AOGCC versus Mental Health Trust; issue P&A of well on Trust land

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has been going after the federal government for wells that haven’t been properly plugged and abandoned and now it has the same issue with a fellow state agency, the Alaska Mental Health Land Trust. The commission has scheduled a hearing for Oct. 17 at 10 a.m. at its Anchorage offices following a notice of violation it sent to the Alaska Mental Health Land Trust’s Trust Land Office. The commission is holding the Trust Land Office responsible for plugging and abandoning the Northern Dancer 1 well, drilled on a Trust lease.

Storm Cat Energy, a Canadian company, acquired the lease on which the well was drilled in a Trust sale in late 2004. The company drilled the Northern Dancer well in 2006 near Big Lake in the Matanuska-Susitna Borough and told Petroleum News at that time that it had “found gas throughout the section” and was “sufficiently encouraged to set casing.” The well was suspended in 2006, and although the company had said it planned to do production testing, by 2007 there was a change of leadership at the company and Storm Cat turned its focus elsewhere.

Trust responsible

In a June 27 letter French noted that the Trust had extended the lease term in 2009, but that the lease expired in 2013. Wells must be plugged and abandoned prior to termination of the lease on which they are drilled.

Citing the agency’s regulations, French said: “AOGCC clearly has authority to order a landowner to plug and abandon a well on the landowner’s land.”

The well has not been properly plugged and abandoned, French said, and because the Trust “is currently both the landowner and the owner - the entity with the right to drill into, and appropriate the oil and gas produced from the lease - it is responsible for plugging and abandonment of Northern Danger 1.”

In an Aug. 2 letter requesting a hearing, Franger said the Trust wishes to discuss the current condition of the well; potential value of the resource to the Trust; leasing activity for the tract; and obligations of the state to the Trust.

Correspondence around the issue in the commission’s files indicates that the Trust is hoping to find a new operator for the Northern Dancer well.

- KRISTEN NELSON