The URL can be used to link to this page

Home My WebLink AboutO 215Other Order 215 Docket Number: OTH-24-009 1. February 21, 2024 Background information email 2. April 18, 2024 AOGCC notice of violation and request for information 3. July 15, 2024 Hilcorp response to notice of violation 4. August 8, 2024 AOGCC notice of proposed enforcement action 5. September 30, 2024 Hilcorp civil penalty payment STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to complete required Temperature Survey, Trading Bay Unit D- 41 well (PTD 1790830), Area Injection Order 5 ) ) ) ) ) ) ) ) Docket Number: OTH-24-009 Other Order 215 Trading Bay Unit (TBU) McArthur River Field Hemlock Oil Pool September 19, 2024 DECISION AND ORDER On August 8, 2024, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to Hilcorp Alaska, LLC (Hilcorp) regarding the D-41 well. The Notice proposed a $50,000 civil penalty under AS 31.05.150(a). Hilcorp did not request an informal review or otherwise contest the Notice. This decision and order now follow. SUMMARY OF PROPOSED ENFORCEMENT ACTION: The Notice identified that Hilcorp violated the provisions of Rule 5 of Area Injection Order 5 (AIO 5) (“Demonstration of Tubing/Casing Annulus Mechanical Integrity”) for the D-41 well. AIO 5 was approved July 25, 1986. The order authorizes the underground injection of fluids for enhanced oil recovery in the TBU, McArthur River Field. The rules require mechanical integrity tests (MITs) on TBU injection wells. Rule 5 of AIO 5 states “A schedule must be developed and coordinated with the Commission which ensures that the tubing/casing annulus for each injection well is pressure tested prior to initiating injection and at least once every four years thereafter.” On February 2, 2016, AOGCC approved AIO 5.021, which is an administrative approval that, subject to conditions, allowed D-41 to continue water only injection with a known tubing by inner annulus pressure communication. The well would not pass the primary mechanical integrity testing protocols and Hilcorp requested to use an alternate means of verifying well integrity and injection confinement. Condition 3 of AIO 5.021 states Hilcorp shall perform a temperature survey every 2 years to confirm injection is confined to the authorized injection zone. Hilcorp subsequently performed the temperature surveys every 2 years with the last survey completed on January 21, 2022. On February 21, 2024, Hilcorp notified the AOGCC by email that D-41 was overdue for the 2- year temperature survey. Other Order 215 September 19, 2024 Page 2 of 3 Hilcorp subsequently completed the overdue temperature survey on February 25, 2024, and the results were provided to AOGCC via email on February 26, 2024. Hilcorp’s failure to demonstrate via temperature survey, the mechanical integrity and zonal isolation of the D-41 injection well within the required two-year cycle violated AIO 5.021. Violating an AOGCC order, like AIO 5.021, makes Hilcorp liable for civil penalties pursuant to AS 31.05.150(a). The Notice proposed civil penalties of $50,000 as follows.1 - $50,000 - initial violation failure to perform the required temperature survey in compliance with testing protocols specified in Condition 3 of AIO 5.021. In addition to the imposed civil penalty, the AOGCC has historically required Hilcorp to provide a detailed written explanation as to how it intends to prevent recurrence of this violation. The AOGCC has also historically required Hilcorp to demonstrate to the AOGCC’s satisfaction a more robust regulatory compliance tracking system that addresses all AOGCC-mandated obligations. For this D-41 violation, Hilcorp has completed an internal investigation (emailed to AOGCC dated July 15, 2024) that included a root cause analysis and actions to prevent recurrence. Thus, the AOGCC will not require an additional written explanation from Hilcorp. It is the expectation with every enforcement action that Hilcorp identify, implement, and continue to assess the effectiveness of compliance improvement initiatives. The factors in AS 31.05.150(g)2 have been considered in the determination of penalties for the violation. The penalty does not reflect amounts based on per-day assessments. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. The AOGCC issues injection orders, drilling and sundry permits for enhanced oil recovery projects with specific rules and conditions of approval to ensure injection activities are done safely, in a manner that protects the environment, and won’t cause waste. Hilcorp’s failure to comply with the AOGCC order raises the potential for similar behavior with more serious consequences. Consideration of the civil penalty includes Hilcorp’s history of compliance/noncompliance and the need to deter similar behavior(s). Other considerations include the existing TBU aquifer exemption, no injury to the public or the environment, and Hilcorp’s cooperation with the investigation. AOGCC tracks and periodically audits for compliance. Nothing above should imply that AOGCC is partially responsible for Hilcorp’s violation, or infer that not assessing a penalty amount for days in non-compliance is based on action/inaction on AOGCC’s part. FINDINGS AND CONCLUSIONS: Hilcorp did not dispute the alleged violation in the Notice. 1 AS 31.05.150(a) provides for not more than $100,000 for the initial violation and not more than $10,000 for each day thereafter on which the violation continues. 2 AS 31.05.150(g) requires AOGCC to consider nine criteria in setting the amount of a civil penalty. Other Order 215 September 19, 2024 Page 3 of 3 The AOGCC finds that Hilcorp committed the violation as initially alleged in the Notice and restated in the “Summary of Proposed Enforcement Action” section above. NOW THEREFORE IT IS ORDERED THAT: Hilcorp is assessed a civil penalty in the amount of $50,000 for the violation detailed within this Order. If this Order is not appealed, the fine must be paid within 30 days of issuance. If appealed, the fine will be held in abeyance until the appeal process is complete. In addition to the civil penalty, Hilcorp is required to improve its regulatory compliance by implementing the corrective actions as detailed in the Hilcorp investigation as emailed to the AOGCC dated July 15, 2024, that included a root cause analysis and actions to prevent recurrence. As an Operator involved in an enforcement action, Hilcorp is required to preserve documents concerning the above action until after resolution of the proceeding. DONE at Anchorage, Alaska and Dated September 19, 2024. Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner cc: Casey Morse, Well Integrity Engineer, Hilcorp Alaska, LLC James Robinson, US Environmental Protection Agency, Region 10 Jim Regg, AOGCC Supervisor, Inspections AOGCC Inspectors RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.09.19 08:53:07 -08'00' Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.09.19 09:28:46 -08'00' From:Coldiron, Samantha J (OGC) To:AOGCC_Public_Notices Subject:[AOGCC_Public_Notices] Other Order 215 (Hilcorp) Date:Thursday, September 19, 2024 9:59:22 AM Attachments:other 215.pdf Failure to complete required Temperature Survey, Trading Bay Unit D-41 well (PTD 1790830), Area Injection Order 5 Samantha Coldiron AOGCC Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-1223 __________________________________ List Name: AOGCC_Public_Notices@list.state.ak.us You subscribed as: samantha.coldiron@alaska.gov Unsubscribe at: https://list.state.ak.us/mailman/options/aogcc_public_notices/samantha.coldiron%40alaska.go v 5 September 30, 2024 Commissioner Jessie Chmielowski Commissioner Gregory Wilson Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501 Re: Docket Number: OTH-24-009 Other Order 215 Failure to complete required Temperature Survey Trading Bay Unit D-41 well (PTD 1790830) Area Injection Order 5 Dear Commissioners Chmielowski and Wilson: Hileorp Alaska, LLC Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone:907/777-8300 Please find enclosed payment for civil penalty per Docket Number: OTH-24-009, Other Order 215. Sincerely, HELCORP ALASKA, LLC Digitally signed by Dan Dan Marlowe Marlowe (1267) (1267) DN cn=Den Marlowe (1267) Date. 2024.09.30 10,5022 - 08'00' Dan Marlowe Area Operations Manager Cook Inlet Offshore DEMJJLL Enclosure: Check Number 42037379 Lij Hilcorp Alaska LLC P.O.Box 61229 Houston TX 77208-1229 Owner: 40012563 Check Date: 1 09/24/2024 Check Number: 42037379 A N Irs bn++tit 1Icnt1Fti 1900145573 09/19/2024 OTHERORDER215 $0.00 $ 50,000.00 SEA' 3 0 202� AO G CC THIS CHECK IS PRINTED ON CHEMICALLY REACTIVE PAPER THAT HAS VISIBLE FIBERS AND A WATERMARK -HOLD TO LIGHTTO VIEW Hilcorp Alaska LLC P.O.Box 61229 Houston TX 77208-1229 PAY TO THE ORDER OF Fifty Thousand Dollars And Zero Cents STATE OF ALASKA AOGCC 333 WEST 7TH AVE ANCHORAGE AK 99501-3539 Void After 90 Days Check No Check Date Check Amount 42037379 09/24/2024 * * * * * $ 50,000.00 Authorized Signature VL4 203737911' I: L L3 1105861: 0444407748111 4 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov August 8, 2024 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7017 2400 0000 5648 0626 Mr. Casey Morse Well Integrity Engineer Hilcorp Alaska, LLC 3800 Centerpoint Dr., Suite 1400 Anchorage, AK 99503 Re: Docket Number: OTH-24-009 Notice of Proposed Enforcement Action Failure to complete required Temperature Survey Trading Bay Unit D-41 (PTD 1790830) Area Injection Order (AIO) 5.021 Trading Bay Unit (TBU), McArthur River Field, Hemlock Oil Pool Dear Mr. Morse: The Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies Hilcorp Alaska, LLC (Hilcorp) of a proposed enforcement action. Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)). Hilcorp violated the provisions of Condition 3 of AIO 5.021 (“Hilcorp shall perform a temperature survey every 2 years to confirm injection is confined to the authorized injection zone”) for the D-41 well. Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). AIO 5 was approved July 25, 1986. The order authorizes the underground injection of fluids for enhanced oil recovery in the TBU, McArthur River Field. The rules require mechanical integrity testing on TBU injection wells. Rule 5 of AIO 5.000 states “A schedule must be developed and coordinated with the Commission which ensures that the tubing/casing annulus for each injection well is pressure tested prior to initiating injection and at least once every four years thereafter. Docket Number: OTH-24-009 Notice of Proposed Enforcement Action August 8, 2024 Page 2 of 4 On February 2, 2016, AOGCC approved AIO 5.021, which is an administrative approval that, subject to conditions, allowed D-41 to continue water only injection with a known tubing by inner annulus pressure communication. The well would not pass the primary mechanical integrity testing protocols and Hilcorp requested to use an alternate means of verifying well integrity and injection confinement. Condition 3 of AIO 5.021 states Hilcorp shall perform a temperature survey every 2 years to confirm injection is confined to the authorized injection zone. Hilcorp subsequently performed the temperature surveys every 2 years with the last survey completed on January 21, 2022. On February 21, 2024, Hilcorp notified the AOGCC by email that D-41 was overdue for the 2-year temperature survey. Hilcorp subsequently completed the overdue temperature survey on February 25, 2024, and the results were provided to AOGCC via email on February 26, 2024. Hilcorp’s failure to demonstrate via temperature survey, the mechanical integrity and zonal isolation of the D-41 injection well within the required two-year cycle violated AIO 5.021. Violating an AOGCC order, like AIO 5.021, makes Hilcorp liable for civil penalties pursuant to AS 31.05.150(a). Proposed Action (20 AAC 25.535(b)(3)). The temperature survey violation at TBU is not isolated and demonstrates Hilcorp’s ongoing compliance problems. AOGCC has issued enforcement actions against Hilcorp which include provisions for Hilcorp to identify corrective actions that, when implemented, will prevent recurrence of the violation or incident. Repeat violations call into question the effectiveness of Hilcorp’s efforts to improve its regulatory compliance. For these violations, the AOGCC intends to impose civil penalties on Hilcorp as follows.1 - $50,000 – initial violation failure to perform the required temperature survey in compliance with testing protocols specified in Condition 3 of AIO 5.021. In addition to the imposed civil penalty, the AOGCC has historically required Hilcorp to provide a detailed written explanation as to how it intends to prevent recurrence of this violation. The AOGCC has also historically required Hilcorp to demonstrate to the AOGCC’s satisfaction a more robust regulatory compliance tracking system that addresses all AOGCC-mandated obligations. On April 18, 2024, AOGCC issued a Notice of Violation (NOV) and Request for Information for this missed temperature survey. In the NOV, AOGCC required Hilcorp to provide: 1. a root cause analysis and actions taken to prevent recurrence of this missed temperature survey; 1 AS 31.05.150(a) provides for not more than $100,000 for the initial violation and not more than $10,000 for each day thereafter on which the violation continues. Docket Number: OTH-24-009 Notice of Proposed Enforcement Action August 8, 2024 Page 3 of 4 2. a written description of Hilcorp’s implementation of its Underground Injection Control (UIC) regulatory compliance program. This should include the: a. compliance tracking system/process b. software, personnel, training, handover process, hierarchy of management responsibility, and accountability c. management of shut-in injection wells that assure compliance with AOGCC orders and regulations 3. an audit of automation conditional parameters (refer to Hilcorp’s investigation regarding the MPU S-33A missed MIT enforcement (Docket Number: OTH-23-026)) and generation of a corresponding automated report of “Not Operable” wells with status of online or with flow indication, and a schedule for routinely running these reports. 4. a report of wells that have flow indication without a valid Mechanical Integrity Test or valid alternate test requirement (e.g., temperature survey), the well’s status, and a schedule for routinely running these reports; and 5. a written review of all UIC regulatory mandated obligations as detailed in the applicable Area Injection Orders and Disposal Injection Orders, cross-referenced by well, with the next test date/requirement identified and verified as either current or overdue. Overdue testing to be identified and an AOGCC approved plan developed to get the well(s) into compliance within 90 days. Hilcorp has completed this investigation and provided this information to AOGCC on July 15, 2024, within the required 90 days. Hilcorp presented preliminary results of the investigation to AOGCC on July 9, 2024. The investigation identified numerous differences in how UIC compliance is monitored and managed across Hilcorp’s many Alaska operations. Hilcorp’s investigation identified that there were no additional wells with overdue testing requirements. Thus, the AOGCC will not require an additional written explanation from Hilcorp. The total proposed civil penalty is $50,000. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. Hilcorp’s repeated failure to comply with fundamental wellbore MIT requirements raises the potential for similar behavior with more serious consequences. The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. Consideration of the civil penalty includes Hilcorp’s history of compliance/noncompliance and the need to deter similar behavior(s). Other considerations include the existing TBU aquifer exemption, no injury to the public or the environment, Hilcorp’s ongoing efforts to correct the violation and prevent future violations, Hilcorp’s cooperation in the investigation, and Hilcorp’s timely and detailed response to the AOGCC issued Notice of Violation and Request for Information. AOGCC tracks and periodically audits for compliance. Nothing above should imply that AOGCC is partially responsible for Hilcorp’s violation or infer that not assessing a penalty amount for days in non-compliance is based on action/inaction on AOGCC’s part. Rights and Liabilities (20 AAC 25.535(b)(4)). Within 15 days after receipt of this notification – unless the AOGCC, in its discretion, grants an extension for good cause shown – Hilcorp may file with the AOGCC a written response that concurs Docket Number: OTH-24-009 Notice of Proposed Enforcement Action August 8, 2024 Page 4 of 4 in whole or in part with the proposed action described herein, requests informal review, or requests a hearing under 20 AAC 25.540. If a timely response is not filed, the proposed action will be deemed accepted by default. If informal review is requested, the AOGCC will provide Hilcorp an opportunity to submit documentary material and make a written or oral statement. If Hilcorp disagrees with the AOGCC’s proposed decision or order after that review, it may file a written request for a hearing within 10 days after the proposed decision or order is issued. If such a request is not filed within that 10-day period, the proposed decision or order will become final on the 11th day after it was issued. If such a request is timely filed, the AOGCC will hold its decision in abeyance and schedule a hearing. If Hilcorp does not concur in the proposed action described herein, and the AOGCC finds that Hilcorp violated a provision of AS 31.05, 20 AAC 25, or an AOGCC order, permit or other approval, then the AOGCC may take any action authorized by the applicable law including ordering one or more of the following: (i) corrective action; (ii) suspension or revocation of a permit or other approval; and (iii) imposition of penalties under AS 31.05.150. In taking action after an informal review or hearing, the AOGCC is not limited to ordering the proposed action described herein, as long as Hilcorp received reasonable notice and opportunity to be heard with respect to the AOGCC’s action. Any action described herein or taken after an informal review or hearing does not limit the action the AOGCC may take under AS 31.05.160. Sincerely, Jessie L. Chmielowski Gregory C. Wilson Commissioner Commissioner cc: James Robinson, US Environmental Protection Agency, Region 10 Jim Regg, AOGCC Supervisor, Inspections AOGCC Inspectors Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.08.08 14:12:21 -08'00'Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.08.08 14:50:48 -08'00' 3 Hilcorp Alaska,LLC Hilcorp North Slope,LLC Luke Saugier, SVP-Alaska 3800 Centerpoint Dr, Suite 1400 Anchorage, Alaska 99503 07/15/2024 Commissioner Jessie Chmielowski and Commissioner Greg Wilson Alaska Oil and Gas ConservaƟon Commission 333 West 7th Avenue Anchorage, Alaska 99501 Subject: Docket Number: OTH-24-009- Request for informaƟon regarding late temperature survey for Trading Bay Unit D-41 (PTD 1790830). Dear Commissioner Chmielowski and Commissioner Wilson, Please ﬁnd aƩached the Hilcorp Alaska, LLC and Hilcorp North Slope, LLC response to OTH-24-009: NoƟce of ViolaƟon and Request for InformaƟon regarding the late temperature survey on Trading Bay Unit D-41 (PTD 1790830). Should you have any further quesƟons, please contact Oliver Sternicki at 907-564-4891. Sincerely Luke Saugier SVP- Alaska By Samantha Coldiron at 10:34 am, Jul 15, 2024 1. A root cause analysis and acƟons taken to prevent recurrence of this missed temperature survey; a. Inadequate implementaƟon of policy / standard / procedures, due to deﬁciencies i. The Dolly Plaƞorm relies on varying systems including Outlook email and calendar reminders, manual entries into a work order tracking tool, noƟﬁcaƟon from Engineering or Compliance staff, or wriƩen entries in the control rooms. In this case, the tools were deﬁcient in noƟfying the responsible and accountable personnel in advance of the policy deadline. b. Inadequate verƟcal communicaƟon between supervisor and person i. There was insufficient or inadequate communicaƟon amongst Engineering and Compliance in Anchorage, Lead Operators / Foreman, and Operators regarding the sensiƟvity of Ɵming for the required work. c. AcƟons taken to prevent recurrence. i. Examine an automated, standardized noƟﬁcaƟon process for compliance regulatory tesƟng, the details of which will be discussed further with AOGCC staff (addresses root cause A). ii. Regularly monitor the tracking system to verify tools are working correctly to noƟfy personnel, and compliance acƟviƟes are completed in advance of applicable deadlines (addresses root cause A). iii. Standardize ownership of compliance tasks across the organizaƟon to ensure proper delegaƟon (addresses root cause B). 2. A wriƩen descripƟon of Hilcorp’s implementaƟon of its Underground InjecƟon Control (UIC) regulatory compliance program. This should include: a. compliance tracking system/process b. soŌware, personnel, training, handover process, hierarchy of management responsibility, and accountability c. management of shut-in injecƟon wells that assure compliance with AOGCC orders and regulaƟons a. Compliance tracking system/ process i. PBU 1. Compliance test due dates and test frequency by well are documented in AKIMS (Alaska Integrity Management System). Compliance acƟviƟes which are due in the next 90 days are reported in a Daily Compliance Report and Foreman Report and sent by email to the Well Integrity Coordinator, Well Integrity Supervisor, OperaƟons Foreman, Drillsite Lead Operators. These compliance tasks are scheduled and executed, and AKIMS is updated with the compleƟon and status (pass/ fail) of the task and a new due date for that task is generated. ii. MPU/ NSI 1. Compliance test due dates and test frequency by well are documented in AKIMS (Alaska Integrity Management System). Compliance acƟviƟes which are due in the next 90 days are reported in a Daily Compliance Report generated and sent by email to the Well Integrity Engineer and the Facility/Wells Foreman, Drillsite Lead Operators. These compliance tasks are scheduled and executed, and AKIMS is updated with the compleƟon and status (pass/ fail) of the task and a new due date for that task is generated. iii. Kenai/ CIO 1. Compliance test due dates and test frequency by well are documented in an Excel spreadsheet. The Well Integrity Engineer sorts the compliance acƟviƟes by due date and alerts the Lead Operators and Foreman for the applicable area when a task is coming due. Many of the ﬁeld / plaƞorms also track these compliance acƟviƟes in their work order tracking system or via Outlook calendar reminders. These compliance tasks are scheduled and coordinated by the Well Integrity Engineer in cooperaƟon with the Lead Operators. The tasks are then executed by the Operators or Lead Operators. NoƟce of completed tasks is provided to the Lead Operators, Foreman, OperaƟons Manager, and Well Integrity Engineer. The compliance tracking spreadsheet is then updated by the Well Integrity Engineer with the compleƟon and status (pass/ fail) of the task and a new due date for that task is entered. Compliance test due dates and test frequency by well are also documented in AKIMS (Alaska Integrity Management System). Compliance acƟviƟes due in the next 90 days are reported in a daily compliance report generated and sent by email to the Well Integrity Engineer and monthly to the asset Engineering staff, OperaƟons Manager, Foremen, and Lead Operators. b. SoŌware, personnel, training, handover, management responsibility and accountability i. PBU 1. SoŌware used to manage the UIC compliance tesƟng program: a. AKIMS- Well integrity tesƟng/ acƟvity tracking and scheduling (MITs, logs, suspended well inspecƟons/ renewals, subsidence monitoring). b. Operator Tools- Recording of daily TIO readings and well inspecƟons, documentaƟon of bleeds, anomaly reporƟng. c. Daily Compliance Reports- Emailed list of upcoming compliance tesƟng acƟviƟes, injector anomaly noƟﬁcaƟon. d. Monthly (AA’d, Under Eval wells) and Quarterly (Not Operable wells) injector reports- Standardized reports that are generated based off of well aƩributes or classiﬁcaƟon in AKIMS applicaƟon. 2. Personnel involved in the UIC compliance tesƟng program: a. Well Integrity Coordinator (WIC)- rotaƟonal posiƟon located on the North Slope. b. Well Integrity Supervisor (WIS)- Anchorage based engineering posiƟon. c. Well Site Supervisor (WSS)- rotaƟonal posiƟon located on the North Slope supervising well intervenƟons acƟviƟes. d. Drillsite Operators- rotaƟonal posiƟon located on the North Slope. e. Drillsite Leads- rotaƟonal posiƟon located on the North Slope. f. OperaƟons Engineer – Anchorage based engineering posiƟon. Figure 1 PBU UIC compliance testing workﬂow 3. UIC program training : a. Annual AOGCC injector training. b. Annual WIP (PBU Well Integrity PracƟce) training 4. Handover: a. Relevant informaƟon such as reported anomalies, TIO reads and well inspecƟon results are recorded in Operator Tool- Field Logbook daily and distributed to appropriate personnel through the Daily Compliance Reports. A list of the upcoming compliance tesƟng due in the next 90 days is also distributed to personnel through the Daily Compliance Report. Wells remain visible on the Daily Compliance Report unƟl the test results are entered in AKIMS and a new test due date is generated. 5. Hierarchy of management responsibility and accountability. AKIMS software updated by WIC with testing/ logging results and frequency requirement. Changes in well operability status in AKIMS made by WIC as required based on testing results. Internal and external notification emails sent by WIC as required. Automated Daily Compliance Reports with 90 day schedule emailed to Well Integrity and Field Operations personnel. WIC schedules compliance testing jobs. Notification for AOGCC witness sent by WIC. WIS generates work plan for compliance related logging and well interventions. WIC or WSS executes work and job data is entered into AWGRS database. Daily AWRGS well work report is reviewed by WIC Ultimate accountability of the UIC program is placed on the Alaska SVP position while functional accountability for UIC required tasks is placed positionally at the Asset Team Lead or the Operations Manager level. Other positions, such as Drill Site Leads, Pad Operators, Well Integrity Engineers, Well Site Supervisors within Hilcorp may be tasked with execution of certain responsibilities related to the UIC program. ii. MPU/ NSI 1. SoŌware used to manage the UIC compliance tesƟng program: a. AKIMS- Well integrity tesƟng/ acƟvity tracking and scheduling (MITs, logs, suspended well inspecƟons/ renewals, subsidence monitoring). b. Field Data Capture (FDC) - Recording of daily TIO readings and well inspecƟons, documentaƟon of bleeds, anomaly reporƟng. c. Daily Compliance Reports- Emailed list of upcoming compliance tesƟng acƟviƟes, injector anomaly noƟﬁcaƟon. d. Monthly (AA’d, Under Eval wells) and Quarterly (Not Operable wells) injector reports- Standardized reports that are generated based off of well aƩributes or classiﬁcaƟon in AKIMS applicaƟon. 2. Personnel involved in the UIC compliance tesƟng program: a. Well Integrity Engineer (WIE)- Anchorage based engineering posiƟon. b. Wells Foreman – rotaƟonal posiƟon located on the North Slope supervising well intervenƟons acƟviƟes. c. Well Site Supervisor (WSS)- rotaƟonal posiƟon located on the North Slope supervising well intervenƟons acƟviƟes. d. Drillsite Operators- rotaƟonal posiƟon located on the North Slope. e. Drillsite Leads- rotaƟonal posiƟon located on the North Slope. f. OperaƟons Engineer – Anchorage based engineering posiƟon. g. Regulatory Technician – Anchorage based posiƟon. Figure 2 MPU/Islands UIC compliance testing workﬂow 3. UIC program training : c. Annual AOGCC injector training. d. Annual WIP (MPU/ NSI Well Integrity PracƟce) training 4. Handover: b. Relevant informaƟon such as reported anomalies, TIO reads and well inspecƟon results are recorded in FDC daily and distributed to appropriate personnel through the Daily FDC Reports. A list of the upcoming compliance tesƟng due in the next 90 days is also distributed to personnel through the Daily Compliance Report. Wells remain visible on the Daily Compliance Report unƟl the test results are entered in AKIMS and a new test due date is generated. 5. Hierarchy of management responsibility and accountability. Ultimate accountability of the UIC program is placed on the Alaska SVP position while functional accountability for UIC required tasks is placed positionally at the Asset Team Lead or the Operations Manager level. Other positions, such as Drill Site Leads, Pad Operators, Well Integrity Engineers, Well Site Supervisors within Hilcorp may be tasked with execution of certain responsibilities related to the UIC program. AKIMS software updated by WIE with testing/ logging results and frequency requirement. Changes in well operability status in AKIMS made by WIE as required based on testing results. Internal and external notification emails sent by WIE as required. Automated Daily Compliance Report with 90 day schedule emailed to Well Integrity, WSS, and Field Operations personnel. WSS/Operator schedules compliance testing job. Notification for AOGCC witness sent by WSS/Operator. WIE generates work plan for compliance related logging and well interventions. WSS/Operator executes work and job data is entered into AWGRS database. Daily AWRGS well work report is reviewed by WIE iii. Kenai/ CIO 1. SoŌware: a. Excel spreadsheet for MITs, logs, suspended well inspecƟons / renewals, annual performance reports, monthly / quarterly / semi-annual / annual email communicaƟons. b. AKIMS for MITs, logs, suspended well inspecƟons / renewals. c. Equipment Asset Management (EAM) for work order tracking, including MITs. d. Field Data Capture (FDC) for entering of daily TIO readings, injecƟon volumes, well inspecƟons, documentaƟon of bleeds, and automated anomaly reporƟng via email. e. Daily Compliance Reports generated from AKIMS for list of upcoming compliance tesƟng acƟviƟes. f. Monthly (storage wells and offsets, wells with AdministraƟve Approval, select wells as required by DIOs) and Quarterly (shut- in injecƟon wells) reports – Manual compiling of wells and plots to create the report. 2. Personnel: a. Operators – rotaƟonal posiƟon located in the relevant ﬁeld or on the plaƞorm. b. Lead Operators – rotaƟonal posiƟon located in the relevant ﬁeld or on the plaƞorm. c. OperaƟons Foremen – full-Ɵme posiƟon located in the relevant ﬁeld or on the plaƞorm. d. OperaƟons Manager – full-Ɵme posiƟon based in the Nikiski or Anchorage office. e. Well Integrity Engineer – full-Ɵme posiƟon based in the Anchorage office. f. OperaƟons Engineer – full-Ɵme posiƟon based in the Anchorage office. g. Regulatory Technician – full-Ɵme posiƟon based in the Anchorage office. Figure 3 KEN / CIO UIC compliance testing workﬂow 3. Training: a. Annual AOGCC injector training. 4. Handover: a. TIO pressure variance reports are generated daily and sent to Operators, Lead Operators, Foremen, and Engineering. Monthly TIO reports are prepared by the Integrity Engineer and copied to the area Reservoir Engineers, OperaƟons Engineers, and Regulatory Technicians. Well inspecƟon results are performed by the Operators and Lead Operators, reports are sent to Well Integrity Engineers with copy to Foremen for consultaƟon prior to submiƩal to AOGCC. Daily Compliance Reports are transmiƩed to Lead Operators, Foremen, OperaƟons Managers, OperaƟons Engineers, Reservoir Engineers, Asset Team Leads, and Well Integrty Engineers with a list of the upcoming compliance tesƟng due in the next 90 days. UpdaƟng of the compliance tracking sheet is completed by the WIE upon compleƟon of the acƟvity. 5. Management responsibility and accountability Ultimate accountability of the UIC program is placed on the Alaska SVP position while functional accountability for UIC required tasks is placed positionally at the Asset Team Lead or the Operations Manager level. Other positions, such as Lead Operators, Operators, Well Integrity Engineers, Well Site Supervisors within Hilcorp may be tasked with execution of certain responsibilities related to the UIC program. AKIMS software and compliance tracking spreadsheet updated by WIE with testing/ logging results and frequency requirement. Changes in well operability status in AKIMS made by WIE as required based on testing results. Internal and external notification emails sent by WIE as required. WIE email notifications based on compliance tracking spreadsheet and automated compliance report with 90-day schedule emailed to Well Integrity and Field Operations personnel. Lead Operator schedules compliance testing job. Notification for AOGCC witness sent by Lead Operator with copy to WIE and Foreman. WIE generates work plan for compliance related logging and well interventions. Lead Operator / Operator executes work and sends results to WIE. WIE or Regulatory Technician enters job data into Wellview. Automated daily Wellview reports are reviewed by WIE and updates are made to compliance schedule in AKIMS and compliance tracking spreadsheet. c. Management of SI injecƟon wells that assure compliance with AOGCC orders and regulaƟons. i. PBU 1. Daily compliance reports ﬂag shut-in (Not Operable) wells with injecƟon volumes or injecƟon Ɵme from the SCADA system. 2. Quarterly TIO reports are compiled by the Well Integrity Engineer and sent to AOGCC for all injectors that are classiﬁed as not operable. 3. Black locks are installed on the wing valve of all Not Operable injectors to ensure they are not placed on injecƟon. ii. MPU/ NSI 1. Daily compliance reports ﬂag shut-in (Not Operable) wells with injecƟon volumes or injecƟon Ɵme from the SCADA system. 2. Quarterly TIO reports are compiled by the Well Integrity Engineer and sent to AOGCC for all injectors that are classiﬁed as not operable. 3. Locks are installed on the wing valve of all Not Operable injectors to ensure they are not placed on injecƟon. iii. Kenai/ CIO 1. Daily automated reports ﬂag pressure changes of >10% day over day on all wells’ tubing and annulus pressures. The pressure variance reports are sent to the office engineers, Lead Operators, and Foremen. Each day, this report ﬂags wells that go on or off of injecƟon by recognizing the change in tubing or IA pressure that results from the change in operaƟon. 2. Quarterly TIO reports are compiled by the Well Integrity Engineer and sent to AOGCC for all injectors that are classiﬁed as not operable. 3. Not Operable have been LOTO or disconnected from service either by removing or blinding the injecƟon lines or LOTO of the power supply to the injecƟon pump. 3. An audit of automaƟon condiƟonal parameters (refer to Hilcorp’s invesƟgaƟon regarding the MPU S-33A missed MIT enforcement (Docket Number: OTH-23-026)) and generaƟon of a corresponding automated report of “Not Operable” wells with status of online or with ﬂow indicaƟon, and a schedule for rouƟnely running these reports. See Table 4: Hilcorp North Slope, LLC/ Hilcorp Alaska, LLC UIC NOVs 2020-2024 Table 4: Hilcorp North Slope/ Hilcorp Alaska UIC NOVs 2020-2024 Docket Number Operator Asset Team Field/Location/Well(s) Month/Year of Violation Regulatory Area Description Actions to prevent recurrence: Status of implementation: Other Order 208 Hilcorp North Slope, LLC PBU PBU L-109, & PBU S- 104 7/1/2020 UIC Reporting Unauthorized injection; unauthorized comingling of miscible injectant L-109: (1) Internal review of all wells completed across multiple zones with stacker packer completions to verify if injection is authorized into each zone. If injection is not authorized, the wellbore schematic and AKIMS will be updated to reflect this. (2) Upon completion of this review, communicate and training of Operations and Reservoir Engineers will be performed to familiarize them with information resources regarding well pool authorization and wellbore schematics and AKIMS updates. S-104: (3) Additional training with staff engineers completed on 8/22/2023. (4) Development and implementation of an injection well tracking resource to document authorized injection zones, injection fluids and commingled injection on an individual well basis in PBU. PBU: All actions implemented. MPU: (1-2) implemented. (3-4) – identified 3 comingled wells, AKIMS & schematics updated with identification and staff engineers notified. NSI (N*, Endicott, PTU): Not implemented, no comingled injection. Kenai: Not implemented, no comingled injection. CIO: Not implemented, no comingled injection. Other Order 209 Hilcorp Alaska, LLC MPU MPU S-33A 4/1/2023 MIT Failed to test (1) An audit of automation conditional parameters was completed for all wells at MPU. Only dual-string injectors were found to have a flow rate conditional parameter for SCADA viewing. (2) All dual string injectors will have individual tubing string status switches added to remove the minimum flow condition. All drill sites at MPU will then be consistent with their online/offline logic for SCADA view. This will be completed by 10/31/2023. (3) Upon due date of all scheduled integrity testing, wells will be visually inspected for operational status by secondary verification to protect for the possibility of automation errors. This verification will be completed by the drill site operator. A physical lock is to be placed on the wing valve of non- operable wells by 10/31/2023. (4) An audit of current non-operable injection wells at MPU for mis-injection was completed. No anomalies were found. (5) Although it would not prevent recurrence, an automated report of ‘Not Operable’ wells with online status or flow indication to the Well Integrity Engineer and Operations would have found this incident sooner. This report exists for Prudhoe Bay and has been assigned to Hilcorp’s IT department to be completed for Milne Point by 12/31/2023. (6) A Lessons Learned Bulletin about incident to be distributed across the Hilcorp Alaska assets with an action item assigned to field operations to review automation logic for one-off considerations. PBU: (1) Not implemented, no indication of automation condition parameter issues in PBU. (2) Not applicable, no dual string injectors in PBU. (3) Pre-existing practice in PBU. (4) Completed based on review of daily compliance report. (5) Pre-existing report in PBU. (6) Implemented. MPU: All actions implemented. NSI (N*, Endicott, PTU): (1) Not implemented, no indication of automation condition parameter issues (2) Not applicable. (3-6) Implemented. Kenai: (1) Not applicable. (2) Not applicable. (3) Other practices in place as described above in section 2.c.3.iii (4) Completed. (5) Specific automated report not implemented due to current data limitations. (6) Implemented. CIO: (1) Not applicable. (2) Not applicable. (3) Other practices in place as described above in section 2.c.3.iii (4) Completed. (5) Specific automated report not implemented due to current data limitations. (6) Implemented. OTH 24-018 Hilcorp Alaska, LLC Kenai/ CIO TBU-M-30 1/31/2024 MIT Overdue MIT as required by AIO 5. State witnessed MIT on 3/9/24. Delayed to align with drilling rig BOP test. (1) Examine an automated, standardized notification process for compliance regulatory testing, the details of which will be discussed further with AOGCC staff (addresses root cause #1). (2) Regularly monitor the tracking system to verify tools are working correctly to notify personnel, and compliance activities are completed in advance of applicable deadlines (addresses root cause #1). (3) Standardize ownership of compliance tasks across the organization to ensure proper delegation (addresses root cause #2). PBU: (1) Pre-existing system in PBU. (2) Pre-existing system in PBU. (3) In progress across organization. MPU: (1) Pre-existing system in MPU. (2) Pre-existing system in MPU. (3) In progress across organization. NSI (N*, Endicott, PTU): (1) Pre-existing system (2) Pre-existing system (3) In progress across organization. Kenai: (1) Ongoing implementation of automated process. (2) Ongoing implementation of automated process. (3) In progress across organization. CIO: (1) Ongoing implementation of automated process. (2) Ongoing implementation of automated process. (3) In progress across organization. OTH 24-009 Hilcorp Alaska, LLC Kenai/ CIO TBU-D-41 2/1/2024 UIC Overdue temp log as required by administrative approval. 1 month overdue. Self reported 2/21/2024 In progress PBU: MPU: NSI (N*, Endicott, PTU): Kenai: CIO: 4. a report of wells that have ﬂow indicaƟon without a valid Mechanical Integrity Test or valid alternate test requirement (e.g., temperature survey), the well’s status, and a schedule for rouƟnely running these reports; and a. PBU: No out of compliance wells. Well Compliance report is run daily to report any misinjecƟon acƟvity. b. MPU/ NSI: No out of compliance wells. Well Compliance report is run daily to report any misinjecƟon acƟvity. c. Kenai/ CIO: No out of compliance wells. FDC Pressure Variance Report is run daily to ﬂag pressure changes of >10% day over day on all wells’ tubing and annulus pressures. The pressure variance reports are sent to the office engineers, Lead Operators, and Foremen. Each day, this report ﬂags wells that go on or off injecƟon by recognizing the change in tubing or IA pressure that results from the change in operaƟon. 5. a wriƩen review of all UIC regulatory mandated obligaƟons as detailed in the applicable Area InjecƟon Orders and Disposal InjecƟon Orders, cross-referenced by well, with the next test date/requirement idenƟﬁed and veriﬁed as either current or overdue. Overdue tesƟng to be idenƟﬁed and an AOGCC approved plan developed to get the well(s) into compliance within 90 days. Data as of 7/2/24. See aƩached tables. 2 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov April 18, 2024 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7018 0680 0002 2049 1204 Mr. Casey Morse Well Integrity Engineer Hilcorp Alaska, LLC 3800 Centerpoint Drive, Suite 1400 Anchorage, AK 99503 Re: Docket Number: OTH-24-009 Notice Of Violation and Request for Information Late Temperature Survey Trading Bay Unit D-41 (PTD 1790830) Area Injection Order (AIO) 5.021 Trading Bay Unit (TBU), McArthur River Field, Hemlock Oil Pool Dear Mr. Morse, On February 21, 2024, Hilcorp Alaska, LLC (Hilcorp) notified the Alaska Oil and Gas Conservation Commission (AOGCC) by email that the Dolly Varden Platform well TBU D-41 was overdue for a 2- year temperature survey as required by AIO 5.021, Condition 3. The prior temperature survey was conducted on January 21, 2022. Hilcorp subsequently completed the overdue temperature survey on February 25, 2024, and the results were provided to AOGCC via email on February 26, 2024. Within 90 days of receipt of this notice of violation, you are requested to provide AOGCC with the following: 1. a root cause analysis and actions taken to prevent recurrence of this missed temperature survey; 2. a written description of Hilcorp’s implementation of its Underground Injection Control (UIC) regulatory compliance program. This should include the: a. compliance tracking system/process b. software, personnel, training, handover process, hierarchy of management responsibility, and accountability c. management of shut-in injection wells that assure compliance with AOGCC orders and regulations Notice of Violation and Request for Information – Late Temperature Survey TBU D-41 Docket Number: OTH-24-009 April 18, 2024 Page 2 of 2 3. an audit of automation conditional parameters (refer to Hilcorp’s investigation regarding the MPU S-33A missed MIT enforcement (Docket Number: OTH-23-026)) and generation of a corresponding automated report of “Not Operable” wells with status of online or with flow indication, and a schedule for routinely running these reports. 4. a report of wells that have flow indication without a valid Mechanical Integrity Test or valid alternate test requirement (e.g., temperature survey), the well’s status, and a schedule for routinely running these reports; and 5. a written review of all UIC regulatory mandated obligations as detailed in the applicable Area Injection Orders and Disposal Injection Orders, cross-referenced by well, with the next test date/requirement identified and verified as either current or overdue. Overdue testing to be identified and an AOGCC approved plan developed to get the well(s) into compliance within 90 days. For clarification, the above requested information is a comprehensive review of all UIC regulatory compliance requirements covering all wells and fields under the operatorship of Hilcorp Alaska, LLC and Hilcorp North Slope, LLC with the intent and expectation that Hilcorp identify, implement, and continue to assess the effectiveness of compliance improvement initiatives. The AOGCC reserves the right to pursue an enforcement action in this matter according to 20 AAC 25.535. Failure to comply with this request is itself a regulatory violation. Should you have any questions about this violation notice, please contact Chris Wallace at 907-793-1250 or chris.wallace@alaska.gov. Sincerely, Brett W. Huber, Sr. Chair, Commissioner cc: James Robinson, US Environmental Protection Agency, Region 10 Jim Regg Phoebe Brooks Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2024.04.18 16:04:23 -04'00' 1 CAUTION: This email originated from outside the State of Alaska mail system. Do not click links or open attachments unless you recognize the sender and know the content is safe. You don't often get email from casey.morse@hilcorp.com. Learn why this is important From:Wallace, Chris D (OGC) To:Coldiron, Samantha J (OGC) Cc:Regg, James B (OGC); Brooks, Phoebe L (OGC) Subject:FW: TBU D-41 Temperature Survey Date Date:Wednesday, February 21, 2024 2:54:23 PM Sam, Please create an OTH Docket for this AIO 5.021 violation. Thanks Chris From: Casey Morse <Casey.Morse@hilcorp.com> Sent: Wednesday, February 21, 2024 2:34 PM To: Wallace, Chris D (OGC) <chris.wallace@alaska.gov> Subject: TBU D-41 Temperature Survey Date Mr. Wallace, I have been reviewing compliance records and transferring historical information for Hilcorp’s Cook Inlet assets into a database system to automate the tracking of our well integrity requirements going forward. This effort will align the integrity management system of Cook Inlet assets with the tracking systems used in Hilcorp’s North Slope assets. In this process, I recognized and am self-reporting that the 2-year requirement for temperature survey on the TBU Dolly 41 PTD# 179083 (as required by Administrative Approval Area Injection Order No 5.021) had lapsed last month. The prior temperature survey was conducted on 01/21/2022. Since identifying this, we have prepared the Dolly platform deck for the required slickline work. We interrupted the current slickline work on the Steelhead platform and are mobilizing the crew and tools this afternoon to the Dolly. I will send the temperature survey results to you after they are processed. Thank you for your cooperation on this matter. Casey Morse Well Integrity Engineer Hilcorp Alaska, LLC (907) 777-8322 The information contained in this email message is confidential and may be legally privileged and is intended only for the use of the