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Vol. 14, No. 40 Week of October 04, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

AOGCC requirements; DNR permits

Geothermal wells will be drilled with Department of Natural Resources permits, but drilling must meet commission requirements

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission held a hearing Sept. 23 on a commission motion to require an AOGCC drilling permit for any well with a total vertical depth greater than 1,000 feet in specified townships and ranges within the Bristol Bay Borough, an area where Naknek Electric Association is proposing to drill geothermal wells.

The commission regulates oil and gas drilling, but geothermal drilling is regulated by the Department of Natural Resources. DNR has been reviewing Naknek Electric’s proposed program and the commission has been reviewing, at DNR’s request, the geothermal drilling permit applications for that project.

Under state statutes, a well is subject to commission regulations if there is likelihood of “an unexpected encounter of oil, gas, or other hazardous substance as a result of well drilling.”

Art Saltmarsh, a senior petroleum geologist with the commission said in an overview at the hearing that statutes allow the commission to designate in its regulations an area and depth of wells subject to those regulations.

The commission aired its concerns about regulation of geothermal drilling at its August public meeting.

Commissioner Cathy Forester said at the August meeting that DNR’s drilling regulations are based on 1986 commission regulations and in a number of areas the commission currently has stricter standards than DNR.

Closest wells 70 miles away

Saltmarsh provided an overview of several wells drilled on the Alaska Peninsula south of Naknek. More than 25 wells have been drilled on the peninsula, he said. He reviewed some 15 wells for which the commission has data and well logs.

The closest wells to the proposed Naknek G-1 geothermal well are some 70 miles to the south and slightly to the west, Saltmarsh said. Wells within 70 miles of the proposed Naknek G-1 have encountered oil and gas, he said.

Commission reservoir engineer Winton Aubert said there was the potential for significant environmental and physical damage from unexpected encounters with hydrocarbons where drillers were not prepared for pressure containment. He told Foerster that the area where the geothermal drilling is proposed is an area where it would be appropriate for the commission to step in with stricter requirements than DNR has in its regulations.

Tab Ballantine, the assistant attorney general who works with the commission, told the commission in August that its authority would arguably be circumscribed by whether there was a likelihood of an unexpected encounter with oil or gas during the drilling of a geothermal well.

Ballantine said at the September hearing that the commission could require compliance with its regulations even though DNR was issuing a drilling permit.

That appeared to be the direction in which the commission was leaning; a formal decision will be issued within 30 days.



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