|
Commission confirms its $50,000 CIE fine
Alaska Oil and Gas Conservation Commission rules on reconsideration for failure to report pressure communication at RU 3A well
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission ruled Dec. 26, on reconsideration, that a $50,000 fine it imposed on Cook Inlet Energy earlier in the year, along with specific corrective actions, was appropriate based on the company’s failure to comply with the commission’s rules and the area injection order for the Redoubt Unit 3A well.
The commission issued a notice of proposed enforcement action to CIE in March for failure to report a pressure communication at the Redoubt Unit 3A well and failure to complete the required mechanical integrity test at the well.
The commission said CIE requested an informal review, which was held in April.
On June 25 the commission issued a decision and order on the matter, with corrective actions and the $50,000 civil penalty, citing two violations: failure to notify the commission and submit a plan of corrective action “when pressure communication, leakage or lack of injection zone isolation” was indicated, as required by relevant regulations and provisions of the area injection order for the Redoubt Shoal field; and violation of the AIO requirement that a mechanical integrity test witnessed by AOGCC be performed once the well began injection for the first time.
The civil penalty of $50,000 was $25,00 for each initial violation.
The commission said the penalty considered mitigating circumstances, including that no injury to the public occurred, the absence of known sources of freshwater in the Redoubt unit, and that, “once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well.”
CIE requested reconsideration and oral argument on the June order and a hearing was held Oct. 24.
Company’s view At the October hearing the commission heard from Phillip Elliott, president of Glacier Oil and Gas, the parent company of Cook Inlet Energy, the operator at Redoubt, and David Pascal, vice president of operations for Glacier.
Elliott told the commission that over the past three years they had been working to fix the company and have tried to do the right things, including plugging and abandoning six wells, 40 percent of the company’s non-producing wells, and addressing the antiquated production facilities at West McArthur River by consolidating production at the Kustatan facility - about a million spent on the P&A effort and $4 million on the production issue.
Redoubt was previously part of the assets of Miller Energy Resources, a publicly traded company, which became the privately owned Glacier Oil and Gas when it emerged from bankruptcy protection in 2016.
Elliott has been with the company since 2015 and became president of Glacier in November; he was previously chief financial officer and executive vice president.
He said prior to bankruptcy there were regulatory compliance issues but said since the bankruptcy the company brought on staff to work on those compliance issues.
Pascal reviewed in detail actions CIE had taken and said it had acted in good faith and that the violation did not pose a threat to the public.
Commission’s view In its December final order, the commission said, “CIE has presented nothing which would warrant changing the findings or penalties in the order,” and said the company had violated its regulations and rules.
Changes which affect future actions did not change the violations the company committed, the commission said.
“CIE’s commitment to an increased level of oversight as well as review of established training and process protocols for employees governing injection operations is satisfactory to help prevent further occurrence of these violations. However, the violations committed by CIE were neither trivial nor technical. Neither violation can be characterized as an unintended consequence of good faith attempt at compliance with AOGCC’s orders and regulations. AOGCC’s assessment as to the appropriate civil penalties is unchanged.”
In addition to the fine, the commission said CIE needs to provide a detailed description of its underground injection control regulatory compliance program; provide details of its tracking system for determining when mechanical integrity tests are required; provide a detailed description of its AOGCC regulatory compliance program; provide a root cause analysis addressing its failure to provide notification of a pressure communication to the commission within the next business day; and provide a root cause analysis addressing failure to complete an AOGCC-witnessed MIT test as required.
The order may be appealed to the superior court.
| 