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Providing coverage of Alaska and northern Canada's oil and gas industry
November 2019

Vol. 24, No.45 Week of November 10, 2019

AOGCC fines BP $20,000 over NGL meters

Kristen Nelson

Petroleum News

The Alaska Oil and Gas Conservation Commission has fined BP Exploration (Alaska) Inc. $20,000 for violating an August 2018 conditional approval of natural gas liquids custody transfer measurement equipment.

In an Oct. 30 order the commission said it issued a notice of proposed enforcement action to BP in July based on the company’s “failure to submit required meter performance reports” for NGL custody transfer meters. The commission had proposed a $30,000 fine, reduced to $20,000 following a review.

Violations cited in the July proposed action concerned NGL sales to ConocoPhillips Alaska Inc.’s Kuparuk River unit. The proposed $30,000 fine included $15,000 for the initial violation of failure to provide a meter performance report and $15,000 for the initial violation of failure to provide notification for AOGCC witness as required.

The commission said the notice also proposed that BP “submit the required information and describe how it will prevent recurrence of this violation.”

Custody transfer

The commission said custody transfer measurement equipment used for sale of Prudhoe NGL was conditionally approved by AOGCC in August 2018 with requirements including a monthly meter prove frequency notification to the commission to provide an opportunity to witness meter proves, “required actions before making changes to the custody transfer measurement equipment, and reporting following proves.”

BP initiated sales of NGL to Kuparuk in September 2018 “and immediately encountered mechanical problems which prevented the use of meter proving equipment,” the commission said. AOGCC approved continued sales based on an alternate means of demonstrating meter accuracy. On April 6 the commission was given verbal notice of the initial NGL meter prove which was witnessed April 7, with subsequent monthly meter proves in May, June and July.

But the commission’s approval letter required that BP “provide information (table and graph) used to validate meter performance each month,” as well as giving 24-hour notice to the commission for the opportunity to witness meter proves. BP did not provide notice of meter proves in May and June, and there were no meter performance reports submitted in April, May, June and July.

Mitigating circumstances

BP acknowledge receipt of the commission’s notice of proposed action, requested an informal review “and provided the current meter factor control chart for the NGL custody transfer meter.” BP asked clarifying questions at an informal review held in August, the commission said, and “provided an updated NGL custody transfer meter proving procedure, a BPXA organizational management-of-change, and an excerpt from BPXA’s Compliance Task Management System showing key personnel responsibilities related to the NGL custody transfer meter.”

The commission said mitigating circumstances it considered included BP’s “lack of good faith in its attempts to comply with the imposed conditions and need to deter similar behavior,” and failure to submit information related to meter performance; the fact that there was “nothing different required in the conditions of approval and nothing ambiguous about the approval conditions requiring submittal of meter prove results”; and absence of equipment performance tracking equipment which compromised “the ability of AOGCC to make informed, fact-based decisions about how frequently to witness meter proves.”

The commission said BP did submit information identified as missing and demonstrated acceptable meter performance. There was no injury to the public. AOGCC said it “has significantly reduced the penalty by not involving per-day or per-month assessments for the violations.”

The commission reduced the civil penalty to $20,000 due within 30 days if BP chooses not to appeal the order.






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