Alaska commission fines Hilcorp $452,100 for violations at North Slope oil sites

The agency that regulates oil and gas wells in Alaska has assessed a $452,100 fine on Hilcorp for rule violations on the North Slope.

The Alaska Oil and Gas Conservation Commission, in an enforcement order issued on Tuesday, cited Hilcorp for unauthorized injections into various parts of the Prudhoe Bay Unit, which encompasses several satellites. The company has operated Prudhoe Bay, including its satellites, since 2020, when it acquired BP’s remaining Alaska assets as the latter company exited the state.

The violations concern injections of miscible gas, a substance that blends with oil to enhance oil recovery. Violations date from mid-2021 to mid-2023, according to the enforcement order issued by the AOGCC.

The order issued Tuesday makes final a fine that was proposed in December.

In the past, the commission has criticized the company for a series of lapses and violations. A 2021 order assessing a $267,500 fine for violations at the Milne Point Unit cited Hilcorp’s “lack of good faith” and “track record of regulatory non-compliance,” and it noted that it had already issued more than 60 enforcement actions against the privately held company for violations in both the Cook Inlet basin and on the North Slope.

This time, however, the AOGCC said Hilcorp has made some changes and taken steps to improve its performance. The downward trend in violations was discussed in meetings between Hilcorp and the AOGCC in December and January, the enforcement order said.

“While it is always AOGCC’s goal to have zero violations, and consequently zero repeat violations, AOGCC does acknowledge the overall downward trend in Hilcorp’s violations as Hilcorp noted during the informal review. It is encouraging to see that Hilcorp is monitoring its compliance history and seeing improving performance in this area,” the order said.

Hilcorp did not dispute the violations, though it questioned the assessed penalty, the order said. The commission opted against lowering the penalty from what was proposed in December, but it dropped a requirement that Hilcorp submit a report on the events, the order said. Hilcorp has already conducted an internal investigation into the causes and ways to prevent future recurrences and shared the results with the commission, the order said.

Along with paying the penalty, Hilcorp must carry out the corrective actions identified in its internal investigation, the order said.

In a statement, Hilcorp spokesperson Luke Miller referred to the company’s improved performance.

“We are pleased to see a downward trend in compliance issues, as noted by AOGCC in its Order, and look forward to continuing to work closely with AOGCC to ensure compliant, safe and responsible operations,” Miller said in the statement.

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.