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 will 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 a ‑‑
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 is ‑‑ 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 get
sufficient detail that the reviewer thoroughly understands what\'s being
proposed. APDs are transferable. And operator might not be the same
operator that ends up drilling the well. It should be essentially a
standalone document that a new operator can take in 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:

Does the Forest Service any involvement in the drilling plan?

\>\> B. Burkehardt:

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.