DNR denies Donkel’s request to form Greater Point Thomson unit
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On March 28, the Division of Oil and Gas under a delegation of authority from the commissioner of the Alaska Department of Natural Resources denied Donkel Oil & Gas LLC’s application to form the Greater Point Thomson unit, or GPTU, deciding that approval under state statute was not necessary or advisable to protect the public interest.
The proposed unit is on and offshore the eastern North Slope, covering approximately 58,790 acres. The application was signed by Daniel K. Donkel and Samuel H. Cade, 100% working interest owners of the 24 state oil and gas leases that are the core of the proposed unit. The leases, acquired over time, have varying expiration dates. Unitization would extend the leases by at least five years. Twelve of the 24 leases are already expired with an expiration date of Dec. 31, 2022; two leases expire Nov. 30, 2024; four leases expire March 31, 2026; and six leases, expire June 30, 2028.
The division published a notice Dec. 29, inviting interested parties and members of the public to submit comments on the proposed new unit by Jan. 28.
Twenty-three comments supporting Donkel O&G’s application were received. In its decision, which was signed by Director Derek Nottingham, the division said “a vast majority of those comments contained, in part, the following identical language: ‘Approval of the unit application as submitted will provide the opportunity to attract new investment capital to the eastern North Slope and Beaufort Sea areas. And it could lead to much-needed new oil and gas development in the areas. The formation of the Greater Point Thomson unit can lead to much-needed new oil and gas development and production in the interest of developing, conserving, and enhancing Alaska’s natural resources for present and future Alaskans.’”
Opportunity to invest or bring new capital to the eastern North Slope and Beaufort Sea lease areas is not changed by unitization, the division said, noting that Donkel O&G’s application contains “no commitment to explore, or develop the area.”
“Exploration, or development therefore would be no different if conducted on a lease-by-lease basis,” the division said.
The application said operator Donkel O&G has a three-pronged approach to developing the acreage: either sell 100% of the working interest “to a competent qualified buyer who will in turn take over operations”; bring in partners and jointly develop the acreage; or develop the leases on their own.
Unleased state acreageThe agency also noted that the application proposes to unitize unleased state lands, which were available in the most recent North Slope Area Wide lease sale and received no bids.
The proposed unit, the division said, “further contains a tract leased by Andrew Bachner and Keith Forsgren” but “no evidence” has been provided that the lessees of that tract, ADL 393574, have ratified either the proposed GPTU Agreement or GPTU Operating Agreement.
In the plan of exploration, POE, submitted with the GPTU application, a well is planned for both the third and the fourth year, but all drilling is contingent on finding funding and partners.
The division said “unitizing the leases is not necessary to conduct any of the activities proposed in the POE. Nor would the activities … be conducted any differently as a unit than as individual leases.”
- KAY CASHMAN