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December 12, 2003 --- Vol. 9, No. 116December 2003

AOGCC fines BP $2.5 million

The Alaska Oil and Gas Conservation Commission said this afternoon that it has finished its investigation of the Aug. 16, 2002, explosion and fire at Prudhoe Bay well A-22, and has concluded that BP Exploration (Alaska) “may have violated” the commission’s regulations “by failing to carry on operations and maintain the property in a safe and skillful manner in accordance with good oil field engineering practices.”

Specifically, the commission said, BP appears to have “failed to ensure sufficient engineering analysis as to the causes of high annular pressure occurring in wells, allowing such wells to be operated or restarted without an adequate understanding of the problem or without repair…” The commission also said BP “failed to ensure sufficient monitoring of annular pressure; and … failed to ensure that shut-in wells characterized by high annular pressure were bled down to safe pressure levels before startup.”

Those failures, the commission said, led to well A-22 being brought into production Aug. 15 and Aug. 16, 2002, “with an outer annulus pressure buildup that exceeded the burst capacity of the surface casing, causing a catastrophic failure of the well with the release and explosion of high-pressure gas.” One BP employee was seriously injured in that explosion.

The fine, $2,530,000, is based on $5,000 per day from March 21, 2001, when BP’s annulus pressure policy was last revised, to the date of the explosion.

BP has 15 days to file a written response, request an informal review or request a hearing.

BP Exploration (Alaska) spokesman Daren Beaudo told Petroleum News that BP is still reviewing the AOGCC report, and noted that what the commission issued was a notice of proposed enforcement action.

“In many respects this report is consistent with our own internal investigation which was shared with the AOGCC and BP employees,” Beaudo said.

“There are some details with which we disagree, but substantially there’s nothing new in the report.”

Beaudo said “A22 was a very serious accident and we regret it deeply. We’ve taken steps to prevent a recurrence.”

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