Alaska oil and gas regulators say a federal agency violated the rules when its contractor failed to properly abandon two wells last winter during the cleanup of a decades-old environmental mess in the National Petroleum Reserve-Alaska.
The missteps occurred as part of the U.S. Bureau of Land Management's $50 million project to clean up old well sites abandoned long ago by the federal government. The government undertook the drilling efforts to explore the hydrocarbon potential of its 23-million acre reserve.
The two wells — the "whistling well" at Iko Bay that once hissed methane and another well surrounded by a lake of naturally seeping oil — have long served as emblems highlighting the pollution.
Alaska politicians have seized on images of the two wells to mock the federal government for setting strict cleanup standards for the oil industry while ignoring some of its own mess in the reserve.
The attention generated by the outcry helped lead to this latest round of cleanups after U.S. Sen. Lisa Murkowski secured federal funding for the effort in the Helium Stewardship Act of 2013.
The agency and its contractor will have to redo the well work next winter — when heavy equipment and other rigs can travel the frozen tundra — because it was improperly done this winter, said Cathy Foerster, chair of the Alaska Oil and Gas Conservation Commission. But the agency wasn't fined because the AOGCC has no authority to penalize the federal government.
The BLM is in the process of cleaning up dozens of the 136 oil and gas wells that were drilled by the U.S. Navy and U.S. Geological Survey in the Indiana-sized reserve, starting in the 1940s.
Many of the wells were not properly plugged to prevent leaking before the federal government abandoned them. Debris such as pipes, fuel drums and other building materials were often left on the tundra to rust.
The agency must properly "plug and abandon" many of those wells. BLM officials said the work generally involves inserting a 100-foot-deep plug of cement at the top of the well pipe or casing, and welding on a metal identification plate before the pipe is buried, hopefully forever.
In both the mismanaged projects, the wells were not properly plugged, Foerster said. BLM is the project operator and responsible party, she said.
Marsh Creek LLC is the BLM's contractor for the job and oversaw the work, while subcontractor SolstenXP conducted the physical plugging and abandonment, BLM officials said.
Marsh Creek is an Alaska Native corporation owned by Kaktovik Inupiat Corp., the village corporation for Kaktovik, and SolstenXP is an oil field services provider in Anchorage.
Jon Ealy, chief operating officer at Marsh Creek, said the work associated with remediating the two wells and many others as part of the project is challenging.
But he said all the work has been completed perfectly except for the problems at the two wells involving Marsh Creek's subcontractor, SolstenXP.
"We did an excellent job in all but two parts," he said. "We take a lot of pride in our performance up there, and this is not something we're used to and not something we're comfortable with."
An official with SolstenXP referred requests for comment to the BLM.
Next winter's redo of work at the well surrounded by the oil seep — located at Cape Simpson about 50 miles southeast of Barrow — will mark BLM's third attempt to fix the well.
The cement plug was also not properly installed at the Simpson Core Test 26 — as the well is called — a decade ago, during an earlier, $99 million round of cleanup work that involved the BLM and the U.S. Army Corps of Engineers.
"They didn't do it right in 2006 and they didn't do it right again in 2016," Foerster said.
The latest problems at that well included a blowout on March 19, said Foerster. The error and a related mistake led to back-to-back violation notices sent by the commission to the BLM, in March and April.
The mistake came shortly after a ceremonial visit to the Cape Simpson and Iko Bay sites by BLM's national director, Neil Kornze.
BLM does not characterize the March 19 event as a blowout. No oil or other pollution from the well leaked into the environment, said Nicole Hayes, the BLM's legacy well project coordinator.
Despite the challenges of the project, the agency and Marsh Creek have made important progress at Cape Simpson, successfully remediating 10 of 11 wells, said Hayes.
Surface debris has also been removed from some spots, including rusting barrels that once drew attention to Simpson Core Test 26, and more will be removed next winter.
The March 19 incident occurred because the required well-control equipment, including a blowout preventer stack, had not been installed, the AOGCC said in the first violation notice, sent March 24 and signed by Foerster.
That resulted in the "uncontrolled flow" of wellbore fluids and oil to the surface, the notice said.
"That's a blowout," Foerster said on Thursday.
According to the procedure approved by the commission, the equipment should have been installed before warm fluid was circulated in the well to clear the frozen fluids inside, Foerster said in the letter.
The BLM acknowledged that its contractor did not follow approved procedures, according to an April 5 reply letter signed by Bud Cribley, BLM's state director in Alaska.
None of the oily fluids ever left the casing, Hayes said. They rose slowly and, with temperatures at 20 degrees below zero, froze quickly. A small amount of the fluid was captured by workers and put into a bucket before it reached the environment.
Cribley said in his letter that "all fluids were recovered without incident."
Also, Marsh Creek immediately responded by changing on-site supervisory personnel, increasing communication and reviews of each day's tasks, and flying its lead drilling engineer to oversee well work, Cribley said.
The blowout contributed to the second violation notice sent April 4, Foerster said. After the blowout, SolstenXP tried to regain control of the well by pumping cement down it, said Foerster.
"They claimed they had properly plugged it with the cement and they proceeded to cap it, but we said, 'No, you have no idea where the cement went,' " said Foerster.
At BLM's direction, SolstenXP returned to Simpson Core Test 26 and could not find any indication of a cement plug down to 57 feet, as deep as the equipment on site could test, Foerster said in the notice.
Crude oil, not cement, was at the top of the well casing when the identification plate was welded on, violating approved procedures that require cement to be atop the well casing, the notice said.
The well was not sealed, said Foerster.
Hayes, with BLM, said the cement was not pumped into the well to regain control of it. Instead, it was pumped into the well as part of the original plan.
But she acknowledged that the cement was nowhere to be found, and that the well was not properly plugged.
She said each of the wells can present unique challenges, in part because they are very old and there are few historical records to provide the agency with information, such as how the drilling was originally done.
"Were not sure what's going on with the cement," she said.
Foerster said the commission's approved plans were also not followed at Iko Bay at a well about 15 miles southeast of Barrow, where work was done to repair the whistling well, so-called because of the sound made when it leaked methane, a potent greenhouse gas.
The well was drilled in 1975. This winter, contractors capped the old wellhead with a new wellhead, stopping the methane leak, said Rob Brumbaugh, the lead official for BLM's oil and gas program in Alaska.
But the agency acknowledged in an email that work at that site "deviated from approved procedures," leading to incomplete well plugs. Marsh Creek will be required to fix the problem at its own expense, the agency said.
Brumbaugh said he could not provide specifics about the why work was not properly completed.
Foerster, who has criticized the agency in previous years for being slow to address the cleanup, publicly praised its efforts in February as work was getting underway this winter.
But on Thursday, she said she's not as happy with the agency, because it has not worked as closely with the AOGCC as it should have.
"If they had worked with the AOGCC as cooperatively as they said they would then both wells would be properly plugged," she said.
The AOGCC's violation notices did not include proposed fines, as they often do.
Mike Gieryic, an attorney-adviser in the Interior Department's Office of the Regional Solicitor, said that under Alaska law, the commission "has no legal jurisdiction over federal agencies, including authority to issue fines."
He added: "Under the doctrine of sovereign immunity the federal government cannot be sued for a given cause of action unless Congress authorizes such lawsuits."
Cribley, in his April 5 letter addressing the problems at the Cape Simpson well, said the agency is committed to satisfying AOGCC's concerns. He also said BLM will work more closely with the commission to ensure that the remediation work meets federal cleanup standards.