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AOGCC fines Tolsona Oil & Gas Exploration Proposed $380,000 penalties include failure to provide pressure reports, have inspectors witness tests, install pressure gauge Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission said in a May 24 order that it is proposing to fine Tolsona Oil and Gas Exploration LLC $380,000 for failure to comply with requirements of the commission’s approval of the company’s application to suspend the Tolsona 1 well.
The commission said it issued a notice of proposed enforcement action to Tolsona on April 11 based on the company’s failure to provide pressure reports, to afford commission inspectors opportunity to witness pressure tests and the failure to install a required pressure gauge.
The commission said all of the violations were of conditions it imposed for approval of Tolsona’s request to suspend the well.
“The failure to provide the reports has previously been the subject of an enforcement action. In addition, after the violations, Tolsona ignored repeated efforts of the AOGCC to obtain compliance,” the commission said. It issued a notice on March 6, advising Tolsona of its rights, “including the right to an informal review and the right to a hearing,” and advising Tolsona that “failure to respond would be deemed both an admission of the allegations and an acceptance of the AOGCC’s proposed penalties. Tolsona never responded to the Notice,” the commission said.
Suspension approved in December The commission said it approved an application to suspend the well Dec. 14, 2016, and on Dec. 15 Tolsona informed the commission that after it started work to suspend the well, there was an increase in pressure in the 7-inch by 9-5/8-inch casing annulus from 0 psi to 895 psi, building to about 1100 psi.
The commission said it approved continued well suspension operations Dec. 19 - including addition of a second mechanical tubing plug and four weeks of weekly pressure monitoring and reporting. On Jan. 11 Tolsona requested permission to set a back pressure valve in the tubing string at the end of the four-week reporting cycle scheduled to end Jan. 20.
The commission said it approved the request Jan. 12, “with a requirement to provide monthly pressure reports and to provide AOGCC inspectors 72 hours’ notice for the opportunity to witness the pressure readings.”
The commission said Tolsona failed to provide the well pressure report Jan. 20, but did provide it Jan. 23 following a request from the commission.
On Jan. 25 the commission added a requirement for monitoring and monthly pressure reports for the 9-5/8-inch by 13-3/8-inch annulus and following “multiple inquiries” Tolsona confirmed on Feb. 13 that it would comply with the requirement.
A monthly pressure report was due Feb. 20 and on Feb. 28 the commission said it requested the report via email.
“Tolsona did not respond. Follow up phone calls on March 2nd were not returned,” the commission said, and on March 3 it dispatched an inspector to inspect the well and witness the pressure recording, followed by the March 6 notice of violations.
“Tolsona remains non-responsive and has failed to provide the required monthly well pressures for March 2017,” the commission said, and did not install a pressure gauge on the 9-5/8-inch by 13-3/8-inch annulus.
No dispute on violations The commission said there is no dispute that the violations occurred, “and, as of the time of this order, remain ongoing.” Prior to sending the May 24 notice, AOGCC made “numerous attempts to obtain Tolsona’s compliance. Tolsona has in large part stonewalled” attempts to obtain compliance, the commission said.
In determining penalties AOGCC said it considered factors in statute.
“Tolsona’s demonstrable disregard for regulatory compliance precludes any finding that it acted in good faith; any unmonitored over-pressured annulus is deemed a serious violation which poses a serious and significant risk to public health and the environment. Although there was no injury to the public, the seriousness of the violation, the absence of any effort by Tolsona to correct the violation or prevent future violations and the need to deter such behavior weigh strongly in the penalty imposed,” the commission said.
The penalty includes $260,000 for failure to install appropriate gauges on all annuli at the well, $10,000 for the initial event and $5,000 per day for 50 days from Feb. 20 to April 11 when the pressure gauge was not installed.
The fine includes $120,000 for failing to follow regulatory requirements to provide monthly pressure reports.
Ahtna owned Tolsona Oil and Gas Exploration LLC, wholly owned by Ahtna Inc., was originally owned 60 percent by Ahtna Inc. and 40 percent by Rutter and Wilbanks Corp. It became 100 percent Ahtna owned in 2016.
Ahtna, the Alaska Native corporation for the Copper River area, completed operations at the Tolsona No. 1 well, some 11.5 miles west of Glennallen, in early January, after completing drilling in early December, followed by some initial flow testing in the well to test for a potential natural gas resource.
Ahtna said in early January that it would take several months to evaluate data obtained from the well, the goal of which is to find a viable natural gas resource which could be developed for use in the region, where energy costs are high.
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