After months of reconsidering their new surety well bonding regulation enacted April 18, 2019, that contains much higher bonding costs on existing and new ells, the Alaska Oil and Gas Conservation Commission is proposing to increase the number of annual installments an operator can make from 4 years to 7 years. These payments are on what AOGCC billed operators for the retroactive bonding increases, which often involved millions of dollars.
The quasi-judicial commission did not address the duplicate bonding already in place with the Alaska Department of Natural Resources and other landowners, saying it will only allow a reduction in the bond amount if an operator demonstrates it has a bond in place with the landowner that is "dedicated exclusively to the plugging and abandonment of a well or wells."
"DNR requires a producer to have a statewide bond of $500,000 for surface operations (11 AAC 83.160(c))," Deputy DNR Commissioner Sara Longan said in August 2019. "The (DNR) Commissioner has discretion to require additional financial assurances from companies, which typically includes assurances to effectively cover proper plugging and abandonment (P&A)" - something she suggested at the time the commissioner might be willing to always require.
DNR, she said, has multiple financial assurance agreements with its lessees that require operators to post a bond in excess of the $500,000 statewide bond.
"The bonds held for the plugging and abandoning of wells will only be released after the work has been performed," Longan said.
"The public may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes," AOGCC's notice said, by submitting written comments to Jody Colombie at 333 West 7th Avenue, Anchorage, Alaska 99501, or by facsimile at (907) 276-7542, or by electronic mail at [email protected], or by submitting them through the Alaska Online Public Notice System's special link for AOGCC's notice.
Comments must be received no later than 4:30 p.m. on Sept. 10.
A hearing is scheduled for Sept. 1 at 10 a.m. at the address above. The COVID-19 virus may necessitate it be held telephonically, so check with AOGCC after August 25 to find out.
- KAY CASHMAN
See story in Aug. 9 issue, available online Friday, Aug. 7 at www.PetroleumNews.com
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