Danco, Allen file suit against state

Kristen Nelson

A demand by overriding royalty interest holders to have leases added to the gas-producing North Cook Inlet unit was in court even before the Alaska Oil and Gas Conservation Commission ruled on reconsideration requests.

Danco Inc., Monte Allen, John Blume, George Kasper M.D. and Danco Royalty Partnership Ltd. petitioned in Superior Court in Anchorage Jan. 23 for review of the commission’s Order 391A, which denied a petition by Danco and Allen to integrate leases in which they held overriding royalty interests into the North Cook Inlet unit operated by Phillips Alaska Inc.

The petitioners argue Phillips is draining gas from two leases to the north in which they held overriding royalty interests when those leases expired in 1996.

Phillips denies gas extends to the north.

The Alaska Supreme Court remanded the petition to the commission for a hearing on the merits, saying the commission erred in 1997 when it dismissed the petition because the leases expired shortly after it was filed.

Petitioners requested a rehearing on the commission’s Dec. 3 decision Dec. 24. The commission extended its 10-day response window to Feb. 8 to give it time to consider “the large number of points raised.”

Petitioners said they do not believe the commission can delay its response beyond 10 days and filed ahead of the commission’s decision to be within the 20-day window to petition the court for review.

Petitioners told the court they believe the commission has “departed from the accepted and usual course of administrative adjudication,” has failed “to provide any relief, investigation, or due process with respect to the Petitioners’ claims of uncompensated drainage.” and that “the findings of fact and conclusions of law as stated in the Order are clearly erroneous…”

Petitioners have asked the court to vacate the commission’s order and hold a trial on the merits of the original petition.