CINGSA latest to ask for bond reduction

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has denied another request for bond reduction based on the existence of a dismantlement, removal and restoration bond with the Alaska Department of Natural Resources.

The latest petition for a reduction in bonding amount came in October from Cook Inlet Natural Gas Storage Alaska, CINGSA.

CINGSA has five permitted wellheads at its Kenai Peninsula gas storage facility.

The commission notified CINGSA in July 2019 that based on its five wellheads, its bonding requirement would increase to $2 million under AOGCC’s new bonding regulations. CINGSA had a $200,000 bond in place, so the commission required an additional $1.8 million.

In its request for reconsideration of its bond amount, CINGSA said it has increased its $200,000 bond: in 2019, to $700,000; in July of this year, to $1 million; and in August of this year, to $1.2 million.

CINGSA proposes to increase its bond to $1.5 million in August 2022, “at which point, provided this request for reconsideration is granted, it will have fulfilled its AOGCC-related bonding requirements,” the company said.

In a Nov. 30 decision the commission denied the request for reconsideration, saying that the $500,000 DR&R bond with DNR is a bond to return DNR’s leases to a condition acceptable to that agency.

“As of the date of this order, no evidence has been offered that any of the DNR bond is exclusively dedicated to the costs to properly plug and abandon CINGSA’s wells. CINGSA’s bonding amounts will not be reduced by the amount of the DNR DR&R bond.”

The commission acknowledged that CINGS currently has bonding with AOGCC at $1.2 million and said “CINGSA’s revised bond required an additional $800,000.”

- KRISTEN NELSON