Alaska Oil and Gas Conservation Commission report: July 2017

• Effective July 1, Gov. Bill Walker appointed former state Sen. Hollis French to a four-year term as chair of the Alaska Oil and Gas Conservation Commission. French replaced Commissioner Cathy Foerster, who had been chairing the commission since 2012.

• On July 11, the AOGCC approved (Conservation Order No. 76.34) a request from Hilcorp Alaska LLC for permission to drill the Granite Point State 22-13RD3 development oil well within 1,000 feet of an existing well producing from the same pool.

The Granite Point State 22-13RD3 well will be an offshore, deviated development oil well located less than 1,000 feet from the existing Granite Point State 32-13RD well.

The closer well spacing is needed to maximize recovery, according to the company.

• On July 20, the AOGCC imposed (Other Order No. 122) a $100,000 fine against NordAq Energy Inc. for failing to permanently abandon the Tiger Eye No. 1 well before the expiration of its leases. The AOGCC had proposed a $150,000 fine against the company when it issued its original notice in early December 2016 but lowered the fine after an April 2017 hearing. The AOGCC also required the company to post an $800,000 bond to guarantee the abandonment, down from an earlier $1.3 million bond. The lower bond amount reflects a different estimate for the cost of performing the work in question.

The company attributed its delay to failed attempts to transfer the property to Cook Inlet Energy LLC, to seasonal restrictions in the area and to a robbery at its offices.

In a related decision on July 21, the AOGCC imposed (Other Order No. 123) a $100,000 fine against NordAq for failing to permanently abandon the Shadura No. 1 well before the expiration of its leases. The AOGCC has proposed a $621,000 fine against the company when it issued its original notice in early December 2016 but lowered the fine after a May 2017 hearing. The AOGCC also required the company to post a $1.2 million bond to guarantee the abandonment, as proposed in the original notice of enforcement.

NordAq provided similar explanations for the Shadura well as for the Tiger Eye well.

• On July 24, the AOGGC approved (Area Injection Order No. 10B.011) a request from Hilcorp Alaska LLC to conduct a polymer enhanced waterflood injectivity test on the Milne Point Unit L-48 well for approximately 30 days. Polymers have the potential to improve oil recovery by increasing the viscosity of the water being injected. The approval was required because pool rules at the unit do not include provisions for polymers.

• On July 26, the AOGCC imposed (Other Order No. 124) an $110,000 fine against Eni US Operating Company Inc. for failing to conduct mechanical integrity tests at 11 wells at the Nikaitchuq unit. The commission also required the company to “develop and implement a tracking system for regulatory obligations, including an automated alert for approaching and past-due obligations, with notifications provided to Eni personnel responsible for the regulatory obligation.” Eni blamed its failure to conduct the tests on confusion over responsibility for the work between its drilling and production groups.

• The AOGCC has tentatively scheduled a public meeting for Aug. 30 to consider two separate requests from BlueCrest Energy Inc. (Docket Number: CO-17-014 and Docket Number: CO-17-015) for a spacing exemption for the Hansen H-16-L1 and Hansen H-16-L1-ST1 wells. The company wants to drill the well within the same governmental quarter sections as several existing wells at the offshore Cosmopolitan unit. The commission must receive a written request for the hearing by Aug. 4 for the hearing to proceed.

• The AOGCC has scheduled a public meeting for Sept. 12 to consider a proposed enforcement action against Tolsona Oil and Gas Exploration LLC. The commission proposed the action against the company for failure to follow approved permit requirements at the Tolsona No. 1 exploration well in the Glennallen region.

- ERIC LIDJI