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Home My WebLink AboutCO 277• • Image Project Order File Gover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. C ~ Order File Identifier Organizing (done) RESCAN ^ Color Items: ^ Greyscale Items: ^ Poor Quality Originals ^ Other: NOTES: BY: ~ Maria .wo.,aed IIIIIIIIIIIIII!Ili DIGITAL DATA ^ Diskettes, No. ^ Other, No/Type: Date: /s! Project Proofing BY: _ Maria Date: !'~ /s/ Scanning Preparation BY: Maria Production Scanning x 30 = + =TOTAL PAGES /`~ ~ (Count does not include cover sheet) 'n Date:. J/ !s! r Stage 1 Page Count from Scanned File: ~~ (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: YES _ BY: Maria Dater/3/ Stage 7 If NO in stage 1, page(s) discrepancies were found: YES BY: Maria Date: Scanning is complete at this point unless rescanning is required. NO /s/ NO iiiumiiuuiuii ReScanned III I)~)I) VIII II III BY: Maria Date: /s/ Comments about this file: Quality Checked III IIIIII III IIII III Re,~a~~eeaa, iiuuiiiiuiiiuii OVERSIZED (Scannable) ^ Maps: ^ Other Items Scannable by a Large Scanner OVERSIZED (Non-Scannable) ^ Logs of various kinds: ^ Other:: P 10/6/2005 Orders File Cover Page.doc INDEX CONSERVATION ORDER N0.277 1) August 6, 1991 Court Decision 2) February 24, 2009 Letter from Ciri requesting to be notified of any requests to drill Mike Pelch #lwell CONSERVATION ORDER NO. 277 STATE OF ALASKA ALASKA OIL ANI} GAS CONSERVATION COMIaIISSION 3001 Porcupine Drive Anchorage Alaska 99501-3192 Re: Court decision in Case No. 3AN-90-) Conservation Order No. 277 6998CI, James W . White v Alaska } Corrected Oil and Gas Conservation ) Commission requiring amendments to ) Conservation Order No. 254 ) October 10, 1991 Pursuant to the Memorandum Decision issued by Superior Court Judge Donald D. Hopwood on August 6, 1991 the Commission hereby amends Conservation Order No. 254 to correct any reference to Far North Oil and Gas as the Leaseholder or Operator of Record . Underlined language is added, bracketed language is deleted. NOW, THEREFORE IT IS ORDERED: A . Finding No . 7 of CO 254 is amended to read 7. The Mike Pelch #1 well is located on a 120 acre parcel of fee land owned by Pelch and subject to an oil and gas lease to James W . White et al [Far North Oil and Gas Inc . ] . B . Finding No . 8 is amended to read 8 . Several persons [other than Far North Oil and Gas Inc . ] have the right to drill and produce gas on tracts of land other than the Pelch tract that are within the boundary of the proposed drilling unit . C . Rule 2 of CO 254 is Amended to read With an approved drilling permit, the operator [Far North Oil and Gas, Inc. ], is permitted to re-enter the abandoned Cannery Loop Unit No . 2 well to explore for hydrocarbons . If the well proves to be capable of hydrocarbon production, regular production will i • Conservation Order No . 277 Corrected October 10, 1991 Page 2 not be permitted until the Commission has established a drilling unit for the pool and issues an order integrating the interests of owners within the drilling unit, absent voluntary integration by the owners, or until the Commission is furnished by the operator of the Mike Pelch #1 well with a copy of an agreement, certified by the operator to be signed by all persons with a right to drill for and share in the production from the lands within the Mike Pelch #1 well drilling unit, to produce the well for a six month period following the date of initial production. All other provisions of Conservation Order No . 254 remain in effect . DONE at Anchorage, Alaska and dated October 10, 1991. ~A ®IL David W. 'Johns on, Chairman 4.~ ~d c Alaska Oil nd Gas onservation Commission r ~. ~~ ,~ _ ~ ti1 ~' ~ ® onnie C. S~fiith, Commissioner cP~ ~~~ 5 Alaska Oil and Gas Conservation Commission ,S,M .y * ~'~~ ~~Tra~ Cow Russell A. Douglass, ommissioner Alaska Oil and Gas Conservation Commission - L.Lj% �iFz 'CIRI ~ __ February 24, 2009 Mr. Dan Seamount, Chairman Alaska Oil & Gas Conservation Commission 333 W. 7th Ave., Ste. 100 Anchorage, Alaska 99501 RE: CO #254, Mike Pelch #1 Well Dear Mr. Seamount: Cook Inlet Region, Inc. ("CIRI") is a mineral owner within the drilling unit established in 1990 by CO #254 ("Drilling Unit") for the Mike Pelch #1 Well ("Well"). The Well lies approximately 160 feet south and 457 feet east of CIRI property lines. The purpose of this letter is to request that the AOGCC notify CIRI of any and all applications and actions involving the Well or the Drilling Unit. CIRI is interested in protecting its correlative rights as a significant mineral owner within the Drilling Unit as, to date, CIRI has agreed to no voluntary integration of its interest with other persons owning mineral interests within the Drilling Unit. Please send notifications pursuant to this request to: Kim Cunningham Director, Land and Resources Cook Inlet Region, Inc. (CIRI) 2525 C Street, Suite 500 Anchorage, AK 99503 Thank you for your assistance and please let us know if you have any questions or concerns. Sincerely, COOK INLET REGION, INC. 'J""„ Kim Cunningham Director, Land and Resources cc: Pirtle Bates, )r., Manager, Resources Tom Maunder, Petroleum Engineer, AOGCC 2525 "C" STREET, SUITE 500 P.O. BOX 93330 a ANCHORAGE, ALASKA 99509-3330 (907) 274-8638 ~ FAX (907) 279-8836 Web Site: www.ciri.com raim .-v y- ~~ ~~~ ~ ``~ 1~9 N THE SUPERIOR COURT FOR THE STATE OF ALASKA ~~~'4 tom' THIRD JUDICIAL DISTRICT AT KODIAK ~I~~~ E~ ~ : ;~ Sias<a Trial Courts 3 JAMES W. WHITE, ) ThirddeBic!aftistrict at K~d!ak 4 Appellant, ) ~;U~ ~ ~9Q1 5 vs. ) ) Clerk of fha Tria! Courts 6 7 s 9 10 11 12 13 14 15 16 17' 18 19 20 21 22 23 24 25 Alaska Court System ALASKA OIL AND GAS ) ~~ CONSERVATION COMMISSION, ) Gy°JT'd Appellee. ) Case No. 3AN-90-6998CI MRMORANDIIM DECISION James W. White appeals the decision of the Alaska Oil and Gas Conservation Commission manifested by Order No. 254. The order requires a pooling agreement before allowing production from the Mike Pelch Well #1. As an lalternative, the order allows all the interest holders to agree to production for up to six months without a pooling agreement to allow the parties to develop production information on which to negotiate an agreement. On appeal, White claims that the Commission acted without statutory authority. It is White's contention that once a drilling unit is established, each interest owner has the right to immediately produce his fair share WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 1 OF 15 1 • • of the resource. White also argues that certain factual 1 findings of the Commission were erroneous. 2 The State contends that White not only misapplies 3 the law, but that his appeal is procedurally defective 4 for failure to exhaust administrative remedies. 5 Because certain findings are not supported by evidence, 6 the case is REMANDED. to the Commission with instructions. 7 In all other aspects the appeal is DISMISSED.. 8 9 i I. STATEMENT OF THE CASE 10 In 1978, Union Oil proposed to develop an oil and 11 gas field near Kenai known as .the Cannery Loop Unit. Wells 12 were drilled in 1981, including a well on the homestead 13 of Mike Pelch. This well was known at the time as Cannery 14 Loop Unit #2, and is now called the Mike Pelch Well #l. 15 The well was plugged and shut in. It was abandoned 16 until 1983, when Pelch leased to James W. White., the 17 18 appellant, for the purpose. of re-entering the well and 19 determining if it could be brought to production. Because the well was closer to the homestead line 20 21 than the regulations allowed, an exception was sought in 22 1985. The proper parties were notified and, there being 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 25 3AN-90-6998CI - PAGE 2 OF 15 R~~EIWLD Alaska Court System ~~081991 ~~_ j-,~ -Gas Cons. Commissio~ ' ~ Anchorage • • no objection, an exception was granted by the Oil and Gas t Conservation Commission pursuant to 20 AAC 25.055. Order 2 No. 210, May 31, 1985. 3 Gas was found. by the operator, Far North Oil and Gas, 4 Inc. In 1987, the Commission approved the substitution 5 of Alaskan Crude Corporation as the operator of the well, 6 replacing Far North. In 1990, Alaska Crude applied for 7 the establishment of a .drilling unit and for a production 8 permit. 9 After a hearing, a 640-acre drilling unit was t0 11 established. This is the minimum size for a drilling unit 12 and nobody is contesting the size or the particular acreage 13 that has been designated. The 640 acres, however, encompass 14 several parties who have an interest in the .gas contained t5 in the unit. Prior to drilling, some, but not all, of i6 the other interest owners had been contacted to see if 17 anybody was willing to invest in the exploration. Nobody I i8 was . I~ 19 At the time of the hearing, the interest owners had 20 not reached an agreement on the pooling of the interests, 21 but there was no testimony that anyone refused to voluntarily 22 enter an agreement. Several owners, especially the two 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 25 3AN-90-6998CI - PAGE 3 OF 15 Alaska Court System interest owners with the greatest oil and gas 1 experience--CIRI and Unocal--expressed concern that the 2 operator was not providing any information on which an 3 agreement would be negotiated. Specifically, Union Oil 4 Company of California, as an example., testified by letter 5 that they desired to review the well test data and be 6 provided with a detailed, orderly and prudent project 7 proposal which includes cost allocation, timing scenarios, 8 designation. of operatorship, and a mutually agreed upon 9 operating agreement. CIRI submitted a similar letter. t0 Following the hearing, the Commission issued Order 11 No. 254, which set the drilling unit, but specifically 12 reserved the question of pooling interests. The Commission 13 found that the operator had not .shown that a voluntary 1a 15 agreement could not be reached, only that one had not been 16 reached. t7 To allow for more information, the Commission agreed 18 to allow production for six months. If a voluntary agreement 19 was not reached within those six months, the Commission 20 would require the operator to submit to the Commission 21 a certified audit report setting out the operator's actual 22 and reasonable expenditures covering the costs of development 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 4 OF 15 25 Alaska Court System 1 2 3 4 5 6 7 8 9 10 11 12 13 1a 15 16 17 18 19 20 21 22 23 24 25 • and operation of the well, unless the operator abandoned production. The well was to be shut in after the six month period unless a pooling agreement was in .effect. Following the issuance of the order, James A. White, the son of the appellant, wrote two letters to the Commission. The first, dated June 8, 1990, specified two factual errors. First, White claimed that Finding No. 7 was incorrect. The Commission found that Pelch had leased his interests to Far North Oil and Gas. White. claimed that the lease was actually to his father, James W. White. Second, White objected to Finding No. 8, where the Commission found that several parties other than Far North had a right to produce gas on tracts of land within the drilling unit (excluding the Pelch homestead). White's objection was that Far North was not the lessee and was no longer the operator, and thus had no right to produce gas. Also, iWhite claimed that only the operator, Alaskan Crude,. had the right to work on the well. The second letter from James A. White is dated July 20, 1990, and is designated by White as "our appeal." White repeats the objection to Finding No. 7, and goes on to argue that the Commission was bound by its earlier WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 5 OF 15 Alaska Court System 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17, 18 19 20 21 22 23 24 25 • • order, No. 210, to order an involuntary pooling. The Commission treated the letters as an application for rehearing under AS 31.05.080(a). In its decision on the rehearing, the Commission noted that the lease from Mike Pelch was to "James W. White et al." The Commission determined that "James W. White et al" is in reality .James W. White acting as President and CEO of Far North Oil and Gas, and therefore, the lease was from Diike Pelch to Far North 0i1 and Gas. As to being bound by its earlier order, and being required to order involuntary pooling, the Commission noted that any party could petition under AS 31.05.100 for a hearing to involuntarily integrate the .interests. either after the well had been producing for .six months "or at any such time that evidence can be presented that a voluntary agreement cannot be reached ." Letter from the ~', Commission to James A. White (July 30, 1990) (.containing the agency's decision on rehearing). James W. White filed the instant appeal on August 20, 1990. The State moved for dismissal, arguing lack of standing and failure to exhaust administrative remedies. The case was assigned to Superior Court Judge Pro Tempore WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 6 OF 15 Alaska Court System Ralph Stemp for motions. He originally granted the Motion t to Dismiss October 29, 1990, noting that it had been 2 unopposed. An opposition had been filed, however, on October 3 19, 1990. Judge Stemp vacated his Order of Dismissal on a November 2, 1990. 5 6 II. STANDING 7 The State, challenges James W. White's standing based 8 on AS 31.05.080. The statute sets out the procedure for 9 rehearing by any party affected by an order of the 10 Commission, and the procedure for appeal to the Superior 11 Court. It says, "A party to the rehearing proceeding, 12 dissatisfied with the disposition of the application for. 13 rehearing, may appeal from it to the Superior Court ..." 14 AS 31.05.080(b). 15 The State contends that James W. White was not a party 1s 17 to the rehearing proceeding, which- consisted entirely of 18 two letters to the Commission by James A. White. The 19 appellant's response is that the letters sent by his son 20 to the Commission were sent on James W. White's behalf. 21 There is some merit to the appellant's argument. 22 In James A. White's first letter to the Commission, where 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 7 OF 15 25 Alaska Court Sysiem • he challenged Findings No. 7 and 8, it is apparent that t he was asserting a claim on behalf of his father. In the 2 letter, the younger White says: 3 The Pelch fee land is not now, nor has it ever a been leased and/or assigned to Far North .Oil & Gas, Inc. The Pelch fee land oil and gas rights 5 are leased to James W[.] White and/or to whomever else he may have assigned this lease to. 6 The Commission, while questioning James A. White's 7 standing, directly addressed the issue. on its merits. 8 The Court is reluctant to dismiss the appeal on the basis 9 of standing. At the least, James W. White has acquiesced 10 11 in, and adopted, the arguments presented on rehearing. 12 Additionally, requiring James W. White to apply for rehearing 13 on an issue which the Commission has already addressed 14 on rehearing would, contributed nothing to "administrative 15 autonomy and sound judicial economy." State, Dept. ~6 of Labor v. University of Alaska, 664 P.2d 575, 581 (Alaska ~~ 1983) (citing B. Schwartz, Administrative Law, §.172, at 18 498 (1976)). 19 20 III. FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES 21 The State also argues that the Court should not reach. 22 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMbIISSION 3AN-90-6998CI - PAGE 8 OF 15 25 Alaska Couri System 1 2 3 4 5 6 7 8 9' 10 11 12 13 14 15 16 17 18 19 I 20 21 22 23 24 25 • the merits of the appeal because the appellant has not exhausted administrative remedies on either of the two .arguments raised on appeal. Following a brief discussion of thee- analysis used on an exhaustion question, each of these two issues will be taken up separately. The exhaustion argument is based on the statutory requirement that before an aggrieved party appeals a decision of the Commission to the Superior Court, the party must first apply to the Commission for rehearing. AS 31.05.080(b) explicitly says, "[T]he questions reviewed on appeal shall be only questions presented to the Commission by the applicant for rehearing.." The Alaska Supreme Court has observed that "[t]he basic purpose of the exhaustion doctrine is to allow an administrative agency to perform functions within its special Incompetence--to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies." Ben Lomond, Inc, v. Municipality of Anchorage, 761 P.2d 119, 121-22 (Alaska 1988) (quoting Van Hyning v. University of Alaska, 621 P.2d 1354, 1355-56 (Alaska 1981), other citations omitted). The statute referred to above complements and mandates WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 9 OF 15 Alaska Court System 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • :7 the judicial doctrine of exhaustion before Superior Court review of the Commission's orders. Admnistrative decisions are presumed to be judicially reviewable, unless the legislature provide otherwise. Bethel Utilities Corp. v. City of Bethel, 780 P.2d 1018, 1022 (Alaska 1989). Here the legislature has provided that the Commission's orders are not reviewable unless the Commission has had an opportunity to review them on rehearing. Thus, it is incumbent upon the Court to examine each issue raised on appeal to determine whether it has been reviewed by the Commission on rehearing. A. FINDINGS NO. 7 AND 8 On appeal, James W. White argues that Far North Oil & Gas has no present interest in the drilling unit and therefore reference to Far North in Findings No. 7 & 8 ',should be stricken. Brief of Appellant at 10. As discussed earlier, this. issue was presented to the Commission by James A. White in his first letter, and the Commission squarely addressed it on its merits. The Court determines that the issue is properly presented on appeal, as administrative remedies have been exhausted. WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 10 OF 15 Alaska Court System • • The decision on rehearing by the Commission makes it clear that although the challenge is to what are termed 2 findings, the findings are the result of a mixed question 3 of fact and law, The Court will accept the factual findings a of the Commission if, after review of the record as a whole, 5 the findings are supported by substantial evidence. Alaska 6 Advocacy Council v. State, DEC, 778 P.2d 1126, 1139 (Alaska 7 1989). The legal conclusions that flow from those facts, 8 however, are subject to the independent judgment of the 9 Court. Earth Resources Co. v. State, Dept. of Revenue, 10 665 P.2d 960, 965 (Alaska 1983). 11 In its decision on rehearing, the Commission said: 12 The Commission's records indicate that the lease 13 is in fact under the name of James W. White et al Further, the records. show that James 14 W. White is the President and CEO of Far .North Oil and Gas, Inc., and that James W. White, acting 15 for and on behalf of Far North Oil and Gas, requested the Commission to grant a spacing is exception to reenter the abandoned Cannery Loop 17 #2 well,. now known as Mike Pelch #1 well. The Commission granted the spacing exception (C0210) to Far North Oil and Gas, and issued a permit ~$ to drill (#86-7) addressed to James W. White, President and CEO, Far North Oil and Gas, Inc. t9 Based upon the records, and the representations 20 made by James W. White, our conclusion. is that James W. White et al is Far North Oil and Gas, 21 Inc . 22 23 24 WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 11 OF 15 25 Alaska Court System b 7 1 t 2 3 4 5 6 7 8 9 10 11 12 13 1a 15 16 17 18 19 20 21 22 2? 24 2`. • • Letter from the Commission to James A. White (July 30, 1990) (containing the Commission's decision on rehearing) (emphasis in original). While the record supports the factual premises in the Commission's letter, those premises do not support the legal conclusion the Commission reached. The commonly used phrase "et al" or "et al." is an abbreviation for et alius (and another) or et alii (and others). Therefore, the lease to "James W. White et al" was to James W. White as principal and to unknown others. This Court is not asked to identify who the others might be; that is not the issue being litigated. The Court has. found no authority, however, for the i proposition that "et al" may be interpreted to mean "acting as agent for" or "in his position as President and CEO of" some unnamed company. The finding by the Commission that the lease to "James W. White et al" is in reality a lease to Far North Oil and Gas has no basis in fact or law. The Commission is 'directed to amend the order accordingly. B. WHETHER THE COMMISSION EXCEEDED ITS AUTHORITY WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 12 OF 15 Alaska Court System r 1 2 3 a 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 U • The only other issue James A. White raised in his application for rehearing was whether the Commission had the authority to amend the previous order. White. argued that the Commission was bound by its previous order and that the amendment did not protect the correlative rights. of the interest owners. Because this is the only other ~, issue that was decided on rehearing, this is the only other issue the Court may consider. See discussion of AS 31.05.080(b), supra. James W. White does not raise this issue on appeal, however. As a matter of fact, James W. White's argument on appeal before this .court is antithetical to James A. White's argument on rehearing before the Commission. While the son argued on rehearing that the Commission must order involuntary pooling, the father argues on appeal that the Commission has no authority to order involuntary pooling. James W. White argues that, except for pre-development organization and disputes over development costs, "the Commission has no statutory authority to get involved in the relationships of the parties, the expenses of development and operation or the business decision of the leaseholders of small units." Reply Brief of Appellant at 8. WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 13 OF 15 Alaska Court System ~- 1 2 3 4 5 6 7 s 9 10 11 12 13 14 15 1s 17 18 19 20 21 22 23 24 25 • Elsewhere, the appellant appears to rely on a different argument. He contends, "Order 254 formed the unit and therefore was the pooling order integrating the parties' interests provided for in AS 31[.]05.100(c). Nothing further was or is authorized by Alaska law." Brief of .Appellant at 9. Thus, the two theories relied upon by James W. White are. that the Commission either has no authority to order involuntary pooling or that the Commission automatically pooled the interests by forming the drilling unit. Neither of these theories is in any way consistent with James A. White's argument on rehearing that the Board was bound by its previous order and was required to pool interests involuntarily. The arguments raised by James W. White on appeal have not been addressed by the Commission as required by AS 31.05.080(b), and there is nothing in the record to indicate they were ever argued before the Commission. Where a party has failed to exhaust administrative remedies, the Court may properly dismiss the appeal. Standard Alaska Production Co. v. State, Dept. of Revenue, 773 P.2d 201, 206 (Alaska 1989). WHITE vs. ALASKA OIL AND GAS CONSERVATION COb1I~1ISSION 3AN-90-6998CI - PAGE 14 OF 15 Alaska Court System a w 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 • • The case is REMANDED to the Commission to enter findings consistent with this decision.. In all other respects, the appeal is DISMISSED. DATED this 6th day of August, 1991 at Kodiak, Alaska. ~ /~- DONALD D. HOP OOD SUPERIOR COURT JUDG i Certify th2t 0? ~ ~ ~ i a ccpy of the above :+•as ~:s~l~ i °ach of the fallowing at their adCress o` reccrd: ~'~~ DeputyCterk /QK p~•/ ><GaS ConStrvc~~ion ~',,,miss~on WHITE vs. ALASKA OIL AND GAS CONSERVATION COMMISSION 3AN-90-6998CI - PAGE 15 OF 15 Alaska Court System