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Hilcorp fined $10,000 over Prudhoe well
AOGCC inspector discovered violation, defeat of a safety system requirement on a well at PBU H pad, during a September inspection
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has fined Hilcorp North Slope $10,000 for violation of a regulation requiring working low-pressure safety valve system detection devices.
AOGCC said that on Sept. 27 an AOGCC inspector found “the safety valve system’s low-pressure detection device defeated, preventing the automatic closure of the surface safety valve” on the Prudhoe Bay unit H-24A well.
In an Oct. 4 letter to Hilcorp, commission Chair Jeremy Price said the inspector was witnessing safety valve system tests at the Prudhoe Bay unit H pad. “The low-pressure pilot on Prudhoe Bay Unit H-24A was found defeated at the time of performance testing,” Price said. He said facts reported by the inspector “indicate a failure to maintain an operable safety valve system” in violation of state regulations.
In a further letter, dated Oct. 26, Price said that the detection device was “defeated, preventing the automatic closure of the surface safety valve.” Commission regulations, he said, require that completed wells be equipped with functional safety valve systems, with tagging procedures in the regulations “for a well safety valve system component that is inoperable, removed or blocked. There was no tag observed on Prudhoe Bay Unit H-24A that would indicate an inoperable low-pressure pilot.”
Hilcorp response In a Nov. 2 response to the commission, Hilcorp said “the pilot bypass switch on the wellhouse wall was found to be in bypass. The switch was returned to normal service and the system was successfully tested.”
Hilcorp said it does not know when the pilot was bypassed, but practices the company has in place, “including daily operator well inspections, installation of custody seals on normalized equipment, flagging and documentation of defeated safety devices should have prevented this incident.”
Hilcorp said it investigated the incident and “found a lack of attention to the required job duties by the day and night pad operator responsible for H-pad at the time.” The company said disciplinary action has been taken against both individuals.
Hilcorp said biennial safety valve system training is in place “to enforce understanding of regulatory requirements and this incident has been reviewed with the operations team to raise awareness.”
Issue of notice The commission originally proposed that, in addition to the $10,000, a fine of $2,000 per day would be imposed because Hilcorp did not respond to the original notice which the commission sent Oct. 4, providing Hilcorp 14 days to provide an explanation of what happened and what the company would do to prevent a recurrence.
When it got no response, the commission on Oct. 26 proposed an enforcement action of the $10,000 fine plus $2,000 per day from Oct. 4 until the requested information was received.
In its Nov. 2 response, Hilcorp said it had no record of receiving the Oct. 4 notice, but said it did receive the Oct. 26 notice, which was sent certified mail. The company said in a follow-up Nov. 8 letter that it is continuing “to scour our electronic and paper files” but had not found the original notice. “We in good faith do not believe we ever received a copy of the October 4 Notice of Violation,” Hilcorp told the commission.
In its Nov. 30 decision and order the commission said it had accepted Hilcorp’s request to reconsider the $2,000 per day assessment.
Decision and order In its Nov. 30 decision, the commission said factors it considered in the $10,000 fine included “the critical role of the SVS device that was defeated, Hilcorp’s substantial history of compliance, and need to deter similar behavior.”
The commission said while Hilcorp conducted an internal investigation, “no details have been shared that would point to a root cause for the defeated critical well SVS at PBU H-24A and how long it was defeated before being discovered by an AOGCC inspector. Hilcorp has not provided any information to change the initial penalty for the defeated well safety valve and states it will not contest the $10,000 initial penalty for a defeated SVS.”
The commission said Hilcorp has not provided a root cause analysis identifying the cause of the defeated critical well SVS and said it “questions the effectiveness of Hilcorp’s reliance on disciplinary action against those involved with the PBU H-24A SVS maintenance as a means of prevent a recurrence of this violation, especially in light of corrective actions that Hilcorp claimed it would implement in response to previous SVS-related violations.”
The commission also said “Hilcorp has not adequately addressed AOGCC’s request for information about what has or will be done in the future to prevent its recurrence.”
In addition to the $10,000 civil penalty, the commission is requiring within 10 days a written investigation report and a detailed written explanation of how Hilcorp will prevent recurrence as the commission requested in its Oct. 4 notice of violation.
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