Providing coverage of Alaska and northern Canada's oil and gas industry
February 2007

Vol. 12, No. 7 Week of February 18, 2007

BP cleared of allegations

Investigation spurred by Hamel’s well cellar leak accusations vindicates company

Alan Bailey

Petroleum News

The Alaska Oil and Gas Conservation Commission has issued its report on its investigation into allegations by oil industry watchdog Charles Hamel concerning drilling pad and tundra contamination from BP-operated Alaska North Slope wells. Hamel told AOGCC in June 2006 that BP employees had notified him that oil was leaking into some well cellars and that the oil was escaping into gravel well pads and tundra ponds.

Hamel accused AOGCC and the Alaska Department of Environmental Conservation of being complicit in allowing the alleged contamination to continue. Hamel also said that trash discarded by BP contractors into the snow, litters the tundra around the well sites

But an investigation commissioned by AOGCC and led by independent consultant Edward Morgan has vindicated BP.

“The commission finds no basis to take enforcement actions against BPXA as a result of the findings of this investigation,” the commission said.

And Morgan said that Hamel had declined to provide the investigation with any additional information about the allegations or “to assist in establishing a communications channel with the concerned individual(s).” Hamel had stated that “he lacked trust in anyone working for the AOGCC or BP” and that “the AOGCC was not acting in the best interests of Alaskans,” Morgan said.

Well cellars

A well cellar is an excavation around a wellhead in a gravel well pad, the investigation report says. A cellar typically extends 4 feet out from the well and is about 6 feet deep; the cellar can be cylindrical or cubic in shape, and may or may not be lined with an impervious membrane. Cellars tend to accumulate water from rain or from snow melt.

The gravel well pads with the well cellars sit 5 to 10 feet above the surrounding tundra. In an old oil field such as Prudhoe Bay, a reserve pit lies on one side of the pad. Water drains into the reserve pit.

The wellhead itself consists of an assembly of valves that connect the production tubing in the center of the well to the flowline that carries produced fluids from the well to a gathering center. The production tubing extends through an outer well casing, down deep into the underground oil producing rock formation. A well contains a system of barriers to prevent produced fluids reaching the surface through any route other than the production tubing. And pressure monitoring enables the detection of any leakage from the production tubing.

On the North Slope, freeze protection fluids are injected into an outer annulus in the well casing to a depth of about 2,000 feet, to insulate the warm fluids in the production tubing from the permafrost surrounding the well. The freeze protection fluids contain diesel oil, bentonite and “dead” crude oil (weathered crude oil from which all volatile material have been removed).

Alleged oil leaks

According to the investigation report, Hamel’s allegations stated that oil has been leaking from 50 BP production wells into the well cellars. Fluids from some cellars escaped through leaking cellar liners into the gravel pads. And floodwater from the 2006 spring snow melt carried oil from the cellars through and over the gravel pads, into surrounding ponds, the allegations said. Hamel also alleged that gas and other fluids have become trapped underneath cellar liners.

In response to these allegations, the investigation team inspected the fluid contents of nearly 100 well cellars. The team also interviewed a range of oil field staff, including operators, technicians, engineering staff, support staff and management.

In addition, the investigation team sent voluntary questionnaires to the 203 BP well pad operators. Responders to the questionnaires did not have to identify themselves. The questionnaires asked the operators about BP health, safety and environmental reporting procedures, and about any observations of oil sheens, oil sheen overflows or under liner fluid buildups at well cellars.

“The investigation team found that hydrocarbons are accumulating in some well cellars and, in several instances, have flowed out of the cellar onto the gravel pad within the well house,” the investigation report said. “There was no evidence to suggest, however, that the above hydrocarbons then migrated to the tundra or tundra ponds, although such a migration is possible according to the BP environmental managers and in the opinion of the lead investigator.”

The report also said that a vacuum truck normally removes any liquid hydrocarbons from a well cellar within a short time of the hydrocarbons being reported.

Variety of hydrocarbon sources

The investigation found that hydrocarbons accumulating in well cellars could have come from a variety of sources, the most likely of which was the leakage of freeze protection fluids from the well outer annuli.

“There was no evidence to suggest that the hydrocarbons found in the well cellars were the result of loss of well control,” the investigation report said.

“A review of well mechanical integrity for these (inspected) wells indicates that at least two competent barriers exist between the producing reservoir and the surface, which is consistent with good oilfield engineering practice,” AOGCC said.

And the investigation found no evidence for the migration of hydrocarbons from well cellars to the tundra.

“One tundra pond was observed that may have had a hydrocarbon base (sic) sheen. However, it didn’t seem likely that this sheen, if it were hydrocarbon based, was the result of hydrocarbons from a well cellar. No additional tundra pond sheens, other than those formed naturally from biological causes, were found,” the report said.

The investigation team observed some situations in which fluids were accumulating under well cellar liners, apparently as a result of liner leakage or inadequate liner installation. Tiny bubbles of gas rising to the surface in water in some unlined cellars “appeared very similar to those observed in tundra ponds as a result of natural causes.”

Several people reported to the investigation team that they had observed a gas build up under a liner and in one instance the gas was determined to be methane — the source of the gas could not be determined.

The investigation dismissed the allegations of AOGCC and ADEC complicity in permitting and concealing well cellar oil spills.

“It is the lead investigator’s opinion that the probability of an ADEC and/or AOGCC investigator covering up a spill or tundra pond sheen is so small that it hasn’t occurred,” the report said. “… There is no apparent motive for an ADEC or AOGCC inspector to cover up a spill and a lot of obvious negative consequences for doing so. … Because each well is inspected each day by an operator (weather permitting) and because the operators assigned to specific wells vary periodically, it is unlikely that a reportable condition would go intentionally unreported for an extended period.”

Responses to the anonymous questionnaire sent out by the investigation team indicated that the majority of the well operators would report any health, safety and environmental concerns to their supervisors without fear of retaliation. Some respondents did express skepticism about the consequences and effectiveness of making problem reports, but these responders said that they would be willing to report problems by at least one of the mechanisms that are available to them.

Trash on the tundra

The investigation team did find that the accumulation of trash in the snow during the winter has increased in recent years, perhaps because of factors such as increasing amounts of winter work.

“Winter darkness and severe weather make trash collection difficult and even dangerous depending on trash location, which is often far from its point of origination due to high winds,” the report said.

But BP operates a student-hire “stick picker” program every summer to clean up the trash that has accumulated during the winter, the report said.

“Based on personal observation from July 22 to Aug. 1, the ‘stick pickers’ have done an excellent job in removing trash,” the report said. “Very little is present in the areas they have worked and the tundra overall is nearly trash free. … Personal observation … indicated that North Slope workers take extraordinary care to prevent anything from defacing the tundra.”


Although the AOGCC investigation has vindicated BP, the investigation team did make some recommendations for improvement. These recommendations included:

• The formation of a government agency working group to establish a mechanism for different regulators to communicate between each other information about potential problems that fall under different regulatory jurisdictions.

• The formation of an agency/industry working group to establish a common understanding of reporting requirements for hydrocarbon releases in secondary containment areas.

• Resolution by BP of some misunderstandings between field and office technical personnel regarding the actions to be taken in response to the discovery of fluids in well cellars.

• The development by ADEC of design standards for well cellar secondary containment; and BP needs to consider replacing some of the existing liners.

• The implementation by BP of the visual inspection of potential leakage locations of well freeze protection fluids, and a reconsideration of the company’s policy of allowing some wells with fluid leaks in the casing to continue to operate.

BP evaluating report

“We will fully evaluate the report and consider all the recommendations and apply the learnings,” BP spokesperson Daren Beaudo told Petroleum News. “It corroborates our previous statements about well operations and hydrocarbons in well cellars.”

Beaudo said that following the allegations BP had shut in all of its North Slope wells that had known surface casing leaks, except for a Northstar injector well that has a completely sealed and permitted well cellar. BP is reviewing some techniques for sealing well cellars and welcomes the dialogue on issues such as housekeeping the wells, Beaudo said.

“We’ve identified a method for repairing shallow casing leaks that involves excavating and welding a sleeve around the casing,” Beaudo said. “We’ve got a team working on applying those techniques.”

Beaudo also said that BP now has several ways by which people can raise concerns anonymously, in addition to the normal reporting routes. Reporting can be made to the newly appointed company ombudsman or through a corporate, anonymous reporting mechanism, for example.

“We’re pleased to see that the vast majority of employees feel welcomed in raising issues and sharing concerns — that is the kind of culture that we are fostering,” Beaudo said. “We would like to see that 100 percent, but for those folk that don’t feel comfortable raising these issues, we have a number of mechanisms for them to raise concerns.”

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