Commission reduces Kuparuk fine to $25K

Petroleum News

The Alaska Oil and Gas Conservation Commission has reduced a proposed $53,250 fine against ConocoPhillips Alaska to $25,000 based on mitigating factors.

At the end of March the commission proposed the $53,250 fine against the Kuparuk River field operator for failing to make a timely report of a well integrity failure at an injector well that occurred Aug. 24, 2004, failing to obtain approval from the commission of a plan of corrective action and failing to get permission to continue injection.

In addition to the fine, the commission gave Conoco 30 days to correct deficiencies in its surveillance program and 30 days to provide the commission with “new protocols established to insure the timely identification and reporting of injection well mechanical integrity failures.”

The $53,250 proposed fine included: $5,000 each for violating reporting and corrective action plan requirements; $250 each day for 173 days for violating requirements to obtain approval for continuing injection.

The commission said Conoco did not dispute the facts of the case “and acknowledges that KRU 1D-39 did point out the existence of a gap in their annular pressure monitoring and surveillance program.”

The company told the commission it believed only 171 days passed, not 173 days; that it reported the tubing/annulus communication in KRU 1D-39 within a day following leak observation “and voluntarily self-disclosed that 171 days had passed between leak initiation and observation”; and that the circumstances KRU 1D-39 are different than previous well integrity enforcements and warrant a different response.

The commission said it agreed that its original language did not acknowledge that Conoco self-reported the tubing/annulus communication in this injection well, and also agreed that the time period was 171 days not 173 days.

The commission said circumstances were clarified in a May 11 informal meeting, and said it agreed, based on evidence presented after the beginning of the review, that this well, KRU 1D-39, “was not ever in danger of annulus overpressure or misinjection of fluids. … “

“However, the fact remains that the clear regulatory requirements for well integrity were violated, and (Conoco) does not dispute that fact.” There is, the commission said, a different “and more stringent” regulation for injection wells than for development wells.

Mitigating factors

“Because of the low injection pressures, fluids being injected (water), and well design (multiple casing strings with pressure ratings exceeding injection pressure available to contain pressure communication or leakage), there was never any danger of annulus overpressure and no misinjection of fluids,” the commission said in a May 20 order. Conoco has “instituted corrective actions to improve compliance with applicable regulations and orders,” actions instituted at the company’s own initiative “immediately following the identification of a gap in the annular pressure monitoring and surveillance program.”

The commission said it concluded that civil penalties are called for to deter future violations by any operator, but that because of Conoco’s “self-reporting and self-disclosure, cooperation throughout the investigation, and absence of substantial risk associated with the violations, the penalty amount originally proposed should be significantly reduced.”

In addition to the $25,000 fine, the company was directed to provide the commission with a detailed descriptions of actions it has taken to correct deficiencies in the annular pressure monitoring and surveillance program and provide the commission with a description of new protocols established to ensure identification and reporting of mechanical integrity failures in injection wells in a timely fashion.