Alaska regulators fine Hilcorp $30K for oil meter violations on Kenai Peninsula

Alaska regulators have fined Hilcorp Energy Co. $30,000 for meter-related violations at an oil and gas field on the Kenai Peninsula, citing the company’s history of violations as a factor for the penalty.

The Alaska Oil and Gas Conservation Commission said in a May 14 order that Hilcorp failed to submit required meter performance reports for the Beaver Creek unit in the Kenai National Wildlife Refuge, Alaska's Energy Desk reported.

The reports detail how accurately meters measure the volume of oil or gas leaving a field. The state uses the readings to calculate royalties owed to the government.

Hilcorp's violation stems from an agreement in October under which the commission allowed use of new metering equipment but required the monthly performance reports.

"Oil custody transfer meters are essentially the state's cash register," Alaska Oil and Gas Conservation Commission Chair Jeremy Price said in a statement. "AOGCC strives to ensure the till is always accurate."

The penalty decision considered Hilcorp's "lack of good faith in its attempts to comply with the imposed conditions, its history of regulatory noncompliance and need to deter similar behavior," the commission said.

Hilcorp had similar, recent violations in Alaska at the Granite Point and Trading Bay units in Cook Inlet, the commission said.


"While improvements in Hilcorp's compliance can be shown in the past 2 years, the recurrence of failing to account for approval conditions imposed by AOGCC calls into question the effectiveness of corrective actions implemented in responses to past enforcement actions," the commission's order said.

Hilcorp has asked the Regulatory Commission of Alaska to shield areas of its finances from public scrutiny during a proposed $5.6 billion purchase of BP Alaska assets.

BP in August announced plans to sell its operation to Hilcorp, including interests in Prudhoe Bay, the Point Thomson gas field and the trans-Alaska pipeline system.

The companies have argued that the disclosure of some corporate information could put Hilcorp at a competitive disadvantage.