ConocoPhillips faces $45,000 penalty

Wesley LoyPetroleum News

ConocoPhillips Alaska Inc. is facing a $45,000 civil penalty for alleged violations at a well in the Kuparuk River unit on the North Slope.

The company has asked the Alaska Oil and Gas Conservation Commission, which regulates drilling, to reconsider its decision to impose the penalty.

As a result, the commission has scheduled a public hearing for 9 a.m. Aug. 20 in Anchorage.

The commission says ConocoPhillips, which operates the huge Kuparuk oil field, missed the deadline for a mechanical integrity test and failed to report "pressure communication" in well KRU 3Q-16 by the next working day.

"We expect to resolve this matter at the hearing in August," company spokeswoman Natalie Lowman told Petroleum News on Wednesday.

The commission's proposed order indicates KRU 3Q-16 is an injection well. It says the well was due for a mechanical integrity test no later than Sept. 25, 2012.

"By email dated November 13, 2012 CPAI notified the AOGCC that KRU 3Q-16 was returned to injection on August 22, 2012 and ceased taking injection November 1, 2012, and was shut in November 13, 2012," the order says.

Every day from Sept. 26 through Nov. 12 was a violation, the order says.

Further, graphical plots of the well's tubing, inner annulus and outer annulus pressures indicated "significant pressure anomalies" that were not reported to the AOGCC, the order says.

The commission said it considered certain factors in determining the appropriate penalty for ConocoPhillips.

The civil penalty was decreased from the maximums provided by statute, in part due to the company's "general history of satisfactory compliance and practices."

Other mitigating circumstances included "the lack of actual threat to public health or the environment," and the company's shut-in of the well once it determined KRU 3Q-16 was out of compliance.

The commission is proposing a number of corrective actions. Within two weeks of the order becoming final, ConocoPhillips would have to provide "a detailed description of its Underground Injection Control regulatory compliance program."

The company also would have to provide details of its tracking system for determining when mechanical integrity tests are required. And ConocoPhillips would have to provide a root cause analysis addressing the violations.

At an informal conference, the company indicated it had performed a root cause analysis and "outlined the changes it had made in order to avoid similar violations in the future," the proposed order says.

But the company didn't share the analysis with the AOGCC.

Petroleum News