NordAq fined $100,000 for unplugged well

On Thursday the Alaska Oil and Gas Conservation Commission issued a $100,000 penalty and a $800,000 bond requirement to Alaskan independent oil and gas company NordAq Energy, Inc. for failing to plug an exploration well on its former lease on the west side of Cook Inlet.

NordAq incorporated in 2009 and soon after began onshore explorations for gas in Cook Inlet: first on the east side with the Shadura 1 exploratory gas well north of Nikiski’s Captain Cook State Park in 2011, then on the west side in May 2013, when it acquired the Tiger Eye lease — inland from the Kustatan Peninsula, also known as the West Forelands — in the state’s lease sale that year.

The Tiger Eye well, according to AOGCC’s Thursday notice, is only accessible in summer and sits on land owned by the Salamatof Native Association. NordAq’s exploratory well drilled into mineral leases held by the regional native corporation Cook Inlet Region, Inc.

CIRI terminated its mineral lease to NordAq in July 2015. The state terminated NordAq’s mining lease in October 2016. In December 2016, AOGCC proposed to fine NordAq $150,000 for leaving the Tiger Eye 1 well unplugged after the lease ended. In addition to the fine, AOGCC’s notice also proposed that NordAq deposit a $1.3 million bond to cover the state’s costs of plugging the well if NordAq should fail to do so.

NordAq did not respond to AOGCC’s notice due a robbery in its office, the company’s representatives told AOGCC during later meetings in April and June 2017.

The AOGCC notice states no leaks “or other problems other than a time delay” have occurred from the unplugged well. NordAq stated that it hadn’t plugged the Tiger Eye well after losing its CIRI lease in July 2015 because it was negotiating to transfer the well to Cook Inlet Energy, another company exploring for oil and gas resources in the Cook Inlet region. By July 2016, Cook Inlet Energy had informed NordAq that “it was not interested in assuming responsibility for the Tiger Eye-1 well,” according to the AOGCC notice.

After the April 4 hearing, AOGCC lowered the $150,000 fine to $100,000. It also lowered the bond to $800,000 because the site is accessible by road and because the land owners, Salmatof Native Association, want to keep the pad and road intact, lowering the state’s potential cost of reclaiming the site. NordAq began work to plug Tiger Eye 1 in June, but plan to be delayed until August because another company, Chevron, is using the dock on the west side of Cook Inlet that provides road access to the well. NordAq will forfeit the bond amount if the well remains unplugged on July 20, 2018.

NordAq is also facing another AOGCC fine in a similar case centered around its other Cook Inlet exploration well in the Shadura lease, which it also failed to plug after again having its lease revoked, again by CIRI, in May 2016.

After losing the Tiger Eye and Shadura leases, the only onshore Cook Inlet state lease NordAq presently holds is in Nikiski, according to the most recent Department of Natural Resources Division of Oil and Gas lease report.

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

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