A small energy company operating a North Slope oil field has been ordered to pay a $357,905 fine for illegally flaring natural gas over a six-month period.
The Alaska Oil and Gas Conservation Commission assessed the fine against Cook Inlet Energy in an order issued on Aug. 14.
Cook Inlet Energy flared over 51 million cubic feet of natural gas at the Badami field between last October and March, according to the commission.
The fine’s dollar amount is equal to twice the market value of the gas lost to flaring, as specified by state law, the AOGCC said in its order.
Cook Inlet Energy could reduce the fine amount if it upgrades or replaces the vapor recovery unit that had been inoperable at the time the gas was flared, the AOGCC order said.
The commission initially proposed the fine in May. The company disputed the commission’s initial findings of violations, arguing that the flaring was necessary for safety because the Badami vapor recovery unit was unexpectedly inoperable, that there was no backup system and that a power outage compounded the problem, according to the order.
Cook Inlet Energy pointed out that it had duly reported the gas flaring, and it argued that the flaring was legal under a rule that allows natural gas to be burned off in that way in emergencies or other special circumstances. The company cited a 2022 AOGCC order that allowed flaring at a well drilled by Great Bear Pantheon LLC.
However, the AOGCC found that those special circumstances did not apply in this case, according to the order.
Cook Inlet Energy raised other issues in its arguments against the commission’s finding. One company argument cited the lack of a market for North Slope natural gas; because there is no market, the company argued, no royalties were lost to the state through the flaring.
However, the commission said it considers the flaring to be a waste of a state-owned natural resource, nonetheless.
“Resource conservation, including that of reducing or eliminating gas flare volumes, is of utmost importance to the State of Alaska, with lack of a current export path or current unrealized royalties being immaterial,” the AOGCC order said.
A small amount of gas flaring is allowed in Alaska, despite Gov. Mike Dunleavy’s repeated claims that oil producers in the state do not flare any natural gas. However, Cook Inlet Energy’s flaring well exceeded what would be allowable, according to the AOGCC order.
Cook Inlet Energy has a year to pay the fine, and it can credit the costs of a vapor recovery unit upgrade or replacement against the assessed $357,905, according to the order. The company also has the right to appeal the commission’s findings.
Cook Inlet Energy is a subsidiary of Glacier Oil & Gas, a privately held independent company. Until recently, a different Glacier Oil & Gas subsidiary, Savant Alaska, operated the Badami field.
Badami, located on the eastern side of the North Slope, was originally brought into development by BP. Production there started in 1998. A decade later, BP formed a partnership with Savant that established the latter as Badami’s operator.
Badami’s production has fluctuated. It was about 2,000 barrels a day from April 2024 to March 2025, but in the year prior to that period, it averaged less than 900 barrels a day, according to the Alaska Division of Oil and Gas. The increase in production was largely attributed to a new well.