Agency fines Hilcorp Alaska $200,000 for incident it says nearly killed workers

An Alaska state agency on Friday levied a $200,000 fine against Hilcorp Alaska over a 2015 industrial accident at the Milne Point oil field in which, it said, only good fortune saved three North Slope workers from suffocation.

"The extent and seriousness of the consequences of the violations cannot be overstated," the Alaska Oil and Gas Conservation Commission said in its decision. "Nothing but luck prevented the deaths of three workers during the cleanout operations."

The fine stemmed from the operator's unapproved decision to use nitrogen gas to help clean out a well after initially attempting to use seawater.

Nitrogen, a natural component of the atmosphere, is a colorless and odorless gas that replaces life-supporting oxygen as it's concentrated in a closed space. On Sept. 25, 2015, nitrogen filled a trailer where the contractors were working when a valve was left open. The nitrogen caused the crew members to lose consciousness, according to the agency.

A crew member shut in the well, causing the nitrogen to stop flowing into the trailer, and the men were evacuated to a clinic, the agency said. Hilcorp notified the agency, leading to an investigation.

The agency initially proposed a $720,000 sanction in November 2015, saying the incident caused the "near deaths" of the contractors.

Friday's order lowers the civil penalty, in part because Hilcorp has taken steps to improve "overall regulatory compliance" over the past year, the agency said.


The fine comes as Hilcorp is responding to a gas leak in Cook Inlet discovered on Feb. 7. The leak comes from a gas line associated with aging facilities Hilcorp purchased in 2015 at the Middle Ground Shoal field northwest of Kenai. Hilcorp has said that because of ice floes over the leak and other factors, it doesn't expect to deploy divers to patch the leaking pipe until at least mid-March.

In a statement issued to reporters, Hilcorp said it disagrees with some of the order's findings but does not plan to appeal.

Hilcorp's statement said it has doubled its Alaska workforce over the last five years as it increased operations and has remained above U.S. averages on occupational health and safety.

"Personal health and safety is of the utmost importance to Hilcorp and we are doing everything we can to ensure responsible operations," said the statement, emailed by Lori Nelson, external affairs manager at Hilcorp Alaska.

"Hilcorp has reviewed its procedures and has taken steps to make sure we do not have a similar incident occur," the statement said.

The Alaska Oil and Gas Conservation Commission has aggressively pursued small, independent operators like Hilcorp to ensure they follow state requirements. Hilcorp has expanded rapidly in Alaska since arriving in 2011, becoming the dominant operator in Cook Inlet and a key North Slope oil producer after acquiring some of BP's assets in 2014. Hilcorp's parent company is based in Houston, Texas.

The AOGCC on Friday said Hilcorp "has a significant history of noncompliance" with the its regulations, leading to several enforcement actions against the company.

"The potential severity of the outcome of Hilcorp's actions, Hilcorp's ongoing history of performing work outside of approved permits or management-of-change protocols, its history of compliance issues and the need to deter are significant factors in the AOGCC's analysis," the agency said.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or