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Gold/Mining/Energy : Centurion Gold --CGHI-- -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (456)	8/26/2006 9:28:54 PM
From: Snowshoe	Respond to of 460

Platform proposals raise ire of oil firms - DNR: Smaller companies would have to post large bond to ensure rig's removal. adn.com By ALAN BAILEY, Petroleum News Published: August 18, 2006 Last Modified: August 18, 2006 at 01:42 AM Small independent companies planning offshore exploration in Cook Inlet are screaming in protest at a bonding requirement that the state is proposing as part of new regulations governing the dismantling, removal and restoration arrangements for offshore oil and gas platforms. The Department of Natural Resources' proposed regulations would apply to platforms on leases in state waters. These include upper Cook Inlet fields Middle Ground Shoal, Trading Bay, McArthur River, Redoubt Shoal and North Cook Inlet, as well as the Kitchen and Sunfish oil and gas prospects. "It will kill what investment is coming in," said Mark Landt, a partner with Renaissance Resources. Renaissance hopes to explore several prospects using the rig that Escopeta Oil and Gas and partner Centurion Gold are bringing into the Inlet next year. Renaissance is seeking investors to help fund its exploration program, Landt said. Pat Galvin, land manager for the department's Division of Oil and Gas, said the proposed regulations are a response to concerns about what will happen when an offshore platform reaches the end of its useful life. He said industry has also requested more clarity about state requirements for dismantling, removal and restoration. Currently the rules are specified in the site cleanup plan of a lease or unit's operations plan, Galvin said. But in 2005, the state Legislature passed a resolution requiring DNR to review the Cook Inlet oil and gas platform abandonment. The key change DNR is proposing calls for the oil company to post a big enough bond to ensure proper removal of its offshore platforms, unless the company demonstrates it has "the financial strength and operational reliability to fully meet its financial obligations." This demonstration includes such requirements as a net worth of at least $100 million and at least five years experience in offshore exploration and development. Under current regulations the resources commission could require a large bond. But the proposal mandates the bond. About a dozen platforms, some not working, are in Cook Inlet. Galvin said the new bonding rule would come into play whenever anyone applies to construct or operate an offshore platform. "That would shut down any activity of independents coming into the Cook Inlet," said Landt. The cost of the bonding would kill the economics of offshore exploration, he said. In effect, the bond would close Cook Inlet to everyone except the very large independent companies and the major oil companies, he said. There is no similar bonding requirement elsewhere in the United States, he said. "Alaska needs to do everything in its power to encourage independents," he said. Landt said he can't understand why, rather than imposing bonding, the state doesn't require a dismantlement "sinking fund" tied to remaining reserves, as currently happens for the Middle Ground Shoal field. A sinking fund defers the dismantlement funding until some point in the field's life. In response, Galvin encouraged Landt to submit comments on the proposed regulations. However, Galvin said the proposed bonding is designed to ensure adequate funding for offshore platform removal; companies building offshore platforms need to be capable of eventually removing those platforms. Comments on the proposed regulations must be submitted to the Division of Oil and Gas by 5 p.m. on Oct. 2. The state plans public hearings in Kenai on Sept. 18 and in Anchorage on Sept. 19. -------------------------------------------------------------------------------- FOR MORE: See the proposed regulations for offshore oil and gas platforms in Cook Inlet at www.dog.dnr.state.ak.us/oil