Slide Show Explaining the Unit Process
Transcript of Slide Show Explaining the Unit Process
The Unitization Process
By Carol Lee, Petroleum Land Manager
Revised August 20, 2003
Unit Process 1. Acreage is offered in Areawide Lease Sales.
2. Lease terms are established before each Lease Sale.
3. The lessees identify a prospect and apply to form a unit.
4. The lessees in the proposed unit area select a Unit Operator.
5. The Unit Operator and the State negotiate the terms of the Unit Agreement, the unit boundaries, and the Unit Plan of Exploration.
6. The Unit Operator proposes forming a Participating Area.
7. The Unit Operator and the State agree on a Plan of Development and tract allocation factors for the Participating Area.
8. A unit may include multiple participating areas.
9. The unit area may be contracted or expanded.
10. After a stated period of time the unit area automatically contracts down to the participating area.
Acreage is offered in Areawide Lease Sales
6 4 2
7 9
15 14
19 21 23
27 25
13
5 3 1
10
18 17 16
20 22 24
30 28
12
31 33 3532 34 36
Tract 6
Tract 3
Tract 5 Tract 2 Tract 1
Tract 11 Tract 12
Tract 4Tract 8Tract 7
Tract 9Tract 10Tract 13Tract 14
Tract 15 Tract 16
• Each area is offered once a year in Areawide Lease Sales: North Slope, Beaufort Sea, Cook Inlet.
• All tracts are offered annually.
• Each lease sale tract can contain up to nine sections.
20E 19E
6N
5N
6 4 25 3 1
7 9 10 12
15 14
19 21 23
1318 17 16
20 22 24
27 2530 28
27 2530 28
27 2530 28
31 33 3532 34 3631 33 3532 34 36
31 33 3532 34 36
6 45 3 12
6 45 3 12
7 9 10 12
7 9 10 12
15 14 1318 17 16
15 14 1318 17 16
23 24
23 24
19 2120 22
19 2120 22
Sale 1: 12.5% RoyaltyLeases effective 1/1/2000 Expire 12/31/2009
•Each tract that receives a bid is assigned an (Alaska Division of Lands) ADL number.
Sale 2: 16.67% RoyaltyLeases effective 1/1/2001 Expire 12/31/2010
Sale 3: 12.5% Royalty, 30% Net Profit ShareLeases effective 1/1/2002 Expire Dec. 31, 2011
Tract 6 Tract 5 Tract 2ADL 300102ADL 300302ADL 300303 Tract 1ADL 300101
Tract 4ADL 300301Tract 3ADL 300103Tract 8ADL 300104Tract 7ADL 300105
Tract 9Tract 10Tract 13Tract 14 ADL 300304ADL 300305ADL 300203ADL 300204
Tract 11 Tract 12Tract 15 Tract 16ADL 300206ADL 300205 ADL 300202ADL 300201
Lease terms are established before each Lease Sale
Tract 6Tract 6 Tract 5Tract 5 ADL 300102 ADL 300101
Tract 11Tract 11 Tract 12Tract 12
Tract 4Tract 4
Tract 9Tract 9Tract 10Tract 10Tract 13Tract 13Tract 14Tract 14
Tract 15Tract 15 Tract 16Tract 16
BP 100%
CHEVRON 100%
UNOCAL 100%
WINTHER 100%
ADL 300303 ADL 300302
ADL 300204 ADL 300203
ADL 300206 ADL 300201
ADL 300305
ADL 300205
ADL 300301
ADL 300304
ADL 300202
BP 50% CHEVRON 50%
Tract 7Tract 7 Tract 8Tract 8ADL 300104ADL 300105 Tract 3Tract 3ADL 300103
Lease Ownership
Reservoir
Proposed Unit Boundary
Tract 2 Tract 3
Tract 6
Unit Tract
ADL 300103
BPTract 5
ADL 300102
Chevron
ADL 300302
BP
Tract 4
ADL 300104
BP
Tract 9Tract 8
ADL 300203
Unocal
Tract 7
Tract 1
ADL 300204
BP
ADL 300305
Unocal
ADL 300105BP
ADL 300303BP
BP identifies a prospect and proposes forming the Serendipity Unit.
Unit Application Process
100 days from Application to Decision
• Public Notice within 10 days of application
• 30-day Public Comment Period
• Decision within 60 days after close of Public Comment Period
Unit Application
• Unit Agreement
• Exhibit A - List of leases and ownership
• Exhibit B - Map of the unit area
• Plan of Exploration
• Technical Data to support the application
• Unit Operating Agreement
• Application Filing Fee - $5,000.00
Serendipity UnitExhibit A
TractNumber
LeaseNumber
LegalDescription
TractAcreage Royalty % NPS % Ownership
1 ADL 300302T6N R20ESec. 10 - 15 3,840 acres 12.5 % 30 % BP 50%
Chevron 50%
2 ADL 300102T6N R19ESec. 7, 8, 17,and 18
2,560 acres 12.5 % Chevron 100%
3 ADL 300104T6N R20ESec. 22 – 27,and 34 - 36
5,760 acres 12.5 % BP 100%
4 ADL 300103T6N R19ESec. 19, 20,and 29 - 32
3,840 acres 12.5 % BP 100%
Total Unit Acreage 16,000 acres BP 11,520 acres 72%Chevron 4,480 acres 28%
Reservoir
Unit Boundary
Unit Tract
Tract 1ADL 300302BP/Chevron
Tract 3ADL 300104
BP
Tract 4ADL 300103
BP
Tract 2ADL 300102
Chevron
Serendipity UnitExhibit B
Serendipity UnitPlan of Exploration
• 3-year Term June 1, 2000 - May 31, 2003• Seismic Program by May 31, 2001• Exploratory Well by May 31, 2002• Submit an application to form a Participating Area
by by May 31, 2003• If the unit operator fails to meet any of the three
obligations in a timely manner the unit will terminate.
SERENDIPITY UNIT BOUNDARY
New Leases, ADL 300555 Segregated out of ADL 300302 andADL 300557 Segregated out of ADL 300103
New Lease,
ADL 300556 Segregated out of ADL 300102
Tract 3ADL 300104
Tract 3ADL 300104
Tract 1ADL 300302
ADL 300555 ADL 300556
Tract 2ADL 300102
ADL 300557
Tract 4ADL 300103
Leases are Segregated upon Unitization
Serendipity UnitPlan of Exploration
June 1, 2001 1st Annual Report
• Seismic data acquired and processed.
• Presentation of geologic data.
• Exploratory well location identified.
Reservoir
Unit Boundary
Unit Tract
Well
Tract 3ADL 300104
BP
Tract 1ADL 300302BP/Chevron
SU Well #1Tract 4
ADL 300103BP
Tract 2ADL 300102
Chevron
The lessees drill an exploratory well on Tract 3
Serendipity UnitInitial Plan of Exploration
June 1, 2002 2nd Annual Report
• Drilled Serendipity Unit Well #1
• Will apply to form a participating area
The Unit Operator Submits an Application to form the Atlantis Participating Area
• Exhibit C Tract Allocation Schedule
• Exhibit D Map of PA Boundary
• Plan of Development for the Atlantis PA
• Plan of Exploration for Unit Area outside of Atlantis Participating Area
Serendipity UnitAtlantis Participating Area
Exhibit C
TractNumber
LeaseNumber
LegalDescription
TractAcreage Royalty
TractAlloction Ownership
3 ADL 300104T6N R20ESec. 22 – 27,and 34 - 36
5,760 acres 12.5 % 75% BP 50%Chevron 50%
4 ADL 300103T6N R19ESec. 19, 20,and 29 - 32
3,840 acres 12.5 % 25% Chevron 100%
Total Unit Acreage 9,600 acres
Reservoir
Unit Boundary
Unit Tract
Well
PA Tract
Tract 2ADL 300102
Chevron
Tract 1ADL 300302BP/Chevron
Tract 4ADL 300103
BPTract 3ADL 300104
BP
SU Well #1
Atlantis Participating AreaExhibit D
Atlantis Participating AreaPlan of Development
• 5-year plan June 1, 2003 - May 31, 2008
• Drill three more development wells
• Build stand-alone facilities for processing hydrocarbons
Unocal Lease Operation
• Unocal applies to drill a well on ADL 300305 and perform well tests during a 90-day test period.
• Test fluids to be transported to an adjacent unit and commingled with that unit’s production.
Reservoir
Unit Boundary
Unit Tract
Well
PA Tract
Tract 2ADL 300102
Chevron
Tract 1ADL 300302BP/Chevron
Tract 4ADL 300103
BPTract 3
ADL 300104BP
Unocal Well #1
SU Well #1
ADL 300305Unocal
The lessee drills a well to test the extent of the reservoir.
Unit Expansion Process
100 days from Application to Decision
• Public Notice within 10 days of application
• 30-day Public Comment Period
• Decision within 60 days after close of Public Comment Period
Unit Expansion Application
• Unit Agreement
• Exhibit A - List of leases and ownership
• Exhibit B - Map of the unit area
• Plan of Exploration
• Technical Data to support the application
• Unit Operating Agreement
• Application Filing Fee - $500.00
Reservoir
Unit Boundary
Unit Tract
Well
PA Tract
Tract 1ADL 300302BP/Chevron
Tract 3ADL 300104
BP
Tract 5ADL 300203Unocal
Tract 6 UnocalADL 300305l
Tract 2ADL 300102
Chevron
Tract 4ADL 300103
BP
Tract 4.1ADL 300103
BPSU Well #1
Unocal Well #1
The unit operator applies to expand the Serendipity Unit and the Atlantis Participating Area
Serendipity UnitExhibit A
TractNumber
LeaseNumber
LegalDescription
TractAcreage Royalty % NPS % Ownership
1 ADL 300302 T6N R20ESec. 10 - 15 3,840 acres 12.5 % 30 %
BP 50%Chevron 50%
2 ADL 300102T6N R19ESec. 7, 8, 17,and 18 2,560 acres 12.5 % Chevron 100%
3 ADL 300104T6N R20ESec. 22 – 27,and 34 - 36 5,760 acres 12.5 % BP 100%
4 ADL 300103T6N R19ESec. 19, 20,and 29 - 32 3,840 acres 12.5 % BP 100%
4.1 ADL 300103T6N R19ESec. 28 and 33 1,280 acres 12.5 % BP 100%
5 ADL 300203T5N R19ESec. 1-3 and10-13
5,760 acres 16.67% Unocal 100%
6 ADL 300305T5N R19ESec. 4-9 and16-18
5,760 acres 12.5% 30% Unocal 100%
Total Unit Acreage 28,800 acresBP 12,800 acres 44.44%Union 11,520 acres 40.00 %Chevron 4,480 acres 15.56%
Atlantis Participating AreaExhibit C
TractNumber
LeaseNumber
LegalDescription
TractAcreage
TractAllocation Royalty % NPS % Ownership
3 ADL300104
T6N R20ESec. 22 – 27,and 34 - 36
5,760 acres 40% 12.5 % BP 100%
4 ADL300103
T6N R19ESec. 19, 20,and 29 - 32
3,840 acres 20% 12.5 % BP 100%
4.1 ADL300103
T6N R19ESec. 28 and33
1,280 acres 5% 12.5 % BP 100%
5 ADL300203
T5N R19ESec. 1-3 and10-13
5,760 acres 20% 16.67% Unocal 100%
6 ADL300305
T5N R19ESec. 4-9 and16-18
5,760 acres 15% 12.5% 30% Unocal 100%
Total Unit Acreage 28,800 acres 100% BP 65%Unocal 35%
Serendipity Unit2nd Plan of Exploration
• 2-year term Nov. 1, 2003 - Oct. 31, 2005
• Acquire seismic data over northern unit area to confirm oil prospect
• If seismic data is encouraging, drill exploration well
• If the Unit Operator fails to fulfill seismic and drilling commitments Tracts 1 and 2 will contract out of the unit area.
Reservoir
Unit Boundary
Unit Tract
Well
PA Tract
Tract 1ADL 300302BP/Chevron
Tract 3ADL 300104
BP
SU Well #1
Tract 5ADL 300203Unocal
Tract 6 UnocalADL 300305l
Unocal Well #1
Tract 4.1ADL 300103
BP
Tract 2ADL 300102
Chevron
Tract 4ADL 300103
BP
SU Well #2
The unit operator proposes an Exploration Well
Serendipity Unit2nd Plan of Exploration
November 1, 2004 1st Annual Report
• Acquired Seismic Data
• Presented Interpretation of Seismic Data
• Plan to Drill Serendipity Unit Well #2
• Request Approval of Tract Operation for testing and evaluating production.
Serendipity Unit2nd Plan of Exploration
November 1, 2005 2nd Annual Report
• Drilled Serendipity Unit Well #2
• Present results from Tract Operation.
• Apply to form Utopia Participating Area.
Utopia Participating AreaExhibit C
TractNumber
LeaseNumber
LegalDescription
TractAcreage
TractAllocation Royalty % NPS % Ownership
1ADL300302
T6N R20ESec. 10 - 15 3,840 acres 100% 12.5 % 30 % BP/Chevron
100%
Total PA Acreage 3,840 acres 100%
Reservoir
Unit Boundary
Unit Tract
Well
Tract 3ADL 300104
BP
Tract 5ADL 300203Unocal
Tract 6 UnocalADL 300305l
Unocal Well #1
Tract 4ADL 300103
BP
Utopia PA
Tract 1ADL 300302BP/Chevron
Tract 4.1ADL 300103
BPSU Well #1
Tract 2ADL 300102
Chevron
SU Well #2
Utopia Participating AreaExhibit D
Utopia Participating AreaPlan of Development
• 5-year plan Feb. 1, 2005 - Jan. 31, 2010
• Sustain production from Serendipity Unit Well #2
• Negotiate facility sharing agreement with Atlantis PA for processing hydrocarbons
Serendipity Unit3rd Plan of Exploration
• 2-year term Nov. 1, 2005 - Oct. 31, 2007
• Apply for Tract Operation to Extend Unocal Well #1 to explore deeper horizon.
• Test fluids to be commingled with Atlantis PA production.
• If well tests are successful, form new participating area.
The Unit Operator Submits an Application to form the Shangri La Participating Area
• Exhibit C Tract Allocation Schedule
• Exhibit D Map of PA Boundary
• Technical Data to support PA application
• Plan of Development for the Shangri La PA
Shangri La Participating AreaExhibit C
TractNumber
LeaseNumber
LegalDescription
TractAcreage
TractAllocation Royalty % NPS % Ownership
5.1 ADL300203
T5N R20ESec. 1 and12
1,280 acres 25% 12.5 % Chevron100%
6.1 ADL300305
T5N R19ESec. 5 - 8
2,560 acres 75% 12.5% 30% Unocal100%
Total PA Acreage 3,840 acres 100%
Reservoir
Unit Boundary
Unit Tract
WellTract 1ADL 300302BP/Chevron
Tract 3ADL 300104
BP
SU Well #1Tract 4.1
ADL 300103 BP
Tract 4ADL 300103
BP
SU Well #2
Tract 2ADL 300102
Chevron
Shangri La PA
Tract 6 UnocalADL 300305
Tract 5ADL 300203Unocal
Tract 5.1
Tract 6.1
Unocal Well #1
Shangri La Participating AreaExhibit D
Shangri La Participating AreaPlan of Development
• 5-year plan Feb. 1, 2007 - Jan. 31, 2012
• Sustain production from Unocal Well #1
• Negotiate facility sharing agreement with Atlantis PA for processing hydrocarbons
Reservoir
Unit Boundary
Unit Tract
Well
Shangri La PA
Tract 5ADL 300203Unocal
Tract 5.1
Atlantis PA
Utopia PA
Tract 1ADL 300302BP/Chevron
Tract 2ADL 300102
Chevron
Tract 3ADL 300104
BP
Unocal Well #1
Tract 6 UnocalADL 300305l
Tract 6.1
Tract 4.1ADL 300103
BP
Tract 4ADL 300103
BPSU Well #1
SU Well #2
Serendipity Unit
Automatic Contraction
• In 2010 the Serendipity Unit contracts down to only the area within a participating area.
• Tract 2 contracts out of the unit.
• ADL 300102 is beyond its primary term and expires.
Reservoir
Unit Boundary
Unit Tract
WellTract 1ADL 300302BP/Chevron
Shangri La PA
Tract 5ADL 300203Unocal
Tract 5.1
Tract 6.1Atlantis PA
Utopia PA
Tract 3ADL 300104
BP
SU Well #2
SU Well #1Tract 4
ADL 300103BP
Unocal Well #1
Tract 6 UnocalADL 300305l
Tract 4.1ADL 300103
BP
Serendipity Unit