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NEWS BULLETIN

August 18, 1999 --- Vol. 5, No. 38August 1999

Division of oil and gas pulls permits for some Pioneer unit wells

Work at the Pioneer coalbed gas prospect north of Anchorage has hit a snag. Unocal Alaska Resources, Ocean Energy Inc., the Department of Natural Resources Division of Oil and Gas and surface owners at well sites are in disagreement over surface use issues.

The division has revoked approval for wells — except the well presently being drilled and a well on state surface land — pending surface owners’ consent. A hearing has been scheduled on operations at the DA well, now being drilled, and bonds submitted must be resubmitted on a form provided by the state.

Kevin Tabler, land and government affairs manager for Unocal Alaska, told PNA Aug. 18 that drilling continues at the first well in the unit, a disposal well.

On Aug. 4 the division notified Unocal and Ocean Energy that they were in non-compliance with the terms of the unit plan of operations issued July 27 because the lessee had not certified to the division that the surface owner had been provided with a copy of the plan of operation for the owner’s property and asked for a bond as security to owners of payment for any damages from operations.

Tabler told PNA that Unocal provided the required bond but had not been able to reach agreement with surface land owners. Mineral owners, Tabler said, have the right to access, and surface owners have the right to damages — but damages, he said, can’t be evaluated until after the drilling operation.

On Aug. 17, division Director Ken Boyd, issued a decision that Ocean Energy, as operator, continues to be in violation of the unit plan of operations and scheduled a hearing for Aug. 24.

Tabler said the hearing would allow all sides to present their views. Then the state can pick a bonding amount.

He also said that $50,000 bonds had been provided for the first two drilling locations and that while the state is now disputing the form of the bonds, they did accept them.

Yukon Pacific negotiating with pipeline mayors to manage gas project

Yukon Pacific Corp. is in negotiations with mayors of the communities which will vote in early October to approve a port authority to build a gas pipeline and LNG facility.

Yukon Pacific’s Wayne Lewis told PNA Aug. 16 that the pipeline mayors and Yukon Pacific are exchanging drafts of agreements which would have Yukon Pacific representing the mayors and overseeing the project.

The three days of meetings in Fairbanks the week of Aug. 6, Lewis said, were the first time all three mayors and their representatives, bond counsel from O’Melveny & Myers, Yukon Pacific, Williams Cos. and Bechtel, all met in one place.

Bechtel, Lewis said, did a lot of the preliminary pipeline and liquefied natural gas plant design for Yukon Pacific’s trans-Alaska gas system.

Williams owns and operates more than 27,000 miles of pipeline in the Lower 48 and is the largest volume transporter of natural gas in the United States.

Yukon Pacific, Lewis said, is discussing two separate issues with the mayors’ group: First, Lewis said, is the role of Yukon Pacific in representing the mayors — and ultimately the port authority — in overseeing marketing, engineering and permitting for the project. Second, there are discussions about valuing the permits Yukon Pacific has, permits which are, he said, “fundamental to the advancement of any project.”

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