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Mental Health Trust asks more time from AOGCC to P&A Northern Dancer
Alan Bailey Petroleum News
On Oct. 17 the Alaska Oil and Gas Conservation Commission held a public hearing for the reconsideration of a commission notice of violation regarding the need to plug and abandon the Northern Dancer exploration well. The well is in Alaska Mental Health Trust land near Big Lake in the Matanuska-Susitna Borough.
Canadian company Storm Cat Energy drilled the Northern Dancer well in 2006 and at that time told Petroleum News that it had “found gas throughout the section.” But the well was never tested and Storm Cat ultimately became bankrupt without plugging and abandoning the well - responsibility for plugging and abandonment reverted to the Mental Health Trust, the landowner. The lease in which the well was drilled expired several years ago, but the commission requires a well that is not in use to be plugged and abandoned before the lease on which it was drilled terminates. Hence the commission’s notice of violation, which was served on the Land Trust.
The Mental Health Land Trust petitioned for the Oct. 17 hearing, saying that the well likely penetrates a gas resource and that there is potential for having another company lease the land tract and test the well. In that way the potential gas resource could be evaluated without the need to drill another well. The Alaska Mental Health Trust seeks revenue from the land that it owns, as a means of providing financial support for mental health programs in Alaska.
Drilled but not tested During the Oct. 17 hearing Mike Franger, senior land manager for the Mental Health Trust Land Office, told the commission that Storm Cat had drilled the Northern Dancer well to a depth of 6,233 feet. The well is cased to the bottom, was not perforated and is cemented from the surface to total depth. Storm Cat demobilized the drilling rig but indicated that it planned to return during the term of the lease to test several prospective sands that the well had encountered. In the event, however, Storm Cat went bankrupt before it was able to conduct any testing Franger said.
The lease with Storm Cat expired on Jan. 31, 2011. Subsequently in 2014 the tract with the well was leased to MetGas Industries (USA) Ltd., a company that had expressed interest in testing the Northern Dancer well for conventional and unconventional gas resources. But MetGas was unable to raise funds to conduct the testing and the new lease terminated on May 31, 2015, after the company had failed to make rental payments.
The Trust Land Office believes that there is untested potential for a gas resource in the well and is actively engaged in discussions with a potential lessee for the tract, with the intent of having the well tested - a lease would require financial assurance from the lessee for the ability to plug and abandon the well during the lease term, Franger said.
Safe condition And the well remains safe, Franger assured the commission. In August of this year a visual inspection of the well, coupled with pressure testing, in the presence of an AOGCC well inspector had shown the well to be in good condition, with zero pressure in the well bore. The pad is in good shape, with a perimeter fence and locked access.
Franger said that the timeframe for plugging and abandonment contained within the notice of violation would preclude the land tract from being leased for the purposes of testing the well. And that would reduce the viability of leasing the tract. Meanwhile there is no health and safety issue that requires urgency over the well plugging and abandonment. Hence, the Trust Land Office is requesting deferral of the plugging and abandonment requirement for an indeterminate time, provided that the well is periodically tested to ensure that it remains safe, Franger said.
Commission Chair Hollis French told Franger that the commission needs to decide how long it is reasonable to wait for someone to invest money into perforating and testing the well.
“It’s been sitting in place now for over 10 years,” French said. “There has to be an end to this. That’s what we’re trying to balance out this morning.”
- ALAN BAILEY
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