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AOGCC puts Kenai Loop hearing on hold Commission makes change in Buccaneer escrow requirement; defers gas field unitization action following company’s bankruptcy filing Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission put its Kenai Loop unitization hearing on hold in a brief hearing July 7 due to the Chapter 11 bankruptcy filing by Buccaneer, the Kenai Loop operator. The bankruptcy petition was filed May 31 in the U.S. Bankruptcy Court for the Southern District of Texas (see story in this issue and previous Petroleum News coverage of the bankruptcy).
In the notice for the hearing commission Chair Cathy Foerster said the commission proposed to “compel pooling and/or unitization of the Kenai Loop Gas Field in order to protect the correlative rights of the operator and landowners.”
Foerster said at the scheduled July 7 hearing that all parties to the proceeding had agreed it was appropriate hold off on the hearing until the bankruptcy court stay was lifted.
The commission has been hearing Kenai Loop issues since last August when Cook Inlet Region Inc. appealed a spacing exception requested by Buccaneer for a Kenai Loop well.
Buccaneer is producing natural gas from wells on Mental Health Trust acreage, but in the course of the hearings all parties - Buccaneer, the Mental Health Trust, CIRI and the state of Alaska - agreed that the wells were draining acreage from all three landowners. Buccaneer has been making royalty payments only to the Mental Health Trust.
Buccaneer requests escrow change On May 22 the commission ordered Buccaneer to establish an escrow account for future revenues from the Kenai Loop field.
Buccaneer responded to that order May 29, asking that payments into an escrow account be timed to coincide with the payments Buccaneer receives for natural gas from the field. The commission’s order required that payments be made into the escrow account no later than the 10th day of each month beginning in June, with the deposit to equal 100 percent of total gas sales from wells at the field during the preceding month multiplied by the prevailing value of Cook Inlet gas published by the Alaska Department of Revenue, less operating expenses.
Buccaneer’s response said it had three gas sales contracts with Alaska Pipeline Co. and under the provisions of those contracts Buccaneer does not receive payment for gas until on or about the 25th day of the following month.
Buccaneer requested that the commission modify its order to provide that it make its deposit into the escrow account on or before the last business day of the month.
The commission gave other parties until June 9 to respond.
CIRI responded that the Chapter 11 bankruptcy petition filed by Buccaneer “automatically stays the commencement or continuation of a judicial, administrative, or other action or proceeding against Buccaneer that began before the filing of the bankruptcy case,” and said that neither CIRI nor any other party would be able to respond to Buccaneer’s motion pending further order of the bankruptcy court.
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