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Home My WebLink AboutO 205Other Order 205 Docket Number: OTH-23-025 1. September 7, 2023 Hilcorp waiver request for propane requirements 2. September 19, 2023 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Hilcorp North Slope, LLC for a waiver of the requirements of 20 AAC 25.228(a) which requires custody transfer metering of production before it is severed from the unit to allow vehicles fueled with propane from the Prudhoe Bay Unit (PBU) to be able to leave the unit boundaries for operations supporting PBU ) ) ) ) ) ) ) ) Docket Number: OTH-23-025 Other Order 205 Hilcorp North Slope, LLC Custody Transfer Metering Waiver Request December 19, 2023 IT APPEARING THAT: 1. By letter dated September 7, 2023, Hilcorp North Slope, LLC (Hilcorp) as the operator of the Prudhoe Bay Unit (PBU) requested that the Alaska Oil and Gas Conservation Commission (AOGCC) waive the requirement of 20 AAC 25.228(a) which requires custody transfer metering of production before it is severed from the unit to allow vehicles fueled with propane generated in the PBU to leave the unit for PBU related purposes. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for November 14, 2023. On September 19, 2023, the AOGCC published notice of that hearing on the State of Alaska’s Online Public Notice website, the AOGCC’s website and electronically transmitted the notice to all persons on the AOGCC’s email distribution list. On September 20, 2023, the notice was published in the Anchorage Daily News. 3. The AOGCC did not receive any public comments or protests. 4. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. 5. The tentatively scheduled hearing was vacated and the period for public comment ended on October 26, 2023. FINDINGS: 1. Hilcorp is the operator of the PBU. 2. The Central Gas Facility (CGF) in the PBU, among other things, creates propane for use within the PBU and for eventual commercial sales. 3. The PBU currently has about 30 vehicles equipped to run on unleaded gasoline or propane and Hilcorp plans to, subject to approval from the other PBU working interest owners, keep adding to this number for PBU owned vehicles. 4. Operators are allowed to use production for lease purposes without this being considered a sale, on which royalties and taxes would be collected, provided the activity occurs on the unit. 5. Some common examples of on lease uses that are allowable and thus not subject to payment of royalties and taxes include: a. Fueling generators to create electricity, b. Heating buildings, and Other Order 205 December 19, 2023 Page 2 of 3 c. Fueling pumps and compressors used to ship products. 6. Using propane generated in the unit to fuel vehicles used in the unit would fall into this same category of allowable uses that aren’t considered sales. 7. As opposed to the stationary uses in Finding 5, propane fueled vehicles can, by their very nature, move on their own and thus potentially drive out of the unit which would lead to severing the propane from the unit. 8. Since 20 AAC 25.228(a) requires custody transfer quality metering of production prior to production being severed from the unit, without a waiver propane fueled vehicles would be restricted to in unit use only unless the propane is measured by custody transfer quality meters prior to fueling the vehicles. 9. Meters used to measure products that are not going to be sold do not have to be built and operated to the same stringent requirements as a custody transfer meter. 10. Hilcorp is planning to install a custody transfer quality meter at the CGF that will be used for future commercial sales of propane, but it is not planned to be used for fueling PBU owned propane fueled vehicles. 11. Some reasons why a PBU owned vehicle may need to leave the unit boundaries in order to perform unit related activities include: a. PBU personnel driving to another unit in order to borrow or purchase a tool needed in the PBU, b. PBU personnel responding to emergencies elsewhere on the North Slope as part of mutual aid support, and c. PBU personnel assisting governmental and regulatory agencies with transportation across the North Slope. 12. Fueling a propane powered vehicle with propane that has gone through a sales quality meter would eliminate the need for a waiver but this is an impractical solution because there would not be a reasonable way of determining how much of that fuel was used off lease and thus would be required to be sold and have royalties and taxes paid versus how much was on lease and wouldn’t be subject to paying royalties and taxes. CONCLUSIONS: 1. Using propane to fuel unit owned vehicles conducting work in the unit is allowable and not subject to the payment of royalties and taxes. 2. There are legitimate reasons that a unit vehicle would have to leave the unit in order to perform unit related work. 3. Granting a waiver to 20 AAC 25.228(a) is appropriate in this situation. NOW THEREFORE IT IS ORDERED THAT: The requirement to measure production before it is severed from the unit is waived for propane fueled vehicles owned by the PBU to allow such vehicles to leave the PBU boundaries for purposes related to PBU operations without the requirement to first provide custody transfer quality metering of the propane. Other Order 205 December 19, 2023 Page 3 of 3 DONE at Anchorage, Alaska and dated December 19, 2023. Brett W. Huber, Sr Jessie L. Chmielowski Gregory C. Wilson Chair, Commissioner Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2023.12.19 09:03:21 -09'00' Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2023.12.19 10:31:50 -09'00' Gregory Wilson Digitally signed by Gregory Wilson Date: 2023.12.19 12:51:03 -09'00' From:Christianson, Grace K (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 205 (PBU) Date:Wednesday, December 20, 2023 2:44:45 PM Attachments:other 205.pdf Request by Hilcorp North Slope, LLC for a waiver of the requirements of 20 AAC 25.228(a) which requires custody transfer metering of production before it is severed from the unit to allow vehicles fueled with propane from the Prudhoe Bay Unit (PBU) to be able to leave the unit boundaries for operations supporting PBU Best, Grace Christianson Executive Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 907-793-1230 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska, and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use, or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it without first saving or forwarding it, and so that the AOGCC is aware of the mistake in sending it to you, contact Grace Christianson at (907-793-1230 ) or (grace.christianson@alaska.gov). __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.carlisle@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.carlisle%40alaska.gov 2 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-23-025 Hilcorp North Slope, LLC (Hilcorp), by letter dated September 7, 2023, filed an application to the Alaska Oil and Gas Conservation Commission (AOGCC) for a waiver of certain provisions of 20 AAC 25.228(a), the Alaska Oil and Gas Conservation Commission’s (AOGGC) regulations that pertain to sales metering of oil and gas for propane fueled vehicles at the Prudhoe Bay Unit (PBU). AOGCC regulations allow produced gas to be used on a property for development-related purposes but require that gas that is severed from a property be measured through a sales quality meter before being severed. Utilizing propane produced in the PBU as a fuel source for vehicles used on the unit for field operations is an allowable use of the gas produced from the unit. However, when a vehicle fueled with propane physically leaves the unit boundaries, that gas is severed from the unit and by regulations is required to be metered through a sales meter. Hilcorp has applied for a waiver of part of this regulation to allow for vehicles fueled with propane to leave the unit for unit operations-related purposes (such as to pick up a part from a different field and take it back for use in the PBU) without metering the propane. Since this would constitute a waiver of the AOGCC’s regulations, scheduling hearing in accordance with 20 AAC 25.540 is required. This notice does not contain all the information filed by Hilcorp. To obtain more information, contact the AOGCC’s Special Assistant, Samantha Carlisle, at (907) 793-1223 or samantha.carlisle@alaska.gov. A public hearing on the matter has been tentatively scheduled for November 14, 2023, at 10:00 a.m. The hearing, which may be changed to full virtual, if necessary, will be held in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. The audio call-in information is (907) 202-7104 Conference ID: 262 638 713#. Anyone who wishes to participate remotely using MS Teams video conference should contact Ms. Carlisle at least two business days before the scheduled public hearing to request an invitation for the MS Teams. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on October 17, 2023. If a request for a hearing is not timely filed, the AOGCC may issue an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1223 after October 19, 2023. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 west 7th Avenue, Anchorage, AK 99501 or samantha.carlisle@alaska.gov. Comments must be received no later than 4:30 p.m. on October 26, 2023, except that, if a hearing is held, comments must be received no later than the conclusion of the November 14, 2023, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact Samantha Carlisle, at (907) 793-1223, no later than November 7, 2023. Jessie L. Chmielowski Commissioner Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2023.09.19 09:59:43 -08'00' Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the afore- said place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on AFFIDAVIT OF PUBLICATION ______________________________________ Notary Public in and for The State of Alaska. Third Division Anchorage, Alaska MY COMMISSION EXPIRES ______________________________________ 09/20/2023 and that such newspaper was regularly distrib- uted to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed________________________________ Subscribed and sworn to before me this 25th day of September 2023. Account #: 100869 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501 Order #: W0040731 Cost: $351.8 Notice of Public HearingSTATE OF ALASKAALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-23-025 Hilcorp North Slope, LLC (Hilcorp), by letter dated September 7, 2023, filed an application to the Alaska Oil and Gas Conservation Commission (AOGCC) for a waiver of certain provisions of 20 AAC 25.228(a), the Alaska Oil and Gas Conservation Commission’s (AOGGC) regulations that pertain to sales metering of oil and gas for propane fueled vehicles at the Prudhoe Bay Unit (PBU). AOGCC regulations allow produced gas to be used on a property for development-related purposes but require that gas that is severed from a property be measured through a sales quality meter before being severed. Utilizing propane produced in the PBU as a fuel source for vehicles used on the unit for field operations is an allowable use of the gas produced from the unit. However, when a vehicle fueled with propane physically leaves the unit boundaries, that gas is severed from the unit and by regulations is required to be metered through a sales meter. Hilcorp has applied for a waiver of part of this regulation to allow for vehicles fueled with propane to leave the unit for unit operations-related purposes (such as to pick up a part from a different field and take it back for use in the PBU) without metering the propane. Since this would constitute a waiver of the AOGCC’s regulations, scheduling hearing in accordance with 20 AAC 25.540 is required. This notice does not contain all the information filed by Hilcorp. To obtain more information, contact the AOGCC’s Special Assistant, Samantha Carlisle, at (907) 793-1223 or samantha.carlisle@alaska. gov. A public hearing on the matter has been tentatively scheduled for November 14, 2023, at 10:00 a.m. The hearing, which may be changed to full virtual, if necessary, will be held in the AOGCC hearing room located at 333 West 7th Avenue, Anchorage, AK 99501. The audio call-in information is (907) 202-7104 Conference ID: 262 638 713#. Anyone who wishes to participate remotely using MS Teams video conference should contact Ms. Carlisle at least two business days before the scheduled public hearing to request an invitation for the MS Teams. To request that the tentatively scheduled hearing be held, a written request must be filed with the AOGCC no later than 4:30 p.m. on October 17, 2023. If a request for a hearing is not timely filed, the AOGCC may issue an order without a hearing. To learn if the AOGCC will hold the hearing, call (907) 793-1223 after October 19, 2023. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 west 7th Avenue, Anchorage, AK 99501 or samantha.carlisle@alaska.gov. Comments must be received no later than 4:30 p.m. on October 26, 2023, except that, if a hearing is held, comments must be received no later than the conclusion of the November 14, 2023, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact Samantha Carlisle, at (907) 793-1223, no later than November 7, 2023. Jessie L. Chmielowski Commissioner Pub: Sept. 20, 2023 STATE OF ALASKA THIRD JUDICIAL DISTRICT 2026-08-04 Document Ref: UT86Y-2TSBE-YRXQB-DB6Y5 Page 30 of 34 From:Carlisle, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] OTH-23-025 Public Hearing Notice, PBU propane metering Date:Tuesday, September 19, 2023 10:18:53 AM Attachments:OTH-23-025 Public Hearing Notice, PBU propane metering.pdf Docket Number: OTH-23-025 Hilcorp North Slope, LLC (Hilcorp), by letter dated September 7, 2023, filed an application to the Alaska Oil and Gas Conservation Commission (AOGCC) for a waiver of certain provisions of 20 AAC 25.228(a), the Alaska Oil and Gas Conservation Commission’s (AOGGC) regulations that pertain to sales metering of oil and gas for propane fueled vehicles at the Prudhoe Bay Unit (PBU). Samantha Carlisle Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.carlisle@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.carlisle%40alaska.gov 1 North Slope, LLC 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone: 907/777-8386 Fax: 907/777-8301 kyndall.carey@hilcorp.com September 7, 2023 Brett Huber, Sr., Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 RE: 20 AAC 25.228(a) Waiver Request for PBU Use of PBU Propane Outside of the PBU Lease Boundary Dear Chair Huber: Hilcorp North Slope, LLC (“Hilcorp North Slope”), as the operator of the Prudhoe Bay Unit (“PBU”), requests that the Alaska Oil and Gas Conservation Commission (“AOGCC”) waive requirements under 20 AAC 25.228(a) regarding the use of Prudhoe Bay Unit propane as a fuel in vehicles supporting PBU operations. Enclosed in this waiver request is supporting information. If you need additional information, please contact me at (907) 777-8386. Sincerely, Kyndall Carey Land Tech Hilcorp North Slope, LLC By Samantha Carlisle at 7:51 am, Sep 08, 2023 Digitally signed by Kyndall Carey (3936) DN: cn=Kyndall Carey (3936) Date: 2023.09.07 09:25:44 - 08'00' Kyndall Carey (3936) 20 AAC 25.228(a) Waiver Request for PBU Use of PBU Propane Outside of the PBU Lease Boundary September 7, 2023 2 Supporting Information Hilcorp North Slope is actively modifying PBU owned vehicles to operate on dual fuels. The primary fuel source is propane, and the secondary fuel source is unleaded gasoline. The propane being used as fuel is produced at the PBU Central Gas Facility ("CGF") and produces fewer emissions including reduced GHG emissions than a gasoline fuel. All unleaded gasoline being used within the PBU is imported. Hilcorp North Slope currently has approximately 30 vehicles operating on both propane and unleaded gasoline. Subject to PBU Working Interest Owner alignment, Hilcorp North Slope plans to continually install dual fuel conversion kits on PBU owned vehicles. Part of Alaska state regulation 20 AAC 25.228(a) for production measurement equipment for custody transfer states that "[h]ydrocarbon production must be measured in accordance with [20 AAC 25.228] before severance from the property or unit where produced." Hilcorp North Slope is in the process of installing a sales quality meter at the CGF in compliance with all applicable regulations. When the PBU begins to sell CGF produced propane to third parties, effectively severing certain volumes of propane from the PBU, all PBU CGF produced propane will flow through the sales quality meter. The propane being used in support of PBU lease operations is not accounted for as a sale. A non-exhaustive list of examples where PBU CGF propane powered vehicles may leave the PBU while conducing PBU business is below. 1. PBU personnel drive to another operator's asset to borrow or purchase a tool to be used in the PBU operation (e.g., Kuparuk River Unit, Milne Point Unit, etc.). 2. PBU personnel respond to emergencies on the haul road, other operator's assets or to North Slope residents with mutual aid support. 3. PBU personnel assist governmental and regulatory agencies with transportation across the North Slope of Alaska. In accordance with Alaska state regulation 20 AAC 25.228(j), Hilcorp North Slope requests AOGCC approval to waive the requirements of 20 AAC 25.228(a) for the specific use of CGF propane as a fuel in vehicles supporting PBU operations.