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AOGCC fines Hilcorp over meter reports Commission concerned about lack of records, response to alarms, at Bartolowits pad in Ninilchik unit; does reduce original fine KRISTEN NELSON Petroleum News
The Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska $30,000 for failure to submit meter reports for the Ninilchik Unit Bartolowits Pad from August 2014 through December 2015.
The commission issued a notice of violation Dec. 16, 2015, proposing a $170,000 civil penalty. In an Oct. 20 decision and order the commission said Hilcorp requested an informal review, which was held Jan. 21.
The commission said Hilcorp violated a conditional approval letter for the Bartolowits pad custody transfer measurement equipment which required that the company provide monthly meter calibration and performance reports. The commission’s Dec. 16, 2015, notice proposed that Hilcorp provide a detailed written explanation describing how it would prevent recurrence of the violations for which the original $170,000 fine was proposed.
Hilcorp requested an informal review and forwarded missing calibration reports, but the commission said the submittal was incomplete, missing ultrasonic meter health check reports for September and November 2014 and February and October 2015, and missing the meter calibration report for August 2014.
The missing health check reports were submitted, but the commission said it has never received the missing meter calibration report.
“Review of the health check reports identified numerous times meter alarms were recorded, which raise concerns about the gas measurement system’s accuracy,” the commission said.
The commission also said that Hilcorp said in its submittal that the commission had inspected the Bartolowits custody transfer meter three times since the meter was approved, and said documentation was given to the AOGCC inspector after each witnessed test. The commission said its records show only two inspector witnessed meter calibration between the July 28, 2014, start of production at Bartolowits through Dec. 31, 2015, and said its inspectors were not provided copies of the health check reports for the ultrasonic meter.
Lacking auditing mechanism Hilcorp told the commission during the informal review that it had no auditing mechanism of its regulatory tracking system, but “nonetheless characterized its failure to submit the reports as an honest mistake due to its failure to add the conditions of approval into its regulatory tracking system.” Hilcorp said it didn’t know reports were due because it had no tracking system.
“Hilcorp contends that in combination its failures render its conduct a single initial event (failure to submit reports) that carried forward each month since the Bartolowits custody meter was placed in service,” and characterized the proposed $170,000 penalty as excessive, disagreeing with the commission’s finding of a separate penalty for each failure to report.
Meter alarms The commission characterized several occurrences during the 17-month period of meter alarms as significant and said it had “raised concerns about the performance of this particular ultrasonic meter during the application review due to previous issues at the Kasilof pad where health check reports exhibited some of the same alarms” and said Hilcorp could not answer the commission’s questions about content of the reports, specifically the recurring velocity of sound alarms.
The commission said Hilcorp placed part of the blame for regulatory violations on AOGCC, claiming that the commission “is responsible for contacting Hilcorp and educating its personnel about the conditions of approval.” Hilcorp also said the commission “incorrectly” accused it of failing to provide reports associated with two monthly calibrations and said the commission declined to provide guidance on what the company characterized as “ambiguous requirements.”
The commission said it “bears no responsibility for Hilcorp’s behavior.”
It also said: “There is nothing ambiguous about the conditions imposed by AOGCC for approval of the Bartolowits meters.”
And the commission referred to what it called “Hilcorp’s history of noncompliance and its failure to take the rudimentary measure of entering AOGCC’s requirements in its regulatory tracking system” and said those factors “preclude any claim that Hilcorp has acted in good faith.”
It said that prior to this violation AOGCC staff met with Hilcorp on a number of occasions regarding ongoing compliance issues.
“AOGCC resolved Hilcorp’s earlier violations without enforcement actions,” the commission said, but noted that approach “has had little discernible impact on Hilcorp’s behavior.”
The commission also said Hilcorp’s previous commitments to train its personnel have been insufficient to avoid violations of AOGCC regulations.
Order The commission ordered a civil penalty of $30,000 - reduced from $170,000 originally imposed. Of that amount $20,000 was for failing to calibrate the Bartolowits meter in August 2014 and $10,000 was for failure to submit required reports.
“In addition to the required monthly meter calibration reports, Hilcorp must commence at least daily health checks of the meter and provide the monthly average of the collected data. Average performance data that is outside operating limits must be addressed in the health check report. Hilcorp must maintain the daily health check reports to substantiate the monthly summary reports.”
The commission attached a list entitled “Hilcorp Noncompliance History” which includes non-compliance events from April 2012 through April 2015 and AOGCC actions including none, no action taken, correction actions, civil penalty notice of violation and operations shut down until corrective actions implemented.
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