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AOGCC finalizes fines against Hilcorp
KRISTEN NELSON Petroleum News
The Alaska Oil and Gas Conservation Commission has finalized two fines it proposed against Hilcorp Alaska in November 2015, raising the initially proposed fine for each incident of $75,000 to $80,000. The fines are for changing the approved work procedure and performing well cleanouts using an unapproved contingency plan.
But the commission also noted a change in the company and said in its March 21 orders that “during the past twelve months, Hilcorp has taken initiatives that have improved their overall regulatory compliance.”
Both fines involve the use of nitrogen at well workovers in the Hilcorp-operated Milne Point field which occurred in April and August of 2015 when the company had applied only to use water.
The commission said a review of workovers done by Hilcorp-operated rigs showed that three fill cleanout operations used nitrogen without AOGCC approval. In the case of work on the Milne Point unit J-08A well, three workers were overcome by nitrogen in an incident that the commission said could have been fatal “except for one worker’s good fortune to collapse into the fresh air environment outside of the enclosed trailer.” The commission had initially imposed a $720,000 fine for that incident, later reduced to $200,000 (see story in March 12 issue of Petroleum News).
No workers were impacted in the other two incidents, which occurred at the MPU J-09A well in April 2015 and at the MPU J-01A well in August 2015.
Changes at Hilcorp In a March 22 statement from Hilcorp, provided by spokeswoman Lori Nelson in an email, the company said: “Personal health and safety is of the utmost importance to Hilcorp.”
The company said that since the 2015 events it has “integrated the lessons we have learned into our current and future operations,” and said it was pleased that the commission has “recognized our improvements over the past year.”
“The entire Hilcorp team is focused on getting better every day, therefore we will continue to work openly and honestly with our regulators and the community to ensure we are developing Alaska’s resources safely and responsibly.”
The company said it did not agree with all of the commission’s findings but does not plan to appeal.
Similar rulings The commission rulings are similar as the cases involved similar circumstances: Hilcorp applied to do a workover using water for the cleanouts: The use of nitrogen was not authorized.
Hilcorp told the commission that use of nitrogen for fill cleanout was a contingency plan, but the commission said a contingency plan “constitutes a change to an approved permit requiring AOGCC approval prior to implementation.”
“The point of requiring preapproval for this operation is to allow review of the entire proposed program, not just one of the alternatives from which Hilcorp may pick,” the commission said, and noted that in an earlier workover request Hilcorp had listed nitrogen.
The commission also noted several earlier enforcement actions against Hilcorp and said it had met several times with the company’s Alaska managers.
AOGCC said that after the initial investigation it stopped work on all four Hilcorp workover rigs during most of October 2015 until the company could demonstrate compliance with the commission’s conditions and said it “recognizes that this shutdown of well workover operations had a significant financial impact to Hilcorp.”
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