OSA to tighten procedures after $30,000 AOGCC fine for changes

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has fined Oil Search (Alaska) $30,000 for violating its regulations by failing to follow an approved permit to drill for the NDBi-044 well at its Pikka unit. The commission's regulations require approval of changes to an approved drilling permit.

AOGCC said in a June 12 order that the drilling permit for the well was approved Oct. 17 and OSA completed drilling Dec. 22. The commission said mitigating circumstances considered in imposing the civil penalty included OSA's lack of previous enforcement actions and the fact that there was no injury to the public beyond the company's failure to comply with the permit.

In an April notice of proposed enforcement action AOGCC said its regulations require that "an operator may not undertake a change to an approved program or activity without AOGCC Sundry approval." The agency said its investigation found OSA emailed the agency Oct. 30 informing it of plans to make changes in the well's directional plan; install an 9-5/8 inch tieback casing string; and move the second stage cement job collar from 6,750 feet measured depth to 4,126 feet MD based on a reinterpretation of the Tuluvak productive interval.

The Oct. 30 email advised the commission of operational changes to the drilling plan based on the company's "fast moving continuous improvement process," but without asking approval to the changes it was making to the permitted drilling plans.

On Nov. 1, AOGCC replied with questions, which OSA partially answered Nov. 6, without answering a question on why oil-bearing sands were to be left uncemented.

On Nov. 21 OSA ran the second stage cement collar at a much shallower depth than approved in the drilling permit; and on Dec. 1 ran the 9-5/8 inch tieback casing string, which was not included in the approved drilling permit.

The agency said minor changes which OSA made in the directional plans for the well did not require approval as the approved bottomhole location was not changed by more than 500 feet, but other changes did require approval, and AOGCC said it had no record of receiving an application for sundry approvals nor of any verbal or written approval of the changes.

Response

In addition to the fine, AOGCC required OSA to provide a detailed explanation of how the company plans to prevent recurrence.

OSA said it would immediately roll out a series of actions:

*Directing all requests for changes to approved permits solely "to the AOGCC-assigned petroleum engineer," with that individual being "the single point of contact for approving such requests."

*Specifically request approval from the AOGCC petroleum engineer, with OSA drilling engineers including "their best estimates of the timeframe in which approvals are needed" and notifying the AOGCC petroleum engineer "of any urgency related to the requests."

"Operations will not proceed unless clear written approvals are received from the AOGCC Petroleum Engineer," OSA said.

*The relevant OSA manager will be copied on change request communications, the company said, with the goals of consistency between drilling and completion teams, improving compliance and fostering cooperation moving forward.

OSA said that given its plan going forward, its "good faith efforts at clear and transparent communications" and "excellent record of compliance in the past," it requested the commission issue a warning rather than a notice of violation.

In imposing the fine, AOGCC said it considered benefits from the violation and need to deter similar behavior as factors influencing its decision to impose the fine and noted that it did not impose a per-day assessment which would have significantly raised the penalty.

--KRISTEN NELSON