Alaska Oil and Gas Conservation Commission report: May 2017

• On May 5, the Alaska Oil and Gas Conservation Commission assessed (Other Order 119) a $20,000 civil penalty against Eni US Operating Co. Inc. for repeatedly failing to submit required annual reservoir surveillance reports for the Nikaitchuq unit on time.

The commission initially issued a notice of enforcement on June 30, 2016, covering actions from 2013 through 2016. The company requested an informal review, which was held on July 14, 2016. The company submitted additional information on July 21, 2016.

“During the informal review, Eni took responsibility for the reports being submitted late, admitted there was no excuse for them being late, acknowledged providing the reports late was unacceptable and advised it would not happen again,” according to the AOGGC.

• On May 10, the AOGCC approved (Conservation Order No. 725.002) a request from ConocoPhillips Alaska Inc. to revoke Rule 8(b) of the relevant conservation order.

The rule required the company to hold a technical review by June 1 of each year to discuss the annual reservoir surveillance report for the Kuparuk River-Torok Oil Pool.

The commission added the reporting it desired into other Conservation Order rules.

ConocoPhillips has been working in recent months to streamline reporting requirements.

• On May 10, the AOGCC approved (Conservation Order No. 341F.005) a request from BP Exploration (Alaska) Inc. to waive Rule 7(a) of the order for the coiled sidetrack Prudhoe Bay Unit 07-29E. The rule requires the company to run an open-hole or cased-hole neutron log, in certain portions of the Prudhoe Oil Pool, on newly drilled wells prior to sustained production for the purpose of gas-oil contact monitoring in the pool.

An attempted neutron log encountered an obstruction, and the company worried that any additional attempts to run the log by jeopardize the equipment inside the well bore.

On May 11, the AOGCC approved (Conservation Order No. 341F.006) a request from BP to waive Rule 7(a) of the order for the coiled sidetrack Prudhoe Bay Unit G-27B.

The commission found that the design of the sidetrack negated the benefits of logging.

• On May 17, the AOGCC revoked (Other Order 120) a civil penalty and other corrective actions against ConocoPhillips related to a 2011 Notice of Proposed Enforcement Action.

The commission issued the original notice in July 2011 over activities regarding ConocoPhillips’ well safety valve system (SVS) testing at the Kuparuk River Unit 2B-pad. The commission initially proposed a $580,000 penalty and corrective actions.

The AOGCC required testing at the pad starting in February 2010 and continuing for 90-days, until “an acceptable level of performance … was achieved.” In response to unacceptable testing results, the AOGCC extended the testing indefinitely, requiring testing every 90 days. But the company tested every six months, triggering the notice.

In an informal review, ConocoPhillips questioned the extremity of the penalty and said that the violation was really a matter of communication and scheduling. As a result of the review, the AOGCC found that the current testing regime was adequate and found “no evident of bad faith, no benefits derived from failing to test, and no injury to the public.”

• On May 18, the AOGCC approved (Area Injection Order No. 18C.002) a request from ConocoPhillips to resume water alternating gas injections at the Colville River unit CD4-321 well. The approval required the commission to amend the Area Injection Order.

ConocoPhillips reported signs of a potential casing leak at the well in March 2013. The company performed a work over of the well in March 2017 to repair an outer annulus communication. But subsequent testing revealed another leak deeper down the wellbore.

A second workover undertaken with a different approach resolved the issue to a degree to satisfy the concerns of the AOGCC, which allowed the company to resume injections.

On May 22, the AOGCC approved (Area Injection Order No. 18C.011) a request from ConocoPhillips to continue water only injections at the Colville River unit CD2-78 well.

• The company reported a Tubing x Inner Annulus pressure communication to AOGCC on April 3, 2017 while the well was on miscible gas injection. A subsequent tests found sufficient integrity, as did a 30-day water alternating gas test approved by the AOGCC.

• On May 24, the AOGGC proposed (Other Order 121) imposing two civil penalties totaling $380,000 against the Ahtna Inc. subsidiary Tolsona Oil & Gas Exploration LLC for violations arising from the Tolsona No. 1 exploration well, drilled last year.

The violations included “its duty to provide required pressure reports, its duty to allow AOGCC inspectors to witness pressure tests and its duty to install a pressure gauge.”

The company never responded to the original March 2017 notice, which, under regulations, is accepted as an admission of the allegations and acceptance of the fine.

- ERIC LIDJI