Court ruling goes against Alaskan Crude

Alaskan Crude Corp. has lost an appeal to the Alaska Supreme Court.

The case centered on the Burglin 33-1 well, in the company’s Arctic Fortitude unit on the North Slope. The well was drilled, tested and then suspended in the 1980s.

Alaskan Crude, a small operator, in 2006 applied to the Alaska Oil and Gas Conservation Commission for approval to reopen and test the well, the Supreme Court’s Aug. 30 opinion said. The AOGCC regulates drilling activity.

Alaskan Crude wanted to investigate geologic strata known as the Ugnu and West Sak formations.

“Arguing that it was highly unlikely that oil from the well would rise to the surface unassisted, Alaskan Crude made a series of requests to the Commission to be exempted from oil discharge response requirements or, in the alternative, to have the requirements reduced,” the opinion said. “The Commission made successive reductions to the technical flow-rate assessments and the response planning standards that it recommended to the Alaska Department of Environmental Conservation for use in setting Alaskan Crude’s discharge response requirements. The Commission declined, however, to classify the Burglin 33-1 well as a gas facility, which would have exempted Alaskan Crude entirely from such requirements.”

Alaskan Crude challenged the commission’s decision in state Superior Court. That court upheld the commission.

The Supreme Court, with its 17-page opinion, affirmed the lower court ruling.

“We conclude that the Commission did not err,” the opinion said. “The Commission knew from past experience that parts of the West Sak formation had the capability of flowing oil to the surface unassisted. The Commission’s analysis of testing data from the Burglin 33-1 well from the 1980s, ‘when combined with a reasonable set of rock and fluid properties from the Ugnu formation elsewhere on the North Slope,’ indicated that the Ugnu had the same capability.”

The high court also affirmed the Superior Court’s award of $10,000 in attorney’s fees to the commission.

—Wesley Loy