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State approves two CIE Redoubt requests
Cook Inlet Energy request included voluntary relinquishment of some acreage, request for delay of mandatory contraction of unit Kristen Nelson Petroleum News
The Alaska Division of Oil and Gas has approved requests from Cook Inlet Energy, a Glacier Oil & Gas Corp. company, for voluntary relinquishment of some acreage within the Redoubt unit a request the division said also included a request for a one-year delay in mandatory unit contraction.
The Feb. 24 decision, signed by division Director Tom Stokes, said the division is deferring the automatic contraction and approving the voluntary relinquishment.
Last May, the division said, Cook Inlet Energy applied for and was granted suspension of operations and production until April 30, 2021. This followed approval, earlier in May, of a plan of development which included near- and long-term plans for the unit.
Subsequent to the approval of the suspension of operations, CIE notified the division that it had converted the Redoubt unit and its infrastructure from warm shutdown to cold shutdown, effective Sept. 29. In its most recent report on the suspension of operation, CIE told the division the Redoubt unit is “entirely shut-in, powered down, unmanned, and subject only to minimum monthly integrity inspections.”
Unless extended by the division, the suspension of operations ends April 30.
Division decision In its application CIE told the division it did not want to defer mandatory contraction - a requirement 10 years after sustained production begins - but did request retention of acreage outside the Hemlock participating area and “areas currently facilitating production, the area to which it would regulatorily be required to contract.”
The division said the director has discretion to delay contraction under the regulations after consideration of environmental costs and benefits, geological and engineering characteristics of the reservoir or potential hydrocarbon accumulations, prior exploration in the unit area, applicant’s plans for exploration or development, economic costs and benefits to the state and any other relevant factor.
The voluntary relinquishment protects the public interest, the division said, “by contracting acreage from the RU and making it available for competitive lease.”
The decision also “promotes conservation by allowing CIE to retain RU acreage that can be explored and produced from the existing Osprey platform infrastructure, requiring no new facilities to development the resource,” thus protecting interests of both the state and CIU “by allowing reasonable additional time to explore and produced from that acreage.”
The division retains the authority to require further contraction if the acreage remains unexplored and said it “strongly encourages CIE to proceed with pragmatic expediency vis-à-vis its long-range plans to evaluate the oil and gas potential of the areas identified as having production potential.”
The approvals are subject to CIE submitting a lease action request to sever and terminate the relinquished acreage.
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