Providing coverage of Alaska and northern Canada's oil and gas industry
July 2018

Vol. 23, No.26 Week of July 01, 2018

AOGCC fines Cook Inlet Energy $50,000

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission said in a June 25 decision and order that it is fining Cook Inlet Energy $50,000 for failure to report to the commission a pressure communication at the company’s Redoubt Unit 3A well and failure to complete the required mechanical integrity test on the well.

The commission said it issued a notice of proposed enforcement action to the company in March, proposing specific corrective actions and a $50,000 civil penalty.

The commission said the violations were of the its regulations and orders, which require a company to notify the commission of pressure communication or leakage by the next working day and submit a plan of corrective action for commission approval.

Cook Inlet Energy told the commission in a letter dated Dec. 18, 2017, that the well had significant inner annulus pressure increases and reported tests on Aug. 28 and Nov. 5-18 but failed to report by the next working day.

The well, RU 3A, had injection continuously beginning July 1, but had never passed an AOGCC-witnessed post-injection mechanical integrity test, the commission said, a violation of the injection order for the Redoubt field. The commission said the company operated the well for some six months without the required test.

Successful test completed

The commission said that after the company was notified on Dec. 20 that the well must pass a witnessed-test to continue on injection, a successful test was completed Dec. 23.

The commission said it determined, based on information provided by Cook Inlet Energy and the successful passing of the mechanical integrity test, that water injection could safely continue with restrictive conditions set out in a Dec. 28, 2017, administrative approval, which included monthly reporting of well pressures, injection rates and pressure bleeds; installation and testing of automatic well shut-in equipment linked to the well’s inner annulus pressure; and a more frequent mechanical integrity test.

“CIE’s failure to notify AOGCC of the pressure communication shows disregard for or ignorance of CIE’s compliance responsibilities,” the commission said. “Mitigating circumstances considered in the assessment of the proposed civil penalty include the absence of known sources of freshwater in the Redoubt Unit, as well as the fact that once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well.”

The commission said the company has “committed to an increased level of oversight and review of established training and process protocols for employees governing injection operations,” and said it “finds CIE’s implementation of the proposed actions to be satisfactory to help prevent further occurrence of these violations.”

In addition to the $50,000 civil penalty, the commission is requiring the company to take a number of corrective actions: provide a detailed description of its underground injection control regulatory compliance program; provide details of its tracking system for determining when mechanical integrity tests are required; provide a detailed description of its AOGCC regulatory compliance program; provide a root cause analysis addressing the failure to provide the commission with notification of pressure communication the next business day; and provide a root cause analysis addressing its failure to complete an AOGCC-witnessed mechanical integrity test once the well began injection.

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