The Alaska Oil and Gas Conservation Commission (AOGCC) has imposed a civil penalty of $267,500 on Hilcorp Alaska LLC for allegedly violating an approved drilling process, according to an official order from the regulator.
The commission imposed the penalty after Hilcorp in February 2021 allegedly failed to officially notify a change in equipment that was not approved in a previous permit by the regulator. Hilcorp was conditionally approved to drill in the Milne Point oil field on Alaska’s North Slope in 2021, and the Permit to Drill (PTD) included the completion of an electric submersible pump artificial lift. The commission’s order stated that Hilcorp installed a jet pump to complete the artificial lift without the regulator’s approval.
In assessing the penalty, the AOGCC said it considered Hilcorp’s “lack of good faith in its attempts to comply with the approved PTD” and that the company was aware that “well completion was different than required without make any attempt to resolve the discrepancy.” .
The commission also considered “the company’s history of non-compliance” and “the need to deter similar behavior in future operations”.
In the document, the AOGCC said it had issued more than 60 enforcement actions against Hilcorp. Enforcement measures include provisions for the company to identify and implement corrective actions to prevent the recurrence of violations or incidents. Of those enforcement actions, several were issued to modify permits approved without prior approval, the commission said.
In a May 2023 letter to the AOGCC, Hilcorp offered four actions to prevent a repeat of the incident, which the commission said were insufficient and “lacking detail”. Hilcorp’s proposed steps “appear to be narrowly focused on operations and regulatory personnel at Hilcorp Alaska and ignore the possibility of similar events occurring at Hilcorp North Slope LLC’s operations,” the regulator said. Additionally, the proposed steps “fail to identify deficiencies in management oversight to ensure compliance with permit specifications,” as well as “fail to provide a corporate structure to prevent a similar repeat violation.” The commission said these omissions “make it unlikely to prevent the recurrence of such violations.”
In a statement obtained by the Anchorage Daily News, Hilcorp spokesman Luke Miller said, “Upon learning of this specific incident, Hilcorp immediately initiated an investigation and took steps to improve our oversight and internal systems, including the reviewing procedures, dedicating additional resources and strengthening training programs.. An important part of Hilcorp’s culture is to improve every day, and we look forward to continuing to work closely with AOGCC to ensure operations are compliant, safe and responsible “.
In March 2022, the US Environmental Protection Agency fined Hilcorp $180,580 for Clean Air Act violations at 35 of its Alaska facilities, located in Prudhoe Bay, Milne Point and the Peninsula from Kenai. The EPA said Hilcorp “failed to make timely repairs when methane and volatile organic compound leaks were found, failed to perform leak inspection at a new facility, and failed to accurately report on inspection activities and leak repair from 2018 to 2020.”
Hilcorp was founded in 1989 and entered Alaska more than a decade ago, according to the company’s website. The company said it is the state’s largest supplier of natural gas, with nearly one million gross acres and more than 1,700 producing wells producing approximately 135,000 net barrels of oil equivalent per day.
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