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Home My WebLink AboutO 127OTHER ORDER 127 BPXA. Docket Number: OTH-17-025 1. -------------------- various emails 2. October 3, 2017 Notice of Enforcement Action — PBU H-03 Well l 3. October 24, 2017 BPXA accepts NOV and agrees to pay fine in the amount of $24,500.00 r STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501-3539 Re: Failure to complete a Mechanical Integrity Test (MIT) Other Order 127 Prudhoe Bay Unit H-03 (PTD 1710190) Docket Number: OTH-17-025 Area Injection Order 3B October 25, 2017 Western Operating Area, Prudhoe Bay Field Prudhoe Bay Unit (PBU) DECISION AND ORDER On October 3, 2017, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to BP Exploration (Alaska) Inc. (BPXA) regarding the Prudhoe Bay Unit H-03 well (H-03). The Notice advised that BPXA failed to complete a Mechanical Integrity Test (MIT) in H-03. The Notice proposed a $24,500 civil penalty under AS 31.05.150(a). In reply to the notice of enforcement, BPXA provided a faxed letter dated October 24, 201 i not contesting the proposed enforcement action and committing to arrange payment of the $24,500 civil fine. Summary of Proposed Enforcement Action: The Notice identified a violation by BPXA of Rule 6 of Area Injection Order 3B (AIO 313) ("Demonstration of Tubing -Casing Annulus Mechanical Integrity"). A violation occurred every day after May 20, 2014, that BPXA injected into H-03 without completing an MIT, specifically June 17, 2016 to July 15, 2016. The AOGCC proposed payment by BPXA of a civil penalty under AS 31.05.150(a) in the amount of $24,500' ($10,000 for the initial violation - failure to perform the required MIT of the injection well in compliance with testing protocols specified in '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. Other Order 127 1 Jctober 25, 2017 Page 2 of 4 Rule 6 of AIO 313, and $500 for each day June 17, 2016 to July 15, 2016 (29 days) for injecting in a well out of compliance with MIT regulations). Demonstration of TubingXasing Annulus Mechanical Integrity Rule 6 of AIO 3B states "The mechanical integrity of an injection well must be demonstrated before injection begins, and before returning a well to service following a workover affecting mechanical integrity. An AOGCC-witnessed mechanical integrity test must be performed after injection is commenced for the first time in a well, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent tests must be performed at least once every four years thereafter (except at least once every two years in the case of a slurry injection well). " The last AOGCC-witnessed MIT occurred May 20, 2010. Therefore, a MIT was required on or before May 20, 2014. Though out of compliance, the well was placed on injection for 29 days, from June 17, 2016 to July 15, 2016. BPXA's failure to demonstrate the mechanical integrity of injection well PBU H-03 within the required four-year cycle violated State regulations and AIO 3B. Violation: A MIT on H-03 was required no later than May 20, 2014. By telephone July 20, 2016, and follow up emails, BPXA notified the AOGCC that H-03 was returned to injection on June 17, 2016. In the BPXA July 19, 2017; email in response to the AOGCC investigation, BPXA provided data specifying that injection occurred from June 17, 2016 to July 15, 2016 (29 days) before BPXA shut in the well. Mitigating Circumstances: The AOGCC considered the factors in AS 31.05.150(g) in determining the appropriate penalty. The penalty was reduced due to BPXA's general history of satisfactory compliance and practices, an aquifer exemption for the PBU, the lack of actual or potential threat to public health or the environment, and BPXA's immediate shut-in of H-03 and notification to AOGCC once BPXA determined the well was out of compliance. Other Order 127 Page 3 of 4 Findings and Conclusions: I Jctober 25, 2017 The AOGCC finds that BPXA violated Rule 6 in AIO 3B governing the Demonstration of Tubing - Casing Annulus Mechanical Integrity. Mitigating circumstances outlined above were considered in the AOGCC's Notice of Enforcement Action and its assessment as to the appropriate civil penalty, which was decreased from the maximums provided by statute. BPXA did not contest the AOGCC's proposed enforcement action and committed to paying the civil fine. BPXA had previously committed by email dated July 19, 2017 to an increased level of oversight and review of established training and process protocols for employees and contractors governing dewatering injection operations. The AOGCC finds BPXA's renewed training and process protocols to be satisfactory to help prevent further occurrence of this violation of failure to complete a Mechanical Integrity Test. Now Therefore It Is Ordered That: BPXA is assessed a civil penalty in the amount of $24,5002: for violating Rule 6 of AIO 3B. If the operator chooses not to appeal this Order 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. As an operator involved in an enforcement action, you are required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated October 25, 2017. Hollis S. French Cay Foerster ' Daniel T. Seamount, Jr. Commissioner Commissioner Commissioner cc: Evan Osborne, EPA Region 10 AOGCC Inspectors z 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. Other Order 127 ( -)ctober 25, 2017 Page 4 of 4 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 maybe 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. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501-3539 Re: Failure to complete a Mechanical Integrity Test (MIT) Other Order 127 Prudhoe Bay Unit H-03 (PTD 1710190) Docket Number: OTH-17-025 Area Injection Order 3B October 25, 2017 Western Operating Area, Prudhoe Bay Field Prudhoe Bay Unit (PBU) DECISION AND ORDER On October 3, 2017, the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to BP Exploration (Alaska) Inc. (BPXA) regarding the Prudhoe Bay Unit H-03 well (H-03). The Notice advised that BPXA failed to complete a Mechanical Integrity Test (MIT) in H-03. The Notice proposed a $24,500 civil penalty under AS 31.05.150(a). In reply to the notice of enforcement, BPXA provided a faxed letter dated October 24, 2017 not contesting the proposed enforcement action and committing to arrange payment of the $24,500 civil fine. Summary of Prouosed Enforcement Action: The Notice identified a violation by BPXA of Rule 6 of Area Injection Order 3B (AIO 3B) ("Demonstration of Tubing -Casing Annulus Mechanical Integrity"). A violation occurred every day after May 20, 2014 that BPXA injected into H-03 without completing an MIT, specifically June 17, 2016 to July 15, 2016. The AOGCC proposed payment by BPXA of a civil penalty under AS 31.05.150(a) in the amount of $24,5001 ($10,000 for the initial violation - failure to perform the required MIT of the injection well in compliance with testing protocols specified in '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. Other Order 127 )ctober 25, 2017 Page 2 of 4 Rule 6 of AIO 313, and $500 for each day June 17, 2016 to July 15, 2016 (29 days) for injecting in a well out of compliance with MIT regulations). Demonstration of Tubing/Casing Annulus Mechanical Integrity Rule 6 of AIO 3B states "The mechanical integrity of an injection well must be demonstrated before injection begins, and before returning a well to service following a workover affecting mechanical integrity. An AOGCC-witnessed mechanical integrity test must be performed after injection is commenced for the first time in a well, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent tests must be performed at least once every four years thereafter (except at least once every two years in the case of a slurry injection well). " The last AOGCC-witnessed MIT occurred May 20, 2010. Therefore, a MIT was required on or before May 20, 2014. Though out of compliance, the well was placed on injection for 29 days, from June 17, 2016 to July 15, 2016. BPXA's failure to demonstrate the mechanical integrity of injection well PBU H-03 within the required four-year cycle violated State regulations and AIO 3B. Violation: A MIT on H-03 was required no later than May 20, 2014. By telephone July 20, 2016, and follow up emails, BPXA notified the AOGCC that H-03 was returned to injection on June 17, 2016. In the BPXA July 19, 2017 email in response to the AOGCC investigation, BPXA provided data specifying that injection occurred from June 17, 2016 to July 15, 2016 (29 days) before BPXA shut in the well. Mitigating Circumstances: The AOGCC considered the factors in AS 31.05.150(g) in determining the appropriate penalty. The penalty was reduced due to BPXA's general history of satisfactory compliance and practices, an aquifer exemption for the PBU, the lack of actual or potential threat to public health or the environment, and BPXA's immediate shut-in of H-03 and notification to AOGCC once BPXA determined the well was out of compliance. Other Order 127 Page 3 of 4 Findings and Conclusions: I Jctober 25, 2017 The AOGCC finds that BPXA violated Rule 6 in AIO 3B governing the Demonstration of Tubing - Casing Annulus Mechanical Integrity. Mitigating circumstances outlined above were considered in the AOGCC's Notice of Enforcement Action and its assessment as to the appropriate civil penalty, which was decreased from the maximums provided by statute. BPXA did not contest the AOGCC's proposed enforcement action and committed to paying the civil fine. BPXA had previously committed by email dated July 19, 2017 to an increased level of oversight and review of established training and process protocols for employees and contractors governing dewatering injection operations. The AOGCC finds BPXA's renewed training and process protocols to be satisfactory to help prevent further occurrence of this violation of failure to complete a Mechanical Integrity Test. Now Therefore It Is Ordered That: BPXA is assessed a civil penalty in the amount of $24,5002: for violating Rule 6 of AIO 3B. If the operator chooses not to appeal this Order 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. As an operator involved in an enforcement action, you are required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated October 25, 2017. //signature on file// //signature on file// //signature on file// Hollis S. French Cathy P. Foerster Daniel T. Seamount, Jr Commissioner Commissioner Commissioner cc: Evan Osborne, EPA Region 10 AOGCC Inspectors 0 L yn n ? off 'PFRY q5= A110N f.0� '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. I Other Order 127 Jetober 25, 2017 Page 4 of 4 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. Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Wednesday, October 25, 2017 2:35 PM To: 'chris.wyatt@bp.com'; Evan Osborne (osborne.evan@epa.gov); aogcc.inspectors@alaska.gov, 'Bender, Makana K (DOA) (makana.bender@alaska.gov)'; 'Bettis, Patricia K (DOA) (patricia.bettis@alaska.gov)'; 'Brooks, Phoebe L (DOA) (phoebe.brooks@alaska.gov)'; Carlisle, Samantha J (DOA); 'Colombie, Jody J (DOA) oody.colombie@alaska.gov)'; 'Davies, Stephen F (DOA) (steve.davies@alaska.gov)'; 'Foerster, Catherine P (DOA) (cathy.foerster@alaska.gov)'; 'French, Hollis (DOA)';'Frystacky, Michal(michal.frystacky@alaska.gov)';'Guhl, Meredith (DOA sponsored) (meredith.guhl@alaska.gov)'; Kair, Michael N (DOA); 'Link, Liz M (DOA)'; Loepp, Victoria T (DOA); 'Mumm, Joseph (DOA sponsored) Qoseph.mumm@alaska.gov)'; 'Paladijczuk, Tracie L (DOA) (tracie.paladijczuk@alaska.gov)'; 'Pasqual, Maria (DOA) (maria.pasqual@alaska.gov)'; 'Quick, Michael (DOA sponsored)'; 'Begg, James B (DOA) (im.regg@alaska.gov)'; 'Roby, David S (DOA) (dave.roby@alaska.gov)'; 'Schwartz, Guy L (DOA) (guy.schwartz@alaska.gov)'; 'Seamount, Dan T (DOA) (dan.seamount@alaska.gov)'; 'Singh, Angela K (DOA)'; 'Wallace, Chris D (DOA) (chris.wallace@alaska.gov)'; AK, GWO Projects Well Integrity; 'AKDCWeIIIntegrityCoordinator'; 'Alan Bailey'; 'Alex Demarban'; Alicia Showalter; 'Allen Huckabay'; 'Andrew VanderJack'; 'Ann Danielson'; Anna Raff; 'Barbara F Fullmer'; bbritch; Becky Bohrer;'Ben Boettger';'Bill Bredar'; Bob; Brandon Viator;'Brian Havelock'; 'Bruce Webb'; 'Caleb Conrad'; 'Candi English'; Cocklan-Vendl, Mary E; Cody Gauer; Colleen Miller, 'Connie Downing'; Crandall, Krissell;'D Lawrence';'Dale Hoffman';'Darci Horner';'Dave Harbour'; David Boelens; 'David Duffy'; David House;'David McCaleb';'David McCraine';'ddonkel@cfl.rr.com'; Diemer, Kenneth J (DNR);'DNROG Units'; 'Donna Ambruz';'Ed Jones'; 'Elizabeth Harball'; Elowe, Kristin; 'Elwood Brehmer'; Evans, John R (LDZX); Garrett Brown; 'George Pollock'; Gordon Pospisil; Greeley, Destin M (DOR); 'Gretchen Stoddard'; gspfoff; 'Hunter Cox'; Hurst, Rona D (DNR); Hyun, James J (DNR); 'Jacki Rose'; Jason Brune; Jdarlington Oarlington@gmail.com); 'Jeanne McPherren'; 'Jerry Hodgden'; Jill Simek; 'Jim Watt'; Jim White; 'Joe Lastufka'; Joe Nicks; 'John Burdick'; 'John Easton'; John Larsen; 'John Stuart'; Jon Goltz; Josef Chmielowski; 'Juanita Lovett'; 'Judy Stanek'; Kari Moriarty; 'Kasper Kowalewski'; 'Kazeem Adegbola'; 'Keith Torrance'; Keith Wiles; Kelly Sperback; Kevin Frank, Kruse, Rebecca D (DNR); Kyla Choquette; Laura Silliphant (laura.gregersen@alaska.gov); Leslie Smith; Lori Nelson; 'Luke Keller'; 'Marc Kovak'; Mark Dalton; Mark Hanley (mark.hanley@anadarko.com); 'Mark Landt'; 'Mark Wedman'; 'Mealear Tauch'; 'Michael Bill'; Michael Calkins; 'Michael Moora'; Mike Morgan; MJ Loveland; mkm7200; 'Motteram, Luke A'; Mueller, Marta R (DNR); nelson; Nichole Saunders; 'Nick Ostrovsky'; NSK Problem Well Supv; Patty Alfaro; 'Paul Craig'; Paul Decker (paul.decker@alaska.gov); 'Paul Mazzolini'; Pike, Kevin W (DNR); Randall Kanady,'Renan Yanish';'Richard Cool';'Robert Brelsford'; Robert Warthen; Sara Leverette; 'Scott Griffith'; Shahla Farzan; Shannon Donnelly; 'Sharon Yarawsky'; Skutca, Joseph E (DNR); Smart Energy Universe; Smith, Kyle S (DNR); 'Stephanie Klemmer'; 'Stephen Hennigan'; Sternicki, Oliver R; Steve Moothart (steve.moothart@alaska.gov); 'Steve Quinn'; 'Suzanne Gibson'; Tamera Sheffield; 'Tanisha Gleason'; 'Ted Kramer'; Teresa Imm; Tim Jones; 'Tim Mayers'; Todd Durkee; 'Tom Maloney'; trmjrl; 'Tyler Senden'; Umekwe, Maduabuchi P (DNR); Vinnie Catalano; Well Integrity; Well Integrity; Weston Nash; Whitney Pettus; 'Aaron Gluzman'; 'Aaron Sorrell'; Ajibola Adeyeye; Alan Dennis; Andy Bond; Bajsarowicz, Caroline J; 'Bruce Williams'; Bruno, Jeff 1 (DNR); Casey Sullivan; Corey Munk; 'Don Shaw'; Eppie Hogan ; Eric Lidji; Garrett Haag; 'Graham Smith'; Heusser, Heather A (DNR); Holly Fair; Jamie M. Long; 'Jason Bergerson'; Jesse Chielowski; 'Jim Magill'; Jim Shine; Joe Longo; John Martineck, Josh Kindred; Keith Lopez; Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; 'Marie Steele'; Matt Armstrong; Melonnie Amundson; 'Mike Franger'; Morgan, Kirk A (DNR); Pascal Umekwe; Pat Galvin; 'Pete Dickinson'; Peter Contreras; Rachel Davis; Richard Garrard; Richmond, Diane M; Robert Province; 'Ryan Daniel'; 'Sandra Lemke'; 'Susan Pollard'; Talib Syed; Tina Grovier (tmgrovier@stoel.com);'William To: Subject: Attachments: Please see attached. Van Dyke' Other Order 127 other127.pdf Re: Failure to complete a Mechanical Integrity Test (MIT) Prudhoe Bay Unit H-03 (PTD 1710190) Area Injection Order 3B Western Operating Area, Prudhoe Bay Field Prudhoe Bay Unit (PBU) Jody J. Co(omhie AOGCC SpeciaCAssistant ACaska Oi(andGas Conservation Commission 333 West ;" .Avenue .Anchorage,.A(aska 995o1 Office: (907) 793-1221 ,fax: (907) 276-7542 Other Order 127 Docket Number: OTH-17-025 October 25, 2017 CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC(, State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending if to you, contact Jody Colombie at 907.793.1221 or iodv.colombie@alaska.aov. ' A Bend alongline to i Use Avery® Template 51600 Feed Paper expose Pop -p EdgeTM ' AVERY® 51600 �l 1 Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711-0055 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639-0309 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706-0868 :tiquettes faciles A peter A ltilisez le gabarit AVERY® 51600 Sens de i Repliez a la hachure afin de www.avery.com reveler le rebord Po u yr ' chargement P- P l 1 -800 -GO -AVERY BP EXPLORATION ALASKA REMITTANCE ADVICE by ALASKA OIL AND GAS CONSERVATION COMMISSION 333 WEST 7TH AVENUE SUIT 100 0 ANCHORAGE ANC 99501-3539 UNITED STATES BANK ACCOUNT 006571890060 BANK SORT CODE 011000028 PAYMENT REFERENCE 2000144047 OUR ACCOUNT REF. 80390272 VALUE DATE 11/07/2017 Date Our Doc No. Your Doc No. PO Number. Gross Amt. 10/26/2017 1900380018 PR102617 24,500.00 Currency Gross Total USD 24,500.00 E0 Chris Wyatt Senior Counsel Phone: 907-564-5674 Email: chris.wyatt®bp.com October 24, 2017 Via Fax: (907) 276-7542 and Hand Delivery Hollis S. French Commissioner Chair Alaska Oil and Gas Conservation Commission 333 West 71' Avenue Anchorage, AK 99501 0 BP Exploration (Alaska) Inc. 900 E. Benson Boulevard Anchorage, AK 99508 P.O. Box 196612 Anchorage, AK 99519-6612 RECEIVED OCT 2 5 2017 A®GCC Re: Response to Notice of Proposed Enforcement Action Failure to complete a Mechanical Integrity Test (MIT) Prudhoe Bay Unit H-03 (PTD 1710190) Area Injection Order 3B Western Operating Area, Prudhoe Bay Field, Prudhoe Bay Unit (PBU) Docket Number: 0TH -17-025 Dear Chair French: BP Exploration (Alaska) Inc. (BPXA), operator of the Prudhoe Bay Unit, has received the referenced Notice of Proposed Enforcement Action, in which the commission proposes a civil penalty in the amount of $24,500.00. Please accept this letter as confirmation that BPXA has elected to not contest the proposed civil penalty. BPXA accepts the civil penalty of $24,500.00 and will arrange with the commission's accounting department to make payment. Thank you for your consideration. Sincerely, Chris Wyatt Senior Counsel BP Exploration (Alaska) Inc. THE STATE °fALASKA GOVERNOR BILL WALKER October 3, 2017 CERTIFIED MAIL — RETURN RECEIPT REQUESTED 7015 0640 0003 5185 6045 Mr. Ryan Daniel Well Integrity Engineering Team Lead BP Exploration (Alaska), Inc. P.O. Box 196612 Anchorage, AK 99519-6612 Re: Notice of Proposed Enforcement Action Failure to complete a Mechanical Integrity Test (MIT) Prudhoe Bay Unit H-03 (PTD 1710190) Area Injection Order 3B Alaska Oil and Gas Conservation Commission Western Operating Area, Prudhoe Bay Field, Prudhoe Bay Unit (PBU) Docket Number: OTH-17-025 Dear Mr. Daniel: 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alaska.gov The Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies BP Exploration (Alaska) Inc. (BPXA) of a proposed enforcement action. Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)). BPXA violated the provisions of Rule 6 of Area Injection Order 3B (AIO 3B) ("Demonstration of Tubing -Casing Annulus Mechanical Integrity") in its operation of the PBU H-03 well. Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). On July 20, 2016 BPXA contacted AOGCC by telephone to report that well H-03 was brought back on injection for approximately 29 days before BPXA discovered the well was operating without a current Mechanical Integrity Test (MIT) and shut it in. AOGCC records indicate the well is generally used for a short period annually for pit dewatering which included injection from June 17, 2016 to July 15, 2016. Rule 6 of AIO 3B states "The mechanical integrity of an injection well must be demonstrated before injection begins, and before returning a well to service following a workover affecting Notice of Proposed Enforcement r.,,tion H-03 Docket Number: OTH-17-025 October 3, 2017 Page 2 of 3 mechanical integrity. An AOGCC-witnessed mechanical integrity test must be performed after injection is commenced for the first time in a well, to be scheduled when injection conditions (temperature, pressure, rate, etc.) have stabilized. Subsequent tests must be performed at least once every four years thereafter (except at least once every two years in the case of a slurry injection well). " The last AOGCC-witnessed MIT occurred May 20, 2010. Therefore, an MIT was required on or before May 20, 2014. Though out of compliance, the well was placed on injection for 29 days, from June 17, 2016 to July 15, 2016. BPXA's failure to demonstrate the mechanical integrity of injection well PBU H-03 within the required four-year cycle violated State regulations and AIO 3B. Proposed Action (20 AAC 25.535(b)(3). For these violations the AOGCC intends to impose civil penalties on BPXA as follows': - $10,000 for the initial violation — failure to perform the required MIT of the injection well in compliance with testing protocols specified in Rule 6 of AIO 313; - $500 for each day June 17. 2016 to July 15, 2016 (29 days, $14,500) for injecting in a well out of compliance with MIT regulations. The total proposed civil penalty is $24,500. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. BPXA's failure to comply with the fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. Mitigating circumstances were considered in the assessment of the proposed civil penalty including the operator's history of satisfactory compliance and practices, the existing aquifer exemption of the PBU, the lack of actual or potential threat to public health or the environment, and BPXA's immediate shut in of the well and notification to AOGCC once BPXA determined the well was out of compliance. 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 — BPXA 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 BPXA an opportunity to submit documentary material and make a written or oral statement. If BPXA 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 11'h ' 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. f Notice of Proposed Enforcement n, tion H-03 Docket Number: OTH-17-025 October 3, 2017 Page 3 of 3 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 BPXA does not concur in the proposed action described herein, and the AOGCC finds that BPXA has violated or failed to comply with 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 or remedial work; (ii) suspension or revocation of a permit or other approval; (iii) payment under the bond required by 20 AAC 25.025; and (iv) 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 BPXA 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, Hollis S. French Chair, Commissioner cc: Evan Osborne, USEPA, Region 10 AOGCC Inspectors Wallace, Chris D (DOA) From: AK, GWO Well Integrity Engineer <AKGWOWellSiteEnginee@bp.com> Sent: Sunday, July 23, 2017 5:12 AM To: Wallace, Chris D (DOA); Regg, James B (DOA) Subject: FW: H-03 TIO & injection plots Attachments: H -Pad Documents.pdf; H-03.pdf; Undeliverable: H-03 TIO & injection plots Sorry for the delay but for some reason the e-mail keeps getting kicked back to me. Chris & Jim; Here's the well bore schematic, hard copies, injection and TIO plots for H-03 dewatering. 2000 - 1800 1600 1400 ---.--. 1200 - - 1000 800 600 400 --..._.. - 200 -- 0 - 24 -Jun 4000 3500 3000 2500 2000 1500 1000 Soo ' 0 24 -Jun 29 -Jun 4 -Jul Thanks. 29 -Jun 1 4 -Jul Matt Ross (Alternate: Josh Stephens) Well Integrity Engineering Office 907-659-8110 Cell 907-980-0552 Harmony 4530 Wallace, Chris D (DOA) From: AK, GWO SUPT Well Integrity <AKDCWelllntegrityCoordinator@bp.com> Sent: Wednesday, July 19, 2017 12:59 PM To: Wallace, Chris D (DOA) Cr Regg, James B (DOA); AK, GWO Well Integrity Engineer; AK, GWO Projects Well Integrity; AK, GWO SUPT Well Integrity; Daniel, Ryan Subject: RE: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Chris, Per our phone conversation yesterday afternoon, the witnessed MIT -IA's of 5/20/2010 and 7/5/2017 are the only ones performed during that period; we have not performed any other MIT -IA's in the interim. History of dewatering activity on H-03 is as follows: 5/20/2010: Witnessed MIT -IA. 2010: Did not use for dewatering. 2011: Did not use for dewatering. 2012: Used for dewatering from 7/9 — 7/31. 2013: Used for dewatering from 6/26 — 7/15. 4/19/2014: Reclassified Not Operable due to witnessed MIT -IA due 5/20/2014, and no plans to use for dewatering injection in 2014. Added to Quarterly Not Operable Injector Report. 2014: Did not use for dewatering. 9/11/2015: Planned to use for dewatering in 2015. Sent e-mail, and obtained AOGCC approval, with plan forward (same as Proposed Plan Forward below). 9/14/2015: Due to ongoing work on adjacent wells, decided not to use for dewatering in 2015. 2016: Injected into well from 6/17 — 7/15. Well was classified Not Operable, AOGCC MIT -IA not scheduled or performed. Verbally notified AOGCC as soon as the issue came to light, on 7/20. 6/27/2017: Reclassified Operable, witnessed MIT -IA scheduled internally. Removed from Quarterly Not Operable Injector Report. 6/29/2017: Began dewatering injection. 7/5/2017: AOGCC MIT -IA. Present: Dewatering injection continues. A few follow-up items: 1) 2016 injecting while overdue for a witnessed MIT -IA: We (BPXA Well Integrity) have increased our level of oversight of Dewatering operations to prevent this from happening again, namely: a. Prior to every Dewatering rig -up, the crew must obtain documented approval from Well Integrity. b. Dewatering personnel received well control training, and BPXA WIOP (Well Integrity Operating Practice) training. 2) 2017 Proposed Plan Forward (see below): Although a shut-in MIT -IA is not required prior to placing a well on injection, we did include it in the plan forward, and therefore should have performed it, or sought your approval for our change of plans. Apologies for this oversight. 3) 2017 TIO and Injection Rates/Volumes to Date: Because H-03 is only used for dewatering, and has no flowline, we don't yet have electronic records of injection rates and volumes. We are acquiring hard copies of the data, and will digitize and provide this data to you as soon as possible. Thanks, Adrienne McVey Well Integrity Superintendent — GWO Alaska (Alternate: Jack Lau) 0:(907)659-5102 C: (907) 943-0296 H: 2376 From: Wallace, Chris D (DOA) [mailto:chris.wallaceCdalaska.00vl Sent: Tuesday, July 18, 2017 9:50 AM To: AK, GWO Well Integrity Engineer Cc: Regg, James B (DOA) Subject: RE: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Matt, Josh Our records indicate a state witnessed MITIA was completed on 7/5/2017. As per the plans below there should also be a 2500 psi MITIA completed in 2017 for the well while shut in. Please provide this on the AOGCC form to the AOGCC distribution. Also, checking up on the 2015 and 2016 activity, please provide any MITIA's completed between our witnessed MITIA's of 5/20/2010 and 7/5/2017. Regards, Chris From: Wallace, Chris D (DOA) Sent: Monday, lune 26, 2017 7:27 AM To: AK, GWO Well Integrity Engineer <AKGWOWeIISiteEneinee@bp.com> Cc: Regg, James B (DOA) <iim.re¢a@alaska.Pov> Subject: RE: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Matt, Thank you for the follow up phone call. The plan below is acceptable for the 2017 pit dewatering project. Regards, Chris From: AK, GWO Well Integrity Engineer [mailto:AKGWOWeIISiteEneinee@bp.com] Sent: Thursday, June 22, 2017 9:11 AM To: Wallace, Chris D (DOA) <chris.wa[lace @alaska.¢ov> Cc: Regg, James B (DOA) <iim.reaa@alaska.gov> Subject: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Chris, BP requests to use Injector H-03 (PTD #1710190) for pit dewatering. This injector is mechanically sound but was not placed on injection for an updated AOGCC MIT -IA and is therefore Not Operable for missing it's state witnessed four year MIT -IA. This well is a class II disposal well without a flowline that is used for pit dewatering. The well was last used for pit dewatering from lune 16, 2016 to July 20, 2016. The last state witnessed MIT -IA passed to 2500 psi on May 20, 2010. Proposed Plan Forward: 1. Downhole Diagnostics: MIT -i , co 2500 psi with well shut in 2. Well Integrity Coordinator: Submit non witnessed MIT form for state review 3. Operations: Place well on injection for pit dewatering 4. Downhole Diagnostics: Perform AOGCC state witnessed MIT -IA A Wellbore schematic and TIO & injection plot of 2016 dewatering have been included for reference. Please call with any questions or concerns. Thank you, 2, HOC 2,ODO 1,BDo 1.600 1,4100 1.2OO 1,CsD ZDD 6COi e00 2DD O5'3016 CG 041:+16 OR, 111 CD2016 ,. 3 Regg, James B (DOA) From: Wallace, Chris D (DOA) Sent: Monday, June 26, 2017 7:27 AM To: AK, GWO Well Integrity Engineer Cc: Regg, James B (DOA) Subject: RE: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Matt, Thank you for the follow up phone call. The plan below is acceptable for the 2017 pit dewatering project. Regards, Chris From: AK, GWO Well Integrity Engineer [mailto:AKGWOWeIISiteEnginee@bp.com] Sent: Thursday, June 22, 2017 9:11 AM To: Wallace, Chris D (DOA) <chris.wallace@alaska.gov> Cc: Regg, James B (DOA) <jim.regg@alaska.gov> Subject: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Chris, BP requests to use Injector H-03 (PTD #1710190) for pit dewatering. This injector is mechanically sound but was not placed on injection for an updated AOGCC MIT -IA and is therefore Not Operable for missing it's state witnessed four year MIT -IA. This well is a class II disposal well without a flowline that is used for pit dewatering. The well was last used for pit dewatering from June 16, 2016 to July 20, 2016. The last state witnessed MIT -IA passed to 2500 psi on May 20, 2010. Proposed Plan Forward: 1. Downhole Diagnostics: MIT -IA to 2500 psi with well shut in 2. Well Integrity Coordinator: Submit non witnessed MIT form for state review 3. Operations: Place well on injection for pit dewatering 4. Downhole Diagnostics: Perform AOGCC state witnessed MIT -IA -7/5/20 1-7 A Wellbore schematic and TIO & injection plot of 2016 dewatering have been included for reference. Please call with any questions or concerns. Thank you, _ ._ � ,s ._ _. ;� z Regg, James B (DOA) From: Wallace, Chris D (DOA) Sent: Friday, September 11, 2015 1:19 PM To: 'AK, D&C Well Integrity Coordinator' Cc: Regg, James B (DOA) Subject: RE: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Whitney, The plan below is approved. Thanks and Regards, Chris Wallace Sr. Petroleum Engineer Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, AK 99501 (907) 793-12SO (phone) (907) 276-7542 (fax) chris.wal lace@alaska.Rov CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Chris Wallace at 907-793-1250 or chris.wallace@alaska.aov. From: AK, D&C Well Integrity Coordinator[mailto:AKDCWellIntegrityCoordinator@bp.coml Sent: Friday, September 11, 2015 1:12 PM To: Wallace, Chris D (DOA) Cc: AK, D&C Well Integrity Coordinator; Regg, James B (DOA) Subject: Permission to Operate Injector H-03 (PTD #1710190) For Pit Dewatering Well and Updated AOGCC MIT -IA Chris, As per our earlier conversation, BP requests to use Injector H-03 (PTD #1710190) for pit dewatering. This injector is mechanically sound but was not placed on injection for an updated AOGCC MIT -IA and is therefore Not Operable for missing it's state witnessed four year MIT -IA. This well is a class II disposal well without a flowline that is used for pit dewatering. The well was last used for pit dewatering from June 26, 2013 to July 19, 2013. The last state witnessed MIT -IA passed to 2500 psi on May 20, 2010. Proposed Plan Forward: 1. Downhole Diagnostics: MIT -IA to 2500 psi with well shut in 2. Well Integrity Coordinator: Submit non witnessed MIT form for state review 3. Operations: Place well on injection for pit dewatering 4. Downhole Diagnostics: Perform AOGCC state witnessed MIT -IA r A Wellbore schematic and TIO & injection plot of 2013 dewatering have been incluaed for reference. Please call with any questions or concerns. Thank you, Whitney Pettus BP Alaska - Well Integrity Coordinator G WIC Office: 907.659.5102 WIC Email: AKDCWellintegrityCoordinator(@BP.com