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Division approves 47th Nicolai Creek POD
Kristen Nelson Petroleum News
The Alaska Department of Natural Resources’ Division of Oil and Gas has approved the 47th plan of development for the Nicolai Creek unit submitted in September by Amaroq Resource LLC, the Nicolai Creek operator and 100% working interest owner.
Nicolai Creek is a small gas field on the west side of Cook Inlet.
The division approved the new POD, which covers Dec. 29, 2020, through Dec. 28, 2021, but is requiring a status report within 30 days before June 15 to update the division on the status of injection operations at the NCU No. 1B well and implications of Alaska Oil and Gas Conservation Commission “orders regarding bond relief, if any, to the future economic viability of the NCU.”
Amaroq intends to place the NCU No. 1B online as a saltwater disposal well, the division said, and possibly bring NCU No. 10 back online if the target injection capacity at NCU No. 1B is achieved.
During the 46th POD, Amaroq received AOGCC approval to convert the NCU No. 1B to injection, but further surface equipment was required, the division said.
In its September 47th POD submittal, Amaroq told the division that NCU No. 1B “was deemed ready for injection of produced water in mid-June. Installation of permanent surface injection facilities are in progress.” The company said the NBC No. 10 remains shut-in until the permanent water disposal facilities at NCU No. 1B are complete.
Bonding issue On the AOGCC bonding issue, Amaroq has appealed the commission’s $2.4 million bond requirement for plugging and abandonment of the six wells Amaroq operates at Nicolai Creek. The commission had not yet issued a decision on Amaroq’s appeal when this issue of Petroleum News went to press, but is holding a Nov. 4 hearing (see story in this issue) on proposed bonding changes which would reduce the requirement from $400,000 each for one to 10 wells ($2.4 million for Amaroq’s six wells) to $400,000 each for one to five wells, and for six to 20 wells, $2 million plus $250,000 for each well above five, bringing Amaroq’s total down by $150,000 to $2.25 million (see story on proposed bonding changes in Oct. 25 issue of Petroleum News).
In its September POD application, Amaroq said long-range plans for Nicolai Creek depend on the operator’s ability to attract additional capital but listed the first impact on its long-range plans as outcome of its motion to AOGCC for reconsideration.
“If the operator is required to post a $2.4 million bond with AOGCC pursuant to the newly established requirements,” Amaroq told the division, “the field immediately becomes uneconomic and is likely destined for cessation of operations.”
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