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AOGCC v French dispute over scope of agency authority continues
Kristen Nelson Petroleum News
In February 2019 Hollis French, formerly commission chair at the Alaska Oil and Gas Conservation Commission, petitioned the commission to hold a hearing on a complaint of waste from a 2017 fuel gas leak in Cook Inlet.
After the commission denied the petition for a hearing, followed by two rounds in court, the second of which saw French the victor, the commission held a hearing Dec. 15 and on Jan. 20 issued an order denying the petition.
Alaska Superior Court had deferred to the commission in its ruling; the Alaska Supreme Court required the commission to hold a hearing, which it has now done, and also said the commission had not presented evidence that it investigated the leak.
The current decision may be appealed for reconsideration within 20 days, and if reconsideration is denied, the decision may be appealed to Alaska Superior Court.
January petition denial French argued in the hearing, as he did when he was commission chair, that the commission should take action on the leak, based on his belief that the commission has statewide authority over waste.
On its website, AOGCC says: “The Commission acts to prevent waste, protect correlative rights, improve ultimate recovery and protect underground freshwater.”
French argues for a dictionary definition of waste.
The commission disagrees, saying in its Jan. 20 decision: “Oil and gas conservation law, which developed in response to the rush to find oil, was aimed at practices by drillers that resulted in loss of recoverable hydrocarbons when wells were drilled inefficiently, gas was flared, and well spacing and production was done in a manner that dissipated reservoir pressure thereby reducing ultimate recovery from a reservoir. These kinds of practices were defined as waste.”
The commission said it had no jurisdiction over the gas leaking in Cook Inlet because that gas had been sold to the operator, Hilcorp Alaska, by a third party onshore, and was being shipped out to the platform as fuel gas.
French cited the statute establishing the commission, which says: “The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States.”
The commission has said its authority ends once oil or gas is metered and leaves the field where it was produced. French argues that because the commission’s authority extends statewide, per its authorizing statute, it has authority over oil and gas in the state.
In its Jan. 20 decision, the commission said: “Nothing in the AOGCC’s enabling act or its legislative history suggests that the Alaska Legislature intended to expand the AOGCC’s authority to regulate wasteful uses of oil or gas after it has been produced and purchased.” The commission also said it is not aware, and French has not cited, instances where any U.S. conservation agency “has exercised its authority to make a waste determination as to gas or oil which has been produced and become private property.”
The commission said: “To expand its authority, as suggested by French, would mean that the AOGCC would be extending its authority over cases like the Exxon Valdez tanker spill, a rupture in an Enstar Natural Gas Company’s gas line that serves its residential or business customers, and even private consumers who are wasteful with the oil and gas they purchase.”
That authority, the commission said, was not included in the enabling act passed by the Legislature.
Commission’s investigation On the investigation issue, James Regg, a senior petroleum engineer at the commission, testified on the investigation the commission did at the time the leak occurred in 2017 at the commission’s December hearing on the petition.
Regg reviewed work done by the commission on the leak, which included gathering information on the source of the gas leaking from the pipeline going to Platform A in Cook Inlet.
That investigation determined the gas had been purchased by Platform A operator Hilcorp Alaska and was being shipped to the platform from shore.
- KRISTEN NELSON
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