Alaska regulators fine Hilcorp $50,000 for overdue test at Cook Inlet well

Alaska regulators on Thursday ordered Hilcorp to pay $50,000 for missing a deadline for testing the integrity of a well in one of its Cook Inlet fields.

The Alaska Oil and Gas Conservation Commission assessed the fine for overdue temperature checks at a well in the Trading Bay Unit on the west side of the Inlet. The temperature surveys are part of the procedure for checking the integrity of wells, looking for any leaks of injected water.

Hilcorp notified the commission that it had missed the two-year deadline for the temperature survey at the well, called D-41, the AOGCC order said. The company performed the necessary temperature measurements almost exactly a month after the two-year anniversary of the test conducted on Jan. 21, 2022, and results indicated no leakage of injected water, according to AOGCC documents.

Hilcorp did not dispute the findings, the AOGCC said in its order. The commission’s usual requirement of a written report from the company was omitted and considered unnecessary because Hilcorp already conducted its own investigation of the causes and how recurrences should be avoided, the order said. The report was sent in July to the commission, the order said.

Hilcorp is the dominant operator in the Cook Inlet oil and gas basin.

The fine was the second in two months assessed against Hilcorp by the AOGCC for well-integrity testing violations at the Trading Bay Unit. In July, the commission fined the company $86,000 for missing a deadline for a pressure test on a different well, called M-30, and for continuing to operate the well before completing the required test.

Thursday’s order was also the fifth AOGCC-assessed penalty for Hilcorp this year.

On Feb. 6, the commission fined Hilcorp $452,100 for unauthorized injections at various sites of the Prudhoe Bay Unit. Two days later, the commission assessed a $260,477 penalty against the company for failure to complete a required mechanical integrity test at the Milne Point Unit, which like Prudhoe is on the North Slope.

The commission on March 5 assessed a $55,000 penalty on Hilcorp for some reporting lapses at the Endicott field, also on the North Slope.

Additionally, Hilcorp earlier this year settled a dispute with the federal government over management of pipelines and other facilities at three aged Cook Inlet fields.

The dispute was with the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. It concerned pipelines and facilities for natural gas production and underground gas storage in the Swanson River Field, Kenai Gas Field and Pretty Creek Unit.

A consent agreement signed in May resolved that the gas pipelines and facilities at issue are now subject to regulation by the federal agency. The facilities were originally designed and operated specifically for production, which is not subject to federal regulation, but they have evolved over time to now support other functions that are regulated by the federal government, such as transmitting gas, according to PHMSA.

Under the consent agreement, Hilcorp must abide by federal regulations in the way it manages the relevant facilities. The company must submit reports to PHMSA and expand its program to control for corrosion. It also must patrol for leaks, conduct pressure tests and carry out other specific safety tasks as required by the federal agency, according to the consent agreement.

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