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AOGCC drops $100k Hilcorp fine to $30k Company reduced authorized secondary surface casing size on Granite Pt well from 47# L-80 to 40# L-80 without notifying commission Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has reduced a proposed fine against Hilcorp Alaska from $100,000 to $30,000.
The commission notified Hilcorp on July 31 of a proposed enforcement action for an unauthorized change the company made to the casing used in Granite Point State 17586 011, a development well Hilcorp drilled in June using 9-5/8 inch 40 pound secondary surface casing, rather than the 9-5/8 inch 47 pound casing in the drilling permit, "a lighter casing with a larger internal diameter and lower burst resistance, than what was permitted," the commission said July 31.
Hilcorp requested an informal review of the matter with AOGCC staff, which was held in August, and in October the company requested a public hearing on the matter, which was held in December.
In its Dec. 22 decision the commission said: "Hilcorp stated in the informal review that because "47/40" #/ft was written in the 'Tubular Program' section of the permit application it believed it was authorized to run 40# casing in the well even though no engineering calculations were submitted for the thinner walled casing."
Hilcorp also told the commission the casing change was not substantive "in the Cook Inlet region of Alaska, but it would be a 'substantive change' on the North Slope of Alaska."
December public hearing John Howard of Atlus Well Experts testified on behalf of Hilcorp at the December public hearing, presenting "a design change stress assessment for the 9-5/8" 40# L-80 surface casing," the commission said, an analysis performed several weeks before the hearing.
Hilcorp told the commission at the hearing that it disagreed with the commission, and characterized the change as an engineering equivalency, not a substantive change, saying in overheads prepared for the hearing that: "The substitution did not materially alter the well design, safety margins, or barrier integrity."
The company also said the commission "has historically" applied substantive change "to modifications" materially affecting "wellbore integrity, barrier performance, or compliance with casing design requirements," and said the commission "has not issued clear guidance defining 'substantive change' for casing substitutions. Applying it here represents a new interpretation rather than consistent practice," Hilcorp said.
The Granite Point 17586 011 was drilled from the Bruce Platform and Hilcorp said wells from that platform "have historically run 9-5/8" 40# L-80 casing to greater depths without incident."
Substantive The commission said in its Dec. 22 order that "if Hilcorp had confusion on whether changing the approved well casing would be considered a 'substantive change' by the AOGCC, it could have contacted the AOGCC for clarification. Hilcorp chose not to. Instead, Hilcorp unilaterally made the change without seeking AOGCC approval even though 20 AAC 25.507(b) allows for oral approval of changes when operational necessity requires prompt action."
The commission said Hilcorp did not provide evidence of a safety analysis of the 40-pound casing before it ran that casing in the well.
It said it found that Hilcorp committed the violation alleged and assessed a civil penalty of $30,000, citing consideration of "seriousness of the violation, Hilcorp's compliance history, the need to defer future violations, and the economic benefit resulting from noncompliance."
The commission cited "a recurring pattern of unauthorized changes in approved programs," with 10 violations, five in 2025. "This pattern calls into question the effectiveness of corrective actions implemented in responses to past enforcement actions and weighs heavily in favor of a meaningful penalty to deter continued noncompliance and reinforce the necessity of prior regulatory approval."
The reduction from the original penalty of $100,000, the commission said, "reflects consideration of the lack of demonstrated harm while still addressing the need for deterrence and regulatory accountability."
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