AOGCC hits BP with fine for annulus pressure violation at Prudhoe unit

Alaska Oil and Gas Conservation Commission proposes $117,500 fine, corrective action, increased monitoring by agency; BP preparing a response

Kristen Nelson

Petroleum News Editor-in-Chief

The Alaska Oil and Gas Conservation Commission is proposing to fine BP Exploration (Alaska) for failure to record annular pressure problems, notify the commission of those problems and to bleed down pressure at Prudhoe Bay well H-11 at the BP-operated Prudhoe Bay field on Alaska’s North Slope.

The commission notified BP Oct. 25 that it was proposing to fine the company $117,500 and order corrective action.

The commission said in a letter to BP that it appears the company violated Conservation Order No. 492, “by failing to record and make available on request the results of monitoring the H-11 tubing and annulus pressures” between Aug. 19 and Sept. 8. The commission said the violations are indicated by gaps in the record of H-11 tubing pressure, inner annulus pressure and outer annulus pressure.

A second violation was failure to notify the commission of outer annulus pressure exceeding 1,000 psig at H-11 from Sept. 9 through Sept. 21. The commission said it received a report on the outer annulus pressure from BP only after it inquired.

In a third violation, of both the conservation order and of the commission’s regulations, BP failed to bleed off H-11’s outer annulus pressure before it was restarted Sept. 9, after the well had been shut-in.

Corrective action ordered

Within 30 days BP is to provide the commission “with a detailed description of actions, planned and accomplished, to prevent recurrence of violations similar to those that appear to have occurred in connection with the start-up of H-11” and monthly progress reports until the planned actions are completed.

For 180 days BP will provide the commission with 24-hour advance notice of all Prudhoe Bay well restarts so that the commission will have the opportunity to witness the restart operations, and documentation of well pressure bleeds in connection with well restarts.

The commission is proposing a lighter fine ($2,500 a day vs. the maximum of $5,000 a day) for the first group of violations because, the commission said, it understands “that the pressures in question were in fact monitored and that the failure to record the observations may have been due at least in part to confusion about the workings of BPXA’s well data recording system.”

BP has 15 days from Oct. 25 date to notify the commission that it “concurs in whole or in part with the proposed action …, requests informal review, or requests a hearing …,” otherwise the commission will consider BP has accepted by default and will issue an enforcement order.

BP reviewing

BP said it is investigating “why H-11 operated above policy guidelines of 1,000 psi (pounds per square inch) on the outer annulus for several days.” The company said according to its policies and procedures “the well should have been monitored closely during start-up to ensure pressure remained below 1,000 psig during start-up operations.” To keep pressure below 1,000 psig, BP said, pressure can be bleed from the outer annulus either prior to the well being brought online, or while the well is being brought on line.

“Bleeding pressure out of an annulus is a routine, relatively simple procedure that well site operators and contractors are trained to safely perform,” BP said.

On the issue of recording data — the violation for which the commission has proposed a lesser penalty — BP said its preliminary investigation found that the workers were uncertain “about whether data that had not changed over the identified period of time (Aug. 19-Sept. 8) needed to be entered into the computer database. Operators felt that if the data did not change from day to day no entry was required because the computer would automatically use the previous reading. We have since reinforced the need to input this data.”

Rules established last year

The commission fined BP for the incident and said when it finished its investigation in late 2003 that BP “may have violated” the commission’s regulations “by failing to carry on operations and maintain the property in a safe and skillful manner in accordance with good oil field engineering practices.”

BP revised its Prudhoe Bay annular pressure management policies, and the commission said in mid-2003 when it issued its new rules that while BP’s policies “provide a reasonable starting point for establishing rules regulating annular pressure,” those policies needed to be supplemented by a rule requiring BP to notify the commission when “wells exhibit annular pressures that exceed specific thresholds,” by a rule requiring submission by the operator of proposed corrective actions for affected wells, by specific annular pressure limits necessitating corrective action and “operator accounting for annular pressure increases due to well heating during start-up.”

The commission has established annular pressure rules for wells at Kuparuk, Alpine and Milne Point similar to those for Prudhoe.