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AOGCC makes Three Mile Creek P&A decision
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has issued a decision on plugging and abandonment responsibility for the Three Mile Creek Unit 1, 2 and 3 wells formerly operated by Aurora Gas.
When Aurora Gas went bankrupt it had 19 wells on the west side of Cook Inlet, only six of which were purchased out of bankruptcy by the company that became Amaroq.
Of the 13 not purchased, AOGCC Commissioner Cathy Foerster told legislators in March that 10 are on Cook Inlet Region Inc. land and are covered by agreements CIRI has made. That left three, on state land.
The commission said Oct. 17 that Cook Inlet Energy LLC and Apache Alaska Corp. are owners of state oil and gas lease ADL 388233, where the remaining three wells are located, and had been required to designate which would be the operator of record for plugging and abandoning the wells.
While CIE and Apache are both owners of interests in ADL 388233, the commission said CIE is also a working interest owner in the three wells.
Designated operator required The commission said neither company provided a designation of operator for the P&A work, although “CIE has twice offered to ‘immediately submit a Designation of Operator form and Application for Sundry Approvals’ if AOGCC would agree to pay CIE Aurora’s bond proceeds.
In essence, CIE wants money in exchange for regulatory compliance,” the commission said, adding that CIE failed to provide any support for its claim that it is entitled to proceeds from the Aurora bond.
The commission said Apache has denied that it is an owner for purposes of the duty to P&A the Three Mile Creek wells and supported its response with some 50 pages of exhibits, including a Sept. 20, 2017, denial by the Department of Natural Resources of CIE’s attempt to assign its working interest ownership in the three wells.
DNR found, AOGCC said, that CIE is a working interested owner in ADL 388233 including the three wells, but DNR also found that ADL 388233 was horizontally segmented in 2012.
Aurora Gas assigned its interest in the deeper segments to Apache, and DNR found that the deeper segments of the lease “lie below and are segmented from the producing intervals of the lease which contain the Three Mile Creek wells.”
Based on that, the commission said Apache is not responsible for plugging and abandoning the Three Mile Creek wells, and said CIE is the working interest owner in the wells and must plug and abandon them prior to the expiration of its rights in the lease, which Division of Oil and Gas records show is held by a producing well.
The commission said CIE must submit an application to P&A the Three Mile Creek wells within 30 days and complete the P&A work within one year.
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