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Providing coverage of Alaska and northern Canada's oil and gas industry
November 2006

Vol. 11, No. 46 Week of November 12, 2006

Oversight office recruiting staff

Alaska’s newest program for monitoring oil and gas operations will start by reviewing BP’s Prudhoe Bay quality assurance

Kristen Nelson

Petroleum News

The new Alaska Division of Oil and Gas office that will monitor oil and gas operations on state lands has an acting manager, contracts out for consulting work and is ready to begin recruiting staff. Lease Monitoring and Engineering Integrity Oversight was established after corrosion in transit lines at Prudhoe Bay caused a large spill in March, leading to the shutdown of half the field in August.

Jonne Slemons was selected by the commissioner of the Alaska Department of Natural Resources, Mike Menge, to head up oversight. Slemons, manager of oil and gas permitting and best interest findings at the Division of Oil and Gas, told Petroleum News her new title is acting coordinator, lease monitoring and engineering integrity office.

Menge announced formation of the oversight office in Aug. 18 testimony to the joint House and Senate Resources committees, comparing it in concept to the Joint Pipeline Office, the group of federal and state agencies that work together to monitor the trans-Alaska oil pipeline. Gov. Frank Murkowski issued an administrative order establishing oversight on Oct. 6.

Slemons said in a Nov. 1 interview that the office has approval for seven staff positions and recruiting will begin for two petroleum facilities engineers and a petroleum facilities quality assurance specialist. “We’re focusing on the integrity of infrastructure, as well as the operations and maintenance procedures and programs that contribute to it,” she said.

“We don’t yet know what the changes may be that a new administration coming in might want to see,” she said. “… The commissioner’s vision is clear in terms of what he would like to see implemented and we are proceeding along that path.”

“The state has broad discretion in what our oversight is,” Slemons said. “… And we have previously chosen not to exercise such explicit and broad oversight. I think the assumption was probably that enlightened self interest would lead the companies to perform up to industry standards.”

Liaisons named

The state agencies named as oversight office participants in the administrative order have named liaisons and submitted budget information.

The North Slope Borough has also named a liaison and will be part of the first coordination meeting Nov. 29, Slemons said. A meeting with borough Mayor Edward Itta, Dennis Roper and the borough’s special counsel, Todd Sherwood, took place in late October: “We are in the process of working on a draft MOU with the borough,” Slemons said.

Dennis Roper will be the borough’s liaison to the oversight office. Roper is retiring from the borough at the end of January, but Slemons said she understands that he will continue to do contract work for the borough, including being the borough liaison to her office.

Other local boroughs are expected to join “when our attention focuses on areas around them,” Slemons said. While the initial focus of the office will be on the North Slope — first Prudhoe Bay and then other units — Cook Inlet, Alaska Peninsula and statewide will follow. “We’ll be dealing with the Kenai Peninsula Borough, the Mat-Su Borough, the Anchorage borough, when we come to Cook Inlet,” she said.

A memorandum of understanding is also in the works with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration Office of Pipeline Safety. Slemons said there have been “some very productive and positive discussions with Admiral (Thomas) Barrett and Stacey Gerard, their chief of pipeline safety.” Slemons and Gerard are working on the language and details of an agreement. Slemons said they are “also hoping to establish a liaison and a cooperative relationship” with the U.S. Environmental Protection Agency.

DOT won’t be part of the first coordination meeting, which will be just the state and North Slope Borough participants.

Contracts out

Bid solicitations have closed on two contracts, Slemons said.

“One is to collect and describe BP’s quality assurance program.” BP has initiated an integrity management program, and will be collecting some of the same information as the state contractor, “corrosion prevention plans, maintenance procedures, all of these various elements that together make up a quality assurance program.”

“The current schedule calls for a final product at the end of January,” Slemons said, with a draft in mid-December. At that time a decision will be made on whether or not additional time is needed, she said.

The other contract is going to go back out, with a broader distribution this time.

It is to collect and make recommendations on what performance standards should be for the company’s quality assurance programs. Slemons said you hear the term “industry standards,” but “there is no one source of total truth in terms of what is the standard for X. … There is no one industry standard; there’s just the collection of practices” of each company, along with the guidelines of organizations such as the Society of Petroleum Engineers.

“And so without a single source to bounce these quality assurance programs against,” the state needs assistance from someone with “the expertise to look at all of the options out there and make some well-justified recommendations to us about what the standard should be that we use to assess the industry’s QA programs.”

In addition to these two contracts “we do envision having a contract with a technical firm of some sort with engineering and QA experience to be available on demand,” she said. If a high-risk problem is found in going through quality assurance programs, and the state doesn’t have staff to immediately look at it, then that contractor would do a technical assessment and make recommendations.

The actual work of the oversight office will start with awarding of the contract for the Prudhoe Bay unit analysis, Slemons said.

“And immediately on the heels of that, our coordination meeting for the state and local liaisons at the end of November will initiate a regulatory gap analysis to ensure that we are covering everything on state lands and missing nothing and duplicating nothing.

“And that’s really essential to get our hands around a real clear understanding of the fact of who’s doing what: what elements of a particular system are being regulated, which ones are not and then ensuring that this office, DNR, will step in for those that are not covered.”






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