Legislature(2005 - 2006)CAPITOL 124
04/18/2005 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska Oil and Gas Conservation Commission | |
| HCR7 | |
| HB9 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HCR 7 | TELECONFERENCED | |
| + | HB 9 | TELECONFERENCED | |
| + | HB 241 | TELECONFERENCED | |
| + | TELECONFERENCED |
HCR 7-COOK INLET OIL & GAS PLATFORM ABANDONMENT CO-CHAIR SAMUELS announced that the next order of business would be HOUSE CONCURRENT RESOLUTION NO. 7, Urging the governor to direct the division of oil and gas, Department of Natural Resources, to undertake a comprehensive review of the subject of Cook Inlet oil and gas platform abandonment for the purpose of developing new oil and gas platform abandonment regulations and their adoption and implementation. ELEANOR WOLFE, Staff to Representative Kurt Olson, said there are offshore oil platforms in Cook Inlet that are over 40 years old, and regulations regarding abandoning the platforms are needed. The large number of entities involved will make the process time consuming. She said it is imperative the process begins as soon as possible, "particularly considering the impending sale of Unocal." She said the process will involve Cook Inlet Keeper, Trustees for Alaska, the Department of Environmental Conservation, industry members, Department of Natural Resources (DNR), Alaska Oil and Gas Conservation Commission (AOGCC), and others. She concluded that HCR 7 requests a comprehensive review be undertaken by DNR. 1:38:48 PM MARK MYERS, Director, Division of Oil and Gas, Department of Natural Resources (DNR), said DNR is fine with HCR 7. There are 16 platforms in Cook Inlet, and 4 are in lighthouse status, meaning the wells have been plugged and abandoned. He said these platforms are not economic for production, and there are others that are below their peak level of production. "The ultimate abandon standards need to be addressed in the near future," he stated. "Under the current lease terms, basically, they're required to fully remove and abandon all the facilities, remove all the seafloor pipelines and permanently plug and abandon the wells to AOGCC satisfaction." There is still exploration potential with lower and deeper targets, he said. "So the question is, can someone else economically operate the platforms or should they be removed permanently?" He suggested the platforms could be totally removed or left for other purposes. The state needs a process and standards, which will take time, and DNR supports moving forward, he said. 1:41:24 PM CO-CHAIR RAMRAS asked the cost to tear down and clean up a platform. 1:41:53 PM MR. MYERS said between $2 to $10 million for just the platform, and then there is the pipeline. Much of the infrastructure is connected and interrelated, creating complications. Specialized equipment will be needed, and there are questions of what the ultimate structure will be, if anything. He said the platforms could be used for habitat, further exploration, fish farms or be obliterated. 1:43:24 PM CO-CHAIR RAMRAS asked the cost of a new platform in Cook Inlet. MR. MYERS said up to $20 million just for the platform without the rigs. CO-CHAIR RAMRAS asked how the state can help urge the big operators to sell to the independent oil companies and overcome the concern of increased competition. 1:45:05 PM MR. MYERS said Cook Inlet does not have enough oil production for export, reducing competition. He said the bigger issue is that large corporations want more profits than the platforms are currently generating, and they want to lose their deep-pocket liability of oil spills from the aging platforms. "So they want to go ahead and sell the asset," he said. Some platforms are still lucrative, but the marginal platforms will likely be sold. The state will want to make sure the new operator is capable of operating the platform safely, and will want to keep the deep-pocket connection so the state doesn't end up with the liability. 1:47:00 PM REPRESENTATIVE CRAWFORD asked how long the platforms can withstand the inclement environment. MR. MYERS said they appear to be adequate for 20 years, but each platform needs to be considered individually. 1:49:02 PM REPRESENTATIVE GATTO asked if the platforms can be blown up, with the debris left for fish habitat. MR. MYERS said that might be permissible but it will need to go through the public process. There are strong tidal currents, so it may not be stable. He noted it would go through an Alaska Coastal Management Program process. 1:50:50 PM MICHAEL MUNGER, Executive Director, Cook Inlet Regional Citizens Advisory Council, Kenai, said the council is a nonprofit organized exclusively for the oversight and monitoring of oil operations in Cook Inlet. The council took a detailed look at the dismantling of the platforms, and said DNR has no specific statutes or regulations for such. He said HCR 7 will allow regulators to develop regulations, and the council has a white paper on it that will be ready in May. 1:53:03 PM DANIEL SEAMOUNT, Commissioner, Alaska Oil and Gas Conservation Commission (AOGCC), said the AOGCC supports HCR 7, but he urged caution "because there is a lot of oil left under Cook Inlet that is accessible from these platforms." Some light-housed platforms have only recovered 30 percent of the oil, he said. "There are hundreds of millions of barrels left in the produced fields of Cook Inlet," he noted, and motivated production companies should be encouraged to use new technology to extract as much oil as reachable from the platforms. 1:55:05 PM MR. SEAMOUNT said Cook Inlet is regarded as a mature field, but it is still under-explored. He noted a study that said only four percent of the oil has been identified in Cook Inlet, so with the 3 billion barrels that have been identified, "that comes out to 75 billion barrels of oil that was generated, and no one knows where it went. It may have escaped to the surface or there may be a lot of it left in undiscovered reservoirs and undiscovered rocks." He said his experience tells him that it is still trapped somewhere, and a lot would be accessible from the platforms. 1:56:53 PM MR. SEAMOUNT said the source rocks may be in the Jurassic layer. It makes sense to reenter well bores and drill another 5,000 feet into that section. He noted that the rocks are folded and faulted, making seismic identification difficult, so the best way to test the potential is through old well bores. 1:57:45 PM MR. SEAMOUNT said, "There are four tiers of potential left in Cook Inlet. One is discovered reservoirs that have been under- produced--less than 30 percent recovery. There are untested fault blocks that separate the known reservoir from its equivalent under and off to the sides of the platforms. There are identified prospects that have been around for years but not tested. And then there's the deep Jurassic and Cretaceous potential." The AOGCC believes the platforms are assets and all stakeholders must be careful when considering abandonment, which closes a window of economic potential, he concluded. 1:59:03 PM CO-CHAIR SAMUELS asked if AOGCC has the ability to tell the difference between a true exploratory well and a well going to an under-produced area that would be considered a production well. MR. SEAMOUNT said there is the expertise to accurately separate them out anywhere in Alaska. REPRESENTATIVE CRAWFORD asked about gas in Cook Inlet. MR. SEAMOUNT said he believes there is gas potential, especially at depth. "In fact the gas oil ratio is fairly low in the presently produced reservoir, so where is that gas?" he asked. 2:00:28 PM REPRESENTATIVE OLSON offered Amendment 1, labeled 24-LS0876\A.1, Chenoweth, 4/12/05 as follows: 1 Page 2, line 6: 2 Delete "smaller" 3 Insert "growing, independent" There being no objection, Amendment 1 carried. REPRESENTATIVE OLSON moved to report HCR 7 as amended out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHCR 7 (RES) passed out of the House Resources Standing Committee. The committee took an at-ease from 2:01 p.m. to 2:02. 2:02:40 PM
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