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Home My WebLink AboutO 180Conservation Orders Date Record last Modified Filter by Field Filter Filter by Pool Clear Order Type: Other Order No I g0 Order Approval No 000 Order Am, RollFrame Current?� Dt. Issue F 3/7/2021 Legacy Area Override Dt.Over r- Dt. Expire Operator Cmmt Order Hyperlink Fields & Pools Description 20 AAC 25.025 Bonding Regulations Other 180 1. August 4, 2020 File Opening Request and Opening by DOL 2. August 4, 2018 Notice of public hearing; affidavits of publication, email distribution, mailings 3. September 1, 2020 Transcript, sign in sheet and Comments 4. October 18, 2020 Notice of public hearing; affidavits of publication, email distribution, mailings 5. November 4, 2020 Transcript, sign in sheet and Comments at hearing or after 6. December 10, 2020 Final Regulations Package to Juneau and Agency -Attorney Review Memorandum Colombie, Jody J (CED) From: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Sent: Wednesday, February 10, 2021 7:20 PM To: AOGCC Public Notices Subject: [AOGCC_Public_Notices] Final Bonding Regulations Attachments: Post Hearing Notice.pdf, 20 AAC 25 025 Final Bonding Regulation.pdf Categories: Yellow Category BRIEF DESCRIPTION The Alaska Oil and Gas Conservation Commission has amended 20 AAC 25.025. The regulations update bonding requirements to ensure that bonding amounts better protect the state against potential costs associated with plugging and abandonment of wells. The Lieutenant Governor signed and filed the regulation changes on February 5, 2021, with an effective date of March 7, 2021. The regulations will appear in Register 237, April 2021, of the Alaska Administrative Code. For further information or to obtain a copy of the amended regulations, contact Jody Colombie at (907) 793-1221, fax (907) 276-7542, or e-mail jody.colombie(a)alaska. og_v. Jody J. Colombie AOGCC Special Assistant Alaska Oil and Gas Conservation Commission State of Alaska 333 West 7`h Avenue Anchorage, AK 99501 Phone Number: 907-793-1221 Email: jody.colombie@alaska.gov List Name: AOGCC—Public—Notices@list.state.ak.us You subscribed as: jody.colombie@alaska.gov Unsubscribe at: http:Hlist.state.ak.us/mailman/options/aogcc_public_notices/jody.colombie%40alaska.gov Register 237, April 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount #1-#5 wells $400,000 per well #6420 wells $2,000,000 plus an additional $250,000 per well for each well above five (e.g., the bond for an operator with eight wells would be $2,750,000 ($2,000,000 for the first five wells plus $250,000 per well for wells 6 through 8) #21-#40 wells $6,000,000 [# 1-# 10 wells $400,000 per well #11440 wells $6,000,000] 441-4100 wells $10,000,000 #101-#1,000 wells $20,000,000 Over 1,000 wells $30,000,000 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of one or more wells is in place with each landowner; or Register 237, April 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United States Environmental Protection Agency is dedicated to the plugging and abandonment of underground injection control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the final seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and Register 237, April 2021 MISCELLANEOUS BOARDS the level required under (b) of this section [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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am 3/7/2021, Register 237) Authority: AS 31.05.030 Register 237, April 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount #1—#5 wells $400,000 per well #6420 wells $2,000,000 plus an additional $250,000 per well for each well above five (e.g., the bond for an operator with eight wells would be $2,750,000 ($2,000,000 for the first rive wells plus $250,000 per well for wells 6 through 8) #21440 wells $6,000,000 [# 1-# 10 wells $400,000 per well #11440 wells $6,000,000] #41-# 100 wells $10,000,000 # 101-# 1,000 wells $20,000,000 Over 1,000 wells $30,000,000 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of one or more wells is in place with each landowner; or Register 237, April 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United States Environmental Protection Agency is dedicated to the plugging and abandonment of underground infection control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the final seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and Register 237, April 2021 MISCELLANEOUS BOARDS the level required under (b) of this section [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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am 3/7/2021, Register 237) Authority: AS 31.05.030 Bernie Karl Recycling Inc. Gordon Severson Richard Wagner K&K P.O. Box 5 3201 Westmar Cir. P.O. Box 60868 Anchorage, AK 99508-4336 Fairbanks, AK 99706 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Kevin Meyer Lieutenant Governor 530 West 7m Ave, Suite 1700 State CapitolAnchorage, Alaska 99501 Juneau, Alaska 99811 �. 'j '' 907.269.7460 907,465.3520 Ll'.GOVERNOR@ALASKA.GOV WWW.LTGOV ALASKA.GOV ��t• `�'` '� OFFICE OF THE LIEUTENANT GOVERNOR ALASKA MEMORANDUM TO: Amy Demboski Department of Commerce, Community, and Economic Development FROM: April Simpson, Office of the Lieutenant Governor 465.4081 �k DATE: February 5, 2021 RE: Filed Permanent Regulations: Alaska Oil and Gas Conservation Commission Alaska Oil and Gas Conservation Commission regulations re: bonding requirements (20 AAC 25.025) Attorney General File: 2020200516 Regulation Filed: 2/5/2021 Effective Date: 3/7/2021 Print: 237, April 2021 cc with enclosures: Harry Hale, Department of Law Judy Herndon, LexiSNexis Jeremy Price, Commissioner ORDER CERTIFYING THE CHANGES TO REGULATIONS OF THE ALASKA OIL AND GAS CONSERVATION COMMISSION The attached 3 pages of the regulations are certified to be a correct copy of the regulation changes that the Alaska Oil and Gas Conservation Commission adopted under the authority of AS 31.05.030 at its December 2, 2020 meeting. This action is not expected to require an increased appropriation. On the record, in considering public comments, the Alaska Oil and Gas Conservation Commission paid special attention to the cost to private persons of the regulatory action being taken. The regulation changes described in this order take effect on the 30th day after they have been filed by the lieutenant governor as provided in AS 44.62.180. Date: December 7, 2020 /\ A/. n Chair, Commissioner, AOGCC FILING CERTIFICATION 1, Kevin Meyer, Lieutenant Governor for the State of Alaska, certify that on I eiatm , 2021, at :OZ . m., I filed the attached regulation. KA -f/b Lieutenant Govern r YWivi 17. Effective: TA& 2DZI . Register: 7-34 FOR DELEGATION OF THE LIEUTENANT GOVERNOR'S AUTHORITY I, KEVIN MEYER, LIEUTENANT GOVERNOR OF THE STATE OF ALASKA, designate the following state employees to perform the Administrative Procedures Act riling functions of the Office of the Lieutenant Governor: Josh Applebee, Chief of Staff Kady Levale, Notary Administrator April Simpson, Regulations and Initiatives Specialist IN TESTIMONY WHEREOF, I have signed and affixed the Sea] of the State of Alaska, in Juneau, on December I1th, 2018. ........................................... KEVIN MEYER LIEUTENANT GOVERNOR Register 2 31, - k 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: (([ )" '?r'«2rZc:s eLA ti( ,*,O- ,tisc� �2 Number of Permitted Wellheads Bond Amount 1-5 wells $400 000 per well 7h -/ 6-20 well $2 000 000 lus an additional 250 000 er well for each well above 3i aC ,aaoair, bond for an o erator wit . wells would be Z 750 000 or the first lit lus $250 000 pet- well for wells 6 throu h 8 21-40 wells 6 000 000 [ l -10 we] is $400,000 per wel I VVQU 11-40 well $6,000,000] ►« 41-100 wells $10,000,000 •, 101-1,000 wells $20,000,000 Over 1,000 wells $30,000,000 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that W engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the (;-jne.) -. m, r21 1 Register ZS1 , 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United is , States Environmental Protection Aaency' 3c edicated to the plugging and u�4i!'< :z JJ> abandonment of Underground Iniecti n Control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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 fox �JII THE LEVEL REQUIRED UNDER (B) OF THIS SECTION, WHICHEVER IS GREATER]; and (3) the fmal seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST 2 Register 23� 2021 MISCELLANEOUS BOARDS 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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am .3 /_L/Zdllk Register 93 1 ) Authority: AS 31.05.030 3 Kevin Meyer •t'_ - �>• Lieutenant Governor ...i�, �. State Capitol�'T Juneau, Alaska 99811 907.465.3520 i r ��d WWW LTGOV ALASKA.GOV .��••�;r� OFFICE OF THE LIEUTENANT GOVERNOR ALASKA MEMORANDUM 530 West 711 Ave, Suite 1700 Anchorage, Alaska 99501 907.269.7460 L't' GOVERNORLALASKA.GOV TO: Amy Demboski Department of Commerce, Community, and Economic Development FROM: April Simpson, Office of the Lieutenant Governor 465.4081 4k-' DATE: February 5, 2021 RE: Filed Permanent Regulations: Alaska Oil and Gas Conservation Conunission Alaska Oil and Gas Conservation Commission regulations re: bonding requirements (20 AAC 25.025) Attorney General File: 2020200516 Regulation Filed: 2/5/2021 Effective Date: 3/7/2021 Print: 237, April 2021 cc with enclosures: Harry Hale, Department of Law Judy Herndon, LexiSNexiS Jeremy Price, Commissioner ORDER CERTIFYING THE CHANGES TO REGULATIONS OF THE ALASKA OIL AND GAS CONSERVATION COMMISSION The attached 3 pages of the regulations are certified to be a correct copy of the regulation changes that the Alaska Oil and Gas Conservation Commission adopted under the authority of AS 31.05.030 at its December 2, 2020 meeting. This action is not expected to require an increased appropriation. On the record, in considering public comments, the Alaska Oil and Gas Conservation Commission paid special attention to the cost to private persons of the regulatory action being taken. The regulation changes described in this order take effect on the 30th day after they have been filed by the lieutenant governor as provided in AS 44.62.180. Date: December 7, 2020 n A11n Chair, Commissioner, AOGCC A � Al f vl - )>` FILING CERTIFICATION I, Kevin Meyer, Lieutenant Governor for the State of Alaska, certify that on f e' �A 4A. , 2021, at 01 . m., I filed the attached regulation. i e g''' 'Lieutenant Govern r �e%y� KA� Effective: fG ZaZI . Register: Z31 'a��. FOR DELEGATION OF THE LIEUTENANT GOVERNOR'S AUTHORITY I, KEVIN MEYER, LIEUTENANT GOVERNOR OF THE STATE OF ALASKA, designate the following state employees to perform the Administrative Procedures Act filing functions of the Office of the Lieutenant Governor: Josh Applebee, Chief of Staff Kady Levale, Notary Administrator April Simpson, Regulations and Initiatives Specialist IN TESTIMONY WHEREOF, I have signed and affixed the Seal of the State of Alaska, in Juneau, on December 1lth, 2018. ............................. KEVIN MEYER LIEUTENANT GOVERNOR Register 2 3 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: (1< AA4- Ast4;'1%A Number of Permitted Well eLA- ;ond Amount X� o-w weu ac uuv uuu Plus an aaaitional LSU ou) per well for each well above vit�i —wells e.. the bond for an o erator would be $Z 750 000 or the first five wells plus $250 000 Per well for wells 6 throu h 8 2140 wells 6 000 000 (1-10 wells $400,000 Rewell aL U 11-40 well $6,000,000] A - 41-100 we] is $10,000,000 a .�� w•, 101-1,000 wells $20,000,000 �1 A Over 1,000 wells $30,000,000 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts;, (B) a bond and. if required, security that is exclusively dedicated to the to Pe.? , m.: r21 1 Register 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United ,mates Environmental Nrotection Agency'dedicated to the plugging and abandonment of Underground nieet� n Control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (e) 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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must he a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the fmal seventh installment is due on August 16 of the year following the sixth_ installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST 2 Register 23� ,P,�S 2021 MISCELLANEOUS BOARDS 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, 4,. 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 j(A Zuu UNDER (B) OF THIS SECTION]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; ain ,3 /_j_/A k Register dal ) Authority: AS 31.05.030 3 Colombie, Jody J (CED) From: Weaver, Steven C (LAW) Sent: Friday, February 5, 2021 9:19 AM To: Price, Jeremy M (CED); Colombie, Jody J (CED); Ballantine, Tab A (LAW) Cc: Pollard, Susan R (LAW); Hale, Harry J (LAW) Subject: edits, AOGCC update to bonding regulations (2020200516) Attachments: edits 1 iPhone.pdf Categories: Yellow Category I have finished my review of the Alaska Oil and Gas Conservation Commission's update to the requirements that well operators supply bonding (2020200516), and I have included with this message, as a .pdf attachment, a copy of my edits for your review. Please pardon any oddness in the .pdf attachment. I'm sending this from my house and using the "scan" function on my iPhone Notes app. I will do a proper scan before delivery of the regulations to the lieutenant governor's office for filing. All my edits were technical. The only one that I call to your attention is in 20 AAC 25.025(b)(3)(B). Because the "X or Xs" construction is highly disfavored under state drafting conventions for legislation and regulations, I prefer a substitute for "well or wells". I used "one or more wells". Please review my edits, and let me know if you have questions, concerns, or refinements. If everything is okay, I'll finalize the approval paperwork and arrange for delivery to the lieutenant governor's office for filing. Thank you for your time and work —I'll stand by, Steven C. Weaver Senior Assistant Attorney General Legislation and Regulations Section Alaska Department of Law 123 4tn Street, Suite 600 P.O. Box 110300 Juneau, AK 99811-0300 907-465-3600 CONFIDENTIAL I ATTORNEY WORK PRODUCT I DELIBERATIVE PROCESS PRIVILEGE MEMORANDUM To: The Honorable Kevin Meyer Lieutenant Governor os Thru: Susan R. Pollard Chief Assistant Attorney General and Regulations Attorney Legislation and Regulations Section From: Steven C. Weaver SeW Senior Assistant Attorney General Legislation and Regulations Section State of Alaska Department of Law Date: February 5, 2021 File No.: 2020200516 Tel. No.: 465-3600 Re: Alaska Oil and Gas Conservation Commission regulations re: bonding requirements (20 AAC 25.025) The Department of Law has reviewed the attached regulations of the Alaska Oil and Gas Conservation Commission against the statutory standards of the Administrative Procedure Act. Based upon our review, we find no legal problems. This memorandum constitutes the written statement of approval under AS 44.62.060(b) and (c) that authorizes your office to file the attached regulations. The regulations were adopted by the Alaska Oil and Gas Conservation Commission after the close of the public comment period. To reflect how prior regulations -- adopted in 2019, to address inadequate bond amounts --worked in practice, these regulations adjust requirements for the bonding of operators: to reduce slightly the bonding amounts for certain operators with fewer wells; to reduce the default bonding by the amount of any bond, held by a landowner or agency, that an operator can demonstrate is dedicated exclusively to the costs of plugging and abandoning wells; and to split annual installment payments over a longer period of time, easing the burden of higher bond amounts, and without any substantial adverse impact on compliance with the 2019 regulations. The August 5, 2020 public notice, the October 18, 2020 supplemental public notice, and the December 7, 2020 certification of adoption order all state that this action is not expected to require an increased appropriation. Therefore, a fiscal note under AS 44.62.195 is not required. Honorable Kevin Meyer, Lieutenant Governor File No. 2020200516 February 5, 2021 Page 2 of 2 We have made some technical corrections to conform the regulations in accordance with AS 44.62.125. The corrections are shown on the attached copy of the regulations. SCW cc wienc: Jeremy M. Price, Chair and Commissioner Alaska Oil and Gas Conservation Commission Amy Demboski, Assistant Commissioner and Regulations Contact Department of Commerce, Community, and Economic Development Jody Colombie, Special Assistant to the Commission and Regulations Specialist Alaska Oil and Gas Conservation Commission Thomas A. "Tab" Ballantine, Senior Assistant Attorney General Oil and Gas Section ORDER CERTIFYING THE CHANGES TO REGULATIONS OF THE ALASKA OIL AND GAS CONSERVATION COMMISSION The attached 3 pages of the regulations are certified to be a correct copy of the regulation changes that the Alaska Oil and Gas Conservation Commission adopted under the authority of AS 31.05.030 at its December 2, 2020 meeting. This action is not expected to require an increased appropriation. On the record, in considering public comments, the Alaska Oil and Gas Conservation Commission paid special attention to the cost to private persons of the regulatory action being taken. The regulation changes described in this order take effect on the 30th day after they have been filed by the lieutenant governor as provided in AS 44.62.180. Date: December 7, 2020 1 1 Chair, Commissioner, AOGCC FILING CERTIFICATION I, Kevin Meyer, Lieutenant Governor for the State of Alaska, certify that on , 2021, at . in., I filed the attached regulation. Lieutenant Governor Effective: Register: Register 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: 41[ A.4&- AAA- -1 Number of Permitted W ' i'-e Zs Bond Amount C$2.M[1. 000 five wells olus $250 000 ger well for wells 6 throu 8 21-40 wells $6,000 000 '4 [1-10 wells $400,000 per -Well �) 11 40 well $6,000,000] 41-100 wells '0,000,000 s* 101-1,000 wells $20,000,000 .� A-4 Over 1,000 well $30,000,000 --'20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that W engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amountsi 1B) a bond and, if required, security that is exclusively dedicated to, the tooe) , mdrzi 1 Register , _ 2021 MISCELLANEOUS BOARDS (C) a bond and, If required, security that is in glace with the United 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the ftrst installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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 f(a zw AA-" n x) THE LEVEL REQUIRED UNDER (B) OF THIS SECTION, WHICHEVER IS GREATER]; and (3) the final seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand and, if required, security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST 19 Register , _ 2021 MISCELLANEOUS BOARDS 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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 1 l /7/99, Register 152; am 5/18/2019, Register 230; am /_/ Register __) Authority: AS 31.05.030 Colombie, Jody J (CED) From: Simpson, April L (GOV) Sent: Friday, February 5, 2021 4:57 PM To: Demboski, Amy L (CED); Price, Jeremy M (CED) Cc: Colombie, Jody J (CED) Subject: Title 20 - Alaska Oil and Gas Conservation Commission regulations re: bonding requirements Attachments: 2020200516.pdf Categories: Yellow Category Filing notification attached. Title 20 - Alaska Oil and Gas Conservation Commission regulations re: bonding requirements Department of Law file number: 2020200516 20 AAC 25.025 Filed: 2/5/2021 Effective: 3/7/2021 Published in Register: 237, April 2021 Thanks! April April Simpson I Regulations & Initiatives Coordinator The Office of Lieutenant Governor Kevin Meyer P.O. Box 1 10015 1 Juneau, AK 99811 2 : (907) 465-4081 INDEXES THE STA`l'E 'ALASKA GOVERNOR MIKL DUNLEAVY Memorandum Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.olaska.gov DATE: December 10, 2020 TO: Susan Pollard, Regulations Attorney Legislative and Regulations Section Department of Law FROM: Jeremy M. Price, Regulations Contact Department of Commerce, Communityl conomic Development Alaska Oil and Gas Conservation Commission SUBJECT: Request for legal review of regulation project Amending Bond Regulations 20 AAC.25.025 FILE NO.: We are requesting legal review and approval of the attached regulation that adopted by the Alaska Oil and Gas Conservation Commission on December 3, 2020 in a public hearing. Enclosed are the following documents: (1) the original and two copies of the final regulation for use by the Department of Law; (2) the original of the public notices; (3) the original of the additional regulation notice information form distributed with the notices; (4) the original of the publisher's affidavit of publications; (5) order certifying the changes to regulations of the Alaska Oil and Gas Conservation Commission (6) affidavit of notice of proposed regulation and furnishing of additional information (7) the original of the affidavit of oral hearing; (8) excerpt from unapproved minutes; and (9) affidavit of commission action. We have worked with Assistant Attorney General Thomas Ballantine on the project. Upon completion of your review, please forward the regulation to the lieutenant governor for filing. Register 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount 1-5 wells $400,000 per well 6-20 wells $2,000,000 plus an additional $250,000 per well for each well above 5 (e.g. the bond for an operator with 8 wells would be $2,750,000 f$2 million for the first five wells plus $250,000 per well for wells 6 through 81) 21-40 wells $6,000,000 [ 1-10 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 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that 1I engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amountsi (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of a well or wells is in place with each landowner, or Register 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United States Environmental Protection Agency dedicated to the plugging and abandonment of Underground Injection Control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the fmal seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST 2 Register , 2021 MISCELLANEOUS BOARDS 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]. (Ef£ 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am / / , Register ) Authority: AS 31.05.030 3 Register 2021 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount 1-5 wells $400,000 per well 6-20 wells $2,000,000 plus an additional $250,000 per well for each well above 5 (e.p-. the bond for an operator with 8 wells would be $2,750,000 f $2 million for the first five wells plus $250,000 per well for wells 6 through 81) 21-40 wells $6,000,000 [I -10 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 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amountsi (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of a well or wells is in place with each landowner; or Register 2021 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United States Environmental Protection Agency dedicated to the plugging and abandonment of Underground Injection Control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the final seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST 2 Register , 2021 MISCELLANEOUS BOARDS 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]. (Ef£ 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am / /, Register ) Authority: AS 31.05.030 �j CE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF ALASKA OIL AND GAS CONSERVATION COMMISSION The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Jody Colombie at 333 West 71h Avenue, Anchorage, Alaska 99501. Additionally, the Alaska Oil and Gas Conservation Commission will accept comments by facsimile at (907) 276-7542 and by electronic mail at aogcc.customer. svc(c�alaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on September 10, 2020. The hearing is scheduled for September 1, 2020 at 10:00 a.m. at 333 W. 71h Avenue, Anchorage, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC after August 25, 2020 to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800-315-6338 and, when instructed to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. Written comments also may be submitted at the September 1, 2020 hearing. The hearing is scheduled from 10:00 a.m. to 2:00 p.m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Jody Colombie at jody.colombie@alaska.gov or mailing 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221 not later than August 25, 2020 to ensure that any necessary accommodation can be provided. A copy of the proposed regulation changes is available on the Alaska Online Public Notice System and by contacting Jody Colombie at the Alaska Oil and Gas Conservation Commission at 333 West 71h Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221. After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed if your interests could be affected. Statutory authority: AS 31.05.030 Statutes being implemented, interpreted, or made specific: AS 31.05.030 Fiscal information: The proposed regulation changes are not expected to require an increased appropriation. The Alaska Oil and Gas Conservation Commission keeps a list of individuals and organizations interested in its regulations. Those on the list will automatically be sent a copy of all the Alaska Oil and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the list, send a request to the Alaska Oil and Gas Conservation Commission at jody.colombie@alaska.gov, giving your name, and either your email address or mailing address, as you prefer receiving notices. Date: August 4, 2020 Jerenly M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission ADDITIONAL REGULATION NOTICE INFORMATION (AS 44.62.190(g)) 1. Adopting agency: Alaska Oil and Gas Conservation Commission 2. General subject of regulation: Bonding 3. Citation of regulation (may be grouped): 20 AAC.25.025 4. Department of Law file number, if any: 5. Reason for the proposed action: ( ) Compliance with federal law ( ) Compliance with new or changed state statute ( ) Compliance with court order ( ) Development of program standards (X) Other (identify): Development of Program._ 6. Appropriation/Allocation: Alaska Oil and Gas Conservation Commission/Alaska Oil and Gas Conservation Commission 7. Cost of implementation to the state agency and available funding (in thousands of dollars): Operating Cost Capital Cost 1002 Federal receipts 1003 General fund match 1004 General fund Initial Year Subsequent FY2021 Years $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 1005 General fund/ program $0 $0 Other (identify) $0 $0 8. The name of the contact person for the regulation: Name: Jodv Colombie Title: Special Assistant to the Commission Address: 333 West 7tn Avenue, Anchorage, AK 99501 Telephone: (907) 793-1221 E-mail address: Jody.colombie(a,alaska.gov 9. The origin of the proposed action: X Staff of state agency Federal government General public Petition for regulation change Other (identify) 10. Date: 8/4/2020 Prepared by: Name: Jod olo bi Title: Special Assistant to the Commission Telephone: (907) 793-1221 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 #: W0017192 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the afore- said place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 08/05/2020 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 indivi&als. Signed ,// U/ ` - I Subscribed and sworn to before me this 1 Oth day of December 2020. 0 L 0 rn t J ary Public in and for, U i e State of Alaska. v C- * W Third Division co z r— Anchorage, Alaska N 0 MY COMMISSION EXPIRES A /�/�-:)rj Cost: $438.26 NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF ALASKA OIL AND GAS CONSERVATION COMMISSION The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to allow a reduction in the requisite bond amount If an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Jody Colombie at 333 West 7th Avenue, Anchorage, Alaska 99501. Additionally, the Alaska Oil and Gas Conservation Commission will accept comments by facsimile at (907) 276-7542 and by electronic mail at aogcc.customer.svc4�alaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on September 10, 2020. The hearing is scheduled for September 1, 2020 at 10:00 a.m. at 333 W. 7th Avenue, Anchorage, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC after August 25, 2020 to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800-315- 6338 and, when instructed to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. Written comments also may be submitted at the September 1, 2020 hearing. The hearing Is scheduled from 10:00 a.m. to 2:00 p m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Jody Colombie atjodycolombie@alaska.gov or mailing 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793- 1221 not later than August 25, 2020 to ensure that any necessary accommodation can be provided. A copy of the proposed regulation changes is available on the Alaska Online Public Notice System and by contacting Jody Colombie at the Alaska oil and Gas Conservation Commission at 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221. After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed If your interests could be affected. Statutory authority: AS 31.05.030 Statutes being implemented, interpreted, or made specific: AS 31.05.030 Fiscal Information: The proposed regulation changes are not expected to require an increased appropriation. The Alaska oil and Gas Conservation Commission keeps a list of individuals and organizations interested in its regulations. Those on the list will automatically be sent a copy of all the Alaska oil and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the list, send a request to the Alaska oil and Gas Conservation Commission at Jody. colombie@alaska.gov, giving your name, and either your email address or mailing address, as you prefer receiving notices. Date: August 4, 2020 //signature on file// Jeremy M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission Published: August 5, 2020 NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF ALASKA OIL AND GAS CONSERVATION COMMISSION The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to modify the number of permitted wellheads bond amount table and allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Jody Colombie at 333 West 7th Avenue, Anchorage, Alaska 99501. Additionally, the Alaska Oil and Gas Conservation Commission will accept comments by facsimile at (907) 276-7542 and by electronic mail at aogcc.customer.svc@alaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on November 20, 2020. The hearing is scheduled for November 4, 2020 at 10:00 a.m. at 333 W. 71h Avenue, Anchorage, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC after October 25, 2020 to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800-315-6338 and, when instructed to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. Written comments also may be submitted at the November 4, 2020 hearing. The hearing is scheduled from 10:00 a.m. to 2:00 p.m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Jody Colombie at jody.colombie@alaska.gov or mailing 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221 not later than October 30, 2020 to ensure that any necessary accommodation can be provided. A copy of the proposed regulation changes is available on the Alaska Online Public Notice System and by contacting Jody Colombie at the Alaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221. After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed if your interests could be affected. Statutory authority: AS 31.05.030 Statutes being implemented, interpreted, or made specific: AS 31.05.030 Fiscal information: The proposed regulation changes are not expected to require an increased appropriation. The Alaska Oil and Gas Conservation Commission keeps a list of individuals and organizations interested in its regulations. Those on the list will automatically be sent a copy of all the Alaska Oil and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the list, send a request to the Alaska Oil and Gas Conservation Commission at jody.colombie@alaska.gov, giving your name, and either your email address or mailing address, as you prefer receiving notices. Date: October 15, 2020 Jerenly M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission ADDITIONAL REGULATION NOTICE INFORMATION (AS 44.62.190(g)) 1. Adopting agency: Alaska Oil and Gas Conservation Commission 2. General subject of regulation: Bonding 3. Citation of regulation (may be grouped): 20 AAC.25.025 4. Department of Law file number, if any: 5. Reason for the proposed action: ( ) Compliance with federal law ( ) Compliance with new or changed state statute ( ) Compliance with court order ( ) Development of program standards (X) Other (identify): Development of Program. 6. Appropriation/Allocation: Alaska Oil and Gas Conservation Commission/Alaska Oil and Gas Conservation Commission 7. Cost of implementation to the state agency and available funding (in thousands of dollars): Initial Year Subsequent FY2021 Years Operating Cost $0 $0 Capital Cost $0 $0 1002 Federal receipts $0 $0 1003 General fund match $0 $0 1004 General fund $0 $0 8 0 10 1005 General fund/ program $0 $0 Other (identify) $0 $0 The name of the contact person for the regulation: Name: Jodv Colombie Title: Special Assistant to the Commission Address: 333 West 7th Avenue, Anchorage, AK 99501 Telephone: (907) 793-1221 E-mail address: iody.colombie(u�alaska.gov The origin of the proposed action: X Staff of state agency Federal government General public Petition for regulation change Other (identify) Date: 10/15/2020 Prepared by: Jody J. Colombie Name: Jody J. Colombie Title: Special Assistant to the Commission Telephone: (907) 793-1221 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 #: WOO 18541 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the afore- said place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 10/ 18/2020 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//y `� Subscribed and sworn to before me this 1 Oth day of December 2020. FF >> o ry Public in and for �fie State of Alaska. m ty Third Division � Z r Anchorage, Alaska A 0 MY COMMIS IOONN EXPIRES ALL Cost: $916.34 The Alaska Oil and Gas Conservation Commissionoposes to adopt regulation changes In 20 AAC 25.025 of the Alaska Administrative Code, dealing wpprh Bonding, including the following: 20 AAC 25.025 Is proposed to be omendetl to modify the number of permitted wellheads bond amount table and allow a reduction In the reGulsite bond amount if an operator demonstrates that It has a bond in place with the landowner detlicatetl exclusNely to the dugging and abandonment of a well or wells. In addition, the proposed change Increases the number of annual Installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, Including the potential costs to �rivate persons of complNng with the proposed changes, by su mlttlng written comments to Jody Co omble at 333 West 7th , venue, Anchorage, Alaska 9 501. Additionally, the Alaska OII and Gas Conservation Commission will accept comments by facslmlle at (907)) 276-7542 and by electronic mall at aogcc. customer.svc®aleska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system end using the comment link. The comments must be receNed not later than 4:30 p.m. on November 20, 2020. The hearing Is scheduled for November 4. 2020 at 10:00 B.M. at 333 W. 7th Avenue. Anchorage. Alaska. a.m., on Written comments also may be submitted at the November 4, 2020 hearing. The hearing Is scheduled from 10:00 a.m. to 2:00 p.m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you area person with a disability who needs a special accommodation In order to participate in this process, please contact lolly COIOmWe at otly.colomb1malaska.gov or mailingg 333 west 7th Avenue, Anchorage, Alaska 99501 or calling (907) 7 3-1221 not later than October 30, 2020 to ensure that any necessary accommodation can be provided. A copy of thetltlpproposyyed regulation Uanlgges Is avallable on the Alaska Online Public Notice System andAve ueCAnchorage�Alaska 99501 or callA^gs� a0oil and Gas Conservation Commission at 333 West 7th After the public comment period ends, the Alaska Oti and Gas Conservation Commission may either adopt the pproposed regulation changes or other provisions dealing with the same sub ect, without further notice, or decide to take no action. The language of the final regulation may be rent from that of the proposed regulation. You should comment during the time allowed If your Interests could be affected. Statutory authority: AS 31.05.030 Statutes being Implemented, Interpreted, or made specific: AS 31.05.030 Fiscal Information: The proposed regulation changes are not expected to require an Increased appropriation. The Alaska Oil and Gas Conservation Commisslon keeps a list of Individuals and organizations Interested In Its reguletlons. Those on the list will automatlolly be sent a copyy of all the Alaska oil and Gas Conservation Commission notices of proposed regulation changes. 7o be atltled or removed from the list send a request to the Alaska Oil and Gas Conservation Commisslon et )oW.colomb]a alaska.gov, g�Ndg your name, and either your email address or malting address, as you pre er receiving notices. Date: October 15 2020 //signature on file// Jeremy M. Price, Chair, Commissioner Kaska OII and Gas Conservation Commission (AS 44ON NOTIC (AS .62.190(g)) 1. Adopting agency: Alaska Oil and Gas Conservation Commission 2. General sub)ect of regulation: Banding 3. Citation of regulation (may be gmupe ): 20 AAC.25.025 4. Department of Law file number, R any: 5. Reason for the proposed action: Compliance with fetla" law Compllance with new or changed state statute () Compllance wlth court order () Development ( program standards (X) Other (identify): Development of Program 6. A proopDrriaation/Allocatlon: Alaska,gi-nggas_ Conservation Commission/Alaska Oil and Gas ionserCost o m�S1f I plemernatIon to the state agency and available funding (in thousands of dollars): Initial Year Subsequent FY2021 Years Operating Cost $O s0 Capital Cost $0 s0 1002 Federal recelpts $0 $0 1003 General fund match $O $0 1004 General fund S0 SO 1005 General fund/ program $0 s0 other Odentify) so so 8. The name of the contact person for the regulation: Name: lody colorable Title: 5cec al Assistant to the Commisslon Address' 333 West 71Avenue. An 95 AK 99501 Telephone: 23- 22L E-mall addressloM colomble0alaska.¢w 9. The origin of the proposed action: _X_ Staff of state agency Federal govemment _ General public Petition for regulation change Other(Identipp TO. Date: 10/15/2020 Prepared by: //signature on file// Name: Jody 1. Colorable Title: Special Assistant to the Commission Telephone:(907) 793-1221 Published: October 18. 2020 ORDER CERTIFYING THE CHANGES TO REGULATIONS OF THE ALASKA OIL AND GAS CONSERVATION COMMISSION The attached 3 pages of the regulations are certified to be a correct copy of the regulation changes that the Alaska Oil and Gas Conservation Commission adopted under the authority of AS 31.05.030 at its December 2, 2020 meeting. This action is not expected to require an increased appropriation. On the record, in considering public comments, the Alaska Oil and Gas Conservation Commission paid special attention to the cost to private persons of the regulatory action being taken. The regulation changes described in this order take effect on the 30th day after they have been filed by the lieutenant governor as provided in AS 44.62.180. Date: December 7, 2020 FILING CERTIFICATION Chair, Commissioner, AOGCC I, Kevin Meyer, Lieutenant Governor for the State of Alaska, certify that on , 2021, at . m., I filed the attached regulation. Lieutenant Governor Effective: Register: AFFIDAVIT OF NOTICE OF PROPOSED REGULATION AND FURNISHING OF ADDITIONAL INFORMATION I, Jody J. Colombie, Special Assistant, of the Alaska Oil and Gas Conservation Commission, being sworn, state the following: As required by AS 44.62.190, notice of the proposed adoption of changes to 20 AAC 25.025 has been given by being (1) published in a newspaper or trade publication; (2) furnished to every person who has fled a request for notice of proposed action with the state agency; (3) furnished to appropriate state officials; (4) furnished to interested persons; (5) furnished to the Department of Law, along with a copy of the proposed regulation; (6) furnished electronically to incumbent State of Alaska legislators; (7) posted on the Alaska Online Public Notice System as required by AS 44.62.175(a)(1) and (b) and 44.62.190(a)(1). As required by AS 44.62.190, additional regulation notice information regarding the proposed adoption of the regulation changes described above has been furnished to interested persons and those in (2), (4) and (6) of the list above. The additional regulation notice information also has been posted on the Alaska Online Public Notice System. Date: December 7, 2020 Jc(4 J. ma, , Special Assistant AOGCC Subscribed and sworn to before me at Anchorage, Alaska on December 7, 2020. , Notary Public in and for the StiVe o aska AFFIDAVIT OF ORAL HEARINGS I, Jeremy M. Price, Chair, Commissioner of the Alaska Oil and Gas Conservation Commission, being sworn, state the following: On September 1, 2020 and November 4, 2020, at 10:00 a.m., 333 West 7ch Avenue, Anchorage, Alaska 99501, I presided over public hearings held under AS 44.62.210 for the purpose of taking testimony in connection with the adoption of changes to 20 AAC 25.025. Date: December 7, 2020 Subscribed and sworn to before me at Anchorage, Alaska on December 7, 2020. 01(i Q'4191MI zl-� N ry P li n and for the State of Alaska ALASKA OIL AND GAS CONSERVATION COMMISSION HEARING December 2, 2020 Excerpt From Unapproved Minutes Chair, Commissioner Jeremy M. Price moved and Commissioner Jessie L. Chmielowski seconded the following motion: "I move to adopt 20 AAC 25.025 as written in November 4, 2020, draft regulation." The motion carried unanimously. AFFIDAVIT OF COMMISSION ACTION I, Jody J. Colombie, Special Assistant, for the Alaska Oil and Gas Conservation Commission, being duly sworn, state the following: The attached motion was passed by the Alaska Oil and Gas Conservation Commission during its December 2, 2020 meeting. Date: December 7, 2020 J y J C mbie, AOGC pecial Assistant Subscribed and sworn to before me at Anchorage, Alaska on December 7, 2020. Notary Public in and for the ate of Alaska AOGCC 11/4/20201TMO: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of ) Adopt changes in Title 25, ) Chapter 25 of the Alaska ) Administrative Code. ) Docket No. R20001 PUBLIC HEARING November 4, 2020 Anchorage, Alaska 10:01 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: sahileGgci.net AOGCC 1 I A120201TMO: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chairman Price 03 3 Testimony by Ms. Pease 06 4 5 6 7 8 9 10 11 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: sahileGgci.net AOGCC 11 ,4i2020ITM0: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 Page 3 1 P R O C E E D I N G S 2 (On record - 10:01 a.m.) 3 CHAIRMAN PRICE: Good morning. I'll call this 4 hearing to order, the time is 10:01. This is a public 5 hearing to consider proposed regulations -- I'm sorry, 6 changes to our proposed bonding regulations. This 7 hearing is being held on Wednesday, November 4th, 2020 8 at 10:00 a.m. We're located at the office of the 9 Alaska Oil and Gas Conservation Commission at 333 West 10 Seventh Avenue, Anchorage, Alaska. 11 Before we begin I'll introduce the 12 Commissioners, and joining me today are Commissioner 13 Dan Seamount as well as Commissioner Jessie 14 Chmielowski. I am Chair and Commissioner Jeremy Price. 15 If any persons here or on the phone need 16 special accommodations to participate in these 17 proceedings, please speak to Jody Colombie and she will 18 do her best to accommodate you. She may be reached at 19 (907) 793-1221. 20 Computer Matrix will be recording the hearing 21 today. Upon completion and preparation of the 22 transcript, persons desiring a copy will be able to 23 obtain it by contacting Computer Matrix. 24 This hearing is being held in accordance with 25 Alaska Statute 44.62 and 20 AAC 25.540 of the Alaska Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile�jn gci.net AOGCC 11 /4i2020ITM0: ADOPT CHANGES 1N TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 1 Administrative Code. Page 4 1 2 Today the Alaska Oil and Gas Conservation 3 Commission proposes to adopt changes in Title 25, 4 Chapter 25 of the Alaska Administrative Code. The 5 notice of this hearing was published in the Anchorage 6 Daily News on October 18th, 2020. It was also posted 7 on the State of Alaska online notices website as well 8 as the AOGCC's website. If you'd like a copy of the 9 proposed regulation, please contact Jody Colombie. 10 When considering factual, substantive and other 11 relevant matter, the Agency shall pay special attention 12 to the cost to private persons of the proposed 13 regulatory action. The Docket No. R20001. 14 The AOGCC proposes to adopt regulation changes 15 in 20 AAC 25.025 of the Alaska Administrative Code 16 dealing with bonding including the following: 17 20 AAC 25.025 is proposed to be amended to 18 modify the number of permitted wellheads bond amount 19 table in order to put things more clearly. We have 20 proposed to modifying the table found in 25.025 in a 21 way that smooths out the transitions between brackets 22 on the low end. The proposed regulation also allows 23 for reduction in the requisite bond amount if an 24 operator demonstrates that it has a bond in place with 25 the land owner dedicated exclusively to the plugging Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2, Anch. AK 99501 Fax: 907-243-1473 Email: sahile(agci.net AOGCC 1 li4%2020ITMO: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 Page 5 1 1 and abandonment of a well or wells. Finally, the 2 proposed change increases the number of annual 3 installments which an operator must pay from four years 4 to seven years. 5 The AOGCC held the first hearing on this matter 6 on September 1st, 2020 and since then has revised that 7 version of the draft bonding regulation. 8 While we will be accepting public testimony 9 today, please note that the comment period does not 10 close at the conclusion of today's proceeding. Public 11 comments may be submitted until November 20th, 2020. 12 Do we have any comments from Commissioners at 13 this point. 14 COMMISSIONER SEAMOUNT: I have none. 15 COMMISSIONER CHMIELOWSKI: I have none. 16 CHAIRMAN PRICE: Okay. I have on the list that 17 we have one person that's indicated interest in 18 testifying, Mary Ann Pease. Is there anyone else on 19 the phone that wishes to testify at today's hearing. 20 (No comments) 21 CHAIRMAN PRICE: Okay. As I said previously, 22 we'll obviously allow written comments up until 23 November 20th. Please contact Jody if you have any 24 questions. Any oral testimony given today needs to be 25 relevant to the topic of the draft regulation. I think Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahiloogo.net AOGCC 1 Ii4i2020ITMO: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 1 we can jump into it. Page 6 1 2 Mary Ann, just speak clearly so the court 3 reporter can hear you -- sorry, I should call you, Ms. 4 Pease -- please speak clearly so the court reporter can 5 hear you, and, Nickelle, just jump in if you can't -- 6 if you're having trouble hearing. 7 Ms. Pease, please, go ahead with your 8 testimony. 9 MS. PEASE: Yes, thank you very much, Chairman 10 Price and Commissioners of AOGCC and Staff. As a 11 followup to our November 2nd, 2020 letter that we sent 12 to the Commission, Furie Operating Alaska has reviewed 13 the revised bonding requirement proposed by the 14 Commission. We're supportive of the increase in 15 payment installations from four to seven years outlined 16 under 20 AAC 25.025(b)(1). We also are very supportive 17 of the new language that was added that addresses 18 additional security, that is, dedicated to the plugging 19 and abandonment of wells or wells in place with each 20 land owner. We fell that that is a very important 21 added language because during these challenging 22 economic times we support the Commission's efforts to 23 reduce redundant bonding requirements and the undue 24 financial burdens that will result on small independent 25 operators in the Cook Inlet. Ensuring that we have Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(a,gci.net AOGCC 1 1 /4/20201TM0: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 Page 7 1 1 that continued investment and vibrant production from 2 Cook Inlet will allow the Railbelt utilities and of the 3 Interior to provide reliable energy for our sustainable 4 economy. 5 And, again, we thank the Commissioners and we 6 request that the Commission approve their revised 7 requirements and look at our letter that clearly 8 identifies existing bonding requirements and other 9 securities that we believe that are in place. 10 Thank you, very much Commission for your time 11 today. Again, this is Mary Ann Pease, and I'm speaking 12 on behalf of Furie Operating Alaska. 13 CHAIRMAN PRICE: Thank you, Ms. Pease. And we 14 do have the written comments that were submitted, as 15 well now as your oral testimony today. Appreciate 16 those comments. Do we have any other comments from the 17 public today. 18 (No comments) 19 CHAIRMAN PRICE: Hearing none, do we have any 20 closing comments from Commissioners. 21 COMMISSIONER SEAMOUNT: I have none, and, thank 22 you, Ms. Pease. 23 CHAIRMAN PRICE: In that case, at this point 24 it's 10:08, we will close this hearing, this hearing is 25 adjourned. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste, 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile(agci.net AOGC'C 1 1 /4,120201TMO: ADOPT CHANGES IN TITLE 25 CHAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 Page 8 1 (Adjourned - 10:08 a.m.) 2 (END OF PROCEEDINGS) 3 4 5 6 7 8 9 10 11 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: sahile(a gci.net AOGCC 11 /4%20201TMO: ADOPT CHANGES IN TITLE 25 CIIAPTER 25 OF THE ALASKA ADMIN CODE Docket No. R20001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 9 1 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 09 are a true, accurate, and complete transcript of proceedings IN RE: Docket No. R20001, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahilc@gci.net STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: R-20-001 November 4, 2020 at 10:00 am NAME AFFILIATION Testify (yes or no) i L kS; 1 V 0( UL CGZ 1 Y"C c-mil L r IjCt iOn::::o�0000 FQR 1,g ALASK November 2, 2020 Commissioner Jeremy Price, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Re: FURZE Operating Aiaska, LLC (FURit)''s comments on amendments to 20 AAC 25.025(b)(1) revised bonding requirements. Dear Commissioner Price: FURIE Operating Alaska has reviewed the revised bonding requirements proposed by the Commission and are supportive of the increase in payment installments from four (4) to seven (7) years. FURIE also agrees with the nominal reduction in bonding requirements for 7 wells from $2.8 million to $2.5 million; however, we still feel that this level of bonding is counterproductive to exploration and development in the Cook Inlet during these economically distressed times. In light of recent discussions on the KLU with AOGCC staff, we are pursuing confirmation that FURIE should be bonding on only the 4 producing wells identified in the table below. The remaining wells have been suspended or are currently awaiting AOGCC's final determination that they have been properly suspended and will not fall under the bonding requirements. Well Name current Status API 9 KLU A-4 Producer 50.733-20682-00.00 KLUA-IA Producer 50.733-20655-01.00 KW A-1 Producer 50.733.20656-00-00 KW 3 Producer 50-733.20620-00-00 KLU 4 50.733.20616-00.00 KW 2A 50.733-I0603-01-00 KLU 1 50.733-2059340.00 KLUA-2 P&A 50.733-20655.00-00 KLU 5 PLA 50.733-206324)0-00 KW 2 P&A 50.733-20603.004)0 Page 11 Furie Operating Alaska, LLC 1 188 W Northern Lights Blvd, Suite 620, Anchorage, AK 99503 1907.277.3726 F U R, E We are requesting a revision to our bonding requirements as follows based on 4 wells: 7 year true up conversion Date Payment Total Bonding remaining true up Starting $ 200,000 $ 200,000 $ 1,400,000 Aug-19 $ 650,000 $ 850,000 $ 750,000 Aug-20 $ 121,565 $ 992,177 $ 607,823 Aug-21 $ 121,565 $ 1,113,742 $ 486,258 Aug-22 $ 121,565 $ 1,235,307 $ 364,693 Aug-23 $ 121,565 $ 1,356,872 $ 243,128 Aug-24 $ 121,565 $ 1,478,437 $ 121,563 Aug-25 $ 121,563 $ 1,600,000 $ - FURIE/HEX Cook Inlet LLC ("HEX") further submits the following table (based on 4 wells) and supplemental documents in support of this October 30, 2020 Request for Reduction of the AOGCC Bonding Obligation. This table shows the reduced amount based on existing security already in place at DNR and in the DR&R fund. 7 year true up ( including $SOOk DNR Bond + % of DR&R ) Date Payment Total Bonding remaining true up Starting $ 200,000 $ 200,000 $ 1,400,000 Aug-19 $ 650,000 $ 850,000 $ 150,000 Aug-20 $ 25,000 $ 875,000 $ 125,000 Aug-21 $ 25,000 $ 900,000 $ 100,000 Aug-22 $ 25,000 $ 925,000 $ 75,000 Aug-23 $ 25,000 $ 950,000 $ 50,000 Aug-24 $ 25,000 $ 975,000 $ 25,000 Aug-25 $ 25,000 $ 1,000,000 $ - The following Bonds/CDs are in place for FURIE Operating Alaska LLC and total over $1.7 million in financial commitments, including a sinking fund that is paid to DNR on a monthly basis based on current gas production for the eventual P&A liability of the KLU. Page 12 Furie Operating Alaska, LLC 1 188 W Northern Lights Blvd, Suite 620, Anchorage, AK 99503 1907.277.3726 100, F� Uf tlj t �lC� ALA -Y ^ I LC Type of Bond Agency AOGCC AOGCC Blanket Well Bond Statewide Oil and Gas Bond Pipeline DR&R Pipeline Survey DNR P&A Agreement* TOTAL AOGCC SOA,DNR SOA, Div of Mining, Land and Water SOA, Div of Mining, Land and Water % of DR&R sinking fund Amount $650,000 $200,000 $500,000 $228,375 $ 50,000 $ 100,000 $1,728,375 *Monthly deposit to DNR based on actual production - % dedicated to DR&R of wells FURIE Operating supports the addition of section (B) identified below and in particular the "security that is exclusively dedicated to the plugging and abandonment of wells." "20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that (A) engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of a well or wells is in place with each landowner; or..." FURIE has a bond and financing plan in place with the State of Alaska/DNR dedicated to the plugging and abandonment obligations of FURZE. The amount of deposits into the DR&R sinking fund should also be considered as part of the "Security" that is place as identified under the new regulations, 20AAC 25.025(b)(3)(B). The HEX team continues to demonstrate a commitment to the State, hiring Alaskans and operating in a prudent and responsible manner. During these challenging economic times, we support the Commission's effort to reduce redundant bonding requirements and undue financial burdens on small independent operators in the Cook Inlet. Ensuring continued investment and production from Cook Inlet will allow the Railbelt Utilities and the Interior to provide reliable energy for a sustainable economy. Page (3 Furie Operating Alaska, LLC 1 188 W Northern Lights Blvd, Suite 620, Anchorage, AK 99503 1907.277.3726 ��O -,) F,,, R I E"" % . (Y. We request the Commission approve FURIE's revised Bonding requirements as outlined in this letter. Thank you for supporting the viability and sustainability of Cook Inlet producers. Sincerely, j� Rick Dusenbery Chief Operating Officer Furie Operating Alaska LLC/HEX Cook Inlet LLC Cc: Jessie Chmielowski, AOGCC Commissioner Dan Seamont, AOGCC Commissioner Jody Colombie, Special Assistant AOGCC Page 14 Furie Operating Alaska, LLC 1 188 W Northern Lights Blvd, Suite 620, Anchorage, AK 99503 1907.277.3726 (1) Oil Search November 20, 2020 Jody Colombie VIA EMAIL Alaska Oil and Gas Conservation Commission 333 West 71h Avenue Anchorage, AK 99501 aogcc.customer.svc(�alaska.gov Re: Notice of Proposed Changes on Bonding, 20 AAC 25.025 Dear Ms. Columbie, Oil Search (Alaska), LLC ("OSA") provides the following comments on the Alaska Oil and Gas Conservation Commission ("AOGCC") proposed modifications to the bonding regulations in 20 AAC 25.025. OSA appreciates the AOGCC's consideration of OSA's comments and the AOGCC's ongoing efforts to review and revise their regulations to be more streamlined. Oil Search Limited (Oil Search) was established in 1929 in Papua New Guinea. OSA, a subsidiary of Oil Search, was established in 2017 and began operating on the North Slope of Alaska in early 2018. OSA currently holds 432 leases on approximately 722,000 acres in Alaska and is the operator of the Pikka Unit, comprised of State of Alaska and Arctic Slope Regional Corporation leases. The Pikka Unit is located on State of Alaska and Kuukpik Corporation surface lands northeast of the community of Nuiqsut and east of the boundary of the NPR -A. As a lease holder and operator on the North Slope, OSA supports clear and reasonable bonding requirements. OSA provided comments to AOGCC's previously proposed changes to 20 AAC 25.025, in a letter dated October 16, 2018. In OSA's October 2018 comments, OSA recommended that AOGCC consider the following changes: • Clarify the State's expectations of operating companies regarding financial assurances; • Provide flexibility for individual companies to negotiate bonding structure that consider various factors; and • Eliminate duplicative bonding requirements where agencies have overlapping regulatory requirements. OSA is encouraged that AOGCC is proposing revisions that are consistent with changes suggested in OSA's October 2018 comments. Namely, OSA supports the proposed changes in 20 AAC 25.025(b)(3) to include a provision to increase or decrease a company's bonding obligation based on (A) engineering, geotechnical, environmental, or location conditions, (B) bond or other security required by a landowner, and (C) bonding or other security required by the U.S. Environmental Protection Agency to address disposal wells. These changes are aligned with OSA's previous recommendations. Oil Search (Alaska), LLC Anchorage office Tel: +1 907 375 4600 PO Box 240927 Fax: +1 907 375 4630 Anchorage, Alaska 99524-0927 www.oilsearch.com 4) Oil Search OSA appreciates the opportunity to engage in the public process and comment on the proposed regulation. OSA supports the revisions to 20 AAC 25.025 proposed by AOGCC. These changes will serve to reduce duplicative requirements and provide AOGCC the ability to negotiate reasonable and appropriate bonding requirements tailored to specific projects and activities. If you have any questions or clarifications, please do not hesitate to contact me at 907-375-4624, or by email at tim.iones(aoilsearch.com. Sincerely, t^m Tim Jones Oil Search (Alaska), LLC Land Manager 2 Alaska Oil and Gas Association A -A 121 W. Fireweed Lane, Suite 207 Anchorage, Alaska 99503-2035 Phone: (907) 272-1481 Email: bergt@aoga.org Patrick Bergt, Regulatory & Legal Affairs Manager November 20, 2020 VIA EMAIL: aogcc. customer. svcgalaska.gov Jeremy M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission 333 West 71h Avenue Anchorage, Alaska 99501 Re: Notice of Proposed Changes on Bonding in the Regulations of the AOGCC, Second Draft Dear Commissioner Price: The Alaska Oil and Gas Association (AOGA) is a professional trade association whose mission is to foster the long-term viability of the oil and gas industry for the benefit of all Alaskans. AOGA's membership includes 14 companies representing the industry in Alaska that have state and federal interests, both onshore and offshore. These comments are submitted on behalf of AOGA and its members in response to the Public Notice of Proposed Changes on Bonding in the Regulations of the Alaska Oil and Gas Conservation Commission (AOGCC), Second Draft (Second Draft), dated October 15, 2020. AOGA previously provided written comments on the first draft of the Notice of Changes on Bonding in the Regulations of the AOGCC (First Draft). AOGA's comments were submitted on September 10, 2020 and are incorporated by reference hereto. AOGA commends AOGCC for its efforts to update and modernize the bonding requirements in Alaska Administrative Code (AAC) 20 AAC 25.025 and supports the proposed changes in the Second Draft. Adding a category for 6-20 wells in the permitted wellheads bond amount table will work to increase opportunity in Alaska and, together with the proposed changes to the payment schedule, helps smaller operators shoulder financial burdens resulting from recent developments in the global oil and gas markets. AOGA also supports allowing for reductions in requisite bond amounts when an operator can demonstrate that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. However, AOGA suggests further modifying 20 AAC 25.025 to provide that the Commission can allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond, cash deposit, or other acceptable form of security in place with the landowner, or other affected party, dedicated exclusively to the plugging and abandonment of a well or wells. The additional changes help protect operators from duplicative bonding requirements and accomplishes the intent of the regulation (to cover the financial burden or costs of plugging or abandoning a well). Commissioner Jeremy Price November 20, 2020 Page 2 As stated above, AOGA supports the proposed changes in the regulations as provided for in the Second Draft. AOGA believes that the proposed changes work to modernize and make more efficient bonding regulations, creating a more competitive environment for smaller operators in Alaska. We look forward to working with the AOGCC and are available to answer any questions it might have regarding the comments in this letter. Please do not hesitate to contact me should the need arise. Sincerely, PATRICK N. BERGT Regulatory and Legal Affairs Manager DocuSign Envelope ID: 5FC50505-901D-4247-A1B3-02D4DFD29AC7 �Imarroq Resources, LLC November 19, 2020 Alaska Oil and Gas Conservation Commission Jeremy M. Price, Chair, Commissioner 333 West 7t" Avenue Anchorage, Alaska 99501 RE: 20 AAC 25.025 Proposed changes dealing with Bonding Dear Commissioner Price, Amaroq Resources, LLC ("Amaroq") offers the following comments in response to the NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF THE ALAKSA OIL AND GAS CONSERVATION COMMISSION issued October 15, 2020. Amaroq continues to be supportive of AOGCC's efforts to adopt regulations on bonding that give consideration to unique circumstances facing each operator. However, the proposed revised wording continues to fail to recognize a State of Alaska Department of Natural Resources Dismantlement, Removal and Restoration Agreement (DR&R) that requires an operator to fund the estimated well plugging and abandonment (P&A) costs in addition to surface reclamation costs. We implore the Commission to find a way to coordinate its bonding requirements with the DNR in such a way as to avoid duplicative financial coverage for plugging and abandonment. Increasing the annual installments from 4 years to 7 years is a positive step; however, the benefit to Amaroq is marginal given the $500,000 minimum for the first installment. Amaroq's ability to make the first installment would be questionable. Thank you for the opportunity to provide comments. Sincerely, —DocuSigned by: G. Saff P G.FS�cott'VOf= President Amaroq Resources, LLC xc: Jessie Chmielowski - Commissioner Dan Seamount - Commissioner Jody Colombie - AOGCC Special Assistant 4665 Sweetwater Blvd., Suite 103 • Sugar Land, Texas 77479 0 (832) 999-4603 STATE OF ALASKA ADVERTISING `A ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVITOF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. .ADVERTISING ORDER NUMBER AO-08-21-011 FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O. 10/15/2020 AGENCY PHONE: (907) 279-1433 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907) 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: LEGAL DISPLAY CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE Bonding Regulations Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Page I of 1 Total of All Pa es $ REF Type Number Amount Date Comments I PvN VCO21795 2 Ao AO-08-21-011 4 FYN AMOUNT SV Act. Template PGM LGR Object FY DIST LIQ 1 21 AOGCC 3046 21 2 3 4 5 Purchasing Authority Name: Title: Jody J. Colombie Special Assistant Purchasing Authority's Signature Telephone Number 1. A.O. # and receiving agency name must appear on all invoices and documents relating to this purchase. 2. The state is registered for tax free transactions under Chapter32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for resale. DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving' Form:02-901 Revised: 10/15/2020 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 #: W0018541 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Misa being first duly sworn on oath deposes and says that she is a representative of the An- chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the afore- said place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 10/18/2020 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 indidduals. Si aned Subscribed and sworn to before me this 1 Oth day of December 2020. FF,- 0 _t7-�-yy`?��1 i rs 'tary Public in and for he State of Alaska. ' > Q -a Third Division ` 1C` C W Anchorage, Alaska Z F A� �l/ MY CO MISS N EXPIRES C3 N A Cost: $916.34 NOTICE OF PROPOSED CNANGEC ON BONDING IN THE REGULATION5OFA a A OIL AND GAS CQUEBMAIDN COMMISSION The Alaska fill and Gas Conservation Commission Proposes tO adopt regulation changes In 20 AAC 25.025 of the Alaska Administrative Code, dealing with Ronding, Including the following. 20 AAC 25.045 Is proposed to be amended to modify the number of permitted wellheads bond amount table and allow a retluctlon In the reyyulsite bond amount If an operator demonstrates that It has a bond In place with the landowner dedicated excluslvely to the plugging and abandonment of a well or wells. In addition, the proposed change Increases the number of annual Installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, Including the potential costs to pprivate persons of complying with the proposed changes, by submitting wtitten comments to IOtly Colomble at 333 West 7th Venue, Anchorage, Alaska 9 501. Addhl.raZ the Alaska Off and Gas Conservation Commisslon will accept comments by facsimile at (907) 276-7542 and by electronic mall at aogcc. custOmer.svc®alaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice 0n the system and using the comment Ilnk. The comments must be received not later than 4:30 p.m. on November 20, 2020. The hearing is scheduled for November 4, 2020 at 10'00 a.m. at 333 W. 7th Avenue, Anchoragge, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those tlesirin to Participate or be present at the hearing should check with AOGCC after October 25, 2020 to ascertain the hearing will be telephonic. If the hearing Is telephonic, on the tlay of the hearing, those desiring to be present or participate should call 1.800-315-6338 and, when Ins[mcted to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depentling on call volume. those calling In may need to make repeated attempts before getting through. Written comments also may be submittetl at the November 4, 2020 hearing. The hearing Is scheduled from 10:00 a.m. to 2:00 p.m. antl might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disabillry who needs a special accommodation In order to participate In this process, please contact lotly Colomble at jody.colomble®alaska.gov or mailingg 333 west 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221 not later than October 30, 2020 [o ensure that any necessary accommodation can be provided. A copy of the Proposyed regulation changes Is available on the Alaska Online Public Notice System Ave a �Aachorage, Alaska 99501 orrcalling (90O11793 1221Conservatlon Commission at 333 west 7th After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the 4roposed regulation changes or other provisions dealing with the same sublet[, without further not ce, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment dudng the time allowed If your Interests could be affected. Statutory authority: AS 31.05.030 Statutes being Implemented Interpreted or made specific: AS 31.05.030 Fiscal Information: The proposed regulation changes are not expected to require an Increased appropriation. The Alaska Oil and Gas Conservation Commission keeps a list of Individuals and organizations Interested In Its regulations. Those on the list will automatically be sent a copy of all the Alaska fill and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the Ilst, send a request to the Alaska Oil and Gas Conservation Commission at JoW.colomble® alaska.gov, giving your name, and either your emall address or mailing address, as you prefior receiving notices. Date: October 15 2020 //signature on file// Jeremy M. Price, Chair, Commissioner Alaska OII and Gas Conservation Commission ADDITIONAL REGULATION NOTICE INFORMATION (As 44.62.19O(9)) 1. Adopting agencY: Alaska Oil and Gas Conservation Commission 2. General sub Jectofregulatlon: Bonding 3. Cltatlon of regulation (may be grouped): 20 AAC.25.O25 4. Department of law file number, If any: 5. Reason for the proposed action: ( ) Compllance with fetleral law ( 1 Compllance with new or changed state statute ( ) Compllance with court order ( ) Development Of program standards (x) Other (Identify): Development of Program 6. Approprlatlon/Allocation: Alaska Oil and Gas Conservation Commission Alaska OII and Gas Co servatll�on Commisslon 7. Cost of Implementation to the state agency and available funding (in thousands of dollars): Initial Year Subsequent FY2O21 Years Operating Cost $0 $0 Capital Cost $0 $0 1002 Federal receipts $0 $0 1003 Geneml fund match $0 sO 1004 Geneml fund so so 1005 General fund/ program $0 sO Other (Identify) sO $0 8. The name of the contact person for the regulation: Name: Jody Colomble Title: Spec al As—( slst�a t[o the Commisslon Address: 33 We5S 7�h Avenue AnC ¢ AK 99501 Telephone: 9 7 1 E-mall address' o co Om le@alaska.gov 9. The origin of the proposed action: _x_ Staff of state agency Federal government _ General public _ Petition for regulation change Other (identify) 10. Date: ton 5/2020 Prepared by: //signature on file// Name: Jody 1. Colomble Titre: Special Assistant to the Commisslon Telephone: (907) 793-1221 Published: October 18, 2020 NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF ALASKA OIL AND GAS CONSERVATION COMMISSION The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to modify the number of permitted wellheads bond amount table and allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Jody Colombie at 333 West 7"' Avenue, Anchorage, Alaska 99501. Additionally, the Alaska Oil and Gas Conservation Commission will accept comments by facsimile at (907) 276-7542 and by electronic mail at aogcc.customer. svcgalaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on November 20, 2020. The hearing is scheduled for November 4, 2020 at 10:00 a.m. at 333 W. 71h Avenue, Anchorage, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC after October 25, 2020 to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800-315-6338 and, when instructed to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. Written comments also may be submitted at the November 4, 2020 hearing. The hearing is scheduled from 10:00 a.m. to 2:00 p.m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Jody Colombie at iody.colombie@alaska.gov or mailing 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221 not later than October 30, 2020 to ensure that any necessary accommodation can be provided. A copy of the proposed regulation changes is available on the Alaska Online Public Notice System and by contacting Jody Colombie at the Alaska Oil and Gas Conservation Commission at 333 West 71h Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221. After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed if your interests could be affected. Statutory authority: AS 31.05.030 Statutes being implemented, interpreted, or made specific: AS 31.05.030 Fiscal information: The proposed regulation changes are not expected to require an increased appropriation. The Alaska Oil and Gas Conservation Commission keeps a list of individuals and organizations interested in its regulations. Those on the list will automatically be sent a copy of all the Alaska Oil and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the list, send a request to the Alaska Oil and Gas Conservation Commission at jody.colombie@alaska.gov, giving your name, and either your email address or mailing address, as you prefer receiving notices. Date: October 15, 2020 //signature on file// Jeremy M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission ADDITIONAL REGULATION NOTICE INFORMATION (AS 44.62.190(g)) 1. Adopting agency: Alaska Oil and Gas Conservation Commission 2. General subject of regulation: Bonding 3. Citation of regulation (may be grouped): 20 AAC.25.025 4. Department of Law file number, if any: 5. Reason for the proposed action: ( ) Compliance with federal law ( ) Compliance with new or changed state statute ( ) Compliance with court order ( ) Development of program standards (X) Other (identify): Development of Program. 6. Appropriation/Allocation: Alaska Oil and Gas Conservation Commission/Alaska Oil and Gas Conservation Commission 7. Cost of implementation to the state agency and available funding (in thousands of dollars): Operating Cost Capital Cost Initial Year Subsequent FY2021 Years $0 $0 $0 $0 1002 Federal receipts $0 $0 1003 General fund match $0 $0 1004 General fund $0 $0 1005 General fund/ program $0 $0 Other (identify) $0 $0 8. The name of the contact person for the regulation: Name: Jodv Colombie Title: Special Assistant to the Commission Address: 333 West 7I" Avenue, Anchorage, AK 99501 Telephone: (907) 793-1221 E-mail address: jody.colombiegalaska.gov 9. The origin of the proposed action: X Staff of state agency Federal government General public Petition for regulation change Other (identify) 10. Date: 10/15/2020 Prepared by: //signature on file// Name: Jody J. Colombie Title: Special Assistant to the Commission Telephone: (907) 793-1221 Register 2020 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(1) is amended to read: (1) a bond, and if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount 1-5 wells $400,000 per well 6-20 wells $2,000,000 plus an additional $250,000 per well for each well above 5 (e.g. the bond for an operator with 8 wells would be $2,750,000 f$2 million for the first five wells plus $250,000 per well for wells 6 through 81) 21-40 wells $6,000,000 [1-10 wells $400,000 per well 11-40 wells $6,000,000] 4 1 -100 wells $10,000,000 101-1,000 wells $20,000,000 Over 1,000 wells $30,000,000 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts; (B) a bond and, if required, security that is exclusively dedicated to the plugging and abandonment of a well or wells is in place with each landowner; or Register 2020 MISCELLANEOUS BOARDS (C) a bond and, if required, security that is in place with the United States Environmental Protection Agency dedicated to the plugging and abandonment of Underground Iniection Control permitted Class I disposal wells. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding, rounded up to the nearest thousand, and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and (3) the final seventh installment is due on August 16 of the year following the sixth installment and must be in the amount of the difference between the operator's existing level of bonding, rounded up to the nearest thousand, and, if required, security and the level required under (b) of this section [THE THIRD INSTALLMENT IS DUE AUGUST Register 2020 MISCELLANEOUS BOARDS 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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am / / , Register ) Authority: AS 31.05.030 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Friday, October 16, 2020 7:21 AM To: Pollard, Susan R (LAW); Anderson, Julie B (CED) Subject: AOGCC 2nd Draft Bonding Regulations Attachments: Public Notice Additional Info - Second Notice.pdf; 20 AAC 25 025 Second version regulation Bonding.pdf From: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Sent: Friday, October 16, 2020 7:17 AM To: Begich, Thomas S (LEG) <senator.tom.begich@akleg.gov>; Bishop, Click (LEG)<senator.click.bishop@akleg.gov>; Carpenter, Benjamin E (LEG) <Rep.Ben.Carpenter@akleg.gov>; Claman, Matt (LEG) <representative.matt.claman@akleg.gov>; Coghill, John (LEG) <senator.john.coghill@akleg.gov>; Costello, Mia C (LEG) <senator.mia.costello@akleg.gov>; Drummond, Harriet A (LEG) <representative.harriet.drummond@akleg.gov>; Eastman, David C (LEG) <representative.david.eastman@akleg.gov>; Edgmon, Bryce E (LEG) <representative.bryce.edgmon@akleg.gov>; Fields, Zack (LEG) <rep.zack.fields@akleg.gov>; Foster, Neal W (LEG) <representative.neaLfoster@akleg.gov>; Giessel, Cathy (LEG) <senator.cathy.giessel@akleg.gov>; Gillis, Bias M (LEG) <rep.mel.gillis@akleg.gov>; Gray -Jackson, Elvi (LEG) <Sen.Elvi.Gray-Jackson@akleg.gov>; Hannan, Sara (LEG) <Rep.Sara.Hannan@akleg.gov>; Hoffman, Lyman F (LEG) <senator.lyman.hoffman@akleg.gov>; Hopkins, Grier (LEG) <rep.grier.hopkins@akleg.gov>; Hughes, Shelley <senator.shelley.highes@akleg.gov>; Jackson, Sharon D (LEG) <Rep.Sharon.Jackson@akleg.gov>; Jennifer Johnston <rep.jennifer.johnston@akleg.gov>; Johnson, Delena (LEG) <Representative. De Lena.Johnson@akleg.gov>; Josephson, Andrew L (LEG) <Rep.Andy.Josephson@akleg.gov>; Kawasaki, Scott 1w (LEG) <sen.scott.kawasaki@akleg.gov>; Kiehl, Jesse W (LEG) <sen.jesse.kiehl@akleg.gov>; Knopp, Gary <representative.gary.knopp@akleg.gov>; Kopp, Charles M (LEG) <representative.chuck.kopp@akleg.gov>; Kreiss- Tomkins, Jonathan S (LEG) <representative.jonathan.kreiss-tomkins@akleg.gov>; Lebon, Barton (LEG) <Rep.Bart.Lebon@akleg.gov>; Ledoux, Gabrielle R (LEG) <representative.gabrielle. led oux@akleg.gov>; Lincoln, John F (LEG) <rep.john.lincoln@akleg.gov>; Merrick, Kelly Richards (LEG) <rep.kelly.merrick@akleg.gov>; Micciche, Peter A (LEG) <senator.peter.micciche@akleg.gov>; Mike Shower<Senator.Mike.shower@akleg.gov>; Von Imhof, Natasha A (LEG) <senator.natasha.vonimhof@akleg.gov>; Neuman, Mark A (LEG) <representative.mark.neuman@akleg.gov>; Olson, Donny (LEG)<senator.donny.olson@akleg.gov>; Ortiz, Dan (LEG) <representative.daniel.ortiz@akleg.gov>; Prax, Glenn M (LEG) <rep.mike.prax@akleg.gov>; Pruitt, Lance (LEG) < representative. lance. pruitt@akleg.gov>; Rasmussen, Sara (LEG) <Rep.Sara.Rasmussen@akleg.gov>; Rauscher, George (LEG) <representative.george.rauscher@akleg.gov>; Reinbold, Lora (LEG) <Sen.Lora. Rein bold @akleg.gov>; Revak, Joshua (LEG) <Sen.Joshua.Revak@akleg.gov>; Shaw, Laddie (LEG) <rep.laddie.shaw@akleg.gov>; Spohnholz, Ivy A (LEG) <representative.ivy.spohnholz@akleg.gov>; Stedman, Bert K (LEG) <senator.bert.stedman@akleg.gov>; Stevens, Gary L (LEG) <senator.gary.stevens@akleg.gov>; Story, Andrea (LEG) <Rep.Andi.Story@akleg.gov>; Stutes, Louise B (LEG)<representative.louise.stutes@akleg.gov>; Sullivan -Leonard, Colleen (LEG) <representative.colleen.sullivan-leonard@akleg.gov>; Talerico, David M (LEG) <representative.david.talerico@akleg.gov>; Tarr, Geran L (LEG) <representative.geran.tarr@akleg.gov>; Thompson, Steve (LEG) <representative.steve.thompson@akleg.gov>; Tiffany Zulkosky <representative.tiffany.zulkosky@akleg.gov>; Tilton, Cathy (LEG) <representative.cathy.tiIto n@akleg.gov>; Tuck, Christopher (LEG) <representative.chris.tuck@akleg.gov>; Vance, Sarah (LEG) <Rep.Sarah.Vance@akleg.gov>; Wielechowski, Bill (LEG)<senator.bill.wielechowski@akleg.gov>; Wilson, David S (LEG) <senator.david.wilson@akleg.gov>; Wool, Adam L (LEG) <representative.adam.wool@akleg.gov> Cc: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: AOGCC 2nd Draft Bonding Regulations Please see attached. The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to modify the number of permitted wellheads bond amount table and allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. List Name: AOGCC Public Notices@list.state.ak.us You subscribed as:.*ody.colombie@alaska.gov Unsubscribe at: http://list.state.ak.us/mailman/options/aogcc public notices/iody.colombie%40alaska.gov 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 AOGCC 9/l /2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Proposed Changes to ) 20 AAC 25.025 Regarding Bonding. ) Docket No.: R-20-001 PUBLIC HEARING September 1, 2020 10:00 a.m. Anchorage, Alaska 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 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Chmielowski 03 3 Testimony by Mr. White 06 4 5 6 7 8 9 10 11 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: sahile@gci.net AOGCC 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 3 1 1 P R O C E E D I N G S 2 (On record - 10:04 a.m.) 3 COMMISSIONER CHMIELOWSKI: Good morning. I 4 will call this meeting to order. This is a public 5 hearing to consider a proposed regulation. This 6 hearing is being held on Tuesday, September 1st, 2020 7 at 10:00 o'clock a.m. We are located at the office of 8 the Alaska Oil and Gas Conservation Commission at 333 9 West 7th Avenue, Anchorage, Alaska. Before we begin 10 I'll introduce the Commissioners. Commissioner Dan 11 Seamount is to my left, Commissioner Jeremy Price is 12 participating telephonically and I am Commissioner 13 Jessie Chmielowski. 14 If any persons here or on the phone needs 15 special accommodations to participate in these 16 proceedings please speak to Samantha Carlisle and she 17 will do her best to accommodate you. She may be 18 reached at 907-793-1223. 19 Computer Matrix will be recording the hearing. 20 Upon completion and preparation of the transcript 21 persons desiring a copy will be able to obtain it by 22 contacting Computer Matrix. Our court reporter today 23 is Nickelle. 24 This hearing is being held in accordance with 25 AS 44.62 and 20 AAC 25.540 of the Alaska Administrative Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 4 1 Code. Today the Alaska Oil and Gas Conservation 2 Commission proposes to adopt changes in Title 20, 3 Chapter 25, of the Alaska Administrative Code. The 4 notice of this hearing was published in the Anchorage 5 Daily News on August 5th, 2020. It was also posted on 6 the State of Alaska Online Notices website and AOGCC's 7 website. 8 If you would like a copy of the proposed 9 regulation please contact Jodie Colombie at 907-793- 10 1221. 11 When considering factual, substantive and other 12 relevant matter the agency shall pay special attention 13 to the cost to private persons of the proposed 14 regulatory action. 15 Docket number R-20-001. The AOGCC proposes to 16 adopt regulation changes in 20 AAC 25.025 of the Alaska 17 Administrative Code dealing with bonding, including the 18 following. 20 AAC 25.025 is proposed to be amended to 19 allow a reduction in the requisite bond amount if an 20 operator demonstrates that it has a bond in place with 21 the landowner dedicated exclusively to the plugging and 22 abandonment of a well or wells. In addition the 23 proposed change increases the number of annual 24 installments which an operator must pay from four years 25 to seven years. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 5 1 1 While we will be accepting public testimony 2 today please note that the comment period does not 3 close at the conclusion of today's proceedings. Public 4 comments may be submitted until September 10th, 2020. 5 Now I would like to offer any member of the 6 public who wishes to do so an opportunity to speak. I 7 understand that Mr. James White and Maryann Pease have 8 indicated that they may wish to comment. Is there 9 anyone else participating telephonically who may wish 10 to comment? 11 (No comments) 12 COMMISSIONER CHMIELOWSKI: Mr. White and Ms. 13 Pease, do you plan to testify this morning? 14 MR. WHITE: Oh, I have a few words I would say, 15 yes. 16 COMMISSIONER CHMIELOWSKI: Okay. A few 17 housekeeping topics before we begin. A sign -in sheet 18 is being used to help format hearing testimony. 19 Individuals planning to testify, please be sure that 20 you have identified yourself and indicated that you 21 will be testifying. Your information will be added to 22 our sign -in sheet. Submitted written comments are 23 included in the record so there is no need to reiterate 24 your testimony, but you are welcome to do so. 25 Oral testimony must have relevance to the topic Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 6 1 of this draft regulation. I would like to remind those 2 that are testifying telephonically to speak clearly so 3 the court reporter can get a good recording. 4 Nickelle, if you have a difficult time hearing, 5 please speak up. 6 Those on the phone who are not testifying, 7 please keep your phone on mute. 8 Any comments from Commissioner Seamount? 9 COMMISSIONER SEAMOUNT: I have none. 10 COMMISSIONER CHMIELOWSKI: Any comments from 11 Commissioner Price? 12 CHAIRMAN PRICE: None for me. Thank you. 13 COMMISSIONER CHMIELOWSKI: Thank you. Mr. 14 White, please state your name and affiliation for the 15 record. 16 JAMES WHITE 17 called as a witness on his own behalf, testified as 18 follows on: 19 DIRECT EXAMINATION 20 MR. WHITE: My name is James White and I have 21 an operating company up there called Alaskan Crude 22 Corp. 23 My comments really tend to run towards the 24 homesteader that owns his minerals. And this bonding 25 set at exorbitant rates prohibits this homesteader 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 9/l /2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 Page 7 1 having the ability to develop his own property. 2 The homesteader received his deed of trust 3 saying that he owned the homestead and he also owned 4 the oil and gas below it. He obviously can't own that 5 oil and gas until he gets the oil to the surface. So 6 when the bonding requirement gets too high he can't -- 7 he's been deprived of the ability to exercise what he 8 paid for when he homesteaded that piece of ground to 9 start with. 10 So of course my plea to you guys is that in 11 you're -- making your decisions on this thing that you 12 at least give that some consideration in arriving at 13 your judgment. The homesteader feels like he got a raw 14 deal, he didn't get what he paid for. 15 But anyway that -- with that being said I yield 16 to the next speaker. 17 COMMISSIONER CHMIELOWSKI: Thank you, Mr. 18 White. Is there anything more? 19 MR. WHITE: Not at this point, no. 20 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 21 Ms. Maryann Pease, are you planning to testify this 22 morning? 23 MS. PEASE: Yes. Thank you very much. No, I 24 am not going to testify. I believe our written 25 comments to the Commission speak for themself in Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 9/l /2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 1 support of the proposed bonding regulation changes. 2 COMMISSIONER CHMIELOWSKI: Thank you. And can 3 you just please state your name and affiliation for the 4 record, Ms. Pease? 5 MS. PEASE: Maryann Pease and I am a consultant 6 for Fury Operating Alaska, LLC. 7 COMMISSIONER CHMIELOWSKI: Thank you very much. 8 Are there any others who would like to give testimony? 9 (No comments) 10 COMMISSIONER CHMIELOWSKI: Hearing none, are 11 there any comments from Commissioner Seamount? 12 COMMISSIONER SEAMOUNT: I have none. 13 COMMISSIONER CHMIELOWSKI: Any comments from 14 Commissioner Price? 15 CHAIRMAN PRICE: The only comment I would make 16 is that we've had a pretty small number of comments 17 under this so I personally hope to see more engagement 18 from the publisher at the 10th of September, but we'll 19 see what happens. 20 That's it. 21 COMMISSIONER CHMIELOWSKI: Thank you. Hearing 22 no other business, the time is 10:12 a.m. and this 23 hearing is adjourned. 24 (Hearing adjourned - 10:12 a.m.) 25 (END OF PROCEEDINGS) Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 9/l/2020 ITMO: PROPOSED CHANGES TO 20 AAC 25.025 Docket No. R-20-001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 9 1 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 09 are a true, accurate, and complete transcript of proceedings in Docket No.: R-20-001, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. .. , TAWTV Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: R-20-001 September 1, 2020 at 10:00 am NAME AFFILIATION Testify (yes or no) P*A@ -- 1 kS l '�d .A '*1Ammaroq Resources, LLC September 10, 2020 Alaska Oil and Gas Conservation Commission Jeremy M. Price, Chair, Commissioner 333 Vilest 71" Avenue Anchorage, Alaska 99501 RE: 20 AAC 25.025 Proposed changes dealing with Bonding Dear Commissioner Price, RECEIVED SEP 14 2o2o AOGCC Amaroq Resources, LLC ("Amaroq") offers the following comments in response to the NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF THE ALAKSA OIL AND CAS CONSERVATION COMMISSION issued August 4, 2020. Amaroq is supportive of AOGCC's efforts to adopt regulations on bonding that incorporate a global view and gives consideration to all factors that impact the specific circumstances facing each operator. It makes good sense to avoid imposing "duplicate bonding" on an operator if there is sufficient bonding in place with the landowner. However, the wording of any amendment should go further, and state that the AOGCC will also recognize a State of Alaska Department of Natural Resources Dismantlement, Remova', and Restoration Agreement (DR&R) that requires an operator to fund the estimated well plugging and abandonment (P&A) costs. The DR&R agreement is not a bond but it is an agreement that, in the case of Amaroq, requires the deposit of funds necessary to plug and abandon wells which serves the same purpose of a bond. Further, the DR&R requires AOGCC final approval prior to the final release of any residual DR&R funds. AOGCC maintains its regulatory responsibility because of its final approval. If AOGCC does not recognize DR&R agreements that include the funding for P&A, an operator continues to be faced with redundant coverage which makes no regulatory or rational sense. 4665 Sweetwater Blvd., Suite 103 0 Sugar Land, Texas 77479 0 (832) 999-4603 Increasing the annual. installments from 4years to7years isa positive step; however, Amaroq remains very concerned about the initial level of bonding required and the duplicate nature mfthe current regulatory requirements for this contingency. Arnanoqhas presented testimony to this commission evidencing significantly less P&Acosts per well than the newly established levels adopted by the AOGCC which are not based on the experienced P&/\costs per well. Thank y,--,u for the opportunity to provide comments. Sincerely, G.Scot Pfof —Pnesident xc:JessieChrnie|omski-Cornrnissioner QanSeanmount-Cornrnissioner Jody Co|mmobie'A0GCCSpecial Assistant 4665 Sweetwater 8lvd,Suite 1U3 0 Sugar Land, Texas 77479 0 (832)9994603 THE STATE °'ALASKA GOVERNOR MIC.HAEL ). DUNLEAVY September 10, 2020 Commissioner Jeremy Price, Chair Commissioner Jessie Chmielowski Commissioner Dan Seamount Alaska Oil & Gas Conservation Commission 333 7'b Ave Anchorage, AK 99501 Dej partment of Natural Resources DIVISION OF OIL & GAS 550 W 7th Avenue, Suite 1 100 Anchorage, Alaska 99501-3560 Main: 907.269.8800 Fax: 907.269.8939 1r EWNBUT". N RE: AOGCC Public Notice, Additional Information and Proposed Amended Bond Regulations Dear Commissioners Price, Chmielowski, & Seamount, Thank you for the opportunity to comment on the regulation changes proposed for 20 AAC 25.025. The Alaska Oil & Gas Conservation Commission (AOGCC) and Department of Natural Resources, Division of Oil & Gas (DNR/DOG) have common responsibilities and interests regarding the protection of State property when wells are abandoned. DNR/DOG requires operators on State land to have a $500,000 general liability bond. Additionally, DNR/DOG enters into a Financial Assurances Agreement (FAA) with each operator to provide funding for the dismantlement, removal, and restoration (DR&R) obligations once the facilities are no longer operated. DR&R obligations include wells, facilities, piping, roads, pads, and other appurtenances. The highest risk to the State is abandoned wells. Regarding DR&R expenditures, the priority for DNR/DOG will be to plug and abandon (P&A) wells. AOGCC amended regulation 20 AAC 25.025(b)(3) is proposed to read: (B) a bond, and, if required, security that is exclusively dedicated to the plugging and abandonment of a well or wells is in place with each. landowner. DNR/DOG requests this portion of the amendment be removed. Requiring a bond exclusively for P&A of a well or wells, may limit the amount of funding available for other DR&R costs. For example, if actual DR&R costs for P&A are less than the exclusively funded bond, the excess funds may not be available for other DR&R activities. DNR/DOG will track the P&A costs of DR&R so that it is noted as a component of the broader DR&R. Then assurances can be provided that the P&A costs are covered and accounted for, though it will have to be a part of the greater lump sum. It will not be a separate bond, but a component of the larger bonded amount. DNR/DOG is willing to prepare a Memorandum of Understanding with AOGCC for this purpose. Please contact me at 269-7493 or via email at tom.stokes@alaska.gov if you have any questions. Respectfully, Tom Stokes Director Alaska Oil and Gas Association 121 W. Fireweed Lane, Suite 207 Anchorage, Alaska 99503-2035 Phone: (907) 272-1481 Email: bergt@aoga.org Patrick Bergt, Regulatory & Legal Affairs Manager September 10, 2020 VIA EMAIL: aogcc.customer. svcAalaska.gov Jeremy M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission 333 West 71" Avenue Anchorage, Alaska 99501 Re: Notice of Proposed Changes on Bonding in the Regulations of the AOGCC Dear Commissioner Price: The Alaska Oil and Gas Association (AOGA) is a professional trade association whose mission is to foster the long-term viability of the oil and gas industry for the benefit of all Alaskans. AOGA's membership includes 14 companies representing the industry in Alaska that have state and federal interests, both onshore and offshore. These comments are submitted on behalf of AOGA and its members in response to the Public Notice of Proposed Changes on Bonding in the Regulations of the Alaska Oil and Gas Conservation Commission (Notice), dated August 4, 2020. AOGA commends the Alaska Oil and Gas Conservation Commission (AOGCC) for its work and, in general, supports the proposed changes to Alaska Administrative Code (AAC) 20 AAC 25.025 as provided for in its Notice. As a result of COVID-19, developments in the oil and gas markets over the past six months have been devastating, particularly here in Alaska. Although we can expect more tough days to come, the world will eventually bounce back. Alaska's oil and gas industry has the potential to play a significant role in our state's economy, and we should be doing all that we can do to position Alaska for a speedy recovery. To that end, AOGA suggests that AOGCC consider the following comments to the proposed regulation changes before their promulgation: The proposed changes increase the number of annual installment payments from four to seven years. Additional clarity is needed to understand what the installment structure would be for the increased number of years. There remains concern regarding the original bond amount table. The current structure puts substantial financial burden on smaller companies to increase their bond. For example, under the current structure, a company with one to 10 wells pays $400,000 per well while a company with 40 wells pays a total of $6,000,000 or about $150,000 per well. Adding additional categories to the well groupings would help smaller operators shoulder financial burdens and would provide more opportunity for work in Alaska. AOGA suggests reducing the number of wells for the first category to one to five wells (at $400,000 per well up to a maximum of $2,000,000), creating a second category for e�FURIE August 28, 2020 Commissioner Jeremy Price, Chairman Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 RECEIVE® AUG 3 1 2020 AOGCC Re: FURZE Operating Alaska, LLC comments on "New Proposed Bonding Regulations — AOGCC proposal to adopt regulation changes to 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding." Dear Commissioner Price: FURIE Operating Alaska, LLC (FURIE) has reviewed the proposed changes to existing bonding regulations. We are supportive of the changes being proposed to Alaska Administrative Code 20 AAC 25.025 contingent upon the consideration that they should take into account any financial security a company has on deposit, bonded or in a sinking fund with any state agency. We will be submitting under separate cover the final FURIE proposed bonding schedule that reflects the 7-year revised annual installments, as well as the sinking fund that has been established by FURIE with DNR for DR&R obligations. FURIE supports the proposed changes as discussed. We believe the Commission's effort to reduce redundant bonding requirements and undue financial burdens on small independent operators is necessary. Ensuring continued investment and production from Cook Inlet will allow the Railbelt Utilities and the Interior to provide reliable energy for a sustainable economy. We appreciate the Commission's efforts to eliminate redundant financial responsibility requirements that are currently required by multiple State agencies. Thank you for supporting the viability and sustainability of Cook Inlet producers. Sincerely, John L \Hendrix ,P,residen� & CEO FURIE Operating Alaska LLC Cc: Jessie Chmielowski, AOGCC Commissioner Dan Seamont, AOGCC Commissioner Jody Colombie, Special Assistant AOGCC Furie Operating Alaska, LLC 1 188 W Northern Lights Blvd, Suite 620, Anchorage, AK 99503 1907.277.3726 Colombie, Jody J (CED) From: AOGCC Cust Svc (CED sponsored) Sent: Tuesday, September 8, 2020 8:08 AM To: Colombie, Jody J (CED) Subject: FW: Bonding change comments From: Steve Sutherlin <stevepna@hotmail.com> Sent: Sunday, September 6, 2020 1:17 PM To: AOGCC Cust Svc (CED sponsored) <aogcc.customer.svc@alaska.gov> Subject: Bonding change comments I think mineral landowners drilling on federal homestead parcels should be exempt from AGOCC bonding requirements. Steve Sutherlin Action Associates -- SAA Post Office Box 112546 Anchorage, AK 99511-2546 cell 907)250-1533 STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVITOF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER A O-OQ-� A O 1-00c J FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O. 8/4/2020 AGENCY PHONE: (907) 279-1433 333 West 7th Avenue Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907) 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: WO LEGAL f— DISPLAY f` CLASSIFIED 1— OTHER (Specify below) DESCRIPTION PRICE R-20-001 Initials of who prepared AO: Alaska Non -Taxable 92-600185 SUBMIT INVOICE SHOWING ADVERTISING - ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO:. AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pa e I of I Total of All Pages $ REF Type Number Amount Date Comments I PVN VCO21795 2 Ao AO-08-21-005 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FY DIST LIQ 1 21 AOGCC 3046 21 2 3 4 5 Purchasing Authority Name: Title: Purchasing Authority's Signature Telephone Number 1. A.O. # and receiving agency name must appear on all invoices and documents relating to this purchase. 2. The slate is registered for tax free transactions under Chapter32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for resale. DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving' Form: 02-901 Revised: 8/4/2020 NOTICE OF PROPOSED CHANGES ON BONDING IN THE REGULATIONS OF ALASKA OIL AND GAS CONSERVATION COMMISSION The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Jody Colombie at 333 West 7th Avenue, Anchorage, Alaska 99501. Additionally, the Alaska Oil and Gas Conservation Commission will accept comments by facsimile at (907) 276-7542 and by electronic mail at aogcc. customer. svegalaska.gov. Comments may also be submitted through the Alaska Online Public Notice System, by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on September 10, 2020. The hearing is scheduled for September 1, 2020 at 10:00 a.m. at 333 W. 7th Avenue, Anchorage, Alaska, 99501. The COVID-19 virus may necessitate that the hearing be held telephonically. Those desiring to participate or be present at the hearing should check with AOGCC after August 25, 2020 to ascertain if the hearing will be telephonic. If the hearing is telephonic, on the day of the hearing, those desiring to be present or participate should call 1-800-315-6338 and, when instructed to do so, enter the code 14331. Because the hearing will start at 10:00 a.m., the phone lines will be available starting at 9:45 a.m. Depending on call volume, those calling in may need to make repeated attempts before getting through. Written comments also may be submitted at the September 1, 2020 hearing. The hearing is scheduled from 10:00 a.m. to 2:00 p.m. and might be extended to accommodate those present before 10:30 a.m. who did not have an opportunity to comment. If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Jody Colombie at jody.colombie@alaska.gov or mailing 333 West 7th Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221 not later than August 25, 2020 to ensure that any necessary accommodation can be provided. A copy of the proposed regulation changes is available on the Alaska Online Public Notice System and by contacting Jody Colombie at the Alaska Oil and Gas Conservation Commission at 333 West 71h Avenue, Anchorage, Alaska 99501 or calling (907) 793-1221. After the public comment period ends, the Alaska Oil and Gas Conservation Commission may either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed if your interests could be affected. Statutory authority: AS 31.05.030 Statutes being implemented, interpreted, or made specific: AS 31.05.030 Fiscal information: The proposed regulation changes are not expected to require an increased appropriation. The Alaska Oil and Gas Conservation Commission keeps a list of individuals and organizations interested in its regulations. Those on the list will automatically be sent a copy of all the Alaska Oil and Gas Conservation Commission notices of proposed regulation changes. To be added or removed from the list, send a request to the Alaska Oil and Gas Conservation Commission at jody.colombie@alaska.gov, giving your name, and either your email address or mailing address, as you prefer receiving notices. Date: August 4, 2020 //signature on file// Jeremy M. Price, Chair, Commissioner Alaska Oil and Gas Conservation Commission Register , 2020 MISCELLANEOUS BOARDS 20 AAC 25.025(b)(3) is amended to read: (3) upon request of an operator, or its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts, or (B) a bond and, if required, security that is exclusively dedicated to the Pluming and abandonment of a well or wells is in place with each landowner. 20 AAC 25.025(c) is amended to read: (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 seven [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 through sixth installments are due annually on August 16 of the five years following the first installment and must be a minimum of one -sixth of the difference between the operator's level of bonding and, if required, security after payment of the first installment and the level required under (b) of this section [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]; and Register , 2020 MISCELLANEOUS BOARDS (3) the final seventh installment is due on August 16 of the year following the sixth installment 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 [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]. (Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152; am 5/18/2019, Register 230; am / / , Register ) Authority: AS 31.05.030 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Tuesday, August 4, 2020 12:41 PM To: Anderson, Julie B (CED); Colombie, Jody J (CED); Begich, Thomas S (LEG); Bishop, Click (LEG); Carpenter, Benjamin E (LEG); Claman, Matt (LEG); Coghill, John (LEG); Costello, Mia C (LEG); Drummond, Harriet A (LEG); Eastman, David C (LEG); Edgmon, Bryce E (LEG); Fields, Zack (LEG); Foster, Neal W (LEG); Giessel, Cathy (LEG); Gillis, Bias M (LEG); Gray - Jackson, Elvi (LEG); Hannan, Sara (LEG); Hoffman, Lyman F (LEG); Hopkins, Grier (LEG); Hughes, Shelley; Jackson, Sharon D (LEG); Jennifer Johnston; Johnson, Delena (LEG); Josephson, Andrew L (LEG); Kawasaki, Scott Jw (LEG); Kiehl, Jesse W (LEG); Knopp, Gary A (LEG); Kopp, Charles M (LEG); Kreiss-Tomkins, Jonathan S (LEG); Lebon, Barton (LEG); Ledoux, Gabrielle R (LEG); Lincoln, John F (LEG); Merrick, Kelly Richards (LEG); Micciche, Peter A (LEG); Mike Shower; Von Imhof, Natasha A (LEG); Neuman, Mark A (LEG); Olson, Donny (LEG); Ortiz, Dan (LEG); Prax, Glenn M (LEG); Pruitt, Lance (LEG); Rasmussen, Sara (LEG); Rauscher, George (LEG); Reinbold, Lora (LEG); Revak, Joshua (LEG); Shaw, Laddie (LEG); Spohnholz, Ivy A (LEG); Stedman, Bert K (LEG); Stevens, Gary L (LEG); Story, Andrea (LEG); Stutes, Louise B (LEG); Sullivan -Leonard, Colleen (LEG); Talerico, David M (LEG); Tarr, Geran L (LEG); Thompson, Steve (LEG); Tiffany Zulkosky; Tilton, Cathy (LEG); Tuck, Christopher (LEG); Vance, Sarah (LEG); Wielechowski, Bill (LEG); Wilson, David S (LEG); Wool, Adam L (LEG) Subject: Proposed Amended Bonding Regulations Attachments: AOGCC Public Notice, Additional Information and Proposed Amended Bonding Regulation.pdf The Alaska Oil and Gas Conservation Commission proposes to adopt regulation changes in 20 AAC 25.025 of the Alaska Administrative Code, dealing with Bonding, including the following: 20 AAC 25.025 is proposed to be amended to allow a reduction in the requisite bond amount if an operator demonstrates that it has a bond in place with the landowner dedicated exclusively to the plugging and abandonment of a well or wells. In addition, the proposed change increases the number of annual installments which an operator must pay from 4 years to 7 years. Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7°i Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax 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: Wright, Angela R (LAW) Sent: Tuesday, August 4, 2020 3:23 PM To: Price, Jeremy M (CED) Cc: Ballantine, Tab A (LAW); Ptacin, John M (LAW); Pollard, Susan R (LAW); Weaver, Steven C (LAW); Hale, Harry J (LAW); Simpson, April L (GOV); Colombie, Jody J (CED) Subject: Regulation file opened: 20 AAC 25.025: Alaska Oil and Gas Conservation Commission - Bonding: 2020200516 To: Jeremy M. Price, Chair, Commissioner Alaska Oil & Gas Conservation Commission Re: Regulation file opened: 20 AAC 25.025: Alaska Oil and Gas Conservation Commission - Bonding: 2020200516 Our office received a file opening request regarding the regulations project referenced above. We have opened and assigned the file to Assistant Attorney General Thomas Ballantine, phone number (907) 269-5100. Susan R. Pollard, Chief Assistant Attorney General Legislation & Regulations Section Department of Law THE STATE "'ALASKA GOVERNOR NIICK.kEL J. DUNLE.NVY Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alasko.gov TO: Susan Pollard, Regulations Attorney DATE: August 4, 2020 Legislation and Regulations Section Department of Law FILE NO.: TEL. NO.: (907) 793-1221 FROM: Jeremy M. Price, Regulations Contact SUBJECT: File -opening request for Department of Commerce, Community new regulation project and Economic Development, Alaska Oil regarding Bonding a Gas on er Gas Commission 20 AAC 25.025 We are requesting that you open a new file for a regulation project regarding Bonding 20 AAC 25.025 for Alaska Oil and Gas Conservation Commission. Attached is a draft of the regulation, public notice and additional information for your review. This department intends to make the regulation permanent. Please assign an assistant attorney general to this project. We have worked with Assistant Attorney General Thomas Ballantine on this topic. Our agency contact person for the project is Jody Colombie (907) 793-1221. Email address is iody.colombie(a?alaska. og_v.