Commission finalizes Linc Energy decision

Refuses after October hearing to reduce $20,000 financial penalty for violations in reporting on Tyex-01, Tyex-01X and Keex-02 wells

KRISTEN NELSON

Petroleum News

The Alaska Oil and Gas Conservation Commission has reviewed its July 1 order against Linc Energy Operations and found no reason to reduce the $20,000 penalty it ordered at that time.

The commission said it issued a notice of proposed enforcement action to Linc in April for the Tyex-01, Tyex-01X and Keex-02 wells, citing violation of regulations for failure to submit well inclination surveys, core analysis reports and digital log data, and failure to provide information the commission requested in January and February.

Linc requested an informal review which was held by teleconference in May. Linc submitted digital log data and core chips for the Keex-02 well in response to the notice.

After the commission issued Other Order No. 104 in July, Linc requested reconsideration and the commission held a hearing in October.

The commission’s July order identified multiple violations of its regulations following drilling and abandonment of the Tyex-01, Tyex-01X and Keex-02 wells, imposed a $20,000 civil penalty and required corrective actions.

The commission said that evidence at the Oct. 6 hearing established that no inclination surveys were run in the Tyex wells and no core analyses were performed on any of the three wells.

Linc told the commission in an Oct. 22 letter that cores recovered from the Tyex wells were buried in the well cellars at the time of abandonment and Linc did not recover any chip samples from the cores recovered from those wells.

Linc argued that it kept in communication with the commission about difficulties encountered at each of the wells, conducted drilling in a safe and responsible manner and said it received variances and waivers from the commission for required data and could not gather data due to poor well conditions, failure of the wells and risk of losing expensive equipment.

“Linc’s claims are not supported in the record,” the commission said in its Nov. 30 order: no variance was granted for core chips for the Tyex wells and Linc produced nothing to document its claim of a variance; and the core chip requirement was specifically addressed in an email.

Linc initially told the commission core chips were consumed in testing, but later admitted all cores were buried in the well cellars and no testing consuming the core chips was conducted.

Linc also failed to provide information to the commission on changes in management.

In its conclusion the commission said it considered both statutory criteria and mitigating circumstances claimed by Linc, “including Linc’s effort to correct some violations and prevent future violations.”

But the commission denied Linc’s request to reduce the financial penalties for its violations.