Alaska Oil and Gas Conservation Commission report

•On Aug. 30, the Alaska Oil and Gas Conservation Commission allowed (Area Injection Order No. 2C.037) ConocoPhillips Alaska Inc. to continue water injections in the Kuparuk River Unit 2H-01 well. The company reported potential pressure communication in the well in May 2016 while injecting gas and switched to water injection for 30 days while suspending production and conducting tests. The commission concluded the well has “at least two competent barriers to the release of well pressure” and “does not exhibit signs of pressure communication while on water injection.”

•On Sept. 1, the AOGCC canceled Area Injection Order No. 2C.022. ConocoPhillips asked the commission to cancel the order, which was issued in late June 2015. The order placed the Kuparuk River Unit 3O-06 well on water-only injection in response to a “tubing by inner annulus pressure communication” while on gas injection in June 2013. A rig workover of the well in October 2015 repaired the well and resolved the problem.

•On Sept. 1, the AOGCC granted (Area Injection Order No. 4G.002) a request from BP Exploration (Alaska) Inc. to continue water-alternating-gas injection in the Prudhoe Bay Unit P2-09 well. The company had reported a potential casing leak in the well. A series of mechanical integrity tests convinced the commission that the well was sound.

•On Sept. 1, the AOGCC granted (Area Injection Order No. 4G.003) a request from BP to continue water only injection in the Prudhoe Bay Unit 13-31A well. The company reported a potential Inner Annulus repressurization. A recent mechanical integrity test and planned safeguards convinced the commission to allow water only injections.

•On Sept. 1, the commission granted (Area Injection Order No. 5.028) a request from Hilcorp Alaska LLC to continue water injections at the Trading Bay Unit G-13 well.

Hilcorp shut in the well after reporting a potential pressure communication on July 8, 2016. After the company completed a “static and injecting temperature survey” on August 22, 2016, the commission was satisfied with the integrity of the well.

•On Sept. 7, the AOGCC partially approved a revised agreement between Caelus Natural Resources Alaska LLC and ConocoPhillips concerning multiphase flow meters for hydrocarbon production from the Oooguruk unit. Caelus had asked the AOGCC to approve revisions to its 2009 agreement with ConocoPhillips. The commission approved (Docket Number: CO-16-015) the changes, except for the recurring phrase “at its sole discretion,” which gave ConocoPhillips additional control over aspects of the operations.

•On Sept. 12, the AOGCC approved (Area Injection Order No. 2C.038) a request from ConocoPhillips to continue water-only injections in the Kuparuk River Unit 2G-07 well. The company reported a potential pressure communication on July 7, 2016, when the well was shut in after approximately one year of natural gas injection. The communication was not observed when the well was switched to water injection. The well passed two tests in May and July of this year, according to the commission.

•On Sept. 15, the AOGCC allowed (Conservation Order No. 44.75) Hilcorp to convert the Middle Ground Shoal A44-02 injection well into a production well. The project would involve plugging the well above the Hemlock G sand in the MGS G Oil Pool and recomplete the well as a producer MGS F Oil Pool to access un-drained oil reserves.

•On Sept. 15, the AOGCC modified Conservation Order No. 725 (Conservation Order No. 725.001) to accommodate several requests from operator ConocoPhillips.

ConocoPhillips asked the AOGCC to revise the phrase “regular production” in the description of the Kuparuk River-Torok Oil Pool included in the order. According to the order, “regular production of the proposed Moraine Oil Pool within the Kuparuk River Unit began in 2013 from KRU 3S-19.” ConocoPhillips argued that the order should not describe the production as “regular” because state statutes define “regular production” as continuous for marketing purposes, rather than for testing purposes. ConocoPhillips brought the KRU 3S-19 well online for four stretches between February 2013 and November 2014 and sporadically throughout 2015 and suspended production between those stretches before converting the well back to a Kuparuk pool producer in June 2015.

“Given the discontinuous nature of the 3S-19 Moraine production, and the purpose of producing the well in order to evaluate the reservoir, ConocoPhillips submits that the production should not be characterized as ‘regular’ production,” ConocoPhillips GKA Development Manager Kazeem Adegbola told the commission in a Sept. 1 letter.

The distinction matters because House Bill 247 links the gross value at the point of production to the beginning of “regular production.” The commission removed the word “regular” from the Conservation Order, while also noting that “its willingness to delete “regular” is not a determination of whether regular production has or has not occurred.”

ConocoPhillips also asked the AOGCC to remove automatic expiration clauses from Conservation Order No. 725 and the associated Area Injection Order No. 39. The commission kept the clause but revised the two orders to make their clauses similar.

The AOGCC also agreed to remove a clause stating that ConocoPhillips would pre-produce injectors before beginning injection operations, which conflicted with other rules

Finally, the AOGCC rejected a request from ConocoPhillips to modify a portion of the order establishing a response to sustained casing pressures in certain wells.

•On Sept. 19, the commission approved (Area Injection Order No. 2C.039) a request from ConocoPhillips to continue water-only injection in the Kuparuk River Unit 2F-03 well. The company reported a potential pressure communication on July 18, 2016, while the well was injecting gas. The commission approved a 30-day gas injection program and a 30-day water injection program for monitoring. After a mechanical integrity test, the commission determined that the well was safe for water injection.

•On Sept. 30, the commission granted (Area Injection Order No. 3B.005) a request from BP to continue water only injection in the Prudhoe Bay Unit P-06B well. The company reported a potential Inner Annulus repressurization. Subsequent diagnostics and monitoring convinced the commission of the integrity of the well for water injection.

•On Sept. 30, the AOGCC fined Hilcorp Alaska LLC $30,000 for conducting well operations at the Milne Point Unit without a working gas detection system.

The AOGCC initially proposed a $50,000 fine when it raised the matter in November 2015 but reduced the amount after Hilcorp requested an informal review of the case.

The case concerns a workover operation Hilcorp conducted at the Milne Point Unit F-96 well in August 2015. A required gas detection system was working when the company began work but faced a malfunction a few hours thereafter. The company notified the AOGCC and ordered a replacement part. Hilcorp was required to suspend operations until it fixed the system, but internal emails showed the company “removed the wellhead lock down pins from the tubing hanger,” according to the AOGCC.

While acknowledging that Hilcorp was quick to announce its failed system, that workers had personal gas detection systems during their work and that the public was not harmed by the project, the AOGCC concluded that the company failed to act in good faith by continuing operations. According to the AOGCC, “Hilcorp’s history of non-compliance and the need to deter similar behavior weigh strongly in setting the penalty amount.”

In addition to the $30,000 fine, the AOGCC is requiring Hilcorp to provide “detailed explanation of how recurrence of this violation will be prevented in the future.”

•The AOGCC has tentatively scheduled a meeting for the morning of Oct. 11 to consider a request from Glacier Oil & Gas Corp. subsidiary Cook Inlet Energy LLC to use multiphase flow meters at the West McArthur River and Redoubt units. The request comes as Glacier plans to decommission the West McArthur River unit production facility and route production through the nearby Kustatan production facilities instead.

•The AOGCC will hold a public workshop on Nov. 1 to allow interested parties to provide input on a range of proposed regulatory changes introduced in September.

•The AOGCC has tentatively scheduled a hearing on Nov. 3 to consider a request from BP to classify the gas cap water injection project at the Lisburne field of the Prudhoe Bay unit as “permanent,” rather than its current designation as a pilot project. The commission will proceed with the hearing if it receives a written request before the afternoon of Oct. 15.

- ERIC LIDJI