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Donkel presses Hemi Spring case with new commissioners He petitioned AOGCC in January to protect his overriding royalty interest in lease adjacent to the Hemi Springs well; in February commission said it required him to give notice to adjacent owners Kristen Nelson PNA Editor-in-Chief
Dan Donkel continues to urge the Alaska Oil and Gas Conservation Commission to protect his overriding royalty interests in a lease — now expired — adjacent to the Hemi Springs well, certified by the state in the early 1980s as capable of producing in paying quantities. The Hemi Springs discovery is on the North Slope south of the northwest corner of the Prudhoe Bay unit.
Donkel petitioned the commission in January to protect his overriding royalty interests in oil and gas lease ADL 380066. He told the commission that ADL 380066 is adjacent to ADL 28249, the lease with the Hemi Springs well. He told the commission that he has asked ConocoPhillips Alaska Inc., the working interest owner in ADL 380066, the holder of ADL 28249 and the operator of the adjacent Kuparuk River unit, “to either expand the Kuparuk unit and/or create a unit so as to include ADL 380066 within a unit.”
Donkel told the commission in his Jan. 31 petition that ConocoPhillips had refused to include the lease in a unit.
The term of state oil and gas lease ADL 380066 expired Jan. 31. Back to you The commission responded to Donkel Feb. 11, telling him that he would have to notify adjacent property owners before it could act and requiring him to “contact by certified mail each owner of either a working interest or a royalty interest in ADL 380066 or in ADL 28249,” notifying those adjacent owners that the commission would hold a hearing on the petition and that they had a right to be heard.
The commission further said that if Donkel wished to pursue “involuntary expansion of the existing Kuparuk River unit, as suggested in your petition” then he would also have to notify by certified mail “each owner of either a working interest or a royalty interest in any tract within the Kuparuk River unit.”
The commission — then composed of Mike Bill, Dan Seamount and Cammy Taylor — also told Donkel that it had “investigated the matters raised in your petition to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify action by it.”
The commission said there “has never been regular production from the well (Hemi Springs No. 1) that was drilled on ADL 28249, the well was suspended as of April 3, 1984, and there is no proposal or plan pending to produce that well or develop that lease.”
The commission said in the Feb. 11 letter that because no production has taken place from the Hemi Springs well and none is planned, it “sees no need to take any further action with respect to lease ADL 28249 or lease ADL 38006 in order to prevent waste, insure a greater ultimate recovery of oil and gas, or to protect correlative rights.”
The commission also said it would “not make any threshold determinations as to the sufficiency of the petition, standing, mootness, attempts at voluntary unitization, or any other potential procedural or substantial issue.” It cited “some confusion and procedural difficulties” in an earlier petition when the commission “performed an initial review of the petition with respect to threshold issues” before “other interested parties had an opportunity to be heard.” Appeal to new commissioners There are now two new members on the commission: Sarah Palin has replaced Cammy Taylor in the public seat and Randy Ruedrich has replaced Mike Bill in the engineering seat.
Donkel wrote to the new commission March 9, “respectfully” demanding that the commission protect his interest in ADL 380066, call a hearing and provide notice of a public hearing in a newspaper at its own expense.
He said the Feb. 11 letter from the former commission “clearly shows that they have refused to do their duty and have placed an unfair burden on me contrary to the law.”
Donkel asked for withdrawal of the Feb. 11 letter and asked the commission to “proceed with a public notice in the newspaper.”
“The former commissioners have clearly shirked their duty,” Donkel said.
“Now that the former commissioners are gone we are hoping and believe that you will perform the duties and not place these duties wrongfully on the petitioners,” he said.
Outside counsel urged Donkel also urged the commission to contract for outside counsel because the Department of Law represents both the commission and the Department of Natural Resources. He said it is clear that DNR's Division of Oil and Gas “would like to take these leases and sell them in the next least sale which is in direct conflict with the commission's duty for compulsory unitization in order to protect my rights…”
He also said the previous commissioners “apparently failed to recognize that the bottom hole location of the Hemi Springs well according to their files, came within 66 feet of our property line” and the state certified that well as capable of production in paying quantities.
Donkel said “clearly productive hydrocarbons exist on the several tracts of land affected. The commission has never forced an involuntary unit in its long history and it is clear that it is their duty to do so.”
He said he hopes the new commission “will see the value in providing such adherence to the law's wisdom of protecting all parties of interest, not just the DNR or the big oil companies, but also the average citizen who have property rights under the law also.”
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