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Hilcorp fined for overdue Steelhead test
AOGCC cites company for delayed witnessed mechanical integrity test; fine is $50,000 plus $1,500 per day, $36,000, for 24 days Kristen Nelson
The Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska $86,000 for an overdue witnessed mechanical integrity test on the Trading Bay Unit M-30 injection well on the Steelhead platform in Cook Inlet. The commission's decision was issued July 12, following a June 3 notice of proposed enforcement action.
In a May 15 letter to the commission Hilcorp reviewed the incident.
The TBU M-30 last had a witnessed mechanical integrity test, MIT, on Jan. 24, 2020.
On Feb. 23, 2024, Hilcorp performed an unwitnessed MIT, and on Feb. 24 Hilcorp notified AOGCC and requested a witnessed MIT.
In its June 3 notice of proposed enforcement action AOGCC said Hilcorp violated the provisions of an area injection order requiring that a schedule "be developed and coordinated" with AOGCC ensuring pressure testing on injection wells prior to the beginning of injection and at least once every 4 years thereafter.
Company overview In its May 15 letter, Hilcorp said that as of Feb. 1, 2024, "TBU M-30 remained on injection without required MIT." (AOGCC said a test can be performed anytime in the anniversary month -- in this case January 2024.)
After successfully performing the unwitnessed MIT, Hilcorp said it notified AOGCC, requesting witness of a MIT at the well.
The commission had scheduling issues, and a witnessed MIT was not completed until March 9.
In its May 15 letter Hilcorp discussed root causes of the incident and contributing factors, citing deficiencies as the lead cause of inadequate implementation, with Steelhead relying on "varying systems including Outlook email and calendar reminders, manual entries into a work order tracking tool, notification from Engineering or Compliance staff, or written entries in the control rooms," which didn't notify "responsible and accountable personnel in advance of the policy deadline."
A second root cause was lack of adequate communication between Anchorage personnel and those on the platform "regarding the sensitivity of timing for the required work."
Contributing factors included a requirement for manual entry on tracking systems and the requirement for manual review and updating of a "legacy spreadsheet" for compliance activities.
Hilcorp listed three actions to prevent recurrence of the issue:
*Examining an automated standardized notification process for regulatory compliance, to be "discussed further with AOGCC staff";
*Regular monitoring of the tracking system to verify that tools are working and compliance activities meet deadlines; and
*Standardizing "ownership of compliance tasks across the organization to ensure proper delegation."
AOGCC decision In its July 12 decision and order the AOGCC said Hilcorp's failure to complete a witnessed MIT for the M-30 injection well within the required 4-year cycle violated the area injection order for the field, resulting in a $50,000 civil penalty for the violation, and an additional $1,500 per day penalty for each of the 24 days the well operated with an overdue MIT, $36,000, for a total of $86,000. (The 24 days reflect the time from the end of January through Hilcorp's Feb. 24 notification to the commission.)
The commission said in addition to the penalty it requires a detailed explanation from the company of how it will prevent recurrence and said it "has also historically required Hilcorp to demonstrate to the AOGCC's satisfaction a more robust regulatory compliance tracking system that addresses all AOGCC-mandated obligations."
Hilcorp has completed an internal investigation, the commission said, citing the May 15 letter, and provided a root cause analysis with actions to prevent recurrence.
"It is the expectation with every enforcement action that Hilcorp identify, implement, and continue to assess the effectiveness of compliance improvement initiatives," the commission said.
In discussing the fine the commission said Hilcorp's failure in this instance "raises the potential for similar behavior with more serious consequences," and cited "Hilcorp's history of compliance/noncompliance and the need to deter similar behavior(s)."
On the positive side, the commission noted the existing aquifer exemption for the Trading Bay unit, the lack of injury to the public or the environment "and Hilcorp's cooperation with the investigation."
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