Onshore Oil & Gas Order \# 1

An Overview of the Application for Permit to Drill Process

Drilling Plan

\>\> T. Spisak:

Now we got Eric Jones, petroleum engineer from BLM\'s Moab Field Office.
He's going to provide us some information on drilling plans. Let\'s hear
from Eric.

\>\> The drilling plan provides the BLM information necessary to ensure
that drilling is conducted with appropriate regard for protection of
public health and safety, the environment, correlative rights and
maximum economic recovery of hydrocarbons. I would like to review the
drilling plan requirements under order 1 and highlight the changes that
have been implemented by the revision of Onshore Oil and Gas order #1.

The BLM and the operator have a common interest in processing APDs as
efficiently as possible. Therefore, the drilling plan should attempt to
answer the questions that might arise during review. A drilling plan
should include a complete description of the proposal and anticipated
drilling conditions such as loss circulation, high pressure, hydrogen
sulfide. It should also give some background information as to why those
drilling conditions are or are not anticipated and how the proposed well
design addressed these conditions.

The drilling plan components are essentially the same as the prior
onshore order. Formation tops, depths to oil, gas, water and other
minerals, pressure control, casing design, cement design, circulating
medium, testing, coring and logging, pressures, temperatures, loss
circulation zones, hydrogen sulfide and any other aspects of the
drilling proposal that would aid the reviewer in understanding what\'s
being proposed.

The first of these, the formation tops. Formerly order number 1 required
the identification of important geologic markers. That\'s been modified
to include all geologic groups\... formations, members and zones. And an
applicant would want to include marker beds they used for correlation,
as that would also be a useful correlation tool for BLM.

The second item in the drilling plan are zones that contain oil and gas,
water and other minerals. In addition to listing the zones that might
bear these resources, remember to include the operator\'s plans for
protecting such resources.

Blow‑out prevention\... this is essentially the same as it was in the
prior order. Although, schematic diagrams of well control equipment are
no longer required by the order, but they are an efficient means of
presenting the configuration of equipment, which is required in the
order. And for higher rated systems, such as 5,000 pound and above
ancillary equipment such as a remote kill line, mud‑gas separator, pit
volume totalizer, et cetera, should be listed under the blow‑out
preventer equipment. Also, if formation integrity tests are going to be
done, that could be mentioned there as well.

Casing design.....A notable change in the revision of order 1 is the
requirement to include design criteria and loading assumptions and
safety factors for burst, collapse, and tension along with the casing
design. We basically need you to show your work and identify the
assumptions made and conditions anticipated in casing design. You would
also want to include published specifications if any nonstandard casing
is going to be used. Also, if alternate casing designs are being
considered in a situation such as may use either or a couple different
kinds of casing, go ahead and include both of those in the APD and the
review can be done and then either alternative can be used at the time
drilling occurs. Also, if liners are being used, identify the top and
how much lap is occurring with the overlying casing. And describe any
unusual casing designs and go ahead and explain those so the reviewer
understands exactly what\'s being proposed.

Cementing\... the amount, type of cement, including additives, for each
slurry should be included. That should also include the density and
yield. If stage cementing is going to be done, placement of the DV tool
should be listed. And always identify the top of cement that is being
designed for. Give the cement height and any excess cement volume that
the operator anticipates needing to achieve that cement height.

Circulating medium\... include the type and characteristics of mud for
each section of hole and description of standby mud. One of the notable
differences between the original onshore order 1 and this revised order
is the inclusion of air drilling equipment. In the new order if air
drilling is going to be done, the operator would want to include things
such as the length of the blooie line, dust suppression equipment that
would be used, gas ignition source that would be used and also the
compression equipment size and location on the pad layout relative to
the well bore and other equipment. This correlates nicely with the
requirements for air drilling in Onshore Oil and Gas order #2.

Testing, logging and coring\... this section really hasn\'t been changed
in the revised order. As always you would want to give a general
description of the logging suite you would anticipate using and if drill
stem tests are anticipated, go ahead and identify that.

Anticipated pressures and abnormal pressures and temperatures and
hazardous drilling conditions\... with any APD you would want to list
the bottom hole pressure. Make sure that it corresponds to the casing
design, to blow‑out prevention equipment, and to mud weight. If there is
a lack of correlation among those things, maybe go ahead and explain why
that that condition exists. Also, you would want to identify any uphole
high pressure zones or loss circulation zones and if hydrogen sulfide is
anticipated, Onshore Oil and Gas order #6 would apply.

The final portion of the drilling plan is any other facet of the
proposal that might aid in the understanding of what\'s being proposed,
particularly directional or horizontal wells. You would want to include
a plan design, include measurements for plan view, vertical section,
measured and true vertical depths, and if the completion is deviated,
and that is, it\'s going through the target zone as an angle, you would
want to identify the top of the target zone and the bottom of the target
zone in map view and identify them relative to their location with
respect to lease lines and section lines.

Finally, in summary, a complete and thorough drilling plan improves
processing efficiency. And any aspect of the drilling plan that\'s a
little bit unusual, go ahead and explain that and give sufficient detail
that the reviewer thoroughly understands what\'s being proposed. APDs
are transferable. The operator that submits an APD might not be the same
operator that ends up drilling the well. So the APD and drilling plan
should be essentially a standalone document that a new operator can take
and the APD and drilling plan has sufficient detail for them to drill
the well and accomplish that. And finally, there seems to be a hesitancy
to amend or modify drilling plans until and APD is approved, and I would
suggest that the earlier amendments and modifications can be submitted,
the more efficient the overall processing of the APD will be.

\>\> T. Spisak:

Eric, thanks for that presentation. Hank, Eric mentioned that an APD is
transferable. Does that include the bond?

\>\> H. Szymanski:

No, the bonds are not transferable. The new operator will have to notify
us of the fact that they\'re the new operator and then obtain acceptable
bond coverage for themselves.

\>\> T. Spisak:

Barry, does the Forest Service have any involvement in the drilling
plan?

\>\> B. Burkhardt:

Typically we\'re not directly involved, but a lot of time there are
indirect correlations that are very important in the drilling plan is
often closely associated with surface use needs. For example, if on the
onsite we identify that there\'s a groundwater issue, that would be
reflected in the casing program. Or if you\'re in an H2S environment we
need to consider escape routes. Also, downhole needs with casing would
affect the size of the well pad.

\>\> T. Spisak:

Thank you.