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Home My WebLink AboutO 211Other Order 211 Docket Number: OTH-24-016 1. April 11, 2024 Hilcorp waiver request for MPU use 2. April 30, 2024 Notice of public hearing and affidavit STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Hilcorp Alaska, 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 compressed natural gas from the Milne Point Unit (MPU) to be able to leave the unit boundaries for operations supporting MPU ) ) ) ) ) ) ) ) Other Order 211 Docket Number: OTH-24-016 Hilcorp Alaska, LLC Custody Transfer Metering Waiver Request June 12, 2024 IT APPEARING THAT: 1. By letter dated April 11, 2024, Hilcorp Alaska, LLC (Hilcorp) as the operator of the Milne Point Unit (MPU) 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 compressed natural gas (CNG) produced in the MPU to leave the unit for MPU related purposes. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for June 13, 2024. On April 30, 2024, 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 May 1, 2024, 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. FINDINGS: 1. Hilcorp is the operator of the MPU. 2. Hilcorp has done a pilot project using CNG produced in the MPU to fuel two vehicles owned by the MPU converted to run on CNG. 3. After the successful pilot project Hilcorp plans to have around 10 MPU owned vehicles converted to run on CNG by the end of 2024 with the goal to keep converting vehicles, including heavy equipment such as buses, to dual fuel capability. 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 211 June 12, 2024 Page 2 of 3 c. Fueling pumps and compressors used to ship products. 6. Using CNG produced 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, CNG 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 gas from the unit. 8. Since 20 AAC 25.228(a) requires custody transfer quality metering of production prior to being severed from the unit, without a waiver CNG fueled vehicles would be restricted to in unit use only unless the CNG 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. Some reasons why a MPU owned vehicle may need to leave the unit boundaries in order to perform unit related activities include: a. MPU personnel driving to another unit in order to borrow or purchase a tool needed in the MPU, b. MPU owned buses going to the airport in Deadhorse to drop off and pick up employees, c. MPU personnel responding to emergencies elsewhere on the North Slope as part of mutual aid support, and d. MPU personnel assisting governmental and regulatory agencies with transportation across the North Slope. 11. Fueling a CNG powered vehicle with CNG 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 CNG 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 CNG fueled vehicles owned by the MPU to allow such vehicles to leave the MPU boundaries for purposes related to MPU operations without the requirement to first provide custody transfer quality metering of the propane. Other Order 211 June 12, 2024 Page 3 of 3 DONE at Anchorage, Alaska and dated June 12, 2024. 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. Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.06.12 09:37:55 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.06.12 09:49:48 -08'00' Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2024.06.12 17:07:30 -05'00' From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 211 (Hilcorp) Date:Wednesday, June 12, 2024 2:25:52 PM Attachments:other 211.pdf Request by Hilcorp Alaska, 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 compressed natural gas from the Milne Point Unit (MPU) to be able to leave the unit boundaries for operations supporting MPU Samantha Coldiron AOGCC 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.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 2 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-24-016 Hilcorp Alaska, LLC (Hilcorp), by letter dated April 11, 2024, 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 AOGCC’s regulations that pertain to sales metering of oil and gas for compressed natural gas (CNG) fueled vehicles at the Milne Point Unit (MPU). 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 CNG produced in the MPU 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 CNG 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 MPU) 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 Coldiron, at (907) 793-1223 or samantha.coldiron@alaska.gov. A public hearing on the matter has been tentatively scheduled for June 13, 2024, 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: 666 298 638#. Anyone who wishes to participate remotely using MS Teams video conference should contact Ms. Coldiron 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 May 20, 2024. 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 May 22, 2024. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 west 7th Avenue, Anchorage, AK 99501 or samantha.coldiron@alaska.gov. Comments must be received no later than 4:30 p.m. on June 4, 2024, except that, if a hearing is held, comments must be received no later than the conclusion of the June 13, 2024, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact Samantha Coldiron, at (907) 793-1223, no later than June 6, 2024. Brett W. Huber, Sr. Chair, Commissioner Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2024.04.30 12:36:12 -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 ______________________________________ 05/01/2024 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 Account #: 100869 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501 Order #: W0045416 Cost: $367.2 Notice of Public HearingSTATE OF ALASKAALASKA OIL AND GAS CONSERVATION COMMISSION RE: Docket Number: OTH-24-016 Hilcorp Alaska, LLC (Hilcorp), by letter dated April 11, 2024, 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 AOGCC’s regulations that pertain to sales metering of oil and gas for compressed natural gas (CNG) fueled vehicles at the Milne Point Unit (MPU). 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 CNG produced in the MPU 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 CNG 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 MPU) 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 Coldiron, at (907) 793-1223 or samantha.coldiron@ alaska.gov. A public hearing on the matter has been tentatively scheduled for June 13, 2024, 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: 666 298 638#. 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 May 20, 2024. 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 May 22, 2024. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 west 7th Avenue, Anchorage, AK 99501 or samantha.coldiron@alaska.gov. Comments must be received no later than 4:30 p.m. on June 4, 2024, except that, if a hearing is held, comments must be received no later than the conclusion of the June 13, 2024, hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact Samantha Coldiron, at (907) 793-1223, no later than June 6, 2024. Brett W. Huber, Sr. Chair, Commissioner Pub: May 1, 2024 STATE OF ALASKA THIRD JUDICIAL DISTRICT ______________________________________2024-05-02 2024-07-14 Document Ref: ETTPK-7UYHJ-3OXR6-ZMMNY Page 5 of 30 From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Public Hearing Notice (Hilcorp) Date:Tuesday, April 30, 2024 1:31:12 PM Attachments:OTH-24-016 Public Hearing Notice MPU CNG metering.pdf Docket Number: OTH-24-016 Hilcorp Alaska, LLC (Hilcorp), by letter dated April 11, 2024, 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 AOGCC’s regulations that pertain to sales metering of oil and gas for compressed natural gas (CNG) fueled vehicles at the Milne Point Unit (MPU). Samantha Coldiron AOGCC 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.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 1 By Samantha Coldiron at 1:52 pm, Apr 11, 2024