NEWS BULLETIN

May 23, 2014 --- Vol. 20, No. 31May 2014

AOGCC orders escrow for Kenai Loop gas revenues

The Alaska Oil and Gas Conservation Commission, in response to requests from Cook Inlet Region Inc. and the Alaska Department of Natural Resources, has ordered Buccaneer to escrow all revenues, less costs, from the Kenai Loop field beginning in June.

Buccaneer is producing from two wells on an Alaska Mental Health Trust Authority lease; CIRI and DNR have adjacent leases.

The commission noted in an order issued yesterday that all parties have agreed that the two wells are draining gas from adjacent leases, one CIRI lease, one DNR lease and another MHT lease.

Buccaneer has been making royalty payments only to the Trust Land Office; DNR and CIRI have received no money for production from their adjacent leases, the commission said.

The commission has ordered that effective June 1 all future revenues from Kenai Loop, less operating expenses, be deposited in an escrow account "until a production allocation agreement can be reached." The escrow account will fund retroactive payments and protect parties from future loss.

The commission has ordered that a production allocation agreement be established from Kenai Loop production, and has set a hearing date for July 7 on a commission proposal to compel pooling and/or unitization of the Kenai Loop gas field. The commission said the hearing will be held unless the operator and landowners "come to voluntary agreement on pooling and or unitization prior to the scheduled hearing."

- Kristen Nelson

See story in June 1 issue, available online at 11 a.m. Friday, May 30, at www.PetroleumNews.com


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