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Hilcorp hit with $30,000 fine and stern warning from state regulators

  • Author: Alex DeMarban
  • Updated: September 30, 2016
  • Published September 30, 2016

The state's oil-well safety regulator hammered oil producer Hilcorp Alaska on Friday with a $30,000 fine for operating an oil well with a failed gas detection system.

In issuing the fine, the Alaska Oil and Gas Conservation Commission warned the company about its record of violations despite the commission's repeated emphasis on the importance of regulatory compliance.

The commission said Hilcorp had notified the agency in August 2015 that a gas detection system was not working at a Milne Point well. Hilcorp said it would suspend well operations until the system was functioning.

As it comes from a well, natural gas is odorless and invisible — and explosive.

But, "problematically," Hilcorp proceeded with operations at the well, known as Milne Point Unit well F-96, just two hours after it notified the agency, and before the gas detection system was working and could ensure safe activity, the decision said.

"AOGCC agrees there was no harm to the public," the decision said. "However, Hilcorp continued to perform well operations without AOGCC approval, and utilized personal gas detection monitors without AOGCC approval."

"Hilcorp's history of non-compliance and the need to deter similar behavior weigh strongly in setting the penalty amount," the commissioners said.

The fine was reduced from $50,000 following a hearing and review earlier this year.

The decision includes a list of "numerous prior incidences of regulatory violations by Hilcorp." The list of more than 20 violations dates back to April 2012.

The agency has also blasted Hilcorp for an incident in September 2015 — a month after this gas-detection violation — that it said almost resulted in the suffocation deaths of three North Slope workers.

AOCGG chair Cathy Foerster and commissioner Dan Seamount signed the decision.

The investigation took place before the newest commissioner, former Alaska Sen. Hollis French, joined in on July 25. French didn't sign the decision.

Hilcorp Alaska did not immediately respond to a request for comment Friday afternoon.