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NEWS BULLETIN

December 12, 2017 --- Vol. 23, No. 38December 2017

AOGCC agrees to $200,000 bond for Nicolai Creek

The Alaska Oil and Gas Commission is allowing a $200,000 surety bond for the plugging and abandonment of the wells in the Nicolai Creek gas field on the west side of Cook Inlet, according to filings in federal bankruptcy court in Alaska. As part of the bankruptcy proceedings for Aurora Gas, the field's current owner, Aurora Exploration wants to buy the field and needs AOGCC approval of the change of field operatorship.

As a condition for that change of operatorship, AOGCC had ordered that Aurora Exploration post a $6 million bond with, as an alternative, the company posting a smaller bond but also undertaking to plug and abandon some of Aurora Gas's other wells. After that order was found to be illegal under U.S. bankruptcy law, the commission reduced the bonding requirement to $3.6 million.

Aurora Exploration has commented that these exceptionally high bonding levels would render the field uneconomic and that the bonding requirement, much higher than the $200,000 that the commission has customarily required, was restricting Aurora Gas's ability to transfer its gas field asset.

AOGCC has now agreed to a $200,000 bond, provided that Aurora Gas and Aurora Exploration release the state and AOGCC from any liability arising from AOGCC's previous orders and any other aspect of the bankruptcy case. Aurora Exploration has claimed loss of income as a consequence of the delay and possible denial of the gas field transfer.

Aurora Gas has requested bankruptcy court approval of the proposed settlement.

- ALAN BAILEY

See story in Dec. 17 issue, available online Friday, Dec. 15, at www.PetroleumNews.com

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