Environment News

Bankrupt company faces penalty for leaving gas well unplugged in Alaska

The Alaska Oil and Gas Conservation Commission (AOGCC) has issued an enforcement order against a bankrupt company that failed to plug an exploratory natural gas well in the Matanuska-Susitna Borough. The well was abandoned several years ago and poses a potential environmental and safety risk.

The history of the Middle Lake 1A well

The well in question is located onshore near Point MacKenzie on the west side of Cook Inlet. It was originally completed by Forest Oil Corp. in 2005, but it never encountered any hydrocarbons, according to a well history compiled by the AOGCC. Forest Oil sold its Alaska assets to Pacific Energy Resources Ltd., a California-based company, in 2007. Pacific Energy Resources went into bankruptcy in 2009 and walked away from its Alaska assets that year, leaving the well unplugged and the site unattended.

The AOGCC’s efforts to contact the company

The AOGCC has been trying to reach Pacific Energy Resources since at least 2014 over concerns about this and other Cook Inlet basin wells the company abandoned. The commission sent multiple communications to the company’s last known addresses, but received no response. The commission also tried to contact the company’s bankruptcy trustee, but was unable to obtain any information. By information and belief, it is believed that Pacific Energy Resources ceased to exist as a business entity, the enforcement order said.

Bankrupt company faces penalty for leaving gas well unplugged in Alaska

The enforcement order and the penalty

The enforcement order was issued on Tuesday, February 6, 2024, by the AOGCC. It assessed a $200,000 penalty on Pacific Energy Resources for violating state regulations that require proper plugging and abandonment of wells that are no longer in service. The penalty amount is equal to the cash bond that the company previously submitted to the state as a guarantee for its wells. The commission said that the penalty is justified by the company’s “willful and continuing failure” to comply with its obligations and the potential harm that the unplugged well could cause to the environment and public health and safety.

The plan to plug the well and clean up the site

The AOGCC’s file on the well’s history shows that there is already a company preparing to plug the well and clean up the site in accordance with state requirements. That company is Cook Inlet Energy LLC, a subsidiary of Glacier Oil and Gas Corp., which acquired some of Pacific Energy Resources’ assets in 2010. Cook Inlet Energy has submitted a plugging and abandonment plan to the AOGCC and has obtained the necessary permits and approvals from other state agencies. The company expects to start the work in the spring of 2024, when the weather and road conditions are favorable.


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