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Commission sets date to resume Danco North Cook Inlet hearing Petitioners have access to Phillips seismic, subject to confidentiality agreements; hearing resumes on June 14 Kristen Nelson PNA Editor-in-Chief
The Alaska Oil and Gas Conservation Commission has set a June 14 date for resumption of the hearing on the Danco Inc. application for addition of tracts to the North Cook Inlet unit from which Phillips Alaska Inc. produces gas at the Tyonek platform in northern Cook Inlet.
Danco argues that gas production from the North Cook Inlet unit is coming also from two former oil and gas leases to the north, on which Danco held overriding royalty interests until those leases expired in 1996. The application to the commission was filed just before the leases expired, and the commission denied the application on the basis that anything it did at that point would be moot.
The Alaska Supreme Court disagreed. In May 2000, the court remanded the case to the commission for a hearing on the merits.
From the scheduling hearings held in April, the commission’s latest rulings and papers filed in the matter, it appears the parties have reached some agreement on what information Phillips will make available to experts testifying for Danco. Confidentiality agreements have been signed and Phillips has made seismic data available at its Anchorage offices. Getting data an issue Since Phillips is opposing Danco before the commission, and Phillips has collected most of the data available on the unit and surround area, data has been an issue. Phillips has made data available, some of which the company considers public, and some of which the company considers proprietary and for which it has required confidentiality agreements before the petitioners could have access.
The petitioners requested that the commission acquire and evaluate the data, arguing that the commission has the duty to protect the rights of adjacent owners, and therefore the duty to acquire and evaluate data.
C.R. Kennelly, attorney for the petitioners, told the commission April 5: “It is the applicants position the commission has a right to see and a duty to look at this evidence in determining the interests of applicant, and others under its statutory mandate.”
The commission refused “to take over the petitioners’ burden of developing and presenting their case.” It also refused to strike Phillips’ pre-filed testimony because it was based on seismic data to which the petitioners had not had access, but did require Phillips to disclose what relevant seismic data it possesses that had not been disclosed. Processing questioned Danco also questioned whether there was more than one set of processed seismic data; Phillips said that for the 3-D seismic shot over the area, there is raw data or processed data, but only one product.
Phillips told the commission that the seismic to which Danco has access is a subset of the same data set Phillips is using. The seismic available to Danco is truncated at the edges of the unit and the former leases in question, and extends down only through the gas-producing zones.
Phillips said the 1993 processing was done by ARCO Alaska Inc., but ARCO’s partner Phillips Petroleum quality checked the processing to make sure the shallow data over the Sterling and Beluga gas sands — which Phillips produces from the Tyonek platform — was not compromised, Phillips said.
Danco questioned the processing of the data, and Phillips said they would make the raw data available to a third party for reprocessing at Danco’s cost, with the final product having the same areal extent as what is available for Danco to view at Phillips now. Danco said budgetary and time constraints precluded having the raw data reprocessed.
The application was filed over gas, but the petitioners have sought to extend the hearing to include the deeper, oil zones, in the area, arguing that a unit includes all hydrocarbons, and have asked for seismic over the deeper, oil, zones, a request which Phillips has denied on the basis that the unit is not producing oil.
Phillips said the companies spent hundreds of millions of dollars on the deeper prospects in the North Cook Inlet area, and Phillips, which took over when ARCO dropped out, decided it was not economic to develop.
Phillips is charging the Danco litigation team for the technical assistance Phillips employees have provided with the seismic data, and for copying of other information, and will charge for use of interpretive software and for the use of a standalone workstation if Danco makes extensive use of the workstation and software. Hearing may be lengthy Once issues of access to seismic data had been resolved, the commission told the parties they could submit more pre-filed and rebuttal testimony, based on additional data now available, and asked the parties how much time they would need. Danco said it would require a couple of months just to evaluate the seismic data, but the commission noted Danco has complained about lack of speedy process and gave them until May 21 to complete their supplemental pre-filed testimony and exhibits.
Phillips will have until June 11 to respond and the hearing was set for June 14.
But after setting the June 14 date, the commission issued an order May 8, responding to a request by Phillips that since the hearing is likely to take longer than the two days allocated, it would be wise to secure additional hearing days to minimize scheduling conflicts later.
In addition to the June 14-15 dates set earlier, the commission has scheduled hearing times for the entire following week, should the parties require the time.
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