1. January 21, 2011. House Resources. AOGCC Commissioner Foerster 1 The Alaska Oil and Gas Conservation Commission January 21, 2011 Testimony House Resources Committee AOGCC Chair, Dan Seamount

2. January 21, 2011. House Resources. AOGCC Commissioner Foerster 2 Outline Who we are and what we do Activity trends Hot topics

3. January 21, 2011. House Resources. AOGCC Commissioner Foerster 3 Who We Are and What We Do

4. January 21, 2011. House Resources. AOGCC Commissioner Foerster 4 AOGCC Staffing 3 commissioners: a petroleum engineer, a petroleum geologist, a public member with relevant oil & gas experience 5 petroleum engineers 2 petroleum geologists 6 field inspectors IT, admin, and clerical support staff

5. January 21, 2011. House Resources. AOGCC Commissioner Foerster 5 AOGCC Mission Prevent hydrocarbon waste Protect correlative rights Promote greater ultimate hydrocarbon recovery Protect underground fresh water from damage caused by oil and gas operations Protect human safety

6. January 21, 2011. House Resources. AOGCC Commissioner Foerster 6 AOGCC Jurisdiction Oil and gas resource development Geothermal resource development Underground storage of natural gas Metering accuracy for custody transfer

7. January 21, 2011. House Resources. AOGCC Commissioner Foerster 7 Typical AOGCC Approvals Drilling Sundry Wellwork Underground Injection (EOR, disposal, gas storage) Conservation Orders Other

8. January 21, 2011. House Resources. AOGCC Commissioner Foerster 8 Activity Trends

9. 9 Approved Permits 0 5 10 15 20 25 30 35 1996 4 1997 3 1998 5 1999 2 2000 6 2001 5 2002 7 2003 8 2004 9 2005 12 2006 9 2007 11 2009 13 2008 10 $0 $20 $40 $60 $80 $100 $120 $140 PPT Enacted ACES Enacted EXPLORATORY WELL PERMITS (1996 - 2010) with West Coast Spot Price for Alaska North Slope Crude Oil (Dollars per Barrel) Total Permits = 292 AOGCC January 4, 2011 2010 5 Key 5 Number of Operators obtaining permits during specified year BROOKS RANGE STORM CAT TECK COMINCO FEX ALASKAN CRUDE RUTTER & WILBANKS DEPT of INTERIOR ENI / KERR-MCGEE PELICAN HILL PIONEER/EVERGREEN TOTAL E&P ANADARKO PACIF/FOREST/FORCE UNOCAL GRI AURORA MARATHON CONOCOPHIL/ARCO BP SAVANT RENAISSNACE FOWLER ARMSTRONG ULTRASTAR RAMPART ENERGY EXXONMOBIL CITY OF AKUTAN CIRI LINC ENERGY ORMAT NEVADA Oil and Gas Permits Alternative Energy Permits

10. 10 DEVELOPMENT AND SERVICE WELLS / LATERALS (1996 - 2009) Drilled (Completed) Wells 0 50 100 150 200 250 300 350 1997 3 AOGCC Jan. 13, 2010 1996 4 1998 6 1999 5 2000 7 2001 8 2002 7 2003 7 2004 6 2005 5 2006 4 5 2007 2008 6 2009 7 Total Wells / Laterals = 2,601 Operator 5 Number of Operators completing wells and / or laterals during a specified year RUTTER & WILBANKS ENI / KERR-MCGEE PIONEER/EVERGREEN PACIFIC/FOREST/FORCE UNOCAL AURORA MARATHON CONOCOPHILLIPS/ARCO BP XTO EXXONMOBIL $0 $25 $50 $75 $100 $125 $150 $175 W. Texas Intermediate Spot Price (Dollars per Barrel) PPT Enacted ACES Enacted

11. January 21, 2011. House Resources. AOGCC Commissioner Foerster 11

12. January 21, 2011. House Resources. AOGCC Commissioner Foerster 12 Hot Topics North Slope gas sales Gas storage Geothermal and other non-traditional drilling Response to the GOM disaster Liberty Suspended wells

13. January 21, 2011. House Resources. AOGCC Commissioner Foerster 13 AOGCC Role in North Slope Gas Sales Prevent hydrocarbon waste Ensure greater ultimate recovery of hydrocarbons Prudhoe Bay study complete, will need minor updating Pt Thomson study nearing completion

14. January 21, 2011. House Resources. AOGCC Commissioner Foerster 14 AOGCC’s Role in Gas Storage Ensure no hydrocarbon waste Ensure safe operations 7 storage injection orders exist in Cook Inlet –Swanson River (3), Pretty Creek, Kenai Gas Field, Nicolai Creek, and Cannery Loop CINGSA injection order issued. Request for reconsideration under review.

15. January 21, 2011. House Resources. AOGCC Commissioner Foerster 15 Non-traditional Drilling under AOGCC Jurisdiction Coal Bed Methane –No current activity Geothermal (under AOGCC jurisdiction since July 2010) –Naknek Electric –Ormat Mt Spurr –Akutan

16. January 21, 2011. House Resources. AOGCC Commissioner Foerster 16 AOGCC’s role in “other” drilling: AS 31.05.027(g) When the commission finds sufficient likelihood of an unexpected encounter of oil, gas or other hazardous substance... the commission may...designate the area... subject to the regulations and requirements...

17. January 21, 2011. House Resources. AOGCC Commissioner Foerster 17 Recent Applications of AS 31.05.027(g) Naknek Electric (before July, 2010) CIRI’s Cook Inlet UCG (underground coal gasification) project

18. January 21, 2011. House Resources. AOGCC Commissioner Foerster 18 AOGCC’s Response to the GOM Incident Increased vigilance Responding to local and national inquiries Reviewing findings from various studies Recruiting additional field inspectors Reviewing our regulations and statutes Holding public hearing(s) (AOGCC docket #OTH 10-16) Adopting or amending regulations and statutes, if need is identified

19. January 21, 2011. House Resources. AOGCC Commissioner Foerster 19 Liberty Some characteristics similar to the Gulf of Mexico ultra-deep well More stringent oversight than normal

20. January 21, 2011. House Resources. AOGCC Commissioner Foerster 20 Suspended Wells Recently updated regulations Suspended wells on active pads and platforms are not a problem BLM legacy wells in NPR-A are not in compliance with regulations

21. January 21, 2011. House Resources. AOGCC Commissioner Foerster 21 Questions?