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


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 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 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 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 3ADL 300104

BP

SU Well #1



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


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.


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


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



Unocal Well #1

Tract 4ADL 300103

BP

Utopia PA


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


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 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 5.1

Atlantis PA

Utopia PA


Tract 2ADL 300102

Chevron

Tract 3ADL 300104

BP

Unocal Well #1


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 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 4.1ADL 300103

BP

Serendipity Unit

slide show explaining the unit process

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