JOINT ORDER OF THE MINISTRY OF THE OIL AND GAS INDUSTRY OF THE REPUBLIC OF KAZAKHSTAN AND MINISTRY OF GEOLOGY AND PROTECTION OF THE SUBSOIL OF THE REPUBLIC OF KAZAKHSTAN

of June 2, 1995 No. 62/120-P

About enforcement of the Regulations on procedure for preservation of wells on oil, gas fields, the underground gas storages (UGS) and fields of thermal waters

For the purpose of increase in the economic responsibility of the oil-and-gas and prospecting production enterprises which are engaged in operation of oil fields, gas and other liquid minerals and construction of deep wells, streamlinings of questions of observance of rules and methods of development of oil fields, gas iodine-bromine, heat power, etc. waters, and also strict accomplishment of legal acts of the Republic of Kazakhstan on use and protection of subsoil of PRIKAZYVAYU:

1. Enter into actions Regulations on procedure for preservation of wells on oil, gas fields, the underground gas storages (UGS) and fields of thermal waters.

2. To the oil-and-gas and prospecting production enterprises and the organizations, the State-owned Holding Companies (SOHC), the joint-stock companies (JSC), the joint businesses (JB), offices of the ministries to accept the enclosed Provision to management and execution.

3. Declare invalid Provisions, regulating and instructive documents on these questions approved by Minneftegazprom, Mingeo and Gosgortekhnadzor of the former USSR.

4. To the oil-and-gas and prospecting production enterprises to develop (in a month) the standard projects of insulating and liquidating works tied to specific geological specifications and approved with local authorities of the Komgortekhnadzor.

5. To impose control of execution of this order on the relevant services of the office of the ministries, and also territorial administrations of protection and use of subsoil of the Ministry of geology and protection of subsoil of the Republic of Kazakhstan.

Regulations on procedure for preservation of wells on oil, gas fields, the underground gas storages (UGS) and fields of thermal waters

Parametrical, search, exploratory, operational and delivery wells (including UGS wells) in cases when their input in operation is impossible within one month after the end of testing, and also the operating wells in need of the termination of their operation are subject to preservation. The wells entered into preservation shall be hermetic, not have interbedded overflows of formation fluids.

Note: Further for brevity statements it is necessary to understand all types of the exploratory and operational wells which are drilled or drilled on the field (area) as the general name "well" or "exploratory well".

1. Can be preserved:

a) the exploratory wells finished with testing on the reconnoitered fields (areas) which in subsequent can be used in case of development of these fields or are suitable for use at the underground gas storages (UGS) for a period of up to transfer of the field (area) to the oil processing company for development or creation of UGS.

For exploratory wells which formation fluids contain aggressive components (hydrogen sulfide, carbon dioxide, etc.), terms and procedure for preservation in each case are established by the companies in coordination with territorial administrations of protection and use of subsoil and bodies of Committee on safe operation in the industry and to mountain supervision under the Cabinet of Ministers of the Republic of Kazakhstan.

The exploratory wells accepted on balance of oil-and-gas production enterprises including on again reconnoitered sites (deposits) of the developed fields - for a period of up to input in development of deposits or sites of the field where these wells according to projects of arrangement and development are located. On the fields accepted but not brought into development, all accepted exploratory wells are preserved for terms to the organization of crafts (workshops) on them on production or creation of underground gas storages according to projects of arrangement and development, aggregate term of preservation is determined by the companies, proceeding from technology need and technical condition of wells.

Exploratory wells if they after the term of preservation are not accepted by oil-and-gas production enterprise, and earlier accepted will be unsuitable for use in case of development or creation of UGS, liquidations in accordance with the established procedure are subject;

b) for a period of up to 5 years - the advancing wells drilled according to decisions of directive bodies or gas and oil producing ministries (the companies, the joint-stock company, the joint venture), for the purpose of the accelerated preparation of input of fields in development, UGS in commercial operation;

c) for a period of up to 2 years with the subsequent if necessary prolongation - operational and delivery wells which operation is stopped.

- in connection with carrying out research works on plans of research institutions - authors of projects of development for the term provided by these plans;

- in connection with work on development process regulation if the stop of wells exceeds 2 months;

- in order to avoid development of the mode of dissolved gas, and also because of premature flood (break of waters);

- before their transfer into the forced selection waiting for transfer into other horizons or under pumping water (gas) according to projects (schemes) of development;

- the gas-condensate wells stopped on recovery of pressure in connection with its fall below the critical pressure of the beginning of condensation in case of not recovery of pressure within 6 months;

- wells which operation is economically not effective - but can become effective in case of corresponding change of oil price;

- upon the demand of the relevant departments and the companies.

2. Acts of preservation of operational and delivery wells are, as a rule, constituted for a period of up to 2 years. When aggregate term of preservation exceeds 2 years, acts on preservation of wells can be drawn up directly for all term of preservation. In case of the positive conclusion of bodies of territorial administration of protection and use of subsoil and the Komgortekhnadzor of the Republic of Kazakhstan acts on preservation of wells affirm superior organization.

After the term of preservation, the wells which are not put into operation are reflected in idle fund.

3. In case of preservation of wells for the term of over 3 months the equipment of the mouth and trunk of wells is performed according to the standard project developed by the company and approved with bodies of territorial administration of protection and use of subsoil, the Komgortekhnadzor of the Republic of Kazakhstan and the militarized antigushing part proceeding from specific geological specifications.

At the same time it is necessary to provide:

a) possibility of input of wells in operation;

b) preserving hermeticity of the mouth and the lowered upsetting columns;

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