AOGCC cuts bonding for Alaskan Crude

Kristen Nelson

Petroleum News

Alaskan Crude Corp. challenged a decision by the Alaska Oil and Gas Conservation Commission requiring it to bond for three previously drilled wells at the commission's newly established rate of $400,000 per well for up to five wells.

The Alaska Superior Court agreed with the commission's decision, but the Alaska Supreme Court, in an April 5, 2023, decision, remanded the appeal back to Superior Court to be remanded back to the agency.

In a Feb. 6 decision, AOGCC said that under its regulations it "can decrease the presumptive bonding amount based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment."

The commission said Alaskan Crude submitted evidence that the Mike Pelch 1 well was on private land on the Kenai Peninsula. The company also submitted a plugging and abandonment estimate demonstrating the cost to P&A the well is less than $400,000. \

AOGCC said it reviewed the evidence and found "the engineering, geotechnical, environmental and location conditions warrant an adjustment of the bonding amount for the Mike Pelch 1 well to $200,000."

That is the amount of a bond held by Alaskan Crude.

As to the other two wells, Burglin 33-1 and Katalla KS-1, the commission said Alaskan Crude submitted information that due to a 1990 bankruptcy, which removed Alaskan Crude from control of its assets, including interests in the Burglin 33-1 and Katalla KS-1, and expiration of the leases while Alaskan Crude's assets were controlled by the bankruptcy trustee, followed by termination of the leases by the landowners, liquidation of Alaskan Crude's assets and discharge of its liabilities, "the entity that existed prior to the bankruptcy with the putative plugging and abandonment responsibilities no longer exists."

--KRISTEN NELSON