Providing coverage of Alaska and northern Canada's oil and gas industry
October 2016

Vol. 21, No. 40 Week of October 02, 2016

AOGCC sets regulation changes workshop

AOGA, ConocoPhillips support updating, but have concerns with sunset provisions, cementing changes, log submittal requirements


Petroleum News

Alaska’s oil and gas industry is objecting to some of the regulatory changes proposed by the Alaska Oil and Gas Conservation Commission. The commission took public comments Sept. 27 on the proposed changes, with ConocoPhillips Alaska and the Alaska Oil and Gas Association expressing concerns with some of the proposed changes and requesting a public workshop so industry could better understand the commission’s goals.

In response the commission scheduled a public workshop on the proposed changes for Nov. 1 and continued the Sept. 27 hearing to Jan. 10.

Another issue aired at the Sept. 27 hearing involved regulations for hydraulic fracturing. Cook Inlet Keeper has asked the commission to address hydraulic fracturing regulations and the commission said it would schedule a separate hearing on that issue for Dec. 15.

In announcing the regulations workshop date, AOGCC Chair Cathy Foerster said she would be hesitant to schedule a second workshop, telling industry representatives that while the proposal for a workshop was a good idea, she wouldn’t allow a workshop to turn into a lengthy stalemate over the proposed changes. The Nov. 1 public workshop will provide time for public input and modifications of regulations to be firmed up for the Jan. 10 continuation of the hearing, she said.

Impacts seen

In written comments ConocoPhillips told the commission it “sees merit in many of the proposed changes” and supports “updating and clarifying the regulations.”

But the company said several of the commission’s proposed changes “could have material adverse impacts to oil and gas producers,” and encouraged the commission to hold a workshop on the proposed changes.

Kara Moriarty, president and CEO of AOGA, said a hallmark of the commission has been consistency and predictability. Most of the proposed changes are not particularly problematic, she said, but AOGA members are concerned about the change in cementing requirements, the expansion of logs subject to filing and sunsetting of the commission’s orders.

Moriarty said the change in wording on logs required to be filed could be read as encompassing all logs run, including those with confidential information such as interpretive logs, with a potential result that companies wouldn’t do some interpretive work.

AOGA had suggested more confidentiality for logs and Commissioner Dan Seamount asked if that would apply to development wells.

Joshua Kindred, AOGA environmental counsel, said the issue was that if some confidentiality is not allowed, companies may stop investing in some interpretive log work.

Cementing issue

A proposed cementing change inserts the word “vertical” in a requirement that cement fill a minimum of 500 feet above significant hydrocarbon zones, a change from the previous measured depth. Measured depth is measurement along the wellbore, whereas vertical depth is measurement from the surface. There would be no difference in a vertical well, but today most North Slope wells are directionally drilled.

Seamount asked about the additional cost of requiring cementing based on vertical depth rather than measured depth and Kindred said AOGA did not have costs which he said would be case specific.

He told Commissioner Hollis French that the change from measured depth to vertical depth in the requirements could lead to technical risk and suggested the commission look at the requirement on a case-by-case basis.

Randall Kanady, ConocoPhillips drilling engineer, told the commission the company was particularly concerned about changes in cementing requirements, casing test pressures and automatic sunsetting for the commission’s orders.

Kanady said that in a sample Colville River unit well, the length requiring cement would be almost double. He said 500 feet of measured depth has provided good zonal protection and said he doesn’t know of a case where it hasn’t been sufficient.

He also cited potential technical risks from the vertical measurement cementing requirement.


The commission has proposed sunsets for all of its orders, including pool rules which govern pool operations.

Moriarty said sunsetting would create greater uncertainty and noted the commission already has the authority to alter orders.

In its written comments ConocoPhillips said it “strongly opposes” the sunset proposal, urging the commission “to refrain from adopting such an onerous rule without greater consultation with affected operators” and a public workshop to discuss the commission’s objective “and less burdensome alternatives to the current proposal.”

The company said it sees “a high risk of new and unnecessary problems” with automatic expiration.

The commission has proposed that conservation orders expire five years after adopted or when the operator changes for the property; enhanced recovery, area, storage and disposal injection orders would expire two years after adoption if operations have not begun or two years after the operations authorized by the order or five years from adoption if operations are ongoing or when the operator changes.

In its written comments AOGA said the commission needs to clarify whether the change would affect only new orders, and also said the commission already possess the authority to alter orders and said the automatic sunset would place a large administrative burden on operators.

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