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AOGCC fines Emerald over Umiat P&A work Umiat 18 successfully plugged and abandoned, but Emerald House failed to follow commission requirements in completing the work Kristen Nelson Petroleum News
Emerald House, a wholly owned subsidiary of 88 Energy, acquired the Umiat oil field in the National Petroleum Reserve-Alaska in early January.
This spring, Emerald House plugged and abandoned one of the existing wells at the field, completing the work April 2, but that work wasn’t done according to requirements set out by the Alaska Oil and Gas Conservation Commission, which ensure the work is done properly, and AOGCC has fined the company $40,000.
In a June 10 letter, AOGCC Chair Jeremy Price told Erik Opstad, vice president of Emerald House, that the company “failed to comply with the conditions imposed” in the work procedures it set out.
Four issues were cited:
*Cement pumping began into tubing and tubing-casing annulus of the well on March 22, but the cementing procedure was submitted to the commission March 24. Prior approval of the commission is required before beginning cementing operations.
*An attempt to pump cement into the ¼-inch chemical injection line on March 23 was not successful and cement plugs were pumped into the tubing and tubing-casing on March 22. The commission required cementing the chemical injection line before pumping cement plugs into the tubing and tubing-casing annulus.
*Daily operation summaries were submitted to the commission on March 25 and April 1, 2 and 3, but plug and abandonment operations were begun March 20. The commission required daily reports once operations begin.
*The commission’s regulations require reservoir cement plug verification before placing the cement plug. This procedure was changed without prior AOGCC approval and cement was pumped to the surface in both tubing and tubing-casing annulus “eliminating the required plug tag and pressure test verifications,” the commission said.
Emerald House response In a June 30 response to the commission, Opstad enclosed a check for the $40,000, but said: “Although somewhat imperfect in its procedural execution, it is hard for us to see given the extenuating circumstances and positive outcome how a $40,000 penalty is warranted.” Opstad asked for reconsideration of the amount of the penalty.
Opstad said that after receiving the AOGCC’s June 10 letter, “Emerald House management conducted an internal review of the Umiat-18 field work. The elements of noncompliance revealed by that assessment, did not materially differ from those cited by the AOGCC in items 1 through 4 on page 2 of 3. In that regard, we concur with the Commission’s finding that Emerald House did violate the provisions of 20 AAC 25.507 (‘Change of an approved program’) while performing abandonment operations at Umiat-18 and in accordance with that determination enclose herewith the civil penalty of $40,000.00.”
In asking the commission to review the amount of the penalty, Opstad said.
“From our perspective, the deviations from the conditions of approval imposed by Sundry 321-114 were largely the result of some initial confusion on the part of the field team given the federal & state duopoly in NPRA, coupled with the unprecedented impact of required COVID-19 protocol compliance and a number of communication challenges posed by the Umiat-18 site itself that included: limited snow trail access, no cell phone coverage, poor satellite links, no line of sight radio tie in due to terrain issues, weather imposed access constraints, plus a host of other minor hurdles that made this site uniquely challenging.”
Commission decision In a decision and order issued Aug. 19, the commission said it had already considered statutory mitigating circumstances.
“Emerald House’s lack of good faith in its attempts to comply with the imposed conditions, the potential seriousness of the violation, and the need to deter similar behavior in future operations are the factors which most heavily influenced AOGCC’s decision and the penalty being assessed.”
It said the conditions of approval for the work “were clearly written.”
“Verbal discussions occurred with Emerald House representatives responsible for plug and abandonment operations at Umiat-18 through the work planning and implementation. Mitigating circumstances include no injury to the public or the environment by the unapproved changes, and no history of noncompliance by Emerald House.”
The commission also noted it had not imposed per-day assessments, thus reducing the amount of the penalty.
In its findings the commission said: “Emerald House’s argument suggests that a technical success for the plug and abandonment operations should somehow overshadow compliance with clear and specific regulatory requirements, including conditions of the Sundry approval.”
AOGCC said Emerald House violated regulations “by failing to obtain prior approval for changes to the approval conditions” for the work and said the company “has not provided any factual information that would warrant changing the penalty amount.”
The company has 20 days to request reconsideration.
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