Alaska regulators fine North Slope oil field operator for unauthorized gas flaring

Alaska regulators on Wednesday assessed a $741,520 civil penalty against the operator of a small and trouble-plagued North Slope oil field for five months of unauthorized flaring of natural gas.

In Alaska, underground oil and gas fields are owned collectively by state residents. Wasting oil and gas without paying the state for it is equivalent to theft. Flaring — burning unused gas — is allowed for safety reasons and for early development of an oil or gas well, but only with state permission.

The Alaska Oil and Gas Conservation Commission took the enforcement action against Mustang Holding LLC., the leaseholder at the Southern Miluveach Unit.

The unit, which holds a field and related infrastructure commonly called Mustang, lies on the western North Slope, just west of the ConocoPhillips-operated Kuparuk River Unit.

During initial production startup last year, Mustang Holding had permission to flare gas temporarily for well testing, but the company continued the practice after that permission expired, the AOGCC said in its order. It flared gas without authorization continuously from Nov. 1, 2025, to March 31, 2026, resulting in the burning of 112.3 million cubic feet of natural gas, the AOGCC said in its order.

As required by state law, the commission assessed a penalty equivalent to twice the market value of the burned-off natural gas, which is considered a wasted state resource, the order said.

The commission initially proposed the penalty on April 28. Mustang Holding objected, and an informal review was held in June, the order said. After that, the commission upheld its $741,520 penalty.

Mustang Holding admitted to flaring beyond the permitted period, which expired on Oct. 31. However, it argued that flaring beyond that date should not be penalized, according to the AOGCC order, which summarized the company’s defenses.

Mustang Holding argued that the flaring occurred before the site’s gas processing infrastructure was in operation “and therefore should not be treated the same as unauthorized flaring after the commencement of regular production,” the AOGCC order said. Mustang Holding also argued that the flaring “was neither willful nor commercially motivated,” the AOGCC order said.

An email to Mustang Holding’s representative was not returned, and he was not available by telephone.

The Southern Miluveach Unit, initially formed in 2011, has had a rocky history, with numerous changes in ownership and failures to meet financial obligations to the state.

A previous developer, Brooks Range Petroleum Co., defaulted on a loan provided by the Alaska Industrial Development and Export Authority. That prompted the state development agency to foreclose on the property in 2021.

Support from AIDEA included financing an access road to the property. In all, AIDEA had provided $72 million for the development, and the state provided another $22.5 million loan through the Department of Revenue.

In October 2023, an independent company called Finnex LLC acquired Mustang Holding, allowing AIDEA to divest itself of the project. Finnex is owned by another company, Houston-based Thyssen Petroleum USA.

Production at the Southern Miluveach Unit started at about the beginning of 2025, according to the most recent plan of development reviewed by the Alaska Division of Oil and Gas. Average daily oil production from January to October 2025 was about 500 barrels, according to the plan of development.

Mustang Holding has now installed facilities intended to enable it to handle daily production of 5,000 barrels, according to the plan of development.