|
Hilcorp fined $30,000 for not reporting
AOGCC says company failed to submit required custody meter performance reports from Cook Inlet units Granite Point, Trading Bay Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska LLC $30,000 for “failure to submit required meter performance reports” for custody transfer meters at the company’s Cook Inlet Granite Point and Trading Bay units. The commission said in an order issued June 12 that in addition to the civil penalty, Hilcorp must provide, within 10 days, “a detailed written explanation that describes how it intends to prevent recurrence of this violation.”
The commission issued a proposed enforcement action May 7, which said: “Hilcorp has violated the provisions of the conditional approval letters for the Granite Point Unit and Trading Bay Unit custody transfer oil measurement equipment.”
The commission conditionally approved meter changes and upgrades designed for the Cross Inlet Pipeline extension in February. The commission said the changes provided for two sizes of custody transfer meters at each production facility to allow for variable flow rates.
In its May 7 letter to Hilcorp the commission said the conditional approval in February required “meter prove frequency, notification to AOGCC for opportunity to witness meter proves, required actions before making changes to the custody transfer measurement equipment, and reporting obligations following proves.”
The reporting obligations required Hilcorp to provide results of monthly meter proves within seven days following the proves. The commission said “Hilcorp failed to submit meter performance reports as directed” in the February conditional approval.
Not isolated events The commission said in its May 7 letter that Hilcorp’s failures to report “are not isolated events,” and cited a notice of proposed enforcement issued in 2016 for a similar violation at the Bartolowits pad at the Ninilchik unit.
“Hilcorp’s non-compliance history in conducting hydrocarbon development activities in Alaska includes past failures to obtain necessary approvals, failures to install, maintain, and test required well control safety systems, failures to perform required tests, and failure to provide reports,” the commission said, and cited 18 non-civil penalty and seven civil penalty enforcement actions it has issued against Hilcorp since January 2012.
“Recurring areas of noncompliance, such as Hilcorp’s inability to account for specific approval conditions in its regulatory compliance tracking efforts, call into question the assurances that corrective actions implemented in response to past enforcement actions would be effective in mitigating repeat violations,” the commission said.
Civil penalties The commission said in its June 12 order that the $30,000 civil penalty was $15,000 each for the initial violations, the failure to provide meter performance reports, at Granite Point and at Trading Bay.
An AOGCC inspector witnessed initial functional checks and initial meter proves at the Trading Bay unit production facility on March 1 and at the Granite Point tank farm on March 2. Hilcorp performed required monthly meter proves at both locations April 1, the commission said.
The commission said it was provided reports from meter proves and transmitter calibration checks on March 5 but said no meter factor control charts were included.
No results were provided for meter proves on April 1 and May 1, the commission said.
Hilcorp provided copies of the required reports by email on May 16, and by letter on May 17 the company acknowledged receipt of the commission’s notice and requested an informal review. That review was held June 6 and the commission said “Hilcorp asked several clarifying questions and provided verbal assurance that corrective actions have been implemented.”
The commission’s June 12 order does not include any specifics from the informal review, but the commission said: “Acceptance of arguments that the conditions of approval are new provisions to Hilcorp operations personnel responsible for overseeing the custody transfer meters at Granite Point and Trading Bay Units would essentially encourage personnel not to familiarize themselves with the requirements of applicable orders and regulations.” The commission said the approval conditions were not ambiguous “and the requirements are consistent with the industry recognized practices found in API Manual of Petroleum Measurement Standards.”
Recent improvements The commission noted that there have been improvements in Hilcorp’s compliance over the past two years, but “the recurrence of failing to account for approval conditions imposed by AOGCC calls into question the effectiveness of corrective actions implemented in responses to past enforcement actions.”
The commission did note a number of mitigating circumstances, including Hilcorp’s partial submittal of information from the March 1-2 meter proves, “Hilcorp’s urgency in providing the missing information to AOGCC after receiving the Notice, the demonstrated good performance of the meters as shown in their respective meter factor control charts, and no injury to the public.”
The commission noted it did use its discretion “in significantly reducing the penalty by not invoking per-day or per-month assessments for the violations.”
Hilcorp did not respond to a request for comment in time for this issue’s deadline.
| 