Providing coverage of Alaska and northern Canada's oil and gas industry
February 2024

Vol. 29, No.6 Week of February 11, 2024

AOGCC fines Hilcorp North Slope $452,100

Civil penalty is for injection at Prudhoe wells not compliant with regulations; company points to improved record of compliance

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission is fining Hilcorp North Slope, operator of the Prudhoe Bay unit, $452,100 for violations involving unauthorized injection into the Schrader Bluff oil pool in the L-109 well in the Orion development area and unauthorized injection into the Polaris/Aurora oil pools in the S-104 well.

The violations were reported by Hilcorp -- the Prudhoe Bay unit Orion L-109 on June 27 last year and the Polaris/Aurora water injector S-104 on July 21. Hilcorp told the commission in a July email that the second well was identified while reviewing wells related to the previously reported L-109.

L-109 was a multi-zone completion into the Kuparuk and Schrader Bluff, but injection was not authorized into the Schrader Bluff. In March 2023, however, the Kuparuk pool was isolated and injection begun into the Schrader Bluff, with water injection beginning April 3, 2023, and continuing until the operations engineer discovered the mis-injection April 21, and the well was shut-in and AOGCC notified.

The second well, a commingled Polaris/Aurora water injector, S-104, was placed on miscible injection July 15, 2023. Hilcorp said on July 21 when it realized MI had begun without authorization to commingle MI injection into the Polaris/Aurora pools, it placed the well back on water injection and notified AOGCC.

Proposed enforcement action

AOGCC issued a notice of proposed enforcement action Dec. 1, citing violation of conditions in a Sundry Approval at the L-109 well and violation of an area injection order at the S-104 well.

Hilcorp provided the commission was its investigation into the L-109 well violation in June, including well history, event summary, investigation details, root cause of incident, immediate cause, system cause and action to prevent recurrence.

In August, Hilcorp provided the commission with its investigation of the S-104 well violation, also including well history, event summary, investigation details, root cause of incident, immediate cause, system cause and action to prevent recurrence.

In its proposed enforcement action the commission said: "The unauthorized injection violations are not isolated and demonstrate Hilcorp's ongoing compliance problems," and noted more than 60 enforcement actions against the company, adding: "Repeat violations call into question the effectiveness of Hilcorp's effects to improve its regulatory compliance."

Hilcorp's response

In a Jan. 18 response, Hilcorp requested reconsideration of the proposed enforcement action and objected to the commission's characterization of its response to regulatory concerns.

The company said it "respectfully disagrees" with the commission's statement that the company's efforts to improve regulatory compliance are called into question by its repeat violations.

"The number of non-compliance events measured against proxy data for Hilcorp activity levels shows a downward trend of incidents since 2012," Hilcorp said. "Additionally, Hilcorp notes that the number of compliance events is currently at an annual all-time low. Hilcorp strives for continued reduction of non-compliance events and conducts timely investigations of incidents and implementation of substantive actions to prevent recurrence."

Feb. 6 order

The commission addressed the compliance issue in its Feb. 6 order.

"While it is always AOGCC's goal to have zero violations, and consequently zero repeat violations, AOGCC does acknowledge the overall downward trend in Hilcorp's violations as Hilcorp noted during the informal review. It is encouraging to see that Hilcorp is monitoring its compliance history and seeing improving performance in this area. Hilcorp has initiated continued engagement with AOGCC through a data request for historical enforcement and violation records and AOGCC is providing the requested information, where available."

But, the commission said, the violations "do demonstrate repeated instances of failure to comply with AOGCC imposed conditions on a permit or order or failing to obtain prior AOGCC approval before making changes to an approved permit or order, and warrant the imposition of civil penalties as proposed in the Notice."

The commission rejected a request from Hilcorp for reduced penalties.

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