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AOGCC fines Hilcorp for Milne Point well
$260,477 civil penalty for failure to do mechanical integrity test as required; Hilcorp implements procedure to address issue Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska $260,477 for failure to perform a required mechanical integrity test, MIT, on the S-33A well in the Milne Point unit on the North Slope.
The violation of rule 4 of Area Injection Order 10B occurred last year. Hilcorp reported it to the commission in September, relating that the S-33A well, an injector, was scheduled for a 4-year MIT update March 31, but the test was not done because the well was incorrectly documented as shut-in.
On Sept. 16, however, a pad operator found an error on the SCADA (supervisory control and data acquisition system) and the company determined that the well had been on injection all along.
Hilcorp said it immediately shut in the well and reported it to AOGCC, and then began an investigation into the incident.
In a Sept. 20 letter to the commission the company reported:
*The well passed a state-witnessed MIT March 16, 2019.
*In March 2023 the company's SCADA reported MPU S-33A as shut-in, and a new MIT was not scheduled.
*April 2, 2023, the well integrity engineer changed the well integrity status of S-33A to "Not Operable" and emailed notification to AOGCC that the well was shut-in and its classification changed to "Not Operable," also notifying operations and wellsite supervisors of the change in status of S-33A; a wellsite supervisor then placed an "Out of Service" tag on the well's tree. Hilcorp noted, however, that: "Valve position was not verified. Communication and verification by drill-site operator was not completed."
*Sept. 16, 2023, following discovery of SCADA error, S-33A was shut-in, with notifications to the well integrity engineer and operations manager. The missed MIT was reported to the commission and the company began an investigation to determine "why MPU S-33A's online/offline status showed in SCADA as shut-in."
*Sept. 17, 2023: "Based on initial findings, investigation was expanded to full field MPU for possible conditional parameters for SCADA offline status," Hilcorp said.
Root cause In its root cause analysis, Hilcorp said the online/offline indication on SCADA at Milne Point S Pad "for dual string injectors is based on satisfaction of two parameters: the injection pressure switch on the well shut down panel, and an injection flow rate greater than 100 BPD."
The injection set-point was met on the S-33A, Hilcorp said, but because water flow rate was under 100 barrels per day during the review period, SCADA showed the well as shut-in.
The well integrity status on S-33A was properly changed on April 2, 2023, to "Not Operable," and an "Out of Service" tag placed on the tree, "but not on the well shut-down panel, SSV, or wing," and the wellsite supervisor did not check the valve position.
Hilcorp said S Pad is the only Milne Point drillsite with a separate wellhouse for divert shelters; the company said location of the tagging was an issue, as a tag in a different location would have raised a flag to the wellsite operator
The company also said communication between the wellsite supervisor and pad operator was not completed when the tag was hung.
Contributing factors Hilcorp listed three contributing factors to the missed MIT test.
*The test is scheduled by the wellsite supervisor, based on well status on SCADA, which showed the well as shut-in, a status the company said was not reviewed at the time of the scheduling and was not verified by the drillsite or field lead operator.
*The automatic logic for scheduling has existed since S Pad was brought online in 2002, Hilcorp caid, and although injection rates have been reduced since then, the logic for online/offline status based on 100 bpd of injection hadn't been reviewed or updated.
*The well status of S-33A was properly changed to "Not Operable," but "since the well status did not change for a shut-in or restoration to bring online, the standard operator practice to review the well integrity status prior to operational change was not completed."
Actions to prevent recurrence In addressing what it has done to prevent recurrence, Hilcorp listed half a dozen steps:
*Completed an audit of automation conditional parameters for all Milne Point wells and found only dual-string injectors have a flow rate conditional parameter for SCADA viewing.
*By Oct. 31, 2023, company said it would add individual tubing string status switches to all dual string injectors to remove the minimum flow condition, making all MPU drill sites "consistent with their online/offline logic for SCADA view."
*By Oct. 31, place a physical lock on the wing value of non-operable wells and visually inspect wells for operational status upon due date of all scheduled integrity testing as secondary verification to protect against possibility of automation errors; work to be completed by drillsite operator.
*It audited all current non-operable wells at Milne Point for mis-injection completed with no anomalies found.
*IT department by Dec. 31, 2023, to complete automated report of "Not Operable" wells for well integrity engineer and operators showing online status or flow indication. Hilcorp said such a report exists for Prudhoe Bay and while it would not prevent recurrence, incident would have been found sooner.
*Lessons Learned Bulletin on incident distributed across Hilcorp Alaska assets with field operations to review automation logic for on-off considerations.
Commission action The commission initially proposed a civil penalty of $303,500, based on $50,000 for the initial violation and $1,500 for each of the 169 days the well was operable with an overdue MIT, $253,500.
It noted a Prudhoe Bay well which missed its MIT in June 2021, calling it substantially similar to this violation, and said: "Repeat violations call into question the effectiveness of Hilcorp's efforts to improve its regulatory compliance."
In its Jan. 18 reconsideration request, Hilcorp said its number of non-compliance events "shows a downward trend of incidents since 2021," and in its Feb. 8 order, the commission said: "AOGCC does acknowledge the overall downward trend in Hilcorp's violations."
Hilcorp also said the W-44 well at Prudhoe cited by the commission was "fundamentally different" that the S-33A, discussing at some length events which led to a delay in the MIT of the W-44; the commission did not discuss the W-44 well in its Feb. 8 order.
The commission reduced the amount of the fine by $43,023, expenses and labor which Hilcorp listed in its Jan. 18 reconsideration request for work it undertook to prevent future similar violations.
In imposing the $260,477 civil fine the commission said Hilcorp's failure to comply with the MIT testing schedule "raises the potential for similar behavior with more serious consequences. Consideration of the civil penalty includes Hilcorp's history of compliance/noncompliance and the need to deter similar behavior(s)."
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