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Home My WebLink AboutO 226Alaska 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 December 26, 2024 Scott Pessetto Operations Manager Hilcorp, Alaska, LLC 3800 Centerpoint Dr., Suite 1400 Anchorage, AK 99503 Re: Docket Number: OTH-24-033 Notice of Proposed Enforcement Action - Closeout Milne Point XF-5511 Fin-Fan Cooler Leak, Milner Point Central Facility Milne Point Unit (MPU) Dear Mr. Pessetto: The Alaska Oil and Gas Conservation Commission has completed its review of Hilcorp Alaska, LLC (Hilcorp)’s response to the subject Notice of Proposed Enforcement Action. The proposed enforcement action, a fine in the amount of $16,247, was uncontested by Hilcorp. Hilcorp paid its civil penalty of $16,247 in full, on November 22, 2024. As such, this notice of violation is considered closed. Sincerely, Gregory C. Wilson Commissioner cc: P. Brooks Gregory C. Wilson Digitally signed by Gregory C. Wilson Date: 2024.12.26 09:04:21 -09'00' 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 October 29, 2024 CERTIFIED MAIL RETURN RECEIPT REQUESTED 7017 2400 0000 5648 0633 Scott Pessetto Operations Manager Hilcorp, Alaska, LLC 3800 Centerpoint Dr., Suite 1400 Anchorage, AK 99503 Re: Docket Number: OTH-24-033 Notice of Proposed Enforcement Action Milne Point XF-5511 Fin-Fan Cooler Leak, Milne Point Central Facility Milne Point Unit (MPU) Dear Mr. Pessetto: The Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies Hilcorp Alaska, LLC (Hilcorp) of a proposed enforcement action. Nature of theApparent Violation or Noncompliance (20 AAC 25.535(b)(1)). Hilcorp violated 20 AAC 25.235(d) with an ongoing gas leak on the XF-5511 fin-fan cooler bundle on the roof of MOD 55 at the Milne Point CFP (Central Facility Pad). The fin-fan bundle knowingly leaked throughout 10 months, from October 2023 into July 2024, with an estimated total leaked gas volume of 2 070 MSCF. Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). Per email correspondence, phone calls, and its Final Written Report on the subject, on October 15, 2023 Hilcorp discovered a small pinhole gas leak in the XF-5511 fin-fan cooler bundle on the roof of MOD 55 at the Milne Point CFP (Central Facility Pad) during routine maintenance work. The leak was seen via an optical gas imaging (OGI) survey DQG ZDV confirmed as minor and below Hilcorp’s normal meter detection levels. The leak size was initially estimated to be between 426 scf/day and 7 064 scf/day. Per telephone and email correspondence, on October 27, 2023, Hilcorp contacted the AOGCC conveying details of the leak discovery, estimated possible leak rates, and their planned repair date of November 10, 2023. The date of the repair was selected to coincide with the time that necessary crews and materials would be available at Milne Point. In the email correspondence Hilcorp asked AOGCC for permission to flare gas for 24-36 hours while the repairs took place, due to Milne Docket Number: OTH-24-033 October 29, 2024 Page 2 of 4 Point’s CFP having only one gas train, disallowing for any processed fluids bypassing of the leaking fin fan cooler. On October 30, 2023, the AOGCC gave permission to do so via email, stating that it would not likely consider the flaring for the repairs to be considered waste but that the gas lost/leaked/vented from the leak would likely be considered waste, per 20 AAC 25.235(d)(5)(A). Per email on November 8, 2023, Hilcorp informed the AOGCC that due to inclement weather conditions on the North Slope, they planned on delaying the repairs until November 11, 2023. Per email on November 11, 2023 Hilcorp informed the AOGCC that due to shortening of third-party crews’ availability due to weather and the potential consequences of a full-field shutdown in cold weather, they were deferring the repair of the leak until summer 2024. In this correspondence Hilcorp made the commitment to monitor the leak, inform the AOGCC of any changes in the leak rate, and to include estimated leak volumes in Milne Point’s monthly gas disposition 10-422 reports. Per email on December 13, 2023, the AOGCC informed Hilcorp that their reasoning for delaying the repairs was sound and that a final decision on waste determination would be made once the repairs were completed. Per email on April 10, 2024 Hilcorp informed the AOGCC that they had received their spare/new exchanger and that the work was to begin May 1, 2024. Per email on April 30, 2024 Hilcorp informed the AOGCC that due to low ambient temperatures and high winds, and hence missing their maintenance window, the repairs would be made late June or July 2024. Per email on July 25, 2024, Hilcorp informed the AOGCC that the repair of the XF-5511 fin-fan cooler leak had been completed over July 19, 2024 and July 24, 2024. Hence, the last day of the leak was July 19, 2024, when the fin-fan cooler was taken out of service for the repair. Hilcorp’s final written report on the leak and its repair, required by 20 AAC 25.205, dated August 19, 2024, lists the months the leak was active, the monthly leak rates, and the total leak volume: y Docket Number: OTH-24-033 October 29, 2024 Page 3 of 4 The AOGCC concurs ZLWK the estimated monthly leak rates and the total leak volume. As per AAC 25.235, the total monthly gas released from the Milne Point XF-5511 fin-fan cooler leak, 2 070 MSCF, is considered waste and subject WR a civil penalty pursuant to AS 31.05.150(d). Proposed Action (20 AAC 25.535(b)(3). Per AS 31.05.150(d), the penalty for gas determined to be waste is twice the fair market value for every 1 000 SCF of gas wasted. Gas fair market value is being referenced from the Alaska Department of Revenue’s website at https://tax.alaska.gov/programs/oil/prevailing/ index.aspx. The Milne XF-5511 leak was ongoing across four yearly quarters, with the prevailing market value fluctuating across them. Thus, monthly leak volumes have been multiplied by the fair market value for the appropriate month (see table below). The proposed action is for Hilcorp to pay the penalty, totaling $16,247. Quarter, yr Month Total waste gas (MSCF) Fair market value, MCF Total x2 Qtr 4, 2023 October 219 4.044 885.64 1 771.27 Qtr 4, 2023 November 212 4.044 857.33 1 714.66 Qtr 4, 2023 December 219 4.044 885.64 1 771.27 Qtr 1, 2024 January 219 4.103 898.56 1 797.11 Qtr 1, 2024 February 205 4.103 841.12 1 682.23 Qtr 1, 2024 March 219 4.103 898.56 1 797.11 Qtr 2, 2024 April 212 3.708 786.10 1 572.19 Qtr 2, 2024 May 219 3.708 812.06 1 624.10 Qtr 2, 2024 June 212 3.708 786.10 1 572.19 Qtr 3, 2024 July 134 3.525 472.35 944.70 TOTAL: 16,247.00 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 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 Docket Number: OTH-24-033 October 29, 2024 Page 4 of 4 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 Jessie L. Chmielowski Digitally signed by Jessie L. Chmielowski Date: 2024.10.28 18:24:39 06'00' Gregory Wilson Digitally signed by Gregory Wilson Date: 2024.10.29 03:53:49 -08'00' August 19, 2024 Dave Roby Alaska Oil and Gas Conservation Commission 333 W 7th Avenue Anchorage, Alaska 99501 RE: 20 AAC 25.205 – Final Written Report Mr. Roby, Below are the details related to the XF-5511 fin fan cooler leak on the roof of MOD 55 at the Central Facility Pad (“CFP”). 1)A small pinhole leak was discovered in the XF-5511 fin-fan cooler bundle on October 15, 2023. The leak was discovered during a shutdown of the fan bay for routine maintenance work. An optical gas imaging (“OGI”) survey confirmed the leak as minor and below our normal meter detection levels. 2)The leak occurred in the cooler bundle of fin fan cooler XF-5511. The fin fan cooler is located on the roof of Module 55 at CFP. 3)Estimated total leak volume was 2,070 MSCF. The leak rate was estimated due to the inability to access the tube bundle directly. Using an assumed 380 psi gas pressure the leak was estimated between 426 scf/day and 7,064 scf/day. The total leak volume was calculated using the high side leak estimate of 7,064 scf/day. The table below shows the total volume calculation methodology. Month Days Daily Rate scf/day Monthly Total, MSCF October 31 7,064 219 November 30 7,064 212 December 31 7,064 219 January 31 7,064 219 February 29 7,064 205 March 31 7,064 219 April 30 7,064 212 May 31 7,064 219 June 30 7,064 212 July 19 7,064 134 Leak Total, MSCF 2,070 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone: (907) 564-4373 Email: scott.pessetto@hilcorp.com 4)The release was caused due to a suspected pinhole leak in the cooler tubing. After the cooler was removed the pin hole was unable to be found. Two pieces of cooler tubing were cut out for inspection from two separate areas in the tubing bundle. Inspections showed a small amount of solids build up and minimal corrosion (see photos below). It is suspected that a small amount of water may have pooled up and corroded a low point in the tubing over time but no evidence was found during the inspection. 5)On July 19, 2024 the Milne Point gas compression train was taken down to allow for the removal of the leaking tubing bundle and installation of a new tube bundle. The removal and installation took five days to complete. During the gas compression train shutdown, maintenance was completed on the gas compressors, piping, and valves to ensure the integrity of the gas compression train. 6)To avoid another leak Milne Point Operations will continue to pump corrosion inhibitor to prevent damage to process piping. Thank you for your support as we worked through the best way to isolate and repair this leak. Should you require additional information regarding the XF-5511 gas leak please contact the undersigned at (907) 564-4373. Sincerely, Scott Pessetto Operations Manager Hilcorp Alaska, LLC