Vol. 26, No.26 Week of June 27, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Court allows limited use of rig in inlet for abandonment, nearby wells

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Kristen Nelson

Petroleum News

In a May 27 ruling U.S. District Court Judge Sharon L. Gleason is allowing Hilcorp to use a drilling rig in Cook Inlet - with required towing - for a planned well abandonment this summer and the drilling of two planned production wells close to the well abandonment site.

Plaintiffs Cook Inletkeeper and the Center for Biological Diversity sued the National Marine Fisheries Service in 2019 asking that its decisions allowing Hilcorp Alaska to shoot seismic and do oil and gas exploration and production activities in Cook Inlet from 2019 to 2024 be overturned.

In an initial ruling in March, Gleason upheld NMFS’ mitigation and monitoring measures for Hilcorp’s seismic surveying in Cook Inlet but found “arbitrary and capricious” the agency’s determination that noise from tugs towing a drilling rig would not cause take or harassment of Cook Inlet beluga whales.

Gleason ordered supplemental briefing on the appropriate remedy, briefing which is now complete, the judge said in a May 27 order on remedy.

Defendants are the U.S. Secretary of Commerce and NMFS; Hilcorp and the State of Alaska are interveners in the case.

In her March order Gleason found Incidental Take Regulations, the Biological Opinion and the Environmental Assessment/Finding of No Significant Impact for Hilcorp activities in Cook Inlet over five years violated the Marine Mammal Protection Act, the Endangered Species Act and the National Environmental Policy Act.

The vacatur issue

Plaintiffs argued that the agency’s actions should be vacated.

Flawed rules may be left in place “when equity demands” while the agency corrects its error, Gleason said, noting that the 9th Circuit Court of Appeals has said remand without vacating the actions is appropriate only in limited circumstances, with the court to weigh the seriousness of errors against disruptive consequences of vacating the agency’s actions in whole or in part.

Plaintiffs argued for vacating the agency’s actions while defendants and intervenors argued for remand without vacating the actions.

The federal defendants noted that in the March ruling Gleason upheld portions of NMFS’ analysis regarding impacts of some of Hilcorp’s activities, including seismic surveys.

Hilcorp said remanding without vacating would not present risk to the beluga whale because of limited use of towing rigs in the Year 3 letter of authorization activities, Gleason said.

She said Hilcorp “states that it plans to implement numerous mitigation measures focused on the tug boats that will render ‘the potential for incidental Level B harassment of beluga whales … to be at or near zero.’”

“NMFS may well need to require additional mitigation measures for authorized tug activities in order to meet its statutory obligation,” Gleason said. Errors pertained, however, to only a limited set of activities - and did not affect Hilcorp’s seismic operations, which mitigation measures, the judge specifically upheld in the March decision. NMFS’ errors, she said, affect only “a discrete set of tug operations.”

Plaintiffs argued that environmental impact, not economic impact, is what matters in environmental cases such as this, while Hilcorp asserted that partial or full vacating of the agency’s decisions would prevent it from undertaking any activities requiring incidental take authorization and would present significant risks to human health and environmental integrity and reliability of energy from Cook Inlet by preventing activities covered by the Year 3 letter of authorization, Gleason said in her order on remedy.

The state noted that it had ordered Hilcorp to plug and abandon a well and said further delay would create higher likelihood that hydrocarbons from that well would migrate into other strata or to the surface. The state also cited the significance of revenue streams from oil and gas activities.

Disruptive consequences

Gleason said the disruptive consequences of vacating all the actions “would foreclose Hilcorp’s planned platform and pipeline maintenance activities, thereby impacting the safety and reliability of Hilcorp’s oil and gas production.”

The 9th Circuit, she said, has “explicitly considered the economic consequences of vacatur.”

Gleason also said Hilcorp’s planned maintenance activities do not involve tugs towing drill rigs “and thus are not directly implicated in the Court’s order granting partial summary judgment.”

There could be harmful environmental consequences from prohibiting pipeline and platform maintenance and preventing the well decommissioning activity planned for this June and, Gleason said, “the risks posed to beluga whales by allowing the use of tugs for the well abandonment will be tempered by Hilcorp’s proposed mitigation measures. Those measures resemble or exceed the measures included in a biological opinion for similar oil and gas activities that Plaintiffs described as a ‘careful analysis’ of the effects of tug noise, and that found the effects of tug noise discountable with those litigation measures,” Gleason said, and did not order vacating agency actions with respect to planned maintenance and well commissioning.

As for the two planned production wells at the Tyonek platform, Hilcorp said they are within about a half mile of the abandonment activities, and by drilling them this summer, the drill rig would only have to make one 40-mile round-trip from Nikiski to the North Cook Inlet unit.

The court is allowing that planned production drilling.

However, a partial vacatur applies to Hilcorp’s use of tugs to tow drilling rigs for exploratory wells and all production drilling activities other than the planned 2021 production drilling at the Tyonek Platform.

Gleason also ordered Hilcorp to “implement all of the mitigation measures outlined in its opening brief while engaging in well plugging and abandonment in the North Cook Inlet Unit authorized in the Year 3 Letter of Authorization and while engaging in production drilling at the Tyonek Platform.”


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