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Cook Inlet producer fined $446,000 for well-safety violations

  • Author: Alex DeMarban
  • Updated: February 16, 2017
  • Published February 16, 2017

Alaska regulators on Tuesday hit oil and gas producer Cook Inlet Energy with a $446,000 fine for numerous safety violations designed to prevent a blowout at a producing well in Cook Inlet.

The company, recently emerged from bankruptcy, had fought the violations for about two years after the Alaska Oil and Gas Conservation Commission originally proposed sanctions in December 2014.

The case was delayed for a year after the company requested that it not be judged until the commission's third seat was filled. Gov. Bill Walker took that step last July, appointing Hollis French.

The agency charged Cook Inlet Energy with violating requirements associated with the testing and operation of safety valves at its Sword No. 1 well in western Cook Inlet in late 2013 and early 2014, and for not providing information sought by the agency.

The agency's decision was signed by AOGCC Chair Cathy Foerster and French.

The decision said the company's efforts to justify its inoperable safety valve system had no merit, the decision said.

The company's assertions that its approach "provided 'additional layers of protection' demonstrate that CIE believes it has the authority to make decisions regarding the necessity of compliance without AOGCC involvement," the agency said.

The company struck oil at the well in late 2013. The agency said its actions allowed it to produce from the well for three months, despite the violations.

The agency said it took into account the company's prior history of noncompliance. The only mitigating factor, it said, was that people and the environment were not hurt.

Cook Inlet Energy, a subsidiary of Glacier Oil and Gas in Tennessee, is now owned by two private equity firms that picked up the company and former parent company Miller Energy after the bankruptcy filing.

Cook Inlet plans to drill an exploration well called Sabre in western Cook Inlet, starting in April about 3 miles off the coast in Trading Bay, according to an application filed with the U.S. Army Corps of Engineers.

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