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Hilcorp draws $49,000 fine for not scheduling required meeting
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission fined Hilcorp Alaska $49,000 for failure to schedule a meeting required in the commission's Other Order 193, issued in 2022, which deals with required plugging and abandonment of wells on Cook Inlet platforms.
OO 193, the commission said, "conditionally" granted Hilcorp's request to delay previously ordered plugging and abandonment of wells on the Spurr Platform, allowing wells on the Dillon and Baker platforms and wells with a higher risk to be P&A'd first.
The order requires an annual report by Nov. 15 of each year on P&A activities completed the previous summer and plans for the following year's open water season. The commission said in its April 3 notice of proposed enforcement that Hilcorp submitted that report on Nov. 15, 2024.
The order also requires Hilcorp to meet with AOGCC no later than Dec. 1 annually to discuss the report.
In an April 17 response to the commission's notice of proposed enforcement, Hilcorp said AOGCC notified it Jan. 21 that the required formal review was outstanding; the company said it reached out on Feb. 6 to schedule the review, which was held Feb. 19.
The commission said Hilcorp offered meeting dates from Feb. 17 to Feb. 21. Feb. 17, the commission said, is 78 days after the meeting was due. AOGCC said it imposed a $10,000 civil penalty for the initial violation plus $500 per day for each of the 78 days that the meeting was late, based on the first potential date Hilcorp requested.
AOGCC also required a written response describing steps to ensure all provisions of OO 193 are met going forward.
Hilcorp responds In its April 17 response to the commission, Hilcorp acknowledged the late timing of the formal review.
The company said that since the 2022 order, it has "has completed P&A activities on the Dillon platform, the subsea Well CI-17489-1A and, most recently, abandonment of the MGS Oil Pool on three wells on the Baker Platform in 2024."
It had multiple discussions with AOGCC on Cook Inlet P&A activity during and after the 2024 Cook Inlet P&A season, including an Oct. 16 meeting where the topics discussed included: comparing P&A operations at specific Dillon and Baker platform wells; the P&A challenges the company encountered during 2024 at Dillon, Baker and Middle Ground Shoal; lessons learned and application of those to future P&A work; and the approach and strategy for the 2025 P&A season.
While this meeting occurred before the 2024 report was submitted on Nov. 15, Hilcorp said "the discussions that occurred covered much of the substance and content of the 2024 P&A report, as required by OO 193 Condition #6."
Hilcorp attributed its failure to schedule the meeting to: "Inadequate review of OO-193 conditions of approval." Contributing factors were the discussions held prior to the Nov. 15 submittal of the annual report, particularly the Oct. 16 meeting. The company said those discussions "were incorrectly assumed to have met the requirement of Condition #6, as these discussions covered much of the substance and content of the 2024 annual P&A report."
A compliance task management task has been generated for the Cook Inlet operations engineer, well integrity engineer, well integrity manager and operations manager, describing specific requirements of the OO 193 report and the requirement for a formal review after the report is submitted, Hilcorp said.
Other Order 193 The commission issued OO 193 in 2022 after Hilcorp requested a reordering of plugging and abandonment of Cook Inlet platform wells, citing higher priority for Dillon and Baker platform wells than for Spurr Platform wells which had been scheduled for P&A first.
The commission said in the order that because of delays in plugging Spurr Platform wells "it is appropriate to set dates by which wells on Dillon, Baker and Spurr platforms will be P&A'd." The order specified information to be included in the annual P&A report and required the annual meeting no later than Dec. 1.
Hilcorp did an assessment of long-term shut-in wells on the Dillon, Baker and Spurr platforms, considering both subsurface and surface risk factors, with Dillon considered to have the highest subsurface risk since most of its wells did not have downhole cement plugs, while Spurr platform wells all had at least one cement plug between the reservoir and the surface, the commission said.
Spurr had been first on the list because of information provided by the previous operator, Marathon, that wells on that platform had no further utility. Before Marathon P&A'd the Spurr wells, scheduled for 2013, the asset was sold to Hilcorp, which requested an extension to re-evaluate. AOGCC said Hilcorp spent 4 years getting the Spurr platform, which last produced in 1992, in condition to support P&A operations.
P&A work at Spurr was scheduled to begin in 2021 but was delayed due to crane malfunction; Hilcorp said Dillon and Baker platform cranes and helidecks were operational.
In its order the commission said wells on Dillon, Baker and Spurr would be P&A'd respectively in 2022, 2023 and 2024.
It also required that the Spurr 05RD3 must have a tree and pressure monitoring equipment installed in 2022, with monthly pressure monitoring checks required on all Spurr wells until they were P&A'd. Those two items, Hilcorp said in its April 17 letter, had been done.
--KRISTEN NELSON
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