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AOGCC fines Hilcorp for DIU violations
$55,000 fine stems from requirements imposed in 2022 for installation of new Coriolis custody transfer meters at Duck Island unit
Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska, the Duck Island unit operator, $55,000 for failure to provide the commission with advance notice of monthly meter proves and for failure to submit monthly meter prove results within seven days. Both were conditions of a 2022 approval of new meters.
In a Feb. 6 notice of proposed enforcement action, the commission said Hilcorp failed to provide at least 24-hour notice of opportunity to witness monthly meter proves in December 2023 and January 2024, and failed to submit meter performance reports for November 2023 through January 2024.
Hilcorp requested permission to replace two of four Duck Island unit oil custody transfer meters in 2022. The two were out-of-service turbine meters and were to be replaced with Coriolis meters, a change which required a variance, AOGCC said at the time.
It required a one-month demonstration comparing results from the Coriolis and turbine meters, with Hilcorp required to demonstrate that the new meters met a performance level acceptable to the commission. Once AOGCC accepted the meters, it required monthly proves, with 24-hour notice to allow it the opportunity to witness the meter proves, and required Hilcorp to provide it with results of the monthly meter proves within seven days.
The new meters AOGCC said in its Feb. 6 notice that it conditionally approved use of the Coriolis transfer meters in June 2022, and a successful demonstration period began in September 2023 and was completed in October.
Since then, however, Hilcorp has "repeatedly violated" two of the approval conditions, the commission said: failing to provide the 24-hour notice of the monthly meter prove in December and January; and failing to provide monthly performance reports for November through January.
In a Feb. 8 response to the notice of proposed action, Hilcorp said it would not appeal and submitted payment of the $55,000 fine.
The company described the measures it put in place to ensure the problem does not recur:
"Added all Conditions Of Approval (COA's) for oil custody transfer meters to Compliance Task Manager system to trigger notifications to submit 24 hour notice and subsequent reports bi-weekly."
It also said reviews will be held on all management of change in the future to ensure all parties are aware of the conditions of approval and said a paper copy of the conditions of approval will be attached to new equipment before start-up.
In its March 5 order on the matter, AOGCC noted its inspectors did witness three meter proves at Endicott during a trial demonstration period, with the successful demonstration completed in October and associated reports were provided which documented performance of the meters.
AOGCC said Hilcorp provided notice of an opportunity to witness meter proving on Nov. 25, which the commission waived, but said no notice was received of meter proves in December and January.
In its order the commission said there were no mitigating circumstances in Hilcorp's favor, and imposed the proposed $55,000 fine, based on $10,00 for failure to notice the opportunity to witness meter proves -- two months at $5,000 each; and $45,000 for failure to submit meter performance reports -- three months at $15,000 per month.
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