Department of Commerce, Community, and Economic Development
Alaska Oil and Gas Conservation Commission
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HomeMy WebLinkAboutO 167Other Order 167
AIX Energy LLC
Bonding Reconsideration
1. July 2, 2019
AOGCC itr to AIX regarding new bonding amounts
2. July 18, 2019
AIX response and request decrease bond amount
3. August 7, 2019
AIX Request fir Recalculation of Outstanding Bonding
Obligation
4. November 4, 2019
Notice of public hearing; affidavits of publication, email
distribution, and mailings and sign in sheet for workshop
5. February 13, 2020
Transcript, sign in sheet exhibits
6. February 13, 2020
Supplemental to August 7, 2019 Request fir Recalculation
of Outstanding Bonding Obligation
7. February 13, 2020
Supplemental to August 7, 2019 Request fir Recalculation
of Outstanding Bonding Obligation
8. ------------------------
Various Emails
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
333 West 7" Avenue
Anchorage, Alaska 99501
Re: Reconsideration request by AIX Energy ) Docket Number: OTH-20-004
LLC for reduction in the bonding amount ) Other Order #167
required under new regulation 20 AAC )
25.025. ) AIX Energy LLC
) Bond Reconsideration Request
March 31, 2020
DECISION AND ORDER
On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent AIX Energy
LLC (AIX) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised
that, under the new regulations, AIX's 4 permitted wellheads increased AIX's bonding level to
$1,600,000. Because AIX had a $200,000 bond in place, an additional $1,400,000 in bonding was
required, payable in three annual increments of $500,000, $500,000 and $400,000.
On July 18, 2019, AIX requested a reduction in the required bonding amount from $1,600,000 to
$1,037,166 based upon a third -party engineering cost estimate to plug and abandon (P&A) its 4
wells.
On August 7, 2019, AIX requested reconsideration, seeking a reduction in the required bonding
amount based upon its other bonding obligations.
On February 13, 2020, the AOGCC held a hearing on AIX's request for reconsideration. At the
hearing, AIX provided proof of its bonds with the Department of Natural Resources (DNR) and
the Alaska Mental Health Trust Land Office (MHTLO) as well as testimony from its chief financial
officer.
On March 6, 2020, AIX provided supplemental documents in support of its reconsideration
request.
FINDINGS:
Based upon the evidence presented by AIX, including the testimony of its chief financial officer,
AOGCC finds as follows:
1. AIX states that it is entitled to an offset because the DNR required AIX to post a statewide
dismantlement, removal and restoration (DR&R) bond. That bond covers the costs of
DR&R of the surface of AIX's DNR leases. AIX claims that the DR&R bond includes an
unspecified amount intended to cover the costs to P&A AIX's wells.
2. AIX also contends it should get an offset for the $950,000 certificate of deposit AIX has in
place with the MHTLO. That certificate of deposit is dedicated exclusively to the P&A of
AIX's 4 wells and does not secure any other DR&R obligations.
3. AIX requests a total reduction of its new AOGCC bonding amount of $1,400,000, leaving
AIX with the bonding requirement of $200,000 that is already in place.
Other Order 167
March 31, 2020
Page 2 of 3
CONCLUSIONS:
The AOGCC grants, in part, AIX's request for reconsideration.
1. AOGCC finds that the third -party engineering cost estimate of $1,037,166 to P&A AIX's 4
wells is reasonable.
2. The $950,000 MHTLO certificate of deposit is restricted exclusively to the P&A costs of
AIX's 4 wells and does not secure any other DR&R obligations. The MHTLO certificate of
deposit will be accounted for in AIX's bonding obligation to the AOGCC.
3. The $500,000 bond with DNR is for the DR&R of the surface of DNR's leases to a condition
acceptable to DNR. No evidence was offered that any of that bond is irrevocably restricted to
the costs to properly P&A AIX's wells. AIX's bonding amounts will not be reduced by the
amount of the DNR DR&R bond.
NOW THEREFORE IT IS ORDERED THAT:
In accordance with the above, AIX's bonding requirement with the AOGCC stands at $200,000
and no increase is required at this time.
This Order is entered based on the facts set forth above. AIX must immediately notify AOGCC
of any change in those facts, including but not limited to a change in the amount or status of the
MHTLO certificate of deposit.
DONE at Anchorage, Alaska and dated March 31, 2020.
Jeremy ,°"°'" nmN Daniel T. 0gie1j1giK°a
o°mans»mwol.x.
M. Price Seamount,Jc°"G0u0101
ISIW°L6R/ 1P]2NMM'
Jeremy M. Price Daniel T. Seamount, Jr
Commissioner, Chair Commissioner
Jessie L.
Chmielowski»�.,erm�
Jessie L. Chmielowski
Commissioner
Other Order 167
March 31, 2020
Page 3 of 3
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 this order, 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.
Bernie Karl
K&K Recycling Inc. Gordon Severson Penny Vadla
P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave.
Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714
George Vaught, Jr. Darwin Waldsmith Richard Wagner
P.O. Box 13557 P.O. Box 39309 P.O. Box 60868
Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706
INDEXES
Coiombie, Jody J (CED)
From: Colombie, Jody J (CED)
Sent: Thursday, October 31, 2019 1:45 PM
To: Romerdahl, Elena M. (Perkins Coie)'
Subject: Public Notices
Attachments: Cook Inlet Energy Bonding Public Hearing Notice.pdf, Savant Bonding Public Hearing
Notice.pdf, AIX Bonding Public Hearing Notice.pdf
Elena,
Please see Attached.
Cook Inlet Energy
Savant
AIX
Jody J. Colombie
Special Assistant
Alaska Oil and Gas Conservation Commission
333 West 7`h Avenue
Anchorage, AK 99501
(907) 793-1221 Direct
(907) 2 76- 7542 Fax
Notice of Public Hearing
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
Re: AIX Energy LLC.
Request for Recalculation of Outstanding Bonding Requirements
20 AAC 25.025
AIX Energy LLC. requested the Alaska Oil and Gas Conservation Commission (AOGCC)
reconsider bonding amounts that were established when 20 AAC 25.025 was adopted May 18,
2019.
The AOGCC has scheduled a public hearing on this application for February 13, 2020, at 10:00
a.m. at 333 West 7'h Avenue, Anchorage, Alaska 99501
In addition, written comments regarding this application may be submitted to the AOGCC, at 333
West 7'h Avenue, Anchorage, Alaska 99501. Comments must be received no later than the
conclusion of the February 13, 2020 hearing.
If, because of a disability, special accommodations may be needed to comment or attend the
hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than
February 9, 2020.
//signature on file//
Jessie L. Chmielowski
Commissioner
Colombie, Jody J (CED)
From:
Colombie, Jody J (CED)
Sent:
Thursday, August 8, 2019 2:19 PM
To:
Romerdahl, Elena M. (Perkins Coie)
Cc:
Wendy Sheasby
Subject:
AIX's Request for Recalculation of Outstanding Bonding Obligation
The Commissioners have reviewed your Request for Recalculation of Outstanding Bonding Obligation. AIX's 1st
installment can be postponed until 30 days after written decision by the Commission. All other installment remain the
same.
Jody J Colombie
Special Assistant
Alaska Oil and Gas Conservation Commission
333 West 7t6 Avenue
Anchorage, AK 99501
(907) 793-1221 Direct
(907) 276-7542 Fax
Colombie, Jody J (CED)
From: Colombie, Jody J (CED)
Sent: Monday, August 5, 2019 1:44 PM
To: Wendy Sheasby
Cc: Colombie, Jody 1 (CED)
Subject: Request for Reconsideration
Ms. Sheasby:
Your Request for Reconsideration is GRANTED. The Alaska Oil and Gas Conservation Commission will issue a Notice of
Hearing in the near future.
Jody J Colombie
Special Assistant
Alaska Oil and Gas Conservation Commission
333 West 7' Avenue
Anchorage, AK 99501
(907) 793-1221 Direct
(907) 2 76- 7542 Fax
Colombie, Jody J (CED)
From: Roby, David S (CED)
Sent: Thursday, July 18, 2019 10:16 AM
To: Wendy Sheasby; Colombie, Jody J (CED)
Subject: RE: AIX Energy LLC - AOGCC bonding request
Hi Wendy,
Site inspections can usually be done pretty quickly, within a week or so, once the operator notifies us that the site is
ready for inspection. However, we do need clear ground in order to conduct the site inspection. So, for example, if an
operator P&A's a well in the winter time when there's snow and ice on the ground we won't conduct the site inspection
until sometime in the spring once all of the snow and ice has melted and we're able to see what the ground looks
like. This is to ensure there's no debris or anything that's hidden beneath the snow.
Additionally, an AOGCC site inspection is not mandatory. If the surface landowner sends us a letter saying that they are
happy with the condition an operator leaves the land in we do not need to do a location clearance inspection. We will
still inspect the P&A operation itself to make sure the well is plugged properly, cutoff at the proper depth, a proper
marker plate is installed, etcetera.
Regards,
Dave Roby
907-793-1232
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 Dave Roby at 907-
793-1232 or dave.robvClBalaska.eov.
From: Wendy Sheasby <wsheasby@brantaep.com>
Sent: Thursday, July 18, 2019 8:19 AM
To: Colombie, JodyJ (CED) <jody.colombie@alaska.gov>; Roby, David S (CED) <dave.roby@alaska.gov>
Subject: AIX Energy LLC - AOGCC bonding request
Good morning Jody & Dave,
I hope this email finds you both doing well.
Please find attached a letter request for a decrease with AOGCC bonding under 20 AAC 25.025 (b) (3) based upon an
independent estimate by Mr. Stephen Hennigan with Petroleum Engineers, Inc., total $1,037,166.
Attached are the AFEs per well along with the associated wellbore diagrams, as follows.
• AFE for KL1-1$281,702
• AFE for KI -1-2 $199,414
• AFE for KI -1-3 $290,227
• AFE for KL1-4 $265,823
The $500,000 bonding increase per new reg due on 8/16/2019 is being processed.
Also, for plartriing purposes, I understand that a site inspection is required upon a well P&A in order to be released from
bonding. What is the estimated timeframe for a site inspection?
Thank you for your assistance. I can be reached at 281-863-9920 for any questions or concerns.
Regards,
Wendy Sheasby, CPA
CFO
AIX Energy LLC
2441 High Timbers, Suite 120
The Woodlands, TX 77380
wsheasbyC brantaep.com
Direct: 281-863-9920
Main: 832-813-0900
E-MAIL CONFIDENTIALITY NOTICE: The contents of this e-mail message and any attachments are intended solely for the
intended recipient and may contain confidential and/or legally privileged information. If you are not the intended recipient of this
message or if this message has been addressed to you in error, please immediately alert the sender by reply e-mail and then delete this
message and any attachments. If you are not the intended recipient, you are notified that any use, dissemination, distribution, copying,
or storage of this message or any attachment is strictly prohibited.
VA
P2RKINSC012
February 28, 2020
VIA HAND DELIVERY
Commissioner Jeremy Price, Chair
Commissioner Jessie Chmielowski
Commissioner Dan Seamount
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue, Suite 100
Anchorage, AK 99501
1029 West Third Avenue O +1907 279,8561
Suite 300 O +1.907,176.3108
Anchorage. AK 99501-1981 perklnscoie,corn
Elena M. Romerdahl
ERomerdahl@perkinscoie.com
D . +1.907.263.6914
F. +1.907.263.6428
RECEIVE®
MAR 6 2020
AOGCC
Re: Supplement to August 7, 2019 Request for Recalculation of Outstanding
Bonding Obligation
Dear Commissioners:
AIX Energy LLC ("AIX") submits the following supplemental documents in support of its
August 7, 2019 Request for Recalculation of Outstanding Bonding Obligation, as requested
during its February 13, 2020 hearing:
• Attachment A: Letter from Dr. Karsten Eden at the Alaska Mental Health Trust
Land Office confirming that the $950,000.00 Performance Deposit Certificate of
Deposit with Amegy Bank of Texas for the Alaska Mental Health Trust Land Office
is solely for the purpose of plugging and abandoning the four Kenai Loop Gas Field
wells located on MHT lease #9300082: KL1-1, KL1-2, KL1-3, and KLl-4.
• Attachment B: City of Kenai Lease for the surface estate of the Kenai Loop Gas
Field. All four Kenai Loop Gas Field wells are located within this lease.
• Attachment C: Assignment of lease to AIX approved by City of Kenai.
As noted above, the owner of the surface estate of the Kenai Loop Gas Field is the City of
Kenai. Attachment B is the lease for AIX's surface use, and Attachment C is the
assignment of that lease to AIX following AIX's acquisition of the Kenai Loop Field.
You also asked during the hearing when KL1-4 well was shut-in. The KL1-4 well was
shut-in in December 2013 by Buccaneer who was owner and operator at that time.
February 28, 2020
Page 2
Thank you for the opportunity to provide additional information at the February 13, 2020
hearing and with this letter. Please let me know if we can provide any additional
information. Thank you again for your consideration.
Respectfully,
Elena Romerdahl
Counsel for AIX
Perkins Lore LLP
February 19, 2020
Commissioner Jeremy Price, Chair
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue, Suite 100
Anchorage, AK 99501
Dear Commissioner Price:
ATTACHMENT A
67�
� L,zuul Otfi��
z600 Cordova Strect. Suite ioo
Anchorage, AK 995e;
Tel 907.269.8658
ww w.trustlandofficc.Com
I am writing to confirm that the $950,000 Performance Deposit Certificate of Deposit
("Performance Deposit") with Amegy Bank of Texas assigned by AIX Energy LLC (`AIX") to
the Alaska Mental Health Trust Land Office ("MHTLO") solely secures AIX's plugging and
abandonment obligations under the Alaska Mental Health Trust Land Office lease MHT
9300082 held by AIX. Specifically, the $950,000 secures AIX's obligation to plug and abandon
the four wells, KL1-1, KL1-2, KL1-3 and KL1-4, located on MHT 9300082 pursuant to the
requirements of 20 AAC 25.105 - 20 AAC 25.172. The Performance Deposit does not secure
any other dismantlement, removal, and restoration obligations.
Sincerely,
//. (5 --
Dr. Karsten Eden, CPG, EmGreol
Minerals & Energy Section Chief
ATTACHMENT B
A 2013-010986-0
A Recording Dist: 302 - Kenai
s 11A8/2013 10:30 AM Pages:1 of 18
K
A Illllllllllllllllllllllllllllillllllllllllllllllllllllnlllllllllllllllllilllllllllll
LEASE OF AIRPORT LANDS
(Outside the Kenai Municipal Airport Reserve)
THIS AGREEMENT, entered into this 17*"' day of[2013, by and between the
CITY OF KENAI, 210 Fidalgo Avenue, Kenai, Alaska 99611-7794, a home -rule municipal
corporation of Alaska, hereinafter called "City", and BUCCANEER ALASKA OPERATIONS,
LLC, whose address is952 Echo Lane, Suite 420, Houston, Texas, 77024, hereinafter called
"Lessee".
That the City, in consideration of the payments of the rents and performance of all the covenants
herein contained by the Lessee, does hereby demise and lease to the Lessee the following
described property in the Kenai Recording District, Third Judicial District, State of Alaska; to
wit:
Lot 8, Kenai Industrial Park Subdivision
A. PURPOSE: The purpose for which the Lease is issued is: Natural Gas
Production Facility (Gas Manufacturer/Storage); Operation of Class 11 Injection Facility
for the Storage/Disposal of Onsite and Offsite Materials.
B. TERM: The term of this Lease is for thirty (30) years, commencing on the I"
day of November, 2013 to the 31" day of October, 2043.
C. RENTAL PAYMENT: Subject to the terms of General Covenant No. 9 of this
Lease, rental for the above-described land shall be payable as follows:
1. The annual rental rate shall be 8% of the fair market value (as set forth and
defined in General Covenant No -9) of the demised premises. The rental effective November 1,
2013, shall be $28,000 per year, plus applicable sales tax, based on a value of $350,000, subject
to redetermination pursuant to General Covenant No. 9,
2. Annual rent for the fiscal year beginning July 1 and ending June 30 shall
be payable in advance on or before the first day of July of each year. If the annual rent exceeds
$2,400, then the Lessee may opt at the time of the execution hereof or at the beginning of each
new Lease year to pay rent in equal monthly installments, payable in advance on or before the
first day of July and on or before the first of each month thereafter.
Lease of Airport Lands - Page 1 of 17 Lessor: r���
Lessee: i'K KC
3. Rental for any period that is less than one (1) year shall be prorated based
on the current annual rental rate.
4. In addition to the rents specified above, subject to General Covenant No.
9, Lessee agrees to pay to the appropriate parties all levies, assessments, and charges as
hereinafter provided:
(a) Taxes pertaining to the leasehold interest of the Lessee.
(b) Sales tax now enforced or levied in the future computed upon rent payable
in monthly installments whether rent is paid on a monthly or yearly basis.
(c) Lessee agrees to pay all taxes and assessments levied in the future by the
City of Kenai, as if Lessee was considered the legal owner of record of the leased
property.
(d) Interest at the rate of eight percent (8%) per annum and ten percent (10%)
penalties of any amount of money owed under this Lease which is not paid on or
before the date it becomes due.
D. GENERAL COVENANTS:
I . USES: Except as provided herein, any regular use of lands or facilities
without the written consent of the City is prohibited. This prohibition shall not apply to use of
areas designated by the City for specified public uses, such as passenger terminals, automobile
parking areas, and streets.
2. USES NOT CONTEMPLATED PROHIBITED: The promotion or
operation of any part or kind of business or commercial enterprise, other than as specifically set
forth herein, upon, in or above airport lands, without the written consent of the City is prohibited.
3. ASSIGNMENT OR SUBLETTING: Lessee with City's prior written
consent, which will not be unreasonably denied, may assign or sublet, in whole or in part, its
rights as Lessee hereunder.
Any assignee of part or all of the leased premises shall assume the duties and
obligations of the Lessee as to such part or all of the leased premises. No such assignment,
however, will discharge Lessee from its duties and obligations hereunder.
4. COSTS AND EXPENSES: Costs and expenses incident to this lease,
including but not limited to recording costs, shall be paid by Lessee.
Lease of Airpon Lands — Page 2 of 17 Lessor:
Lessee:
III IIIII�IIIIIII IIIIIIIIIIIIIIIIlll
2 of 19
2013.010986-0
5. TREATMENT OF DEMISE: The Lessee agrees to keep the premises
clean and in good order at its own expense, allowing no damage, waste, nor destruction thereof,
nor removing any natural material therefrom, without written permission of the City. At the
expiration of the term fixed, or any sooner determination of the Lease, the Lessee will peaceably
and quietly quit and surrender the premises to the City.
6. PAYMENT OF RENT: Checks, bank drafts, or postal money orders shall
be made payable to the City of Kenai and delivered to the City Administration Building, 210
Fidalgo Avenue, Kenai, Alaska 99611.
7. CONSTRUCTION APPROVAL AND STANDARDS: Building
construction shall be neat and presentable and compatible with its uses and surroundings. Prior
to placing of fill material and/or construction of buildings on a leased area, the Lessee shall
submit a plan of proposed development of property to the City, which shall be approved in
writing for all permanent improvements.
8. DEFAULT RIGHT OF ENTRY: Should default be made in the payment
of any portion of the rent or fees when due, or in any of the covenants or conditions contained in
the Lease or in any regulations now or hereinafter in force, then in such event the City shall by
written notice give Lessee thirty (30) days to cure such default or defaults, after which if the
default is not cured, the City may terminate the Lease, reenter and take possession of the
premises, and remove all persons therefrom.
9. RENT ESCALATION: In the event this Lease is for a term in excess of
five (5) years, the amount of rents or fees specified herein shall, at the option of either party, be
subject to redetermination for increase or decrease based on the percentage rate (set in C.1 above)
of fair market value. No increase or decrease in the amount of rents or fees shall be effective,
until after thirty (30) days written notice. Fair Market Value is defined as "the highest price
estimated in terms of money which a property will bring if exposed for sale on the open market
allowing a reasonable period of time to find a purchaser who buys with knowledge of all the uses
to which it is adapted and for which it is capable of being used". This Fair Market Value will be
based on the condition of the land on the date of this lease plus the value of improvements, if
any, made by the City subsequent to the date of this Lease which would affect the value of the
property.
At each five (5) year interval, the City will have the fair market value determined
by a qualified independent appraiser. However, the first rent adjustment shall be made in
2015.
10. LEASE UTILIZATION: Leased lands shall be utilized for purposes within
the scope of the approved application (made a part of this Lease and attached hereto), the terms
of the Lease, the terms of the deed under which the land was granted to the City (and any releases
Lease of Airport Lands — Page 3 of 17 Lessor:
Lessee:
III I'lillillll IIII IIIIIIIIIIIiillil III
3 of 13
2013-010986.0
pertinent thereto), in conformity with the ordinances of the City and Borough, with Kenai Airport
Regulations, and in substantial conformity with the comprehensive plan. Utilization or
development for other than the allowed uses shall constitute a violation of the Lease and subject
the Lease to cancellation at any time. Failure to substantially complete the development plan of
the land, consistent with the proposed use and terms of the Lease, shall constitute grounds for
cancellation.
11. CONDITION OF PREMISES: The premises demised herein are
unimproved and are leased on an "as is, where is" basis.
12. UNDERLYING TITLE: The interests transferred, or conveyed by this
Lease are subject to any and all of the covenants, terms, or conditions contained in the
instruments conveying title or other interests to the City.
13. RIGHT OF INSPECTION: City shall have the right at all reasonable
times to enter the premises, or any part thereof, for the purposes of inspection.
14. INDEMNIFICATION AND INSURANCE: Lessee covenants to
indemnify, defend, save and hold the City, its elected and appointed officials, agents and
employees harmless from all actions, suits, liabilities, or damages, or liability of any nature, kind
or character, including costs, expenses and attorney's fees resulting from or arising out of any
acts of commission or omission by the lessee, his agents, employees, customers, invitees, or
arising from or out of the Lessee's occupation, or use of the premises demised, or privileges
granted, and to pay all costs connected therewith.
Lessee, at the expense of Lessee, shall keep in force, during the term of this
agreement, insurance issued by responsible insurance companies authorized to do business in
Alaska, in forms, kinds and amounts as determined and directed by the City for the protection of
City and/or Lessee. Insurance requirement hereunder shall be subject to the sole determination of
the City. All policies or endorsements thereto shall in all cases where possible name City as
Additional Named Insured thereunder and shall contain a waiver of subrogation against the City.
All insurance shall be by a company/corporation currently rated "A-" or better by A.M. Best.
Upon approval by City of all insurance required, in the forms, kinds and amounts
directed to be procured, Lessee shall deliver all policy originals or duplicate originals and
endorsements thereto to the City for incorporation within this agreement as attachment thereto.
In any event, Lessee is not to commence to exercise any of the rights and privileges granted
under this agreement until such time as all insurance directed and required to be furnished by
Lessee is in full force and effect.
Lessee expressly understands and agrees that any insurance protection furnished
by Lessee hereunder shall in no way limit its responsibility to indemnify and save harmless
Lessor under the provisions of this agreement.
Lease of Airport Lands — Page 4 of 17 Lessor::
Lessee: i/�
III IIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIII
4 of 18
2013-010986-0
No policy of insurance shall be cancelled or amended with respect to the City
without thirty (30) days written notice by registered or certified mail to City by the insurance
company.
Until otherwise directed in writing by the City Manager, Lessee shall provide
certificates of insurance within thirty (30) days of the date hereof as follows:
(a) Comprehensive General Liability, including all operations, property
damage, products and completed operations, and personal injury and
death, broad -form contractual, with a per -occurrence limit of not less than
$1,000,000 combined single limit. If this lease authorizes the Lessee to
engage in the sale or the commercial dispensing or storage of aviation fuel,
the policy must not exclude coverage of the Lessee's fuel handling
activities. This policy must name the City as an additional insured.
(b) Commercial Automobile Covera P with not less than $1,000,000
combined single limit per occurrence. This insurance must cover all
owned, hired, and non -owned motor vehicles used by Lessee.
(c) Workers Compensation Insurance. The Lessee will provide and maintain,
for all employees, coverage as required under AS23.30.045, and, where
applicable, any other statutory obligations. The policy must waive
subrogation against the City.
Notwithstanding anything to the contrary, if Lessee fails or neglects to secure
required insurance or if said policy or policies are terminated, altered, or changed in any manner
not acceptable to the City, then and in that event this lease may be cancelled and terminated,
without penalty, on five (5) days written prior notice to Lessee.
The City may approve a self-insurance program in lieu of the insurance
requirements in this section, if the City finds in its sole discretion that such self-insurance
program adequately protects the City. The typical amount of insurance coverage required is
subject to review and adjustment at the discretion of the City at each five (5) year renegotiation
of the lease.
15. COLLECTION ON UNPAID MONIES: Any or all rents, charges, fees, or
other consideration which are due and unpaid at the expiration of voluntary or involuntary
termination or cancellation of this Lease, shall be a charge against the Lessee and Lessee's
property, real or personal, and the City shall have such lien rights as are allowed by law.
16. EASEMENT GRANTS RESERVED: City reserves the right to grant and
control easements in, or above the land leased. No such grant or easement will be made that will
Lease of Airport Lands — Page 5 of 17
Lessor: 0/t
Lessee:]
III IIIIIIIIII�IIi llillill�l�llllll�ll
5 of to
2013-010986-0
unreasonably interfere with the Lessee's use of the land, and Lessee shall have free access and
use of any and all parking and loading rights, rights of ingress and egress now or hereafter
appertaining to the leased premises.
17. LEASE SUBORDINATE TO FINANCING REQUIREMENTS:
Lessee agrees that City may modify this Lease to meet.revised requirements for Federal or State
grants, or to conform to the requirements of any revenue bond covenant. However, the
modification shall not act to reduce the rights or privileges granted the Lessee by this Lease, nor
act to cause the Lessee financial loss.
18. SURRENDER ON TERMINATION: Lessee shall, on the last day of the
term of this Lease or upon any earlier termination of this Lease, surrender and deliver upon the
premises into the possession and use of City without fraud or delay in good order, condition, and
repair, except for reasonable wear and tear since the last necessary repair, replacement,
restoration or renewal, free and clear of all lettings and occupancies unless expressly permitted
by the City in writing, and free and clear of all liens and encumbrances other than those created
by and for loans to City. Upon the end of the term of this Lease or any earlier termination
thereof, title to the buildings, improvements and building equipment shall automatically vest in
City without requirement of any deed, conveyance, or bill of sale thereon. However, if City
should require any such document in confirmation hereof, Lessee shall execute, acknowledge,
and deliver the same and shall pay any charge, tax, and fee asserted or imposed by any and all
governmental units in connection herewith.
19. AIRCRAFT OPERATIONS PROTECTED:
(a) There is hereby reserved to the City, its successors and assigns, for the use
and benefit of the public, a right of flight for the passage of aircraft in the airspace
above the surface and all improvements approved by the City of the premises
herein conveyed, together with the right to cause in said airspace such noise as
may be inherent in the operation of aircraft, now or hereafter used for navigation
of or flight in the air, using said airspace for landing at, taking off from, or
operating on the Kenai Airport. (When the City approves plans for improvements
pursuant to paragraph 7, the City to the extent of those improvements releases the
easement here expressed.)
(b) The Lessee by accepting this conveyance expressly agrees for itself, its
representatives, successors, and assigns, that it will not erect not permit the
erection of any structure or object, nor permit the growth of any trees on the land
conveyed hereunder, which would be an airport obstruction within the standards
established under the Federal Aviation Administration Regulations, Part 77, as
amended. In the event the aforesaid covenant is breached, the City reserves the
right to enter on the land conveyed hereunder and to remove the offending,
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structure or object, and to cut the offending tree, all of which shall be at the
expense of the Lessee or its heirs, successors or assigns.
20. RIGHT TO ENJOYMENT AND PEACEABLE POSSESSION: City
hereby agrees and covenants that the Lessee, upon paying rent and performing other covenants,
terns, and conditions of this Lease, shall have the right to quietly and peacefully hold, use,
occupy, and enjoy the said leased premises, except that any inconvenience caused by public
works projects in or about the leasehold premises shall not be construed as a denial of the right of
quiet or peaceable possession.
21. LESSEE TO PAY TAXES: Lessee shall pay all lawful taxes and
assessments which, during the tern hereof may become a lien upon or which may be levied by
the State, Borough, City, or any other tax levying body, upon any taxable possessory right which
Lessee may have in or to the property by reason of its use or occupancy or the terms of this lease,
provided however, that nothing herein contained shall prevent Lessee from contesting any
increase in such tax or assessment through procedures outlined in State statutes.
22. SPECIAL SERVICES: Lessee agrees to pay the City a reasonable charge
for any special services or facilities not provided for herein if requested by Lessee in writing, and
if the City agrees to provide such services or facilities.
23. NO PARTNERSHIP OR JOINT VENTURE CREATED: It is expressly
understood that the City shall not be construed or held to be a partner or joint venturer of Lessee
in the conduct of business on the demised premises; and it is expressly understood and agreed
that the relationship between the parties hereto is, and shall at all times remain landlord and
tenant.
24. DEFAULT BANKRUPTCY. ETC.: If the Lessee shall make any
assignment for the benefit of creditors or shall be adjudged a bankrupt, or if a receiver is
appointed for the Lessee or Lessee's assets, or any interest under this Lease, and if the
appointment of the receiver is not vacated within thirty (30) days, or if a voluntary petition is
filed under Section 18(a) of the Bankruptcy Act by the Lessee, then and in any event, the City
may, upon giving the Lessee thirty (30) days' notice, terminate this lease.
25. NONDISCRIMINATION: The Lessee, for himself, his heirs, personal
representatives, successors in interest, and assigns, as a part of the consideration hereof, does
hereby covenant and agree as a covenant running with the land, that:
(a) No person on the grounds of race, color, or national origin shall be
excluded from participation in, denied the benefits of, or be otherwise subjected to
discrimination in the use of said facilities;
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(b) In the construction of any improvements on, over or under such land and
the famishing of services thereon, no person on the grounds of race, color, or
national origin shall be excluded from participation, denied the benefits of, or
otherwise be subjected to discrimination;
(c) The Lessee shall use the premises in compliance with all other
requirements imposed by or pursuant to Title 49, Code of Federal Regulations,
Department of Transportation, Subtitle A, Office of the Secretary, Part 21,
Nondiscrimination in Federally -assisted Programs of the Department of
Transportation -Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations maybe amended.
(d) In the event facilities are constructed, maintained, or otherwise operated
on the said property described in this Lease, for a purpose involving the provision
of similar services or benefits, the Lessee shall maintain and operate such facilities
and services in compliance with all other requirements imposed pursuant to Title
49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office
of the Secretary, Part 21, Nondiscrimination in Federally -assisted Programs of the
Department of Transportation - Effectuation of Title VI of the Civil Rights Act of
1964, and as said Regulations may be amended.
26. PARTIAL INVALIDITY: If any term, provision, condition, or part of this
Lease is declared by a court of competent jurisdiction to be invalid or unconstitutional, the
remaining terms, provisions, conditions, or parts shall continue in full force and effect as though
such declaration was not made.
27. MODIFICATIONS: No lease may be modified orally or in any manner
other than by an agreement in writing, signed by all parties in interest or their successors in
interest. Any such modification shall require Council approval.
28. WARRANTY: The City does not warrant that the property which is the
subject of this Lease is suited for the use authorized herein, and no guarantee is given or implied
that it shall be profitable or suitable to employ the property to such use.
29. RIGHT TO ADOPT RULES: City reserves the right to adopt, amend, and
enforce reasonable rules and regulations governing the demised premises and the public areas
and facilities used in connection therewith. Except in cases of emergency, no rule or regulation
hereafter adopted or amended by the City shall become applicable unless Lessee has been given
thirty (30) days notice of adoption or amendment thereof.
30. NON -LIABILITY: City shall not be liable to Lessee for any diminution or
deprivation of possession, or of Lessee's right hereunder, on account of the exercise of any such
right or authority as provided in this or the preceding section, nor shall Lessee be entitled to
Lease of Airport Lands — Page 8 of 17
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terminate the whole or any portion of the leasehold estate herein created, by reason of the
exercise of such rights or authority, unless the exercise thereof shall so interfere with Lessee's use
and occupancy of the leasehold estate as to constitute a termination in whole or in part of this
lease by operation of law in accordance with the laws of the State of Alaska and of the United
States made applicable to the states.
31. FINANCING:
(a) Lessee, after giving written notice thereof to the City, may encumber by
mortgage, deed of trust, assignment or other appropriate instrument. Lessee's
interest in the leased premises and in and to this Lease, provided such
encumbrance pertains only to such leasehold interest and does not pertain to or
create any interest in City's title to the leased prernises. If such mortgage, deed of
trust, or assignment shall be held by a bank or other established lending or
financial institution (which terms shall include an established insurance company
and qualified pension or profit sharing trust) and such institution shall acquire the
Lessee's interest in such Lease as a result of a sale under said encumbrance
pursuant to a foreclosure or other remedy of the secured party, or through any
transfer in lieu of foreclosure, or through settlement of or arising out of any
pending or contemplated foreclosure action, such lending institution shall have the
privilege of transferring its interest in such Lease to a nominee or a wholly owned
subsidiary corporation with the prior consent of the City, provided, however, such
transferee shall assume all of the covenants and conditions required to be
performed by the Lessee, whereupon such lending institution shall be relieved of
any further liability under such Lessee from any default after such transfer. Such
lending institution or the nominee or wholly owned subsidiary corporation to
which it may have transferred such Lease, or any other lending institution which
may at any time acquire such lease shall be relieved of any further liability under
such lease from and after a transfer of such lease.
(b) A leasehold mortgagee, beneficiary of a deed of trust or security assignee,
shall have and be subrogated to any and all rights of the Lessee with respect to the
curing of any default hereunder by Lessee.
(c) If the holder of any such mortgage, or the beneficiary of airy such deed of
trust, or the security assignee shall give the City before any default shall have
occurred in the Lease, a written notice containing the name and post office address
of such holder, the City shall thereafter give to such holder a copy of each notice
of default by the Lessee at the same time as any notice of default shall be given by
the City to the Lessee, and the City will not thereafter accept any surrender or
enter into any modification of this Lease without the prior written consent of the
holder of any first mortgage, beneficial interest under a first deed of trust, or
security assignee, in this Lease.
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(d) If, by reason of any default of the Lessee, either this lease or any extension
thereof shall be terminated at the election of the City prior to the stated expiration
therefor, the City will enter into a new Lease with the leasehold mortgagee for the
remainder of the term, effective as of the date of such termination, at the rent and
additional rent, and on the terms herein contained, subject to the following .
conditions:
(1) Such mortgagee, beneficiary or security assignee, shall make written
request to the City for such new Lease within twenty (20) days after the
date of such termination and such written request shall be accompanied by
a payment to the City of all sums then due to the City under this Lease.
(2) Such mortgagee, beneficiary, or security assignee, shall pay to the
City, at the time of the execution and delivery of such new lease any and
all sums due thereunder in addition to those which would at the time of the
execution and delivery thereof be due under this Lease but for such
termination, and in addition thereto, any reasonable expenses, including
legal and attorneys' fees, to which the City shall have been subjected by
reason of such default.
(3) Such mortgagee, beneficiary, or security assignee shall, on or before
the execution and delivery of such new Lease, perform all the other
conditions required to be performed by the Lessee to the extent that the
Lessee shall have failed to perforin such conditions.
(e) if a lending institution or its nominee or wholly owned subsidiary
corporation shall hold a mortgage, deed of trust, or similar security interest in and
to this Lease and shall thereafter acquire a leasehold estate, derived either from
such instruments or from the City, and if such institution, nominee, or corporation
shall desire to assign this Lease or any new Lease obtained from the City (other
than to a nominee or to a wholly owned subsidiary corporation as permitted by the
above provisions) to an assignee who will undertake to perform and observe the
conditions in such Lease required to be performed by the Lessee, the City shall not
unreasonably withhold its consent to such assignment and assumption, and any
such lending institution, nominee, or subsidiary shall be relieved of any further
liability under such Lease from and after such assignment. if the proposed
assignor shall assert that the City is unreasonably withholding its consent to any
such proposed assignment, such dispute shall be resolved by arbitration.
32. HAZARDOUS MATERIALS AND HAZARDOUS WASTE: City and
Lessee agree that each shall comply with all applicable laws and regulations concerning
hazardous chemicals and other hazardous materials, and shall properly store, transfer and use all
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hazardous chemicals and other hazardous materials and not create any environmental hazards on
the lands leased herein.
Should any hazardous chemicals or hazardous materials of any kind or nature
whatsoever, or hazardous wastes to be released by Lessee upon the subject lands during the term
of this lease, Lessee shall immediately report such release to !he City Manager or other
appropriate City official and to any other agency as may be required by law, and Lessee shall, at
its own cost, assess, contain and clean up such spilled materials in the most expedient manner
allowable by law.
City and Lessee agree to hold harmless and indemnify the other from, and to
assume all duties, responsibilities and liabilities at the indemnifying party's sole cost and expense
(for payment of penalties, sanctions, forfeitures, losses, costs or damages), for responding to any
action, notice, claim, order, summons, citation, directive, litigation, investigation or proceeding
which is related to (i) failure to comply with any local, state or federal statutes, regulations, or
ordinances pertaining to hazardous chemicals, hazardous materials, hazardous wastes, or any
environmental conditions or matters as may now or hereafter be in effect, and (ii) any
environmental conditions that arise out of or are in any way related to the condition of the
property or activities conducted by the party thereon, unless the environmental conditions that are
caused by the other party. The indemnifications of this paragraph specifically include reasonable
costs, expenses and fees incurred in connection with any investigation of property conditions or
any clean-up, remediation, removal or restoration work required by any governmental authority.
The provisions of this paragraph will survive the expiration or termination of this right to
terminate this Lease upon notice to the City of Kenai. Interference is defined as anything that
prohibits the uses specified in Section 3 of this lease.
As used herein, "hazardous chemical" means a chemical that is a physical hazard
or a health hazard.
As used herein, "hazard material" means a material or substance, as defined in 49
C.F.R. 171.8, and any other substance determined by the federal government, the state of Alaska
or City of Kenai, to pose a significant health and safety hazard.
As used herein, "hazardous waste" means a hazardous waste as identified by the
Environmental Protection Agency under 40 C.F.R. 261, and any other hazardous waste as
defined by the federal government, the state of Alaska or City of Kenai.
The covenants and obligations described in this article shall survive the
termination of this lease.
33. COMPLIANCE WITH LAWS: Lessee shall comply with all applicable
laws, ordinances, and regulations of public authorities now or hereafter in any manner affecting
the leased premises or the sidewalks, alleys, streets, and ways adjacent thereto or any buildings,
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structures, fixtures and improvements or the use thereof, whether or not any such laws,
ordinances, and regulations which may be hereafter enacted involve a change
of policy on the part of the governmental body enacting the same. Lessee agrees to hold City
financially harmless:
(a) From the consequences of any violation of such laws, ordinances, and/or
regulations; and
(b) From all claims for damages on account of injuries, death, or property
damage resulting from such violation.
(c) Lessee further agrees it will not permit any unlawful occupation, business,
or trade to be conducted on said premises or any use to be made thereof contrary
to any law, ordinance, or regulation as aforesaid with respect thereto, including
coning ordinances, rules and regulations.
34. CARE OF PREMISES: Lessee, at its own cost and expense shall keep the
]eased premises, all improvements which at any time during the term of this Lease may be
situated thereon, and any and all appurtenances thereunto belonging, in good condition and repair
during the entire term of this Lease.
35. SANITATION: The Lessee shall comply with all regulations or
ordinances of the City that are promulgated for the promotion of sanitation. The premises of the
lease shall be kept in neat, clean, and sanitary condition, and every effort shall be made to
prevent the pollution of water.
36. LESSEE'S OBLIGATION TO REMOVE LIENS: Lessee will not permit
any liens including, but not limited to, mechanics', laborers', or materialmen's liens obtainable or
available under the then existing laws, to stand against the leased premises or improvements for
any labor or material furnished to Lessee or claimed to have been furnished to Lessee or to the
Lessee's agents, contractors, or sublessees, in connection with work of any character performed
or claimed to have been perfonned on said premises or improvements by or at the direction or
sufferance of Lessee, provided, however, Lessee shall have the right to provide a bond as
contemplated by Alaska law and contest the validity or amount of any such lien or claimed lien.
On final determination of such lien or such claim for lien, Lessee will immediately pay any
judgement rendered with all proper costs and charges and shall have such lien released or
judgement satisfied at Lessee's own expense.
37. CONDEMNATION: In the event the leased premises or any part thereof
shall be condemned and taken for a public or a quasi -public use, then upon payment of any award
or compensation arising from such condemnation, there shall be such division of the proceeds,
such abatement in rent payable during the term or any extension of the tern hereof, and such
other adjustments as the parties may agree upon as being just and equitable under all the
��/j
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circumstances. If the City and Lessee are unable to agree within thirty (30) days after such an
award has been paid into Court, upon what division, airnual abatement in rent, and other
adjustments are just and equitable, the dispute shall be determined by arbitration.
38. PROTECTION OF SUBTENANTS: To protect the position of any
subtenant(s)hereafter properly obtaining any interests in the leasehold estate granted Lessee
hereunder, City agrees that in the event of the cancellation, termination, expiration, or surrender
of this Lease (the ground lease), the City will accept the Subtenant, its successors and assig is, as
its lessee for a period equal to the full unelapsed portion of the term of the sublease, including
any extensions or renewals thereof, not exceeding the term of this Lease, upon the same
covenants and conditions therein contained, to the extent that said covenants and conditions are
not inconsistent with any of the terms and conditions of this Lease, provided such subtenant shall
make full and complete attomment to the City for the balance of the term of such sublease so as
to establish direct privity of estate and contract between the City and the subtenant with the same
force and effect as though such sublease was originally made directly between the City and such
subtenant; and further provided such subtenant agrees to comply with all the provisions of the
ground lease and all the terns of any mortgage, deed of trust, or security assignment to which
such leasehold estate is subject, except the payment of rent under the ground lease and the
payment of any debt service under any such mortgage, deed of trust, or security assignment.
39. SUCCESSORS IN INTEREST: This Lease shall be binding upon and
shall inure to the benefit of the respective successors and assigns of the parties hereto, subject to
such specific limitations on assignment as are provided for herein.
40. GOVERNING LAW: This indenture of Lease shall be governed in all
respects by the laws of the State of Alaska.
41. NOTICES:
(a) Any notices required by this Lease shall be in writing and shall be deemed to
be duly given only if delivered personally or mailed by certified or registered mail
in a prepaid envelope addressed to the parties at the address set forth in the
opening paragraph of this lease unless such address has been changed pursuant to
sub -paragraph (b) hereafter, and in that case shall to the most recent address so
changed.
Any notice so mailed shall be deemed delivered on the date it is deposited in a
U.S. general or branch post office.
The City shall also mail a copy of any notice given to the Lessee, by registered or
certified mail, to any leasehold lender (mortgagee, beneficiary of a deed of trust,
security assignee) who shall have given the City notice of such mortgage, deed of
trust, or security assignment.
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(b) Any such addresses may be changed by an appropriate notice in writing to all
other parties affected provided such change of address is given to the other
parties by the means outlined in paragraph (a) above at least fifteen (15) days prior
to the giving of the particular notice in issue.
42. RIGHTS OF MORTGAGEE OR LIENHOLDER: In the event of
cancellation or forfeiture of a lease for cause, the holder of a property recorded mortgage, deed of
trust, conditional assignment or collateral assignment will have the option to acquire the Lease
for the unexpired term thereof, subject to the terms and conditions as in the original lease.
43. ENTRY AND RE-ENTRY: In the event that the Lease should be
terminated as hereinbefore provided, or by summary proceedings or otherwise, or in the event
that the demised lands or any part thereof should be abandoned by the Lessee during said term,
the Lessor or its agents, servants, or representatives may, immediately or any time thereafter,
re-enter, and resume possession of said lands or such part thereof, and remove all persons and
property therefrom, either by summary proceedings or by a suitable action or proceeding at law
without being liable for any damages therefor. No re-entry by the Lessor shall be deemed an
acceptance of a surrender of the Lease.
44. RETENTION OF RENTAL: In the event that the Lease should be
terminated because of any breach by the Lessee as herein provided, the rental payment last made
by the Lessee shall be retained by the Lessor as partial or total damages for said breach.
45. WRITTEN WAIVER: The receipt of rent by the Lessor with knowledge
of any breach of the Lease by the Lessee, or any default on the part of the Lessee in observance
or performance of any of the conditions or covenants of the Lease, shall not be deemed to be a
waiver of any provisions of the Lease. No failure on the part of the Lessor to enforce any
covenant or provision therein contained, nor any waiver of any right thereunder by the Lessor,
unless in writing, shall discharge or invalidate such covenants or provisions, or affect the right
of the Lessor to enforce the same in the event of any subsequent breach or default. The receipt,
by the Lessor, of any rent or any other sum of money after the termination, in any manner, of
the tens therein demised, or after the giving of the Lessor of any notice thereunder to effect such
termination, shall not reinstate, continue, or extend the resultant term therein demised, or
destroy, or in any manner impair the efficacy of any such notice of termination as may have
been given thereunder by the Lessor to the Lessee prior to the receipt of any such sum of
money or other consideration, unless so agreed to in writing and signed by the Lessor.
46. BUILDING AND ZONING CODES: Leased lands shall be utilized in
accordance with the building and zoning ordinances and rules and regulations of said authority.
Failure to do so shall constitute default.
Lease of Airport Lands — Page 14 of 17
Lessor:
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47. FIRE PROTECTION: The Lessee will take all reasonable precautions to
prevent, and take all necessary action to suppress destructive or uncontrolled fires and comply
with all laws, regulations, and rules promulgated and enforced by the City for fire protection
within the area wherein the leased premises are located.
48. PERSONAL USE OF MATERIALS: All coal, oil, gas and other
minerals and all deposits of stone or gravel valuable for extraction or utilization are excepted
from the operation of a surface Lease. Specifically, the Lessee of the surface rights shall not sell
or remove for use elsewhere any timber, stone, gravel, peat moss, topsoil or any other material
valuable for building or commercial purposes; provided, however, that material required for the
development of the leasehold may be used if its use is first approved by the City Manager.
49. MUTUAL CANCELLATION: Leases in good standing may be cancelled
in whole or in part at any time upon mutual written agreement by Lessee and the City Council.
50. UNLAWFUL USE PROHIBITED: Lessee shall not allow the leasehold
premises to be used for an unlawful purpose.
51. APPROVAL OF OTHER AUTHORITIES: The issuance by the City of
leases does not relieve the Lessee of responsibility of obtaining licenses or permits as may be
required by duly authorized Borough, State or Federal agencies.
52. REQUEST TO PURCHASE: If the tract of land proposed to be sold is
leased land where the lease sets forth a development schedule, the lessee may request the sale of
said land at not less than fair market value. The current lessee obtains the right to request a sale
only after, to the satisfaction of the City Manager, completed development as detailed in the
development schedule that has been incorporated into the lease agreement. The decision whether
or not to sell the property rests within the sole discretion of the City.
53. NOTICE OF CONSTRUCTION: Lessee agrees to notify the City in
writing three days prior to commencing any construction project valued in excess of $1,000.00
upon the property. Lessee agrees to assist in the posting of a notice of non -responsibility and
maintenance of the notice upon the property during construction. Lessee agrees that in the event
of the Lessee's failure to notify the City as provided above, Lessee shall indemnify the City
against any materialmen's liens as defined in AS 34.35.050 which arise as a result of construction
upon the premises.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and
year stated in the individual acknowledgments below.
Lease of Airpon Lands — Page 15 of 17 Lessor: I'
Lessee: w(
is of 18
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:,"PP tUVED By COUNCIL
Dale-, wl,141 13 -sem
(If Lessee is a Corporation)
ATTEST:
Name
Title
STATE OF AZ*SK:X Ti5XA 5 )
Ccua e� Hprzs ) ss.
-sei^t=MT )
LESSOR:
CITY OF KENAI
M
LESSEE:
BUCCANEER ALASKA OPERATIONS, LLC
By:
THIS IS TO CERTIFY tnISat on this 1 b'' day of Qefcl:,d 2013, Name: IUAr h I LnNor
Tile Vu "V�c1H ; -ladn -+ kkw i re i n of BUCCANEER ALASKA OPERATIONS, LLC, being
personally known to me or having produced satisfactory evidence of identification, appeared
before me and acknowledged the voluntary and authorized execution of the foregoing instrument
o Qr�➢aii➢a
v r
Paula Hastreiter
x My Commission Expires �awel lJk.�%t,
qF
07/1812015
Notary Pubic for _A1251<dTEXfi 5
My Commission Expires: 7 11' i 5
Lease of Airpon Lands — Page 16 of 17
Lessor: k
Lessee:
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16 of to
2013.010986-0
STATE OF ALASKA )
ss.
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this � day ofr LN�� 2013, Rick R. Koch, City
Manager of the City of Kenai, Alaska, being personally known to me or having produced
satisfactory evidence of identification, appeared before me and acknowledged the voluntary and
authorized execution of the fore wg,i%Vment on behalf of said City.
a
_' ^
Notary Public for Alaska
My Commission Expires: t� Oi A1C L
Approved as to lease form by -City Att
Approved by Finance Director:
Le proved b}t Council on
Sana odi h, Cit Jerk
RETURN TO:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Lease of Airport Lands — Page 17 of 17 Lessor:
Lessee:
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18 of 18
2013-010986-0
MEMO:
ATTACHMENT C
"Villaye with a Past, Gc�y with a Future"
210 Fidalgo Avenue, Kenai, Alaska 99611-7794
Telephone: (907) 283-7535 / FAX: (907) 283-3014
www dkenai.ak.us
Rick Koch, City Manager
FROM: Christine Cunningham, Assistant to the City Manager YY'"
DATE: November 13, 2014
SUBJECT: Assignment of Lease(s) between Buccaneer Alaska Operations, LLC
and AIX Energy, LLC for Lease of Airport Lands
1. ITEM G-9 — Tract A-2, Kenai Spur Airport Lease Property
2. ITEM G-10 —Lot 8, Kenai Industrial Park Subdivision
Assets owned by Buccaneer Alaska Operations, LLC (Buccaneer) were purchased by AIX
Energy, LLC (AIX) on November 7, 2014. The sale contemplated the assignment of the
referenced City of Kenai leases with no change in the use being proposed.
Buccaneer entered into a lease with the City for Tract A-2, Kenai Spur Airport Lease
Property for the purpose of locating a pig catcher, metering skid, and installation of an
underground 6 -inch pipeline for delivery of gas from Kenai Loop Field for a term of 20 years,
effective November 1, 2011. Buccaneer also entered into a lease with the City for Lot 8,
Kenai Industrial Park Subdivision for the purpose of operating a Natural Gas Production
Facility and operation of a Class 11 Injection Facility for the storage/disposal of onsite and
offsite materials for a term of 30 years, effective November 1, 2013. Both of these leases are
located on Airport Land outside of the Kenai Municipal Airport Reserve and require the
written consent of the City Council for any assignment.
AIX has worked with the City Attorney in completing the attached assignment documents for
the above leases as well as transfer/assignment of a Natural Gas Pipeline Easement,
Drilling Permit, Right of Entry, and Conditional Use Permit(s), The City Attorney
recommends any consent to assignment or approval of a new permit be conditioned on
AIX's explicit consent to continue to allow the City access to the seismic data provided in
the General License Agreement for Use of Proprietary Data between the City and
Buccaneer dated March 22, 2012.
If the City Council approves the assignment, the Consent to Assignment and Assignment of
Lease can be executed.
cc: AIX Energy, LLC
Attachments
CITY OF KENAI
CONSENT TO ASSIGNMENT
The Assignment of that certain lease entered into on December 7, 2011 and recorded at 2011-
011242-0, Kenai Recording District, from BUCCANEER ALASKA OPERATIONS, LLC, whose
address is c/o Conway MacKenzie, 1301 McKinney St., Suite 2025, Houston, Texas 77010, to AIX
ENERGY LLC, whose address is 2441 High Timbers Drive, Suite 120, The Woodlands, TX 77380,
covering the following -described property:
Tract A-2, Kenai Spur Airport Lease Property, T 5N R I1 W Section 5, Seward Meridian,
Third Judicial District, State of Alaska, According to attached preliminary plat marked as
"Exhibit A" and incorporated here by reference.
is hereby ACKNOWLEDGED AND APPROVED, subject to the same terms and conditions as
contained in the original lease above-described.
This Consent is given by the City of Kenai without waiving any right or action, or releasing
the Assignor from any liability or responsibility under the aforementioned Lease, and does not
relieve the Assignee from the condition requiring the City's approval for any subsequent sublease or
assignment.
Dated this _day of 2014.
Rick Koch
City Manager
Approved as to form:
Scott Bloom, City Attorney
Consent to Assignment of Lease — Tract A-2, Kenai Spur Airport Lease Property Page 1 of 2
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this day of 2014, RICK KOCH, City
Manager of the City of Kenai, Alaska, being personally known to me or having produced satisfactory
evidence of identification, appeared before me and acknowledged the voluntary and authorized
execution of the foregoing instrument on behalf of said City.
Notary Public for Alaska
My Commission Expires:
Return to:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Consent to Assignment of Lease — Tract A-2, Kenai Spur Airport Lease Property Page 2 of 2
ASSIGNMENT OF LEASE
This ASSIGNMENT is entered into between BUCCANEER ALASKA OPERATIONS,
LLC, whose address is c/o Conway MacKenzie, 1301 McKinney St., Suite 2025, Houston, Texas
77010 (Assignor), and AIX ENERGY LLC, whose address is 2441 High Timbers Drive, Suite
120, The Woodlands, TX 77380 (Assignee).
Assignor does hereby assign and transfer all of Assignor's interest in the leasehold estate
as provided by that certain Lease of Airport Lands with the CITY OF KENAI as Lessor, entered
into on December 7, 2011 and recorded at 2011-011242-0, Kenai Recording District and for the
following -described property:
Tract A-2, Kenai Spur Airport Lease Property, T 5N R 11 W Section 5, Seward Meridian,
Third Judicial District, State of Alaska, According to attached preliminary plat marked as
"Exhibit A" and incorporated here by reference.
to Assignee to have and to hold the same from the date hereof, for and during all of the
remainder of the term of said Lease Agreement.
Assignee agrees to comply fully with all the terms and provisions of the Lease.
This Assignment of Lease is effective beginning on, the first (1") day of October, 2014.
ASSIGNOR:
BUCCANEER ALASKA OPERATIONS, LLC
By:
Name: John T "Young, r.
Title: Chief Restructuring Officer
ASSIGNEE:
AIX E Y, LLC
By:
Name: andy tes
Title: ana r
Assignment of Lease — Tract A-2, Kenai Spur Airport Lease Property Page 1 of 2
State of Texas )
) ss
County of Harris )
The foregoing instrument was acknowledged before me this MA day of November, 2014, by
John T. Young, Jr., Chief Restructuring Officer of BUCCANEER ALASKA OPERATIONS,
LLC, an Alaska limited liability company, on behalf of said limited liability company.
State of Texas ) oFP SHIRLEY T WILSON
NOTARY PUBLIC. STATE OF TEXA
) ss � a MY COMMISSION EXPIRES
County of Harris ) F DEC. 5, 2017
The foregoing instrument was acknowledged before me this ?�h day of November, 2014, by
Randy A. Bates, Manager of AIX ENERGY, LLC, a Delaware limited liability company, on
behalf of said limited liability company.
Approved as to form:
Scott Bloom, City Attorney
Return to:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Notary Pu lic of Texas
�Il!!!lIIlIV/!!ll!!llll, i
Q
SHIRLEY T WILSON
t NOTARYPUOLIQ S TATE OF TEXAS
MY COMMISSION EXPIRES t
DEC. 5, 2017 Is
Assignment of Lease — Tract A-2, Kenai Spur Airport Lease Property Page 2 of 2
CITY OF KENAI
CONSENT TO ASSIGNMENT
The Assignment of that certain lease entered into on October 18, 2013 and recorded at 2013-
010986-0, Kenai Recording District, from BUCCANEER ALASKA OPERATIONS, LLC, whose
address is c/o Conway MacKenzie, 1301 McKinney St., Suite 2025, Houston, Texas 77010, to AIX
ENERGY LLC, whose address is 2441 High Timbers Drive, Suite 120, The Woodlands, TX 77380,
covering the following -described property:
Lot 8, Kenai Industrial Park Subdivision
is hereby ACKNOWLEDGED AND APPROVED, subject to the same terms and conditions as
contained in the original lease above-described.
This Consent is given by the City of Kenai without waiving any right or action, or releasing
the Assignor from any liability or responsibility under the aforementioned Lease, and does not
relieve the Assignee from the condition requiring the City's approval for any subsequent sublease or
assignment.
Dated this _day of 2014.
Rick Koch
City Manager
Approved as to form:
Scott Bloom, City Attorney
Consent to Assignment of Lease — Lot 8, Kenai Industrial Park Subdivision Page 1 of 2
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this day of 2014, RICK KOCH, City
Manager of the City of Kenai, Alaska, being personally known to me or having produced satisfactory
evidence of identification, appeared before me and acknowledged the voluntary and authorized
execution of the foregoing instrument on behalf of said City.
Notary Public for Alaska
My Commission Expires:
Return to:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Consent to Assignment of Lease — Lot 8, Kenai Industrial Park Subdivision Page 2 of 2
ASSIGNMENT OF LEASE
This ASSIGNMENT is entered into between BUCCANEER ALASKA OPERATIONS,
LLC, whose address is c/o Conway MacKenzie, 1301 McKinney St., Suite 2025, Houston, Texas
77010 (Assignor), and AIX ENERGY LLC, whose address is 2441 High Timbers Drive, Suite
120, The Woodlands, TX 77380 (Assignee).
Assignor does hereby assign and transfer all of Assignor's interest in the leasehold estate
as provided by that certain Lease of Airport Lands with the CITY OF KENAI as Lessor, entered
into on October 18, 2013 and recorded at 2013-010986-0, Kenai Recording District and for the
following -described property:
Lot 8, Kenai Industrial Park Subdivision
to Assignee to have and to hold the same from the date hereof, for and during all of the
remainder of the term of said Lease Agreement.
Assignee agrees to comply fully with all the terms and provisions of the Lease.
This Assignment of Lease is effective beginning on, the first (15) day of October, 2014.
ASSIGNOR:
BUCCANEER ALASKA OPERATIONS, LLC
By:
Name: John Ti Your. , r. lzzz -2-%
Title: Chief Restructuring Officer
ASSIGNEE:
AIX ENERGY, LLC
By: _
Name:F tes
Title: er
Assignment of Lease — Lot 8, Kenai Industrial Park Subdivision Page 1 of 2
State of Texas )
) ss
County of Harris )
The foregoing instrument was acknowledged before me this J day of November, 2014, by
John T. Young, Jr., Chief Restructuring Officer of BUCCANEER ALASKA OPERATIONS,
LLC, an Alaska limited liability company, on behalf of said limited liability company.
Notary P blic of Texas
My Commission Expires:
�seavvii..vri.��
Y/P SHIRLEY T WILSON l�
State of Texas ) i c�L t NOT�NY Pu3VC, STATE OF TEXAS
1
/�`f,( MY COMMISS ION EXPIRES ,
ss ' OF DEC. 5, 2017
County of Harris ) !!lcyrwirv!!!!!!!!!!�
The foregoing instrument was acknowledged before me this %�` day of November, 2014, by
Randy A. Bates, Manager of AIX ENERGY, LLC, a Delaware limited liability company, on
behalf of said limited liability company.
Approved as to form:
Scott Bloom, City Attorney
Return to:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Notary P blic of Texas
My Commission Expires:
!!I!I!lN/JIi!!!!lIIIlI�
P SHIRLEY T WILSON
1;!C
NOTARY COMMISSION
STATE Of TEXAS,
a MY COMMISSION EXPIRES
r DEC. 5. 2017
!!1llJIlIIIIItII.�III!!§
Assignment of Lease — Lot 8, Kenai Industrial Park Subdivision Page 2 of 2
PeRKINSCOIe
February 13, 2020
VIA HAND DELIVERY
Commissioner Jeremy Price, Chair
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue, Suite 100
Anchorage, AK 99501
1029 West Third Avenue O -1.907.279.8561
Suite 300 O *1907.2763108
Anchorage. AK 99501-1981 perklnscoe.corn
Elena M. Romerdahl
ERomerdahl@perkins oie.com
D, +1.907.263.6914
F. +1.907.263.6428
Re: Supplement to August 7, 2019 Request for Recalculation of Outstanding
Bonding Obligation
Dear Commissioner Price:
AIX Energy LLC ("AIX") submits the following supplemental documents in support of its
August 7, 2019 Request for Recalculation of Outstanding Bonding Obligation:
• Attachment A: $500,000 surety bond with RLI Insurance for the State of Alaska,
Alaska Department of Natural Resources, Division of Oil & Gas Statewide Oil and
Gas Bond
Attachment B: $950,000.00 Performance Deposit Certificate of Deposit with
Amegy Bank of Texas for the State of Alaska, Alaska Department of Natural
Resources, Alaska Mental Health Trust Land Office
Attachment C: $200,000 surety bond with RLI Insurance for the State of Alaska,
Alaska Oil and Gas Conservation Commission Blanket Bond
AIX looks forward to discussing its pending requests further at the hearing today. Thank
you again for your consideration.
Respectfully,
Elena Romerdahl
Counsel for AIX
RECEIVED
FEB 13 2020
AOGCC
ATTACHMENT A
AIX Energy LLC
December 29, 2014
State of Alaska
Department of Natural Resources
Division of Oil and Gas
550 W. 7t° Avenue, Suite 1100
Anchorage, AK 99501
Attn: Tom Barrett, Permitting
Re: AIX Energy LLC Bonding for DNR lease assignments
Dear Tom,
As a follow-up to our phone conversation of this morning, please find enclosed the
original statewide oil and gas bond No. RLB0015860 for leases currently in the
assignment process: ADL 391091, 391092, 391094, and 391095.
Upon completion of the assignment of leases, a representative of AIX Energy LLC
will contact the Division of Oil and Gas Permitting Section.
Please call if you have any questions or concerns regarding the above. For questions
concerning the above mentioned leases, please contact Clayton King, V.P. Land,
281-863-9941.
2441 High Timbers Drive, Suite 120' The Woodlands, TX 77380 ` Phone: 832.813.0900 1 Fax 832-585.0133
Fan DOGIPCU-01
October 2011
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF OIL AND GAS
STATEWIDE OIL AND GAS BOND
KNOW ALL MEN BY THESE PRESENTS that we.
AIX Enerav LLC
as principal, and
RLI Insurance Company
whose address is
8 Greenway Plaza, Suite 400, Houston, Texas 77046
ATTACHMENT A
Bond No. RLB0015860
Fite No.
as surety, are held and firmly bound unto the State of Alaska in the sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00), lawful money of the United States for the use and benefit
of (I ) 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, well and truly to be
made, 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. The principal in one or more of the following ways has an interest in oil and gas leases on
lands of the State of Alaska under the jurisdiction of the Department of Natural
Resources: ( I ) as the lessee of such leases, (2) as the approved holder of operating rights
in all or part of the lands covered by such leases under operating agreements with the
lessee, and (3) as designated operator or agent under such leases pending approval of an
assignment or operating agreement; and,
B. The principal is authorized to drill for, explore for, develop, produce, process, and market
oil and gas deposits in or tinder the lands covered by such leases and is obligated to
comply with certain covenants and agreements set forth in such leases; and,
C. The principal and surety agree that the coverage of this bond shall extend to all of the
principal's holdings under such leases in the State of Alaska, and without notice to the
surety shall also extend to and include:
Any such oil and gas lease hereafter issued to or acquired by the principal, the
coverage to become effective immediately upon such issuance or upon approval by
the Stale of Alaska of a transfer in favor of the principal; and,
!food NO. Ab 0615W
ATTACHMENT A
2. Any such operating agreement hereafter entered into or acquired by the principal, the
coverage to become effective immediately upon approval by the State of Alaska of
the agreement or of a transfer of such an agreement to the principal; and,
3. Any designation hereafter or the principal as operator or agent of a lessee under such
a lease, the coverage to become effective immediately upon the filing of such a
designation with the State of Alaska; and,
4. Any extension of a lease covered by this bond, such coverage to continue without any
interruption due to the expiration of the term set forth in the lease;
Provided however. that the surety may elect to have additional coverage authorized under
this Paragraph C, to become inapplicable as to all interests of the principal acquired more
than 30 days after the receipt of written notice of such election by the Division of Oil and
Gas; and,
D. The surety hereby waives any right to notice of, and agrees that this bond shall remain in
full force and effect notwithstanding:
A transfer or transfers, either in whole or in part, of any or all of the leases or of the
operating agreements, and further agrees to remain bound under this bond as to the
interests, either in the leases or in the operating agreements or in both, retained by the
principal when the approval of the transfer or transfer becomes effective; and.
2, Any modification of lease or operating agreement or obligations thereunder whether
made or effected by commitment of such lease or operating agreement to unit.
cooperative, communitization, 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. The principal and surety agree that notwithstanding the termination of any lease or leases,
operating agreements, or designations as operator or agent covered by this bond, whether
the termination, in part or wholly is by operation of law or otherwise, the bond shall
remain in full force and effect as to all remaining leases. operating agreements, or
designations covered by this bond; and,
F. The principal, as to any lease or part of a lease for lands as to which he has been
designated as operator or agent or approved as operator in consideration of being
permitted to furnish this bond in lieu of the lessees, agrees and by these presents does
hereby bind himself to fulfill on behalf of each lessee all the obligations of each such lease
for the entire leasehold in the same manner and to the same extent as though he were the
lessee; and,
G. The principal and surety agree that the neglect or forbearance of the lessor, in enforcing
against the lessees of such lessor the payment of rentals or royalties or the performance of
any other covenant, conditions, or agreement of the leases, shall not in any way release the
principal and surety, or either of them, from any liability under this bond; and,
ATTACHMENT A
H. The principal and surety agree that, in the event of any default under the leases, 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 ofjoining the lessees.
NOW THEREFORE, if said principal shall in all respects faithfully comply with all of the
provisions of the leases referred to hereinabove, then the above obligations are to be void;
OTHERWISE, to remain in full force and effect.
Dated this 19
day of November
20 14 .
RLI Insurance Cw pany swe[;
0
t.
!.t APPROVAL AND ACCEPTANCE BY THE STATE OF ALASKA
Department of Natural Resources, Division of Oil and Cas
INSTRUCTIONS.,
Dated:
1. The surety on the bond may be any corporation qualified to issue performance and reclamation bonds in the
State of Alaska.
2. 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.
3. Where this bond is executed by a corporation, either as surety oras principal, the bond must be executed by a
duly authorized officer, and the individual signing must submit evidence of their authority to act for the
corporation.
4. When any party executes this bond through an agent, a power of attorney or other evidence of authority must
accompany this bond.
RLI*
RLI Surely
A Gvd'm ur Atl IMu9Me (:anpeM
!Know All Men by These Presents:
ATTACHMENT A
RL80015660
POWER OF ATTORNEY
RLI Insurance Company
That the RLI INSURANCE COMPANY, a corporation organized and existing under the laws of the State of Illinois, and authorized and licensed
to do business in all states and the District of Columbia does hereby make, constitute and appoint: JASON T. KILPATRICK
in the City of HOUSTON , State of TEXAS , as Attorney -in -Fact, with full power and authority hereby conferred upon him to sign,
execute, acknowledge and deliver far and on its behalf as Surety and as its act and deed, all of the following classes of documents to -wit:
$500,000.00
Indemnity, Surety and Undertakings that may be desired by contract, at may be given in any action or proceeding in any court of law
or equity; policies indemnifying employers against loss or damage caused by the misconduct of their employees; official, bail and
surety and fidelity bonds. Indemnity in all cases where indemnity may be lawfully given; and with full power and authority to
execute consents and waivers to modify or change or extend any bond or document executed far this Company, and to compromise
and settle any and all claims or demands made or existing against said Company.
The RLI INSURANCE COMPANY further certifies that the following is a true and exact copy of a Resolution adopted by the Board of
Directors of RW Insurance Company, and now in force to -wit:
:411 bonds, policies, undertakings, Powers of Attorney, or other obligations of the corporation shall be executed in the corporate
name of the Company by the President, Secretary, any Assistant Secretary, Treasurer• or any Vice President, or by such other officers
as the Board of Directors may authorize. The President, any Vice President, Secretary, any Assistant Secretary, or the Treasurer may
appoint Attorneys -in -Fact or Agents who shall have authority to issue bonds, policies, or undertakings In the name of the Company.
The corporate seal is not necessary for the validity of any bonds, policies, undertakings, Powers -of -Attorney or other obligations of
the corporation. The signature of any such officer and the corporate seal may be printed by facsimile.'
IN WITNESS WHEREOF, the RLI Insurance Company has caused these presents to be executed by its PRESIDENT with its
corporate seal affixed thisCE
�-J _ ATTEST.
CORPORATE SECRETARY
Etete aflllirm, I
I SS
County of Poria I
r?yOOPP OR4TF 9�<
_ IX
SEAL •
,/4........
LI Ni 0`,"
RLIIHSUR NCECOMPA*YIN
d nl
PRESIDENT
On this 19 day of November 2014 before me, a Notary Public, personally appeared Michael J. Stone and Jean M. Stephensonwho being by me
duly sworn, acknowledged that they signed the above Power of Attorney as President ant, Curporale Secretary, respectively, of the said RLI INSURANCE
COMPANY, and acknowledged said instrument to be the voluntary act and deed of said corporation.
ace./rf,
Nairn' Public
r�x••rr� rr �xrrrerrrrre rr���r
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SPA028 (03/11)
ATTACHMENT B
ALASKA MENTAL HEALTH TRUST LAND OFFICE
Alaska Department of Natural Resources
2600 Cordova Street, Suite 100
Anchorage, AK 99503
Office (907) 269-8658
Fax (907) 269.8905
Performance Deposit
File # (MHT/ADL) 9300082
Cash Deposit (certified check, money order, cashier's check)
x Certificate of Deposit CD # 5790680895
We, AIX Energy LLC the Principal,
(Applicants Name)
whose address is 2441 High Timbers Drive, Suite 120, The Woodlands, TX 77380,
and Amegv Bank of Texas
(Issuing Institution)
whose address is 4576 Research Forest Drive, The Woodlands, TX 77381
are held firmly bound unto the State of Alaska, Trust Land Office, (TLO) in the sum of Nine Hundred Fifty Thousand and
00/100 Dollars ($950.000.00), lawful money of the United States, for the use and benefit of the Trust Land Office. For the
payment of such sum, we bind ourselves and each of us and each of our heirs, executors, administrators, successors and
assigns, jointly and severally, by this performance deposit.
THE OBLIGATIONS of this performance deposit are as follows:
1. The Principal is by written agreement entering into a contract, permit, or lease with the TLO involving Trust land, which
agreement is identified as 9300082 (MHT file # and agreement type),
(hereinafter "the agreement") and is by reference incorporated fully herein in all its terms and made a part of this
performance deposit.
The coverage of this performance deposit extends to the Principal's obligations under the agreement and the laws and
regulations pertaining thereto, to assure that all of the activities on and uses of the land subject to the agreement are
conducted by the Principal in compliance with the obligations, terms, and conditions of the agreement. Upon a
determination by the TLO that the Principal has satisfactorily complied with the obligations, terms and conditions of the
agreement pertaining to activities on and uses of the land, and the applicable laws and regulations, then the obligations of
this performance deposit shall be void; otherwise, this performance deposit shall remain in full force.
2. The Principal and Issuing Institution understand that (a) with the written consent of the Issuing Institution obtained by
the Principal, the coverage of this performance deposit shall extend to and include any extension in time of the
agreement, such coverage to continue irrespective of the expiration of the terms originally set forth in the agreement; (b)
notwithstanding any other modifications of the agreement however made, this performance deposit remains in full force
and the Issuing Institution waives, as a defense against the TLO, notice of any such modifications; (c) the neglect or
forbearance of the TLO in enforcing against the Principal the performance of any term of the agreement shall not in any
way release the Principal or Issuing Institution from liability under this performance deposit; and (d) whenever the
Principal shall be, and is declared by the TLO to be, in default under the obligations, terms and conditions of the
agreement pertaining to activities on and uses of the land to which this performance deposit applies, the Issuing Institution
shall promptly remedy the default by fully completing performance of the Principal's obligations under the agreement, or
by payment of the face value of this performance deposit.
The term of this performance deposit commences on Friday. February 6. 2015, and shall remain in full force and effect
until released in writing by the Trust Land Office at the request of the Principal.
DATED this 6th day of February '2015
AIX Enerav LLC
2441 High Timbers Drive Suite 120
The Woodlands TX 77380
(Principal)
ATTACHMENT B
Ameav Bank of Texas
4576 Research Forest Drive
The Woodlands TX 77381
(Issuing Institution)
APPROVAL AND ACCEPTANCE BY
ALASKA MENTAL HEALTH TRUS,T, LAND OF/FICHE
y 2-4, 17 By: i '
Date Marcie Menefee, Executi a Di ctor, Mental Health Trust Land Office
INSTRUCTIONS
1. The Issuing Institution of the performance deposit may be any corporation qualified to issue performance deposits in
the State of Alaska. This form may be used in conjunction any Trust Land Office Agreement involving use of Trust
land or resources administered by the TLO.
2. If the Principals are partners, )heir individual names shall appear in the space provided or by securely attached
addendum, with the recital that they are partners comprising a firth, naming it, and all the members of the partnership
shall execute the performance deposit as individuals.
3. This performance deposit must be executed by a duly authorized officer of the corporation acting as Issuing
Institution, and in the case of a corporation acting as Principal, and the individual signing must submit evidence in
writing of his authority to act for the corporation, which shall be made part of the record.
4. When any of the parties execute this performance deposit through an agent, a power of attorney or other evidence of
authority must accompany the performance deposit.
5. This form is to be used in accordance with the regulations and terms of Agreement of the Department of Natural
Resources, Trust Land Office regarding performance deposits and requirements.
6. AS 38.05.035(a) and 11 A.A.C. 99.010 authorizes the Executive Director to decide what information is needed to
process an application for the sale or use of Trust land and resources. False statements made in an application for a
benefit are punishable under AS 11.56.210.
AMEGY BANK N.A.
TIME DEPOSIT CONFIRMATION CD fI IRA
(mmushlAIX ENERGY LLG_ _
Purchase Amount: —s9�000.00 Term. 12
Interest Rate: 0.100% Annual Percentage Yield: _0.10 %
Interest Payment Frequency: ❑ At Maturity ❑ Annually ❑ Quarterly Xp Monthly
Interest Payment Method: N❑ Add to Deposit ❑ Issue Check ❑ Transfer to Account Number
Non -Renewable If Checked: ❑ \
Amegy, Bank N.A. Representative Signature:
ATTACHMENT B
Account Numbec 5790680895 _
Date: 02/06/2015
7f❑ Months ❑ Days
Maturity Date: _ 02/06/2016
❑ Checking/MMDA ❑ Savings
This confirmation Is not negotiable. This confirmation is not transferable except on the records of the Bank.
The Certificate of Deposit is issued in accordance with Amegy Bank's Deposit Agreement.
r
ATTACHMENT B
ALASKA MENTAL HEALTH TRUST LAND OFFICE
2600 Cordova Street, Suite 100
Anchorage, AK 99503
Office (907) 269-8658
Fax (907) 269-8905
Assignment of Negotiable Instrument
Date: 2/6/2015 MHT No. 9300082
For value received, the undersigned hereby assigns and transfers unto the State of Alaska, Mental Health Trust Land Office,
the annexed:
1. Passbook # Issued by
2. TCD# 5790680895 Amount $950.000.00 Issued by Amegy Bank of Texas
3. Trust Account # (cash) (Trust Accounts do not earn interest)
4. Other Securities
Bank Mailing Address 4576 Research Forest Drive The Woodlands TX 77381
As and for the performance guarantee of AIX Energy LLC (name of principal)
As required by the laws of the State of Alaska, for the purpose of obtaining aeas9lpermitroontract agreement (circle one)
To Fulfill P&A Obligation (purpose of agreement) in the location of: Section See attached Exhibit A
Township , Range Seward Meridian. MHT No. 9300082
Only for the purposes of the above account, AIX Energy LLC (name of principal) doing business
as AIX Energy LLC which is a partnership, proprietorship,
or corporation (circle one, ilappncable) enters into this assignment. The undersigned does hereby irrevocably constitute and
appoint the Alaska Mental Health Trust Authority, by and through its duly authorized agent the Trust Land Office (TLO) as its
Attorney -in -Fact, to do all things necessary and appropriate to effectuate the purposes of this assignment. It is agreed and
understood that this assignment shall remain In full force and effect for the period of time provided by law, and until released
bythe TLO for actions agaiqst the pgfformance guarantee
J tip
B nk Representative Title
Date atlit k VJ'N & f'Ak> , Texas, this day of b F 20 � S
By signature above, the issuing institution agrees that only the State of Alaska, Mental Health Trust Land Office, upon presentation of written notice, shall
cause the release of any and all funds described above.
STATE OF TEXAS )
) ss:
Montgomery County )
THIS IS TO CERTIFY that on this day of�, 20 1 5 Be re me he undersigned,
a notary public in and for the State of Texas, duly commissioned and sworn, p rsonally appeared ill r\
known to me to be the person described in and who executed this Assignment of Negotiable instrument and acknowledged
to me freely ancth9funtarily signing this document for the purposes stated.
Notary in and for the State of Texas
kATW HARTZHEIM My Commission Expires
NOTARY PUBLIC
STATE OF TEXAS
MY COMM. EXP. 05115/2018
(All persons whose names appear on the Certificate or Passbook account must sign below In front of a notary.)
Signature
Signature
ATTAr.HMFNT R
STATE OF TEXAS
►ss:
Montgomery County )
THIS IS TO CERTIFY that on this _1� day of r! r 20 , Before me, h un ersi ed,
a notary public in and for the State of Texas, duly commissioned and sworn/personally appeared
known to me to 4e the person described in and who executed this AssignrAent of Negotiable instrument an acknowledged
to me freely anq vGlpntarily signing this document for the purposes stated.
" Notary in and for the State of Texas
My Commission Expires
WENDY M. SHEASSY
Notary Public. State of Texas
''•t" 1."c My Commission Expires
STATE OF TEXAS ) '•` ` April 05, 2016
► ss:
Montgomery County )
THIS IS TO CERTIFY that on this day of 20 -'Before me, the undersigned,
a notary public in and for the State of Texas, duly commissioned and sworn, personally appeared
known to me to be the person described in and who executed this Assignment of Negotiable instrument and acknowledged
to me freely and voluntarily signing this document for the purposes stated.
Notary in and for the State of Texas
My Commission Expires
2/612015
Parcel Section
EXHIBIT A, MHT 9300082
sc+Kr 0 12 �p,6°f Ot,W
i
c
`t >
s ro5`1'0120
TRACT48
Oil & GAS ONLY
Parcel Description
ATTACHMENT B
Acreage
T. 006 N., R. 011 W., SEWARD MERIDIAN, ALASKA
550217
28
T. 005 N., R. 012 W., SEWARD MERIDIAN, ALASKA
320.00
SM -0982
1
SECTION 1: LOT 2;
2.50
SM -0983
1
SECTION 1: LOT 3:
3.62
SM -0984
1
SECTION 1: LOT 4;
3.15
SM -0985
1
SECTION 1: LOT S;
1.96
SM -0986
1
SECTION 1: LOT 6;
2.35
T. 006 N., R. 011 W., SEWARD MERIDIAN, ALASKA
550217
28
SECTION 18: 0'1/2;
320.00
SM -0997-B
29
SECTION 29: E112NE114, SIVI14NE114;
120.00
550218
29
SECTION 29: SE114:
160.00
550219
29
SECTION 29:SIV1/4:
160.00
550220
31
SECTION 31: LOT];
36.94
550221
31
SECTION 3l: LOT 2;
37,08
550222
31
SECTION 31: E112N0'1/4r
80.00
550223
33
SECTION33: 0'1/2;
320.00
TOTAL TRACT 48 ACREAGE 1247.60
ATTACHMENT C
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
SURETY BOND
BOND NUMBER RLa001"59 PENAL SUhl S 2D0,000.00
KNOW ALI, PERSONS BY THESE PRESENTS,
That we, AIX£_!eryy LLC
of the City of The waodlands , state of Texas__
as principal, and RLI Insurance c�mtiany
of a Greenway Plaza, Suite 400, Houaton, Tx 77046 , as surety, an authorized insurer under AS 21.09
whose certificate of authority is in good standing, arc held firmly bound unto the Alaska Oil and Gas
Conservation Commission ut the penal sum as indicated above, lawful money of the United States of
America, for which payment, well and truly to be made, we bind ourselves and each of us, and each of
our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these
presents.
WHEREAS the above bounden principal proposes to engage in the drilling or operating of a well or
welts subject to regulation by the Alaska Oil and Gas Conservation Commission at a location described
as fvl:ows.
C SINGLE �4ELL BOND - minimum penal sunt $100,000 (except as otherwise allowed
by the Commission under 20 AAC 25.025(b))
Unit or Lease Name Well Number Area of State
Surface Well Location - See., Tap., Rng.:md Mor.
Surface Well Location - Alaska State Plane Coordinate System coordinates
e BLANKET BOND - minimum penal sum $200,000
Any and all wells drilled or operated by the principal in the State of Alaska.
NOW, II]EREFORE, the above iluundcu principal shall conytly w9111 all of the plovisium of the laws of
the State of Alaska and the regulations, rules, and orders of the Alaska Oil and Gas Conservation
Commission in the drilling, uperadon, maintenance, repair, and abandonment of each well and the
clearance of each location, and shall file with the Alaska Oil and Gas Conservation Commission all
notices and records required by Said Commission.
Form 14402A Rev 04?011 Paye 1 of 2 Submd,n ouPlica!e
Ilk
RLI Surety
I 6.16gn d RU nvwmxe Cxmcy
Know All Men by These Presents:
ATTACHMENT C
RLB0015B59
POWER OF ATTORNEY
RLI Insurance Company
That the RLI INSURANCE COMPANY, a corporation organized and existing under the laws of the State of Illinois, and authorized and licensed
to du business in a:'. stales and the D,slricl of Columbia due. hereby make, constitute and appoint JASON T. KILPATRICK
in the City of IIOl1STON , State of TEXAS , as Attomey-in-Fact, with full power and authority hereby conferred upon him to sign,
execute, acknowledge and deliver far and on its behalf as Surely and as its act and deed, all of the Inllowing classes of documents to -wit
$200,000.00
Indemnity, Surety and Undertakings that may be desired by contract, or may be given in any action or proceeding in any court of law
Of equity; policies indemnifying employers against loss or damage caused by the misconduct of their employees; official, bail and
surety and fidelity bonds. Indemnity in all cases where indemnity may be lawfully given; and with full power and authority to
execute consents and waivers to modify or change or extend any bond or document executed for this Company, and to compromise
and settle any and all claims or demands made or existing against said Company.
The RLI INSURANCE COMPANY further certifies that the following is a true and exact copy ale Resolution, adopted by the Board of
Directors of RLI Insurance Compeny, and now in force to -wit:
":ADI bonds• policies, undertakings, Powers of Attorney. or other obligations of the corporation shall be executed in the corporate
name of the Company by the President. Secretary, any Assistant Secretary. Treasurer, or any Vice President, or by such other officers
as the Board of Directors may authorize. The President, any Vice President, Secretary, any Assistant Secretary, or the Treasurer may
appoint Attorneys -in. Fact or Agents who shall have authority to issue hands. policies, or undertakings in the name of the Company.
The corporate seal is not necessary for the validity of any bonds, policies, undertakings, Powers -of -Attorney, or other obligations of
the corporation. The signature of ane such Officer and the carparate seal mar he printed by facsimile."
IN WITNESS WHEREOF, the Rl.t Insurance Company has caused these presents to be executed by its PRESIDENT with )Is
corporate seal affixed this
ATTEST:
CORPORATE SECRETARY
sir. nl mB,a.s I
1 SS
Count, ul Parona I
p Uu+nnuo
,yJPp,1dCE CQ�q 'i
2� opPORgT' 9
= SEAL.
IN0
RU INCU NC`E COMPA,R
�Y•7• •ti -I .-•)
PRESIUEhT
0" CJs 19 da: al November 2014 bcf, . m.. a p'; :;a; Eahhc Pco,.ally opp,amJ Mchad 1 sh.ua and ), au_sru._ :ho bunt: bt nn
Judy worn, acknowledged that they signed the above Power of Attorney as President and Curporate Secretary, respechvels•. of the said RLI INSURANCE
COMPANY. and acknowledged said instrument to h Ilse Out our dry act and deed of said corporation.
Notary Pubbc
"OFFICIAL SEAL"
noun,
aaeuc-JACQUELINE M ROCKIER
�COMN5510N ERPtRES DI/id/IE
r .rmmerneeeee�ee�ee�e
SPA028 (03111)
ATTACHMENT C
BOND NUMBER RLa0015659 (continued) PENAL SUM $ 200.000.00
This obligation shall remain in fill] force and effect until released by the Alaska Oil and Gas
Conservation Commission in accordance with 20 AAC 25.025(c).
Witness our hand and seal this 19th _
day of November 2014
Aix Energy Lu
— BY
Principal (OperatDo)
Signatur (attach Tower of Attorney of other evidence of
authority of person signing)
-4n
rrd g 5a /
Printed bans and title
Witness our hand and seal this 19th
day of November 2014
RLI Insurance Company
��// A f•I']
By: /%. ice✓/
i
Surety
Sig
Salon T. Kilpatnck, Attorney -in -Fac[
^)
Printed name and tido
Countersigned
(Resident Agent if necessary)
PRINCIPAL BUSINESS CONTACT INFORMAl10N / ALASKA CONTACT INFORMATION
Naine: AIX F,11g LLC
Name:
Address: 2441 High Timbers, Suite 120
Address:
City/State/Zip The woodlands. TX 71380
City/State/Zip:
Phone/Fav "'21 613 0900
Phone/Fax.
Email: wsheasby4brantaep.com
ALASKA OIL AND GAS CONSERVATION COMMISSION
Approved:i� )N/;L\/)4U unnusxfoner Date
Approved:_ II ' 2-1
Cununlssiunel Dale
s�
Approved:
Cmnmissiouer
(Requires approval by twu Commissioners)
Fahr 10.402A Rev 04/2011 Pago 2 of 2 submfl
ATTACHMENT C
RESOLUTION OF THE SOLE MEMBER OF AIX ENERGY LLC, a Delaware limited liability company
WHEREAS AIX Energy LLC is providing a bond to the Alaska Oil and Gas Conservation Commission
(AOGCC) for its operations in Alaska and to comply with Alaska statutes and regulations,
WHEREAS AOGCC requested evidence of authority for the person signing the bond on behalf of AIX
Energy LLC,
NOW THEREFORE AIX Member LLC as the sole member of AIX Energy LLC, designates
Fred M.Tresca Manager
as authorized representative and signor for AIX Energy LLC on bond number RLB0015859 in the penal
sum of $200,000, AIX Energy LLC, as principal, and RLI Insurance Company as surety, delivered to State
of Alaska, Oil and gas Conservation Commission.
Dated: November 20, 2014
AIX Member LL W1IX Energy LLC
Al
�� ?
By:
Printed name: Fred M. Tresca
Title: Manager
ATTACHMENT C
STATE OF TEXAS
COUNTYOF1!'/n�hn?t°r.J 4
I, Jj/{}�� (5 QQ a Notary Public for said County and State, do hereby
certify that _ f/i 0 .i of AIX Member LLC, a Delaware limited liability
company, which is the sole owner of AIX Energy LLC, a Delaware limited liability company personally
appeared before me this day and acknowledged the due execution of the attached Resolution of the
Sole Member of AIX Energy LLC on behalf of such entity.
� V,/
WITNESS my hand and notarial seal, this day of UD %— 2014.
-4TARY PUBLIC
[NOTARIAL SEAL]
WENDY M. SHEA58Y
Notary Public, state of Texas
My Commission Expires:
r : =
My Commas ion Expires
I',`,a+P
April 05, 2016
November 20, 2014
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
ALASKA OIL AND GAS CONSERVATION COMMISSION
In the Matter of the Request for )
Reconsideration of Bonding )
Requirements by AIX ENERGY, LLC. )
PUBLIC HEARING
February 13, 2020
Anchorage, Alaska
10:00 a.m.
BEFORE: Jeremy Price, Chairman
Jessie Chmielowski, Commissioner
Daniel T. Seamount, Commissioner
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net
AOGCC 2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net
Page 2
1
TABLE OF CONTENTS
2
Opening remarks
by Chairman Price
03
3
Testimony by Ms.
Romerdahl
08
4
Testimony by Ms.
Sheasby
09
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net
AOGCC
2/132020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 3
1 P R O C E E D I N G S
2 (On record - 10:01 a.m.)
3 CHAIRMAN PRICE: I'd like to call this hearing
4 to order. Today is February 13th, the time is 10:01.
5 This is Jeremy Price, to my right is Commissioner
6 Jessie Chmielowski, to my left is Commissioner Dan
7 Seamount. We are at the office of the Oil and Gas
8 Conservation Commission -- Alaska Oil and Gas
9 Conservation Commission located at 333 West Seventh
10 Avenue. This is a hearing to reconsider the bond
11 amount for AIX Energy, LLC. The regulation requiring a
12 bond for permitted wells is found in 20 AAC 25.025.
13 AIX Energy, LLC currently has four permitted
14 wellheads and their bonding amount is $200,000. The
15 total bonding amount under the new regulation is
16 $1,600,000.
17 Computer Matrix will be recording proceedings
18 today. If you'd like a copy please see Computer Matrix
19 for a transcript.
20 Today we have to testify -- I'm sorry, Elena,
21 I've forgotten how to pronounce your last name again.
22 Is it Romerdahl?
23 MS. ROMERDAHL: Yes.
24 CHAIRMAN PRICE: With Perkins Coie.....
25 MS. ROMERDAHL: Yes.
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AOGCC
2/132020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 4
1 CHAIRMAN PRICE: .....representing AIX. And
2 then on the phone I believe we have Wendy -- Wendy, how
3 do you pronounce your last name, Sheasby?
4 MS. SHEASBY: Sheasby.
5 CHAIRMAN PRICE: Sheasby.
6 MS. SHEASBY: That's close enough.
7 CHAIRMAN PRICE: Okay. And you are the CFO at
8 AIX?
9 MS. SHEASBY: Yes, sir, I am.
10 CHAIRMAN PRICE: Okay. I'm going to just run
11 through some ground rules and then I'll swear you both
12 in and we'll start testimony, okay?
13 MS. SHEASBY: Okay.
14 CHAIRMAN PRICE: All right. So Commissioners
15 will ask questions during testimony today. We may also
16 take a recess to consult with staff to determine
17 whether additional information or clarifying questions
18 are necessary. If a member of the audience has a
19 question that he or she feels should be asked please
20 submit that question in writing to Jody Colombie.
21 She'll provide the question to the Commissioners and if
22 we feel that question should be asked we will ask it.
23 For those testifying please keep in mind that
24 you must speak into the microphones so that those in
25 the audience and the court reporter can hear your
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahtleCgci.net
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 5
1 testimony. Also please remember to reference -- never
2 mind, disregard that one. There isn't a slide
3 presentation again -- I'm assuming again, correct?
4 MS. SHEASBY: Yes.
5
CHAIRMAN PRICE: Okay.
I'll ask Commissioners
6
do you have anything to add before we get started?
7
COMMISSIONER SEAMOUNT:
I have nothing.
8
COMMISSIONER CHMIELOWSKI: Nothing, thanks.
9
CHAIRMAN PRICE: Okay.
Elena, why don't we
10
swear you in first. If you'll
raise your right hand.
11
(Oath administered)
12
MS. ROMERDAHL: Yes.
13
CHAIRMAN PRICE: Thank
you. Wendy, we can't
14
see you, but I'm going to ask you to raise your right
15
hand.
16 (Oath administered)
17 MS. SHEASBY: Yes.
18 CHAIRMAN PRICE: Thank you. And, Elena, since
19 you're going to be the first to speak I'll first ask
20 kind of what your name is for the record, your
21 qualifications, your expert field and all that.
22 MS. ROMERDAHL: My name is Elena Romerdahl. I
23 am a partner at Perkins Coie in Anchorage. I'm
24 originally from Anchorage. I have an undergraduate
25 degree from Georgetown University and a JD from
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 6
1 Georgetown Law. I clerked for the Alaska Supreme Court
2 after law school, worked at a law firm in New York for
3 a couple years and then clerked for the Alaska Federal
4 District Court and then was an assistant attorney
5 general at the Department of Law in the oil, gas and
6 mining and natural resources section. I joined Perkins
7 Coie in 2017 in the energy, environment and resources
8 group and my clients are primarily oil, gas, mining,
9 energy and telecom plants.
10 CHAIRMAN PRICE: Okay. Any questions for the
11 witness?
12 COMMISSIONER SEAMOUNT: I have no questions, no
13 objections.
14 CHAIRMAN PRICE: Okay.
15 COMMISSIONER CHMIELOWSKI: No questions, no
16 objections.
17 CHAIRMAN PRICE: Okay. And, Wendy -- I'm
18 sorry, Ms. Sheasby.....
19 MS. SHEASBY: Yes.
20
21 CHAIRMAN PRICE: .....can you give your
22 experience, your position, title, background and
23 qualifications?
24 MS. SHEASBY: Yes. My name is Wendy Sheasby,
25 I'm the CFO for AIX Energy, LLC. I am a certified
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.nel
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 7
1 public accountant, licensed in the state of Texas and
2 Louisiana with over -- now I'm -- I'm giving my age,
3 over 30 years of business and financial management
4 experience in industries ranging from commercial real
5 estate, manufacturing, hospitality, mining and oil and
6 gas exploration and production including acquisitions
7 and divestures. I am also a member of the Alaska
8 Society of Certified Public Accountants, the Texas
9 Society of Certified Public Accountants, the Petroleum
10 Accountants Society of Houston and the American
11 Institute of Certified Public Accountants.
12 CHAIRMAN PRICE: Thank you, Ms. Sheasby. So we
13 can -- we can conclude that you're an expert witness in
14 business. I don't foresee us getting into technical
15 questions, but -- and neither of you have petroleum
16 engineering or geology degrees so we'll avoid any
17 issues like that.
18 Any questions for Ms. Sheasby?
19 COMMISSIONER SEAMOUNT: I have none.
20 COMMISSIONER CHMIELOWSKI: I have none.
21 CHAIRMAN PRICE: Okay. Ms. Romerdahl, why
22 don't you go ahead and get started.
23 ELENA ROMERDAHL
24 previously sworn, called as a witness on behalf of AIX
25 Energy, LLC, testified as follows on:
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
1 DIRECT EXAMINATION
2 MS. ROMERDAHL: I just wanted to start because
3 Wendy wasn't able to be here in person today, I want
4 to just start by just summarizing the two requests that
5 we have pending before the Commission.
6 The first is the July 18th, 2019 request for a
7 decrease in the bonding amount under 20 AAC
8 25.025(b)(3) from $1.6 million to $1,037,166. And
9 that's based on an independent engineering estimate
10 conducted by Stephen Hennigan which was provided to the
11 Commission in July of 2019 with our request.
12 And then the second request is our August 7th,
13 2019 request for recalculation of the outstanding
14 bonding obligations based on bonds and financial
15 assurance totaling $1,650,000. And those include a
16 $500,000 surety bond in place with the Alaska
17 Department of Natural Resources, a $200,000 surety bond
18 in place with the Commission and then a $950,000
19 certificate of deposit in place for the Alaska Mental
20 Health Trust Land Office.
21 I'm now going to turn it over to Wendy who is
22 -- has some additional testimony on the relevant -- the
23 wells that are applicable here and AIX's background in
24 Alaska. But I'm available to answer questions after
25 that.
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile®Sci.nel
AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 9
1 CHAIRMAN PRICE: Thank you. Please proceed,
2 Ms. Sheasby.
3 WENDY SHEASBY
4 previously sworn, called as a witness on behalf of AIX
5 Energy, LLC, testified telephonically as follows on:
6 DIRECT EXAMINATION
7 MS. SHEASBY: Okay. AIX Energy purchased the
8 Kenai Loop gas field in November of 2014 from Buccaneer
9 Resources, LLC, et al out of bankruptcy. The Kenai
10 Loop gas field includes two producing wells, gas wells,
11 which are the KL1-1 and the KL1-3. We have one
12 suspended well, the KL1-2 and one shut-in well, the
13 KL1-4. The gas field is located on Marathon Road in
14 the Kenai Industrial Park located in the city of Kenai,
15 Alaska.
16 And as far as the history of the Kenai Loop gas
17 field wells and their remaining estimated economic life
18 which is five years, well KL1-1 began first production
19 in January of 2012 and cumulative production through
20 2019 is 15.5 bcf and its status is currently producing.
21 The KL1-3 first production in April of 2013 with
22 cumulative production through 2019 of 6.6 bcf. It is
23 currently producing and was placed on compression in
24 2019.
25 The KL1-2 is a suspended well with a cement
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AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 10
1 plug in the well to prevent flow. And this well could
2 be used for possible wastewater disposal in the future.
3 The KL1-4 is currently shut-in and it ties to the same
4 as the 1-3, the KL1-3. So this well could be used to
5 tie into production if unfortunately the KL1-3 were to
6 -- would fail.
7 CHAIRMAN PRICE: Ms. Sheasby, when -- do.....
8 MS. SHEASBY: Yes.
9 CHAIRMAN PRICE: .....do you know when the
10 Kenai Loop 1-4 well was shut-in?
11 MS. SHEASBY: I don't have that readily
12 available, but I -- when it was found I believe that it
13 was also pulling from the same as the KL1-3 is the time
14 that it was decided to go ahead and shut that in. I
15 don't recall, that was of course under Buccaneer's
16 operatorship. I'd have to go back and do some digging
17 to find that out. Of course, I knew those types of
18 things off the top of my head back in 2014, but I don't
19 recall at this point. I can get that answer back to
20 you shortly though.
21 CHAIRMAN PRICE: That would be great if you
22 could provide that. I'm still showing it was still
23 active.....
24 MS. SHEASBY: Okay.
25 CHAIRMAN PRICE: .....so just -- yeah, that
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AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OF BONDING
Page 11
1 would be great if you could provide that.
2 MS. SHEASBY: Okay.
3 CHAIRMAN PRICE: Were you finished with your
4 testimony?
5 MS. SHEASBY: No. I'm sorry, I was taking a
6 note.....
7 CHAIRMAN PRICE: Take as long as you need.
8 MS. SHEASBY: .....so I don't forget to get
9 back with you.
10 I just want to talk about the P&A cost estimate
11 engineering report that was provided I believe back in
12 July. This was provided by Stephen Hennigan who is
13 with Sierra Hamilton and Petroleum Engineers,
14 Incorporated. And I did confirm the estimate with him
15 yesterday that it remains unchanged from the original
16 estimate. This estimate shows the KL1-1 of $281,702,
17 the KL1-2 of $199,414, the KL1-3, 290,227 and the KL1-
18 4, $265,823 for a grand total of $1,037,166.
19 I did also want to mention that the gas field
20 location being in the Kenai Industrial Park does
21 provide for good logistics, road access, to P&A which
22 is unlike many of the other operators with wells on the
23 west side of the Cook Inlet, on water, North Slope,
24 remote areas of the Kenai Peninsula. So I believe this
25 does contribute to the estimate being at 1,037,000 for
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile�)gci.net
AOGCC
1 all four wells.
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 12
2 And I did want to talk about the current
3 bonding in place which I believe Elena did provide the
4 -- the performance deposit which is in the form of a
5 certificate of deposit with Amegy Bank of Texas. And
6 this is for the benefit of the state of Alaska, Alaska
7 Department of Natural Resources, Alaska Mental Health
8 Trust Land Office. We also have a $500,000 surety bond
9 with RLI Insurance for the benefit of the state of
10 Alaska, Alaska Department of Natural Resources,
11 Division of Oil and Gas, which is a statewide oil and
12 gas bond. And then of course we have our $200,000
13 surety bond with RLI Insurance for the benefit of the
14 state of Alaska, Alaska Oil and Gas Conservation
15 Commission which is a blanket bond, bringing the grand
16 total of current bonding in place of $1,650,000.
17 CHAIRMAN PRICE: Ms. Sheasby, thank you
18 for.....
19 MS. SHEASBY: And I.....
20 CHAIRMAN PRICE: I was just going to say thank
21 you for providing that this morning, that copy of the
22 CD from the Alaska Mental Health Trust Land Office.
23 It's helpful to see that and see that it's specifically
24 for fulfilling P&A obligations. So that was helpful so
25 thank you.
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net
AOGCC 2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 13
1 MS. SHEASBY: You're welcome. And I did want
2 to mention with that I know that there was a decision
3 in 2019 made on the Northern Dancer number 1 well.
4 With a P&A responsibility to the landowner which is the
5 Mental Health Trust Land Office so I know in first
6 instance if something unfortunate happened to AIX that
7 the state would look to the landowner on -- which our
8 landowner, one of them, is the Alaska Mental Health
9 Trust. So we do feel that we have sufficient bonding
10 currently in place to cover P&A if something
11 unfortunate were to happen.
12 I did also want to mention as a small operator
13 the increase in insurance premiums if we did increase
14 bonding to $1.6 million from $200,000 current with the
15 AOGCC it would cost us approximately $70,000 annually.
16 And I know this might not seem like a lot, but this
17 would help to cover for instance wages for one of our
18 field guys.
19 CHAIRMAN PRICE: Okay. Thank you. Did you
20 have anything else to add or does that conclude your
21 testimony?
22 MS. SHEASBY: Yes. And I just wanted to
23 reiterate, you know, that we do feel we have sufficient
24 bonding in place and we're just looking for -- to
25 eliminate any redundancy and for it to be fair and
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AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 14
1 equal to the estimate that we have provided.
2 CHAIRMAN PRICE: Okay. Any questions from
3 Commissioners?
4 COMMISSIONER CHMIELOWSKI: Ms. Sheasby, thank
5 you for answering -- you answered most of my questions
6 ahead of time so thank you for that. I just wanted to
7 get onto the record, the CD that AIX holds for the
8 benefit of the Mental Health Trust in the amount of
9 $950,000, can that money be used for any purpose other
10 than well P& -As?
11 MS. SHEASBY: No, it's a restricted CD for the
12 benefit of Mental Health Trust.
13 COMMISSIONER CHMIELOWSKI: So it would not be
14 used for any surface work, I just wanted to confirm it
15 was for well P&As only?
16 MS. SHEASBY: Yes, it's for P&A work which also
17 includes the R&R work so it's all encompassing.
18 COMMISSIONER CHMIELOWSKI: Thank you.
19 COMMISSIONER SEAMOUNT: Thank you, Ms. Sheasby
20 and Ms. Romerdahl, for a very eloquent and concise
21 testimony. I have no questions.
22 CHAIRMAN PRICE: Do we want to take a break for
23 a few minutes?
24 (No comments)
25 CHAIRMAN PRICE: We're going to take a break
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AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OF BONDING
Page 15
1 for 10 minutes and just talk in the back and we'll be
2 right back.
3 So,
Ms.
Sheasby, if
you
don't mind could you
4 stay on the
line
for another
10
minutes?
5 MS. SHEASBY: Yes, of course. Thank you.
6 CHAIRMAN PRICE: Okay. We'll be back in 10.
7 MS. SHEASBY: Okay. Thank you.
8 (Off record - 10:20 a.m.)
9 (On record - 10:30 a.m.)
10 CHAIRMAN PRICE: We'll call this hearing back
11 into order. The time is 10:30.
12 I don't know if Ms Sheasby or Ms. Romerdahl,
13 can track this down. But we have two questions. The
14 first one is we'd like to get -- well, we'd like you as
15 the operator to secure from the Alaska Mental Health
16 Trust the specific uses that that $950,000 certificate
17 of deposit can be used for. When we talk about
18 plugging and abandonment we have a very specific set of
19 criteria in mind and you can reference our regulations
20 for what that entails. We don't obviously include
21 surface activity. So if you can track that down and
22 provide that to us, we're happy to keep the record open
23 for as long as you need to track that down. Do you
24 need -- how much time do you think you'd need?
25 MS. ROMERDAHL: We should be able to get that
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AOGCC
1 quickly.
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 16
2 CHAIRMAN PRICE: Okay.
3 MS. ROMERDAHL: Maybe to be safe if we can have
4 like two, three weeks just to -- I mean, we'll get
5 something in writing from them.....
6 CHAIRMAN PRICE: Okay.
7 MS. ROMERDAHL: .....to provide to you.
8 CHAIRMAN PRICE: Does that work for everybody?
9 COMMISSIONER CHMIELOWSKI: Yeah, and if it's
10 helpful just to clarify when we read the bond document
11 it said it's for plugging purposes.
12 MS. ROMERDAHL: Yeah.
13 COMMISSIONER CHMIELOWSKI: But during the
14 conversation it sounded like it could be used for
15 something else as well.
16 MS. ROMERDAHL: Everything, yeah.
17 COMMISSIONER CHMIELOWSKI: So just wanted to
18 confirm if it's truly for plugging and abandonment.....
19 MS. ROMERDAHL: Yeah.
20 COMMISSIONER CHMIELOWSKI: .....which is what
21 we're concerned with.
22 MS. ROMERDAHL: Yeah.
23 COMMISSIONER CHMIELOWSKI: Yeah.
24 MS. ROMERDAHL: I can see that.
25 CHAIRMAN PRICE: The second question is is the
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AOGCC
2/13/2020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 17
1 surface locations of these specific wells, is that
2 Mental Health Trust land or is that DNR land where
3 these wells are located?
4 COMMISSIONER CHMIELOWSKI: And the facilities,
5 I mean, associated.....
6 MS. ROMERDAHL: Yeah.
7 COMMISSIONER CHMIELOWSKI: .....facilities?
8 MS. ROMERDAHL: So my understanding is it's all
9 Mental Health Trust land, but Wendy.....
10 Wendy, are you on the line?
11 (No comments)
12 MS. ROMERDAHL: She was trying to get Stephen
13 Hennigan on the line to discuss whether that's going to
14 cover surface.....
15 CHAIRMAN PRICE: If she's not on.....
16 MS. ROMERDAHL .....as well. So, yeah, that's
17 my understanding and I'll confirm, if that's not the
18 case I'll let you guys know, but that's.....
19 CHAIRMAN PRICE: Perfect.
20 MS. ROMERDAHI: .....my understanding is, yes,
21 they're all Mental Health Trust land.
22 CHAIRMAN PRICE: Okay.
23 COMMISSIONER CHMIELOWSKI: So let me just --
24 we'll check the calendar. Would you like three weeks,
25 would that be good?
Computer Matrix, LLC Phone: 907-243-0668
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AOGCC
2/132020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 18
1
MS. ROMERDAHL: Yeah, that
would be
great.
2
COMMISSIONER CHMIELOWSKI:
Okay. So
three
3
weeks from today is Thursday, March 5th, close
of
4
business, if that works for you?
5
MS. ROMERDAHL: Yep.
6
COMMISSIONER CHMIELOWSKI:
Okay.
7
CHAIRMAN PRICE: And other
questions
from
8
Commissioners?
9
COMMISSIONER SEAMOUNT: None for me.
10
COMMISSIONER CHMIELOWSKI:
No, thank
you.
11
CHAIRMAN PRICE: Okay. At
this time
we'll
12
close the hearing. Thank you.
13
(Adjourned - 10:35 a.m.)
14
(END OF PROCEEDINGS)
15
16
17
18
19
20
21
22
23
24
25
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AOGCC
2/132020 ITMO: REQUEST FOR RECONSIDERATION OFBONDING
Page 19
1 TRANSCRIBER'S CERTIFICATE
2 I, Salena A. Hile, hereby certify that the
3 foregoing pages numbered 02 through 19 are a true,
4 accurate, and complete transcript of proceedings IN RE:
5 Reconsideration of Bonding Requirements by AIX ENERGY,
6 LLC., transcribed under my direction from a copy of an
7 electronic sound recording to the best of our knowledge
8 and ability.
9
10
11 DATR SAT.RNA A HTT E, ('Transcriber)
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Computer Matrix, LLC Phone: 907-243-0668
135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
AIX ENERGY LLC
RECALCULATION OF BONDING AMOUNT
FEBRUARY 13, 2020 at 10:00AM
NAME AFFILIATION Testify (yes or no)
Notice of Public Hearing
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
Re: AIX Energy LLC.
Request for Recalculation of Outstanding Bonding Requirements
20 AAC 25.025
AIX Energy LLC. requested the Alaska Oil and Gas Conservation Commission (AOGCC)
reconsider bonding amounts that were established when 20 AAC 25.025 was adopted May 18,
2019.
The AOGCC has scheduled a public hearing on this application for February 13, 2020, at 10:00
a.m. at 333 West 7`h Avenue, Anchorage, Alaska 99501
In addition, written comments regarding this application may be submitted to the AOGCC, at 333
West 7 1 Avenue, Anchorage, Alaska 99501. Comments must be received no later than the
conclusion of the February 13, 2020 hearing.
If, because of a disability, special accommodations may be needed to comment or attend the
hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than
February 9, 2020.
JC d"—
sie L. Chmielowski
ommissioner
STATE OF ALASKA
ADVERTISING
ORDER
NOTICE TO PUBLISHER
SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED
AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT.
ADVERTISING ORDER NUMBER
qq 1
AO-20-010
FROM: AGENCY CONTACT:
Jody Colombie/Samantha Carlisle
Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE:
333 West 7th Avenue 10/31/2019 90 279-1433
Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED:
COMPANY CONTACT NAME:
PHONE NUMBER: ASAP
FAX NUMBER:
907 276-7542
TO PUBLISHER: SPECIAL INSTRUCTIONS:
Anchorage Daily News, LLC
PO Box 140147
Anchorage, Alaska 99514-0174
TYPE OF ADVERTISEMENT: r LEGAL j DISPLAY CLASSIFIED OTHER (Specify below)
DESCRIPTION PRICE
AIX Energy LLC
Initials of who re ared AO: Alaska Non -Taxable 92-600185
:SUBMIT 11WOICESHOWB!i(3:AUVF)R'13$N[G�
midgiisio C0R*gH.kF4Yuriyti:01?::
:t?UBLiCA:AbV.1 Yi'N A]]'ACIiB,DCdBY bP
AbVB1tTISMBN'rTo;
AOGCC
333 West 7th Avenue
Anchorage, Alaska 99501
Pae 1 of I
Total of
All Pages $
REF Type I Number Amount Date Comments
1 PvN IVCO21795
2 AO AO-20-010
3
4
FN AMOUNT I SY Act. Template PGM LCR Object I FY I DIST LIQ
1 20 AOGCC 3046 20
2
3
1-4
Purch nth ty a
Title: Purchasing Authority's Signature Telephone Number
1. A.Pj #uAd receiving agency name must appear on all invoices and documents relating to this Purchase.
2. Tht plate is registered for tan free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for
resale
nISTRIBIrlyax:
......tlo F......Onglaal AO Cople'si. Fubllsbe. (....... D............. Regeivlag .
Form: 02-901
Revised: 10/30/2019
Bernie Karl
K&K Recycling Inc. Gordon Severson Penny Vadla
P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave.
Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714
George Vaught, Jr. Darwin Waldsmith Richard Wagner
P.O. Box 13557 P.O. Box 39309 P.O. Box 60868
Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706
`)PI �t) v
I
ANCHORAGE DAILY NEWS
AFFIDAVIT OF PUBLICATION
Account #: 270227 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION
333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501
Order #: W0012240
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
Lisi Miss 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
11/04/2019
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 swom to before me
this 4th day of November 2019.
Cost: $164.36
REDS'-.. :D
NOV 0 jiq
a
Notiee of Public Hearing
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
Re: AIX Energy I.I.C.
Request for Recalculation of Outstanding Bonding Requirements
20 AAC 25.025
AIX Energy LLC. requested the Alaska oil and Gas Conservation
Commission (AOGCC) reconsider bonding amounts that were
established when 20 AAC 25.025 was adopted May 18, 2019.
The AOGCC has scheduled a public hearing on this application
for February 13, 2020, at 10:00 a.m. at 333 West 7th Avenue,
Anchorage, Alaska 99501
In addition, written comments regarding this application may be
submitted to the AOGCC, at 333 West 7th Avenue, Anchorage,
Alaska 99501. Comments must be received no later than the
conclusion of the February 13, 2020 hearing.
If, because of a disability, special accommodations may be needed
to comment or attend the hearing, contact the AOGCC's Special
Assistant, Jody Colombie, at (907) 793-1221, no later than February
9, 2020.
//signature on file//
Jessie L. Chmielowski
Commissioner
Published: November 4, 2019
rtary Public in and for / P�ASKq
State of Alaska.
Third Division
Anchorage, Alaska N d�
MY COMMISSI N EXPIRES Q X03
PeRKINSCOIe
August 7, 2019
VIA HAND DELIVERY
Commissioner Daniel T. Seamount, Jr.
Commissioner Jessie L. Chmielowski
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue, Suite 100
Anchorage, AK 99501
1029 West Third Avenue O +1907,279.8561
Suite 300 0 +1.907.276.3108
Anchorage. AK 99501-1981 perkinscoiecom
Elena M. Romerdahl
ERomerdahl@perkinscoie.com
D, +1.907.263.6914
F. +1.907.263.6428
Re: Request for Recalculation of Outstanding Bonding Obligation
Dear Commissioners Seamount and Chmielowski:
AU,t (': is
On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC or "the
Commission") issued a letter to AIX Energy LLC ("AIX") regarding recent revisions to
AOGCC's regulation 20 AAC 25.025 (the "July 2 Letter," attached hereto as Exhibit A).
The July 2 Letter states that AIX has 4 permitted wellheads and is therefore required to
establish a bond in the amount of $1,600,000 with the AOGCC under 20 AAC
25.025(b)(1). The July 2 Letter provides an installment schedule that AIX may use to
increase its current AOGCC bond of $200,000 in three annual installments of $500,000,
$500,000, and $400,000 beginning August 16, 2019. For the reasons discussed below,
AIX respectfully requests that the Commission adjust AIX's outstanding bonding
obligation based on bonding AIX currently has in place to satisfy its obligations to plug
and abandon its 4 permitted wellheads.
Under 20 AAC 25.025(a), operators proposing to drill wells in the state are required to file
a bond and, if required under 20 AAC 25.025(a)(2), security in the amount specified in the
table provided in 20 AAC 25.025(b)(1) "to ensure that each well is drilled, operated,
maintained, repaired, plugged and abandoned and each location is cleared" in accordance
with AOGCC regulations. The July 2 Letter acknowledges that AIX has a $200,000 bond
in place with the AOGCC (bond number RLB0015859) to address these obligations for its
four permitted wellheads. The July 2 Letter does not, however, acknowledge the $500,000
statewide bond AIX currently has in place with the Alaska Department of Natural
Resources ("DNR") or the $950,000 of financial security AIX currently has in place for
August 7, 2019
Page 2
the benefit of the Alaska Mental Health Trust Land Office ("MHT" )I to satisfy its DR&R
bonding obligations for its four permitted wells.2 The total bonding and financial security
AIX currently has in place to ensure that each of its four wells "is drilled, operated,
maintained, repaired, plugged and abandoned and each location is cleared" in accordance
with AOGCC regulations is therefore $1,650,000.
In addition to the $1,650,000 of bonding and financial security already in place with State
of Alaska entities for DR&R obligations associated with AIX's 4 wells, MHT as landowner
would be required to satisfy any DR&R obligations that AIX failed to complete. As
evidenced by the Commission's actions related to the Northern Dancer 1 well in 2018,3 the
Commission can and would look to MHT as landowner for AIX's leases to complete
plugging and abandonment of AIX's 4 wells if AIX failed to satisfy its DR&R obligations
under those leases. Although AIX's bonding and financial security in place with the State
currently exceeds the estimated cost to remediate its 4 wells,4 MHT's landowner status
provides further assurance for AOGCC that the DR&R obligations associated with those 4
wells will be fully satisfied.
By separate letter dated July 18, 2019, AIX requested that the Commission reconsider the
bonding amounts stated in its July 2 Letter and reduce the amount of AIX's required bond
under 20 AAC 25.025(b)(1) to $1,037,166 based on engineering data submitted pursuant
to 20 AAC 25.025(b)(3).5 The independent engineering estimate completed by Stephen
Hennigan that is attached to the July 18 Request concluded that plugging and abandoning
AIX's permitted wells would cost $1,037,166—$562,834 less than the amount required for
four wells under 20 AAC 25.025(b)(1). On August 5, 2019, the Commission granted
AIX's request for reconsideration and noticed its intent to schedule a hearing regarding
that request. Regardless of whether the Commission grants AIX's July 18 Request to
reduce the amount of its required bonding, AIX requests that the Commission acknowledge
the bonding and financial security currently in place with the State of Alaska for AIX's 4
wells and the additional assurance provided by MHT's landowner status for AIX's leases
AIX can provide redacted documentation of this financial security upon request.
a The $950,000 of financial security currently in place with MHT is based on an actual estimate of the cost to
remediate AIX's leases, including plugging and abandonment of its 4 permitted wells. AIX submitted an
independent engineering report to the Commission on July 18, 2019 to support a request for reduction in bonding
amount under 20 AAC 25.025(b)(3). That request is attached hereto as Exhibit B.
3 See Exhibits C and D attached hereto.
4 See supra note 1.
s See Exhibit B attached hereto (the "July 18 Request").
Pekin Cue LLP
August 7, 2019
Page 3
and find that AIX has fully satisfied its outstanding bonding obligation under 20 AAC
25.025(b)(1) accordingly.
For the reasons stated herein, AIX respectfully requests that the Commission acknowledge
the $1,650,000 of bonding and financial security currently in place for AIX's 4 permitted
wells and the additional assurance provided by MHT's landowner status for AIX's leases
and find that AIX's bonding obligation under 20 AAC 25.025(b)(1) has been fully satisfied.
AIX requests that it have an opportunity to address this request during the hearing the
AOGCC intends to schedule regarding AIX's July 18 Request for reconsideration of its
bonding amount. In the alternative, AIX requests a hearing under 20 AAC 25.540 to review
the evidence submitted and any additional evidence the Commission requires to determine
that AIX's outstanding bonding requirement under 20 AAC 25.025 has been satisfied.
Finally, in light of the Commission's August 5, 2019 decision granting AIX's request for
reconsideration of its bonding amount under 20 AAC 25.025(b)(1) and the additional
request made herein, AIX requests that the Commission stay AIX's requirement to increase
its bond with the AOGCC by $500,000 on August 16, 2019 while the Commission
considers AIX's pending requests. AIX respectfully requests that the Commission respond
to this stay request prior to August 16, 2019.
Thank you for your consideration.
Sincerely,
Elena M. Romerdahl
Counsel for AIX Energy LLC
Pxrkim Coe LLP
rile STA"fl:
July 2, 2019
,,ALASKA
GOVERNOR MICHAEL I IIUNLEAVY
Wendy Sheasby
Chief Financial Officer
AIX Energy LLC
2441 High Timbers, Suite 120.
The Woodlands, TX 77380
Dear Ms. Sheasby:
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279, 1433
Fax: 907.276.7542
v+ wv✓.aogcc.alosk o.g ov
On May 18, 2019, revisions to the Alaska Oil and Gas Conservation Commission's (AOGCC)
Regulation 20 AAC 25.025 became effective (see enclosed). Under 20 AAC 25.025(b), bonding
amounts are set based on the number of permitted wellheads. According to AOGCC records, AIX
Energy LLC has 4 permitted wellheads (see enclosed list). AIX Energy LLC is required to
establish a bond in the amount of $1,600,000 with the AOGCC. AIX Energy LLC currently has
bond number RLB0015859 in the amount of $200,000 on file with the AOGCC. Under the new
regulation, an operator with a bond in place on May 18, 2019 is permitted to increase the amount
of its current bond using up to four installment increments --subject to a minimum installment
amount --over a period of three years. If AIX Energy LLC chooses to increase its bond amount
using installment increments, the schedule is:
Installment
Due Date
Minimum Bond Increase
First
August
16, 2019
$500000
Second
August
16, 2020
$500000
Third
August
16, 2021
$400 000
Fourth
August
16, 2022
$0
Enclosed are new Forms 10-402A and 10-402B for use with establishing a new surety or personal
bond. Also enclosed is the AOGCC's Assignment of Certificate of Deposit and Confirmation and
Agreement of Issuing Bank form, should AIX Energy LLC choose a Certificate of Deposit as its
bonding instrument.
Exhibit A
Page 1 of 14
Page 2 of 2
If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or
iody.colombie(ct�alaska.gov or Mr. Dave Roby at 907-793-1232 or dave.robvia,alaska.ggv. .
Sincerely,
qDiel T, eamount, Jr. J ie L. Chmielowski
Commissioner C16mmissioner
Enclosures:
20 AAC 25.025 Regulations
Forms: 10-402A and 10-402B
Form: AOGCC — Assignment of CD / Confirmation/Agreement
List of Permitted Wellheads
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.
Exhibit A
Page 2 of 14
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Exhibit A
Page 3 of 14
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Exhibit A
Page 3 of 14
D
Register 230, July 2019 MISCELLANEOUS BOARDS
20 AAC 25.025 is repealed and readopted to read:
20 AAC 25.025. Bonding. (a) An operator proposing to drill a well for which a permit is
required under 20 AAC 25.005 shall file a bond and, if required under (2) of this subsection,
security to ensure that each well is drilled, operated, maintained, repaired, plugged and
abandoned and each location is cleared in accordance with this chapter. The bond must be
(1) a surety bond issued on Form 10-402A in favor of the Alaska Oil and Gas
Conservation Commission by an authorized insurer under AS 21.09 whose certificate of
authority is in good standing; or
(2) a personal bond of the operator on Form 10-402B accompanied by security
guaranteeing the operator's performance; security must be in the form of a certificate of deposit
or irrevocable letter of credit issued in the sole favor of the Alaska Oil and Gas Conservation
Commission by a bank authorized to do business in the state, or must be in another form that the
commission determines to be adequate to ensure payment.
(b) A bond and, if required, security must be in compliance with the following:
(1) a bond and, if required, security must be in the amount specified in the following
table:
Number of Permitted Wellheads
Bond Amount
#1 - 910 wells
$400,000 per well
#11 - #40 wells
$6,000,000
#41 - #100 wells
$10,000,000
#101 - #1,000 wells
$20,000,000
Over 1,000 wells
$30,000,000
(2) for the purposes of this section, a wellhead is considered any well, excepting
lateral well branches drilled from an existing well, for which the commission has issued a Permit
to Drill (Form 10-401) that has not been permanently plugged and abandoned;
(3) upon request of an operator, or on its own motion, the commission may
increase or decrease the amounts set out in (1) of this subsection based on evidence that
engineering, geotechnical, environmental, or location conditions warrant an adjustment of those
amounts.
(c) An operator with a bond and, if required, security in place on May 18, 2019 will be
allowed to increase the amount of its bond and, if required, security to the amount required under
(b) of this section in four installments. The installments shall be made as follows:
(1) the first installment is due August 16, 2019 and must be a minimum of
$500,000 or one-quarter of the difference between the operator's existing level of bonding and, if
required, security and the level required under (b) of this section, whichever is greater;
(2) the second installment is due August 16, 2020 and must be a minimum of
$500,000 or one-third of the difference between the operator's existing level of bonding and, if
required, security and the level required under (b) of this section, whichever is greater;
(3) the third installment is due August 16, 2021 and must be a minimum of
$500,000 or one-half of the difference between the operator's existing level of bonding and, if
required, security and the level required under (b) of this section, whichever is greater; and
(4) the final installment is due August 16, 2022 and must be in the amount of the
difference between the operator's existing level of bonding and, if required, security and the
level required under (b) of this section.
Exhibit A
Page 4 of 14
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
SURETY BOND
BOND NUMBER PENAL SUM $
KNOW ALL PERSONS BY THESE PRESENTS,
That we,
of the City of State of
as principal, and
of as surety, an authorized insurer under AS 21.09
whose certificate of authority is in good standing, are held firmly bound unto the Alaska Oil and Gas
Conservation Commission in the penal sum as indicated above, lawful money of the United States of America,
for which payment, well and truly to be made, we bind ourselves and each of us, and each of our heirs, executors,
administrators, successors, and assigns, jointly and severally, firmly by these presents.
WHEREAS the above bonded operator proposes to engage in the drilling or operating of a well or wells subject
to regulation by the Alaska Oil and Gas Conservation Commission.
Check the proper box:
Number of Permitted Wellheads Bond Amount Installment Amount
1 - ] 0 wells $400,000 per well Operators with active
Total Wells
Total Bond Amount
NOW, THEREFORE, the above bonded principal shall comply with all of the provisions of the laws of the State
of Alaska and the regulations, rules, and orders of the Alaska Oil and Gas Conservation Commission in the
drilling, operation, maintenance, repair, and abandonment of each well and the clearance of each location, and
shall file with the Alaska Oil and Gas Conservation Commission all notices and records required by said
Commission.
❑
bonds as of May 18,
El 11 - 40 wells $6,000,000 2019, may increase
❑ 41 - 100 wells $10,000,000 their bonding level
over a period of three
❑ 101 - 1000 wells $20,000,000 years in accordance
with 20 AAC
El
Forth Exhibit A
10-402A Rev. 05/2079 Page 1 of 2 &D�
PRuhmit
25.025(c).
Over 1000 wells
$30,000,000
$liwte
I:i61�17►11u : :
This obligation shall remain in full force and effect until released by the Alaska Oil and Gas
Conservation Commission at the request of principal or surety. The Alaska Oil and Gas
Conservation Commission must be provided written notification at least 90 days before the
expiration or termination of this bond or security.
Witness our hand and seal this day of 20
Principal
Printed name and title
Witness our hand and seal this
Surety
Printed name and title
Countersigned
ALASKA OIL AND GAS
Approved:
Commissioner
Approved:
Commissioner
Approved:
By:
Signature
Address/City/State/ZIP
day of
Bv:
Signature
Address/City/State/ZIP
120
(Resident Agent if necessary)
Official Use Only Below Line
Commissioner
(Requires approval by two Commissioners)
Form 10-402A Rev. 0512019 Page 2 of 2
Date
Date
Date
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
PERSONAL BOND
BOND NUMBER PENAL SUM $
KNOW ALL PERSONS BY THESE PRESENTS,
That
of the City of State of
as operator, is held firmly bound unto the Alaska Oil and Gas Conservation Commission in the penal
sum as indicated above, lawful money of the United States of America, for which payment, well and
truly to be made, the operator binds itself and its heirs, executors, administrators, successors, and
assigns, firmly by these presents.
The operator's performance under this bond is guaranteed by the following security, the disposition
of which shall be solely determined and can only be released by the Alaska Oil and Gas Conservation
Commission.
❑ The attached Certificate of Deposit No. issued in sole favor
Alaska Oil and Gas Conservation Commission by
a bank authorized to do business in the State of Alaska.
❑ The attached Irrevocable Letter of Credit issued in sole favor of the Alaska Oil and Gas
Conservation Commission by
business in the State of Alaska.
❑ [Description of other approved security.]
, a bank authorized
WHEREAS the above bonded operator proposes to engage in the drilling or operating of a well or
wells subject to regulation by the Alaska Oil and Gas Conservation Commission.
Check the proper box:
Number of Permitted Wellhead
Bond Amount
Installment Amount
❑
I - 10 wells
$400,000 per well
Operators with
active bonds as of
❑
11 - 40 wells
$6,000,000
May 18, 2019, may
❑
41 - 100 wells
$10,000,000
increase they
bonding level over a
❑
101 - 1000 wells
$20,000,000
period of three years
$30,000,000
in accordance with
EJ
Over
Total Wells
Total Bond Amount
Form 10-4028 Rev. 05!2019 Pae 1 of 2 SuPxhib� licate
9 Page `io`� i
20 AAC 25.025(c).
1000 wells
$30,000,000
P
BOND NUMBER
NOW, THEREFORE, the above bonded operator shall comply with all of the provisions of
the laws of the State of Alaska and the regulations, rules, and orders of the Alaska Oil and
Gas Conservation Commission in the drilling, operation, maintenance, repair, and
abandonment of each well and the clearance of each location, and shall file with the Alaska
Oil and Gas Conservation Commission all notices and records required by said
Commission.
This obligation shall remain in full force and effect until released by the Alaska Oil and Gas
Conservation Commission in accordance with 20 AAC 25.025(c). The Alaska Oil and Gas
Conservation Commission must be provided written notification at least 90 days before the
expiration or termination of this bond or security.
Witness our hand and seal this day of
Operator
Printed name and title
ACKNOWLEDGEMENT
By: _
Signature
Address/City/State/ZIP
,20
State of
Judicial District (or County of )
The foregoing instrument was acknowledged before me on this day of
, by
(name) (title) of
(operator), on behalf of
Notary Public in and for
(operator).
My commission expires:
_ Official Use Only Below Line
ALASKA OIL AND GAS CONSERVATION COMMISSION
Approved:
Approved:
Approved:
Commissioner
Commissioner
Commissioner
(Requires approval by two Commissioners)
Date
Date
Date
Form 10-402B Rev. 05/2019 Page 2 of 2 SIXgibllicate
Page o 41
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND
CONFIRMATION AND AGREEMENT OF ISSUING BANK
On 20_,
(Principal/Obligor)
(Address)
assigns the following certificate of deposit:
1 • in the amount of $ ;
(Certificate of Deposit Number)
issued by (name of bank), to secure, in accordance with 20 AAC
25.025, any default that may occur under State of Alaska, Alaska Oil and Gas Conservation
Commission Personal Bond No. (Bond).
WHEREAS, under 20 AAC 25.025, an operator submitting a personal bond on Form 10-
402B, must provide security, issued in the sole favor of the Alaska Oil and Gas
Conservation Commission, by a bank authorized to do business in the State of Alaska
guaranteeing the operator's performance;
NOW THEREFORE, to meet the requirements of 20 AAC 25.025, under this Assignment
of Certificate of Deposit and Confirmation and Agreement of Issuing Bank Assignment,
A. the Principal/Obligor agrees to the following:
the assignment of its rights to the Certificate to the Alaska Oil and Gas
Conservation Commission;
2. the State of Alaska, by and through its duly authorized agents, is irrevocably
constituted and appointed as its Attorney -in -Fact to do all things necessary
to effectuate the purposes of this Assignment; and
3. this Assignment shall remain in full force and effect until released in writing
by the Alaska Oil and Gas Conservation Commission in accordance with
20 AAC 25.025.
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 1 of 6
Exhibit A
Page 9 of 14
B. The Issuing Bank confirms and agrees to the following:
1. it is a bank authorized to do business in the State of Alaska;
2. it is federally insured or a Federal Reserve Bank branch;
3. it has changed its records to show that, subject to its compliance with all
applicable State of Alaska and federal laws, only the Alaska Oil and Gas
Conservation Commission may collect the principal amount of the
Certificate;
4. it has placed a hard hold or freeze on the Certificate in accordance with this
Assignment;
it shall, within three business days after the Certificate are issued, deliver
the original Certificate ---or, if it does not issue original Certificate, other
account documents, such as receipts, adequately showing that the
Certificate was issued—to the Alaska Oil and Gas Conservation
Commission (which shall hold them until this Assignment is released in
writing by the Alaska Oil and Gas Conservation Commission);
6. the Certificate complies with the following requirements:
(a) the principal of the Certificate is in the sole favor and for the
exclusive use of the Alaska Oil and Gas Conservation Commission
—i.e., the Certificate will be held by the Alaska Oil and Gas
Conservation Commission or by the Issuing Bank in trust for the
benefit of Alaska Oil and Gas Conservation Commission;
(b) the Certificate is assigned to the Alaska Oil and Gas Conservation
Commission in writing and upon the books of the Issuing Bank to
secure any default, as determined by the Alaska Oil and Gas
Conservation Commission in its sole discretion, that may occur
under the Bond, which accompanies the Certificate;
(c) subject to the Principal/Obligor compliance with all applicable State
of Alaska and federal laws, the Alaska Oil and Gas Conservation
Commission alone, in its sole discretion, may authorize the release,
in any form, to any party of any or all of the principal amount of the
Certificate;
(d) the Certificate is, at any time prior to maturity, redeemable, and the
principal amount of the Certificate is payable, in whole or in part at
the Alaska Oil and Gas Conservation Commission's sole discretion,
to the Alaska Oil and Gas Conservation Commission immediately
upon written demand;
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 2 of 6
Exhibit A
Page 10 of 14
(e) the Certificate is in such amount that liquidation prior to maturity
will result in the full amount of the Bond, or the Certificate is issued
with the provision that all costs of liquidation (including, for
example, penalties for early redemption) will be paid out of the
interest earned by the Principal/Obligor, not out of principal amount
of the Certificate;
(f) the Certificate is federally insured;
(g) the Certificate automatically renews;
(h) the Certificate is subject to no expiration date that would restrict the
right of the Alaska Oil and Gas Conservation Commission to collect
the principal amount of the Certificate at any time of default; and
(i) the Certificate is not, and will not be, subject to any rights of set-off
or liens of the Issuing Bank; and
7. the State of Alaska, by and through its duly authorized agents, is irrevocably
constituted and appointed as its Attorney -in -Fact to do all things necessary to
effectuate the purposes of this Assignment;
8. this Assignment shall remain in full force and effect until released in writing by
the Alaska Oil and Gas Conservation Commission in accordance with 20 AAC
25.025; and
9. it shall immediately notify the Alaska Oil and Gas Conservation Commission
and Principal/Obligor if it becomes unable, for any reason, to fulfill its
obligations under the Certificate or if it learns, or reasonably should have
learned, that any confirmation or agreement above is or becomes inaccurate.
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 3 of 6
Exhibit A
Page 11 of 14
IN WITNESS WHEREOF, the Principal/Obligor has set its signature and seal (if it has
one)
this day of , 2
(Signature of Principal/Obligor)
By:
Title:
IN WITNESS WHEREOF, the Issuing Bank has set its signature and seal (if it has one)
this day of , 2
(Signature of Issuing Bank)
By:
Title:
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 4 of 6
Exhibit A
Page 12 of 14
STATE OF )
)ss.
ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR
On this
day of
, 2 , before me, a notary public in and
for the State
of
duly
commissioned and sworn, appeared
, to me personally known, who, being
by me duly sworn, said the following: (1) he/she is
of
the Principal/Obligor that executed
the attached Assignment of Certificate of Deposit and Confirmation and Agreement of
Issuing Bank (Assignment); (2) the seal (if applicable) affixed to the Assignment is the
Principal/Obligor's corporation seal; (3) the Assignment was signed and sealed (if
applicable) on behalf of the Principal/Obligor by the authority of its Board of Directors;
and (4) executing the Assignment is the free act and deed of the Principal/Obligor for the
uses and purposes set forth in it.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, month,
and year aforesaid.
Notary Public in and for the State of
My Commission Expires:
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 5 of 6
Exhibit A
Page 13 of 14
STATE OF )
)ss.
ACKNOWLEDGEMENT OF ISSUING BANK
On this day of , 2. before me, a notary public in and
for the State of duly commissioned and sworn, appeared
, to me personally known, who, being
by me duly sworn, said the following: (1) he/she is
of
the Issuing Bank that executed the
attached Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing
Bank (Assignment); (2) the seal (if applicable) affixed to the Assignment is the Issuing
Bank's corporation seal; (3) the Assignment was signed and sealed (if applicable) on behalf
of the Issuing Bank by the authority of its Board of Directors; and (4) executing the
Assignment is the free act and deed of the Issuing Bank for the uses and purposes set forth
in it.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, month,
and year aforesaid.
Notary Public in and for the State of
My Commission Expires:
AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019)
Page 6 of 6
Exhibit A
Page 14 of 14
AIX Energy LLC
High Timbers Drive, Suite 120, The Woodlands, TX 77380
832-813-0900 Phone
832-585-0133 Facsimile
July 18, 2019
Commissioner Daniel T. Seamount, Jr.
Commissioner Jessie L. Chmielowski
Alaska Oil and Gas Conservation Commission
333 West r Avenue, Suite 100
Anchorage, AK 99501
Re: 20 AAC 25.025 (b) (3)
Dear Commissioners Seamount & Chmielow,ski
With regardsto 20 AAC 25.025 (b) (3), AIX Energy LLC ("AIX") respectfully requests a decrease in the
amount of bonding from $1,600,000 per regulation to $1,037,166 based upon an independent
engineering estimate. Please refer to the attached AFEs per well along with the associated wellbore
diagrams provided by Mr. Stephen Hennigan with Petroleum Engineers, Inc.
AIX appreciates the opportunity to submit this request for a decrease in bonding. Please contact me
should you have any questions or concerns.
Regards,
OnMSheasby, A
Enclosures
Exhibit B
Page 1 of 14
KLGF -AFEs for P&A
Prepared by Stephen Hennigan, Petroleum Engineers, Inc.
Well
Amount
KL1-1
$281,702
KI -1-2
199,414
KI -1-3
290,227
KLl-4
$265,823
Total $1,037,166
Exhibit B
Page 2 of 14
AIX Energy, LLC
Scoping P&A ScoDinly AFEOnN
AUTHORITY FOR EXPENDITURE
General lntormabon
Operator. AX Energy. LLC
Burt.Loea0on 1884 FNL& 1037'FWL KBMi36N 11W
Lease: Kenai Loop el -1 a.
SH Location:
188V FNL 8103]' FWL Kenai 336N 11W
Oahe Prepared: 22/12 m3m
Location:
SHL: x=2]951813. y=2402268
NAD 27
Prepared By: Steve Henngan
Field:
Kauai Loop
Work: Scoping RIGLESS P&A
Co-lahl31ata:
Kenai Peninsula, Mites
Coca
USA
Well Data
TYO: 10667'
Pura aoa
4 1n" 7774 10680
MD: 10880'
s
WD: 0
Drive/Structural 16 0' 138'
o
NO Conductor 0 0' 0'
Tsaelc
0
Suits" 103/4" 0' 305]'
as Than,
Imm 752" 0' 8024'
Pal Cigna:
0'
Rig Typs: Land
mane:
0 0'
scn ion
pna— P&A, cash,Nmple4on
dal
larroduction
TOUT
Pmt, DNfirs"
P&A
Dry Hole
CaseR&A Completion Cmped/Tmd
Faciliies
opa
10
& Pipeline
Intangible Coal, Ear ate
100 Location dlaposm
200 Rigs, Tools. do
511,400
$11.400
300 Mud a ad Chemicals
$,000
$6.000
400 Rental Tools
$5,225
$5,225
500 Cementing
$95,000
595,000
800 Serviees
$49,643
$49.643
700 Tmnspodation
$14000
$19,000
800 Supervision
$41.825
$41,825
..... et
Tangy 21ikEstL'nate::::>::is=.`;
Tangible oat ads
900 Tubular oda
$0
1000 Wellhead Equipment
$0
so
1100 Casing Equipment
$0
so $0
1200 Completion Equipment$0
$0
m, Sep sep, on,
1300 Lhasa EgpmVHim,
80
$0
1400 Pmd Sales Expl PiBaline :etc
.:•::r:+:::i:fG:i::i
EO
lafA[:....... G'iYE9n11taOLi:::::: i:!:i:ii:i:-i:i
is:':•:i:'ii:i:ii:i::•i:::::i-::S)
Insurance
15001nsurance loyalist
so
Well Cost
3164C[[0:... LCL.... ii;:}:.:<is•:;ii:i ti: iia: is i:::- ......
:t......> .+:
i:l : is i::::is:<ii:viii:
is is isi i?:-:!•i:-:v.ii: i::i-i: is -i:::
iiii:i•:Lti: is
ii. . 6... ,
CONTINGENCY :;:;.{:;:
$25,609
$25,609
AGENT FEES
$0
$0
COST OF MONEY
$0
$0
STARTUP
$0
$0
WIND DOWN
50
$0
TOTAL ESTIMATED WELL COST
5281,]02...
..:.........:..:.............:...:::::::::..::::.
.::
.8281,]02
::.
ROtINUED1GlEffkla6T (d
:........:
paps 1
Exhibit B
Page 3 of 14
PSA PmlguageaaaY pRta: Fatlnl �a.zV=perfz, leave cortin wmgmmp mPNR
Tagana Teat. Linermp: PuncNcm mgNbP mpkr.
Calan pluglnmglaagannulliWMD'a0 elir rmp.. W Jaganrl Test
sg: Svt T PtOg'Mvngsaw. Teat Pedt"anepg. Pump aaltnceey cmt plug lntag and ALLannulll.
Tagane Tnt. Surface Plug: Testt0L zta'amrulus. SH TTBP�2W'SGL.
bycag, pumpbalmzad g00'plug.WOC bg Cuto : Picture, tlaae zum cmemmD. walO pleb.
NI ane Rastme.
Approual
Approved by:
Data:
Approved by:
Date:
Approved by:
Data:
Appmvee by:
Date:
Approved by:
Dam:
Exhibit B
Page 4 of 14
CMPLTN WELLBORE (6)
AIX Energy, LLC*
Kenai LOOP #1-1
BlocklSec 33 6N 11 W
Wildcat 0
Kenai Peninsula
Alaska
Ser #.: 211043
Stephen F (Stew) Hannigan
wivis
as -A, "While: WeldedIs
8.4 8.6 9.8 123'xin
WP/Gas bq CaM/Drnre
Chemical inj Mandrel ±500'
....... . .......... ... . ............................ ...................
4" SS 0.049 wall clan rV fine
2 7/8" 6.5 LBO 2.347"ID API EUE 8rd III
5k9akw SCSSV ±565'
E"o 0429-2011
8.6 9.0 16.0 Trak
4"!
29.7# L80 OTC hapi j 9 ?W
8021
- 3055
�'.:.�
xa
1Y 314
335Z MID 14.7 emw
Pump 42 bbM Mud Chan llwlotrM dye Pump 300Mwate
24
...' 42
OT #2 @ ppg
Testli.WaPed Cftlesafa520bw ftnesimi 12
42
ZXP LT Packer
Poetential Ini zone
1.875"XNnipple gi 9687,14 -
Wd4WwW4SWl&&8PIi Fbebheld!JnmShg, CIP
iu
ir.
Cut St"'gi @ t96e9,
21 300
zlip
42
a.x.r Memo sale J$Hl
L0T#1 15.0 g emw
!im
42
tWe-R/Y BJ br Cnrt Job PJSM brant Job -TM sud Uses 4080 Ped -OK 0.25
in
102 ppg NaCUIUM
hh;-RePWrWH2O Lirw(eahaftPkValiAa) 1ft-W&Pump s0BWIWINlIS
hi
Seem & W 3 al Chn. (pacian, wernamang - Sidn & Otmene) 2.25 h. - W
If
9717' 1M
W152 lgunl"
WS��13.SPPG-Fd�BWTaila
PmplM,58ML��
wtz
1
jsapPG
h,' Pohenmxn (ROX) I(XXW 1!
Pump-PhgBumpedCal OMpterement-n
Bottom Pederalkin (0 SPF) 1004917
NUM rnei Diu NUI ralle'154.
enin
Iw
held 5 Mb- Bleed/off- He)eCIP W 0 HhM40W Inn, Slux, 6024 &
:ix,rro,g@39689'. SDi.g fell.
ii
Float Celha 9 7M'
'tz
EMO 05 19 2011
FIT#3 13.5 ppg ehhv
4z
8.6 9.2 13.5 Nidr—�.O.
S024' E:-
29.7# L80 OTC hapi j 9 ?W
8021
xa
:kca it
TS -1/2'17#x7 -M 291 - 219ft.
24
...' 42
80 KSI File! R. Lock Line, hanger wl
42
ZXP LT Packer
1.875"XNnipple gi 9687,14 -
Cut St"'gi @ t96e9,
zlip
42
a.x.r Memo sale J$Hl
42
I�i t`$2
(RDX) sm
B rn Phrerawn (SSPF) smev
If
9717' 1M
wtz
24;i:
h,' Pohenmxn (ROX) I(XXW 1!
yt
Bottom Pederalkin (0 SPF) 1004917
NUM rnei Diu NUI ralle'154.
enin
Iw
(30940 1000 I=
:ix,rro,g@39689'. SDi.g fell.
'tz
Einumatedtopofftsh 10240'MD
4z
az
4-
PBTID 10565DPM
Drill
CK EXPRO 05 19 2011
66 114 76.5
1080
III12.6#L80
TCN
419-
M.1412
CDa2, 2% X2,.MR4_115% Strac Frea. 1 She FP,5L. Y101,18 w NeX.
9.82'rhankerjr @ 8324'
Ise M 005191 H2O U. 3.32 xm,aM Inne. W,216 We inner W ne,.
Lending cellar 10597', rest co1hr 0 1063
Doemme m 114 M M,
Tagged@ 10565' ON
Csg shoe 10676'
formerly Buccaneer
Exhibit B
Page 5 of 14
AIX Energy, LLC
Scoping P&A SCopInu AFE Only �E•�-MSE> wm^
No.t
Exhibit B
Page 6 of 14
AUTHORITY FOR EXPENDITURE
Denali Intonation
Ope2mwr. Ermrgy, LLCu
.Lautbn'
SL&' J n11w
Lease: Komi Loop#"1-2
R.
BH Loulion:
FSL&'FWL 336nitw
Dale Prepared: 213112
wig
Location:
SHL .=.Y-
NPD 27
Prepared By: Steve Henni9an
Flow:
Korai two
Work: Scoping RIGLEBG P&A
Co- IIJSMW:
Kenai Peninsula. Alaska.
Comm":
USA
Well Data
TVD: 11000•
r,ve tn.
41 27 1130
MD: 11368'
d
WD. 0
Dnvel Structund 16 " 0
120'
d
NO Conductor 0 •• 0'
0'
n.wex:
0
Surface to WWI 0
3027'
and MO..
Intim ]518•' 0
6330'
FAd C.yra:
0'
Rig Type: Land
mm,N:
0 .. 0'
c r
plll,p. OdI, CdM.COTphdan
ota
P uc n
Tatal
Prep
Orill1Shk P&A
Dry Hole
Case/T&A Completion CmpW1TsW
Fnildies
a.Y.
5
& Pipeline
ntangibk pet urn
319.003
100 Lpcatbn pose
1
$5,000
200 Drilling Tools
$8,000
$4,70
300 Mud and Chemicals
$4,000
75,]50
400 Rental Tools
$2,750
$75,000
500 Cementing
$75,000
537,788
600 Services
$37,]86
$10,000
]00 TmnsPotation
$10,000
826]50
B00 SuPervlaion.,__
$28.750
�:::.: �. _. �::. �: .::::::•:•:::
:.:::.
�: ��;..
Wit... tiie�6dscEexhn'ole::;�i:2:�:=;`:;�::�::�i:�::2::�:<'<�v;:�ri.'•:�i:6f6f
.�:::::::::::::::•:::::::::.
Tangible rot Estimate
900 Tubular 4500CIS
ED
1000 Wellhead Equipment
$0
1100 Casing Equipment
$0
�
12W Cemple0on Equipment
$0
13W Lease EgpmO Mn, sep, etc
$0
30
1400Prod $ales Expl Pi Ilne :otc
50
.........................
:: i::.ii
ib10t:....... �'Sll:fi9GMBisisis-isi:Isis:ii:i::ii:'is:i!ii:'isi::{isiiii::isii:isisi:i:i:iis:ii:::!jii:i:v::}i:i:ti:
�:•i:-i:•i:•::•i:::ti•
Insu2nce
150 Inane IDMM
So
Well ost
........ Ep:WELCx...:�:�:�ii<iii;•ii:•i:6i:•'ri:�i
CONTINGENCY i::riiCk;;:
�.'::��i i::i:�i:� ... .
$18,1
:.::::•::. �::::::::::::::::::.:-::::
...................................:.........................:......
:::i:i:i:::::::::::::::::
:::::
$18.129
AGENT FEES
$0
$0
s0
$0
COST OF MONEY
s0
$0
STARTUP
$0
14
WIND DOWN
$0
5199414
TOTAL ESTIMATED WELL COST
$199.414
,
ROUNDEQ�IT3?IEAi�6T [-000:: i:�' =:: i:i}}i:•i:i•:
� i �i:;tii6Y; ::::::::.
�:•i: i::•:iL•ii:•i:::::::
�:::::::i::::•::. �:ii}:i•::.
�::. � i::i•
::.
No.t
Exhibit B
Page 6 of 14
Sudag: Sat CISPIW bMc,shoe. Tart Perfag. Pump33'b anu plugin7"AB07SMXD anEta Ya ndm.
tl Teat Suit @Plug: Tort WL4zi6'annulus.
ars' BDL. PMT 51g, WmP b+lencdl2ara' pug, WDC, tag. Lta aW: Piclurea, Maka apry omtto top, weld pate.
gators. .
A rwal
Approved by:
Date:
Approved by:
Date:
Approved by:
Date:
Approved by:
Date:
Approved by:
Data:
Page 2
Exhibit B
Page 7 of 14
Kenai Loop #3 (1-2)
Pad 1
j 3394' FSL, 1134' FWL i
S33T6N R11W S.M.
Mu IMa
"nRIS
Cart Iron &iege
Plug
Set ® 60)0' MO
W/ 25 ft of
<emlM on top
Peff..ticns
6,950-6,960'
MD
vWwRions
9,790' -9,815' MD
I+edPnuom-10,]2i'-
O,OZ MD
p rt ... fl.6- 10,5X1
'-10,505' MD
perfomtbns-
10,920'-10,905'
MD
211097
50-133-20597-00-0
MHT 9300070
9i 92.5' (21' AGL)
9/26/2011
Cement Top 0
0850' MO
OSaB' iVD
verfora l.rl (i4 5
1. MD
Baker FMx Leh U11M l rger
/ W/ PkranO MR
r fap�BfOD'MD
Cart Iron bridge
plug w/25' cement
On top set at 9,750'
MD
6
6
pxkerw/ feMbore/'%-
pro61e@iD,MS'MD.
"%° pluglMMlee w/
L -. sane
MOO ®10300'
MD. "%"plug
Inp 14cl w/rand
p.Wrw/seafm
lo,w MD
AIX Energy LLC
lion
se-e«�-I Pin.
I
16" x36
"opt
Too
Top
BMtom
8,1W
MB Surt
120'
T,621'
TVD Surf
120'
c,.,fy�g�Dalne^°
16J/0• Lao
�sppf
Top
Ban..
610 0'
3,D2T
2,02'
TVD m
3,026'
RKB' Z1'
I rm dwkDab fa
TSB• L30
29.7 ppf
Top
B nn
MD w
6,330'
TVD 0'
7,669'
lion
4lw
480
12.6ppf H9eNI621
Kerei Loop
Too
Bollom
MO
8,1W
111266'
7VuuD
T,621'
11,OW
Angle &KOP and DePlh'
��'2"TB"
ppf
DM Cpm Mee'
Top
BM Pm
RKB' Z1'
PrepalW
TVD
test ReNMPn DMe:I
MO,mg
2-7/8"V.Wngtail,•X"
nipple a rd 10' Pup cut IAD ISD
010,730.5' MO.
ofoPPe to bottom
ID Em
11,Mr MD 'MD
i1,W0'TVD 'TVD
V/ MI NMne 6 Numb W:
Kenal La 113Reman"i-2
Leeu'.
Kerei Loop
Counw.r Panty:
Kenai Pmwula B b
Sum:
AMeu
Lou USA
Penna 0on0 (MD):
crvD)'
Angle &KOP and DePlh'
Pngle Peftl
I KOPND.
DM Cpm Mee'
RKB' Z1'
PrepalW
Hsm n dab
test ReNMPn DMe:I
MO,mg
Exhibit B
Page 8 of 14
AIX Energy, LLC
Scoping P&A ScopingAFEOnIV
Pails 1
Exhibit B
Page 9 of 14
AUTHORITY FOR EXPENDITURE
General Information
Operator. AIX Erergy. LLC
Sud.L=aWn'FNL&
MC 3361411W
Lease: Kenai Loop #L3
R.,e
BH Laatbn:
FNLS'FWL 336N11W
Date Prepared: 2/3112
511W19
Location:
SHL: x=.y=
NAD 27
Prepared By: Steve Hannigan
Field:
Kenai Loop
Work: Staple, RIGLESS PBA
Cd-PhJSIo1W
Kenai Peninsula. Alaska
Count":
USA
Well Data
TVD: 1262]'
woe kola
41 8359 i
MD: 12944'
o
WD: 0
Drivel Stmctual 16 0
137'
0
NO Conductor 0 0'
0'
q.e.or
0 "
Surface 10314" 0'
3024'
mn nen.cx:
IMm 75,5" 0'
31309'
Pmdi(a, e:
0'
Rig Type: Land
Tuem,
0 " 0'
ces.inpa..
amlkw . Pu c .ronpleucn
Total
Production
Total
Prep
D,,IIlStrk P&A
Dry Hole
Case]TSA Completion CmpSdnstd
Facilities
Drys
10
E Pipeline
ni os Estimate
TW
100 Location a disposal
S28,000
SM.0100
200 Rigs, Tools, etc
$11,400
511,400
300 Mud and Chem irals
$6,000
$5.000
400 Rental Tools
$5,225
$EM$
500 Cementing
$105,00
$105,000
600 Servlces
$47,393
$47.393
700 Transportation
$19,000
$19.000
800 Supervision,..
$41.525
$41825
....
Tangible om t mete
900 T.G.urGoods
1000 Wellhead Equipment
$0
$0
1100 Casing Equipment
So
$0
1200 Completion Equipment
So
$0
1300 Lease EgpmV Htre, sep, etc
so
$0
1400 Pmd Sales ExpIPifaline, etc ....:
............:::::::. .SO
so
$erGTee ...'<�1:64rddeur::::. �. � :::. � »:;::»::>::•::•::•:::::.
�:: h'd:�::�ii::;�;:�>:�i:::�::<�;:�i':�:t
�:�i: i::`-::;�i:�::�i:�:;;�i:�;i:
� ;: ;:-::�:�:
�:-;:-i::�
Insurence
1500 maurence lamm
So
Well Cost
EBTIM54.3 : WELLLOSi::::: is ii .::.:::::::: .
} i. �::::::: �:::.:., :.:
...:...:.:.........:...::..:::::::.:::::...::::::i:ii:::::::::
CONTINGENCY ;:({$ipfy:}:[
$26,384
$26,364
AGENT FEES
$0
$0
$0
COST MONEY
$0
$0
STARTUP
$0
$o
WIND DOWN
$0
$0
TOTAL ESTIMATED WELL COSTE290.22'/
$290.227
fioUNOEIi=31i:...... sr-�96ui:�i:::`�i:;:::2.:>:R:i:;::;i:
�:�>::<:::•:�:::>:•::::»:>:::•::
..::::::::::. �::::. �::::::::.
_. �:.:�::::::
aoo::.
Pails 1
Exhibit B
Page 9 of 14
PAA Pullguagnif.ey... Pale: Fatlq lero•eaa pale, leave emtin Caemarorop oTPxR
T29amiTM Linarop: PunWIa4Wgatropuf Pkt.
P balanced plug in tbglag annalll ro 200' alar. lint Xi WOC. Tag and Test
csg:$elT P100'bee Csgs.ae. TM PaM It, and ceg. Pump balancM M' cent plug In tbg and ALL ... Wil.
Tag and TM SuAace Plug: Taet 1011 s 16' annulus. SetT P@200'WL,
ibyag, pump balanced 200' plug. WOC, tag. Chugs: Wnures. Make sun cmtaetop. Nd plate.
Appindeal
Approved by:
Date:
Approvad by:
Data:
Approved by:
Date:
Approved by:
Date:
Approved by:
Date:
Pegs 2
Exhibit B
Page 10 of 14
Kenai Loop #4 (1.3)
Pad 1
1886' FNL, 1255' FWL
S33 T6N R11 W S.M.
Max Inc 24.33 f
degrees
Baker ZXP Liner Packer
and PBR. Packer top
at 8323' MD
BaMr Flax Lak Liner Winger
W M Pkr and PMR
LONr top 438399'MD
Wertkenwd UkNTk
41/2' Pakkers w1"3• plw
10 rt
10,11WIA 10,1a6'TVD
10,850' MD11.3JZ TVD
11,69fi' MD 31362' TVD
12,589'M012,273'ND
HL5E2061
1mtrt
12MVM012$ZOM
Ks puBpw "I,c cm.
TaMNx1ZWrMD
M
13,047 MD
12,M WD
212 074
50.133-20602-00-00
MHT93WD52
a• 112' (21' AGL)
60A 34 11.520"
151" 13'27.868"
112012
Baker SSSV -2 718"
@ 589' MD
Chemical Inj. Mandrel at 4499'
MD. 2 7/8n 8rd EUE - Modified
x00,r0',
xrtuIP&
l'
Y.nn an.n d
.
tesmESlb psl
AND
wun a7/8•TEann6
mMNemdmtlm TalauryM
die Z41r Pm6.tba.
DKpyed TCP guns VTop
at12 Nr MD
AIX Energy LLC
Ctn.cnrnl m
Korai 44
ifi"
Xx36
84 Pin
county wPadM:
Kenai penmula Baron
T,
BOKgn
DBA
MD
Bun
Pen (NW:WG
lV0
gun
O1Jr
M91e Peds
"gayer-- I
10314-
"0
45 W
Janna 12,2013
Tap
Odium
21'
MO
r
3,024'
Jum3a.301a
TVD
P
3,DM
1M ,n :a,,Caelnn
7.5m"
L40 297 our
Top
Badpm
MD
Y
8,609'
TVD
0'
8.305'
lira[
4.1w
L.40
IL6pp1 Hydra fill
Tap
8xunn,
MD
8,338'
13,QW
TVD
a,O2J'
12,711.'
Tubing
2741
LSA
6.4 ppr
Top
Bud.
MO
0'
10,195'
TVD
0'
91879'
Quem 4 W' clap
sekan lopd N5 912912 MD
12,944 ND 1y595'ND
12,62T'TVD
9,979'-8,980' TVD
10.814•-10,3411ND
Well Neme6 NumOw:
Korai 44
Lease:
Kraal
county wPadM:
Kenai penmula Baron
stue:1 A
w
Cn
DBA
Podw400ns(MD):
Pen (NW:WG
Anle OKOP and Dem
2 DEG 0 3200
M91e Peds
1 DEG
I KOPTVO
3200
Dam Cwn amd:
Janna 12,2013
RKB:
21'
amd9:
Bchamxnski
Lad Rwiabn Dam:
Jum3a.301a
Exhibit B
Page 11 of 14
AIX Energy, LLC
Scoping P&A Scopine AFE Only =.a• -F,
Exhibit B
Page 12 of 14
AUTHORITY FOR EXPENDITURE
General information
Operator. AIX Energy LL
Surf Location'
L&' FAL 336n 11w
Lease: Kenai Loop ##14
srx
BH Location:
' FSL&FAL 336n llw
Data Prepared: 213/12
59M9
Location:
SHL x=.y=
NAD 27
Prepared By: Steve Hannigan
Field:
Kenai Loop
Work: Scoping RIGLESS PSA
Co-PhlState:
Kenai Panimaula, Alaska
Count :
USA
Well Data
WD: 1198'
PNU tnr
412` 9273 "
113W
MD: 113911'
a
WD: 0
Drivel$tructurel 16 0'
138'
0
NO Conductor 0 P
0'
nebce:
0 '
Surraw 10314" 0'
3057'
ma Terse:
Irdm 75151, 0'
9474'
Pion Cean6:
0'
Rig Type: Land
nbiw:
27G 0'
9714'
Description
pnllirq. P6P. foe. Lomphtlen
Total Production
Total
Prep
Dd10Sltk P&A
Dry Hole
Casa?&A CompleUm
CmPBdrtstd Facilities
axYs
&
& Pipeline
ImaCost Estimate
To— .0c Ispasal
100
528A00
$$9,600
Rigs, Tools,
200 Rigs, Tools, etc
59.600
300 Mud Chemicals
$6.600
$6.000
400 Rental Tools
Renal Tools
$4.400
$4,400
54.400
500 Cementing
$95,000
$95,000
600 Services
$45,0
$45,857
700 Transon
$16.000
$16,00
coo Supervision
sWAOD
i:ii::::::::::::
.800
ftit9l.....IEI2GCs[E9t3i1016�:�:�:�:� :'is�:�i:�i:v�iii:>.�:vi:f::::::�4
:::i:ii:ii•i::..::-i:i:::::•:::
i:i:i:iii:i:::•:C:i':::::
Tan ible ost surrete
900 Tubular Goods
so
so
1000 Wellhead Equipment
$0
1100 Casing Equipment
$0
so
1200 Completion Equipment
$0
$0
1300 Lease EW.V Mrs, sap, etc
$0
so
1400 Prod Sales Exp1 Pipeline, ate..,,..
$0
.
fUti[�Tbli...l`it9:Ci0MfIX::•::{L.ii:::�:�:�i:>i�iii::is�ii:4:i:::j:{::::>v�i:Sl/:�i:!ti�:::i�:
i:�::-i:�ii:::
vvL?L:i: � i:�'rii:
� i:�i:�:i �:i�:-i:�:'�:i+r:� �:>}i
�:�:}+;:j;:
Insurance
15N Insurance 1So
Well Coat
��1p a�D.'�� :ii:i:::•:::: �:iii:i:•i:•:::•:':�
i:::�i::
:BST:
..
CONTINGENCY •':<{f(!/(:%.
524,166
524,1$56
AGENT FEES
$0
0
$0
COST OF MONEY
$0
$0
STARTUP
W
$0
WIND DOWN
so
$0
5265823:
TOTAL ESTIMATED WELL COST
5265.823...
f1UUNDEtl�30�RE :.i::i:L::: »:.:::::»i::::::::::$
::::::::::::::::::::::::::.
�:. �:::::::+•::.
�:::::::: :.........:...
000. �.
Exhibit B
Page 12 of 14
A Peds' Fst inl r, , sga parte, leave curt in Mg to above LT. WM, Tag and Ten.
PunchIcm tbg, pump 200'twlimc plugm tbglceg annulus. WOG, Tag and Test.
get T BP 100bM.g Shp.. Test peRMg and peg. Pump balanced ]2g' cml Plug in Ibg and annulln ANO T SR x t)H and 10 L6 annulus.
and Tmit. guMaae Plug: Te'low.x18'annal.
@200 EGL. PMtbg/bug, pump balanced 200' plug nOC, tag. CutPags: Pictures, Make sura cmttp top, weld Plate.
Take Pldumi
by:
by:
by:
by
Page 2
Exhibit B
Page 13 of 14
Kenai Loop 1-4
Pad 1
1765' FNL, 1254' FWL
S33 T6N R11 W S.M.
J. MI.
Max Inc 18.39 /
degrees I�
Bahr Fmx Lok Liner Hanger
e 2XP Pkr aM MR
tap @ 9373' MD; 9O76'TVO
DgHO OCIROMPCP
PWI
mo1145 J
9752' MD
955r1VD
P9lO:
MD9ND950%14'
PTD 213-091
50.133-20168-00-00
MHT930OD82
?y 112' (20'AGL)
60e 34' 12.708"
151- 13'27,89W
9/11/2013
6CSSSV set at 622'
Chem Ini. set at 1806'
DV Collar @ 4499' MD
4491' ND
AIX Energy LLC
nF.nneMlah rxeLPrrom
P[n. rani P'on
I Lease -L
f6"
NTONC
BaP
r
9SAT7 W
ap
B
9.�
MD
SUR
134-
1]a'
lza Opt WchuM
Np
SOM
Ile'
S.A.,C;nn
103!4"
Lao
45.5ppf
9ATr
Top
Bottom
MD
r
3,057'
TVD
0'
0.051'
nF.nneMlah rxeLPrrom
29-
7.518" L-00 29.7 911
I Lease -L
Top
9870-77 MD
MD
r
9SAT7 W
T VD
0'
9.�
Lue
4-tW
LAD
lza Opt WchuM
TOP
Bprpm
MD
9,27r
11Mr
TVD
9ATr
11199'
Pray By
R, 9Ohenwnaki
IoM Rawbn Daae:
72IDIOL
2718"
Lap
a9 ppf EM Mad
Tap
BCCpm
MD
r
9,714'
TVD
a
951,
bttmien 0971x•
=Or kD9728'MD/953TND
9820'MD(IMI
hiss. ^e 6'-esigneg coau�o dZ" Sw) Tabl
terg6 amppeE w to fapromRer on 611-15
was69 Ft wnld Indude0 2 3/8' k 2 7/3'
Cmt Sq2perrs�
b1b18 GE 0M 8 t9aa PORW ISPV
I Lease -L
&11-16 E1 CutTCPgMMolfftdaRan2] CWMrbl=ft MD
9870-77 MD
&1b1SExprOm Stack Pr ,eBgr "wlea7,FWWI"M9a8aRMD
19
EM
11396'MD
1099r MD
11,199'TVD
ta77V
Well N.8 Number:
Kenai LOOP A4
I Lease -L
-Nepal
Coww pr Parish:
Kenai Penlepia Borne k
BMk:
Alab
C USO.
PeKmebns(MD)'
PM(ND'
Angle @KOP and De
Angle PMS:
KOP ND'
DaM Dan ema.
RK9:1 20'
Pray By
R, 9Ohenwnaki
IoM Rawbn Daae:
122018
Hannigan
Exhibit B
Page 14 of 14
THE STATE
01ALASKA
GOVERNOR BILL WALKER
05-07-10A11 12 RCVD
May 4, 2018
CERTIFIED MAIL –
RETURN RECEIPT REQUESTED
7015 0640 0003 5185 6458
Mr. Mike Franger
Trust Resource Manager
Mental Health Land Trust
2600 Cordova Street, Suite 100
Anchorage, AK 99503
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax; 907.276.7542
www.aogcc.olaska.gov
Re: Docket Number: OTH-18-031
Notice of Violation
Failure to Plug and Abandon a Well Prior to Expiration of Owner's Rights in a Lease
Northern Dancer 1 (PTD 206-004)
Dear Mr. Franger:
On February 1, 2005, the Mental Health Trust Land Office (MHT) approved Storm Cat Energy
Corporation (SCEC) as the 100% working interest owner of MHT oil and gas lease 9300054 (MHT
9300054). SCEC drilled the Northern Dancer I exploration well on MHT 9300054 in early 2006,
and suspended the well on March 18, 2006. On September 17, 2009, MHT extended the lease term
to January 31, 2012. On July 18, 2013, lease MHT 9300054 expired.
Northern Dancer 1 has never been properly plugged and abandoned. SCEC declared bankruptcy.
As a result, the MHT—as landowner for MHT 9300054—is responsible for plugging and
abandonment of Northern Dancer 1.
Within 30 days of receipt of this letter, MHT shall submit an Application for Sundry Approvals
(Form 10-403) for plugging and abandonment of Northern Dancer 1. Once approved, the
operations proposed in the Sundry shall be completed within 18 months from the of the date of
this letter.
Exhibit C
Page 1 of 2
Docket Number: OTH-18-031
May 4, 2018
Page 2 of 2
The AOGCC reserves the right to pursue enforcement action in connection with the failure to
properly plug and abandon the Northern Dancer 1.
Sincerely,
Hollis S. French
Chair, Commissioner
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
., m on the nezt day that does not fall on a weekend or state holiday.
Exhibit C
Page 2 of 2
THE STATE
ofALASKA
GOVERNOR MIKE DUNLEAVY
February 7, 2019 i -'I 7 -1 9 ,4 'i 1
CERTIFIED MAIL -
RETURN RECEIPT REQUESTED
7015 0640 0003 5185 7110
Mr. Mike Franger
Trust Resource Manager
Mental Health Land Trust
2600 Cordova Street, Suite 100
Anchorage, AK 99503
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax: 907.276.7542
ww .aogcc.alaska.gov
Re: Docket Number: OTH-18-031
Notice of Violation - Reconsideration Decision
Failure to Plug and Abandon a Well Prior to Expiration of Owner's Rights in a Lease
Northern Dancer 1 (PTD 206-004)
Dear Mr. Franger:
On February 1, 2005, the Mental Health Trust Land Office (MHT) approved Storm Cat Energy
Corporation (SCEC) as the 100% working interest owner of MHT oil and gas lease 9300054 (MHT
9300054). SCEC drilled the Northern Dancer 1 exploration well on MHT 9300054 in early 2006
and suspended the well on March 18, 2006. On September 17, 2009, MHT extended the lease term
to January 31, 2012. On July 18, 2013, lease MHT 9300054 expired. Northern Dancer 1 has never
been properly plugged and abandoned. SCEC declared bankruptcy. As a result, the MHT—as land-
owner for MHT 9300054—is responsible for plugging and abandonment of Northern Dancer 1.
On May 4, 2018, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of
Violation (NOV) requiring MHT to submit an Application for Sundry Approvals (Sundry) for
plugging and abandonment of Northern Dancer I within 30 days and to complete the plugging and
abandonment operations proposed in that Sundry within 18 months.
On May 24, 2018, MHT requested clarification from AOGCC regarding AOGCC's NOV and the
Reconsideration and Appeal Notice attached to the NOV. On June 27, 2018, AOGCC re -issued
the NOV accompanied by a Notice of Rights and Liabilities. On July 10, 2018, MHT requested an
informal review with AOGCC regarding the NOV. The informal review was held on July 11, 2018.
On August 2, 2018, MHT requested a public hearing to discuss relief from the submission of an
Application for Sundry Approvals for plugging and abandonment of Northern Dancer 1. On
October 17, 2018, the public hearing was held and MHT presented testimony.
Exhibit D
Page t of 2
Docket Number: OTH-18-031
February 7, 2019
Page 2 of 2
Northern Dancer 1 was drilled and suspended in 2006 without testing. No further operations have
been conducted. The well has been effectively abandoned for 12 years. The MHT lease containing
the well expired in 2013.
AOGCC regulations require all wells that have been permitted on a property under 20 AAC 25.005
must be properly abandoned before expiration of the owner's rights in that property.
By May 1, 2020, MHT must either: 1) lease Northern Dancer 1 to a third party that establishes a
separate bond dedicated to the plugging and abandonment of Northern Dancer 1, or 2) plug and
abandon Northern Dancer 1 in compliance with the requirements of 20 AAC 25 Article 2.
Sincerely,
4Cath. Foerster
Commissioner
Exhibit D
Page 2 of 2
AIX Energy LLC
2441 High Timbers Drive, Suite 120, The Woodlands, TX 77380
832-813-0900 Phone
832-585-0133 Facsimile
July 18, 2019
Commissioner Daniel T. Seamount, Jr.
Commissioner Jessie L. Chmielowski
Alaska Oil and Gas Conservation Commission
333 West 70 Avenue, Suite 100
Anchorage, AK 99501
Re: 20 AAC 25.025 (b) (3)
Dear Commissioners Seamount & Chmielowski:
With regards to 20 AAC 25.025 (b) (3), AIX Energy LLC ("AIX") respectfully requests a decrease in the
amount of bonding from $1,600,000 per regulation to $1,037,166 based upon an independent
engineering estimate. Please refer to the attached AFEs per well along with the associated wellbore
diagrams provided by Mr. Stephen Hennigan with Petroleum Engineers, Inc.
AIX appreciates the opportunity to submit this request for a decrease in bonding. Please contact me
should you have any questions or concerns.
0Men
RRegands,
Sheaby, A
Enclosures
KLGF- AFEsforP&A
Prepared by Stephen Hennigan, Petroleum Engineers, Inc.
Well
Amount
K1.1-1
$281,702
KL1-2
199,414
KL1-3
290,227
KI -1-4
$265,823
Total $1,037,166
AIX Energy, LLC
Scoping PSA SCCpinp AFE OntY P.+.•w...IFa Pim..
vagal
AUTHORITY FOR EXPENDITURE
General Information
Operate, AIX Energy LLC
Su. Leratlon 1888FNL 8107' FWL Kma 33 6N 11W
Lease: Kenai Looe M1.1
arm
BH Lootion:
1888' FNL 8103]' FWL Kenai 336N 11W
Data Prepuce: X3112
WIWls
Location:
SHL: x=21951813. y=2402268
NAD 27
prepared By: Suave Hannigan
Field:
Kenai Loop
Work: Scoping RIGLESS P&A
Co.PhJ5Gda:
Kenai Peninsula, Alaska
Cour[
USA
Wall Data
TVD:
Pm4Hme
4112" 7774 10680'
MD: 10680'
a
WD: 0
Dirtied Structural 16 0'
138'
NO Conductor 0 0'
G
rescx:
0
Surface 103/4" 0'
3057'
and T..
Imm T5A" 0'
8024'
web, M:
0'
Rig TYPE: land
mm,g:
0 0'
Desaffipfion
nrrllin9. P6<. Can.CMVMbn
Totalm
u
Total
Prep
OriIIISVk P&A
Ory Hole
Casei3A Completion GmpRdRstd
Fifies
mass
10
S Pipeline
iniangihle Cosl Estimate
1 Location dhposal
SM.
528.0 0
200 Riga, Tools, etc
511,400
$11 d00
300 Mud and Chemicals
$5,000
36.0110
400 Rental Toole
$5,225
35.225
500 Cementing
$95,000
395.000
600 Services
349.643
$49.843
TM Transportation
$19,000
$19.000
am Supervision
$41,825
$41.625
i::......
Tangible Cost Estimate
OD Tubular Goods
50
so
1000 Wellhead Equipment
s0
80
1100 Calling Equipment
W
s0
1200 Completion Equipment
0
so
1300 Lease Eqw V Wee, sap. i c
30
s0
1400 Prod Sales FxPI Pipeline, ate
30
$0
iLI01 ub infCG'6iL:HfiM61l ::::-::-i:i ii::i::i
i::i: is is is :i : i:: :::SD:i:ii
ii: ii: iii:
is is ilii: is ii {?C i::: }L:ii: ii: is is
i::i is i:: i:! ::i
is SA
Insurance
1500 Insurance 10 MM
Well Cost
CONTINGENCY .:: if10%Sii
$25jffi:::0
$25,609
S25,609$0
AGENTFEES
SO
30
COST MONEY
s0
Sc
STARTUP
$0
WIND DOWN
$0
W
TOTAL ESTIMATED WELL COST
$261,702
5261 ]0202
. ..... . . . ... . .
RODN TBa¢AitEcr [ D::>:»:: �:>;:::a:::•::�:.::<.»:c
_. _........., _
r,116Ui:�;:`:�::�'<�>:�;:1•::::::::�:::_::::�::�:;;i::c:<:i::ii::�ii:?�:;�:?:�:
vagal
Summary of Operations -Description
PIA Pailpwpslfary, PMa: 6t hgrW agz perla.laweemf in mMpbbPo/PIR
WM. Tag and TM l artoe PUncbleuf Well be M PM.
Pump balanced plug In tbgkfg annulli to AO' above liner to, W0 , Tag and TesL
Surf., Sat TTBP1OO'bbasgabde. Tact. Pedtbpandng. Pumplulenud 3Rb'cmt plugm tbg and ALL annulli.
WM.IpagandT Surface Plug: Ted,410 Mxd8'mnu ed, Set MIRO 0IXIL
Partlbp/op. pomp MlalKod ROC plop, WOGIaG cutogs: Pldurestlake sun mrtto bP vaaltl plata.
Back fill and Realms.
A rwal
Dole;
AppiDade: etl by:
Data:
Approvad by:
pate:
Approved by:
Date:
Approved by:
pate:
CMPLTN WELLBORE (6)
Block/Sec 33 6N 11W
Wildcat 0
Kenai Peninsula 0
Alaska
Ser A: 211 063
8.4 8.6 9.8 123' pn 138
ROP/Gas log ConNDMe to TD.
......................... - -' -
2 7/8" 6.5 L80 2.347"ID API EUE 8rd M
8.6 9.0 16.0 T"..00,m
.10.55'
Pump 42bW Mutl Chan 11 wiN ro0 dY6 W
PuPYNWwab
Test litbab2k pi CmlbeuR�520bW mp 504 12
ppy aM Pump5lWb Wd nnr,J rlinee. eldUnibrip pump
b tlbgace wH5 stile 60 ppp mud Floeb hebUnstlrlp. CIP
21M
LOW 15.0 am
t Ma- RN eJ br Cmt.bb PJSM br CmIJaO- T9 SuR Lube 4000 PM -OK 025
Ma- Repair BJ H2O Lba I aemeM pltp M IL1el 1 M-Mz8 Pump30 BM tOPPG
Spapr 8 My 3 BW Cm1-IPetl0lpowrBbeMq Sten 8 Obcerve) 225 Bm-Mz 6
Pwnp120.5ab Leb1t0SIuMW1135PPC-528019 TeilbStarry YYT
150 PPG ShuWn-Drop Plua6Pump56Eh HW HZO51,1nO
Pump- Phva Bumped ®Cafdpab6 DbplwmeM- PrmYup ho, Pei (1 18
Batl SMln-BbeC/ofl-Floab HeIOLIP=0005 HnNW SM Stge®00240
Float Cdbr ®)938'
FIT#3 13.5 ppg am
8.6 9.2 13.5 Q„a comm pu: 81124'
x6
zq
x¢
z¢
1.875' XNnipple w 965].14xQ
Cur'p-og s±9689' 46
za
String fell.
30240'MD
Drill
8.6 114 I6.5 Woe comes pbn Iwo,
1066
Teetb45000. Mb eM pump 40 bgafealbortl sweep at 12.5ppg
On as 1412 Num/ Max G.12%9A36, 3% KCL, 5%% EC -1 4%
CO -32. 2%X2, 2%R-3, .05%Sti Fbe, I ghe W -SL. YM 1.18 w NeB,
158 p94.95191 H2O els 3.32 Wnwi 0 enb. 79.216 bob water b mix.
131.1 s 114 ppb rmi,
Stephen F (Sbw) Henni9an
0113119
wv. inn
5pN00HC Welded nn... u» /6 '
Chemical inj Mandrel ±500'
A!C SS 0.049 wall chem in! line
JILBaker SCSSV ±565'
DM 0429.2011
uLap e7c 1s 1IY
10 314
LOT 82@3367 MD 16.7 ppg emw
Poeteribil Ino smote
10.2 ppg NaC7KCL
EXPRO 05 19 2011
29.7#L80 8TC tpp1VM 1 97A'
]
1) BOT b1rY i]0 x ]-510.29.] - 39k
80 KSI Hyd Flea t Uner herW w/
Z P LT Parker
Top Prifto r,
(ROX)
One
Bottom PedaMbn
(BSPF)
972405
neew 071T
TSD)
Tap PoRonrb
(RDX)
10009.1
BMbm Por A.ri
(O SPF)
10049.1)
(10800' 10049
SY01
PBTD 105651)PM
COL SU'RO 05 19 2011
12.6#L8070l ewe
9.82' markerlt @ 8324'
Landng toile, 10591; Fbat cellar 0
Tagged ® 10565' DPM
Csg shoe 10676'
4
AIX Energy, LLC
Scoping P&A SCUpinp AFEONy
Page 1
AUTHORITY FOR EXPENDITURE
General lntonnation
Operator NX Enmgy, LL
Surf.Location FSL&' FWL 336n 11w
Lease: Ka., Loop P"i-2
u.w ON Localion:'FSL&'FWL 336nllw
DatePrepmed: 2/3112
SR/19 LaDallon: SNL%=,y=
NAD 27
Prepared By: Slave Henrogan
Field: Kenai Loop
Work: Scoping RILL ESS P&A Cd PhJSbdw Kenai Pmrhhaa, Alaska
Cou USA
Well Data
TVD: 11000'
Imldlnr 4 /2" 273 11368'
MD: 11388'
0
WD: 0
-
odve/Stmaurel l8 " 0'
120' a
NO Conductor 0 " 0'
0' Taarnc 0
Surface 1031x" 0'
302T med N do
Imm 7518" 0'
83M Nadcaene: 0'
Rig Typs: Land
Tt": 0 .. 0'
cnD Ion
On141q VdA, Gp.COIMMrbn
Total
PmducWn
Total
Prep
DNIMhk P&A Dry Hole Ca &A Completion CmpmDad
Facilities
$
& Pipeline
n n 10le osl EW
$19 ow
.P*e
100 Location dlapgsal
SISOM
$8,0$8,000,000
200 Unlling
$4
'
$2'000
300 Mud and Ch. Chemiwle
$0000
$2,750
400 Rental Toole
$2,750
$35,000
50 0 Cementing
$75,000
537,765
600 SaMces
$37,786
310,050
700 Tramp cation
$10.500
326.750goo
Sumo ision
526x50
_.............................
1eiicoi ... eleEb'skEsta'u61i�:�>:;>::>:;:.;:>::>:>::
>:>:>:>:::s:Y16ti >:>:::::::::: •::. �:::. _:::: >:::. �:::::.::::.::::::::•:::::::::
i•::::.
Tangln ost sdmme
900 Tubular cods
90
1000 Wellhead Equipment
$a
$0
1100 Casing Equipment
$0
12M Completion Equlpmem
$0
$
13Lease EgMV MIs, up, etc
00
$0
50
1400 Prod Sales Expl Pipeline, stc..,.,,.•
50
......... .....
................. .............
iOMf]'sh}i:ii:Lti•iii::is:isi:ii::ii:•:}O:�i:!t:i::i:.:.ii:�iii
Insumnce
15001nsurance 10 MM
so
Well Cost
...:.:.::.:::......i :.i'._:.�ii..:::::.::::..........:.:..::..::':.:.
] a...
..$tiiEO:,k`,,lC......::v:}:?:i:ii•:•:•:•::i:ii:•i::.i::ii:ii:
CONTINGENCY c#APk:j<
i:• .
518,129
$18.129
AGENT FEES
$0
so
$0
COST OF MONEY
s0
STARTUP
$0
so$
MNO DOWN
$0
$199:414
TOTAL ESTIMATED WELL COST
_....
5199,414
.....
DEDWNEAI�6T� -000:�iiiii`iii: �:t:i`:�i:iii:'r:�i::;{'
..:.........................................................
Page 1
U&MT] QWiW8Mw N*&Tact PeAcap. Rvnp]2S Wlancetl CIM qu91n)68 ANO1Sl8z W1 mtl10 ]q mWuliv.
JTe t Surly Mq; TW"V4xtg'mnWY
00'N RM7518,pumgWan Mplug.g ,tp. Q6 ugr: RCWm,tlaka sun aNbbp, waltl Rafe.
Pestore.
Kenai Loop #3 (1-2)
Pad 1
3394' FSL, 1134' FWL
S33T6N R11W S.M.
J�
Mei 1m zs
degrees
Casi Iron BrMge
Plug
net @ 6400' MD
w/ 35 ff of
cement on top
Perforations
6,9
MD 60'50-6,9
PM@atlens
9,]90' -9,835' MD
Pnfuatbm-10,2Zr-
so,zaa MD
Perfortic. ]0,520
-1O 51 MD
PerfOmdons-
10,930'-10,9+5'
MD
50.133-20597.000
MHT 9300070
1: 92.5' (21' AGL)
9/12011
9/26/2011
QmerR�T.:@
+g50'4 8'
Perfara80m 6435'-
6450' MD
9akar FMe Lab E.81ar Napger
*VCP PMand MR
tope ma, MD
Cast Iron bridge
plugw/25'mment
on top set at 9,750'
MD
paGerw/xa0wre /'ll'
pr08k @ 10AM5' M0.
"x' inky Insblke w /
Mde
D,+dww'/xaPoOre /
P pmdle I
�pPk 010mxD•
InaaNM w/xM
paderw/xalkM @
D]pp MD
AIX Energy LLC
1.1
a
120
18' x.se
a
PPO
TO
Top
To
Rattott an
8,100
MD euet
130'
T,®1'
TVD Sud
110
Angle 2KUP and De P'.
1" V
10-L+-
45.5ppf
Top
Bdtom
MD 0
3,036'
TVD 0'
3,036'
TVD
39.7ppl
Top
7TVD]
Bottom
MD 0'
8,330
0
],988"
1.1
Kenai Lcop113Remanud l-2
120
13.6 pint Nyddl631
KaMI
TO
Sodom
MD
8,100
Millar
Pertura0ona(MD'
T,®1'
11,000"
Angle 2KUP and De P'.
�uTMVDa�
—1718'
480
pot
TW
ButtOm
TVD
Prepnm By
menolmen apeer
[o "x'
P.
, tP.
4M •-"d�F°n""—a°"�°°a LED 11m
@ 10.730.5'. Mo. M0.
Dropped eo 6oltom
ID aID
11.3W110) 'MD
11'WTVO ! 'TVD
MINampa NumMr
Kenai Lcop113Remanud l-2
l.mx:
KaMI
c:ounuyorPeenn
Renal Pmkula Borough
Sbea'.
Rleeke
Cou WA
Pertura0ona(MD'
PeRcry4l
Angle 2KUP and De P'.
+rµe (d Perts
KOPTVp
Del, conrplabe,
Prepnm By
menolmen apeer
Una R;; Dab:
8,3019
AIX Energy, LLC
Scoping P" Scoping AFE Only
AUTHORITY FOR EXPENDITURE
General Information
Operator. AIX 097LL
Sun. Location' FNL &'FWL 336N 11W
Lease: Kenai Loop M 1-3
asc
BH Location:
' FNL$' M 3361,111W
Date Prapared: 93112
Snr19
Location:
SHL z=.y=
SAID 27
Prepared By: Steve Henn,gan
Field:
Kana, two
Work: Scoping RIGLESS PBA
Co-PblSiate:
Kenai Pmlmula. Nasky
Count
USA
Well Data
TVD: 12621'
a dxm.
6112" 8359
12944'
MD: 12944'
d
WD: 0
Dr el Strectuml 16 0'
137'
0
NO Conductor 0 P
0
n.wu:
0 '
Surface 10314" 0
3024'
Mon .... k:
Inen 75R" 0'
8609'
e,od oerts:
0'
Rig Type: Land
Tueua:
0 0'
rap ion
ane„•> F4a. a..r.eorrona..
Total Production
Tobl
Prep
DriIV$VK PSA
Dry Hob
Cae?8A Completion
Cmpad/Tetd
Day.
10
8 Pipeline
tpimllin
Inlan ible Cot Emanate
too Location B disposal
S28. 0
200 Rigs, Too], etc
$11,400
811,400
300 Mud and Chemicals
$6,000
$S.M
400 Rental Tools
$5,225
$5,225
500 Cementing
$105,000
8105,000
600 Services
$47,393
$47,393
700 Transportation
$19,000
$18,1100
800 Supervision
$41.825
541,825
MAUTangible
CcoA Estimate
900 Tububr Goods
so
1000 We116ead Equipment
s0
$0
1100 Casing Equipment
$0
$0
12M Completion EquipmeM
$0
s0
1300 Lease EgMV Ht., sap, em
50
s0
1400 Prod $abs Espl Pipeline, etc.....
$0
s0
)trlOf�Fili...:GCbl:E56�i::i�:�ii
iii�:4Gi::{�iiiiiii:i�i:�:�i:�i::�i:�i:�:�i:�:�:�ii:�i:�i:e<:i:�ii:�:i�:�i:�:�i:
aeYRnIX
1
W.11 C
Well Costet
ESSIMF..... LC ..i':.:'..:::::: :.:::...:..........:::::
1 :::::::::
� : ;.i'..:..:.....:......
...:..............::::.�:::::::..:.114
—
CONTINGENCY ;?:;:i?1$1yf;:j
5261384
626,384
AGENTF
s0
COST OF MONEY
MO
$0 s0
s0
N
s0
DO`UP
WIND DOWN
$0
0
80
TOTAL ESTIMATED WELL C08T5290.227
8290,717
RYNINOEG,1"0:...... 8T ........::. �::.::.:...............
3290:OOPii
r:.::�<: � :�}::i�i:!•
is�:::::�:::::>:>:�:::::ii:::�:�?::�:�`::<:.i:�ii:i:•
Summary of Operations -Description
PAA MAlguages'dmy... Parrc F#IrytN,agz pa6,lareemtln uaslnpbtop a/PIfR
WOC,Tagaml a Unertep: PuoWcul Wgatlopofpkr.
Pump balazed plug in tbglcsg annWll to 200'a0ove liner tap.. WM.Tagand Teat
Sudosg: Bet TTBP100'bWoSgsbue. Test Pedtbgaudc %Pumpbalanceda25cautpluglntOgand ALLannulli.
W=.Tagand Tut Surface Plug: Tast100l4s16'ionulus. Set TTBP@M'BBL.
Pod tbglesg. pump balanced 200' plug WM,.g. Cm cage: Pictures, Make Sure cmtto toR Sued plata.
Back fill and Restore.
App..f
Approved by:
Data:
Approved by:
Date:
Approved by:
Data:
Approved by:
Date:
Approved by:
Date:
Page 2
Kenai Loop #4 (1-3)
Pad 1
1886' FNL, 1255' FWL
S33 T6N R11 1W S.M.
: Mallon z4s3 /
degrer
Saker2l(P Liner Packer
and PBR. PackertOp
a 0323' MD
Baker Flea Lok liner Hanger
al UP Pkr and PER
Liner top @ 8399' MD
WeakeHmd UkNfik
4 tir Pukerr w/.r pkw
uta,
1nSdCrMD 10,16V WD
10.350' MD 10"' NO
11,698' MO 1138 n wo
12589' MO 1L279' rv0
xis U Ddn at at
1L[40' MD 22,52¢' MD
HL5 qu[ Wded m bottom.
iapetl a tLAix' MD
m
13,057 MD
1z:n r wo
212 074
50-133-20602-00-00
L MHT 9300082
All 112' (21-AGL)
60A 34'11520"
le: 151-13' 27.868"
9/11/2012
10/112012
Baker SSSV -2 7/8"
589' MD
Chemical Inj. Mandrel at 4499'
MD. 2 7/8" 8rd EUE- Modified
POW,
M. Mt60-
Repek Or
Imam ae Md
tmm2B0p pp
AIX Energy LLC
SCum21r2J Pim
Kenai Loop"
1T
XT
O Ppf
CeunM a Paean.
Item] Panmum 9arou k
T,
food
a
119A
MD
hurt
13r
13
ND
Surt
ATr
Angle',MPeffsI
1DEG I KOPTVD
10a
LA0
4S9ppe
RKB:
Tap
BuBan
SClsemanaki
MD
o'
3,02P
TVD
D'
1,07A'
O,temsedettecanma
T -EIB"
LA0 29.7 opt
Tap
Balaton
MD
D
9,mr
TVD
0'
Lime
4-1r!
LAO
120 age Hyddl San
Top
Budog,
MD
8,mw
13AW
TVD
8,027
21 W
LM
6.4 ppf
Tap
Stefan
MD
O
10199
TVD
0
SAM
i
Note:
mnnettedmaetealasay ei 1e.,ow uwor me
10,285,-f0,30r MD BAN - B,BBB' TVD
me D>/B'Dod.[bg. 11 ag5T MD 10.31"01341-TV0
10,4xa'MD 10,646'-m,m-r%rD 11,910'-11,91E
MD 112,660-1L690'MD
E'Qala
0e910w 175'GR d 10,478a,MD(10500KSMD)
Eapm run DH PT Gauen kT Fldd Mde new Pmaae 0nl aM gradow
propped TCP9un aeV Tap
at12Ar MD
0. -na Lt/2" DBP
set an tops]kEH@,91
122 MD
mm
12,414'MD 12595'rvD
1t62T'M
Well Name B Number'.
Kenai Loop"
L.:l
Korai
CeunM a Paean.
Item] Panmum 9arou k
81ad: Amab
119A
Nifera6afn(MD):
Ped DVD:
Male AKOP and Depth
2DEG OR 32M
Angle',MPeffsI
1DEG I KOPTVD
32M
Dela CandWd:
Janus 12.2013
RKB:
a'
prepared! ft
SClsemanaki
Len Ro4ebn Dam:
Jwr2l.2010
AIX Energy, LLC
Scoping P&4 Sczping AFE Oaly
Paget
AUTHORITY FOR EXPENDITURE
General Intonation
Operator. AIX Energy, LLC
Sud. LocationFSLB' FWL 336n 11w
Lease: Kari Loop 8814
Rio
BN Location:'FSLB'
FWL 336nllw
Data Prepared: 213112
slsna
Location:
SHL s=.y=
NAD 27
Prepared By: Steve Hanng.
Field:
Keri Loop
Work- Souping RIGLESS P&A
Co•PhJ tab:
Kenai Peninsula, Wssim
Cou
USA
Well Data
TVD: 11198'
Imwmr
00 9273 "
11396'
MD: 11398'
o
D: 0
Drivel3truct.md 16 D'
138'
a
O ConduM, 0 0'
0'
mean:
0 '
Surface 10]14" 0'
3057'
and Mace:
Intro 7519" 0'
9474'
h Clans:
0'
Rig Type: Lana
s.Mw
2741 0-
9714'
Description
MWip. P4A, Gie.Cam➢le�gn
Tofal Predudron
Total
Prep
DAMSNI, PSA
Dry Hob
Case/T&A Camplation
Cmpft Retd Facilities
0 s
8
&Pipeline
ratan ible Con EaBmaR
100 oaal
2.0
8.000
Rlga.T I.,vc
200 Rigs,
$9.000
$9.800
Chemicals
300 and Chemicals
al
$0,000
$0.000
RMuden T
400 Rental Tools
94.400
94.407
500 Cementing
$45,857
000 Services
$45,000
$45,857
700 Trervision n
$16.000
516,000
$16,000
800 Supervision
536,800
536.800
f
�:�ii'ii:4iii:i:•:;:isii:i:i:i:::.:-::::i.:::i:ii:i:i:iii>i;:S:::�i;:�:::�i:ESrf
Tangible Uost timate
900 Tubular Goods
1000 Wellhead Equipment
s0
so
1100 Casing Equipment
s0
$0
1200 Completion Equipment
a0
SD
1300 Lease Egpmn Htm, sap, etc
i0
so
1400 Prod Solea Ekpl Pipeline. ah.
$0
s0
ieiaLrari.....C�;:c�xiDlere� �;:�i::�::�::�::�i::i�:�:
� vi:: � :�:;�:_;;:�i:"sri:�;;;:::�;i:�;:�;:�;:�i;:�;:�;:::
�::::•>::;>:�;>;:�:
�:�;:�;:�:�;;:�:%:�;:•::::£:�:�:>:�;:�;:;�;:�:<
Insurance
IWO insurance 10 MN1
so
so
Well Cast
...............................................................::
X14v ..:
CONTINGENCY ..:^:1LN.'
CONTINGENCY
924,1$0
2
$24.166
AGENT FEES
s0
$0
MO
COST MONEY
50
$0
U
STARTUP
s7
$D
WIND DOWN
$0
TOTAL ESTIMATED WELL COST -
$285.82323
___..__5265:823
Paget
Summary of Operations - Description
P&A, Perla: Fit int rate, see parts, laava cmt in Me to above LT WOC, Ted and Test.
Uner top: PuncNcuttbd, pump=O'.iancad plug in WW., WOC, Tad and Test.
Sucks,: Sd TTRP100'EIw og Moa. Test Pedtbdarou, PumpbManced0]S'cmt Plr Intbgandannulrm AND>nad and10Laannrdus.
WOC,Tadand Test Surface Pmd: Teatl0Laa10'annulus.
SetT 4300'SGL. ParttW-g,pumpbalanced200gpd,WOC,WW Cmcaps: Pldlues,Make sure cmlto top, vreldplate.
Renton. Take Pictures.
Appm,at
Approved by.
Date:
Approved by:
Data
Approved by:
Data
Approved by:
Date:
Approved by:
Data:
Kenai Loop 1-4
Pad 1
1765' FNL, 1254' FWL
S33 T6N R11 W S.M.
JfMI--
lyylw 16.98 •J
I deYFeeR Ir
Baker Flax Lk Lire Hanger
wl ZSP Par and PBR
tap @ 92n' MD; 9076'TVD
EvandUpDTCF j
Perl6um&91-15
9753' MD
955r 1VD
99PMo-96" :
MD792
5!2
Cmt S02 peris�-
9870.77 MD
ID
1139a MD
1,194 TVD
PTD 213-091
50-133-20168-00.00
Des: MHT9300082
va0on: 117 (2VAGL)
L 80e 34' 12.709"
3s!j 151° 13' Z7.893-
81512013
9/112013
3CSSSV set at 622'
Chem Int, set at 1806'
DV Collar @ 4499' MD
4491'TVD
AIX Energy LLC
'1 1,40 124PP1 Mydi
TW Bottom
MD P.M. 11980
TVD A078' 11180'
IDDOLL
2718" L40 6.6 par EUE Mad
Toa Bo an
MD 0' 9,11'
TVD D 9,516'
din rle:Pa tlm µotl 9930'MDltttai
rgthtleW a ret 9541 Tosal
LeneM or.,nd wn5 6-1115
was 68 Fl wbacn,ni 2 )15- %2119"
2-1515 GE Cal6 Gaon NOW SPV
&11-16 Eado Cut TCP puna uff"tail 6 Ren 2.25 Cu6erio 10300 KMO
&1515Exprd MStorkP.n aprMW arvey,FMtdl"N966M!MD
em
10868' MD
tOn1' MI
NkN Insure 6 NUmMl.
Barai mlPlpe
I La
18" K8011C
84e
County a Pariah.
Top
Bodoni
Ali
MD add
135
TVD Burt
13V
Surfarif",
10A,` LAO
45 Spin
Top
Bonar
MD D
3,OST
TVD 0'
3.061'
ZO'
Pianamd By:
hM.nn.dl,r. Urinal p.nnar.el
7-wr L40
"?w
Top
Boepm
MD 0'
"R
lVD D
9,Zly'
'1 1,40 124PP1 Mydi
TW Bottom
MD P.M. 11980
TVD A078' 11180'
IDDOLL
2718" L40 6.6 par EUE Mad
Toa Bo an
MD 0' 9,11'
TVD D 9,516'
din rle:Pa tlm µotl 9930'MDltttai
rgthtleW a ret 9541 Tosal
LeneM or.,nd wn5 6-1115
was 68 Fl wbacn,ni 2 )15- %2119"
2-1515 GE Cal6 Gaon NOW SPV
&11-16 Eado Cut TCP puna uff"tail 6 Ren 2.25 Cu6erio 10300 KMO
&1515Exprd MStorkP.n aprMW arvey,FMtdl"N966M!MD
em
10868' MD
tOn1' MI
NkN Insure 6 NUmMl.
I La
Itenai Leap
County a Pariah.
Ketal PenkuMBorou h
fits:
Ali
cass : MBA
Pedaa5me(MD):
PM RVDI:
Mie NOP and Deoln
A17 .Peds.
Y.Oi TI'D
DishiCaunplarad!
IRKB:
ZO'
Pianamd By:
Ray S6handi
IonMRaylakn Ds:
• 129016
nennlgan 51
TIIF STA IT'
July 2, 2019
01 1LASK 1
<30VERNOR PIICKkEL J. PUNLLFAVY
Wendy Sheasby
Chief Financial Officer
AIX Energy LLC
2441 High Timbers, Suite 120.
The Woodlands, TX 77380
Dear Ms. Sheasby:
Alaska Oil and Gas
Conservation Commission
333 west Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax: 907.276.7542
�. oog cc.a las k a.gov
On May 18, 2019, revisions to the Alaska Oil and Gas Conservation Commission's (AOGCC)
Regulation 20 AAC 25.025 became effective (see enclosed). Under 20 AAC 25.025(b), bonding
amounts are set based on the number of permitted wellheads. According to AOGCC records, AIX
Energy LLC has 4 permitted wellheads (see enclosed list). AIX Energy LLC is required to
establish a bond in the amount of $1,600,000 with the AOGCC. AIX Energy LLC currently has
bond number RLB0015859 in the amount of $200,000 on file with the AOGCC. Under the new
regulation, an operator with a bond in place on May 18, 2019 is permitted to increase the amount
of its current bond using up to four installment increments --subject to a minimum installment
amount --over a period of three years. If AIX Energy LLC chooses to increase its bond amount
using installment increments, the schedule is:
Installment
Due Date
Minimum Bond Increase
First
August
16 2019
$500000
Second
August
16, 2020
$500,000
Third
August
16 2021
$40-0,00-0-
400 000Fourth
Fourth
August
16, 2022
$0
Enclosed are new Forms 10-402A and 10-402B for use with establishing a new surety or personal
bond. Also enclosed is the AOGCC's Assignment of Certificate of Deposit and Confirmation and
Agreement of Issuing Bank form, should AIX Energy LLC choose a Certificate of Deposit as its
bonding instrument.
Page 2 of 2
If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or
jody.colombiena,alaska.eov or Mr. Dave Roby at 907-793-1232 or dave.roby(a�alaska.eov. .
Sincerely,
Daniel T. eamount, Jr.
Commissioner
eie
hmoner
Enclosures:
20 AAC 25.025 Regulations
Forms: 10-402A and 10-402B
Form: AOGCC — Assignment of CD / Confirmation/Agreement
List of Permitted Wellheads
AND
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, thedate of the event or default after which the designated period begins to ran 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.
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U.S. postal Service"
CERTIFIED o RECEIPT
r` Domestic
Er
Lrl
ru
to Certified Mail Fee
E3
ru Lxl Services &Fees (check Dow eetl ree eswaowierol, - -
ru ❑Return ReceiPt(ha4COPY) = PO1SiMoatk=
O ❑ Return R.10 (aecbonict $ LV'�
O �CerlMaf Mal Regulc,eo nelly $ n
� Adult Signature Requlre S ,t\` — L
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Adult Signature ResYl M1eE nallvery $ �
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C3 TlataWendy Sheasby yCRAGE P�
$Chief Financial Officer
Senl
� AIX Energy LLC
o Svee
(` 2441 High Timbers, Suite 12 _---_--
o" The Woodlands, TX 77380
■ Complete items 1, 2, and 3. A.
■ Print your name and address on the reverse X
so that we can return the card to you.
■ Attach this card to the back of the mailpiece, S'
or on the front if space permits.
Wendy Sheasby
Chief Financial Officer
AIX Energy LLC
2441 High Timbers, Suite 120
The Woodlands, TX 77380
2. Article Number (Transfer Horn service label)
7018 0680 0002 2052 8597
PS Form 3811, July 2015 PSN 7590-02.000-9059
Q$ Agent
Is delivery address different from item 1? u Ye=
If YES, enter delivery address below: p( No
3. Service Typb A -❑
❑ AduK Signature
AduK Signature
Cedifietl Mail®
CMail RerMctetl Delivery
❑ Collectollect on Delivery
❑ Coiled on Delivery Restric[etl Delivery
'3 Insured Mail
] Insured Mail Restricted Delivery
rarer scam
Domestic Return Recelpt
