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AOGCC hears NordAq on proposed P&A fines Company discusses work underway to plug and abandon two onshore Cook Inlet exploration wells; agency has proposed large fine Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission held hearings April 4 on proposed enforcement actions against NordAq Energy Inc. for failure to permanently abandon two onshore Cook Inlet exploration wells, Tiger Eye Central No. 1 on the west side and Shadura No. 1 on the Kenai Peninsula. Bob Warthen, senior advisor to NordAq Energy, represented the company at the hearings.
Tiger Eye was drilled on a state oil and gas lease; Shadura was drilled on a Cook Inlet Region Inc. lease.
On Dec. 2 the commission sent NordAq, by certified mail, return receipt requested, notices of proposed enforcement action for the two wells, citing the company for failure to plug and abandon the wells before its leases expired.
The notices gave the company 15 days to respond if it disagreed with the commission’s actions, which proposed a penalty of $150,000 for violations at the Tiger Eye well and $621,000 for Shadura. Both penalties were on the same basis: $100,000 for the initial violation and $1,000 per day, with 50 days for Tiger Eye and 521 days for Shadura.
The combined fines total $771,000.
NordAq did not respond within the 15 days.
Warthen told the commissioners at the hearing that he was not ignoring the commission but did not receive the certified letters until the end of the year. He said the NordAq office and another office, also on the second floor of the building where the company has its offices, were burglarized and as a result the building went into lock down. Everything had to go through the first floor tenant, and Warthen said he didn’t receive the letters until Dec. 30.
Initial plans for wells Warthen said NordAq had discussions with Cook Inlet Energy to use the Tiger Eye well as a utility well, but following that company’s bankruptcy, the new management, now operating as Glacier Oil & Gas, wasn’t interested in using the well.
Commissioner Hollis French asked about utility use of a well and Warthen said the well could have been used to handle produced water from Cook Inlet Energy’s West McArthur River field.
It was late November of last year before NordAq was aware that the interest wasn’t there, Warthen said. In a January email to the commission he said the sundry for Tiger Eye would be delivered the following week; the sundry application to plug and abandon the Shadura well had already been delivered, he said.
NordAq had tried to interest CIRI in holding onto the Shadura well as a cased well asset, Warthen told the commissioners, but at the end of 2016 CIRI said it wasn’t interested in the well and that NordAq should go ahead and plug and abandon it.
NordAq announced a natural gas discovery after drilling the Shadura well in 2011 and permitted an appraisal well but that was never drilled. CIRI told Petroleum News in 2016 that the corporation revoked the Shadura leases because NordAq missed work commitments.
NordAq drilled the Tiger Eye well in 2012. Warthen said it was an oil prospect and there were oil zones but the well failed to produce oil. Gas was tested, but the well produced significant water, he said. The company’s intent was to suspend the well and use it as a disposal well. NordAq surrendered the Tiger Eye unit and leases in 2016.
Seasonal operations Commission Chair Cathy Foerster asked Warthen why the company didn’t proceed to plug and abandon Tiger Eye after it heard from the new Cook Inlet Energy management that they were not interested in using the well. Warthen said it was a seasonal venture and it was too late when they heard - there was already snow on the pad.
Foerster asked if any more delays were expected for the work needed to plug and abandon the Tiger Eye well. Warthen said further delays were not expected but said they needed to confirm that eagles weren’t occupying old nests or building new nests in the area of the well, which could delay the work to mid-July. If there are no eagles nesting in the area work could begin as soon as snow is off the site and equipment can be barged in, he said.
Commissioner Dan Seamount asked what the estimated cost was to plug and abandon the Tiger Eye well. Warthen said in the $400,000 range, and said the company had funds to cover the work.
Shadura was drilled from a CIRI lease in the Kenai National Wildlife Refuge and is also a seasonal operation, with work done from ice or snow roads in the winter. Warthen said the company planned to plug and abandon the Shadura well in the winter and said the cost of that work would be in the $500,000 range because of the added cost of a snow road and also because the well head is a little heavier and requires a heavier crane.
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