The URL can be used to link to this page

Home My WebLink AboutO 181Other Order 181 Docket Number: OTH-20-032 1. April 14, 2020 B1ueCrest Energy request for Defer bonding amount 2. May 7, 2020 AOGCC response to 4/14/2020 request 3. August 27, 2020 B1ueCrest Energy request to AOGCC ]tr 5/7/2020 4. September 15, 2020 Pioneers ltr regarding fund verification (held confidential in secure storage) 5. October 4, 2020 Notice of Hearing, affidavit and mailings 6. November 17, 2020 Transcript and sign in sheet 7. December 8, 2020 Transcript and sign in sheet 8. December 15, 2020 B1ueCrest Energy request for AOGCC to account for Pioneers funds held in escrow 9. January 13, 2021 AOGCC response to 12/15/2020 request 10. ------------------ emails ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 711 Avenue Anchorage, Alaska 99501 Re: Request by BlueCrest Alaska ) Docket Number: OTH-20-032 Operating, LLC for reduction in the bonding ) Other Order 181 amount required under regulation 20 AAC ) 25.025. ) BlueCrest Operating Alaska, LLC Bond Reconsideration Request March 17, 2021 DECISION AND ORDER ON RECONSIDERATION On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent BlueCrest Alaska Operating, LLC (BlueCrest) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised that under the new regulation BlueCrest's six permitted wellheads increased BlueCrest's bonding level to $2,400,000. Because BlueCrest had a $200,000 bond in place, an additional $2,200,000 in bonding was required, payable in four annual installments of $550,000 per year. In August 2019, BlueCrest paid its first installment of $550,000. On April 14, 2020, BlueCrest sent a letter to the AOGCC requesting to defer the remaining bond payment installments for two years. That request was DENIED. On August 27, 2020, BlueCrest requested reconsideration, seeking a reduction in the required bonding amount. On December 8, 2020, the AOGCC held a hearing on BlueCrest's request for reconsideration. On March 7, 2021, bonding requirements in 20 AAC 25.025 were revised. FINDINGS: Based upon the evidence presented by BlueCrest, including the testimony of its president, AOGCC finds as follows: 1. BlueCrest has $750,000 in existing bonding in favor of AOGCC. 2. BlueCrest provided evidence of $5,000,000 held in escrow in favor of Pioneer Natural Resources (Pioneer) that was included in the purchase of the Cosmopolitan Unit. Of that amount, $3,000,000 is specifically for plugging and abandonment of wells and $2,000,000 is for land reclamation. 3. BlueCrest states that it is entitled to an offset because the Department of Natural Resources (DNR) required BlueCrest to post a statewide dismantlement, removal and restoration (DR&R) bond. That bond covers the costs of DR&R of the surface of BlueCrest DNR leases. BlueCrest claims that the DR&R bond includes an unspecified amount intended to cover the costs to P&A BlueCrest's wells. 4. BlueCrest claims the $6,250,000 in bonding or escrow accounts in place with Pioneer, AOGCC and DNR satisfy the plugging and abandonment and land reclamation requirements of both AOGCC and DNR. Other Order 181 March 17, 2021 Page 2 of 2 5. The specific language of the purchase and sale agreement is confidential and was not shared with AOGCC. The record was left open until January 4, 2021 to determine if a portion of the agreement could be shared with AOGCC. 6. During the public comment period, BlueCrest sent a letter to AOGCC dated December 15, 2020 requesting the AOGCC issue a formal release of liability for Cosmopolitan well abandonment costs. On January 13, 2021, AOGCC sent a letter to BlueCrest clarifying that as owner and operator, BlueCrest, not Pioneer, is liable for well abandonment costs related to the Cosmopolitan Unit. 7. BlueCrest requests a reduction in bonding to the $750,000 amount already in place with the AOGCC. CONCLUSIONS: The AOGCC DENIES BlueCrest's request for reconsideration. 1. The $5,000,000 held in escrow by Pioneer cannot be accessed by AOGCC in the event of a BlueCrest bankruptcy. A bond, certificate of deposit, or irrevocable letter of credit must be issued in the sole favor of AOGCC (20 AAC 25.025(a)(2)). 2. The bond held by DNR is for the return of DNR's leases, including the surface, to a condition acceptable to DNR. BlueCrest has offered no evidence as to the amount of the - DR&R funding -that is dedicated to the costs to properly P&A BlueCrest's wells. BlueCrest's bonding amount will not be reduced. NOW THEREFORE IT IS ORDERED THAT: As of the date of this order, BlueCrest's bonding requirement for the AOGCC is $2,250,000 less the existing amount of $750,000, leaving $1,500,000 remaining, payable in accordance with 20 AAC 25.025. DONE at Anchorage, Alaska and dated March 17, 2021. Jeremy .DgUty signed by Jesemym.rdm M. Price Daw MI.03.1) 12aglg-06•00• Jeremy M. Price Commissioner, Chair Digaal"nedby Daniel T. oanWT.seamwnt,a. Seamount, Jr. Dmr. 20210.17 14:25:31-01Voa Daniel T. Seamount, Jr. Commissioner Jessie L. Digitally signed by Jessie L. Chmielowski Chmielowski 1211.03.17 14:40:29-09'00' Jessie L. Chmielowski Commissioner This order on reconsideration is the FINAL order of the AOGCC. It may be appealed to superior court. Any appeal MUST be filed within 33 days after the date on which the AOGCC mails this order, OR 30 days if the AOGCC otherwise distributes this order. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. From: Carlisle. Samantha 3 (CED) To: AOGCC Public Notices Subject: Other Order 181 Date: Wednesday, March 17, 20213:06:00 PM Attachments: Otherl8I.Ddf Request by B1ueCrest Alaska Operating, LLC for reduction in the bonding amount required under regulation 20 AAC 25.025. Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907)793-1223 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Samantha Carlisle at (907) 793- 1223 or Samantha.CarlislpOalaska.vw. Bernie Karl Gordon Severson Richard Wagner K&K Recycling Inc. 3201 Westmar Cir. P.O. Box 60868 P.O. Box 58055 Anchorage, AK 99508-4336 Fairbanks, AK 99706 Fairbanks, AK 99711 George Vaught, Jr. Darwin Waldsmith P.O. Box 13557 P.O. Box 39309 Denver, CO 80201-3557 Ninilchik, AK 99639 INDEXES Colombie, Jody J (CED) From: John Martineck <john@bluecrestenergy.com> Sent: Tuesday, January 19, 2021 7:49 AM To: Price, Jeremy M (CED); Colombie, Jody J (CED) Subject: BlueCrest Bonding Communications Commissioner Price / Jody, I just want to keep y'all in the loop on my conversation with Pioneer. Please see below: John Martineck <john@bluecrestenergy.com> to Rich Ei Good Morning Rich, As I know you already know, AOGCC is the Agency in Alaska that is over P&A Activities. I can think of another Agency that would need to release you for P&A Activities . Look forward to hearing back from you. Have a blessed week, John On Sun, Jan 17, 2021 at 8:53 AM Dealy, Rich <Rich.Dealy@Dxd.com> wrote: Thanks John, we have our Alaskan attorney involved and appreciate the updated information. It was where we were headed in the sense that we are trying to find out if we need a release from any other agency in Alaska to ensure we are relieved of any liability or if the AOGCC is sufficient. Will let you know as we hear more back. Let me know if your team has any views on whether any additional releases are necessary. Thanks, Rich From: John Martineck <johntw.oluecrestenergy.com> Sent: Thursday, January 14, 2021 7:51 AM To: Dealy, Rich <Rich.Dealy(cDpxd.com> Subject: Re: [External] - AOGCC Bonding Requirement / Pioneer Escrow Rich, I heard back from AOGCC yesterday regarding the P&A activities we discussed. AOGCC would be will to provide a letter that would state Pioneer would not be liable for any P&A activity at any time even if BlueCrest were to go bankrupt. We can draw up the necessary paperwork to provide for the release of the $3.0 MM from Pioneer's account associated with the P&A activities. Thank you for your help in this matter God bless, APT On Thu, Jan 7, 2021 at 8:42 PM Dealy, Rich <Rich.Dealy&pxd.com> wrote: Thanks John.....let me check. Rich Sent from my iPad On Jan 7, 2021, at 3:29 PM, John Martineck <john(a)bluecrestenergy.com> wrote: Rich, 2 lappy New Year Ric,,... I was just reaching out to see if you have heard anything back from your Alaska Council regarding this matter? God bless, John Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight. Proverbs 3: 5-6 John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 Colombie, Jody J (CED) From: John Martineck <john@bluecrestenergy.com> Sent: Thursday, January 14, 2021 2:12 PM To: Price, Jeremy M (CED) Cc: Colombie, Jody J (CED) Subject: Re: Pioneer Categories: Yellow Category Commissioner Price, You are exactly correct in your clarification statement. Pioneer has no ongoing financial relationship with BlueCrest. Pioneer does have funds that we have discussed with AOGCC in the past related to P&A activities ($3.OMM) and land reclamation ($2.0 MM) in reserve for the landowner which Pioneer will keep in place until reclamation work is completed. The plan is to get Pioneer to release the $3.0 MM to partially fund the P&A activities, currently $2.25 MM I hope this answers your question? God bless, John On Thu, Jan 14, 2021 at 4:16 PM Price, Jeremy M (CED) <ieremy.price@alaska.eov> wrote: Dear Mr. Martineck, After further internal discussion, AOGCC wishes to clarify that AOGCC's January 13, 2021 letter absolving Pioneer of any further liability for plugging and abandoning the BlueCrest wells is premised on AOGCC's understanding from BlueCrest that Pioneer has no ongoing financial relationship or involvement with BlueCrest or the operation of the wells. AOGCC further requests that you confirm this in writing. Sincerely, Jeremy Price Chair Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight. Proverbs 3: 5-6 John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 Colombie, Jody J (CED) From: John Martineck <john@bluecrestenergy.com> Sent: Monday, January 4, 2021 10:02 AM To: Colombie, Jody 1 (CED) Subject: BlueCrest Bonding Hearing Response Categories: Yellow Category Jody, I have attached (see below) my recent conversations with Pioneer regarding the release of funds Pioneer controls for P&A activities on the Hansen Production Facility. We have not arrived at a final answer, however, I hope to hear back from Pioneer shortly. If AOGCC is in agreement to release Pioneer from P&A activities and Pioneer would release these funds we would put the required amount in a Bond with AOGCC having the exclusive access. I am trying to avoid having funds in two places to cover P&A activities. The PSA or Purchase and Sales Agreement between Pioneer and BlueCrest does not specify the definition of P&A Activities or any of the events that trigger the release of these funds or who they would be released to in the event P&A activities are required. Pioneer currently controls these funds as part of their bank accounts. I am requesting some additional time to get a ruling from AOGCC is they would provide a release to Pioneer and Pioneer to release these funds to BlueCrest/AOGCC. I believe I have addressed all of the Commissioner's questions for the hearing on December 8, 2020. If you need further information please let me know. Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight. Proverbs 3: 5-6 John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 RE: [External] - AOGCC Bonding Requirement / Pioneer Escrow Inbox Dealy, Rich to me John, just an update. We are working it, but not sure with the holidays we can accommodate the January 4th date, but it is interesting and something we are reaching out to Alaskan counsel on to discuss. Will let you know as we get more information. Happy New Year. Rich From: John Martineck <0ohn(5bluecrestenergy.com> Sent: Tuesday, December 29, 2020 6:03 PM To: Dealy, Rich <Rich.Dealy(u)pxd.com> Subject: Re: [External] - AOGCC Bonding Requirement / Pioneer Escrow Rich, A statement came up in a recent AOGCC Hearing on Bonding. The AOGCC is open to the idea of releasing Pioneer from any P&A Liabilities on the Cosmo Unit if Pioneer would release part of the funds held by Pioneer ($3.0 MM assigned to P&A activities in our PSA) to BlueCrest/AOGCC to fund the required bonding obligation with the state under their new regulations. Could you please confirm that , ioneer would release the funds ($3.0 MM) if the state would release Pioneer from any P&A obligations on Cosmo Unit? BlueCrest has another hearing on January 4, 2021, that I need to provide them with an answer from Pioneer. Please retain the $2.0 MM until the landowner releases Pioneer. Thank you for your time and consideration. God bless, John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 C Colombie, Jody J (CED) From: Colombie, Jody 1 (CED) Sent: Thursday, August 6, 2020 2:51 PM To: John Martineck Cc: Colombie, Jody J (CED) Subject: RE: [AOGCC_Public_Notices] Proposed Amended Bonding Regulations Categories: Yellow Category John, 1. Since the Commission didn't respond by July 31, 2020, the request was DENIED. No order will be sent. 2. Your request for deferral of the Aug. 16, 2020 installment is GRANTED until further notice. An updated payment date will be issued once the Commission has adopted or declined to adopt the proposed amendments to 20 AAC 25.025. Jody Colombie From: John Martineck <john@bluecrestenergy.com> Sent: Wednesday, August 5, 2020 5:52 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Re: [AOGCC_Public_Notices] Proposed Amended Bonding Regulations Commissioner Jeremy Price, Pending before the Commission is BlueCrest Energy's April 14, 2020 request for deferral of its future bonding payments. On inquiry today, we received verbal notice that the Commission intends to deny BlueCrest's requested deferral. By this email, I respectfully request that the Commission reconsider its denial of BlueCrest's requested deferral. BlueCrest will file a formal request for reconsideration detailing the basis for reconsideration once we receive a written order from the Commission. However, as the public process on the Commission's proposed changes to its bonding regulations (20AAC 25.025) has only just started and will run past the deadline for submission of BlueCrest's next installment on its boding obligation (August 16, 2020), we request that the Commission (1) take-up our requested reconsideration, (2) receive comments from BlueCrest in support of additional regulatory revisions we believe appropriate to encourage expanded industry activity in Alaska, and (3) allow BlueCrest to provide additional information and support for its requested deferral consistent with the regulatory direction indicated in the Commission's proposed revised bonding regulations. John Martineck Chief Operating Officer BlueCrest Energy Inc On Tue, Aug 4, 2020 at 3:42 PM Colombie, Jody J (CED) <iody.colombie@alaska.eov> wrote: The Alaska Oil and Gas Conservati Iommission proposes to adopt regulatior inges 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. Colomhie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7" Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax List Name: AOGCC Public Notices@list.state.ak.us You subscribed as: John.Martineck@bluecrestenergv.com Unsubscribe at: http://Iist.state.ak.us/mailman/options/aogcc public notices/iohn.martineck%40bluecrestenergv.com The light shines in the darkness, and the darkness has not overcome it. John 1:5 John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 Colombie, Jody J (CED) From: Chmielowski, Jessie L C (CED) Sent: Thursday, April 16, 2020 11:47 AM To: Roby, David S (CED); Price, Jeremy M (CED); Seamount, Dan T (CED); Carlisle, Samantha J (CED); Colombie, Jody J (CED); Ballantine, Tab A (LAW) Subject: RE: Request for Bonding Requirement Deferal Categories: Green Category I'll set up a mtg next week so we can talk this over. Jessie Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sale use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907- 793-1223 or iessie.chmielowski@alaska.eov. From: Roby, David S (CED) <dave.roby@alaska.gov> Sent: Tuesday, April 14, 2020 4:37 PM To: Price, Jeremy M (CED) <jeremy.price @alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov>; Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov>; Colombie, Jody J (CED) <jody.colombie@alaska.gov>; Ballantine, Tab A (LAW) <ta b.ballantine@alaska.gov> Subject: RE: Request for Bonding Requirement Deferal You are correct. Installments of $550K each are what we said in our letter last year. Regardless of whether we approve this or not we should probably remind them of the actual installment amounts in our decision document. Dave Roby 907-793-1232 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is fort he sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Dave Roby at 907- 793-1232 or dave.robv@alaska.eov. From: Price, Jeremy M (CED) <leremy.price@alaska.gov> Sent: Tuesday, April 14, 2020 4:29 PM To: Seamount, Dan T (CED) <dan.seamountC@alaska.gov>; Chmielowski, Jessie L C (CED) <Jessie.chmielowski(c@alaska.aov>; Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov>; Colombie, Jody J (CED) <iody.colombie@alaska.gov>; Ballantine, Tab A (LAW) <tab.ballantine@alaska.eov>; Roby, David S (CED) <dave. robe@a laska.eov> Subject: RE: Request for Bonding Requirement Deferal i Just looked at RBDMS and by way o. . cminder they have $750,000 in bonding with us now, $200K certificate of deposit and $550K personal bond. They have 6 wells for a total required amount of $2,400,000. The letter says $500,000 but I believe they actually owe $550,000 due for the next installment (1,650,000 / 3 = 550,000). From: Seamount, Dan T (CED) <dan.seamount@alaska.eov> Sent: Tuesday, April 14, 2020 4:06 PM To: Chmielowski, Jessie L C (CED)<iessie.chmielowski@alaska.gov>; Price, Jeremy M (CED) cmeremy. price@alaska.gov>; Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov>; Colombie, Jody (CED) <iody.colombie@alaska.Rov>; Ballantine, Tab A (LAW) <tab.ballantine alaska.¢ov>; Roby, David S (CED) <dave.robv@alaska.aov> Subject: RE: Request for Bonding Requirement Deferal Just kidding From: Chmielowski, Jessie L C (CED) <iessie.chmielowski@alaska.eov> Sent: Tuesday, April 14, 2020 3:19 PM To: Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <leremv.price@alaska.aov>; Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov>; Colombie, Jody J (CED) <iodv.colombie@alaska.gov>; Ballantine, Tab A (LAW) <tab.baIlantine@alaska.gov>; Roby, David S (CED) <dave.roby@alaska.aov> Subject: RE: Request for Bonding Requirement Deferal Really??? Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s),It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907- 793-1223 or iessie.chmielowski@alaska.eov. From: Seamount, Dan T (CED) <dan.seamount@alaska.gov> Sent: Tuesday, April 14, 2020 2:46 PM To: Price, Jeremy M (CED) <ieremy.price @alaska-go v>; Carlisle, Samantha J (CED)<samantha.carlisle@alaska.izov>; Colombie, Jody J (CED) <iodv.colombie@alaska.aov>; Chmielowski, Jessie L C (CED)<iessie.chmielowski@alaska.aov>; Ballantine, Tab A (LAW) <tab.ballantine@alaska.aov>; Roby, David S (CED) <dave.robv@alaska.¢ov> Subject: RE: Request for Bonding Requirement Deferal She is an engineer not a lawyer. What could she contribute? From: Price, Jeremy M (CED) <ieremy.price @alaska.eov> Sent: Tuesday, April 14, 2020 2:44 PM To: Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Carlisle, Samantha J (CED) <samantha.carlisle@alaska.¢ov>; Colombie, Jody (CED) <iodv.colombie@alaska.¢ov>; Chmielowski, Jessie L C (CED)<iessie.chmielowski@alaska.¢ov>; Ballantine, Tab A (LAW) <tab.ballantine@alaska.aov>; Roby, David S (CED) <dave.robv@alaska.aov> Subject: RE: Request for Bonding Requirement Deferal I assume you mean Jessie? From: Seamount, Dan T (CED) <dan.seamount@alaska.gov> Sent: Tuesday, April 14, 2020 2:43 PM To: Carlisle, Samantha J (CED) <sam....cha.carlisleC@alaska.gov>; Colombie, Jody J (CED) <lody.colombie@alaska.gov>; Price, Jeremy M (CED) <meremv.price @alaska.gov>; Chmielowski, Jessie L C (CED)<lessie.chmielowski@alaska.gov>; Ballantine, Tab A (LAW) <tab.ballantine@alaska.gov>; Roby, David S (CED) <dave.robv@alaska.gov> Subject: RE: Request for Bonding Requirement Deferal Sounds reasonable. Let me and the lawyer analyze it. From: Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov> Sent: Tuesday, April 14, 2020 2:42 PM To: Colombie, Jody J (CED) <iodv.colombie@alaska.gov>; Seamount, Dan T (CED) <dan.seamount@alaska.gov>; Price, Jeremy M (CED) <ieremv.price@alaska.gov>; Chmielowski, Jessie L C (CED) <Jessie.chmielowski(cDalaska.gov>; Ballantine, Tab A (LAW) <tab.ballantine@alaska.gov>; Roby, David S (CED) <dave.robv@alaska.gov> Subject: FW: Request for Bonding Requirement Deferal From: Andrew Buchanan <abuchanan@bluecrestenergv.com> Sent: Tuesday, April 14, 2020 2:36 PM To: Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov> Cc: John Martineck <iohn@bluecrestenergv.com> Subject: Request for Bonding Requirement Deferal Dear Commissioners, BlueCrest Alaska Operating, LLC (BlueCrest) hereby respectfully requests that the Commission defer the bonding requirements for existing wells at the Cosmopolitan project for a period of two years, as follows: • August 16, 2020 bond requirement of $500,000 be deferred to August 16, 2022 • August 16, 2021 bond requirement of $500,000 be deferred to August 16, 2023 • August 16, 2022 bond requirement of the remaining balance be deferred to August 16, 2024 As the Commission is aware, the recent collapse in oil prices and the economic downturn resulting from the covid-19 response has placed unprecedented financial strains on all the oil and gas companies operating in Alaska. That strain is particularly acute for smaller companies like BlueCrest, who operate on very close margins and whose access to capital is significantly limited in the current economic environment. Providing BlueCrest with this limited relief will have a material, positive impact for our ongoing operations, yet it will not create any unreasonable risk for the state. BlueCrest is not seeking a waiver of the bonding requirements; rather, it only asks for a limited deferral of those requirements. And that deferral would only run through 2024 on a project that has 25 years of an economic life ahead of it. Please let me know if you have any questions regarding this request. Thank you for your attention to this matter. Best regards, Andrew Buchanan VP - Alaska BlueCrest Energy Ph:907-754-9563 Cell: 907-250-6545 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Saturday, December 19, 2020 11.48 AM To: Price, Jeremy M (CED) Cc: Colombie, Jody J (CED) Subject: Blue Crest Categories: Yellow Category I spoke with John Martineck this morning from Blue Crest and told him the Commission would not to responding to his latest letter until after the closing of the record on the bonding deferral, due to staff vacations, etc. He said he understood. I asked him if Pioneer was aware of his latest request to the Commission and he said no. He wanted to wait until after the Commission responded before going to them especially if his request was denied then there would be no reason to get them involved prematurely. I sent him a copy of the transcript to review in case he still had outstanding items to file before the January 4, 2021 deadline. He asked if the January 4, 2021 date could be extended and I told I did not think so. I explained that we would have to publicly notice again in order to that. He said OK I understood. JodyJ. Colombie AOGCC Special Assistant Alaska Oil and Gas Conservation Commission State ofAlaska 333 West 74 Avenue Anchorage, AK 99501 Phone Number: 907-793-1221 Email: jody.colombie@alaska.gov THE STATE °fALASKA GOVERNOR MICIUEL J. DUNLE.kI'Y January 13, 2021 Mr. John Martineck President & Chief Operating Officer BlueCrest Alaska Operating, LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Re: Docket Number: OTH-20-032 Dear Mr. Martineck: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov By letter dated December 15, 2020, BlueCrest Energy (BlueCrest) requested the Alaska Oil and Gas Conservation Commission (AOGCC) to issue a formal release of liability for Cosmopolitan well abandonment costs to Pioneer Natural Resources (Pioneer), BlueCrest's predecessor in interest in the Cosmopolitan Unit. By way of response, AOGCC seeks to clarify that in terms of liability AOGCC does not hold Pioneer liable for well abandonment costs related to the Cosmopolitan Unit. Once the Notice of Ownership and Designation of Operator forms were received by the AOGCC, designating BlueCrest as owner and operator, Pioneer's liability ceased to exist. BlueCrest is completely and totally liable for the 6 wells in the Hansen Oil Pool. If BlueCrest were to go bankrupt and the wells were not properly plugged and abandoned according to the regulations, AOGCC would retain the bond filed by BlueCrest. Pioneer would not be held liable for plugging the Cosmopolitan wells in the event of a BlueCrest bankruptcy. As stated in your letter, AOGCC requires a total, irrevocable bond amount of $2,250,000, which can be made with installment payments over time, as allowed under 20 AAC 25.025. BlueCrest's current bond amount held with AOGCC is $750,000, leaving $1,500,000 remaining. Sincerely, Jeremy M. Price Chair, Commissioner Page 2 of 2 As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsiderationif the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MAST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.mon the next day that does not fall on a weekend or state holiday. BlueCrest Alaska Operating LLC 3301 CStreet, Suite 202 Anchorage, AK 99503 (214)697-8802 John M Martineck President A Chief Operating Officer December 15, 2020 Alaska Oil and Gas Conservation Commission Arm.: Commissioner Price Commissioner Chmielowski Commissioner Seamount 333 W. 7" Street Anchorage, Ak 995014 RE: BlueCrest / Cosmopolitan Bonding Obligation Dear Commissioners Price, Chmielowski and Seamount: On December 8, 2020, the Alaska Oil and Gas Conservation Commission ("Commission") held a hearing to establish the level of financial assurance required of BlueCrest Energy ("BlueCrest") to ensure future abandonment obligations related to the six existing wells at the Cosmopolitan Unit are met. As the Commission evaluates its final decision, BlueCrest hereby respectfully requests that, as part of its final determination, the Commission issue a formal release of liability for Cosmopolitan well abandonment costs to Pioneer Natural Resources ("Pioneer"), BlueCrest's predecessor in interest at the Cosmopolitan Unit. Release of Pioneer from its past abandonment obligations is appropriate because, according to the Commission's new regulatory requirements (20 AAC 25.025) and the final decision that will issue regarding this matter, BlueCrest will be required to present the Commission with satisfactory financial assurance totaling $2,250,000, which amount the Commission has determined will cover the costs of plugging and abandoning the six existing Cosmopolitan wells. As the Commission is aware, at the time BlueCrest acquired the Cosmopolitan field from Pioneer, Pioneer required BlueCrest to provide it with approximately $3,000,000 in financial assurance to cover well abandonment costs in the event BlueCrest became defunct and the AOGCC then turned to Pioneer to cover those costs. With the Commission's promulgation of its new regulatory requirements, and the certainty those bring to the well abandonment issue, BlueCrest is obligated to post an irrevocable bond(s) with the state in the amount of $2,250,000. As such, in the unlikely event BlueCrest were to become defunct, the state will have access to the monies necessary to cover the well abandonment costs related to the existing Cosmopolitan wells without seeking recourse from Pioneer. In addition to the Pioneer release, BlueCrest respectfully requests that, when accounting for BlueCrest's total well abandonment obligation of $2,250,000 for the six existing Cosmopolitan wells, the Commission recognize and accept as part of BlueCrest's presentation of financial assurance the $500,000 bond BlueCrest posted with the Department of Natural Resources. If the Commission accepts that DNR bond as part of BlueCrest's total financial assurance for well abandonment costs, that amount, added to the $750,000 bond already placed with the Commission, would leave a total of $1,000,000 of additional financial assurance due from BlueCrest ($500,000 + $750,000 = $1,250,000 currently on account with the state; $2,250,000 — $1,250,000 = $1,000,000 outstanding to the state). Thank you for your consideration. We are available to answer any questions you might have regarding the above yoi ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request for ) Reconsideration of Bonding ) Requirements by B1ueCrest ) Operating, LLC. ) Docket No. OTH-20-032 PUBLIC HEARING December 8, 2020 Anchorage, Alaska 10:02 a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner ...« -3403 Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chairman Price 03 3 Testimony by Mr. Martinek 06 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 3 1 P R O C E E D I N G S 2 (On record - 10:02 a.m.) 3 CHAIRMAN PRICE: Good morning, I'll call this 4 hearing to order. This is a public hearing for 5 reconsideration of bonding requirements for B1ueCrest 6 Operating LLC, pursuant to 20 AAC 25.025. This hearing 7 is being held on Tuesday, December 8th, 2020 at 10:02 8 a.m. We are located at the office of the Alaska Oil 9 and Gas Conservation Commission at 333 West Seventh 10 Avenue, Anchorage, Alaska. 11 Before we begin I'll introduce the 12 Commissioners. Joining me to me is Commissioner Dan 13 Seamount as well as Commissioner Chmielowski. I am 14 Jeremy Price, Chair and Commissioner. 15 If any persons on the phone need special 16 accommodations to participate in these proceedings, 17 please speak to Jody Colombie and she will do her best 18 to accommodate you. She may be reached at (907) 793- 19 1223. 20 Computer Matrix will be recording the hearing. 21 Upon completion and preparation of the transcript, 22 persons desiring a copy will be able to obtain it by 23 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 Page 4 1 Administrative Code. 2 The notice of this hearing was published in the 3 Anchorage Daily News on October 4th, 2020. It was also 4 posted on the State of Alaska online notices website 5 and the AOGCC's website. 6 This hearing is on Docket No. OTH-20-032. 7 By letter dated April 14th, 2020, B1ueCrest 8 Operating Alaska, hereinafter known as B1ueCrest, 9 requested AOGCC to defer the 2020 and 2021 bonding 10 installment payments for wells of the Cosmopolitan 11 Project for a period of two years. AOGCC declined to 12 take up the reconsideration request. Failure to act on 13 a reconsideration is a refusal of it per Alaska Statute 14 31.05.080. On August 27th, 2020 B1ueCrest filed 15 another reconsideration request stating that it had 16 other bonds and financial assurance for abandonment and 17 reclamation of the Cosmopolitan wells. Today's hearing 18 is an opportunity for the operator to present evidence 19 on why AOGCC should grant reconsideration from the 20 bonding requirements contained in 20 AAC 25.025. 21 At this time we have Mr. John Martinek from 22 B1ueCrest that will testify on behalf of B1ueCrest. Is 23 there any member of the public who wishes to testify or 24 to ask questions or have an opportunity to speak today, 25 if that's the case, please make it known right now. Page 5 1 MS. COLOMBIE: Commissioner Price, before we 2 begin, my phone number -- Jody Colombie speaking, is 3 (907) 748-7473. Thank you. 4 CHAIRMAN PRICE: Okay. At this point, 5 Commissioners Seamount or Chmielowski, any comments or 6 questions. 7 COMMISSIONER SEAMOUNT: I have none. 8 COMMISSIONER CHMIELOWSKI: I have none. 9 CHAIRMAN PRICE: Okay. Just a quick reminder, 10 Mr. Martinek, please speak clearly so the court 11 reporter can get a good recording, and, Nickelle, if 12 you have a hard time please just interrupt and ask any 13 one of us to speak up if need be. 14 At this time, Mr. Martinek I'll swear you in. 15 Even though you're on the phone I'll ask you to raise 16 your right hand. 17 (Oath administered) 18 MR. MARTINEK: I do. 19 CHAIRMAN PRICE: Thank you. Do you want us -- 20 Mr. Martinek, how would you like to proceed, do you 21 want us to just jump into questions or would you like 22 to give a statement, what's your -- what are you 23 prepared to do this morning. 24 MR. MARTINEK: If I could give just a brief 25 statement, Commissioner Price, I'd appreciate it and Page 6 1 then more than welcome to entertain questions at that 2 point. 3 CHAIRMAN PRICE: Please proceed. 4 JOHN MARTINEK 5 called as a witness on behalf of B1ueCrest Operating, 6 LLC., testified telephonically as follows on: 7 EXAMINATION 8 MR. MARTINEK: Thank you. And thank you to the 9 Commissioners and the Commission for taking this 10 opportunity to let B1ueCrest express their views at 11 this point. So up and to the point where the 12 regulations had changed, B1ueCrest had a total of 13 $700,000 on deposit with one or more of the agencies in 14 the state. We had 500,000 with the DNR and 200,000 15 with AOGCC. We've subsequently made a $550,000 payment 16 to AOGCC for a total of $750,000 that is currently on 17 deposit. So when we first purchased this property from 18 Pioneer back in 2012, we had set aside $5 million for 19 -- in an escrow account for this specific purpose of 20 plugging and abandonment and land reclamation. In 21 particular, $3 million of that was specifically for the 22 plugging and abandonment of wells, and 2 million was to 23 satisfy the land owner on any work that they would 24 require to bring the land back to a suitable use for 25 them. And so to -date we currently have $6,250,000 in Page 7 1 some form or fashion set aside either as bonds or in 2 escrow accounts specifically for the purpose of 3 plugging and abandonment and land reclamation. Under 4 the current regulations, if I've interpreted the 5 regulations correct, with the six wells that we 6 currently are posting for, the requirement by AOGCC is 7 $2,250,000 so we have, you know, $4 million basically 8 in excess of what the Commission has required under the 9 new regulations set aside for this specific purpose. 10 And when I contacted the Commission I specifically 11 requested a deferral of those payments until we figured 12 out what we could do to satisfy the Commission. We 13 since sent a letter requesting reconsideration of it. 14 15 And that's kind of where we are today. 16 We feel like with the money that we have specifically 17 set aside that we've more than covered the requirements 18 of, not only AOGCC, but what DNR had also. So if you 19 take up the $2,250,000 that AOGCC currently requires 20 and the 500,000 that the DNR requires, that brings you 21 up to $2,750,000; and we currently have $6,250,000 set 22 aside. So what I am specifically asking is that we, 23 you know, have satisfied the requirements of both 24 agencies. And that we could perhaps get the $550,000 25 that we have made in additional payment to AOGCC Page 8 1 returned to AOGCC and still have ample money to cover 2 both AOGCC and DNR and their requirements. If you look 3 at just the $3 million that we have on deposit 4 specifically set aside in escrow with Pioneer that 5 would cover both AOGCC and DNR. The $2 million is kind 6 of icing on the cake for land reclamation. 7 So with that I'll turn over if there's any 8 questions. 9 CHAIRMAN PRICE: Thank you, Mr. Martinek, I 10 appreciate those comments. I think most of the 11 questions this morning are related to that escrow 12 account. But since you just mentioned that abandonment 13 of 3 million within the escrow I'll start with that 14 question. In the letter that you provided to the 15 Commission it states, as you said, 3 million of the 16 cash deposit is for abandonment. How is abandonment 17 defined in the context of B1ueCrest's agreement with 18 Pioneer? 19 MR. MARTINEK: It is for the plugging and the 20 abandonment of the wells, in particular. 21 CHAIRMAN PRICE: So it's not related to any 22 surface remediation, it's strictly subsurface? 23 MR. MARTINEK: Correct. Correct. The $2 24 million is specifically spelled out for the land 25 reclamation. Page 9 1 CHAIRMAN PRICE: Is that spelled out at all in 2 the agreement? 3 MR. MARTINEK: It is. 4 CHAIRMAN PRICE: Okay. And maybe I should jump 5 to my next question on the agreement. Is that -- we 6 haven't seen -- the Commission does not have access to 7 that at this time, is that something that you can 8 provide access to? 9 MR. MARTINEK: And unfortunately we have a 10 confidentiality agreement with them that we're not able 11 to provide that but I might request that maybe we could 12 show that section of the contract and -- where you can 13 see the specific language in it. I believe we send out 14 a letter every year to Pioneer, and when I say, we, I 15 mean our auditors, and they send a letter directly to 16 them requesting confirmation that this money is still 17 set aside. And I believe in that letter it tells the 18 -- or it splits out the $3 million from the $2 million 19 amount, and that's something I've already provided the 20 Commission. And if that isn't good coverage, I'm more 21 than happy to go back to Pioneer and ask them for 22 permission to show you that part of the contract. 23 CHAIRMAN PRICE: I think any information -- any 24 amounts of the agreement that you could provide to the 25 Commission would be helpful. Page 10 1 1 MR. MARTINEK: Okay. 2 CHAIRMAN PRICE: Let me run through the rest of 3 these questions that are specific to the escrow account 4 and then we can go from there. 5 Where is the abandonment liability escrow 6 account currently held? 7 MR. MARTINEK: It doesn't specifically say it 8 on here, I'll have to get that information for you. 9 CHAIRMAN PRICE: No problem. What about with 10 respect to whom the funds will be released. What 11 triggers the release of the funds in the account and I 12 assume it's released to you, can you walk through how 13 that works? 14 MR. MARTINEK: It's not spelled out in the 15 contract, or in the agreement, I should say. It is -- 16 it is -- just tells what the purpose of that money is 17 for. It doesn't spell out how that money is to be 18 released. 19 CHAIRMAN PRICE: Okay. And are the funds 20 released to Pioneer or to B1ueCrest? 21 MR. MARTINEK: They would be released to 22 B1ueCrest. 23 CHAIRMAN PRICE: And under what scenario would 24 that occur? For instance, in the event, however 25 unlikely that B1ueCrest were to declare bankruptcy, Page 11 1 what happens at that point? 2 MR. MARTINEK: So they -- Pioneer would still 3 have that money available to them for covering the cost 4 of the abandonment of those wells and the reclamation 5 of the land. 6 CHAIRMAN PRICE: Okay. In our regulations in 7 25.025 there's a subsection in there that references 8 exclusive access to AOGCC so my next question is, kind 9 of following along the same lines as my previous 10 question; in the unlikely even, however unlikely a 11 bankruptcy were to occur, how would AOGCC gain 12 exclusive access to the escrow funds for any wells not 13 properly plugged and abandoned? 14 MR. MARTINEK: That I'm going to have to look 15 back to the agreement on. I don't -- I don't know that 16 there is a mechanism in the agreement itself for 17 exclusive access to AOGCC. The purpose of those funds 18 were dedicated to be exclusive use of abandonment and 19 reclamation so there's no other purpose that that could 20 be used for. So in the unlikelihood of a bankruptcy by 21 B1ueCrest, those funds would be dedicated for that 22 purpose because it would ultimately fall back to 23 Pioneer. 24 CHAIRMAN PRICE: What about with respect to the 25 actual wells. So you got a half a dozen wells, one was Page 12 1 drilled by ConocoPhillips, another was drilled by 2 Buccaneer, one of the laterals was drilled by Pioneer, 3 I think the rest were drilled by B1ueCrest, does the 4 escrow account, is it specific to some of those wells, 5 all of those wells? 6 MR. MARTINEK: It's all of those wells. 7 CHAIRMAN PRICE: Okay. So let's say next year 8 you -- B1ueCrest drills additional wells, you're saying 9 -- would the escrow account apply to wells drilled in 10 the future? 11 MR. MARTINEK: Yes. It's all wells. 12 CHAIRMAN PRICE: Okay. Commissioners, do you 13 have other questions. 14 COMMISSIONER SEAMOUNT: I have a question. 15 This is Dan Seamount. what would happen to that number 16 in the event Pioneer were to go into bankruptcy? 17 MR. MARTINEK: It's in an escrow account so -- 18 and it's specifically set aside for this use on the 19 BlueCrest leases, I would have to consult with our 20 attorneys on that. I mean I don't think it would fall 21 in the hands of Pioneer if that's kind of what you're 22 suggesting. 23 COMMISSIONER SEAMOUNT: Is it possible..... 24 MR. MARTINEK: I guess -- Commissioner 25 Seamount, I'd have to -- I'd have to consult with our Page 13 1 attorneys on that to see what they would say on that. 2 COMMISSIONER SEAMOUNT: Okay, here's another 3 question for the attorneys, if -- is it possible to 4 move some of that into a bond dedicated to -- that 5 AOGCC would have access to in the event of both 6 companies going bankrupt to satisfy the regulation? 7 MR. MARTINEK: In the event of both companies 8 filing bankruptcy, is that what your question was? 9 COMMISSIONER SEAMOUNT: Well, my question is 10 can the amount that's required by the regulation be 11 moved into a normal bond with B1ueCrest that AOGCC 12 could get access to in the event that they had to? 13 MR. MARTINEK: That I would have to pose to 14 Pioneer but let me do that. 15 COMMISSIONER SEAMOUNT: That's all I have. 16 Thank you, Mr. Martinek. 17 MR. MARTINEK: Thank you. 18 COMMISSIONER CHMIELOWSKI: Mr. Martinek, this 19 is Jessie Chmielowski. I think what the AOGCC might 20 need from B1ueCrest is more information and detail on 21 the purpose of the money, the scenario of when it would 22 be released and who would have control of the money. 23 Is that something you can provide? 24 MR. MARTINEK: Yes. So the purpose of the 25 money, who would have control. Page 14 1 COMMISSIONER CHMIELOWSKI: In a scenario or 2 scenarios of when it would be released and who would 3 have control of the money? 4 MR. MARTINEK: When it would be released, okay. 5 Yes. 6 COMMISSIONER CHMIELOWSKI: And, Mr. Martinek, 7 B1ueCrest provided an estimate range of 400,000 to 8 500,000 per well to plug and abandon each well in your 9 letter from August 2020; does BlueCrest plan to provide 10 a third -party engineering cost estimate for plugging 11 and abandonment? 12 MR. MARTINEK: We could. That's our internal 13 estimate. We don't -- I don't think we have a third- 14 party estimate on that but we could provide something 15 like that. 16 COMMISSIONER CHMIELOWSKI: There's no 17 requirement, was just wondering if that was part of 18 your plan to provide information to AOGCC. You had 19 planned to just follow the regulation as written for 20 bonding? 21 MR. MARTINEK: Correct. 22 COMMISSIONER CHMIELOWSKI: Okay. 23 MR. MARTINEK: Correct. 24 CHAIRMAN PRICE: Mr. Martinek, on that line of 25 questioning, the estimate of 400,000 to 500,000, do you Page 15 1 1 know how you came up with those numbers? 2 MR. MARTINEK: It was an internal estimate. I 3 don't know the exact method that was used on that but I 4 can -- I can get a determination on that. 5 CHAIRMAN PRICE: Well, for instance, under what 6 scenario did those numbers come from? For instance, 7 were you looking at including rig costs, other 8 procedures, I think that would be helpful for the 9 Commission, is to see how you came up with those 10 numbers? 11 MR. MARTINEK: Okay. 12 CHAIRMAN PRICE: Is that something you think 13 you can provide? 14 MR. MARTINEK: Yes. 15 CHAIRMAN PRICE: Okay. Any other questions at 16 this time, Commissioners? 17 COMMISSIONER SEAMOUNT: No. 18 COMMISSIONER CHMIELOWSKI: Mr. Martinek, this 19 is Jessie Chmielowski again. We've asked for a copy of 20 the agreement between B1ueCrest and Pioneer and you say 21 that it is confidential, what is the basis for claiming 22 the agreement is confidential? 23 MR. MARTINEK: It was in the agreement itself. 24 You know it was a purchase and acquisition agreement 25 and that was just one of the components of the Page 16 1 agreement and the plugging and abandonment section was 2 part of that agreement, it wasn't a separate agreement. 3 CHAIRMAN PRICE: And so as part of the 4 agreement, just so I'm clear, the 5 million was 5 provided by BlueCrest to Pioneer as part of the 6 transaction? 7 MR. MARTINEK: Yes. 8 CHAIRMAN PRICE: Okay. 9 MR. MARTINEK: As specifically set aside for 10 those two purposes we previously discussed. 11 CHAIRMAN PRICE: Understood. Thank you. 12 MR. MARTINEK: Yep. 13 CHAIRMAN PRICE: Mr. Martinek, if you don't 14 mind, we're going to take a quick recess, about 15 15 minutes, would you mind waiting on the phone for us. 16 MR. MARTINEK: I'll wait, thank you. 17 CHAIRMAN PRICE: We'll reconvene in 15 minutes. 18 MR. MARTINEK: Okay, thank you. 19 (Off record) 20 (On record) 21 CHAIRMAN PRICE: I's like to reconvene this 22 hearing. I apologize for the delay, Mr. Martinek. The 23 time is five to noon -- I'm sorry, five to 11:00. 24 Are you still with us? 25 MR. MARTINEK: I am. Page 17 1 CHAIRMAN PRICE: Okay, sorry about that. 2 MR. MARTINEK: No worries. 3 CHAIRMAN PRICE: So I'll circle back to some of 4 the questions that I asked before and make some 5 clarifications. Upon further consideration and 6 discussion, we don't need more information on the cost 7 estimate so you can disregard that request. 8 MR. MARTINEK: Okay. 9 CHAIRMAN PRICE: with respect to the issue that 10 I touched upon prior, on the exclusive accessibility by 11 AOGCC, that's in, again 20 AAC 25.025, paragraphs one 12 and two if you want to review that, but essentially 13 funds need to be exclusively accessible to AOGCC. 14 There are some exceptions in the regulation and in the 15 proposed regulation. But under this scenario those 16 exceptions are -- don't meet this scenario. So, for 17 instance, if funds were transferred to a bond or a CD 18 for the benefit of AOGCC, if those funds that are in 19 the escrow were transferred, that provided exclusive 20 access to AOGCC, something that like would satisfy our 21 regulations. And then the other thing I wanted to 22 clarify is when we talked about getting access to the 23 agreement and to that escrow account, we should caution 24 you that anything you do provide to the Commission, if 25 you want it to be kept confidential, you have to be Page 18 1 able to make the claim that it should be kept 2 confidential because AOGCC is a government agency and 3 we're subject to the Public Records Act so there's some 4 conditions you'd need to meet to ensure that it remains 5 confidential. 6 MR. MARTINEK: Okay. Okay. 7 CHAIRMAN PRICE: So just a word of caution is 9 MR. MARTINEK: Thank you, I appreciate that. 10 CHAIRMAN PRICE: Yep. Are there other 11 questions, Commissioners, that I may have missed. 12 COMMISSIONER SEAMOUNT: None for me. 13 CHAIRMAN PRICE: Okay. Mr. Martinek, we are 14 going to leave the record open for 14 days, which would 15 mean the record would close, close of business on 16 December 22nd, does that give you enough time to 17 provide answers to the rest of our questions or do you 18 need more time? 19 MR. MARTINEK: If I could, because of the 20 holidays and that, I don't know what people's schedules 21 are going to be, if you wouldn't mind carrying me over 22 to the first of the year, I can probably get all the 23 answers you need after -- by the first of the year. 24 CHAIRMAN PRICE: How about January 4th, close 25 of business January 4th, does that work? TM k 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 19 1 MR. MARTINEK: January 4th it is. CHAIRMAN PRICE: Okay. Then at this time..... MR. MARTINEK: Okay. CHAIRMAN PRICE: .....we'll close the hearing. We'll leave the record open until January 4th. The time is 11:00 o'clock. MR. MARTINEK: Thank you so much for all your time. CHAIRMAN PRICE: Thank you, appreciate it. MR. MARTINEK: Bye now. (Adjournment - 11:00 a.m.) (END OF PROCEEDINGS) 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 201 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 20 are a true, accurate, and complete transcript of proceedings IN RE: Docket No. OTH-20-032, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION December 9, 2020 at 10:00 am OTH-20-032 NAME AFFILIATION Testify (yes or no) ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request for ) Reconsideration of Bonding ) Requirements by B1ueCrest ) Operating, LLC. ) Docket No. OTH-20-032 PUBLIC HEARING November 17, 2020 Anchorage, Alaska 10:00 a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Commissioner Seamount 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 COMMISSIONER SEAMOUNT: Good morning. I will 4 call this hearing to order. Today is Tuesday, November 5 17th, 2020 and the time is 10:00 a.m. We are located 6 at the office of the Alaska Oil and Gas Conservation 7 Commission at 333 West Seventh Avenue, Anchorage, 8 Alaska. This is the time set for a public hearing in 9 Docket No. OTH-20-032, a request that AOGCC reconsider 10 the amount of the bond required of B1ueCrest Operating, 11 LLC, under 20 AAC 25.025. 12 Commissioners Jessie Chmielowski and Jeremy 13 Price are present telephonically, and I am Commissioner 14 Dan Seamount. 15 This hearing is being held in accordance with 16 AS 44.62 and 20 AAC 25.540 of the Alaska Administrative 17 Code. 18 The notice of this hearing was published in the 19 Anchorage Daily News on October 4th -- excuse me, my 20 crickets are cricketing. 21 (Cell phone interruption) 22 COMMISSIONER SEAMOUNT: Okay. The notice of 23 this hearing was published in the Anchorage Daily News 24 on October 4th, 2020. It was also posted on the State 25 of Alaska online notices website and the AOGCC's Page 4 1 website. 2 Computer Matrix will be recording the hearing, 3 upon completion and preparation of the transcripts, 4 persons desiring a copy will be able to obtain it by 5 contacting Computer Matrix. 6 Before we begin I request that anyone attending 7 telephonically identify yourself, including whether you 8 are attending as a representative of any person or 9 entity. 10 So who's on the line. 11 MR. MARTINEK: This is John Martinek with 12 B1ueCrest. 13 COMMISSIONER SEAMOUNT: Mr. Mardek, do we have 14 his name spelled, okay Mardek -- Martinek -- Martinek, 15 okay. If any persons here or on the phone need special 16 accommodations to participate in these hearings please 17 speak to Samantha Carlisle and she will do her best to 18 accommodate you. She may be reached at (907) 793-1223. 19 Although this hearing was set to allow 20 B1ueCrest to represent evidence in support of its 21 request, in light of the Governor's recent directive, I 22 believe it was on Friday, the directive results in 23 State offices being basically closed. So the 24 Commission and B1ueCrest have agreed to continue this 25 hearing to December 8th at 10:00 a.m., for evidence and Page 5 1 comments taken. Is that correct, Mr. Martinek? 2 MR. MARTINEK: Yes, it is. 3 COMMISSIONER SEAMOUNT: Good. With that in 4 mind is there anyone present or on the phone who wishes 5 to be heard at this time on issues relating to this 6 docket. 7 (No comments) 8 COMMISSIONER SEAMOUNT: Commissioner 9 Chmielowski, do you have anything to add? 10 COMMISSIONER CHMIELOWSKI: No, thank you. 11 COMMISSIONER SEAMOUNT: Commissioner Price, do 12 you have any comments? 13 CHAIRMAN PRICE: Nothing from me, thank you. 14 COMMISSIONER SEAMOUNT: Okay. Do I hear a 15 motion to continue this hearing to December 8th, 2020 16 at 10:00 a.m. 17 COMMISSIONER CHMIELOWSKI: I make a motion to 18 continue the hearing. 19 COMMISSIONER SEAMOUNT: Do I hear a second. 20 CHAIRMAN PRICE: I'll second. 21 COMMISSIONER SEAMOUNT: It's unanimous. Okay, 22 having no other comments from anybody I will adjourn 23 this portion of the hearing at 10:05 a.m. 24 Thank you. 25 MR. MARTINEK: Thank you, very much. Page 6 1 COMMISSIONER SEAMOUNT: Thank you, Mr. 2 Martinek. 3 MR. MARTINEK: Bye now. 4 (Adjourned - 10:05 a.m.) 5 (END OF PROCEEDINGS) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 7 1 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 07 are a true, accurate, and complete transcript of proceedings IN RE: Docket No. OTH-20-032, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION November 17, 2020 at 10:00 am NAME AFFILIATION Testify (yes or no) STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OFADVERTISMENT. ADVERTISING ORDER NUMBER AO-08-2I-0I0 FROM: Alaska Oil and Gas Conservation Commission AGENCY CONTACT: Jody Colombie/Samantha Carlisle DATE OF A.O. 10/2/2020 AGENCY PHONE: (907) 279-I433 333 West 7th Avenue Anchorage, Alaska 99301 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: F,LEGAL DISPLAY r-CLASSIFIED r OTHER(Specify below) DESCRIPTION PRICE CO-20-032 Initials of who prepared AO: Alaska Non -Taxable 92-600189 SUBMIT INVOICE SHOWING ADVERTISING ORDERNO.,CERrIFIEDAFFIDAVm OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENTTO: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Page I of 1 Total Of All Pages S REF Type Number Amount Date Comments I PVN IVCO21795 2 AO AO-08-21-010 3 4 FIN AMOUNT SY Act. Template PGM LGR Object F1 I DIST LIQ I 21 AOGCC 3046 21 2 3 4 S 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 state Is registered for tan free transactions under Chapter 32. IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and DISTRIBUTION: Division Fiscal/Original AO Copies: Publisher (faxed), Division Fiscal, Receiving Form:02-901 Revised: 10/212020 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: CO-20-032 B1ueCrest Energy, LLC. Request for Reconsideration of Bonding Requirements 20 AAC 25.025 B1ueCrest Energy, LLC requested the Alaska Oil and Gas Conservation Commission (AOGCC) reconsider bonding amounts that were established when 20 AAC 25.025 was adopted May 18, 2019. The AOGCC has scheduled a public hearing on this application for November 17, 2020, at 10:00 a.m. at 333 West 7' 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 the day before the hearing 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 followed by the # sign. 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. In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the November 17, 2020 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than November 12, 2020. Jeremy M. Price Chair, Commissioner Please see below for the ad confirmation and let me know if this is approved to run. Order Number. W0018228 Order Status: Submitted Classlbc9im: LeMs&PublicNoce<_ Pxkage: Legals ADN Fim Cast: 234.08 I lernl Code: AO-08-21-010 Payment Type: User ID: W0010415 ACCOUNT INFORMATION Sr OF AK OIL AND GAS CONSERVATION COMMISSION 333 W. 7THAVE STE 100 ANCHORAGE. AK 99501 907-279-1433 legaladslicatlncom ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION STATE D AtASItA AIASKA OIL AND OAS CONSERVATION COMMSS Re. DOOkta hl T W 20-032 81U leg D&rgy, MC RQQU2R Of Rec0r61de a[brl 01 Evuling R ememS 20 C 25 025 81WfOR EMV,, t ;vc;ue ted OR) A6 W end Gas e8��p1('.C�E 5 tAxOG1 CC1 35r¢ CIS der Cdrldk�g anKRnts ad0pred May 18. 2019, Me AOGCC Isar Sr2Kda0 a W GK r"fI!l1gg M tltl5 d WNW~ 12, 20W, 8l 1000 am. al 333 yA15t AVRR10, Antlnlage, AMSRa 99501. el l Date 12:42PM-Fri-Oct2,2020 Amount: 234.08 Sun Op 4.2020 Anchorage Datly News lel Lisi Misa Legal Advertising legalads@adn.com 1 907-257-4286 Anchorage Daily News I adn.corn 300 W. 31st Ave. Anchorage, AK 99503 ©00 OCtOO& a, 2020 "As of July 8th, we will be charging for affidavits. The standard affidavit charge is $5. This charge will automatically be included in all cost/quotes unless requested otherwise. Please keep all correspondence for legal advertising addressed to legalads(rD.adn.com, to assure best service and tracking. ADN Virtual Career Fair Oct. 14 &15, 2020. Email inowlina0madn.com „ ATTENTION. AFFIDAVITS ARE MAILED OUT ON TUESDAYS/FRIDAYS — On Fri, Oct 2, 2020 at 12:20 PM Colombie, Jody J (CED) <1ody.colombie(@alaska.eov> wrote: Thank you Bernie Karl Recycling Inc. Gordon Severson Richard Wagner K&K P.O. Box 3201 Westmar Cir. P.O. Box 60868 Fairbanks, AK 99711 Anchorage, AK 99508-4336 Fairbanks, AK 99706 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 CONFIDENTIAL HELD IN SECURE STO RAG E BlueCrest Alaska Operating LLC 3301 CStreet, Suite 202 Anchorage, AK 99503 (214)697-8802 John M Martineck President & Chief Operating Officer August 27, 2020 Alaska Oil and Gas Conservation Commission 333 W 7th Avenue Anchorage, AK 99501 RE: BlueCrest Alaska Operating LLC — Abandonment & Reclamation Bonding/Financial Assurance Commissioners: I write in follow up to recent communications from your office regarding BlueCrest's abandonment and reclamation bonding for the wells at BlueCrest's Cosmopolitan Unit "Cosmo". Specifically, we wanted to follow up on the email memorandum from Ms. Colombie on August 6, 2020, stating that BlueCrest's next bond installment payment is deferred until further notice. BlueCrest has always taken seriously its responsibility to plug and abandon and reclaim its well sites at the Cosmopolitan Unit. To that end, we wanted to ensure that you are informed of the full suite of arrangements BlueCrest currently has in place for abandonment and reclamation. First, BlueCrest has $750,000 in bonding in favor of the AOGCC (an initial $200,000 bond supported by an additional $550,000 bond). Second, BlueCrest has $500,000 in bonding in favor of the Department of Natural Resources. Third (see attached), BlueCrest has a $5,000,000 cash deposit with Pioneer Natural Resources ("Pioneer"), the previous owner of Cosmo. The cash deposit with Pioneer is broken out as $3,000,000 for abandonment and $2,000,000 for reclamation. This comes to $6,250,000 in bonding and other financial assurance for abandonment and reclamation at Cosmopolitan. Currently, Cosmopolitan is a producing oil and gas field. There are five wells in the unit. Based on current reservoir estimates, BlueCrest estimates a field life of 20-30 years. Our current estimate of the cost to plug and abandon each well is $400,000-$500,000. Thus, the bonding and other financial assurance BlueCrest has in place is well in excess of the current estimated costs of abandonment and reclamation at Cosmopolitan. We respectfully submit that the State of Alaska and the public are well protected at Cosmopolitan and that the AOGCC should consider the above information before requiring additional bonding by BlueCrest. I am available to discuss this matter at your convenience. In addition, please advise if you would like any additional information in these regards. G le s, J n arti eck lue est Energy January 27, 2020 BlueCrest Energy Inc. 1320 S. University Dr., Suite 825 Fort Worth TX 76107 (817) 731-0066 Mr. Kenny Lee Pioneer Natural Resources 5205 North O'Connor Boulevard, Suite 200 Irving, Texas 75039 Dear Mr. Lee: For the purpose of assisting our auditors, BKD. LLP, 14241 Dallas Parkway, Suite 1100 Dallas, TX 75254, in performing their audit of our financial statements as of and for the year ended December 31, 2019, we would appreciate you verifying that Pioneer Natural Resources is holding an abandonment -liability escrow balance on behalf of BlueCrest Energy Inc. in the amount of $5,000,000, as of December 31, 2019, related to the Cosmopolitan Properties. Please sign and return to our auditors in the enclosed return envelope. If you prefer, you may e-mail your response directly to elavy bkd.cum Very truly yours, BlueCrest Energy Inc. Kenneth W. Sanders Chief Financial Officer To BKD, LLP: If you have any disagreement with the information presented above, please detail them in the space provided below: lip /om a —Signature Corporate Finance Director Title 2/3/2020 Date Colombie, Jody J (CED) From: John Martineck <john@bluecrestenergy.com> Sent: Wednesday, September 9, 2020 5:34 AM To: Colombie, Jody (CED) Subject: Fwd: [External] - RE: Confirmation -- BlueCrest Energy Inc. Attachments: BlueCrest Energy Pioneer confirm Letter.pdf Jody, I think this is what you are looking for from Pioneer. God bless, John Forwarded message From: Mike Carne <mcarne@bluecrestenergy.com> Date: Tue, Aug 25, 2020 at 3:09 PM Subject: Fwd: [External] - RE: Confirmation -- BlueCrest Energy Inc. To: John Martineck <john@bluecrestenergy.com>, Kenneth Sanders <kenneth@bluecrestenergy.com>, Benjamin Johnson <benjamin@bluecrestenergy.com> Forwarded message From: Lee, Kenny <Kenny.Lee@pxd.com> Date: Mon, Feb 3, 2020 at 9:46 AM Subject: RE: [External] - RE: Confirmation -- BlueCrest Energy Inc. To: Tay, Eric <etay@bkd.com> Cc: Russell, Paul <prussell@bkd.com>, Mike Carne <mcarne@bluecrestenergy.com>, kenneth@bluecrestenergy.com <kenneth @bluecrestenergy.com> Attached is the confirmation. Just a note for your records our new Corporate address is: 777 Hidden Ridge, Irving, TX 75038 Xmny Lee Pioneer Natural Resources Company Kennv.lee(a)pxd.com 972-969-5725 (office) 972-595-4042 (cell) From: Tay, Eric <etay@BKD.com> Sent: Friday, January 31, 2020 11:58 AM To: Lee, Kenny <Kennv.Lee@pxd.com> Cc: Russell, Paul <prussell@BKD.com>; Mike Carne <mcarne@bluecrestenerev.com>; kennethPbluecrestenergy.com Subject: [External] - RE: Confirmation -- BlueCrest Energy Inc. CAUTION - EXTERNAL SENDER Dear Mr. Lee: My name is Eric Tay with BKD LLP, the auditor of BlueCrest Energy Inc. In connection with the audit of BlueCrest Energy Inc. financial statements for the year ended December 31, 2019, we would like you to confirm the attached confirmation. Please provide your response with attachment via email to etay(a)bkd.com. Your prompt attention to this matter is greatly appreciated. Thanks! Eric (Kim Ting) Tay, CPA Audit Manager I BKD 14241 Dallas Parkway, Suite 1100 Dallas, TX 75254 972.361.3713 Direct 972.702.8262 EXT. 43440 972.702.0673 Fax Everyone needs a trusted advisor. Who's yours? CPAs 8 Advtears SIGN UP FOR BKD THOUGHTWARE� ****** BKD, LLP Internet Email Confidentiality Footer ****** Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message, and notify us immediately. If you or your employer do not consent to Internet email messages of this kind,.please advise us immediately. Opinions, conclusions and other information expressed in this message are not given or endorsed by my firm or employer unless otherwise indicated by an authorized representative independent of this message. Any tax advice contained in the body of this email was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. These discussions and conclusions are based on the facts as stated and existing authorities as of the date of this email. Our advice could change as a result of changes in the applicable laws and regulations. We are under no obligation to update this information if such changes occur. Our advice is based on your unique facts and circumstances as you communicated them to us and should not be used or relied on by anyone else. Statement of Confidentiality: This message may contain information that is privileged or confidential. If you receive this transmission in error, please notify the sender by reply e-mail and delete the message and any attachments. "'As surely as I live,' says the Lord, every knee will bow before me; every tongue will acknowledge God."' Romans 14:11 John M. Martineck President & Chief Operating Officer BlueCrest Alaska Operating LLC 214-697-8802 THE STATE °fALASKA GOVERNOR MICFLAEL J. DUNLEAVY May 7, 2020 Andrew Buchanan Vice President- Alaska B1ueCrest Alaska Operating LLC 3301 C Street, Suite 202 Anchorage, AK 99503 Re: Docket No. OTH-20-035 Request to Extend Bond Payment Date Dear Mr. Buchanan: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907,279.1433 Fox: 907.276.7542 www.cogcc.oloska.gov As stated in your letter dated April 14, 2020, the next bond installment is due August 16, 2020. B1ueCrest LLC currently has $750,000 in bonding with the Alaska Oil and Gas Conservation Commission. Per 20 AAC 25.025, the next installment amount is $550,000. Your request to delay the date of the next installment by two years to August 16, 2022 is under advisement. A determination will be provided no later than July 31, 2020. Sincerely, Jessie L. Digially signal by Amie` m�nkl�nn Chmielowski D110eg.07M2,l3 Oigaally signal by Daniel Daniell. T.seamnentk.. Seamount,Jr.-0b` OD5D110A2i10 3 sy Jessie L. Chmielowski Daniel T. Seamount, Jr. Commissioner Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Cosmopolitan Project 20 Alaska Admin. Code 25.025. Bonding April 14, 2020 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 71' Avenue, Suite #100 Anchorage, AK 99501 Re: 20Alaska Admin. Code 25.025. Bonding Deferral of Bonding Dear Commissioners, BlueCrest Alaska Operating, LLC (BlueCrest) hereby respectfully requests that the Commission defer the bonding requirements for existing wells at the Cosmopolitan project for a period of two years, as follows: • August 16, 2020 bond requirement of $500,000 be deferred to August 16, 2022 • August 16, 2021 bond requirement of $500,000 be deferred to August 16, 2023 • August 16, 2022 bond requirement of the remaining balance be deferred to August 16, 2024 As the Commission Is aware, the recent collapse in oil prices and the economic downturn resulting from the covid-19 response has placed unprecedented financial strains on all the oil and gas companies operating in Alaska. That strain is particularly acute for smaller companies like BlueCrest, who operate on very close margins and whose access to capital is significantly limited in the current economic environment. Providing BlueCrest with this limited relief will have a material, positive impact for our ongoing operations, yet it will not create any unreasonable risk for the state. BlueCrest is not seeking a waiver of the bonding requirements; rather, it only asks for a limited deferral of those requirements. And that deferral would only run through 2024 on a project that has 25 years of an economic life ahead of it. Please let me know if you have any questions regarding this request. Thank you for your attention to this matter. Best regards, Andrew Buchanan Vice President - Alaska BlueCrest Energy LLC 3301 C Street, Suite 202 (907)754-9563 Coiombie Jody J (CED) From: Carlisle, Samantha 1 (CED) Sent: Tuesday, April 14, 2020 2:42 PM To: Colombie, Jody 1 (CED); Seamount, Dan T (CED); Price, Jeremy M (CED); Chmielowski, Jessie L C (CED); Ballantine, Tab A (LAW); Roby, David S (CED) Subject: FW: Request for Bonding Requirement Deferal Attachments: AOGCC Request to Defer Bonding Requirements.pdf Categories: Green Category From: Andrew Buchanan <abuchanan@bluecrestenergy.com> Sent: Tuesday, April 14, 2020 2:36 PM To: Carlisle, Samantha J (CED) <samantha.carlisle @alaska.gov> Cc: John Martineck <john@bluecrestenergy.com> Subject: Request for Bonding Requirement Deferal Dear Commissioners, BlueCrest Alaska Operating, LLC (BlueCrest) hereby respectfully requests that the Commission defer the bonding requirements for existing wells at the Cosmopolitan project for a period of two years, as follows: • August 16, 2020 bond requirement of $500,000 be deferred to August 16, 2022 • August 16, 2021 bond requirement of $500,000 be deferred to August 16, 2023 August 16, 2022 bond requirement of the remaining balance be deferred to August 16, 2024 As the Commission is aware, the recent collapse in oil prices and the economic downturn resulting from the covid-19 response has placed unprecedented financial strains on all the oil and gas companies operating in Alaska. That strain is particularly acute for smaller companies like BlueCrest, who operate on very close margins and whose access to capital is significantly limited in the current economic environment. Providing BlueCrest with this limited relief will have a material, positive impact for our ongoing operations, yet it will not create any unreasonable risk for the state. BlueCrest is not seeking a waiver of the bonding requirements; rather, it only asks for a limited deferral of those requirements. And that deferral would only run through 2024 on a project that has 25 years of an economic life ahead of it. Please let me know if you have any questions regarding this request. Thank you for your attention to this matter. Best regards, Andrew Buchanan VP - Alaska BlueCrest Energy Ph: 907-754-9563 Cell: 907-250-6545