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Home My WebLink AboutO 177Other Order 177 Docket No: OTH-20-052 1. October 21, 2020 CINGSA request for Reconsideration of its Bond Amount. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Cook Inlet Natural Gas ) Docket Number: OTH-20-052 Storage Alaska for reduction in the bonding ) Other Order 177 amount required under new regulation 20 ) AAC 25.025. ) Cook Inlet Natural Gas Storage Alaska Bond Reconsideration Request November 30 2020 DECISION AND ORDER On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent Cook Inlet Natural Gas Storage Alaska, LLC (CINGSA) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised that under the new regulation CINGSA's 5 permitted wellheads increased CINGSA's bonding level to $2,000,000. Because CINGSA had a $200,000 bond in place, an additional $1,800,000 in bonding was required, payable in three annual installments of $500,000 and a fourth installment of $300,000 by August 19, 2022. Since the letter dated July 2, 2019, CINGSA has increased its bond to $1.2 million, meeting the installment amounts for 2019 and 2020. On October 21, 2020, CINGSA requested reconsideration, seeking a reduction in the required total bonding amount of $2 million. FINDINGS: Based upon the evidence presented by CINGSA, AOGCC finds as follows: 1. CINGSA states that it is entitled to an offset because it maintains a $500,000 bond with the Alaska Department of Natural Resources (DNR) to satisfy lease requirements in accordance with Paragraph 13 of Lease Agreement for ADL 230925 and Paragraph 35 of the Easement Agreement for ADL 230979. 2. CINGSA proposes to increase its bond to $1.5 million in August 2022, at which point, provided this request for reconsideration is granted, it will have fulfilled its AOGCC- related bonding requirements. Other Order: 177 November 30, 2020 Page 2 of 2 CONCLUSIONS: The AOGCC denies CINGSA's request for reconsideration. 1. The $500,000 bond with DNR is for the dismantlement, removal and restoration (DR&R) of the surface of DNR's leases to a condition acceptable to DNR. As of the date of this order, no evidence has been offered that any of the DNR bond is exclusively dedicated to the costs to properly plug and abandon CINGSA's wells. CINGSA'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, CINGSA's bonding requirement for the AOGCC is $2,000,000 less CINGSA's existing $1,200,000 AOGCC bond. As a result, CINGSA's revised bond requires an additional $800,000. DONE at Anchorage, Alaska and dated November 30, 2020 .n-.1iy Mc0b' Jeremy ,ere"b,wke DI'Itallysignetlby Daniel T. Di Mel T. geamwnb Js. Digitally signed by Jessie L. Jessie L Chsnlel.14 nx M. PriceChmie St, Jr. 0a1i30'a10' 30 lowski 11, 2020,,.30 11 D2:57-09'0 1128,19-0gOD Jeremy M. Price Daniel T. Seamount, Jr. Jessie L. Chmielowski Commissioner, Chair Commissioner Commissioner RECONSIDERATION 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 ifthe 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. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 Colombie Jody J (CED) From: Moira Smith <Moira.Smith@enstarnaturalgas.com> Sent: Monday, November 30, 2020 1:50 PM To: Colombie, Jody 1 (CED) Subject: RE: Other Order 177 Categories: Yellow Category Thanks, Jody! From: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Sent: Monday, November 30, 2020 1:46 PM To: Moira Smith <Moira.Smith@enstarnaturalgas.com> Cc: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Other Order 177 WARNING: This email originated outside of AltaGas. EXERCISE CAUTION when clicking on links or attachments, or inputting data. EXTERNAL EMAIL Use caution when opening links and attachments, replying to requests for information and when prompted to enter User IDs or Passwords. CAUTION: This email originated from outside your organization. Exercise caution when opening attachments or clicking links, especially from unknown senders. Please see attached. Jody Colombie Colombie Jody J (CED) From: Moira Smith <Moira.Smith@enstarnaturalgas.com> Sent: Wednesday, October 21, 2020 2:04 PM To: Colombie, Jody J (CED) Cc: Chelsea Guintu; John Sims; Matthew Federle; Terri J Amey Subject: Request for reconsideration Attachments: CINGSA _DNR-DMLW_ContivationCertCorr_20200702.pdf Dear Commissioners and To Whom it May Concern: CINGSA hereby petitions the Commission for reconsideration of the amount of bond it is required to maintain to comply with AOGCC regulation 20 AAC 25.025. CINGSA's reason for requesting reconsideration is that it maintains a $500,000 bond to satisfy lease requirements in accordance with Paragraph 13 of Lease Agreement for ADL 230925 and Paragraph 35 of the Easement Agreement for ADL 230979. I have attached, for your review, the Certificate of Bond Continuation that CINGSA filed with DNR in July 2020. Under the current (and recently proposed second revision) to 20 AAC 25.025, CINGSA's total bond requirement is $2 million by August 26, 2022. CINGSA has increased its bond: in 2019, CINGSA increased its bond to $700,000. In July 2020, CINGSA increased its bond amount to $1 million. And finally, in August 2020, CINGSA increased its bond for the benefit of the AOGCC to $1.2 million. CINGSA proposes to increase its bond to $1.5 million in August 2022, at which point, provided this request for reconsideration is granted, it will have fulfilled its AOGCC-related bonding requirements. Please let me know if you have any questions or concerns. Thank you in advance for your consideration of this reconsideration request, Moira Smith Moira K. Smith Vice President and General Counsel ENSTAR Natural Gas Company (907)334-7662 C6 Knee anal% below. Call beton you ba Moira K. Smith Vice President and General Counsel ENSTAR Natural Gas Company (907) 334-7662 Cook Inlet Natural,"G®s ST®RAC�Q July 2, 2020 Southcentral Regional Manager State of Alaska, Department of Natural Resources Division of Mining, Land & Water 550 West Seventh Avenue, Suite 1070 Anchorage, Alaska 99501-3579 Subject: ADL 230925 & ADL 230979 Dear Regional Manager: Cook Inlet Natural Gas Storage Alaska, LLC 3000 Spenard Road PO Box 190988 Anchorage, AK 99519-0989 Main (907) 3347980 Facsimile (907) 334-7671 v" w. cingsa.coni CERTIFIED MAIL #7016 2140 0000 9795 2269 In accordance with Paragraph 13 of Lease Agreement for ADL 230925 and Paragraph 35 of the Easement Agreement for ADL 230979, granted by the State of Alaska to Cook Inlet Natural Gas Storage Alaska, LLC (CINGSA), we respectfully submit the enclosed Continuation Certificate for Bond SUR0024542. Please feel free to contact me with any questions or concerns regarding the subject agreements or attached continuation certificate. Regards, Andrew Fraiser Right of Way & Permitting Supervisor Cook Inlet Natural Gas Storage Alaska, LLC Enclosure: Continuation Certificate for Bond SUR0024542 — ADL 230925 & ADL 230979 CONTINUATION CERTIFICATE Argonaut Insurance Company a certain Bond No. SURD024542 dated effective May 28. 2014 (MONTH -DAY -YEAR) on behalf of Cook Inlet Natural Gas Storage Alaska, LLC (PRINCIPAL) and in favor of State of Alaska (OBLIGEE) does hereby continue said bond in force for the further period beginning on June 3, 2020 (MONTH -DAY -YEAR) and ending on June 3, 2021 (MONTH -DAY -YEAR) Amount of bond $ 500,000 Description of bond Land Use Performance Guaranty Surety upon PROVIDED: That this continuation certificate does not create a new obligation and is executed upon the express condition and provision that the Surety's liability under said bond and this and all Continuation Certificates issued in connection therewith shall not be cumulative and that the said Surety's aggregate liability under said bond and this and all such Continuation Certificates on account of all defaults committed during the period (regardless of the number of years) said bond had been and shall be in force, shall not in any event exceed the amount of said bond as hereinbefore set forth. Signed and dated on _ May e, 2020 (MONTH -DAY -YEAR) I -M S-0157/GEEF 11/99 Argonaut Insurance Company � n Rachel A. Chaveriat , Attorney -In -Fact Argonaut Insurance Company Bond Number SURe0NfW2 Deliveries Only: 225 W. Washington, 24th Floor Chicago, IL 60606 United States Postal Service: P.O. Box 469011, San Antonio, TX 78246 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That the Argonaut Insurance Company, a Corporation duly organized and existing under the laws of die State of Illinois and having its principal office in the County of Cook, Illinois does hereby nominate, constitute and appoint: Rachel A. Chaverial Their true and lawful agent(s) and atiomey(s)-in-fact, each in their separate capacity if mom than one is named above, to make, execute, seal and deliver for and on its behalf as surety, and as its act and deed any and all bonds, contracts, agreements of indemnity and other undertakings in suretyship provided, however, that the penal sum of any one such instrument executed hcrcunder shall not exceed the sum of: $85 000.000.00 This Power of ALLomcy is granted and is signed and scaled under and by the authority of the fallowing Resolution adopted by the Board of Directors of Argonaut Insurance Company: "RESOLVED, That the President, Senior Vice President, Vice President, Assistant Vice President, Secretary, Treasurer and each of them hereby is authorized to execute powers of attorney, and such authority can be executed by use of facsimile signature, which may be attested or acknowledged by any officer or mtomcy, of the Company, qualifying the attorney or atiomcys named in the given power of attorney, to execute in behalf of, and acknowledge as the act and deed of the .Argonaut Insurance Company, all bond undertakings and contracts of suretyship, and to affix the corporate seal thereto 0' IN WITNESS WHEREOF, Argonaut Insurance Company has caused its official seal to be hereunto affixed and these presents to be signed by its duly authorized officer on the 8th day of May, 2017. ,n....w,,,Argonaut Insurance Company •`;asuRgryc,, % _ ;`S: ......... E .0% _Sr e O: 6SEAL 9e F..� 4 1, two by: - Josbua C. Betz, Senior Vice President STATE OF TEXAS COUNTY OF HARRIS SS: On this Rth day of May, 2017 A.D., before me, allotary Public of the State of Texas, in and for the County of Harris, duly commissioned and qualified, came THE ABOVE OFFICER OF THE COMPANY, tome personally known to be the individual and officer described in, and who executed the preceding instrument, and he acknowledged the cxccation of same, and being by me duly swam, deposed and said that he is the officer of the said Company aforesaid, and that the seal affixed to the preceding instrument is the Corporate Seal of said Company, and the said Corporate Seal and his signature as officer were duly affixed and subscribed to the said instrument by the authority and direction ofthe said corporation, and that Resolution adopted by the Board of Directors of said Company, referred to in the preceding instrument is now in force. IN TESTIMONY WHEREOF, I have hereunto set my hand, and affixed my Official Seal at the County of Harris, the day and year fust above written. r-. —�� .i 0.E411W-r'YYI. `�YYLat.Yn (Notary Public) 1, the undersigned Officer of the Argonaut Insurance Company, Illinois Corporation, do hereby certify that the original POWER OP A7-fORNEY ofwhich the foregoing is a full, true and correct copy is still in full force and effect and has not been revoked. N WITNESS WHEREOF, I have hereunto set my hand, and affixed the Seal of said Company, on the 8 day of May _ 2020 •••� ailsu.WN0�:•. Vie. r 2r_�ry�........�e. 'moi S SEAL;;: t ;•a". IN$ : re James Bluzard , Vice President -Surety IF YOU HAVE QUESTIONS ON AUTHENTICITY OF THIS DOCUMENT CALL (210) 321 -8400.