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Home My WebLink AboutO 206Other Order 206 Docket Number: OTH-20-003 1. April 5, 2023 Supreme Court MOJ 2. May 1, 2023 Order remanding case to agency 3. June 2, 2023 AOGCC letter to ACC re: Remand from Superior Court 4. December 7, 2023 ACC letter to AOGCC re: Remand from Superior Court STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Reconsideration request by Alaskan Crude Corporation for reduction in the bonding amount required under regulation 20 AAC 25.025. ) ) ) ) ) ) ) ) Docket Number: OTH-20-003 Other Order 206 Alaskan Crude Corporation Bond Reduction Request February 6, 2024 DECISION AND ORDER This matter was remanded to the Alaska Oil and Gas Conservation Commission (AOGCC) by the Superior Court to reconsider Alaskan Crude Corporation’s (ACC) bond reduction request. By letter dated December 7, 2023, ACC submitted additional information that it qualifies for a reduced bonding amount pursuant 20 AAC 25.025(b)(3) and that the well count for determining the appropriate bond should be one well (Mike Pelch 1). FINDINGS: Based upon the evidence presented by ACC, AOGCC finds as follows: 1. Under 20 AAC 25.025(b)(1), the presumptive bonding amount is $400,000 per well for the first five wells an operator is responsible for. 2. Under 20 AAC 25.025(b)(3)(A), the AOGCC can decrease the presumptive bonding amount based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment. 3. ACC submitted evidence that the Mike Pelch 1 well is located on privately owned land in the Kenai Peninsula, and a plugging and abandonment estimate that demonstrates that the cost to plug and abandon this well is less than the presumptive $400,000 bonding amount. 4. The AOGCC has reviewed this evidence and finds the engineering, geotechnical, environmental and location conditions warrant an adjustment of the bonding amount for the Mike Pelch 1 well to $200,000. 5. ACC also submitted information that ACC should not be the responsible operator of record for the Burglin 33-1 and Katalla KS-1 wells due to a 1990 bankruptcy of ACC which (1) removed it from any control of its assets (including its interests in the Burglin 33-1 and Katalla KS-1 wells), (2) the leases expired while ACC was not in control over its former assets and they were controlled by the bankruptcy trustee, (3) the leases were subsequently terminated by the landowners, (4) ACC’s assets were liquidated and liabilities discharged, and (5) the entity that existed prior to the bankruptcy with the putative plugging and abandonment responsibility no longer exists. 6. The AOGCC finds that while ACC nominally remained the operator of record in AOGCC’s files as responsible to plug and abandon the Burglin 33-1 and Katalla KS-1 wells, this responsibility was necessarily extinguished by the 1990 bankruptcy which removed these wells from ACC control, necessarily prevented it from plugging and abandoning the wells prior to lease expiration due to the assets being in control of the bankruptcy trustee, and Other Order: 206 February 6, 2024 Page 2 of 2 ultimately any future liability to plug and abandon the wells was necessarily discharged by the bankruptcy. 7. The effect of the 1990 bankruptcy removes the Burglin 33-1 and Katalla KS-1 wells from the current ACC well count used to determine its bonding obligations to the AOGCC. CONCLUSIONS: The evidence submitted regarding the plugging and abandoning costs of the Mike Pelch 1 well warrants an adjustment of the bonding amount to $200,000. Removing the Burglin 33-1 and Katalla KS-1 wells reduces ACC’s well count for determining bonding obligations with the AOGCC from three to one well. NOW THEREFORE IT IS ORDERED THAT: ACC’s request for reconsideration is granted and its bonding obligation with the AOGCC is set at $200,000. ACC has previously posted a $200,000 bond, so no further bond is required at this time. DONE at Anchorage, Alaska and dated February 6, 2024. Brett W. Huber, Sr Jessie L. Chmielowski Chair, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE This order on reconsideration is the FINAL order of the AOGCC. It may be appealed to superior court. Any appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes this order. 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: 2024.02.06 09:12:45 -09'00' Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2024.02.06 10:17:23 -09'00' From:Carlisle, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 206 (ACC) Date:Tuesday, February 6, 2024 10:23:32 AM Attachments:other 206.pdf Reconsideration request by Alaskan Crude Corporation for reduction in the bonding amount required under regulation 20 AAC 25.025. 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 4 Law offices of JAMES B. GOTTSTEIN 406 G STREET, SUITE 206 ANCHORAGE, ALASKA 99501 (907) 274-7686 TELECOPIER (907) 274-9493 December 7, 2023 Brent W. Huber, Sr. via e-mail Chair, Commissioner Alaska Oil and Gas Conservation Commission Re: Docket Number: OTH-20-003 Remand from Superior Court Reconsideration of bonding amount Dear Chair, Commissioner Huber: This is on behalf of Alaskan Crude Corporation with respect to the above referenced re-opened docket. I am writing because there may be a way to resolve this without relitigating whether 20 AAC 25.025 is improperly retroactive, or whether it has even triggered an increased bond requirement because Alaskan Crude Corporation qualifies for a decreased bonding amount pursuant 20 AAC 25.025(b)(3). More specifically, 20 AAC 25.025(b)(3)(A) & (B) provide, upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that (A) engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of one or more wells is in place with each landowner; The subsection (A) language was included in the regulation at the time Alaskan Crude submitted its request for reconsideration, while subsection (B) has been added since. Attached as Exhibit 1, are March 8, 2018, Memos to the Alaska Oil and Gas Conservation Commission (Commission) in which Jim W. White, the former president of Alaskan Crude Corporation, estimated the costs of plugging and abandoning the three wells in question to be $182,000 as follows. Burglin 33‐1 67,000$ Mike Pelch 1 64,000$ Katalla KS‐01 51,000$ Total 182,000$ AOGCC December 7, 2023 Page 2 Exhibits 2-6 document a $100,000 bond that satisfies 20 AAC 25.025(c)(3)(B), bringing the total amount of bonding to $300,000, $100,000 of which is dedicated to the Burglin 33-1 well. More specifically.  Exibit 2 is the April 5, 1988, Investment Certificate No. 1290303500 from First Interstate Bank (now Northrim Bank) payable to the State of Alaska in trust for Intrepid Production Company (Intrepid CD).  Exhibit 3 is the May 12, 2008, Single Lease Operation Oil and Gas Bond.  Exhibit 4 is the May 14, 2008, authorization by Intrepid for the Intrepid CD to serve as the performance guarantee of Alaskan Crude Corporation with respect to the Burglin 33-1 well.  Exhibit 5 is the May 15, 2008, acceptance by the Alaska Department of Natural Resources Division of Oil & Gas of the Single Lease Oil and Gas Performance Guarantee.  Exhibit 6 is the most recent quarterly interest statement for the Intrepid CD, showing it is still in place. Should the Commision not lower the required bond amount to no more than the $300,00 currently in place for the three wells, including the $100,000 Intrepid CD dedicated for plugging and abandoning the Burglin 33-1 well, I would like at least 90 days notice for filing a pre-hearing brief. I don't think testimony is likely to be reqired at such a hearing, but the Commission may find oral argument helpful. I am not living in Alaska now and not traveling because of health reasons. Therefore, if any hearing is calendared I reluctantly request I be allowed to participate remotely. Sincerely, James B. Gottstein cc: James A. White Patrick Sherry To: Alaska Oil & Gas Conservation Commission Date: March 8, 2018 From: Subject: Jim W, White, President Alaska Crude Corporation Berglin 33-1 Abandonment Cost Estimate PTO 184-059 API 50-029-21106-00 As requested, please find a summary of e stimated costs of abandonment of the subject well. Total costs are estimated to be $67 ,000. Berglin 33-1 is located is located on the North Slope. The well is three miles west of the Haul road with no dedicated road to the well s ite. Per the attached wellbore diagram, all tested zones have been properly plugged . The wel1 entered suspended status in 1985 . The only work that remains for full P&A requirements is replacement of 2200' diesel with kill weight brine of sufficient freezing point depression across the permafrost, installing a 150' cement plug at surface, removal of the wellhead and welding the abandonment plate. Abandonment operations will be executed with equipment owned by Alaska Crude Corp. Labor will be provided by the equity owners. Therefore costs associated with labor and equipment rental are relatively low. Abandonment would be done during summer months . • 20" conductor to 110' • 13-3/8" 72# N-80 12.347" ID surface to 2479' md • 9-5/8" 47# N-80 8.681 " ID surface to 8968' md • 7" 29# N-80 6.184" ID liner 8671 '-9453' md • No tubing • 2200' diesel top of well • Isolated perforations 9300'-9344', 6995'-7045 ', 6336'-6595', 4305 '-4345' • Open perforations in the inner annulus (2-7 /8" x 9-5/8") at 5500' -5520', 8.4 ppg EMW water • Wellbore volume to 2200' of 9-5/8" 161 bbls Proposed Abandonment Operations: Operation Costs ($1000) a. Rolligon loads from Deadhorse to Well site (3 miles) $10 b. Purchase 2200' 10 ppg brine (161 bbls) $2 c. RIH with small diameter, light weight pipe. $1 d. Circulate brine into well at slow rate, taking returns from casing valve. e. Capture returned diesel for rolligon back to Deadhorse $10 f. ND tree g. Punch circulation holes in 9-5/8" at 150', md circulate 13-3/8" to brine $5 h. RIH to 150', cement 9-5/8" and 13-3/8" to surface with Arctic Set 122 sacks $3 I. woe, cut off wellhead, perform top job if necessary $1 j . Weld abandonment plate w/ appropriate info $2 Exhibit 1, Page 1 of 11 k. Rolligon all equipment back t o Deadhorse $10 I. Diesel Fuel for equipment $3 m. Equipment rental $10 n. Miscell aneou s ex pe nses/contingency $10 Total es timated cost $67K In 1986, the Alaska superior court ordered that this well be placed in suspended status. When the lease on the Burglin well expired in 1990 the lessee and its operator Alaskan Crude delivered up the leased area and suspended well in good condition . The State of Alaska then put this land and suspended well up for bid multiple times , and sold the oil and gas lease to b idders that paid the State of Alaska a premium price specifically because it had a suspended well located on it. The present owners of this suspended well are the current lessee and the state of Alaska . The decision and financial responsibility to develop this well , leave it in suspended status, or plug and abandon it rests solely with the State of Alaska and the current lessee , not Alaskan Crude. Exhibit 1, Page 2 of 11 RKB 92'MSL Burglin 33-1 API 50-029-21106 20" Condudor 110'; 13-318" 72# N-80 BTC 2479' 4 Cemenled to wrtaou DV Stage Coaar 7151'1 9-518" 4 7# N-80 BTC 8968' A J.tO 111 15.5 Cass G Diesel to 2200' 10C4204' Cement Plug 2441'-2529' l Balanced Plug m~~~ Perts 4305'-4345', 40' Total TOC61116' TOC6883' TOC91&8' Cement Retainer 6307' Perfs 6336'-6595', 96' Total Cement Retainer 6956' Pelfs 6995' -7045', 50' Total ~ TOL8671'md Cement Retainer 9292' Well suspended March 17, 1985. FuU X-mas tree installed. Exhibit 1, Page 3 of 11 To: From: Subject: Alaska Oil & Gas Conservation Commission Jim W. White, President Alaska Crude Corporation Katalla KS-1 Abandonment Cost Estimate PTD 185-124 API #50-069-20002-00 Date: March 8, 2018 As requested, please find a summary of estimated costs of abandonment of the subject well. Total costs are estimated to be $51 ,000. The Katalla KS-I well is located 2414' WEL, 1865' SNL, Sec. 36. Tl9S, R5E, CRM. Abandonment operations will be executed with equipment owned by Alaska Crude Corp. Labor will be provided by the equity owners. Therefore costs associated with labor and equi pment rental are relatively low. • 9-5/8" 36# N-80 conductor to 76' md • 7" 23# K-55 surface casing to 351' md • 4-1/2" 11.6# K-55 slotted liner 21 '-1804' md • 2-3/8" 4 .6# N-80 tubing to 1740' md • No packer • Original drilled TD 1838' • Water gradient • Wellbore volume to TD (tubing/liner/casing/6-1/8" OH) 61 bbls Proposed Abandonment Operations: Operation Costs ($1000) a. Load necessary equipment to location $15 b . Bullhead kill the well with water, down tubing and annulus. 2X WB vol. $1 c . Mix/pump 300 sacks 15 .8 ppg cement down tubing taking returns up backside. $6 d. Pump until cement returns to surface e. woe, cut off wellhead, perform top job if necessary $2 f. Weld abandonment plate w/ appropriate info $1 g. Diesel Fuel for equipment $1 h. Equipment rental $5 I. Contingency $5 j. Remove equipment from location $15 Total estimated cost $51K Please note, Bill Stevens, the current lessee on this Katalla well , informed me that he had met with the AOGCC on March 1 and has indicated he does not want this well to be plugged and abandoned. He definitely did not want the Katalla well Exhibit 1, Page 4 of 11 P&A'd because the well is capable of producing in paying quantities . He indicated there was some question as to whether he was going to replace Alaskan Crude as operator. Note that this well is also physically located on privately owned property. Exhibit 1, Page 5 of 11 To: Alaska Oil & Gas Conservation Commission Date: March 8, 2018 From: Subject: Jim W. White, President Alaska Crude Corporation Mike Pelch #1 Abandonment Cost Estimate PTD 186-007 API #50-133-20333-00 As requested, please find a summary of estimated costs of abandonment of the subject well. Total costs are estimated to be $64,000. Mike Pelch #1 (formally the Union Oil Cannery Loop #2) is located 1481 feet from the north line (FNL) and 863 feet from the east line (FEL) of Section 2, T5N, R 11 W, Seward Meridian. The well site is located on private property. Abandonment operations will be executed with a rig/BOPE/pipe and other equipment owned by Alaska Crude Corp. Labor will be provided by the equity owners, one of which will have a current Well Control certification. Therefore costs associated with labor and equipment rental are relatively low. • 20" 94# H-40 conductor to 93' md • 13 -3/8" 61# K-55 12.515" ID surface to 2612' md • 9-5/8" 47# N-80 8.681" ID surface to 8100' md • 7" 29# N-80 6.184" ID liner 7691'-10730' md • 2-7/8" 6.4# N-80 2.441" ID tubing 9030' md • Retrievable production packer 9000' md • Fill/plug-back depth 9990' md • Open perforations 9256' -931 O' md, 9.4 ppg EMW reservoir pressure, gas zone • Open perforations in the inner annulus (2-7 /8" x 9-5/8") at 5500' -5520', 8.4 ppg EMW water • Wellbore volume to bottom perfs (w/o tubing, volume of 9-5/8" and 7") 625 bbls Proposed Abandonment Operations: Operation Costs ($1000) a. Rig already on location b. Purchase 2X wellbore volume 10 ppg KWF $15 c. Pull BPV (third party) $1 d. Fill annulus and tubing with KWF e. Install TWC, ND tree, NU BOPE, test, pull TWC $1 f. PU landing joint, unseat retrievable packer, kill well g. Pull and rack back 2-7/8" tubing, pump KWF down backside h. LD packer, RIH with tubing as work string, tag TD i. Mix/pump 195 sacks 15.8 ppg cmt 9990'-9156' (100' above perfs) $4 j. Pull up hole to safety, WOC, RIH weight test plug k. PUH, lay in cmt 5620 '-5400', I 00' above/below perfs, 98 sacks 15.8 ppg $2 Exhibit 1, Page 6 of 11 I. Pull up hole to safety, WOe, Rlli weight test plug m . PUH, lay in cement 2712'-2512', 100' above/below 13 -3/8" shoe 98 sacks 15.8 ppg $2 n. Pull up hole to safety, woe, Rlli weight test plug. POOH o. Punch circulation holes in 9-5/8" at 150', md circul ate 13 -3/8" to KWF $5 p. Rlli to 150', circulate 15.8 ppg cement in 9-5/8" and 13-3/8" annulus 122 sacks $3 q. woe, ND BOPE, cut off wellhead, perform top job if necessary $2 r. Weld abandonment plate w/ appropriate info $1 s. Fill cellar with gravel t. Diesel Fuel for equipment $3 u. Equipment rental $15 v. Miscellaneous expenses/contingency $10 Total estimated cost $64K Please note that the Pelch well is located on privately-owned property that I own. I also own a significant portion of any gas that can be produced from thi s well. For as long as this well is capable of delivering valuable product, I have no intent to plug and abandon this well. By ~o stretch of the imagination is this well stranded or orphaned. Pursuant to AOGCC orders 254 and 277, and Judge Hopwood 's 1990 court order all issued in 1990, establishing a 640 acre production unit for this well, the AOGCC forbids any production from this well until everyone owning correlative rights to the gas from this well have had their interest voluntarily or involuntarily integrated by the AOGCC. To this day the AOGCC has yet to integrate the interests of all the mineral interest owners owning any gas that can be produced from of this well. Only when the AOGCC has duly integrated all interests pursuant AS 31.05.100 (c), will we have the authority to produce the Pelch well. In May of 2013, Mr. Jim Regg, the Supervisor of Petroleum Inspections at the AOGCC , personally corresponded with me, and duly witnessed Cameron valve company install the back pressure valve in the 2-7 /8" tubing on this shut-in Pelch gas well and confirmed the repair of a small leak from a glandular bolt that s imply needed to be tightened. This well is regularly closely physically monitored and supervised. Thi s well is also continuously monitored electronically and instantly transmits the annulus pressure. Additionally we have remote cameras reporting any movement at the well site. The adjacent land and mineral interest owners to this well are entitled to their share of production from this well. They are also entitled to receive gas for free for all of their home and barn heating needs. They are of course responsible for providing their pipe to the wellhead. Competition for selling gas to markets in Alaska is extremely limited. It is a very small market and competition is extreme. One cannot simply open the valve and begin selling and delivering gas. One has to have a customer. Could you please send us the regulation that is being relied upon for this request to provide this plugging and abandonment cost estimate? Exhibit 1, Page 7 of 11 Coaombie, Jody J (DOA) Fr ' -~: Schwartz, Guy L (DOA) Sl. To: Thursday, March 08, 2018 4 :10 PM Colombie, Jody J (DOA) Cc: Davies, Stephen F (DOA) Subject: Attachments: FW: Long term shut-in and suspended wells -Alaska Crude Corporation (ACC) Pelch P&A Estimate.pdf; Katalla KS -1 PA Estimate.pdf; Berglin 33-1 PA Estimate.pdf Jody, Can you put this and the attachments in the Operator folder. Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793-1226 office 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 Guy Schwartz at {907-793-1226) or (Guy.schwartz@alaska .gov). "riginal Message----- h .: Jim White, P.E . [mailto:jim@applecapital.net] Sent: Thursday, March 08, 2018 4 :00 PM To: Schwartz, Guy L {DOA) <guy .schwartz@alaska.gov> Cc: 'Jim White' <jim4thgn@gmail.com> Subject : FW : Long term shut-in and suspended wells -Alaska Crude Corporation {ACC) Dear Guy, Attached are three cost estimates to plug and abandon three of the four wells you mentioned in your February 20, 2018 email. In general, please note that none of the four wells you mentioned in your February 20, 2018 email are "orphan" wells. Three of these wells are also located on privately owned property. At this time there have been no requests by any mineral interest or Jroperty owners to plug and abandon {P&A) any of these wells. :egarding the Amerex Well (a.k.a. Moose Point Well), the status of this well is in legal proceedings that is currently being ruled n by the Alaska Supreme Court. With the exception of the removal of the abandonment marker, the physical condition of the merex well is in the exact same condition as it was when it was plugged and abandoned in 1978. We cannot comment further 1 this well until this legal issue has been resolved . ior to receiving your email, Alaskan Crude was not aware of any deadline for submitting information regarding P & A ·erations that you said were due on March 3rd, and you later sa id was changed to March 8th. We are happy to comply with ur request, but are curious to know what statute, regulation, or order this request and deadline are based upon. If this is nething other than a general information. 1 reference, please se nd any co rre spondence for Alaskan Crude to jim4thgn@gmail.com and cc jim@applecapital.net. • .<an Crude's mailing address is 10011 Villa Lea Lan e, Houston, Texas 77071 . You ca n also reach me on my ce ll phone at 907 - 1 Exhibit 1, Page 8 of 11 394-9148 or my home phone at 281-888-7856. I am leaving tomorrow for Belize for ten days, so if you cannot reach me on my cell number you can contact my son, James A. White at 509-741-7466. ' 1lso forwarded an old email dated June 28, 2017 that was addressed to Daniel Bakka, an individual who has not been e . iyed by Alaskan Crude since at least 2009. Alaskan Crude would have liked to ha ve attended the informal face-to-face meeting that was scheduled to occur last August 2017. For future reference, please note that the email addresses and phone numbers that the AOGCC used to correspond with Alaskan Crude back in 2013 regarding maintenance work that was be ing done in June of that year on the Pelch well would have worked better. Feel free to contact me if you have any further questions. Sincerely James (Jim) W. White President Alaskan Crude Corporation ----------Forwarded message ---------- From : Jame s White <jim4thgn@gmail.com> Date : Mon, Feb 26, 2018 at 3:14 PM Subject: Re: FW : Long term shut-in and suspended wells -Alaska Crude Corporation (ACC) To: "Schwartz, Guy L (DOA)" <guy.schwartz@a laska .gov> On Tue, Feb 20, 2018 at 9:48 AM, Schwartz, Guy L (DOA) <guy.schwartz@alaska.gov> wrote : Please read and reply to the below email. This is separate from the deadline for P & A operations due March 3 rd . G ,chwartz Sr. Petroleum Enginee r AOGCC 907-301-4533 cell 907-793-1226 office 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 Guy Schwartz at (907-793-1226) or (Guy.schwartz@alaska.gov). From: Schwartz, Guy L (DOA) Sent : Wednesday, Jun e 28, 2017 4 :10 PM To: casscon@a laska .net; Dbaca148@gmail.com Subject : Long term shut-in and suspended wells -Alaska Crude Corporation (ACC) Bill and Daniel, The AGOCC recently conducted an open workshop with all state operators to discuss long term Shut-in wells and how we can better manage them on the regulatory side. One of the action items from that meeting is that all current Alaska operators come to the AOGCC office and review long term shut-in wells (including suspended wells) in a face to face informal meeting. This m M +ing shou ld give the commission some idea of long term plans for reducing the well count of unuse d wells in our state and a ive the operator a forum to discuss the future utility of the wells. 2 Exhibit 1, Page 9 of 11 Please note that this is an "in person "meeting and may not be subst ituted by sending us information by mail. Our last corr espondence with ACC was in 2009 rega rd ing the Katalla, Pelch , Moose Pt. 1 and Burglin 33-1 well. 1 ig for this meeting with the AOGCC is roughly this August, 2017. Call our office to set up an appointment at 907-273-1230 . Regards, Guy Schwartz Sr. Petroleum Engineer AOGCC 907-301-4533 cell 907-793 -1226 office 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 in formation may violate state or federal law. If you are an unintended reci pient 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 Guy Schwartz at (907-793-1226) or (Guy.schwartz@alaska.gov). 3 Exhibit 1, Page 10 of 11 Jim White President THE STATE 01ALASKA GOVE R NO R BIL L W ALKER January 8, 2018 Alaskan Crude Corporation 4614 Bohill San Antonio TX 78217 Dear Mr. Opstad: Alaska Oil and Gas Conservation Commission 333 West Seven th Avenue Anchorage. Alaska 99501-3572 Main: 907.279 .1433 Fax: 907.276.7542 www .aogcc .alasko.gov The Alaska Oil and Gas Conservation Commission (AOGCC) is undertaking a review of the adequacy of every operator's current bond to secure the anticipated cost to the AOGCC of plugging and abandoning the wells if the operator defaults on its obligation to do so. The review is undertaken operator by operator due to the significant disparity in well counts, locations, and types of construction. In furtherance of this review, by March 8, 2018 Alaskan Crude Corporation (Alaskan Crude) is requested to submit to AOGCC an estimate of the cost to properly plug and abandon its wells, the methodology by which Alaskan Crude reached its estimate, evidence in support of its estimate, and the means by which Alaskan Crude will assure that funds to cover the estimated cost to plug and abandon the wells will be secured for the sole benefit of AOGCC. Sincerely, Hollis S. French Chair, Commissioner Exhibit 1, Page 11 of 11 Investment Certificate _Non-Transferable InteFsiaie Rrst Interstate Bank of Alaska, N.A. Non-Negotiable 2826N2129030350Bank Date April 5, 198&anch ANCHORAGE MAIN Amountlnvaated$ **100,000.00*** PayaMote ***STATE OF ALASKA ITF INTREPID PRODUCTION COMPANY*** C wlthtlsMot aumvomhlp or right of aur»«romh,pn of this Certificate properly endorsed 181flfjrsTOrrg'|llll| tixi) Hill Dollars days after date. Interest rate of 6.50% (payment frequency). It is agreed that either: □ Interest ceases on the maturity date of ^N^es^relating to this cerate vJ 6e rn^^o the P^’s ne seis renewed and tSs rate will prevail for the term of the Certificate. Notice ofThe authorized signature below indicates that the depo^ is accepted in sot^rdariM w^tiFederal Reserve Sy^m and the Bank relating to time deposits, and any amendments thereto s unles on % per annum and payable monthly by CheCk for non-renewable certificates, OR,; s the Payee shall present this Certificate fo r pawientat aiw maturiw or writhin ^venmaturity, mail written notice to the PEvee of its dedsion to redeem this Certificate. The firstany f vary each time the Certificate the Board of Governors of the nd that the Interest rateior to fenewal.I TA014 AK {REV. 10-88) } Exhibit 2 Alaskan Crude CorporationMay 12 08 05:34p 210-651-0777 p.3 FofmD06ff'ClW4 Feb 2008 ADLMo. File No. cpit*io3«a£ao <?TATF OF Al DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS SINGLE LEASE OPERATION OIL AND GAS BOND KNOW ALL MEN BY THESE PRESENTS that we, Alaskan Crude Corporation as Principal, and Alaskan Crude Corporation whose address is 4614 Bohill San Antonio, Texas 78217 as Surety, are held and firmly bound unto the State of Alaska in the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00), lawful money of the United States for the use and benefit of (1) the State of Alaska, (2) any owner of a portion of the land subject to the coverage of this bond who has a statutory right to compensation in connection with a reservation of the oil and gas deposits to the State of Alaska, and (3) any lessee or permittee under a lease or permit issued by the State of Alaska prior to the issuance of an oil or gas lease for same land subject to this bond, covering the use of the surface or the prospecting for or development of other mineral deposits in any portion of such land, to be paid to the State of Alaska. For such payment, we bind ourselves and each of us and each of our heirs, executors, administrators, successors and assigns, jointly and severally by these presents. THE CONDITIONS of the foregoing obligations are such that, WHEREAS: A. Principal in one or more of the following ways has an interest in an oil and gas lease on lands of the State of Alaska under file jurisdiction of the Department of Natural Resources: (1) as the lessee of the lease, (2) as the approved holder of operating rights in all or part of the lands covered by the lease under operating agreements with the lessee, and (3) as designated operator or agent under the lease pending approval of an assignment or operating agreement: and, Principal is authorized to drill for, explore for, develop, produce, process and market oil and gas deposits in or under the lands covered by the lease and is obligated to comply with the covenants and^reements set forth in the lease; and, B. Principal and Surety agree that the coverage of this bond shall extend to all of the Principal’s holdings under the lease in the State of Alaska, and without notice to the Surety shall also extend to and include: C. Exhibit 3, page 1 of 3 May 12 08 05:34p Alaskan Crude Corporation 210-651-0777 p.4 1.Any lease operating agreement hereafter entered into or acquired by the Principal, the coverage shall become effective immediately upon approval by the Stale of Alaska of the agreement or transfer of such an agreement to the Principal; and, Any designation hereafter of the Principal as operator or agent of a lessee under the lease, the coverage shall become effective immediately upon the filing of such a designation with the State of Alaska; and. 2. Any extension of a lease covered by this bond, such coverage shall continue without interruption due to the expiration of the term set forth in the lease; Provided, however, that the Surety may choose to deny the additional coverage authorized under this Paragraph when those interests of the Principal are acquired more than 30 days after receipt of written notice of such choice firom the Surety by the Division of Oil and Gas; and, D. Surety hereby waives any right to notice of, and agrees that this bond shall remain in full force and effect notwithstanding: 1. A transfer or transfers, either in whole or in part, of any or all of the lease or of the operating £igreements, and further agrees to remain bound under this bond as to the interests, either in the lease or in the operating agreements or in both, retained by the Principal when the approval of the transfer or transfer becomes 3. effective; and. 2. Any modification of the lease or operating agreement or obligations thereunder whether made or effected by commitment of the lease or c^erating agreement to unit, cooperative, coramunitization, or storage agreements, or development contracts, suspensions of operations or production, waivers, suspensions or changes in rental, minimum royalty and royalties, compensatory royalty payments, or otherwise; and, E. Principal and Surety agree that notwithstanding the termination of the lease, operating agreements, or designations as operator or agent covered by this bond, whether the tennination, in part or wholly is by operation of law or otherwise, the bond shall remain in full force and effect as to all reniaining portions of the lease, operating agreements, or designations covered by this bond; and. F. Principal, as to the lease or any part of the lease for lands as to which he has been designated as op^ator or agent or approved as operator in consideration of being permitted to furnish this bond in lieu of the lessee, agrees and by these presents binds himself to fulfill on behalf of each lessee, all the obligations of liie lease for the entire leasehold in the same manner and to the same extent as though he were the lessee; and. G. Principal and Surety agree that neglect or forbearance by the lessor, in enforcing payment of rentals or royalties or the performance of any other covenant, conditions, or agreement of the lease, shall not in any way release the Principal and Surety, or either of them, firom any liability under this bond; and, H. Principal and Surety agree that, in the event of default under the lease, the lessor may commence and prosecute any claim, suit, action, or other proceeding against the Principal and Surety or either of them without the necessity of joining the lessee. Exhibit 3, page 2 of 3 May 13 08 05:10p Alaskan Crude Corporation 210-651-0777 P.1 NOW THEREFORE, if said Principal shall in all respects faithfully comply with all of the provisions of the lease referred to hereinabove, then the above obligations are to be void; OTHERWISE, to remain in full force and effect. Dated this / day of Princip^ , 20 08 , l^kan Crude Corporation es W. White^ President APPROVAL AND ACCEPTANCE BY THE STATE OF ALASKA Dated;By: Department of Natural Resources, Division of Oil and Gas INSTRUCTIONS: The surety on the bond may be any corporation qualified to issue perfonnance and reclamation bonds in the State of Alaska. 1. If the principals are partners, their individual names shall appear in the spaces provided, with recital that they are partners comprising a firm, naming it, and all members of the partnership shall execute the bond as individuals. 2. Where this bond is executed by a corporation, either as surety or as principal, the bond must be executed by a duly authori2ed officer, and the individual signing must submit evidence of their authority to act for the corporation. 3. When any party executes this bond through an agent, a power of attorney or other evidence of authority must accompany this bond. 4. Exhibit 3, page 3 of 3 May 15 08 11:49a Alaskan Crude Corporation 210-651-0777 P.1 Intrepid Production Company 4614BohiU San Antonio, Texas 78217 (210) 651-0777 May 14,2008 Natural Resoiirce Specialist Division of Oil & Gas Alaska Department of Natural Resources 550 W 7tb Avenue, Suite 800 Anchorage, Alaska 99501-3560 Re: Performance Bond Requirements Alaskan Crude Corporation Gentlemen: Currently the State of Alaska has a $100,000 Certificate of Deposit issued by First Interstate Bank of Alaska (no\v Northrini Bank, CD No. 1290303500) on record with the Department of Natural Resources (“DNR’’) Financial SeiAUces office made payable to State of Alaska ITF Intrepid Production Company (“Intrepid CD”). The purpose of this letter is to confirm to DNR that the Intrepid CD is intended to serve as the performance guarantee of Alaskan Crude Corporation (“Alaskan Crude”) in connection with Alaskan Crude's w'ork activities described in Plan of Operations LO.-NS 07-008, Alaskan Crude Corporation, Burglin 33-1 Exploration Well, approved by the Division of Oil and Gas on August 30, 2007 (“Work Plan”)- The undersigned James W. "WTiite is the President of both Intrepid Production and Alaskan Crude and is in all matters authorized to sign this letter on behalf of both parties. As such, the undersigned attests and certifies as follows: Intrepid Production, at the request of AJaskan Crude has agreed to allow the Intrepid CD to serve as the performance guarantee of Alaskan Crude with respect to the Work . Plan. L Intrepid Production grants to the State of Alaska, acting through the DNR or otherwise, the right to exercise the intrepid CD as the performance guaranty of Alaskan Crude with respect to all obligations under the Work Plan, and leases. 2. C033058 Exhibit 4, page 1 of 2 May 15 08 11:50a Alaskan Crude Corporation 210-651-0777 p.2 Natural Resource Speciali^ Division of Oil & Gas Alaska Department of Natural Resources May 14, 2008 Page Two We trust that this letter, along with the completed bond form submitted by Alaskan Crude satisfies DNR’s requirements with respect to the required performance guaranty of Alaskan Crude. Should you need any further information in this regard, please contact the undersigned. Sincerely, Intrepid Production Company rames W. White, President Bv: •» Alaskan Crude Corporatio: By: es W. White, President V, Exhibit 4, page 2 of 2 /::\r SARAH PALIN, GOVERNOR \J Ky u DEPARTMENT OF NATURAL RESOURCES 550 WEST 7™ AVENUE, SUITE 800 ANCHORAGE, ALASKA 99501-3560 PHONE: (907) 269-8800 (907) 269-8938FAX: DIVISION OF OIL & GAS May 15,2008 James W. White Alaskan Crude Corporation 4614 Bohill Street San Antonio, Texas 78217 Re: Single Lease Oil and Gas Performance Guarantee No.CD1290303500 Dear Mr. White: The $100,000 Single Lease Oil and Gas Performance Guarantee with Alaskan Crude Corporation as principal and secured by Northrim Bank Certificate of Deposit No. 1290303500 made payable to State of Alaska ITF Intrepid Production Company is hereby accepted under 11 AAC 83.160, effective immediately. Thank you for your submission of this Performance Guarantee. If I can be of further assistance, please do not hesitate to contact me. Sincerely, Matt Rader Natural Resource Specialist Joe Schierhom Northrim Bank 3111 C Street PO Box 241489 Anchorage, Alaska 99542-1489 cc. Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans.yy Exhibit 5 __, <!; z ~ 0 .;, ~ "" .... N ;;; ?l N N § Cl. (/) ~ c\J 0 0 g 0 0 8 0 1l, ~ 0 0 g ~ "' "' "' 0 0 g 0 AA Northrim Bank· P.O. Box 241489 Anchorage, AK 99524-1489 Return Service Requested 00000338 IB SP090223 0812783486 000001 000000 OM ITF INTREPID PRODUCTION COMPANY STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES TRUSTEE 2214 STEPHANIE BROOKE WENATCHEE WA 98801-1304 DATE: SEPTEMBER 1, 2023 ACCOUNT NUMBER: XXXXXX3500 CERTIFICATE OF DEPOSIT FOR PERSONAL ASSISTANCE CALL: 1-907-562-0062 YOUR CERTIFICATE OF DEPOSIT WILL AUTOMATICALLY RENEW ON 09-22-23, FOR THE TERM LISTED BELOW AT THE PREVAILING INTEREST RATE AND ANNUAL PERCENTAGE YIELD. AFTER THE RENEWAL, A CONFIRMATION NOTICE IS PROVIDED THAT INCLUDES THE NEW INTEREST RATE AND APY. PLEASE CONTACT US IF YOU HAVE ADDITIONAL QUESTIONS. CURRENT INTEREST RATE TERM CURRENT BALANCE INT PVMT AT MATURITY INT WTHLD AT MATURITY THANK YOU FOR CHOOSING NORTHRIM BANK. .600 12 MONTHS 100,000.00 136.44 .00 Exhibit 6 AA Northrim Bank· P.O. Box 241489 Anchorage, AK 99524-1489 Return Service Requested 00000369-0000737-0001 -0001-TIM R8008340930232804 ITF INTREPID PRODUCTION COMPANY STAT~ OF ALASKA DEPARTMENT OF NATURAL .RESOURCES TRUSTEE 2214 STEPHANIE BROOKE WENATCHEE WA 98801-1304 Last statement: June 30, 2023 This statement: September 30 , 2023 Total days in statement period: 92 Pege 1 of 1 XXXXXX3500 ( 0) Direct inquiries to : Northrim Bank PO Box 241489 Anchorage AK 99524-1489 THANK YOU FOR BANKING WITH US. WE APPRECIATE YOUR BUSINESS AND HAVE LOCAL EXPERTS, CUSTOMIZED PRODUCTS AND 24n ACCESS TO MOBILE AND ONLINE BANKING AVAILABLE AS WE STRIVE TO PROVIDE YOU WITH SUPERIOR CUSTOMER FIRST SERVICE. IF YOU NEED ADDITIONAL BANKING SOLUTIONS, PLEASE CONTACT US AT NORTHRIM.COM. Certificate Of Deposit Account number XXXXXX3500 Total principal $100,000 .00 Total current balance $100,000 .00 Total interest year to date $482 .94 DAILY ACTIVITY Date Description Additions Subtractions Balance 06-30 Beginning balance $100,000.00 09-21 Interest Credit 136.44 100,136.44 09-21 Interest Check -136.44 100,000.00 09-30 Interest Credit 48.97 100,048.97 09-30 Interest Check -48 .97 100,000.00 09-30 Ending totals 185.41 -185.41 $100,000.00 Thank you for banking with Northrim Bank 00000369-0000737-0001 -0001 -TIMR8008340930232604 (00000369)-000000739 Exhibit 6 3 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov June 2, 2023 Sent via email and U.S. mail James B. Gottstein Attorney for Alaskan Crude Corporation 406 G. Street, Suite 206 Anchorage, AK 99501 james.b.gottstein@gottsteinlaw.com Re: Docket Number: OTH-20-003 Remand from Superior Court Reconsideration of bonding amount Dear Mr. Gottstein: The Alaska Oil and Gas Conservation Commission (AOGCC) recently received a remand of this case from the Superior Court to hold a new hearing on Alaskan Crude Corporation’s (ACC) reconsideration request of the bonding amount for ACC’s wells. The purpose of this letter is to provide notice of receipt of the remand and that the docket is reopened. The AOGCC will provide future notice regarding the scheduling of ACC’s reconsideration request. Sincerely, Brett W. Huber, Sr. Chair, Commissioner Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2023.06.02 13:31:30 -08'00' 2 IN THE SUPERIOR COURT FOR THE STATE OF ALASKA THIRD JUDICIAL DISTRICT AT ANCHORAGE ALASKAN CRUDE CORPORATION, Appellant, V. Case No. 3AN-20-09027CI ALASKA OIL & GAS CONSERVATION COMMISSION, Appellee. ORDER REMANDING CASE TO AGENCY Due to regulation amendments in 2019, Alaska Oil & Gas Conservation Commission ("AOGCC") ordered Alaskan Crude Corporation ("ACC") to secure additional money in bonds for three well. ACC moved for reconsideration, but was denied by AOGCC. ACC appealed to the Superior Court. In December of 2021, this court issued a Decision and Order in the above -captioned case which affirmed AOGCC's decision to deny reconsideration. ACC appealed this court's decision. The Alaska Supreme Court vacated the Superior Court decision. Per the memorandum opinion and judgment issued by the Alaska Supreme Court, this court is remanding this case to the Commission "for a new hearing focusing on whether the terms of the bonding regulation apply to the company and whether such application is precluded by the statute's retroactivity rule."' IT IS SO ORDERED. DATED at Anchorage, Alaska this = day of May, 2023. h `\_ CATHERINE M. EASTER Superior Court Judge Alaskan Crude Corp. v. Alaska Oil & Gas Conservallon Coninm., 2023 WL 2784583 (Alaska Apr. 5, 2023)(unpublisbed). Order Remanding Case to Agency Alaskan Crude Corp. v. Alaska Oil & Gas Conservalion Comni n, 3AN-20-09027C1 Page 1 of 2 a Icertify that onl• I I an a copy of the above was mailed to: James Gottstein Patrick Sherry cuaeMA �a,�-Eiet3z• T" Order Remanding Case to Agency Alaskan Crude Corp. v. Alaska Oil & Gas Conservafian Conun'n, 3AN-20-09027CI Page 2 of 2 1 NOTICE Memorandum decisions of this court do not create legal precedent. A party wishing to cite such a decision in a brief or at oral argument should review Alaska Appellate Rule 214(d). THE SUPREME COURT OF THE STATE OF ALASKA ALASKAN CRUDE CORPORATION, Appellant, v. ALASKA OIL & GAS CONSERVATION COMMISSION, Appellee. ) ) ) ) ) ) ) ) ) ) ) Supreme Court No.: S-18290 uperior Court No.: 3AN-20-09027 CI EMORANDUM OPINION AND JUDGMENT* o. 1958 – April 5, 2023 S M N Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Catherine M. Easter, Judge. Appearances: James B. Gottstein, Law Offices of James B. Gottstein, Anchorage, for Appellant. Thomas A. Ballantine, Senior Assistant Attorney General, Anchorage, and Treg R. Taylor, Attorney General, Juneau, for Appellee. Before: Winfree, Chief Justice, Maassen, Carney, Borghesan, and Henderson, Justices. INTRODUCTION An oil and gas exploration company obtained three drilling permits in the mid-1980s, posted the $200,000 remediation performance bond required by an existing regulation, and drilled the wells. In 1999 the regulation was amended to broaden the * Entered under Alaska Appellate Rule 214. -2- 1958 scope of the bond’s remediation performance coverage, and in 2019 the regulation was amended to increase the required bond amount for drilling permits. The company was directed to increase the amount of its bond to conform to the amended regulation. The company requested agency reconsideration and asserted that the amended regulation exceeded agency authority and was unlawfully ex post facto. The agency denied reconsideration without addressing the corporation’s ex post facto argument, or considering the possible application of a statute prohibiting certain retroactive regulations, and without expressly considering how the language of the new regulation — referring to operators requesting drilling permits and to denial of requested permits for failure to comply — could apply to an operator who had obtained permits and drilled wells over thirty years earlier. The superior court affirmed the agency decision on appeal, and the company appealed to us. We decline to rule on the company’s statutory authority argument because no live controversy about the scope of bond coverage exists at this time. We also decline to rule on the retroactivity issue in light of a record devoid of any real agency analysis. For the reasons explained below, we VACATE the superior court’s decision and REMAND to the superior court to REMAND to the agency for a new hearing focusing on whether the terms of the bonding regulation apply to the company and whether such application is precluded by the statute’s retroactivity rule. FACTS AND PROCEEDINGS A. Parties Alaskan Crude Corporation is engaged in oil and gas exploration and development in Alaska.1 The Alaska Oil and Gas Conservation Commission is an 1 Alaskan Crude and its president, James White, have a long history of disputes with State entities over oil and gas leases. See, e.g., State, Dep’t of Nat. Res. v. Alaskan Crude Corp. [& James W. White], 441 P.3d 393, 395-96 n.1, 406-07 (Alaska 2018) (identifying White as Alaskan Crude’s president; reversing superior court decision and affirming agency decision not to extend Cook Inlet area oil and gas lease); -3- 1958 independent, quasi-judicial State agency2 that has been granted wide powers to monitor and prevent waste of the State’s oil and gas resources and to regulate oil and gas exploration operations.3 Relevant to this appeal, the Commission is responsible for issuing drilling permits for oil and gas wells4 and may, as a condition to a drilling permit, require an operator to furnish a bond to secure “performance of the duty to plug each dry or abandoned well or the repair of wells causing waste.”5 The Commission is authorized to adopt regulations and issue orders to carry out its duties.6 White [& Alaskan Crude Corp.] v. State, Dep’t of Nat. Res., No. S-15334, 2016 WL 1071444 (Alaska Mar. 16, 2016) (affirming superior court’s decision terminating unit agreement for North Slope oil and gas leases); Alaskan Crude Corp. [& James W. White] v. State, Alaska Oil & Gas Conservation Comm’n, 309 P.3d 1249, 1251 (Alaska 2013) (affirming superior court decision affirming agency decision denying application to reclassify North Slope oil well as gas facility to exempt it from oil discharge contingency plan requirements for reopening well); Alaskan Crude Corp. [& James W. White] v. State, Dep’t of Nat. Res., Div. of Oil & Gas, 261 P.3d 412, 413, 419-22 (Alaska 2011) (identifying White as both individual leaseholder and president of Alaskan Crude; affirming superior court’s decision affirming agency decision declaring lessee in default in North Slope unit agreement); White [et al.] v. State, Dep’t of Nat. Res., 14 P.3d 956, 959-63 (Alaska 2000) (affirming, on res judicata grounds, superior court’s dismissal of White’s unconstitutional takings claim based on agency’s refusal to transfer Cook Inlet area oil and gas leases prior to their expiration); White v. State, Dep’t of Nat. Res., 984 P.2d 1122, 1125-28 (Alaska 1999) (affirming several bases for superior court’s affirmance of agency’s termination of oil and gas lease but reversing and remanding to agency for hearing on one issue relating to lease extension). 2 AS 31.05.005(a); French v. Alaska Oil & Gas Conservation Comm’n, 498 P.3d 1026, 1027 (Alaska 2021). 3 See AS 31.05.030 (outlining Commission’s powers and duties). 4 AS 31.05.090(a). 5 AS 31.05.030(d)(4). 6 AS 31.05.030(c); see 20 Alaska Administrative Code (AAC) 25.005 et seq. (setting out Commission’s permitting regulations). -4- 1958 B. Alaskan Crude’s Oil And Gas Wells And Original Performance Bond In the mid-1980s Alaskan Crude obtained permits from the Commission and drilled three wells, referred to as the Burglin well, the Pelch well, and the Katalla well. At that time the Commission’s regulation required a $200,000 blanket performance bond from operators with two or more wells in Alaska7 to “ensure that each well is abandoned or repaired in accordance with” other regulations.8 Alaskan Crude posted a $200,000 bond, which the Commission still holds. C. Later Changes To Commission’s Bond Requirements In 1991 the legislature recommended that the Commission increase its bond requirement to cover the rising costs of plugging and abandoning wells. The legislature’s recommendation went unheeded until 2019. But in 1999 the bonding regulation was amended in part, leaving the existing bond schedule in place but broadening the purpose of the bond “to ensure that each well is drilled, operated, maintained, repaired, and abandoned and each location is cleared” as required by law.9 In May 2019, after holding public hearings and surveying other states’ bonding requirements, the Commission amended its bonding regulation to require — for “an operator proposing to drill a well for which a permit is required”10 — a bond of $400,000 per well for up to ten wells operated by a common owner.11 The purpose of the bond broadened again to add coverage for an operator’s duty to plug a well at the 7 See former 20 AAC 25.025(a)-(b) (1986). 8 See former 20 AAC 25.025(a) (1986); cf. AS 31.05.030(d)(4) (describing purposes for which performance bonds may be required in connection with drilling permit). 9 20 AAC 25.025(a) (as amended 11/7/1999). 10 20 AAC 25.025(a) (as amended 5/18/2019). 11 20 AAC 25.025(b)(1) (as amended 5/18/2019). -5- 1958 end of its life.12 The Commission retained the discretion to increase or decrease the amount of a required bond if relevant evidence warranted an adjustment,13 and the regulation allowed operators with bonds already in place to use a staggered schedule for coming into compliance with the new bonding schedule.14 The regulation also stated that the Commission “will not approve” a drilling permit for an operator not in compliance with the new bond schedule.15 D. Administrative Proceedings In July 2019 the Commission notified Alaskan Crude that it was required to post a $400,000 performance bond for each of its three wells, which then were unused but unplugged. The Commission said Alaskan Crude was to supplement its existing bond in two annual installments of $500,000, with the first installment due in August. Alaskan Crude asked for reconsideration. Its attorney argued that the “imposition of the increased bonding is erroneous” and “illegal”; he referred to the amended regulation as an “ex post facto application”16 of a new regulation and argued 12 Compare 20 AAC 25.025(a) (as amended 11/7/1999), with 20 AAC 25.025(a) (as amended 5/18/2019). 13 20 AAC 25.025(b)(3) (as amended 5/18/2019). 14 20 AAC 25.025(c) (as amended 5/18/2019). 15 20 AAC 25.025(g) (as amended 5/18/2019). In 2021 the Commission again amended the bonding regulation, changing the bond schedule amounts but leaving in place the purpose for the bond, its stated application to operators “proposing to drill a well for which a permit is required,” and the Commission’s remedy for an operator’s failure to obtain the required bond (specifically that the Commis sion “will not” approve a drilling permit from an operator that is out of compliance” with the bonding regulation). Compare 20 AAC 25.025(a), (b), and (g) (as amended 5/18/2019), with 20 AAC 25.025 (a), (b), and (g) (as amended 3/7/2021). The bond schedule change has no relevance to the matter before us. 16 Ex post facto, BLACK’S LAW DICTIONARY (11th ed. 2019) (“Done or made after the fact; having retroactive force or effect.”); ex post facto law, id. -6- 1958 that the regulation exceeded the Commission’s statutory authority. The Commission granted the request for reconsideration in early August and stayed the first bond installment until the Commission took further action. The Commission held a public hearing for the reconsideration request in late January 2020. Alaskan Crude’s attorney appeared at the hearing. He first contended that applying the updated regulation to Alaskan Crude was “an unconstitutional ex post facto law” because it had “put up the required bond at the time, and the Commission can’t simply . . . go back and increase [the bonding] requirements.”17 He cited Underwood v. State for the proposition that a law is an unconstitutional ex post facto enactment when it “takes away or impairs vested rights acquired under existing laws or creates new obligations, imposes a new duty or attaches a new disability [with] respect to transactions or considerations already passed.”18 Alaskan Crude’s attorney also contended that, even if the revised regulation were not an illegal ex post facto law, it was invalid because it “exceeds the authority of the Commission.” He argued that AS 31.05.030(d)(4) allows the Commission to require bonds only to cover the costs “to plug and abandon wells or (“Constitutional law. A statute that criminalizes an action and simultaneously provides for punishment of those who took the action before it had legally become a crime; specif., a law that impermissibly applies retroactively, esp. in a way that negatively affects a person’s rights, as by making into a crime an action that was legal when it was committed or increasing the punishment for past conduct. Ex post facto criminal laws are prohibited by the U.S. Constitution. But retrospective civil laws may be allowed.”). 17 Cf. Alaska Const., art. I, §15 (“No . . . ex post facto law shall be passed.”). 18 881 P.2d 322, 327-28 (Alaska 1994) (concluding, on merits of claim, that statute amendment regarding residency for Permanent Fund dividend was not unconstitutional ex post facto law). But see Pfiefer v. State, Dep’t of Health & Soc. Servs., 260 P.3d 1072, 1081 (Alaska 2011) (rejecting, without mentioning Underwood, application of constitutional ex post facto prohibition in civil matters). -7- 1958 repair wells causing waste.” He argued that including the additional items in the revised regulation19 — most of which actually were added by the 1999 regulation amendment20 — “exceed[ed] the authority of the Commission.” At the end of the hearing, Alaskan Crude’s attorney was asked to provide the status of Alaskan Crude’s three wells and its plans for them. In mid-February he sent the Commission a status update, raising additional arguments. He asserted that the Burglin well became the property of the Department of Natural Resources when Alaskan Crude’s oil and gas lease terminated in 1990, absolving Alaskan Crude “of all further responsibility [for] eventual abandonment and rehabilitation.”21 He contended that the Katalla well was on a private landowner’s property and that “Alaskan Crude has no authority to enter on the property to plug it.” And he asserted that because Alaskan Crude had a permit and permission to re-enter and re-work the Pelch well, also situated on private property, plugging and abandoning the well would be “premature.” In October 2020 the Commission denied Alaskan Crude’s requested relief. In relevant part, the Commission decided: the Commission is “authorized to require a bond for the performance of the duty to plug wells and the duty to repair wells causing waste”; every operator must have a bond in place to ensure compliance with those duties; Alaskan Crude is the operator of record for the Katalla, Burglin, and Pelch wells 19 Compare AS 31.05.030(d)(4), with 20 AAC 25.025(a) (as amended 5/18/2019). 20 See supra note 9 and related text. 21 Cf. White [& Alaskan Crude] v. State, Dep’t of Nat. Res., No. S-15334, 216 WL 1071444 (Alaska Mar. 16, 2016) (regarding appeal of dispute over Burglin well and related unit agreement; noting lease area containing Burglin well was set to expire in 2006 but was extended with unit agreement and detailing disputes over subsequent years about Burglin well development); Alaskan Crude Corp. [& James W. White] v. State, Dep’t of Nat. Res., Div. of Oil & Gas, 261 P.3d 412, 414-18 (Alaska 2011) (outlining dispute over Burglin well development). -8- 1958 and is required to have a bond in place for all three wells; and a “bond does not confer any rights on an operator.” The Commission made no express comment on retroactivity concerns generally or Alaskan Crude’s “ex post facto” concern specifically. The Commission advised that without written proof private landowners had “prohibited [Alaskan Crude] from entering the properties to plug and abandon the wells or that the landowners have agreed to assume responsibility to plug and abandon the wells, [Alaskan Crude] remains responsible to do so.” Lastly, the Commission noted that Alaskan Crude had applied for separate approval to abandon the Burglin well in July 2018 but that the well had not yet been plugged and abandoned. The Commission informed Alaskan Crude: “In addition to the bond required, the [Commission] reserves the right to pursue enforcement action in connection with the failure to properly plug and abandon [the] Burglin [well].” The Commission ordered Alaskan Crude to satisfy its outstanding $1,000,000 supplemental bond obligation. E. Superior Court Appellate Proceedings Alaskan Crude filed a superior court appeal in November. Its points on appeal were that the revised regulation was an unconstitutional ex post facto law in contravention of article I, section 15 of the Alaska Constitution22 and that it exceeded the Commission’s statutory authority by including that the required bond “is security to ensure that each well is drilled, operated, maintained, and repaired, and each location is cleared in accordance with the . . . Commission’s regulations.” Alaskan Crude argued for the first time in its opening brief that the revised bonding regulation was illegally retroactive under the Administrative Procedures Act (APA),23 not mentioning its earlier constitutional ex post facto argument. Alaskan 22 See supra note 17. 23 See AS 44.62.010-.950 (“Administrative Procedures Act”); AS 44.62.240 (“If a regulation adopted by an agency under this chapter is primarily legislative, the regulation has prospective effect only.”). -9- 1958 Crude argued that “[t]he Commission did not even address its retroactivity problem” in its reconsideration order. Alaskan Crude also argued, as it had during the administrative proceedings, that the amended bonding regulation exceeded the Commission’s statutory authority under AS 31.05.030(d)(4). The Commission responded that Alaskan Crude had waived its APA retroactivity argument by failing to raise it during the administrative proceedings, when it instead had argued that the regulation was an illegal ex post facto enactment. The Commission also asserted that the bonding regulation applies only prospectively — because it applies only to unplugged wells and operators of record in May 2019 — and deals with a subject within the Commission’s expertise and the scope of its powers under AS 31.05. Alaskan Crude admitted in its reply brief that in the administrative proceedings it had “cited the wrong basis for the prohibition against retroactivity applicable to the regulation,” but it urged the court to consider the issue on appeal. The superior court agreed with the Commission that Alaskan Crude had not raised its APA retroactivity argument during the administrative proceedings, and the court said it therefore would review the Commission’s order regarding the prospective nature of the regulation only for plain error. The court thus stated that Alaskan Crude would have to “show that ‘an obvious mistake has been made which creates a high likelihood that injustice has resulted.’ ”24 The court noted Alaskan Crude’s argument that imposing an increased bond requirement 30 years “after the fact” is prohibited by AS 44.62.240 because the increased bond amount would be an imposition of a new duty for an already completed transaction. But using plain error review and looking only to two subsections of amended 20 AAC 25.025 — .025(b)(2) and (d) — the court said it was unpersuaded by Alaskan Crude’s argument because 24 Quoting McCavit v. Lacher, 447 P.3d 726, 732 (Alaska 2019) (describing standard for plain error review). -10- 1958 20 AAC 25.025(b)(2) “is a prospective regulation that applies only to existing wells ‘for which the commission has issued a Permit to Drill (Form 10 -401) that [have] not been permanently plugged and abandoned.’ ” The court said that the relevant transaction under 20 AAC 25.025(d) is complete only when an operator’s existing wells have been permanently plugged and abandoned in accordance with regulations and the Commission has approved final clearance. Thus, according to the court, the amended regulation did not implicate Alaskan Crude’s rights or impose a new duty for an already-completed transaction. The court also ruled that the scope of 20 AAC 20.025(a)’s bond coverage falls within the scope of the Commission’s statutory authority to require bonds for the purpose of plugging or repairing wells to prevent waste. The court determined that 20 AAC 25.025(a) amounts only to a purpose clause and that the Commission to date had required or enforced bonds only for the statutorily authorized purpose of ensuring that operators plug and abandon their wells. The court found that the bonding regulation’s longstanding nature and its historically narrow application to plugging and abandoning unused wells weighed in favor of the regulation’s validity: “[I]t is clear that a bond is paid, forfeited, or released specifically in accordance with operators’ duties to plug and abandon unused wells” and “the amended bond amounts were only focused on the costs associated with plugging and abandoning unused wells, not costs associated with drilling, operation, or maintaining wells.” F. Appeal To Us Alaskan Crude appeals to us from the superior court’s decision, arguing that 20 AAC 25.025(a) is invalid because it exceeds the scope of the Commission’s authority under AS 31.05.030(d) and that 20 AAC 25.025(b) is impermissibly retroactive as applied to Alaskan Crude. The parties’ briefing to us essentially rehashes the arguments raised in the superior court. -11- 1958 DISCUSSION A. We Do Not Reach Whether The Regulation Exceeds The Statute’s Authority. Alaskan Crude argues that, under amended 20 AAC 25.025(a), the required performance bonds secure duties beyond those expressly identified in AS 31.05.030(d)(4) — plugging, repairing, and abandoning wells. The Commission responds that Alaskan Crude waived this argument by not bringing it sooner because the language of 20 AAC 25.025(a) has essentially been the same since the 1999 amendment to the regulation. The Commission then argues that if we conclude Alaskan Crude did not waive its statutory authority argument, we should hold that 20 AAC 25.025(a) is a reasonable interpretation of the agency’s enabling statutes dealing with subject matter within the scope of its expertise. The Commission is correct that much of the disputed regulation language has been in existence since 1999.25 But it is unclear why Alaskan Crude would have had cause to challenge the language change at that time, or at any other time, given that its bond had been in place for years without the Commission having sought to enforce the bond for any reason. At the same time, it also is difficult to understand why Alaskan Crude’s challenge to the amended regulation’s alleged overbreadth is ripe now.26 The 25 Compare 20 AAC 25.025(a) (as amended 11/7/1999), with 20 AAC 25.025(a) (as amended 5/18/2019). 26 “A ripe suit will present ‘a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’ The primary concern of ripeness is ‘whether the case involves uncertain or contingent future events that may not occur as anticipated, or indeed may not occur at all.’ The doctrine of ripeness thus ‘requires a plaintiff to claim that either a legal injury has been suffered or that one will be suffered in the future.’ ” Borer v. Eyak Corp., 507 P.3d 49, 58 (Alaska 2022); reh’g denied (May 25, 2022) (first quoting State v. ACLU of Alaska, 204 P.3d 364, 369 (Alaska 2009); then quoting Brause v. State, Dep’t of Health & Soc. Servs., 21 P.3d 357, 359 (Alaska 2001); and then quoting -12- 1958 Commission’s position has been that it will enforce the regulation only for the purposes set forth in the statute, and the superior court concluded that the Commission has not attempted to use existing bonds for purposes other than those expressed in the statute. Alaskan Crude does not dispute that the Commission had and has authority to look to existing bonds for the reasons set out in the statute, and it would be an incredible stretch to decide that the entire regulation is void due to possible overbreadth rather than decide that any overbreadth is unenforceable when and as applied.27 Until the Commission looks to Alaskan Crude’s performance bond for something other than the duty to plug or repair already drilled wells, there is no real dispute to be resolved. We therefore decline to reach Alaskan Crude’s statutory authorization argument. B. We Decline To Rule On The Retroactivity Issue On The Existing Record, And We Remand To The Agency For Further Proceedings. A fundamental flaw in these proceedings counsels against deciding, on the record before us, whether the 2019 amendment to 20 AAC 25.025 has invalid retroactive effect as applied to Alaskan Crude or prospective effect only.28 That flaw is the parties’ failure to grapple with the correct legal analysis during the administrative proceedings and their failure to conduct a comprehensive examination and appropriate interpretative analysis of the amended bonding regulation during the superior court id.). “The purpose of the ripeness doctrine is to prevent courts from ‘entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.’ ” Alaska Consumer Advoc. Program v. Alaska Pub. Utils. Comm’n, 793 P.2d 1028, 1032 (Alaska 1990) (quoting Abbott Lab’ys v. Gardner, 387 U.S. 136, 148-49 (1967)). 27 See, e.g., State v. Palmer, 882 P.2d 386, 388 (Alaska 1994) (discussing severability of unenforceable regulation provisions). 28 See supra note 23 and related text. -13- 1958 proceedings. Tied to these unfortunate aspects of the underlying proceedings is the requirement that a party exhaust administrative remedies29 and the notion of primary jurisdiction.30 1. Agency proceedings The first deficiency arises from Alaskan Crude’s challenge to the application of the amended bonding regulation under the Alaska Constitution’s ex post facto provision rather than under the APA. Although the 1994 case Alaskan Crude relied upon did apply the ex post facto analysis in a civil matter, we later rejected application of an ex post facto analysis in civil matters.31 But while Alaskan Crude’s retroactivity argument was mislabeled, Alaskan Crude clearly pointed out its concern about applying the regulation to an operator with pre-existing drilling permits, posted bonds, and drilled wells. And while the Commission likely fully understood the implications of Alaskan Crude’s argument, it took a head-in-the-sand approach by (1) not addressing Alaskan Crude’s ex post facto argument in any fashion and (2) not noting and addressing the correct APA retroactivity analysis. That may have seemed a sound strategic move to allow easier denial of Alaskan Crude’s reconsideration request, but it leaves an administrative record void on whether the amended bonding regulation 29 Exhaustion of administrative remedies refers to “the requirement that a party exhaust the administrative process as a predicate for judicial review.” Walker v. State, Dep’t of Corr., 421 P.3d 74, 79 n.17 (Alaska 2018) (emphasis in original). 30 See C.G.A. v. State, 824 P.2d 1364, 1370 (Alaska 1992) (“Primary jurisdiction is a doctrine of common law, wholly court-made, that is designed to guide a court in determining whether and when it should refrain from or postpone the exercise of its own jurisdiction so that an agency may first answer some question presented.” (quoting 4 KENNETH CULP DAVIS, ADMINISTRATIVE LAW TREATISE, § 22:1, 81 (2d ed. 1983))). 31 See supra note 18. -14- 1958 is primarily legislative with only prospective effect.32 For example, the relevant rule- making file likely would have been a part of the administrative record to assist in the necessary regulatory interpretation. And there is no Commission fact-finding establishing whether Alaskan Crude is an “operator proposing to drill a well for which a permit is required” as set forth in amended 20 AAC 25.025(a); the record seems to be clear that Alaskan Crude’s three wells were drilled in the mid-1980s in connection with bonds tendered and permits obtained at that time. The policy behind the exhaustion of remedies doctrine is for agencies to address challenges to their actions and fix mistakes at the agency level.33 Alaskan Crude’s failure to raise the correct analytical framework, and the Commission’s failure to respond with the correct analytical framework, runs afoul of the goals of the exhaustion of remedies doctrine. And the doctrine of primary jurisdiction is implicated; we believe the Commission, not this court, should make the initial determination.34 2. Superior court proceedings The second deficiency arises from the superior court’s cursory analysis of the amended bonding regulation under plain error review. For example, amended 20 AAC 25.025(a) provides that the regulation applies to “an operator proposing to drill a well for which a permit is required” (emphasis added); it does not state that it applies to an operator who has already drilled a well under an already existing permit, has 32 Cf. supra note 23 and related text. 33 See Smart v. State, Dep’t of Health & Soc. Servs., 237 P.3d 1010, 1015 (Alaska 2010) (“We have noted that ‘the basic purpose of the doctrine of exhaustion of administrative remedies is “to allow an administrative agency to perform functions within its special competence — to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies.” ’ ” (quoting Mount Juneau Enters. v. City & Borough of Juneau, 923 P.2d 768, 776-77 (Alaska 1996))). 34 See, e.g., C.G.A., 824 P.2d at 1370 & nn.18-19 (retaining jurisdiction but affording parties opportunity to obtain initial agency decision on issue before court). -15- 1958 already posted a performance bond in accordance with applicable law at the time of the permit/bond/drilling, and is not seeking to drill another well. Nothing in .025(a) refers to requiring an operator of record with existing wells to comply with the new bonding schedule. And the remedy set out in 20 AAC 25.025(g) is telling: “The commission will not approve a permit to drill application from an operator that is out of compliance with this section.” Just as .025(a) refers to a proposal to drill, .025(g) refers to denying a permit for a proposal to drill. Neither refers to an operator of record not seeking a permit to drill. If Alaskan Crude is not proposing to drill a new well and declines to supplement its performance bond as directed by the Commission, how will the Commission deny Alaskan Crude a drilling permit that it has not requested? 3. Appeal to us As in the superior court, on appeal to us the parties simply do not engage with a comprehensive analysis of the amended bonding regulation or the APA’s retroactivity prohibition. As suggested above, in the absence of Alaskan Crude’s application to drill a new well, the relevant transaction for a retroactivity analysis may be obtaining a permit to drill a well and concurrently posting the then-required performance bond, not the ultimate closing and plugging of a well. Alaskan Crude’s argument thus may have far more force than the superior court recognized under its deferential plain error review. Correctly interpreting 20 AAC 25.025 is important to the Commission fulfilling its duties, to properly monitoring Alaska’s oil and gas drilling and operations, and to all Alaskans interested in appropriately using Alaska’s resources. Attempting to resolve this dispute on the inadequate record before us, and under a plain error standard of review rather than independent de novo review, does not advance the matter. Rather than ordering supplemental briefing and later attempting to divine the meaning of 20 AAC 25.025 on the existing record, we believe the best course of action is to remand to the superior court to remand to the Commission for a new hearing on Alaskan -16- 1958 Crude’s reconsideration request, focusing on whether the terms of the bonding regulation apply to Alaskan Crude and whether such application is precluded by the APA’s retroactivity rule. This will afford the parties an opportunity to create an appropriate record and afford the Commission an opportunity to address APA retroactivity in the first instance as part of the traditional primary jurisdiction and exhaustion of remedies framework. CONCLUSION For the reasons expressed above, we VACATE the superior court’s decision and REMAND to the superior court to REMAND to the Commission for a new hearing on Alaskan Crude’s reconsideration request consistent with this decision.