Vol. 26, No.10 Week of March 07, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

AOGCC rules KLU wells P&A’d; requires site clearance, bonding

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Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has ruled on applications from Furie Operating Alaska to change the status of three offshore exploration wells within the Cook Inlet Kitchen Lights unit.

The wells, KLU Nos. 1, 2A and 4, were suspended by a previous operator in 2012 and 2013 with 15 feet of casing stub above the seabed.

Furie’s new owner, HEX Cook Inlet, which acquired Kitchen Lights out of bankruptcy effective July 1, said the wells had been plugged and abandoned, and also asked for a variance from the commission’s site clearance requirements, which do not allow casing stub above the seabed.

In arguing against a requirement that the casing be cut back, the company said Cook Inlet’s extreme tides “present unique challenges and potential risk to any surface or subsea operation,” and said it “believes the human safety risk associated with cutting off the remaining 15 feet of casing stub is high and not commensurate with the operational outcome.”

In a March 1 order, AOGCC granted the change in status from suspended to plugged and abandoned for the three wells, but not the site clearance request.

Suspension requests

The commission said the original decision to classify the three wells as suspended “was based upon Furie’s request to preserve the ability to reenter the wells,” based on applications to suspend the wells submitted in 2012 and 2013.

In all cases, “Furie stated that the purpose of the work was to temporarily suspend the wells in anticipation of future reentry.”

The current owners have a different view of the wells.

The commission said that during the Dec. 23, 2020, hearing on the request for reclassification (see story in Jan. 3 issue of Petroleum News), “Furie stated that the three wells have no future utility as service or production wells, and they are most likely not viable candidates for redrill.”

Regulation change

In its 2020 request, Furie cited six wells which were granted site clearance in the 1960s with casings extending above the mudline. The commission said site clearance for those wells was granted before the current offshore site clearance regulation was enacted in 1986. Since then, the commission said, 17 offshore wells have been drilled from a mobile offshore drilling unit, including Furie’s KLU Nos. 1, 2A and 4, and of the 17, six are producers, four are suspended and seven are plugged and abandoned. “All seven of the wells deemed plugged and abandoned were granted site clearance only after removal of the well casings,” the commission said.

Since Furie’s wells were suspended after the 1986 regulations, allowing them variance from site clearance requirements “could set a precedent for future offshore site clearances in the Cook Inlet and in all of Alaskan waters,” the commission said.

It granted the change of status from suspended to plugged and abandoned but denied waiver of site clearance regulations which would have allowed structural casing to remain 15 feet above the seafloor.

“Until site clearance is granted by the AOGCC, wells KLU 1, KLU 2A and KLU 4 will be included in Furie’s wellhead count for bonding purposes,” the commission said, and ordered Furie to provide well location coordinates and casing heights to the National Oceanic and Atmospheric Administration for inclusion on NOAA’s navigational chart for Cook Inlet and provide evidence by March 15 that the information has been submitted.

There is a 20-day appeal period for the order; the commission has 10 days to grant or refuse the application for reconsideration. There is a 30-day appeal period of the commission’s final decision to Superior Court.

Views on the issue

The commission said Cook Inlet Regional Citizens Advisory Council and Cook Inletkeeper opposed Furie’s request to leaving the casing stubs in place based on navigational risks for marine vessels and the potential of setting a precedent in Alaska for wells drilled from MODUs.

The Department of Natural Resources Division of Oil and Gas supported Furie’s request to reclassify the wells from suspended to plugged and abandoned and to grant site clearance.

In a Jan. 25 letter, division Director Tom Stokes noted the “swift moving tides and high turbidity” in the area and said challenging diving conditions would be a risk “to human safety during operations” to remove the casing.

He said navigation hazards could be mitigated by identification of the wells on NOAA navigation charts.

DNR supports AOGCC’s site clearance regulations, Stokes said, “and contends this action should not establish a change in policy or set precedent. Future application of the regulation can ensure compliance by removing wellhead equipment, casing, piling, and other obstructions to a depth at least five feet below the mudline before removing the drill rig. In the case of Furie’s request, the situation must be evaluated with the drill rig already removed, and the recognition of the balance between safety versus real impact.”


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