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Department of Natural Resources

DIVISION OF OIL AND GAS

550 W. 7th Avenue Suite 1100 Anchorage, Alaska 99501-3560

Main: 907.269.8800 Fax: 907.269.8939

December 15, 2016 Kate Kaufman Environmental Specialist Hilcorp Alaska, LLC 3800 Centerpoint Dr., Ste. 1400 Anchorage, AK 99503 RE: LONS 16-008, Hilcorp Alaska, LLC, Milne Point Unit, Moose Pad Development Unit

Plan of Operations Decision. Dear Ms. Kaufman:

I. INTRODUCTION On September 22, 2016, Hilcorp Alaska, LLC (Applicant) submitted a request to the Division of Oil and Gas (Division) for approval of a Unit Plan of Operations (Plan) to carry out the Moose Pad Development Project in the Milne Point Unit (MPU). The Moose Pad Development Project is approximately 4 miles southeast of Oliktok Point, near the mouth of the Ugnuravik River (Figure 1). Approval of this Plan, along with approvals from other state and federal agencies (Agencies), is necessary for Hilcorp Alaska, LLC (Hilcorp) to carry out the Moose Pad Development Project. Any further development is subject to further review and approval by the Department of Natural Resources (DNR). II. SCOPE OF DECISION The DNR Commissioner has delegated authority for approval of Unit Plan of Operations activities to the Division under Department Order: 003 in accordance with Alaska Statute (AS) 38.05 and 11 Alaska Administrative Code (AAC) 83.346. As set forth below, the Division has evaluated the proposed Plan to determine if sufficient information as required by 11 AAC 83.346 is provided. The Division has also considered that criteria set forth in 11 AAC 83.303. In approving a Plan, the Division may require amendments that it determines are necessary to protect the State’s interests (11 AAC 83.346(e)). The proposed Moose Pad Development Project will be located within the MPU southwest of L Pad (Figures 2 and 3). The project includes a new gravel pad approximately 17.22 acres in size, requiring approximately 140,000 cubic yards of gravel, an access road to the new pad that is approximately 2.83 miles long, requiring approximately 125,000 cubic yards of gravel, a new oil production pipeline running at an offset along the road alignment between the pad and Milne Point Road, and a tie-in pad at Milne Point Road for the new pipeline approximately 0.36 acres in size, requiring approximately 1,500 cubic yards of gravel. Power and fiber optic cables to support facilities at the new pad will be buried in the new access road. This development is

LONS 16-008, Hilcorp, MPU, 12/15/2016 Moose Pad Development Unit Plan of Operations Decision

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proposed in order to expand oil resource development within the MPU Schrader Bluff reservoir. The new pad will accommodate continued development activities by providing space for up to 44 new wells and supporting infrastructure, including a test separator building, a pig launcher building, and an electric submersible pump drive building. Agency authorizations for this project include the following:

• U.S. Army Corps of Engineers – Clean Water Act, Section 404 Authorization • U.S. Environmental Protection Agency – Underground Injection Control Permit • Alaska Department of Environmental Conservation – Minor Air Quality Permit • Alaska Department of Environmental Conservation – Transportable Drill Rig Permit • Alaska Department of Fish and Game – Culvert Installation Permit • Alaska Department of Natural Resources Division of Mining, Land and Water –

Temporary Water Use Authorization • Alaska Department of Natural Resources Division of Mining, Land and Water – Land

Use Permit for ice road and ice pad construction • Alaska Department of Natural Resources Division of Oil and Gas – Unit Plan of

Operations Approval • Alaska Oil and Gas Conservation Commission – Permits to drill and sundry approvals • State Historic Preservation Office – concurrence with “No Historic Properties Affected”

determination • North Slope Borough – Development Permit • North Slope Borough – Inupiat History, Language and Culture Clearance

III. LAND STATUS The MPU is comprised of state lands. A. Division’s Leased Lands: This section refers to Division managed oil and gas leases

regardless of ownership of overlying surface lands.

Oil and Gas Lease: ADL 025514 Oil and Gas Mineral Estate Lessee(s): Hilcorp 50% Working Interest (WI); BP Exploration (Alaska) Inc. 50% WI Surface Ownership and Access Agreement: State of Alaska surface Special Use Lands: ADL 50666, North Slope Area Special Use Lands Jointly Managed Lands: N/A Other Considerations: N/A

Project Components Meridian, Township, Range, & Section(s)

GPS Coordinates NAD83, Decimal Degrees

Moose Production Pad Umiat Meridian, T. 13 N., R. 9 E., Secs. 13 and 14 70.486773, -149.728837

Moose Pad Access Road Umiat Meridian, T. 13 N., R. 9 E., Sec. 13

70.486144, -149.722871 (intersection of road at pad)


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Oil Production Pipeline Umiat Meridian, T. 13 N., R. 9 E., Sec. 13

70.486845, -149.723043 (intersection of pipeline at pad)




Moose Pad Access Road Umiat Meridian, T. 13 N., R. 10 E., Secs. 17 and 18

70.487545, -149.615875 (intersection with Milne Point Road)

Moose Pad Tie-in Pad Umiat Meridian, T. 13 N., R. 10 E., Sec. 17 70.487726, -149.615483

Oil Production Pipeline Umiat Meridian, T. 13 N., R. 10 E., Secs. 17 and 18

70.487695, -149.616319 (point of crossing Milne Point Road)




Moose Pad Tie-in Pad Umiat Meridian, T. 13 N., R. 10 E., Sec. 8 70.487726, -149.615483

Oil Production Pipeline Umiat Meridian, T. 13 N., R. 10 E., Sec. 8

70.488615, -149.612704 (pipeline tie-in to existing production pipeline)

B. State of Alaska Surface Lands: This section refers to State owned surface lands where no

Division managed oil and gas leases exist. Not applicable to this project.


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C. Non-State Lands: This section refers to areas where the State does not own the surface land and no Division managed oil and gas leases exist. Not applicable to this project.

IV. PROPOSED OPERATIONS The Plan describes the proposed operations in full detail. Set forth below is a summary of the key details. A. Sequence and Schedule of Events

Project Milestone # Project Milestone Proposed Start

Date Proposed End

Date 1. Season 1 ice road construction 12/15/2016 2/1/2017

2. Gravel mining and placement for Moose Pad, access road, and tie-in pad

12/15/2016 3/31/2017

3. Gravel Turning and compaction 7/1/2017 8/31/2017 4. Culvert placement 7/1/2017 8/31/2017 5. Power and fiber installation 7/1/2017 8/31/2017 6. Season 2 ice road construction 12/1/2017 2/1/2018 7. Pipeline installation 12/15/2017 3/31/2018 8. Facility installation 5/1/2018 9/31/2018 9. Drilling program 9/1/2018 N/A

B. Well Sites Hilcorp’s proposed Moose Pad will provide access to approximately 7 square miles of undeveloped oil reserves within the MPU (Figures 4-17). Initial development plans for Moose Pad include up to 44 new wells to be developed using directional drilling technology. To increase the amount of crude oil that can be extracted from the Schrader Bluff reservoir that the news wells are targeting, the new wells will include both oil production wells and enhanced oil recovery (EOR) injection wells. C. Buildings The Moose Pad Development Project will require the following infrastructure to be installed on the pad: a test separator building, a pig launcher building, an electric submersible pump drive building. Also, a pig launcher building approximately 10 feet by 30 feet will be constructed at the tie-in pad to facilitate pigging operations at the pipeline intersection. D. Fuel and Hazardous Substances A diesel fuel storage tank (~14,000 gallons) and two 300-gallon day tanks will be onsite for equipment refueling and to support drilling efforts. Up to two 1,000-barrel tanks of methanol, stored within secondary containment, will be located on Moose Pad. Up to 2,000 gallons each of treatment chemicals, including anti-foam, corrosion inhibitor, and demulsifier will be stored in tanks located inside a permanent process module on the pad. Secondary containment will be


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provided for fuel and hazardous substances as required by state, federal and local requirements, consisting of an impermeable diked area with 110% available volume of the largest container stored within the containment. Fuel and hazardous substances will not be stored within 100 feet of a surface water source. Drip pans and surface liners will be placed under leaking or dripping equipment. Any dripping or leaking equipment will be repaired in a timely manner. Appropriate spill response equipment, sufficient to respond to a spill of up to five gallons, will be on hand during any transfer or handling of fuel or hazardous substances. All fuel and hazardous substance containers will be labeled with the contents and lessee’s or contractor’s name. E. Solid Waste Sites Waste will be handled consistent with Hilcorp waste management practices as outlined below:

• Waste will be properly segregated and containers labeled to ensure proper disposal. • Closed-top dumpsters will be onsite for trash and household waste and will be hauled

away from the site regularly to prevent overfilling. • Household waste/paper trash will be sent to the North Slope Borough (NSB) Landfill for

disposal. • Oily waste will be segregated and sent to a specialty waste contractor for disposal. • Waste drilling mud and cuttings will be hauled via vacuum truck or supersucker directly

from the rig process tank to an offsite, permitted underground injection disposal facility. The only anticipated storage of drilling waste on location would be in the event of an issue at the disposal facility that prevented immediate shipment, in which case Hilcorp would obtain Alaska Department of Environmental Conservation (ADEC) Temporary Drilling Waste Storage plan approval.

• Produced water tanks will be routinely emptied and produced water hauled offsite for underground injection.

F. Water Supplies Fresh water will be utilized from existing permitted water sources within the MPU for ice road construction and gravel compaction purposes. In addition, future operations at Moose Pad are anticipated to require two water source wells to support the EOR injection wells. Water source wells will utilize canned pumps and will be permitted prior to installation. G. Utilities Moose Pad will be tied into existing power and communication sources in the MPU by installing power and fiber optic cables within the bed of the access road. Power and fiber optic cables installed within the access road bed will tie into existing MPU power and communication systems at the tie-in pad. Development of the Schrader Bluff reservoir at Moose Pad will require the addition of a new oil production pipeline to transport 3-phase flow back to the Central Facilities Pad (CFP). The new pipeline will be installed 500 feet north of the Moose Pad Access Road to the maximum extent practicable to facilitate caribou crossing concerns raised by the NSB and the Alaska Department of Fish and Game (ADFG) during initial review of the Moose Pad Permit Application. The agreed upon Moose Pad Pipeline route and orientation is shown in Figure 3. The pipeline will be separated from the access road at varying distances in the following areas based on environmental and topographical conditions that exist in the project area. (1) Initial 500-foot separation: After crossing under the Milne Point Road, the Moose Pad Pipeline immediately begins to angle away from the Moose Pad access road to create the recommended 500-foot separation for caribou crossing. This separation is maintained as the


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pipeline continues west for approximately 1.57 miles until the pipeline corridor encounters multiple large surface water bodies in Section 13, T. 13 N., R. 9 E, UM. (2) Primary bottleneck: In the center of Section 13, the pipeline corridor encounters multiple large and impassable water bodies that must be constructed around. Constructing the pipeline to the north of these water bodies would place the pipeline outside the NSB recommended maximum separation of 1,000 feet and placing the pipeline to the south of these water bodies inside of the NSB and ADFG recommended separation of 500 feet. A decision was reached with the NSB, ADFG, and Hilcorp to route the pipeline south near the access road for the segment where the impassable water bodies exist. In this area, the separation of the pipeline alignment and the access road ranges from 50 feet to 500 feet for approximately 0.6 miles. (3) Secondary 500-foot separation: Where the Moose Pad pipeline meets the gravel pad, achieving the recommended 500-foot separation is difficult due to the presence of surface water bodies and relic lake beds. Relic lake beds pose engineering challenges due to the presence of underlying thaw bulbs and/or ice lenses that cause problems for Vertical Support Member (VSM) installation and pipeline integrity. As the Moose Pad pipeline moves past the previously described surface water body constriction, the pipeline angles away from the Moose Pad access road, allowing for a 500-foot separation for approximately 0.22 miles of the alignment, which is the maximum distance possible given the engineering and construction constraints posed by the topography. The new oil production pipeline will be installed on VSMs designed similar to existing VSMs along Milne Point Road. Pipeline VSM installation is anticipated to cover approximately 0.05 acres of footprint and utilize an additional 50 cubic yards of gravel fill. The new oil production pipeline will transition from VSMs to a buried pipeline to cross the Milne Point Road and will return to VSMs to tie into the L Pad to C Pad common carrier pipeline on the east side of Milne Point Road. At this time, water or gas injection pipelines are not required at Moose Pad. H. Material Sites The Moose Pad Development Project will require approximately 266,550 cubic yards of gravel which will be obtained from the Ugnu/E-Pit Mine Site under the existing material sale contract with the Alaska Department of Natural Resources, Division of Mining, Land and Water (DMLW). If for any reason, material sources are not available, Hilcorp will utilize material from the Milne Point Mine Site as a secondary option. I. Roads An access road approximately 2.83 miles long will be constructed to connect Moose Pad to the existing Milne Point Road (Figures 4-17). The proposed Moose Pad access road will leave the Milne Point Road in Section 17, Township 13 North, Range 10 East, Umiat Meridian. The access road will be located within Sections 17 and 18, Township 13 North, Range 10 East, Umiat Meridian, and Section 13, Township 13 North, Range 9 East, Umiat Meridian. The proposed access road footprint is estimated to be approximately 35 feet wide at the top and 55 feet wide and the base, with a total acreage of approximately 17.21 acres. Within the footprint, 4.40 acres of an upland, existing roadbed, referred to as “tractor tracks” in agency meetings, have been identified, leaving 12.80 acres of wetlands to be filled during access road construction. Construction of the access road is estimated to require approximately 125,000 cubic yards of gravel fill. In addition, to avoid disrupting natural drainage and to allow fish passage, culverts will be sized accordingly and installed within the roadbed. To provide for fish passage at stream crossings, culverts will be designed on recommendations of a consulting hydrologist and ADFG personnel.


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J. Airstrips Not applicable to this project. K. All Other Facilities and Equipment The new production oil pipeline will require the addition of a small tie-in pad to allow access to the pigging equipment. This new tie-in pad will be approximately 50 feet by 140 feet at the top and 60 feet by 160 feet at the base (0.36 acres), have 2:1 side slopes, and is estimated to require approximately 1,500 cubic yards of gravel fill. The final location of the tie-in pad will be dependent on the final routes selected for the access road and oil production pipeline. L. Rehabilitation Plan Facility infrastructure will be removed from the MPU pads at the time of facility decommissioning. After the MPU is no longer producing, the road and pad will be cleaned and reclaimed in compliance with applicable laws and regulations. M. Operating Procedures Designed to Minimize Adverse Effects Fish and Wildlife Habitats: Wetland delineation surveys were performed in July 2016 by ASRC Energy Services and documented in a Wetland Delineation Report submitted to the U.S. Army Corps of Engineers in August. The proposed Moose Pad and access road will impact approximately 30.4 acres of wetlands, 4.4 acres of uplands and is utilizing a previously disturbed roadbed for a segment of the access road alignment. Culverts will be installed in the access road to minimize impacts to natural drainage patterns and partially restore local hydrology. Impacts to migratory birds are avoided by utilizing winter time construction. Hilcorp will implement the appropriate monitoring and mitigation to minimize impacts to polar bears. The Moose Pad access road will cross No Point creek, which likely supports anadromous fish species in the summer months. A culvert will be installed at this stream crossing to allow for fish passage.

Historic and Archaeological Sites: Hilcorp contracted with Northern Land Use Research, Alaska (NLUR) in 2015 to identify cultural resources in the project area. Three previously reported and verified AHRS sites have been identified in the vicinity of the project area, the closest within 700 m (2,280 ft.). All previously identified sites will be protected by a 500-foot exclusion zone to ensure they remain unaffected by field operations. Hilcorp received State Historic Preservation Office (SHPO) concurrence that no historic properties would be affected by the proposed action. If the proposed construction site reveals any site, structure, or object of prehistoric, historic, or archaeological significance, Hilcorp will make every effort to preserve and protect the discovered site or object and consult with the SHPO and the NSB Inupiat History, Language and Culture office as to determine the course of action for preservation efforts. Public Use Areas: There is no public access to the MPU. Access is limited and controlled with security checkpoints at the access points to the field. The proposed project does not affect public access to MPU. In approving a Plan, DNR may require amendments necessary to protect the State’s interest (11 AAC 83.346(e)). The Division has determined that to protect the State’s interest, it is necessary to incorporate into the Plan the North Slope and Beaufort Sea Areawide Mitigation Measures. The North Slope Areawide Mitigation Measures apply to lease ADL 025515. The Beaufort Sea


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Areawide Mitigation Measures apply to leases ADL 025509 and 025514. Hilcorp addressed these mitigation measures in the application process, but it is necessary to amend the Plan to make clear that the Plan incorporates the North Slope and Beaufort Sea Areawide Mitigation Measures. All plan applicants must complete a mitigation measure analysis demonstrating that each mitigation measure is satisfied or inapplicable to the proposed Plan, or that the applicant is seeking an exception. Hilcorp’s proposed project will take place within both the North Slope and Beaufort Sea Areawide boundaries. The North Slope and Beaufort Sea Areawide Mitigation Measures allow for the Division to grant an exception if the applicant shows that compliance with the measure is not practicable or that the applicant will undertake an equal or better alternative to satisfy the intent of the mitigation measure. Hilcorp completed the mitigation measure analysis for the North Slope and Beaufort Sea Areawides and seeks exceptions to the mitigation measures discussed below. Moose Pad will be situated within the Beaufort Sea Areawide boundaries. Since the mitigation measures in each areawide for which Hilcorp requested waivers are similar and have the same intent, only the Beaufort Sea Mitigation Measures are given below in full. Beaufort Sea Mitigation Measure: A.1.c (also A.1.c in North Slope Areawide) To the extent practicable, the siting of facilities, other than docks, roads, utility, and pipeline crossings will be prohibited within 500 feet of all fish-bearing streams and water bodies and 1,500 feet from all current surface drinking water sources. Additionally, to the extent practicable, the siting of facilities will be prohibited within one-half mile of the banks of the main channel of the Colville, Canning, Sagavanirktok, Shaviovik, Kadleroshilik, and Kuparuk rivers. Facilities may be sited within these buffers if the lessee demonstrates to the satisfaction of the director, in consultation with ADFG, that site locations outside these buffers are not practicable or that a location inside the buffer is environmentally preferred. Road, utility, and pipeline crossings must be consolidated and aligned perpendicular or near perpendicular to watercourses. Hilcorp provided the request and explanation below for the exception:

The proposed Moose Pad access road placement was designed to follow an existing road bed (referred to as “tractor tracks”) to minimize impacts to wetlands. Following the tractor tracks brings the access road within 175 feet of the Ugnuravik River which is listed in the Catalog of Water important for spawning, reading or migration of Anadromous Fishes (Catalog). The proposed access road also crosses No Point Creek. Although No Point Creek is not listed in the Catalog, it likely supports anadromous species (ninespine stickleback) during the summer months.

The proposed alignment was selected to utilize previously disturbed areas/uplands and to minimize impacts to wetlands. Appropriate construction methods will be utilized to avoid impacts during winter construction and spring breakup.


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The intent of this measure is to protect waterbodies, drinking water, and fish habitats from contamination from a fuel or hazardous substance spill or leak, and to reduce habitat loss through erosion or other disturbances from facility construction and placement. The Division finds that Hilcorp has shown rationale that compliance with the measure is not practicable. Hilcorp’s proposal for the Moose Pad access road alignment seeks to mitigate impacts to wetlands by utilizing an existing road bed, which brings the alignment within the 500-foot buffer outlined within the mitigation measure. Additionally, several large lakes in the project area make placement of the road and pipeline alignment beyond 500 feet of the Ugnuravik River not practicable. The Division grants an exception to this mitigation measure to allow for the Applicant’s alternative as set forth in the Plan. This exception does not apply to activities that the Applicant may propose in future or amended plans of operations. Beaufort Sea Mitigation Measure: A.1.f (appears as A.1.g in North Slope Areawide) Pipelines must utilize existing transportation corridors where conditions permit. Pipelines and gravel pads must be designed to facilitate the containment and cleanup of spilled fluids. Where practicable, onshore pipelines must be located on the upslope side of roadways and construction pads unless DMLW determines that an alternative site is environmentally acceptable. Wherever possible, onshore pipelines must be buried where soil and geophysical conditions permit. All pipelines, including flow and gathering lines, must be designed, constructed and maintained to assure integrity against climatic conditions, geophysical hazards, corrosion and other hazards as determined on a case-by-case basis. Hilcorp provided the request and explanation below for the exception:

The Moose Pad pipeline will be installed along the north, upslope side of the pad access road. The pipeline will be VSM mounted adjacent to the road to minimize impacts to the tundra, allow for routine visual inspections and easy access for maintenance and repair. The new pipeline will be installed 500 feet north of the Moose Pad Access Road to the maximum extent practicable to facilitate caribou crossing concerns raised by the NSB and ADFG during initial review of the Moose Pad Permit Application. The agreed upon Moose Pad Pipeline route and orientation is shown in Figure 3. The pipeline will be separated from the access road at varying distances based on environmental and topographical conditions that exist in the project area. The pipeline will be designed, constructed and maintained to assure integrity against climate conditions, geophysical hazards, corrosion and other hazards.

The intent of this measure is to minimize impacts to the tundra, protect it from contamination from a fuel or hazardous substance spill or leak, and to reduce habitat loss through erosion or other disturbances from facility construction and placement. The Division finds that Hilcorp has shown rationale that proposed activities in the Plan equally satisfy the intent of this mitigation measure. Hilcorp’s proposal for the Moose Pad pipeline alignment utilizes the Moose Pad access road transportation corridor to the maximum extent practicable given other agency mitigation concerns of the NSB and ADFG as well as topographical constraints. The Division grants an exception to this mitigation measure to allow


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for the Applicant’s alternative as set forth in the Plan. This exception does not apply to activities that the Applicant may propose in future or amended plans of operations. The Division has determined that to protect the State’s interest, it is necessary to incorporate into the Plan the Beaufort Sea and North Slope Areawide Mitigation Measures as amendments and stipulations to this Plan (11 AAC 83.346(e)). V. CONSIDERATION OF UNIT PLAN OF OPERATIONS REQUIREMENTS UNDER 11 AAC 83.346(c-d) and 11 AAC 83.390 A. Full Payment of Damages to the Surface Owner 11 AAC 83.346(c) The State owns the surface and full payment of damages to the State are accomplished through the bond posted by the applicant discussed in subsection C below. Thus Hilcorp has provided for full payment of damages prior to starting operations (11 AAC 83.346(c)). B. Plan Sufficiency 11 AAC 83.346(d) A proposed plan must include statements, maps, or drawings setting forth

(1) the sequence and schedule of operations; (2) the projected use requirements directly associated with the proposed operations; (3) plans for rehabilitation; (4) a description of operating procedures to prevent or minimize adverse effects on

natural resources and concurrent uses of the area (11 AAC 83.346(d)). The information in section IV, Proposed Operations, above, and additional information contained in Hilcorp’s proposed Plan satisfy the requirements for a plan under 11 AAC 83.346(d) and thus provide the Division with sufficient information available at this time to determine the surface use requirements and impacts directly associated with the proposed operations. C. Oil and Gas Lease Bond 11 AAC 83.390 The State owns all the surface land where the proposed Plan activities will be located. The State owns all the mineral estate the Plan proposes to produce from. For the State, a lessee provides for payment of damages by posting a bond, and remains liable for full damages under the lease. Hilcorp has a Statewide Oil and Gas Bond in the amount of $500,000 and continuing liability under the lease. VI. CONSIDERATION 11 AAC 83.303 CRITERIA A. Protection of Public Interest The Division has considered the public interest, considering statutory provisions that provide for conserving natural resources through unitized development (11 AAC 83.303(a); AS 38.05.180(p)). The legislature has declared the public’s interest in oil and gas development as an interest in developing oil and gas resources to maximize economic and physical recovery, maximize competition, and maximize use of Alaska’s human resources (AS 38.05.180(a)(1)). This Plan addresses the means for carrying out the Moose Pad Development Project which, as determined by the Milne Point Unit 35th Plan of Development, promotes the State’s interest in maximizing recovery of the oil resources. Additionally, development under this Plan will contribute positively to the market by increasing overall oil production in the area.


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The proposed Plan provides for use of Alaska’s human resources by pledging to provide local employment and contracting opportunities and to encourage its contractors to do the same (Proposed Plan Mitigation Measure Analysis (see proposed Plan Mitigation Measure Analysis # A.7.a).

B. Conservation of Natural Resources The Division has considered whether the Plan promotes conservation of all natural resources, including all or part of an oil or gas Plan, field, or area (11 AAC 83.303(a)(1)). Conservation, in this context, means maximizing the efficient recovery of oil and gas and minimizing the adverse impacts on the surface and other resources (11 AAC 83.395(1)). Development within a unit is intended to provide more efficient development than on the individual leases that make up the unit, and this Plan considers the development of the unit, not single leases. Efficient development creates less impact on the land and promotes maximum use of all natural resources in the area, consistent with the public interest. There are a number of ways in which the Plan seeks to minimize adverse impacts on natural resources. This Plan incorporates the mitigation measures set forth in the 2009 Beaufort Sea Areawide Oil and Gas Lease Sale Final Finding (2009 Beaufort Sea Areawide Mitigation Measures) and the 2008 North Slope Areawide Oil and Gas Lease Sale Final Finding (2008 North Slope Areawide Mitigation Measures with 2011 Supplement). These mitigation measures include measures to protect habitat, fish, and wildlife, protect subsistence resources, and limit the impact from fuel and hazardous substances (Beaufort Sea Final Findings at sections 9.A.2-4 and North Slope Final Findings at sections 7.A.2-4). The Plan also includes operating procedures to prevent or minimize adverse effects, including effects on the environment, wildlife, and subsistence resources discussed in section IV.M of this decision. C. Prevention of Economic and Physical Waste The Division has considered whether the Plan promotes the prevention of economic and physical waste (11 AAC 83.303(a)(2)). Issues of economic and physical waste are carefully considered during Unitization and annually thereafter in the MPU Plan of Development; this Plan conforms to the current Plan of Development on file with the Division’s Units Section. D. Protection of All Parties of Interest, Including the State The Division has considered whether the Plan provides for the protection of all parties of interest, including the State (11 AAC 83.303(a)(3)). The parties of interest to a unit plan are the unit operator and working interest owners. The State has an economic interest in the oil and gas resources because it receives royalties from production. It is further in the State’s best interest to encourage assessment of oil and gas resources, recognize the costs of exploring in varied geographic regions, and minimize the adverse impact of exploration, development, production, and transportation activity (AS 38.05.180(a)(2)). Without approval of a Plan, Hilcorp cannot develop Moose Pad, and the State cannot recover royalties from that development. The Plan thus protects the Unit Operator’s, working interest owners’ and the State’s interests in developing the resources. E. Environmental Costs and Benefits


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The Division has considered the environmental costs and benefits of unitized development outlined in this Plan and through the MPU Plan of Development, and annual updates, on file with the Units Section (11 AAC 83.303(b)(1)); this Plan conforms to the current Plan of Development on file with the Division. The 2009 Beaufort Sea Areawide Mitigation Measures and 2008 North Slope Areawide Mitigation Measures with 2011 supplement, incorporated into this Plan by amendment, include measures to protect habitat, fish, and wildlife (Beaufort Sea Final Finding at sections 9.A.1-4 and 9.B.1-3, 5-8 and North Slope Final Finding at sections 7.A.1-4 and 7.B.1-3, 5-8). Additional operating procedures designed to minimize adverse effects on other natural resources and other uses of the unit area and adjacent areas are discussed in section IV.M of this decision. F. Geological and Engineering Characteristics of Hydrocarbons DNR previously considered the geological and engineering characteristics of a potential hydrocarbon accumulation or reservoir when it approved the unit agreement (11 AAC 83.303(b)(2)); this Plan conforms to the current Plan of Development on file with the Division’s Units Section. G. Prior Exploration Activities The Division has considered prior exploration activities in the Plan area pursuant to 11 AAC 83.303(b)(3). The proposed Moose Pad Development Project will provide Hilcorp access to approximately 7 square miles of undeveloped oil reserves within the MPU. This project will expand development of the Schrader Bluff reservoir, which is estimated to contain 10 to 20 billion barrels of oil reserves. H. Plan of Development The Division has considered the plans for development set forth in and approved by DNR in the Plan of Development (11 AAC 83.303(b)(4)). The Plan proposed by Hilcorp conforms to the current Milne Point Unit 35th Plan of Development approved on July 5, 2016. I. Economic Costs and Benefits to the State The Division has considered the economic costs and benefits to the State (11 AAC 83.303(b)(5)). Without approval of a plan, Hilcorp will be unable to proceed with developing Moose Pad, which will cost the State the economic benefit of the royalties, as well as other economic benefits that flow from production. J. Other Relevant Factors to Protect the Public Interest The Division has considered other relevant factors necessary or advisable to protect the public interest (11 AAC 83.303(b)(6)). These other factors consist of the mitigation measures (section IV.M of this document) that will apply to this Plan; and the necessity to obtain other permits and approvals by different Agencies and landowners. VII. CONSULTATION WITH OTHER GOVERNMENT ENTITIES In reviewing the proposed Plan, the Division considered the fact that Hilcorp may require approvals from Agencies for other elements of its project. Although mentioned in the Plan and above, these aspects of the project are not operations being approved by this decision and the Division offers no opinion on whether an agency should or should not approve these activities.


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In addition to considering the approvals required by Agencies as they relate to this decision, the Division provided an Agency review and comment opportunity for the activities proposed for authorization under this decision. The following government entities were notified on October 4, 2016 for comment on the Plan: U.S. Army Corps of Engineers, ADEC, ADFG, DMLW, and the NSB. The comment deadline was 4:30 pm Alaska time on October 19, 2016. Comments were timely received and the Division, Applicant, and commenting agency modified the Plan to the satisfaction of the commenting agency. The Agency comment and Applicant's response are summarized in Appendix B. The modified Plan was then publicly noticed. VIII. PUBLIC NOTICE Public notice of the Plan and opportunity to comment, per AS 38.05.035, was published in the Alaska Dispatch News and the Arctic Sounder on November 7, 2016 with a deadline for comments of December 7, 2016 at 4:30 pm Alaska time. Additionally, a copy of the notice was posted on DNR’s web site and faxes of the public notice were sent to the Prudhoe Bay/Deadhorse, Nuiqsut and Barrow post offices. No comments were received. IX. CONDITIONS OF APPROVAL Having considered the proposed project, the Division approves the Plan as amended and modified by this decision and subject to the below conditions of approval: 1. A certified As-Built survey of the activity shall be provided within one year of the placement

of the improvement. This As-Built must be both digital and hard copy. To protect the State’s interest, the Division finds that it is necessary to amend the Plan to incorporate the following Conditions of Approval:

a) The applicant shall defend, indemnify and hold the State of Alaska harmless from and against any and all claims, damages, suits, losses, liabilities and expenses for injury to or death of persons and damage to or loss of property arising out of or in connection with the entry on and use of State lands authorized under this approval by the applicant, its contractors, subcontractors and their employees.

b) The applicant shall inform and ensure compliance with any and all conditions of this approval by its employees, agents and contractors, including subcontractors at any level.

c) Unless pre-authorized by a general permit, amendments and modifications to this approval require advance notice and must be approved in writing by the DNR.

d) The Commissioner of the DNR may require that an authorized representative be on-site during any operations conducted under this approval. This stipulation is required to ensure that the Divisions of Oil and Gas and Mining, Land and Water meet their statutory responsibilities for monitoring activities taking place on State-owned lands.

e) A status report for the activities conducted under this approval must be filed with this office on May 1 and November 1 each year, from the date this approval is issued and until a final completion report is filed with the Division. If a lessee requests an assignment, a status report must also be submitted during the assignment process. Failure to file in a timely manner may result in revocation of this approval.


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a. Each status report shall include a statement describing and map(s) depicting all operations actually conducted on the leased area as of the date the report is prepared, which includes the location, design and completion status of well sites, material sites, water supplies, solid waste sites, buildings, roads, utilities, airstrips, and all other facilities and equipment installed.

b. Upon completion of operations, the applicant will submit a completion report which will include all information required of a status report described in (a) above as well as a statement indicating the date of operations completion, any noncompliance with the terms of this plan approval of which a reasonable lessee would have knowledge of, clean-up activities conducted, the method of debris disposal, and a narrative description of known incidents of surface damage.

f) Notification. The applicant shall notify the DNR of all spills that must be reported under 18 AAC 75.300 under timelines of 18 AAC 75.300. All fires and explosions must be reported to DNR immediately. The DNR 24 hour spill report number is (907) 451-2678; the fax number is (907) 451-2751. The ADEC oil spill report number is (800) 478-9300. DNR and ADEC shall be supplied with all follow-up incident reports.

g) A certified As-Built survey of the improvement shall be provided within one year of placement of the improvement. This As-Built must be submitted in both electronic and physical format.

To protect the State’s interest, the Division finds that it is necessary to amend the Plan to incorporate the following Project Specific Stipulations:

N/A X. FINDINGS AND DECISION Having considered the proposed project and based on the foregoing discussion and consideration of issues and conditions of approval, the Division makes the following findings: 1. The Plan provides sufficient information, based on reasonably available data, for the Division

to determine the surface use requirements and impacts directly associated with the proposed operations.

2. The Plan includes statements, maps, or drawings setting forth the sequence and schedule of operations, projected use requirements, description of operating procedures, and a plan of rehabilitation designed to prevent or minimize adverse effects.

3. To protect the State’s interest and mitigate potential adverse social and environmental effects associated with the Plan, the Division finds it necessary to amend the Plan to incorporate the mitigation measures set forth in the 2009 Beaufort Sea Areawide Oil and Gas Lease Sale Final Finding and 2008 North Slope Areawide Oil and Gas Lease Sale Final Finding.

4. All oil and gas activities conducted under oil and gas leases are subject to numerous local, state and federal laws are regulations with which Hilcorp is expected to comply.

5. The people of Alaska have an interest in developing the state’s oil and gas resources and maximizing the economic and physical recovery of those resources. AS 38.05.180(a).

6. Alaska’s economy depends heavily on revenues related to oil and gas production and government spending resulting from those revenues. The related revenue sources include bonus payments, rentals, royalties, production taxes, income taxes, and oil and gas property taxes.

Map Date: 8/26/2016

North Slope BoroughMilne Point Unit

Proposed Moose Pad LocationVicinity

Alaska Albers Equal Area NAD 1983

B e a u f o r t S e a

A r c t i c O c e a n

Project Location

Barrow

Nuiqsut

Kaktovik

DeadhorseCo

lville

Rive

r

Itkillik River

Canning River

Ikpikp

uk Rive

r

Sagavanirktok River

Hulah

ula R

iver

Fish Cree

kIvishak River

Titaluk R

iver

Meade River

Chipp River

Kavik River

Inaru River

Jago

Rive

r

Echooka River

Okpil

ak R

iver

Kalikpik River

Inigok Creek

Price River

Shav

iovik

River

Tamayariak River

Avak Creek

Judy Creek

Miluveach River Oogru

kpuk

Rive

r

Carter Creek

Ublutuoch River

Ishuktak Creek

Fawn

Cree

kChandler River

145°0'0"W150°0'0"W155°0'0"W72

°0'0"N

72°0'

0"N

71°0'

0"N

71°0'

0"N

70°0'

0"N

70°0'

0"N69

°0'0"N

Canada

A l a s k a

Project Location

Nome

Juneau

Barrow

Fairbanks

Anchorage

0 10 20 30 40 50Miles

LegendMPU Proposed Moose Pad Location

Base Map Layer Credits: Esri, DeLorme, GEBCO, NOAANGDC, and other contributors

Village Name Distance to Project (Miles) Nuiqsut 34.9Deadhorse 36.7Kaktovik 147.3Barrow 172.7

Appendix A

kfleming

Typewriter

Figure 1

Proposed Moose Pad Location Proposed Moose

Pad Tie-In Location

Proposed Moose PadAccess Road

MPU S & KRECEIVER

MPU B

MPU E

MPU CFP

MPU F

MPUMINESITE

MPU A

MPU C

MPU D

MPU I

MPU J

MPU H

MPU L

MPU G

DS3K

EQUIPMENTPAD

MINESITE E TRACK14

INTERSECTION

MPU I PAD

ROAD

MPUB

PAD ROAD

MPU MINE ROAD

MINE E ROAD

MPU K PAD ROAD

MPU C PAD ROAD

MPU L PAD ROAD

MPU

TRAC

T14R

OAD

MPU DPAD ROAD

MPU F PAD ROAD

DS3K ROAD

MILN

E POI

NTRO

A D

KUPARUKRIVER UNIT

MILNE POINT UNIT

Sec. 5

Sec. 13Sec. 15

Sec. 1 Sec. 4 Sec. 5Sec. 1Sec. 3Sec. 3

Sec. 9

Sec. 29

Sec. 36

Sec. 25

Sec. 32

Sec. 11

Sec. 20Sec. 20

Sec. 12

Sec. 29

Sec. 13

Sec. 10

Sec. 24

Sec. 33

Sec. 26

Sec. 2

Sec. 23Sec. 23

Sec. 14

Sec. 11

Sec. 17Sec. 14

Sec. 17

Sec. 26

Sec. 22

Sec. 2

Sec. 16Sec. 15

Sec. 8

Sec. 12Sec. 8

Sec. 21

Sec. 2Sec. 2Sec. 5

Sec. 34

Sec. 27

Sec. 3Sec. 1

Sec. 35

Sec. 28

Sec. 1 Sec. 5

Sec. 32Sec. 34

Sec. 27

Sec. 36

Sec. 24

Sec. 25

Sec. 22

Sec. 4

Sec. 35

Sec. 4

Sec. 10

Sec. 6 Sec. 6

Sec. 30

Sec. 31

Sec. 7

Sec. 31

Sec. 19

Sec. 18

Sec. 7

Sec. 18

Sec. 19

Sec. 6

Sec. 30

Sec. 6

U013N009EU012N009E

U013N009EU012N010E

U013

N009

EU0

13N0

10E

U013

N011

EU0

13N0

10E

U013N011EU012N011E

U012

N009

EU0

12N0

10E U012N010E

U013N010E

U012

N010

EU0

12N0

11E

U013N010EU012N011E

Oogru

kpuk

River

West Fork

Ugnuravik

River

Ugnuravik River

Map Date: 8/26/2016

North Slope BoroughMilne Point Unit

Proposed Moose Pad LocationProject Area

0 2,500 5,000 7,500 10,000Feet

Alaska StatePlane Zone 4 NAD 1983 (Feet)Proposed Access RoadMPU Proposed Moose Pad LocationOil and Gas Unit Boundaries

Project Location

Colville River

Saga

vanir

ktok R

iver

Canning River

Hulahula River

Fish Creek

Nanushuk River

B e a u f o r t S e aBarrow

Nuiqsut

KaktovikDeadhorse

kfleming

Typewriter

Figure 2

%,

%,

%,

%,

%,%,

%,

%,

Ugnuravik River

Nopoint Creek

U013

N009

EU0

13N0

10E

Sec.9

Sec. 11

Sec. 20

Sec. 13

Sec. 23

Sec. 14Sec. 17

Sec.16

Sec. 8Sec. 12

Sec.21

Sec.28

Sec. 24

Sec. 7

Sec. 18

Sec. 19

EQUIPMENTPAD

MINE SITE E

Milne Point UnitKuparuk River Unit

Sec. 29

1675000 1680000 1685000 169000060

2000

0

6020

000

6025

000

6025

000

6030

000

6030

000

Map and Engineering by RECON LLC481 W. RECON Cir, Palmer AK 99645NAD1983 Alaska SPCS Z4 (Feet)Imagery/Existing Infra. from Hilcorp Alaska

1:24,000

0 1,000 2,000 3,000Feet

LegendProposed Access RoadProposed Winter Access RoadProposed PipelineProposed Pad

%, Proposed Culvert

Existing RoadExisting Pipeline (Above Ground)Existing Power LineExisting FacilityOil & Gas Unit Boundary

MilnePointUnitKuparuk

RiverUnit

NikaitchuqUnit

1:500,000

º11/1/2016

MoosePad_8x11L_BlkB

HILCORP - Moose PadProposed Infrastructure

Milne Point RoadMoose PadTie-in Pad

500 ft TypicalDistance between Road and Pipeline

ProjectArea

Milne Pt.Oliktok Pt.

S I M P S O N L A G O O N

Proposed Moose PadAccess Road

Proposed Moose Pad Pipeline Corridor

500 ft TypicalDistance between Road and Pipeline

Proposed Winter Access

Proposed Winter Access

kfleming

Typewriter

Figure 3

DESCRIPTIONBYNO. DATE

REVISIONSCOVER SHEET

24" x 36"

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:

RECON LLC, 481 W. RECON CIRCLE PALMER, AK 99674

STEVE ROWLAND, PE

(907)355-3006, [email protected]

MARIA C. SANDERS

SHEET:

OF1 13

SHEET LIST TABLE

SHEET TITLE SHEET NO.COVER SHEET 1

SHEET INDEX MAP 2

MOOSE PAD ACCESS TYPICALS 3

TIE-IN ROAD TYPICALS 4

GENERAL NOTES 5

MOOSE PAD ACCESS ROAD STA 00+00 TO 26+00 6



MOOSE PAD ACCESS ROAD STA 78+00 - 104+00 9


MOOSE PAD ACCESS ROAD STA 104+00 TO EOP 11

TIE IN ROAD STA 00+00 TO EOP 12

MOOSE PAD 13

MOOSE PAD PROJECTROAD AND PAD

10/04/2016

Figure 4


REVISIONSSHEET INDEX MAP

10/04/2016

24" x 36"

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET:

OF2 13

SHEET 6

SHEET 7

SHEET 8

SHEET 9

SHEET 10

SHEET 11

SHEET 12MOOSE PAD

TIE-IN ROAD

MILNE POINT ROAD

NO POINT CREEK

Figure 5

CULVERT SUMMARYNo. North East Inlent Inv.

Elev Azimuth Gradient Length (ft) Dia. (in) thaw pipe1 6027842.6 1687327.5 15.4 L 310.9 0.005 70 24 NO2 6026715.2 1685883.2 10.2 L 321.0 0.005 80 (4) x 48 YES3 6026490.7 1683736.1 12.5 L 346.1 0.005 36 YES4 6026138.5 1682311.0 12.5 L 346.1 0.005 70 24 NO5 6025991.2 1681715.7 13.5 L 346.1 0.005 70 36 YES6 6025778.9 1679630.2 14.0 R 184.8 0.035 80 24 NO7 6025569.1 1676486.8 13.0 R 228.0 0.005 80 24 NO8 6025900.0 1676097.0 14.0 R 214.1 0.005 60 24 YES9 6028132.9 1687646.2 12.3 L 303.7 0.005 50 24 NO


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

MOOSE PAD ACCESS TYPICALS

3 OF 1324" x 36"

SHEET NO.

10/04/2016

Figure 6


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS


4 OF 1324" x 36"

SHEET NO.

10/04/2016

Figure 7


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS


5 OF 1324" x 36"

SHEET NO.

10/04/2016

Figure 8

PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

MOOSE PAD ACCESS ROADSTA 0+00 TO 26+00

SHEET NO.

6 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 9


PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET NO.

7 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 10


PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET NO.

8 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 11


PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET NO.

9 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

UGNURAVIK RIVER

Figure 12

Steve

Line

Steve

Line


PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET NO.

10 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 13

PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

MOOSE PAD ACCESS ROADSTA 104+00 TO EOP

SHEET NO.

11 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 15

MOOSE PAD TIE-IN ROADSTA 0+00 TO EOP

PROFILESCALE 1:1000

PLANSCALE 1 : 1000


REVISIONS

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

SHEET NO.

12 OF 13

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 16


REVISIONS

PROFILESCALE H 1:1000

V 1:250

ADDRESS:

ENGINEER:

CONTACT:

DRAWN BY:


STEVE ROWLAND, PE


MARIA C. SANDERS

MOOSE PAD

SHEET NO.

13 OF 13

PLANSCALE 1:1000

N

S

W E

N S

E W

MOOSE PAD

NW

SW

N-MID

SE

NE

CENTER

2001000Feet

1:1000

100

10/04/2016

24" x 36"

Figure 17

LONS 16-008, Hilcorp, MPU, 12/15/2016 Moose Pad Development Unit Plan of Operations Decision APPENDIX B: Agency comments

Alaska Department of Fish and Game, October 17, 2016, Summary of comments and Plan modification

On October 17, 2016, the Alaska Department of Fish and Game (ADFG) commented that the drawings submitted with the Plan differed from those presented in an October 10, 2016 meeting between the Applicant and ADFG. The initial drawings submitted with the Plan that were sent out for Agency review showed the pipeline alignment immediately adjacent to the access road and appeared to be placed to the south of the road. During the October 10 meeting, the pipeline alignment was presented to ADFG as running along the north side of the access road. Additionally, ADFG indicated at the meeting that the pipeline alignment should be placed to allow a minimum of 400 to 500 feet of separation from the road in order to provide for successful caribou movements in the area. ADFG had presented the information regarding the separation between the pipeline and the road as early as November 2015, during a pre-application meeting with the Applicant. ADFG’s comment during Agency review of the Plan was that, as discussed with the Applicant in these previous meetings, it would like to see the separation of the pipeline from the road as part of the Plan. Acknowledging difficulties that terrain and topography posed for achieving the desired separation, ADFG requested that the road and pipeline be separated at the suggested 500-foot distance to the greatest extent possible along the alignment.

On October 28, 2016, the Applicant, the North Slope Borough, and ADFG had a meeting to discuss the pipeline alignment. During this meeting, agreement was reached regarding the alignment of the pipeline offset from the access road alignment. The Applicant updated the Plan with the agreed upon alignment on November 2, 2016, prior to it being sent out for Public Notice.

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