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BP accepts AOGCC fine $1.4 million in fines covers two Prudhoe Bay safety violations; one amount reduced by half from original fine; BP also doing remote monitoring pilot The Associated Press
BP has agreed to pay civil fines totaling nearly $1.4 million for two safety violations in the Prudhoe Bay oil field, including a 2002 well explosion that badly injured an Anchorage man.
The amount to be paid in the incident that injured employee Don Shugak, almost $1.3 million, is one of the largest penalties the Alaska Oil and Gas Conservation Commission has levied against an oil company.
The second incident drew a $102,500 fine.
The company has told state industry regulators it will not contest the cases further and will pay the fines within the next few days, said BP spokesman Daren Beaudo.
The three-member commission originally had proposed a fine of more than $2.5 million against BP for the Aug. 16, 2002, explosion and fire at Prudhoe Bay well A-22.
The well, which was prone to excessive pressure buildup, blew up just as field operator Shugak was opening the door of the metal building housing the well. Shugak spent months in a Seattle hospital for treatment of burns, broken bones and other injuries.
The commission found that pressure buildup caused an underground steel casing to split open. It criticized BP for seeming to tolerate wells with dangerously high pressure levels and emphasizing oil production over shutting down and fixing faulty wells. The investigation also found ambiguity among BP workers and supervisors on how to handle problem wells.
BP spokesmen denied the company put production ahead of safety and said the company took swift actions to tighten up oil field procedures, including clearer rules for controlling and monitoring well pressure levels. BP lawyers called fine excessive BP lawyers also fought the proposed $2.5 million fine, calling it excessive.
In November, commissioners agreed to halve the fine to just under $1.3 million, saying the maximum penalty should be imposed only in the most egregious violations. The commissioners also noted BP’s “extensive self-investigation” and its voluntary actions to develop better ways to manage and monitor wells.
The reduced fine of nearly $1.3 million is unprecedented for the commission, according to papers filed by Jeff Feldman, an Anchorage attorney for BP.
In a second but related safety case, the commission in October proposed a $117,500 fine against BP for violating rules on monitoring and preventing dangerous pressure buildup in Prudhoe wells. The commission created those rules in the wake of the explosion that injured Shugak.
The commission subsequently trimmed the fine to $102,500. Beaudo said BP conceded that field operators had failed to record pressures on Prudhoe well H-11 on certain dates and that some policies were not followed. Beaudo also noted that H-11, unlike well A-22, was a normal well not prone to excessive pressure buildup. All owners will share in paying fines BP, based in London, is Alaska’s second-largest oil producer. The company operates Prudhoe Bay, the largest producing oil field in North America, on behalf of itself and other owners, including ConocoPhillips and ExxonMobil. All the Prudhoe owners will share in paying the civil fines, Beaudo said.
In the A-22 case, the commission gave BP the option to reduce the $1.3 million fine by $549,000 by spending that sum on a pilot program to determine the feasibility of real-time, remote monitoring of well pressure levels. That program has begun, Beaudo said.
Monitoring well pressure by remote control could make Alaska oil fields safer, commissioners said.
Operators such as Shugak spend much of their time going from well to well, checking pressure gauges and, when needed, bleeding off excess pressure.
BP spokesmen and executives consistently have said Shugak, who reached a settlement with BP and no longer works for the company, was not to blame for the A-22 pressure buildup and explosion.
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