AOGCC adjusts Eni required bonding amount

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has adjusted the bonding requirement for Eni US Operating Co. at the company’s request.

Eni is the operator at the Nikaitchuq and Oooguruk units on the North Slope.

In July 2019, when AOGCC updated its bonding requirements, Eni was the operator of 59 permitted wellheads, with a required bonding of $10 million.

The company had an existing $200,000 AOGCC bond in place, so its additional bonding requirement was $9.8 million, payable in four annual installments, the commission said in a May 18 order.

In August 2019, Eni increased its bond in place with the first of four annual installments.

Also in August 2019, Eni filed with the commission a designation of operator indicating that effective Feb. 1, 2019, it had acquired the northern portion of the Oooguruk unit from Caelus Natural Resources, becoming operator of that portion of the Oooguruk unit, a change which increased the company’s permitted wellheads to 99.

But over time, the commission said, Eni permitted three additional wells, bringing its total permitted wellheads to 102, and bumping its required bonding into the 101 to 1,000 permitted category - requiring a $20 million bond.

In March of this year revisions to the commission’s regulations became effective, including an increase in the number of installments an operator could use to reach its new bonding level from 4 years to 7 years, and, the commission said, “an offset for bonds that an operator has with another entity dedicated exclusively to the plugging and abandonment (P&A) of wells.”

This May, Eni requested reconsideration based on P&A bonding it has in place with the U.S. Environmental Protection Agency for three Underground Injection Control Class 1 disposal wells. Because it acquired a Class 1 disposal well from Caelus, it had increased its bonding with EPA from $1.4 million to $2.1 million.

The commission said Eni has requested that the three Class 1 wells be dropped from its permitted wellhead count, reducing its count from 102 to 99 and thus reducing its required bonding amount from $20 million to $10 million.

The commission said the $2.1 million EPA bond “is exclusively dedicated to the P&A costs of the three Class 1 disposal wells” operated by Eni.

It said the per-well amount required by the EPA bond, is $300,000 more than the $400,000 AOGCC bond for a single well.

Eni has an existing AOGCC bond, the commission said, and the additional to bring the bond up to $10 million will be payable in six installments.

The commission said that if Eni’s permitted well count rises to 101 or more, its bonding requirement would increase to $20 million.