test convinced the commission of the integrity of the well.

• On June 15, the AOGCC approved (Conservation Order No. 443C) a request from ConocoPhillips to change the boundaries of the Alpine Oil Pool at the Colville River unit.

The company asked the commission to expand one section of the pool and contract another section to better reflect the actual reservoir in light of recent CD-5 drilling.

In a related ruling, the AOGCC on June 20 approved (Area Injection Order No. 18D) a request from ConocoPhillips changing the relevant Area Injection Order for the pool.

• On June 27, the AOGCC issued an errata to the two rulings to fix errors in a table showing the legal description of the affected area of CO No. 443C and AIO No. 18D.

• On June 15, the AOGCC approved (Area Injection Order No. 18C.013) a request from ConocoPhillips to continue water injections at the Colville River Unit CD4-26 well.

The company reported a potential Tubing x Inner Annulus pressure communication on February 18, 2017, while the well was on miscible gas injection. Diagnostics, testing and a 30-day water-alternating-gas test convinced the commission of the integrity of the well.

• On June 26, the AOGCC approved (Area Injection Order No. 2B.004 Amended) a request from ConocoPhillips to cancel approval of Area Injection Order No. 2B.004.

The order - approved in February 2006 and amended in September 2007 - governed water injections in the Kuparuk River Unit No. 2M-09A well. The well has been inactive since October 2015. ConocoPhillips is now planning to plug and abandon the well.

• On June 29, the AOGCC approved (Are Injection Order No. 30.009) a request from ConocoPhillips to continue water injections at the Colville River Unit CD3-114 well.

• ConocoPhillips reported a potential Tubing x Inner Annulus pressure communication at the well in late January 2017 while the well was on miscible gas injection. Subsequent diagnostics and mechanical integrity testing, and a monitored 30-day water-alternating-gas injection program, convinced the commission of the overall integrity of the well.

• On Aug. 15, the AOGCC will reconvene a public hearing held on April 18 to consider a request from BP to perform maintenance work on three Prudhoe Bay unit wells - the PBU G-11B producer, PBU 15-48C producer and PBU Y-24 injector. The hearing will specifically consider whether to grant waivers BP needs in order to proceed with the projects.

- ERIC LIDJI