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BIA orders Heald Point production stop Court ruling in case over Native allotment results in order Alan Bailey Petroleum News
The U.S. Bureau of Indian Affairs has told BP Exploration (Alaska) to cease producing oil and gas from the Lisburne participating area through the company’s Heald Point facility on Alaska’s North Slope. In a letter dated Jan. 8 the bureau told BP that the company has 10 days to confirm that production has halted.
The order came on the wake of a Nov. 14 ruling by the U.S. Court of Federal Claims rejecting a BP appeal against a Sept. 18 ruling by the court. The two rulings related to a long-standing claim by the heirs of Andrew Oenga, the erstwhile owner of a Native allotment at Heald Point — the court said that Lisburne drilling and production on the allotment is not allowed under the terms of a 1989 allotment surface lease agreed between Oenga and BP, and approved by BIA.
BIA administers Native allotments on behalf of allotment owners. The allotments, all of which were established prior to the passage of the Alaska Native Claims Settlement Act in 1971, confer surface land rights to their owners.
BP spokesman Steve Rinehart confirmed to Petroleum News Jan. 13 that BP has received the BIA order.
“We are reviewing it very carefully,” Rinehart said.
Two wells Rinehart said that there are only two wells that access the Lisburne participating area from the Heald Point facility. BP has been cycling these wells in and out of production and the wells were off cycle at the time of the November court ruling. The company has stopped cycling the wells following the ruling, he said.
“There is no production impact,” Rinehart said.
According to a statement issued by attorneys representing the Oenga heirs, at the time the lease was signed Andrew Oenga was an Inupiat Native in his late 70s who neither spoke nor read English. Oenga died a year after the lease signing and bequeathed the land to his children, the statement said.
The statement said that BP subsequently used the allotment land for purposes beyond what was specified in the lease. The Oengas have sued the United States for failing to collect proper rents from the lease in the years 1993 to 2001, and have appealed BIA land appraisal and rent decisions in subsequent years.
The Oengas’ case was referred to the U.S. Court of Federal Claims and BP intervened.
Three claims Wells from the Heald Point facility access oil pools in the Lisburne, Raven and Niakuk fields. And according to the Sept. 18 court ruling, the Oengas have filed three separate claims:
• The Oenga estate is entitled to receive a royalty on oil and gas produced in the allotment.
• The rent from the allotment lease is below a fair level and constitutes a breach of the fiduciary responsibility of the federal government.
• Production from the West Niakuk and Lisburne participating areas does not fall within the scope of the lease and its amendments.
BIA said that it had taken a view that wording in the lease “supported an interpretation of the lease under which the complained-of drilling and production were permissible activities.”
However the court has taken a different position.
The court found that the first two claims fell outside a six-year statute of limitations. However, the court did decide that oil and gas production from the Lisburne participating area “exceeded the scope of the lease.” On the other hand the court was unable to determine whether activities associated with West Niakuk constituted a lease violation.
The court has directed that the case will proceed to trial to determine damages arising from the Lisburne-related activities and to determine any liability relating to West Niakuk.
“The BIA’s action this week is a small but important first step in recovering fair rent for BP’s use of our land,” said Oenga heir Joe Delia following the BIA order to BP. “My grandfather leased his land to BP for a road and pipeline project. … All we have ever wanted is to be paid fairly for the oil company’s use of our land.”
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