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April 2019

Vol. 24, No.15 Week of April 14, 2019

French appeals AOGCC decisions

Former chair argued scope of commission’s authority when he was on the commissioner; if appeal denied, Superior Court next step

Kristen Nelson

Petroleum News

When Hollis French was a commissioner and chair of the Alaska Oil and Gas Conservation Commission he disagreed with the other two commissioners on the scope of the commission’s authority.

In the findings of fact for a hearing on whether the governor had grounds to dismiss French, the hearing officer noted that French “was persistent and energetic in pursuing his view that the jurisdiction of the AOGCC was being interpreted more narrowly than he believed that the enabling statutes intended.” The hearing officer said French attempted to secure a written response from the Department of Law “as to whether his legal reasoning had merit, and conducted his own research and issued writings of his own supporting his point of view.”

French arranged a conference with the Attorney General and other members of the Department of Law to argue for his point of view and wrote to then-Gov. Bill Walker to state his position. The hearing officer said the other two commissioners wrote a rebuttal.

Gov. Mike Dunleavy ultimately removed French for cause on Feb. 26 (see story in March 3 issue of Petroleum News), citing causes other than French’s disagreement with the other commissioners on the commission’s scope of authority.

Petitions for hearings

On Feb. 28, French wrote to the commission, requesting hearings on complaints of waste, one concerning a fuel gas leak from an 8-inch line in Cook Inlet in 2017, the other concerning a gas leak from a North Slope well, DS02-03B, which also occurred in 2017. In both cases, French requested that a hearing be scheduled. “At the hearing, I will be urging the commission to take action upon this complaint,” he said in both letters.

On March 20, the commission denied both requests.

Cook Inlet fuel gas

In the case of the fuel line gas leak in Cook Inlet, the commission said it “investigated the leak at the time it occurred.” Initially AOGCC believed the source was “upstream gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property.” Had that been the case, the commission said in a March 20 ruling on French’s petition, “the leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp.”

The commission said its investigation determined the leaking gas had been purchased from a third-party provider and was being shipped back to Platform A.

“The primary purpose behind the prohibition against waste is to maximize resource recovery,” the commission said, and its regulatory authority “like every other state’s oil and gas conservation regulatory authority,” is to regulate waste upstream, before oil or gas is metered and severed from the property, “in connection with drilling, exploration, and production activities. Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor.”

In an April 8 appeal of the commission’s decision, French said the gas lost in the inlet was a waste and said the commission’s job was “to ‘protect the public interest in Alaska’s valuable oil and gas resources.’”

As for the commission’s position that its authority ends once oil or gas is metered, he said: “The law says that the agency’s authority extends statewide.”

“If the Legislature had wanted the agency’s jurisdiction to end at the meter, it would have said so in a statute,” French said, and went on to say that AOGCC’s “interpretation of its own statute short-changes the public, by cutting off the agency’s power far short of what the Legislature enacted.”

Prudhoe gas

On French’s petition for a hearing on gas from the DS02-03B well, the commission denied the request for a hearing and said: “The circumstances surrounding the release of gas from the DS02-03B well are the subject of an on-going AOGCC investigation. A hearing prior to the conclusion of that investigation would be premature.”

In his April 8 appeal, French argued that the commission had a duty to hold a hearing, citing Alaska statute, which says: “On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for a hearing, and shall cause notice of the hearing to be given.”

He said “the agency claims to be investigating the same incident” at the DS02-03b, but said the commission appeared to be referring to a docket on the mechanical integrity of Prudhoe Bay wells, and “seems to be implying that this petition is repetitive of matters being considered in another docket.”

French asked to be notified of a hearing on that well which concerns “wasted gas.”

“Either way, under either docket, the commission must schedule a hearing on this incident of waste. Failing to do so would be an abuse of the commission’s discretion.”

The commission has 10 days to grant or refuse the application for reconsideration. Failure to act is a denial. Appeal is to the Alaska Superior Court.






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