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Home My WebLink AboutO 1421. December 18, 2017 2. December 19, 2017 3. March 15, 2018 4. March 20, 2018 5. March 15, 2018 6. April 5, 2018 7. ------------------- 8. July 16, 2018 9. August 5, 2018 10. October 24, 2018 11. October 31, 2018 12. January 14, 2019 13. January 15, 2019 14. February 28, 2019 OTHER ORDER 142 Docket Number: OTH-17-056 Ltr from Glacier regarding tubing/annular communication of RU -3A Email from AOGCC to Glacier NOV to Glacier for failure to complete a MIT and failure to report a pressure communication Glacier's request for an Informal Review AOGCC ltr setting Informal Review Glacier's Informal Review documentation Ltr and email regarding informal hearing date CIE Request for reconsideration of Other Order No. 142 Notice of hearing, affidavit of publication, email distribution, mailings Transcript and sign -in sheet CIE's supplemental information request by Commission Foerster during formal hearing on request for reconsideration of Other Order 142 CIE request for extension of time AOGCC letter granting extension of time CIE response to Other Order 142 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to report to AOGCC a pressure communication ) Other Order No. 142 Final Failure to complete required Mechanical Integrity Test ) Docket OTH-17-056 Redoubt Unit 3A (PTD 2161700) ) December 26, 2018 Area Injection Order (AIO) 32 ) Redoubt Shoal Field, Osprey Platform, ) Redoubt Shoal Unit (RSU) ) DECISION AND ORDER ON RECONSIDERATION On March 15, 2018, the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) issued a Notice of Proposed Enforcement Action (Notice) to Cook Inlet Energy, LLC (CIE) regarding the Redoubt Unit 3A (RU 3A) well. CIE failed to report to AOGCC a pressure communication and failed to complete the required Mechanical Integrity Test (MIT) in RU 3A. The Notice proposed specific corrective actions and a $50,000 civil penalty under AS 31.05.150(a). CIE requested an informal review. That review was held April 10, 2018. After the informal review, Other Order 142 (Order) was issued. On July 16, 2018, CIE requested reconsideration and oral argument on the Order. AOGCC granted reconsideration. A hearing was held October 24, 2018. The record was left open pending CIE submission of answers to questions posed during the hearing. CIE submitted the supplemental information on October 31, 2018. Summary of Proposed Enforcement Action: The Notice identified violations by CIE of: (1) 20 AAC 25.402 (f) and the provisions of Rule 8 of AIO 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication, leakage or lack of injection zone isolation is indicated in RU 3A; and (2) Rule 6 of AIO 32 requiring CIE to perform an AOGCC witnessed Mechanical Integrity Test once RU 3A commenced injection for the first time. Other Order 142 Final December 26, 2018 Page 2 of 6 The Notice proposed civil penalties of $50,000 as follows: - $25,000 for the initial violation — failure to notify AOGCC of indication of pressure communication or leakage in RU 3A as specified in Rule 8 of AIO 32 and AOGCC regulation 20 AAC 25.402 (f); and - $25,000 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 32. The Notice also proposed five actions for CIE to review its regulatory compliance program and analyze the violations for causes and corrective actions. Violation - Failure to Report a Pressure Communication or Leakage: By letter dated December 18, 2017 CIE notified AOGCC that the well was exhibiting potential tubing (T) by inner annulus (IA) pressure communication while injecting water. In its letter CIE provided a 30 -day injection pressure plot. CIE reported that after approximately 78 days of injection the IA pressure began to rise and the field staff bled it down numerous times to keep it below 200 psi. To confirm the communication, CIE let the pressure build to 1008 psi over 79 days, bled down the pressure, and again let the IA pressure build gradually to 590 psi before another bleed on December 18, 2017. CIE ultimately notified AOGCC of this pressure communication via the letter to AOGCC dated December 18, 2017 (received by AOGCC on December 19, 2017) in which CIE requested to continue water injection. AOGCC regulations require notification by the next working day if an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer. Rule 8 of AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the Operator shall notify the Commission by the next business day and submit a plan of corrective action (on Form 10-403) for Commission approval. The Operator shall immediately shut in the well if continued operation would be unsafe, would threaten contamination of freshwater, or if so directed by the Commission. Monthly reports of daily tubing and casing annuli Other Order 142 Final December 26, 2018 Page 3 of 6 pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation." On December 19, 2017 CIE provided pressure and injection data (pdf format) for RU 3A from June 2, 2017 onwards. CIE's only notice to AOGCC of potential pressure communication occurred via the December 18, 2017 letter. Information provided by CIE demonstrates significant pressure anomalies which were not communicated to the AOGCC. Significant IA pressure increases occurred including the two pressure build up tests: approximately August 18, 2017 to November 5, 2017 (maximum observed pressure was 1008 psi), and November 5, 2017 to December 18, 2017 (maximum observed pressure was 590 psi). There is no evidence to suggest the rate of pressure build was subsiding. CIE failed to report to AOGCC pressure communication indicating a potential loss of mechanical integrity on RU 3A by the next working day, a violation of both the regulations and Rule 8. Violation - Failure to Perform the Required MIT. Demonstration of Tubim/Casing Annulus Mechanical Integrity: A review of the well information provided by CIE shows RU 3A was handed over to injection operations on May 30, 2017, with injection allocated to the well continuously beginning July 1, 2017. Review of the well history demonstrates RU 3A was operating without having passed an AOGCC-witnessed post-injection MIT. Rule 6 of AIO 32 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. A Commission -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." In addition to the MIT requirement in AIO 32, approval of the Permit to Drill for RU 3A was conditioned on a requirement of a post -initial -injection MIT. CIE operated RU 3A approximately six months without the required MIT. CIE was notified on December 20, 2017 that RU 3A must pass an AOGCC-witnessed MIT to continue on injection. A successful MIT was completed December 23, 2017. Other Order 142 Final December 26, 2018 Page 4 of 6 Based on information provided by CIE — including the passing MIT on December 23, 2017 — AOGCC determined that water injection could safely continue if CIE complied with the restrictive conditions set out in an administrative approval dated December 28, 2017. Approval conditions included monthly reporting of well pressures, injection rates, and pressure bleeds; installation and testing of automatic well shut-in equipment linked to the wells inner annulus pressure; and a more frequent MIT schedule. CIE failed to complete the AOGCC-witnessed MIT after injection was commenced for the first time in RU 3A, a violation of Rule 6 of AIO 32. The Factors Considered in Imposing the Fines. Includin¢ Mitigating Circumstances: The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. CIE's four-month delay in reporting significant continuous repressurization events raised possible serious and substantial issues with the integrity of the RU 3A wellbore. Although no injury to the public occurred, the potential wellbore failure posed an obvious threat to both public health and the environment. These violations, which relate to Underground Injection Control Class II well integrity practices, warrant the imposition of civil penalties. Both of these violations demonstrate either disregard for or ignorance of CIE's compliance responsibilities. In tum, CIE's failure to comply with fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. Mitigating circumstances considered in the assessment of the proposed civil penalty include the absence of known sources of freshwater in the Redoubt Unit, as well as the fact that once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well. Findings and Conclusions After Reconsideration: At the hearing on reconsideration CIE admitted the violations. CIE's arguments — that the penalties imposed are excessive — were based on a reiteration of its position during informal review: that it had notified AOGCC as soon as it was satisfied there was a pressure communication and that the well ultimately passed an MIT. Other Order 142 Final December 26, 2018 Page 5 of 6 AOGCC does not agree. CIE was required to notify AOGCC of any indication of a pressure communication. CIE had that indication four months before it notified AOGCC. CIE's justification of its delay — essentially that it has no obligation to report until it has satisfied itself that there is in fact pressure communication — is directly contrary to the language of the requirement. The fact CIE conducted testing establishes that CIE viewed the circumstances as an indication of pressure communication. Likewise, the well ultimately passing an MIT does not mitigate the fact CIE ignored the requirement to conduct the MIT. CIE has presented nothing which would warrant changing the findings or penalties in the order. The AOGCC finds that CIE violated 20 AAC 25.402 (f) and the Rules in AIO 32 governing the Demonstration of Tubing/Casing Annulus Mechanical Integrity and Well Integrity Failure. The factors set forth in AS 31.05.150(g), including mitigating circumstances were considered. CIE's commitment to an increased level of oversight as well as review of established training and process protocols for employees governing injection operations is satisfactory to help prevent further occurrence of these violations. However, the violations committed by CIE were neither trivial nor technical. Neither violation can be characterized as an unintended consequence of good faith attempt at compliance with AOGCC's orders and regulations. AOGCC's assessment as to the appropriate civil penalties is unchanged. Now Therefore It Is Ordered That: CIE is assessed a civil penalty in the amount of $50,000 for violating Rule 6 of AIO 32, Rule 8 of AIO 32, and 20 AAC 25.402(f), assessed at $25,000 for each violation. If CIE 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. In addition to the civil penalty, within four weeks of the date of the AOGCC's final decision, CIE shall: (1) Provide a detailed description of its Underground Injection Control (UIC) regulatory compliance program; (2) Provide details of its tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells; Other Order 142 Final December 26, 2018 Page 6 of 6 (3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.); (4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day; and (5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved. As an Operator involved in an enforcement action, CIE is required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated December 26, 2018. HoPlisS. French 4CaP. Foerster Chair, Commissioner Commissioner cc: Ryan Gross, EPA Region 10 AOGCC Inspectors APPEAL NOTICE This order or decision and 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, this order and decision denying 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 Re: Failure to report to AOGCC a pressure communication ) Other Order No. 142 Final Failure to complete required Mechanical Integrity Test ) Docket OT 4-17-056 Redoubt Unit 3A (PTD 2161700) ) December 26, 2018 Area Injection Order (AIO) 32 ) Redoubt Shoal Field, Osprey Platform, ) Redoubt Shoal Unit (RSU) ) DECISION AND ORDER ON RECONSIDERATION On March 15, 2018, the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) issued a Notice of Proposed Enforcement Action (Notice) to Cook Inlet Energy, LLC (CIE) regarding the Redoubt Unit 3A (RU 3A) well. CIE failed to report to AOGCC a pressure communication and failed to complete the required Mechanical Integrity Test (MIT) in RU 3A. The Notice proposed specific corrective actions and a $50,000 civil penalty under AS 31.05.150(a). CIE requested an informal review. That review was held April 10, 2018. After the informal review, Other Order 142 (Order) was issued. On July 16, 2018, CIE requested reconsideration and oral argument on the Order. AOGCC granted reconsideration. A hearing was held October 24, 2018. The record was left open pending CIE submission of answers to questions posed during the hearing. CIE submitted the supplemental information on October 31, 2018. Summary of Proposed Enforcement Action: The Notice identified violations by CIE of: (1) 20 AAC 25.402 (f) and the provisions of Rule 8 of AIO 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication, leakage or lack of injection zone isolation is indicated in RU 3A; and (2) Rule 6 of AIO 32 requiring CIE to perform an AOGCC witnessed Mechanical Integrity Test once RU 3A commenced injection for the first time. Other Order 142 Final December 26, 2018 Page 2 of 6 The Notice proposed civil penalties of $50,000 as follows: - $25,000 for the initial violation — failure to notify AOGCC of indication of pressure communication or leakage in RU 3A as specified in Rule 8 of AIO 32 and AOGCC regulation 20 AAC 25.402 (f); and - $25,000 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 32. The Notice also proposed five actions for CIE to review its regulatory compliance program and analyze the violations for causes and corrective actions. Violation - Failure to Report a Pressure Communication or Leakage: By letter dated December 18, 2017 CIE notified AOGCC that the well was exhibiting potential tubing (T) by inner annulus (IA) pressure communication while injecting water. In its letter CIE provided a 30 -day injection pressure plot. CIE reported that after approximately 78 days of injection the IA pressure began to rise and the field staff bled it down numerous times to keep it below 200 psi. To confirm the communication, CIE let the pressure build to 1008 psi over 79 days, bled down the pressure, and again let the IA pressure build gradually to 590 psi before another bleed on December 18, 2017. CIE ultimately notified AOGCC of this pressure communication via the letter to AOGCC dated December 18, 2017 (received by AOGCC on December 19, 2017) in which CIE requested to continue water injection. AOGCC regulations require notification by the next working day if an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer. Rule 8 of AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the Operator shall notify the Commission by the next business day and submit a plan of corrective action (on Form 10-403) for Commission approval. The Operator shall immediately shut in the well if continued operation would be unsafe, would threaten contamination of freshwater, or if so directed by the Commission. Monthly reports of daily tubing and casing annuli Other Order 142 Final December 26, 2018 Page 3 of 6 pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation." On December 19, 2017 CIE provided pressure and injection data (pdf format) for RU 3A from June 2, 2017 onwards. CIE's only notice to AOGCC of potential pressure communication occurred via the December 18, 2017 letter. Information provided by CIE demonstrates significant pressure anomalies which were not communicated to the AOGCC. Significant IA pressure increases occurred including the two pressure build up tests: approximately August 18, 2017 to November 5, 2017 (maximum observed pressure was 1008 psi), and November 5, 2017 to December 18, 2017 (maximum observed pressure was 590 psi). There is no evidence to suggest the rate of pressure build was subsiding. CIE failed to report to AOGCC pressure communication indicating a potential loss of mechanical integrity on RU 3A by the next working day, a violation of both the regulations and Rule 8. Violation - Failure to Perform the Required MIT. Demonstration of Tubine/Casine Annulus Mechanical Inteerity: A review of the well information provided by CIE shows RU 3A was handed over to injection operations on May 30, 2017, with injection allocated to the well continuously beginning July 1, 2017. Review of the well history demonstrates RU 3A was operating without having passed an AOGCC-witnessed post-injection MIT. Rule 6 of AIO 32 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. A Commission -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." In addition to the MIT requirement in AIO 32, approval of the Permit to Drill for RU 3A was conditioned on a requirement of a post -initial -injection MIT. CIE operated RU 3A approximately six months without the required MIT. CIE was notified on December 20, 2017 that RU 3A must pass an AOGCC-witnessed MIT to continue on injection. A successful MIT was completed December 23, 2017. Other Order 142 Final December 26, 2018 Page 4 of 6 Based on information provided by CIE — including the passing MIT on December 23, 2017 — AOGCC determined that water injection could safely continue if CIE complied with the restrictive conditions set out in an administrative approval dated December 28, 2017. Approval conditions included monthly reporting of well pressures, injection rates, and pressure bleeds; installation and testing of automatic well shut-in equipment linked to the wells inner annulus pressure; and a more frequent MIT schedule. CIE failed to complete the AOGCC-witnessed MIT after injection was commenced for the first time in RU 3A, a violation of Rule 6 of AIO 32. The Factors Considered in Imoosine the Fines. Including Mitigating Circumstances: The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. CIE's four-month delay in reporting significant continuous repressurization events raised possible serious and substantial issues with the integrity of the RU 3A wellbore. Although no injury to the public occurred, the potential wellbore failure posed an obvious threat to both public health and the environment. These violations, which relate to Underground Injection Control Class II well integrity practices, warrant the imposition of civil penalties. Both of these violations demonstrate either disregard for or ignorance of CIE's compliance responsibilities. In turn, CIE's failure to comply with fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. Mitigating circumstances considered in the assessment of the proposed civil penalty include the absence of known sources of freshwater in the Redoubt Unit, as well as the fact that once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well. Findings and Conclusions After Reconsideration: At the hearing on reconsideration CIE admitted the violations. CIE's arguments —that the penalties imposed are excessive — were based on a reiteration of its position during informal review: that it had notified AOGCC as soon as it was satisfied there was a pressure communication and that the well ultimately passed an MIT. Other Order 142 Final December 26, 2018 Page 5 of 6 AOGCC does not agree. CIE was required to notify AOGCC of any indication of a pressure communication. CIE had that indication four months before it notified AOGCC. CIE's justification of its delay — essentially that it has no obligation to report until it has satisfied itself that there is in fact pressure communication — is directly contrary to the language of the requirement. The fact CIE conducted testing establishes that CIE viewed the circumstances as an indication of pressure communication. Likewise, the well ultimately passing an MIT does not mitigate the fact CIE ignored the requirement to conduct the MIT. CIE has presented nothing which would warrant changing the findings or penalties in the order. The AOGCC finds that CIE violated 20 AAC 25.402 (f) and the Rules in AIO 32 governing the Demonstration of Tubing/Casing Annulus Mechanical Integrity and Well Integrity Failure. The factors set forth in AS 31.05.150(g), including mitigating circumstances were considered. CIE's commitment to an increased level of oversight as well as review of established training and process protocols for employees governing injection operations is satisfactory to help prevent further occurrence of these violations. However, the violations committed by CIE were neither trivial nor technical. Neither violation can be characterized as an unintended consequence of good faith attempt at compliance with AOGCC's orders and regulations. AOGCC's assessment as to the appropriate civil penalties is unchanged. Now Therefore It Is Ordered That: CIE is assessed a civil penalty in the amount of $50,000 for violating Rule 6 of AIO 32, Rule 8 of AIO 32, and 20 AAC 25.402(1), assessed at $25,000 for each violation. If CIE 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. In addition to the civil penalty, within four weeks of the date of the AOGCC's final decision, CIE shall: (1) Provide a detailed description of its Underground Injection Control (UIC) regulatory compliance program; (2) Provide details of its tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells; Other Order 142 Final December 26, 2018 Page 6 of 6 (3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.); (4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day; and (5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved. As an Operator involved in an enforcement action, CIE is required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated December 26, 2018. //signature on file// Hollis S. French Chair, Commissioner cc: Ryan Gross, EPA Region 10 AOGCC Inspectors //signature on file// Cathy P. Foerster Commissioner APPEAL NOTICE This order or decision and 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, this order and decision denying 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. Bernie Karl Gordon Severson Penny Vadla K&K Recycling Inc. 3201 Westmar Cir. 399 W. Riverview Ave. P.O. Box 58055 Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 A Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to report to AOGCC a pressure communication ) Other Order No. 142 Failure to complete required Mechanical Integrity Test ) Docket OTH-17-056 Redoubt Unit 3A (PTD 2161700) ) June 25, 2018 Area Injection Order (AIO) 32 ) Redoubt Shoal Field, Osprey Platform, ) Redoubt Shoal Unit (RSU) ) DECISION AND ORDER On March 15, 2018, the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) issued a Notice of Proposed Enforcement Action (Notice) to Cook Inlet Energy, LLC (CIE) regarding the Redoubt Unit 3A (RU 3A) well. CIE failed to report to AOGCC a pressure communication and failed to complete the required Mechanical Integrity Test (MIT) in RU 3A. The Notice proposed specific corrective actions and a $50,000 civil penalty under AS 31.05.150(a). CIE requested an informal review. That review was held April 10, 2018. Summary of Proposed Enforcement Action: The Notice identified violations by CIE of: (1) 20 AAC 25.402 (f) and the provisions of Rule 8 of AIO 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication, leakage or lack of injection zone isolation is indicated in RU 3A; and (2) Rule 6 of AIO 32 requiring CIE to perform an AOGCC witnessed Mechanical Integrity Test once RU 3A commenced injection for the first time. The Notice proposed civil penalties of $50,000 as follows: - $25,000 for the initial violation — failure to notify AOGCC of indication of pressure communication or leakage in RU 3A as specified in Rule 8 of AIO 32 and AOGCC regulation 20 AAC 25.402 (f); and Other Order 142 June 25, 2018 Page 2 of 6 - $25,000 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 32. The Notice also proposed five actions for CIE to review its regulatory compliance program and analyze the violations for causes and corrective actions. Violation - Failure to Report a Pressure Communication or Leakage: By letter dated December 18, 2017 CIE notified AOGCC that the well was exhibiting potential tubing (T) by inner annulus (IA) pressure communication while injecting water. In its letter CIE provided a 30 -day injection pressure plot. CIE reported that after approximately 78 days of injection the IA pressure began to rise and the field staff bled it down numerous times to keep it below 200 psi. To confirm the communication, CIE let the pressure build to 1008 psi over 79 days, bled down the pressure, and again let the IA pressure build gradually to 590 psi before another bleed on December 18, 2017. CIE ultimately notified AOGCC of this pressure communication via the letter to AOGCC dated December 18, 2017 (received by AOGCC on December 19, 2017) in which CIE requested to continue water injection. AOGCC regulations require notification by the next working day if an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer. Rule 8 of AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the Operator shall notify the Commission by the next business day and submit a plan of corrective action (on Form 10-403) for Commission approval. The Operator shall immediately shut in the well if continued operation would be unsafe, would threaten contamination of freshwater, or if so directed by the Commission. Monthly reports of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation." On December 19, 2017 CIE provided pressure and injection data (pdf format) for RU 3A from June 2, 2017 onwards. CIE's only notice to AOGCC of potential pressure communication Other Order 142 June 25, 2018 Page 3 of 6 occurred via the December 18, 2017 letter. Information provided by CIE demonstrates significant pressure anomalies which were not communicated to the AOGCC. Significant IA pressure increases occurred including the two pressure build up tests: approximately August 18, 2017 to November 5, 2017 (maximum observed pressure was 1008 psi), and November 5, 2017 to December 18, 2017 (maximum observed pressure was 590 psi). There is no evidence to suggest the rate of pressure build was subsiding. CIE failed to report to AOGCC pressure communication indicating a potential loss of mechanical integrity on RU 3A by the next working day, a violation of both the regulations and Rule 8. Violation - Failure to Perform the Required MIT. Demonstration of Tubing/Casing Annulus Mechanical Integrity: A review of the well information provided by CIE shows RU 3A was handed over to injection operations on May 30, 2017, with injection allocated to the well continuously beginning July 1, 2017. Review of the well history demonstrates RU 3A was operating without having passed an AOGCC-witnessed post-injection MIT. Rule 6 of AIO 32 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. A Commission -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." In addition to the MIT requirement in AIO 32, approval of the Permit to Drill for RU 3A was conditioned on a requirement of a post -initial -injection MIT. CIE operated RU 3A approximately six months without the required MIT. CIE was notified on December 20, 2017 that RU 3A must pass an AOGCC-witnessed MIT to continue on injection. A successful MIT was completed December 23, 2017. Based on information provided by CIE — including the passing MIT on December 23, 2017 — AOGCC determined that water injection could safely continue if CIE complied with the restrictive conditions set out in an administrative approval dated December 28, 2017. Approval conditions included monthly reporting of well pressures, injection rates, and pressure bleeds; installation and Other Order 142 June 25, 2018 Page 4 of 6 testing of automatic well shut-in equipment linked to the wells inner annulus pressure; and a more frequent MIT schedule. CIE failed to complete the AOGCC-witnessed MIT after injection was commenced for the first time in RU 3A, a violation of Rule 6 of AIO 32. Mitigating Circumstances: The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. While the penalty does not reflect amounts based on per -day assessment, that decision does not minimize CIE's failure to report the significant repressurization events that occurred four months before notifying the AOGCC of possible serious and substantial issues with the integrity of the RU 3A wellbore. The failure to complete the initial post-injection MIT cannot be characterized as a good faith attempt to comply with the AOGCC's orders and regulations. Although no injury to the public occurred, the potential wellbore failure posed an obvious threat to both public health and the environment. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. CIE's failure to comply with fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. CIE's failure to notify AOGCC of the pressure communication shows disregard for or ignorance of CIE's compliance responsibilities. Mitigating circumstances considered in the assessment of the proposed civil penalty include the absence of known sources of freshwater in the Redoubt Unit, as well as the fact that once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well. Findings and Conclusions: The AOGCC finds that CIE violated 20 AAC 25.402 (f) and the Rules in AIO 32 governing the Demonstration of Tubing/Casing Annulus Mechanical Integrity and Well Integrity Failure. Mitigating circumstances outlined above were considered in the AOGCC's Notice of Proposed Enforcement Action and its assessment as to the appropriate civil penalty. CIE has committed to an increased level of oversight and review of established training and process protocols for Other Order 142 June 25, 2018 Page 5 of 6 employees governing injection operations. The AOGCC finds CIE's implementation of the proposed actions to be satisfactory to help prevent further occurrence of these violations. Now Therefore It Is Ordered That: CIE is assessed a civil penalty in the amount of $50,000 for violating Rule 6 of AID 32, Rule 8 of AIO 32, and 20 AAC 25.402(f). If CIE 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. In addition to the civil penalty, within four weeks of the date of the AOGCC's final decision, CIE shall: (1) Provide a detailed description of its Underground Injection Control (UIC) regulatory compliance program; (2) Provide details of its tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells; (3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.); (4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day; and (5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved. Other Order 142 June 25, 2018 Page 6 of 6 As an Operator involved in an enforcement action, CIE is required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated June 25, 2018. Hollis S. French Chair, Commissioner cc: Ryan Gross, EPA Region 10 AOGCC Inspectors — Ca�oerster Y Commissioner 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. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION 333 West Seventh Avenue Anchorage Alaska 99501 Re: Failure to report to AOGCC a pressure communication Failure to complete required Mechanical Integrity Test Redoubt Unit 3A (PTD 2161700) Area Injection Order (AIO) 32 Redoubt Shoal Field, Osprey Platform, Redoubt Shoal Unit (RSU) DECISION AND ORDER Other Order No. 142 Docket OTH-17-056 June 25, 2018 On March 15, 2018, the Alaska Oil and Gas Conservation Commission (AOGCC or Commission) issued a Notice of Proposed Enforcement Action (Notice) to Cook Inlet Energy, LLC (CIE) regarding the Redoubt Unit 3A (RU 3A) well. CIE failed to report to AOGCC a pressure communication and failed to complete the required Mechanical Integrity Test (MIT) in RU 3A. The Notice proposed specific corrective actions and a $50,000 civil penalty under AS 31.05.150(a). CIE requested an informal review. That review was held April 10, 2018. Summary of Proposed Enforcement Action: The Notice identified violations by CIE of (1) 20 AAC 25.402 (f) and the provisions of Rule 8 of AID 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication, leakage or lack of injection zone isolation is indicated in RU 3A; and (2) Rule 6 of AID 32 requiring CIE to perform an AOGCC witnessed Mechanical Integrity Test once RU 3A commenced injection for the first time. The Notice proposed civil penalties of $50,000 as follows: - $25,000 for the initial violation — failure to notify AOGCC of indication of pressure communication or leakage in RU 3A as specified in Rule 8 of AIO 32 and AOGCC regulation 20 AAC 25.402 (f); and Other Order 142 June 25, 2018 Page 2 of 6 - $25,000 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 32. The Notice also proposed five actions for CIE to review its regulatory compliance program and analyze the violations for causes and corrective actions Violation - Failure to Renort a Pressure Communication or Leakase: By letter dated December 18, 2017 CIE notified AOGCC that the well was exhibiting potential tubing (T) by inner annulus (IA) pressure communication while injecting water. In its letter CIE provided a 30 -day injection pressure plot. CIE reported that after approximately 78 days of injection the IA pressure began to rise and the field staff bled it down numerous times to keep it below 200 psi. To confirm the communication, CIE let the pressure build to 1008 psi over 79 days, bled down the pressure, and again let the IA pressure build gradually to 590 psi before another bleed on December 18, 2017. CIE ultimately notified AOGCC of this pressure communication via the letter to AOGCC dated December 18, 2017 (received by AOGCC on December 19, 2017) in which CIE requested to continue water injection. AOGCC regulations require notification by the next working day if an injection rate, operating pressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer Rule 8 of AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the Operator shall notify the Commission by the next business day and submit a plan of corrective action (on Form 10-403) for Commission approval. The Operator shall immediately shut in the well if continued operation would be unsafe, would threaten contamination of freshwater, or if so directed by the Commission. Monthly reports of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation." On December 19, 2017 CIE provided pressure and injection data (pdf format) for RU 3A from June 2, 2017 onwards. CIE's only notice to AOGCC of potential pressure communication Other Order 142 June 25, 2018 Page 3 of 6 occurred via the December 18, 2017 letter. Information provided by CIE demonstrates significant pressure anomalies which were not communicated to the AOGCC. Significant IA pressure increases occurred including the two pressure build up tests: approximately August 18, 2017 to November 5, 2017 (maximum observed pressure was 1008 psi), and November 5, 2017 to December 18, 2017 (maximum observed pressure was 590 psi). There is no evidence to suggest the rate of pressure build was subsiding. CIE failed to report to AOGCC pressure communication indicating a potential loss of mechanical integrity on RU 3A by the next working day, a violation of both the regulations and Rule 8. Violation - Failure to Perform the Reauired MIT. Demonstration of Tubin Casin¢ Annulus Mechanical Inte¢rity: A review of the well information provided by CIE shows RU 3A was handed over to injection operations on May 30, 2017, with injection allocated to the well continuously beginning July 1, 2017. Review of the well history demonstrates RU 3A was operating without having passed an AOGCC-witnessed post-injection MIT. Rule 6 of AIO 32 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. A Commission -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." In addition to the MIT requirement in AIO 32, approval of the Permit to Drill for RU 3A was conditioned on a requirement of a post -initial -injection MIT. CIE operated RU 3A approximately six months without the required MIT. CIE was notified on December 20, 2017 that RU 3A must pass an AOGCC-witnessed MIT to continue on injection. A successful MIT was completed December 23, 2017. Based on information provided by CIE — including the passing MIT on December 23, 2017 AOGCC determined that water injection could safely continue if CIE complied with the restrictive conditions set out in an administrative approval dated December 28, 2017. Approval conditions included monthly reporting of well pressures, injection rates, and pressure bleeds; installation and Other Order 142 June 25, 2018 Page 4 of 6 testing of automatic well shut-in equipment linked to the wells inner annulus pressure; and a more frequent MIT schedule. CIE failed to complete the AOGCC-witnessed MIT after injection was commenced for the first time in RU 3A, a violation of Rule 6 of AIO 32. Mitigating Circumstances: The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. While the penalty does not reflect amounts based on per -day assessment, that decision does not minimize CIE's failure to report the significant repressurization events that occurred four months before notifying the AOGCC of possible serious and substantial issues with the integrity of the RU 3A wellbore. The failure to complete the initial post-injection MIT cannot be characterized as a good faith attempt to comply with the AOGCC's orders and regulations. Although no injury to the public occurred, the potential wellbore failure posed an obvious threat to both public health and the environment. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. CIE's failure to comply with fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. CIE's failure to notify AOGCC of the pressure communication shows disregard for or ignorance of CIE's compliance responsibilities. Mitigating circumstances considered in the assessment of the proposed civil penalty include the absence of known sources of freshwater in the Redoubt Unit, as well as the fact that once notified of the violations, CIE demonstrated urgency in completion of the required MIT and in the installation and testing of the required automatic well shut-in equipment prerequisite to continued injection in the well. Findings and Conclusions: The AOGCC finds that CIE violated 20 AAC 25.402 (f) and the Rules in AIO 32 governing the Demonstration of Tubing/Casing Annulus Mechanical Integrity and Well Integrity Failure. Mitigating circumstances outlined above were considered in the AOGCC's Notice of Proposed Enforcement Action and its assessment as to the appropriate civil penalty. CIE has committed to an increased level of oversight and review of established training and process protocols for Other Order 142 June 25, 2018 Page 5 of 6 employees governing injection operations. The AOGCC finds CIE's implementation of the proposed actions to be satisfactory to help prevent further occurrence of these violations. Now Therefore It Is Ordered That: CIE is assessed a civil penalty in the amount of $50,000 for violating Rule 6 of AIO 32, Rule 8 of AIO 32, and 20 AAC 25.402(f). If CIE 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. In addition to the civil penalty, within four weeks of the date of the AOGCC's final decision, CIE shall: (1) Provide a detailed description of its Underground Injection Control (UIC) regulatory compliance program; (2) Provide details of its tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells; (3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.); (4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day; and (5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved. Other Order 142 June 25, 2018 Page 6 of 6 As an Operator involved in an enforcement action, CIE is required to preserve documents concerning the above action until after resolution of the proceeding. Done at Anchorage, Alaska and Dated June 25, 2018. //signature on file// Hollis S. French Chair, Commissioner cc: Ryan Gross, EPA Region 10 AOGCC Inspectors //signature on file// Cathy P. Foerster Commissioner 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 maybe 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: Monday, June 25, 2018 9:51 AM To: David Pascal; Bell, Abby E (DOA); Bixby, Brian D (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Cook, Guy D (DOA); Davies, Stephen F (DOA); Earl, Adam G (DOA); Erickson, Tamara K (DOA); Foerster, Catherine P (DOA); French, Hollis (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Herrera, Matthew F (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Laubenstein, Lou (DOA); Loepp, Victoria T (DOA); Martin, Teddy J (DOA); McLeod, Austin (DOA); Mcphee, Megan S (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Rixse, Melvin G (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Wallace, Chris D (DOA); AK, GWO Projects Well Integrity, AKDCWellIntegrityCoordinator; Alan Bailey; Alex Demarban; Alicia Showalter; Allen Huckabay; Andrew Vanderlack, Ann Danielson; Anna Lewallen; Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Ben Boettger, Bill Bredar, Bob Shavelson; Bonnie Bailey, Brandon Viator; Brian Havelock; Bruce Webb; Caleb Conrad; Candi English; Cody Gauer; Cody Terrell; Colleen Miller, Connie Downing; Crandall, Krissell; D Lawrence; Dale Hoffman; Danielle Mercurio; Darci Horner, Dave Harbour; David Boelens; David Duffy, David House; David McCaleb; ddonkel@cfl.rr.com; Diemer, Kenneth J (DNR); DNROG Units (DNR sponsored); Donna Ambruz; Ed Jones; Elizabeth Harball; Elowe, Kristin; Elwood Brehmer; Evan Osborne; Evans, John R (LDZIn; Brown, Garrett A (DNR); George Pollock; Gordon Pospisil; Greeley, Destin M (DOR); Greg Kvokov; Gretchen Stoddard; gspfoff; Hurst, Rona D (DNR); Hyun, James J (DNR); Jacki Rose; Jason Brune; Jdarlington (jarlington@gmail.com); Jeanne McPherren; Jerry Hodgden; Jill Simek; Jim Shine; Jim Watt; Jim White (jim4thgn@gmail.com); Young, Jim P (DNR); Joe Lastufka; Radio Kenai; Burdick, John D (DNR); Easton, John R (DNR); Larsen, John M (DOR); Jon Goltz; Joshua Stephen; Juanita Lovett, Judy Stanek, Kari Moriarty; Kasper Kowalewski; Kazeem Adegbola; Keith Torrance; Keith Wiles; Kelly Sperback; Frank, Kevin J (DNR); Kruse, Rebecca D (DNR); Kyla Choquette, Gregersen, Laura S (DNR); Leslie Smith; Lori Nelson; Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Michael Bill; Michael Calkins; Michael Moora; Michael Quick; Michael Schoetz; Mike Morgan; MJ Loveland; Motteram, Luke A; Mueller, Marta R (DNR); Nathaniel Herz; knelson@petroleumnews.com; Nichole Saunders; Nick Ostrovsky; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Renan Yanish; Richard Cool; Robert Brelsford; Robert Tirpack; Robert Warthen; Ryan Gross, Sara Leverette; Scott Griffith; Shahla Farzan; Shannon Donnelly, Sharon Yarawsky; Skutca, Joseph E (DNR); Smith, Kyle S (DNR); Spuhler, Jes J (DNR); Stephanie Klemmer; Stephen Hennigan; Stephen Ratcliff; Sternicki, Oliver R; Moothart, Steve R (DNR); Steve Quinn; Suzanne Gibson; Sheffield@aoga.org; Tanisha Gleason; Ted Kramer, Teresa Imm; Terry Caetano; Tim Mayers; Todd Durkee; Tom Maloney, Tyler Senden; Umekwe, Maduabuchi P (DNR); Vern Johnson; 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; Casey Sullivan; Corey Munk; Don Shaw; Eppie Hogan; Eric Lidji; Garrett Haag; Smith, Graham O (DNR); Heusser, Heather A (DNR); Fair, Holly S (DNR); Jamie M. Long; Jason Bergerson; Jesse Chielowski; Jim Magill; Joe Longo; John Martineck, Josh Kindred; Keith Lopez; Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck; Marcia Hobson; Matt Armstrong; Melonnie Amundson; Franger, James M (DNR); Morgan, Kirk A (DNR); Umekwe, Maduabuchi P (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Rachel Davis; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Scott Pins; Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); William Van Dyke; Zachary Shulman Subject: Other Order 142 (CIE) Attachments: Other 142.pdf Please see attached. Re: Failure to report to AOGCC a pressure communication Failure to complete required Mechanical Integrity Test Redoubt Unit 3A (PTD 2161700) Area Injection Order (AIO) 32 Redoubt Shoal Field, Osprey Platform, Redoubt Shoal Unit (RSU) Jody J. Co(om6ie .AOGCC Syecia(-ssistant .Alaska Oi(and Gas Conservation Commission 333 -West yfi .Avenue .Anchorage, .Alaska 99501 Office: (907) 793-1221 .Tax: (907) 276-7542 Other Order No. 142 Docket 0TH -17-056 June 25, 2018 1 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 Jody Colombie at 907.793.1221 or iodv.colombie@alaska.ggy. Bernie Karl K&K Recycling Inc. Gordon Severson Penny Vadla P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 e, l U��e�' 1°VV� Cook Inlet Energy, LLC First National Bank Alaska 219307 601 W. 5th Avenue P.O. Box 100720 Suite 310 Anchorage, AK 99510-0720 Anchorage, AK 99501 Fifty thousand dollars and no cents Pay to the Alaska Oil & Gas Conservation Commission Order of 333 West 7th Avenue Suite 100 Anchorage, AK 99501-3539 DATE- I AMOUNT 1/1 019 1 $"50 000.00' T06 Signatures Required for Checks Over $20,000 u'002Lg30?IIn 1:125200060e: 1113L05548611' From: Cook Inlet Energy, LLC To: Alaska Oil & Gas Conservation Commis Vendor Code Check Date 333 West 7th Avenue Suite 100 AOGCC 01/17/2019 Anchorage, AK 99501-3539 Invoice # Invoice Amt OTH-17-056 50,000.00 Docket OTH-17-0056_ _ Check Amount Check Number $50,000.00 D-219307 JAN 2 2 c'Qij A 14 GLACIER February 281h, 2019 Commissioner Dan Seamount Commissioner Cathy Foerster Alaska Oil and Gas Conservation Commission (AOGCC) 333 West 71h Ave., Suite 100 Anchorage, Alaska 99501 RE: Failure to report to AOGCC a pressure communication Failure to complete required Mechanical Integrity Test Redoubt Unit 3A (PTD 2161700) Area Injection Order (AIO) 32 Redoubt Shoal Field, Osprey Platform, Redoubt Shoal Unit (RSU) Dear Commissioners, E. F EE 5 a' tE'i, ,! MAR G A0G%; The following information is in response to the Decision and Order issued on December 26, 2018 to Cook Inlet Energy (CIE). In addition to the civil penalty, the AOGCC required additional detail on five (5) items regarding internal CIE processes, including two Root Cause Analyses regarding the violations as described in the Order. Each item is addressed individually below. 1) Provide a detailed description of CIE's Underground Injection Control (UIC) regulatory compliance program. In order to ensure that CIE stays in compliance with the AOGCC UIC Program, CIE has the following programs in place: a. CIE follows the AOGCC Sundry process to ensure all requested perforations are within the specified strata and are approved by AOGCC prior to being added. All perforations are correlated by the CIE geologists to the RU -01 or RU -02 wells as required in Rule 1 of AIO 32. The sundries and reports are generated and submitted by the CIE engineers who are responsible for ensuring the process is followed correctly for qualified well work. The approved sundries are reviewed by the VP of Drilling and all conditions of approval are added to the operations program. The approved sundries are also reviewed by engineers, drill site managers, and required field personnel. GLACIER b. The wells currently used for injection have been approved by the AOGCC for use in conformance with specified regulations as stipulated by Rule 2 of AIO 32. Any additional need in the future for new injection wells or conversions of existing wells will be applied for by CIE engineers. CIE engineers are responsible for the submittal of AOGCC required forms and information in order to gain approval by the AOGCC prior to any work commencing. c. All field personnel associated with injection activities are trained and aware of which fluids are authorized for injection. The authorized list is posted in the control room of the Osprey Platform and Kustatan facility. The lead operator at the Osprey Platform is required to document the type of fluid(s) being injected. The details of each injection are captured in a live document. RU -03A is currently only approved to inject produced water. In the event one of the other authorized fluids needs to be injected down RU -06, the platform lead operator is required to have authorization from the VP of Operations prior to the injection. This process ensures there is a verification both in the field and from management that the fluid type is approved for injection under the AIO 32 Rule 3. If at any point CIE were to discover an unauthorized fluid was injected, the Commission would be notified by the VP of Operations immediately as required by AIO 32 Rule 9. d. All wells on the Osprey Platform are monitored continuously with real-time pressure sensors that tie in to the main control room. The injection wells have sensors dedicated to ensuring the tubing and IA pressures are documented as required by AIO 32 Rule 5. The real time monitoring also works to ensure the fluids are not injected at a rate that could induce fractures in the confining strata as required by AIO 32 Rule 4. The sensors are set with high- and low-pressure alerts, based on normal operating conditions, that will shut down the injection automatically if reached. The rate and pressure data during injection is also monitored by the Lead Operator. Trend data is reviewed to ensure that even smaller changes are acknowledged and monitored. If there is indication at any time that fracturing or migration of the injected fluid may be occurring, the well would be shut in immediately and the VP of Operations would be notified. A review of the data would be conducted, a plan forward created, and the VP of Operations would notify the Commission. The VP of Operations would also be responsible for notifying the Commission by the next business day if any pressure communication, leakage or lack of injection zone isolation is indicated by the real-time pressure monitoring, or other evidence as required by AIO 32 Rule 8. All monthly, quarterly, and annual reports required by the Commission are tracked and submitted by the VP of Operations. The findings of the RU -03A Root Cause Analysis 2018-01 (see Appendix 4) identified that the results of the first pressure build up test were perceived as inconclusive which caused a delay in reporting the potential issue to the Commission. It is CIE's responsibility to analyze the trend GLACIER data and notify the Commission of any communication issues within the required time frame stipulated. e. The MIT requirement for the injection wells as stated in AIO 32 Rule 6, is tracked by the Lead Operators, Production Engineers and overseen by the VP of Operations. The MIT schedule for applicable wells is tracked using an online database that provides alerts for upcoming test deadlines. Since 2017, CIE has upgraded that system and is currently actively tracking the MIT required schedule for the injection wells in TaskOps. For RU -03A the MIT schedule is dictated by AIO 32.001 requiring a more frequent MIT, every 2 years, rather than the standard 4 -year schedule. Please see Appendix 1 for additional information about TaskOps. As a result of the RU -03A Root Cause Analysis 2018-02 (see Appendix 5), a gap in the transition of information from drilling to production was identified, in addition to the requirement to conduct a full review of AIO 32 Rule 6 prior to start or restart of injection. If a new or converted well is brought online or a major workover is conducted, the Lead Operator is now required to review the CIE MIT Requirement Flow Chart which is in accordance with AIO 32 Rule 6 (See Appendix 2). This process will ensure the initial MIT prior to injection and the MIT once injection conditions have stabilized are scheduled and conducted as stipulated. Also, a complete handover of permit to drill and sundry approval conditions will be conducted prior to the Lead Operator taking control of a well. This handover will ensure that the Lead Operator is aware of any remaining conditions that are required by the Commission. 2) Provide details of CIE's tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells. a) The Lead Operator is responsible for scheduling and tracking the MITs. Based on the timeline dictated by AIO 32 for RU -06 and AIO 32.001 for RU - 03A the upcoming test due dates have been loaded into TaskOps. TaskOps provides a calendar view of upcoming tests. The control room also has a visible list for the timing of the upcoming tests for each well. The most recent test for RU -06 was May 8, 2015, which is on a 4 -year test cycle based on AIO 32 Rule 6. Since no well work has been conducted on RU -06 effecting the mechanical integrity of the well, the next scheduled test is May 8, 2019. GLACIER For RU -03A, AIO 32.001 currently stipulates the next test is to occur on December 23, 2019. Upon a successful test the next test date will be December 23, 2021 due to the 2 -year test cycle requirement. b) The Lead Operator is responsible for notifying the Commission of the upcoming test for witness at least 24 hours in advance of the test which is done by online submission through the AOGCC website. The VP of Operations is responsible for submitting the CIE MIT report once the test is complete to the Commission. c) As a result of the Root Cause Analysis (see Appendix 5), CIE identified a gap in the process that occurs when a well is converted to injection or a new injection well is drilled. The requirement of the MIT once injection parameters stabilized was not identified. In order to ensure the MIT is conducted in the future, if a new injection well is drilled or existing well is converted to injection, the Lead Operator is required to complete the CIE MIT Requirement Flow Chart to ensure the appropriate timing for the required MLTs is scheduled (see Appendix 2). The schedule would be tracked in TaskOps. Once the initial MLTs are completed, the schedule would move to a 4 -year cycle under AIO 32 Rule 6 unless otherwise dictated by the Commission. d) For any MIT test scheduled in TaskOps, the software identifies if the testis completed on time or if the due date passes without completion. If the test is not completed on time, the test is labeled as "Over Due' and a notification is sent via email to the Lead Operator, CIE Engineers and VP of Operations. The software will continue to notify the users that the item is over due until the MIT is conducted and closed out in the software. e) If a well is shut-in at the time the MIT is due, the Lead Operator is required to document the required process prior to the well restart which would include the required MIT. This is noted visually in the Osprey Platform Control Room, reported to the CIE Engineers, and monitored by VP of Operations. 3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.). a) CIE has continuously tracked the compliance requirements for all wells through an infield tracking system. The testing requirements are scheduled as needed and updated once the test is complete. The tracking system was overseen by the Lead Operator. Since 2017, the schedule of the tests has 13 GLACIER been loaded into the online database system, TaskOps. Upcoming tests are monitored by the Lead Operators and CIE engineers. For safety valve testing, including surface and sub -surface, the "Well Safety Valve System (SVS) Testing Decision Matrix" is utilized in order to ensure the Commission requirements are followed (see Appendix 3). The safety valve tests are on a 6 -month cycle. Meter testing is required at different intervals depending on the activity, ranging from monthly to 5 -years, and is also tracked through TaskOps, the due dates are based on the original commissioning of the meters. b) Monthly and annual reports are the responsibility of the VP of Operations. The submittal requirements are tracked electronically depending on the specific schedule. 4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day. Root Cause Analysis 2018-01 included as Appendix 4. 5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved. Root Cause Analysis 2018-02 included as Appendix 5. If you have any questions, please contact me at (907) 433-3836. George norris Executive Vice President & Chief Operating Officer Cook Inlet Energy, LLC (a Glacier Oil & Gas Corp wholly owned company) GLACIER APPENDIX I TaskCps - Regulatory Compliance Tracking Program Introduction Regulatory compliance is the awareness of and actions taken to maintain conformance with relevant laws and regulations. It is achieved through effective task management. Cook Inlet Energy (CIE) uses TaskOps --- a regulatory compliance software package to assign, alert, monitor progress, and update regulatory compliance tasks and corrective actions to ensure timely completion. TaskOps is a web ---based application that is accessed by our personnel both in the field and in the office. Compliance tasks are input into the system as action items which are organized into action groups by regulatory requirement. Each group of action items is displayed in a point and click action table where the compliance tasks can be viewed, sorted, and updated. CIE uses TaskOps to provide automated email notification and task action reminders to required personnel consistent with our chain of command. TaskOps users provide updates to compliance tasks via the event log which keeps a running history of all activity associated with each action item. Supporting documents are uploaded and attached to a compliance task when required. This allows for real ---time task progress communication and monitoring. TaskOps is a password accessed system which ensures confidentiality and provides data control. CIE uses TaskOps to generate a quarterly status report to provide regulatory compliance task tracking and status to affected facilities and personnel. The reports are generated by the regulatory compliance software automatically per the CIE defined report schedule and emailed to the Production Manager, HSE Manager, Production Engineer, and Lead Operators. TaskOps reports are browser independent and can be viewed from mobile devices. Reporting can be generated as HTML, Microsoft Excel, or Microsoft Access files. New Injection yes Well, Nevdy Converteo Well? No l CIE MIT Requirement Process Flow Chart Mfr required prior Pau to start of Injection Fail VP of Drilling submit Sundry Application for Required Well Work untA MIT Pass. J Provide MR restdtsto UVninjecWn AOGCC NO lnxcDm Conditiord Stablized? Continue 1 Injection until Stablized "WVAOGCC for Witnessed Fail MITTest Enter MfT PUS Requirement in TaskOps for every 4 year sdtedule. M Notify W of Ops and VP milling DidWorkover/Well yes o -Request Work affect Mechanical Authorization to Retest Integrity? No VP of Ops to notify,*Fad Pau AOGCC of failed test. Restart ~ Injection - No MIT required - VP of Drilling submit Sundry Application for Required Well Work untA MIT Pass. J Provide MR restdtsto UVninjecWn AOGCC NO lnxcDm Conditiord Stablized? Continue 1 Injection until Stablized "WVAOGCC for Witnessed Fail MITTest Enter MfT PUS Requirement in TaskOps for every 4 year sdtedule. M Well Safety Valve System Testing Decision Matrix and emrtsto Operatorpeirformsh —fur reale. SIISfi.Wbn dted:psbrto L -�bAttgitgaidintodeake Ny r Production Manager per(orrtwme submits SVStelling the � records to AOGCC W Near well in later than the 15th 't,`produeion�N dayo(ng month // Im following the test Ye; Yes M xbe& testedrMhi+ d SSSV HI�t. trill mtq is only a e safety ibe 1es.t ,,, 74 wan—mm hours Or the Shut-in M M APPENDIX 4 - ROOT CAUSE ANALYSIS REPORT: Failure to provide a notification of a pressure communication on RU -03A to AOGCC within the next business day. Cook Inlet Energy Production Osprey Platform Osprey Platform, Cook Inlet, Alaska RCA 2018-01 04/15/2018 11/05/2017 George Morris, COO; Stephen Ratcliff, VP of Drilling; Don Jones, Drilling Superintendent. Team Leader: David Pascal, VP of Operations 2.1. Describe the sequence of events that was expected to take place. Attach flowchart if necessary. Rule 8 of AID 32 requires the AOGCC to be notified by the next business day if pressure communication is indicated. 2.2. Was there a deviation for the expected sequence of events? If yes, describe. Attach flowchart if necessary. Yes, the AOGCC was not notified immediately as required upon verification of annulus pressure increase. 2.3. Was any deviation from the expected sequence likely to have led to or did contribute to the adverse event? If yes, describe. Yes, failure to report the communication caused the violation. 2.4. Was the expected sequence described in written policy, procedure, guidelines, or expressed in staff training? If yes, cite the source. Yes, the AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated... the Operator shall notify the Commission by the next business day with a plan of corrective action for Commission approval." 2.5. Does the expected sequence or process meet any regulatory requirements and/or practice standards? Cite any references reviewed by the team. If no, describe the the deviation from the requirements. Yes. AOGCC regulatory requirements. 2.6. Did human action or inaction appear to contribute to the adverse event? If yes, describe the actions and how they contributed. Yes, upon reviewing the indicators of the tubing and annulus communication, the decision was made to bleed off the pressure. Upon further review, 2 pressure build up tests were conducted to try to validate the initial data set. 2.7. Did a defect, malfunction, misuse of, or absence of equipment appear to contribute to the event? If yes, describe what equipment and how it appeared to contribute. No. 2.8. Was the procedure or activity involved in the event being carried out in the usual location? If no, describe where and why a different location was utilized. Yes. 2.9. Was the procedure or activity being carried out by regular staff familiar with the consumer and activity? If no, describe who was carrying out the activity and why regular staff were not involved. Yes. 2.10. Were involved staff credentialed/skilled to carry out the tasks expected of them? If no, describe the perceived inadequacy. Yes. 2.11. Were staff trained to carry out their respective responsibilities? If no, describe the perceived inadequacy. Yes. 2.12. Were staffing levels considered to have been adequate at the time of the incident? If no, describe why. Yes. 2.13. Were there other staffing factors identified as responsible for or contributing to the adverse event? If yes, describe those factors. No. 2.14. Did inaccurate or ambiguous information contribute to or cause the adverse event? If yes, describe what information and how it contributed. Yes. Slight changes in annulus pressure can occur due to temperature variations in the fluid being injected compared to the fluid in the annulus and rate of injection. Uncertainty in the readings caused the delay in the Agency notification. 2.15. Did a lack of communication or incomplete communication contribute to or cause the adverse event? If yes, describe who and what and how it contributed. Yes. The lack of direct communication with the Agency regarding the situation led to the violation. 2.16. Did any environmental factors contribute to or cause the adverse event? If yes, describe what factors and how they contributed. No. 2.17. Did any organizational or leadership factors contribute to or cause the adverse event. If yes, describe what factors and how they contributed. Yes. All directly associated personnel are aware of the AIO requirements and should have identified the need for the Agency notification. 2.18. Did any assessment or planning factors contribute to or cause the adverse event? If yes, describe what factors and how they contributed. Yes. Proper assessment of the AIO requirements should have been reviewed when a change in the normal well activity was identified. 2.19. What other factors are considered relevant to the adverse event? Describe. N/A 2.20. Rank order the factors considered responsible for the adverse event, beginning with the proximate cause, followed by the most important to less important contributory factors. Attach Contributory Factors Diagram, if available. 1. Lack of communication with the AOGCC. 2. Uncertainty in the data resulting in a delay in Agency communication. 3. Lack of reference data for a similar scenario with a new injection well coming on line. 2.21. Was a root cause identified? If yes, describe. Yes. The uncertainty in the pressure data caused a delay in communicating the issue to AOGCC and a lack of review of the terms of the AIO 32 Rules prevented the urgency of notification to be identified. 3. RISK REDUCTION ACTIONS TAKEN List the actions that have already been taken to reduce the risk of a future occurrence of ti:- consideration. Note the date of implementation. The Rules of AIO 32 have been reviewed with all associated personnel and specifically between the VP of Operations and the Osprey Platform Operators. Chain of Command for any future annulus communication indicators will require the Platform Operator to notify the VP of Operations who will generate the Agency notification by the next business day with a plan of corrective action for Agency approval. 4. INCIDENTAL FINDINGS List and describe any incidental findings that should be carefully reviewed tot correctr� r -. None. 5. APPROVAL After review of this summary report. all learn members should notify the lean, leader of either their approval or reromrner,.,,::. revision. Following all revisions the report should be signed by the learn leader prior to submission. APPENDIX 5 - ROOT CAUSE ANALYSIS REPORT: Failure to complete an AOGCC witnessed MIT once RU -03A commenced injection and stabilization was achieved. Cook Inlet Energy Production Osprey Platform Osprey Platform, Cook Inlet, Alaska RCA 2018-02 04/15/2018 08/01/2017 George Morris, COO: Stephen Ratcliff, VP of Drilling; Don Jones, Drilling Superintendent. Team Leader: David Pascal, VP of Operations 2.1. Describe the sequence of events that was expected to take place. Attach flowchart if necessary. RU -03A was drilled and completed. Injection operations commenced July 1, 2017. Once injection conditions stabilized, the AOGCC should have been notified to witness a MIT. 2.2. Was there a deviation for the expected sequence of events? If yes, describe. Attach flowchart if necessary. Yes, a MIT was not scheduled once injection commenced and stabilized. 2.3. Was any deviation from the expected sequence likely to have led to or did contribute to the adverse event? If yes, describe Yes, the conditions of Sundry 317-150 were received by Drilling Department and not communicated to Production and the full requirement of Rule 6 of AIO 32 was overlooked. 2.4. Was the expected sequence described in written policy, procedure, guidelines, or expressed in staff training? If yes, cite the source. Yes, AID 32 Rule 6 states "A Commission -witnessed MIT must be performed after injection is commenced for the first time in a well, to be scheduled when injection conditions have stabilized." 2.5. Does the expected sequence or process meet any regulatory requirements and/or practice standards? Cite any references reviewed by the team. If no, describe the the deviation from the requirements. Yes. AOGCC regulatory requirements. 2.6. Did human action or inaction appear to contribute to the adverse event? If yes, describe the actions and how they contributed. Yes, the terms of the Approved Sundry was not communicated after the well was handed over to Production from Drilling. The Rules of AID 32 were not reviewed prior to commencing injection to ensure all requirements were met. 2.7. Did a defect, malfunction, misuse of, or absence of equipment appear to contribute to the event? If yes, describe what equipment and how it appeared to contribute. No. 2.8. Was the procedure or activity involved in the event being carried out in the usual location? If no, describe where and why a different location was utilized. Yes. 2.9. Was the procedure or activity being carried out by regular staff familiar with the consumer and activity? If no, describe who was carrying out the activity and why regular staff were not involved. Yes. 2.10. Were involved staff credentialed/skilled to carry out the tasks expected of them? If no, describe the perceived inadequacy Yes. 2.11. Were staff trained to carry out their respective responsibilities? If no, describe the perceived inadequacy. Yes. 2.12. Were staffing levels considered to have been adequate at the time of the incident? If no, describe why. Yes 2.13. Were there other staffing factors identified as responsible for or contributing to the adverse event? If yes, describe those factors. IM 2.14. Did inaccurate or ambiguous information contribute to or cause the adverse event? If yes, describe what information and how it contributed. No. 2.15. Did a lack of communication or incomplete communication contribute to or cause the adverse event? If yes, describe who and what and how it contributed. Yes. Production was not made aware of the Sundry requirement. 2.16. Did any environmental factors contribute to or cause the adverse event? If yes, describe what factors and how they contributed. No. 2.17. Did any organizational or leadership factors contribute to or cause the adverse event. If yes, describe what factors and how they contributed. Yes. All directly associated personnel are aware of the AIO requirements and should have identified the requirement for the MIT. 2.18. Did any assessment or planning factors contribute to or cause the adverse event? If yes, describe what factors and how they contributed. Yes. A review of the AIO requirements should have been conducted prior to the start of injection. 2.19. What other factors are considered relevant to the adverse event? Describe. N/A 2.20. Rank order the factors considered responsible for the adverse event, beginning with the proximate cause, followed by the most important to less important contributory factors. 1. Lack of review of AIO requirements prior to start of injection. 2. Verification of Sundry conditions prior to handover of well from Drilling Department to Production Department to ensure they are completed. 2.21. Was a root cause identified? If yes, describe. Yes. The Rules of the AIO were not reviewed prior to the start of injection and the conditions of the Approved Sundry were not passed on to Production. 3. RISK REDUCTION ACTIONS TAKEN List the actions that have already been taken to reduce the nsk of a future occurrence of pit, consideration. Note the date of implementation. The Rules of AID 32 have been reviewed with all associated personnel and specifically between the VP of Operations and the Osprey Platform Operators. The specifics of Rule 6 have been discussed with both Drilling and Production to ensure communication in the future is clear as to when the need for an MIT is required and that the AOGCC must be notified when one is scheduled. 4. INCIDENTAL FINDINGS List and describe any incidental findings that should be careful(v reviewed for rr•: ; r r None. 5 -APPROVAL After review of this summary report. all team members should notify, the learn leaderof ererrr.mori,�•r,••r , <; revision. Following all revisions the report should be signed by the (earn leader prior to submission. 13 THE STATE 01ALASKA GOVERNOR MIKE DUNLEAVY January 15, 2019 Elena M. Romerdahl Counsel for Cook Inlet Energy Perkins Coie 1029 West Third Avenue, Suite 300 Anchorage, AK 99501-1981 Re: Docket Number: OTH-17-056 Dear Ms. Romerdahl: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 w .aogcc.alaska.gov Your January 14, 2019 letter requesting a 45 -day extension of time until March 9, 2019 to submit the requested compliance program information and root -cause analyses in the above matter is GRANTED. Sincerely, Hollis S. French Chair, Commissioner 12 PeRKINSCOIe January 14, 2019 VIA HAND DELIVERY Commissioner Hollis S. French, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Re: Docket Number: OTH-17-056 1029 West Third Avenue O +1.907.179.8561 Suite 300 O +1.907.276.3108 Anchorage. AK 99501-1981 perkinscoecom Elena M. Romerdahl ERomerdahl@perkinscoie.com D. +1.907.263.6914 F. +1.907.263.6428 FEC IIIE JAN 14 2019 ACGCC Request for Extension of Time to Respond to Request for Information Dear Mr. French: On December 25, 2019, the Alaska Oil and Gas Conservation Commission ("the Commission") issued a final Decision and Order in Docket OTH-17-056 assessing $50,000 in civil penalties and requiring Cook Inlet Energy, LLC ("CIE") to provide information regarding its regulatory compliance programs and root -cause analyses of the violations ("the Final Order"). The Final Order requires CIE to pay the civil penalties within 30 days of December 26—by Friday, January 25—and to submit the requested information and root -cause analyses within four weeks of December 26—by Wednesday, January 23. CIE does not intend to appeal the Final Order. CIE will pay the $50,000 in assessed penalties within 30 days of December 26, as required by the Final Order. However, CIE respectfully requests a 45 -day extension of time until March 9 to submit the requested compliance program information and root -cause analyses. CIE is currently preparing the requested information and analyses but was delayed in beginning its preparation due to the holidays. The requested 45 -day extension will allow CIE to ensure that the information and analyses it provides to the Commission are thorough and complete. Thank you for your consideration. Sincerely, Elena M. Romerdahl Counsel for CIE 11 Cook Inlet Energy_ October 31, 2018 VIA HAND DELIVERY Commissioner Cathy Foerster Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 RECEIVE® OCT 11 2018 AOGCC Re: Supplemental Information Request by Commissioner Foerster During Formal Hearing on Request for Reconsideration of Other Order 142 Dear Commissioner Foerster: During the October 24, 2018 hearing on CIE's Request for Reconsideration of Other Order 142, you requested that Cook Inlet Energy, LLC ("CIE") indicate in writing whether it was complying with the requirements in AI032.001 prior to the date AIO 32.001 was issued on December 28, 2017. Below is a list of the requirements established by AIO 32.001. Under each requirement, CIE has indicated whether it was complying with the requirement before AOGCC issued AIO 32.001, and whether CIE is currently complying with the requirement. AI032.001 Requirements CIE shall record wellhead pressures and injection rate daily; a. Before Issuance: Fully compliant. b. After Issuance: Fully compliant. 2. CIE shall submit to the AOGCC a monthly report of well pressures, injection rates, and pressure bleeds for all annuli. Bleeds to be flagged on the report; a. Before Issuance: Compliant with the requirement to submit monthly report of well pressures and injection rates. Not compliant on submitting monthly reports of pressure bleeds as it is not required by regulations. However, CIE keeps logs of pressure bleeds. b. After Issuance: Fully compliant. CIE shall perform a mechanical integrity test of the inner annulus every 2 years to the minimum of 2500 psi; a. Before Issuance: Fully compliant. b. After Issuance: Fully compliant. 4. CIE shall install, maintain and operate automatic well shut-in equipment linked to the well's inner annulus (IA) pressure. The actuation pressure shall not exceed 2,500 psi for the inner annulus; a. Before Issuance: Not compliant, as this is not required by AOGCC regulations. CIE proposed that this condition be included in AIO 32.001 during our discussions with AOGCC. b. After Issuance: Fully compliant. 5. Testing of the shut in equipment shut -down valve and mechanical or electrical pressure device shall be performed in conjunction with production well pilots and safety valves. CIE shall provide to the commission the testing procedure that will be used to verify integrity of the well shut-in equipment linked to the inner annulus pressure; a. Before Issuance: Not compliant, as this is not required by AOGCC regulations. Like requirement 4, CIE proposed that this condition be included in AIO 32.001 during our discussions with AOGCC. b. After Issuance: Fully compliant. 6. CIE shall immediately shut in the well and notify the AOGCC if there is any change in the well's mechanical condition; a. Before Issuance: After CIE notified AOGCC that a change in pressure indicated a potential change in the well's mechanical condition, AOGCC ordered an MIT. The well passed the MIT, and AOGCC did not require CIE to shut in the well. b. After Issuance: Fully compliant. 7. After well shut in due to a change in the well's mechanical condition, AOGCC approval shall be required to restart injection; and a. Before Issuance: As noted above, AOGCC did not require the well to be shut in after the well passed an MIT, but CIE worked with AOGCC on issuance of AIO 32.001 and necessary approvals to continue injecting b. After Issuance: Fully compliant. 8. The next required MIT is to be before or during the month of December 2019. The Commission must be provided the opportunity to witness the MIT for a test to establish a new test due date. -2- a. Before Issuance: Fully compliant (date has not yet occurred). b. After Issuance: Fully compliant (date has not yet occurred). Please let us know if we can provide any further clarification. Again, we appreciate the opportunity to discuss our Request for Reconsideration on Other Order 142 with the Commission. Thank you for your consideration. Sincerely, e" � 3t VV r � � 1 Dav d Pascal Vic President of Operations Cook Inlet Energy, LLC (907)433-3822 dpascal@glacieroil.com -3- AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request by Cook ) Inlet Energy, LLC, for Reconsideration ) of Other Order 142, Redoubt Unit 3A Well ) Violations. ) Docket No: OTH 17-056 ALASKA OIL and GAS CONSERVATION COMMISSION Anchorage, Alaska October 24, 2018 1:00 o'clock p.m. PUBLIC HEARING BEFORE: Hollis French, Chair Cathy Foerster, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net I AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chair French 03 3 Comments by Mr. Elliott 07 4 Comments by Mr. Pascal 10 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 3 1 P R O C E E D I N G S 2 (On record) 3 CHAIRMAN FRENCH: I'm going to call the meeting 4 to order. It's 1:00 o'clock in the afternoon of 5 October 24, 2018. We're at 333 West Seventh Avenue, 6 Anchorage, Alaska, the headquarters of the Alaska Oil 7 and Gas Conservation Commission. To my right is 8 Commissioner Cathy Foerster and I'm Hollis French, a 9 Commissioner and the Chair of the Commission. 10 We're here today on docket number 0TH 17-056, a 11 motion for reconsideration dealing with the Redoubt 12 Unit 3A well violations. Cook Inlet Energy has 13 requested a hearing. Upon reconsideration of the above 14 docket we have obviously granted their request and 15 that's why we're all here. 16 Computer Matrix will be recording the 17 proceedings, you can get a copy of the transcript from 18 Computer Matrix Reporting. 19 We've got folks here from Cook Inlet Energy 20 signed up to testify, two people. Are there any other 21 parties planning to testify? 22 (No comments) 23 CHAIRMAN FRENCH: I don't hear or see anyone 24 responding. Commissioners may ask questions during 25 testimony, we may also take a recess to consult with Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 4 1 staff to determine whether additional information or 2 clarifying questions are necessary. If a member of the 3 audience has a question that he or she feels should be 4 asked please submit that question in writing to Jody 5 Colombie. She'll provide the question to us and if we 6 feel it's helpful for us in making our decision we'll 7 ask that question to those of you who are testifying. 8 When you are testifying please keep in mind you must 9 speak into the microphone, check and make sure the 10 little green light is on before you start, that's the 11 most common error we have. Remember to reference your 12 slides. Are you doing a slide show today? 13 UNIDENTIFIED VOICE: No. 14 CHAIRMAN FRENCH: Shaking of heads, no slides. 15 So we don't have to worry about that. I may ask you 16 about some of the material you presented though, but 17 we'll get to that when we get there. Of course keep 18 your testimony relevant to the proceeding today, if you 19 drift off topic we'll ask you to get back on topic. 20 Commissioner Foerster, anything to add before 21 we get started? 22 COMMISSIONER FOERSTER: No. I just have one 23 question. Do you guys prefer to be referred to as Cook 24 Inlet or Glacier? 25 UNIDENTIFIED VOICE: Glacier (indiscernible - Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahile@gci.net r AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 10 please. 11 Page 5 1 away from microphone) parent company, Cook Inlet is the 2 subsidiary..... 13 3 REPORTER: Please use your microphone. 4 CHAIRMAN FRENCH: Oh, actually why don't you 5 guys come forward and that'll be the first question we 6 ask you once we -- we'll just go ahead and get you 7 sworn in and then we'll go from there. MR. PASCAL: My name is David Pascal. 8 UNIDENTIFIED VOICE: Sure. 9 CHAIRMAN FRENCH: First raise your right hands, 10 please. 11 (Oath administered) 12 IN UNISON: I do. 13 CHAIRMAN FRENCH: Excellent. Please sit down 14 and one at a time, we'll start with you, sir, on the 15 left, my left, identify yourself. 16 MR. PASCAL: My name is David Pascal. 17 CHAIRMAN FRENCH: Green light on your -- push 18 the -- there's a little button in the mid -- there you 19 go. 20 MR. PASCAL: There you go. 21 CHAIRMAN FRENCH: Yeah, bingo. Very good. 22 MR. PASCAL: Oh. My name is David Pascal and 23 I'm vice president of operations for Glacier Oil and 24 Gas. 25 CHAIRMAN FRENCH: Okay. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net I AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 6 1 MR. ELLIOTT: I am Phillip Elliott, I'm the 2 president of Glacier Oil and Glass. 3 CHAIRMAN FRENCH: Okay. And now the question 4 from Commissioner Foerster, how do you -- how do you 5 prefer to -- which company or what subsidiary are we 6 dealing with here at Redoubt? 7 MR. ELLIOTT: I mean, we are dealing with Cook 8 Inlet Energy as the -- as the operator of..... 9 CHAIRMAN FRENCH: Okay. 10 MR. ELLIOTT: .....the assets. 11 CHAIRMAN FRENCH: Okay. 12 MR. ELLIOTT: The -- you know, the vernacular 13 or the doing business as is Glacier. 14 COMMISSIONER FOERSTER: Okay. I was just 15 confused because you all signed is as Glacier. 16 CHAIRMAN FRENCH: Yeah, I'm probably going to 17 stick with Cook Inlet just because -- I mean, if that's 18 the operator, if that's the -- I mean, the hard hats of 19 the guys working out there say Cook Inlet. 20 COMMISSIONER FOERSTER: That's the -- is that 21 the operator of record, Glacier or Cook..... 22 MR. ELLIOTT: The op -- no, they actually say 23 Glacier, but we -- but it is the operator of record. 24 COMMISSIONER FOERSTER: Cook Inlet is the 25 operator of record and the hard hats say Glacier. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 1 Okay. 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 7 2 CHAIRMAN FRENCH: All right. Clarification. 3 Very good. Who wants to start? 4 MR. ELLIOTT: I will, sir. 5 CHAIRMAN FRENCH: Please. 6 PHILLIP ELLIOTT 7 previously sworn, called as a witness on behalf of CIE, 8 testified as follows on: 9 DIRECT EXAMINATION 10 MR. ELLIOTT: Respected Commissioners, AOGCC 11 staff members and members of the public, thank you for 12 providing us with the opportunity to discuss our 13 request for reconsideration of other order 142 issued 14 on June 25th, 2018. My name is Phillip Elliott and I 15 am the president of Glacier Oil and Gas and its 16 subsidiary, Cook Inlet Energy. My tenure at Glacier 17 started in April of 2015, shortly before the company 18 declared bankruptcy. I along with others, including 19 David Pascal, our VP of operations for Glacier, have 20 been working diligently over the last three years 21 fixing the company, making it a better place to work, a 22 better partner for Alaska, basically trying hard to do 23 the right things. And I think we've accomplished a lot 24 and made a lot of progress. We are clearly not 25 perfect, but there is no doubt that we are much Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net I AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 1 different and a much better company than before 2 bankruptcy. 3 So, I mean, how have we tried to do the right 4 things. I know that the Commission is very focused on 5 P&A liabilities. Proactively we have tackled this 6 problem by P&Aing six wells for about a million 7 dollars. When you put this in context to the number of 8 shut in wells that we operate, this is a fairly 9 impressive endeavor. Our efforts have addressed 40 10 percent of the non -producing wells in our portfolio. 11 Next one of our first projects out of 12 bankruptcy was focused on addressing the antiquated oil 13 processing facility at our West McArthur field. The 14 facility was experiencing spills and increasing safety 15 issues from our perspective. Knowing the situation was 16 not sustainable we engineered a consolidation of the 17 production facility into our nearby Kustatan facility. 18 The cost was material at $4 million, but the results 19 were noticeable. In 2015 and 2016 there were 11 spills 20 related to West McArthur, in 2018 that number has been 21 exactly zero. 22 Compliance matters are one of the most 23 important responsibilities of our company. Prior to 24 bankruptcy I'm almost reluctant to admit how bad we 25 were with regulatory compliance, but we did not have Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 9 1 the dedicated resources necessary period, no reason to 2 make excuses. Since bankruptcy we've hired four 3 subject matter experts to review, refine and/or build 4 our compliance systems and processes. Part of this 5 effort has been focused on building redundancies into 6 our approach so as to avoid compliance failures. Again 7 we are not perfect, but we now have the staff to 8 address the issues. 9 We have implemented a safety first culture and 10 most -- our most valuable resource is our employees and 11 contractors. This approach has permeated our company 12 and paid significant dividends. Knock on wood, we have 13 not had one lost time accident this year, not one. 14 Maybe not as important as everything else we've 15 accomplished, but we did this all, plugged wells, shut 16 down ailing oil processing facilities, built a 17 regulatory compliance function, all the while 18 successfully investing over $60 million in our assets 19 which resulted in increased production. 20 I hope it is clear that we take pride in our 21 operations and are committed to ensuring that we follow 22 all applicable laws and regulations. Also that we have 23 made significant strides in -- since emerging from 24 bankruptcy. I'm not excusing our missteps, but I do 25 commit to working closely with the state and federal Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 10 1 agencies, including the Commission, to ensure that our 2 operations which are exclusively in Alaska, support 3 resource conservation and environmental protection. I 4 do not think there is any other way to approach this, 5 we are all in. 6 Finally we very much value the role the 7 Commission plays in overseeing the responsible 8 development of the state's resources and we are 9 committed to continuing to work with you to ensure that 10 our operations comply with the AOGCC's requirements. 11 I want to thank you again for your time and 12 reconsideration in this matter. 13 With that I'm going to hand it off to David to 14 walk through the technical details of this matter. 15 Thank you. 16 DAVID PASCAL 17 previously sworn, called as a witness on behalf of CIE, 18 testified as follows on: 19 DIRECT EXAMINATION 20 MR. PASCAL: Well, thank you, Phillip, for the 21 statement. And respected Commissioners and staff, once 22 again my name is David Pascal, I'm the vice president 23 of operations for CIE. I've been with the company 24 since September, 2013. 25 On March 15th, 2018 the Commission issued a Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 11 1 notice of proposed enforcement action to CIE related to 2 the Redoubt Unit 3A well. The notice alleged that CIE 3 failed to report to AOGCC the casing tubing pressure 4 communication and failed to complete the required 5 mechanical integrity test on RU 3A. The notice also 6 proposed specific corrective actions and a $50,000 7 civil penalty. 8 CIE requested an informal review which was held 9 by Commission staff on April 10th, 2018. At the 10 informal review CIE provided details regarding what 11 happened at RU 3A and additional documentation to the 12 Commission staff and requested that the Commission 13 reconsider the notice of proposed enforcement action 14 based on this additional information and documentation 15 that clarified what actually occurred at RU 3A. 16 The next communication CIE received from the 17 Commission was other order 142 which largely restated 18 the claims that were in the notice of proposed 19 enforcement. As were described in our request for 20 reconsideration other order 142 notes that an informal 21 review took place, but does not acknowledge or discuss 22 any of the information and documentation provided to 23 the Commission staff during the April 10th informal 24 review. 25 Under AS 31 05.150 subsection (g), the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 12 1 Commission is required to consider certain factors when 2 recommending the amount of civil penalty. We believe 3 that the information and documentation presented to the 4 Commission staff during the informal review was 5 relevant to several of these factors. CIEs request 6 for reconsideration of other order 142 requests that 7 the Commission review the information and documents 8 provided to the Commission staff on April 10 and 9 reconsider its decision to impose a $50,000 civil 10 penalty in light of the additional information and 11 documentation. 12 I would therefore like to take a few moments 13 now to briefly summarize the information and 14 documentation CIE provided at the informal review. 15 The first infraction discussed in other order 16 142 was CIE failed to perform an MIT with an AOGCC 17 inspector onsite to witness prior to well start-up. 18 During the April 10 informal review CIE explained that 19 we did in fact perform a successful MIT prior to well 20 start-up. CIE provided Commission staff the 21 documentation of that test. We also attached those 22 documents to our request for reconsideration. Although 23 CIE failed to notify the Commission of the planned test 24 in order to allow for an inspector to be present, the 25 documentation provides proof that CIE did in fact Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 13 1 perform the required test prior to start-up, a fact 2 that is not included in the Commission's order. Upon 3 receiving notification from the Commission that CIE had 4 failed to submit proof of a witnessed MIT, CIE acted 5 immediately to ensure that the second MIT was performed 6 with an AOGCC witness present. 7 Although CIE failed to fully comply with the 8 Commission's MIT requirements, it did comply in part by 9 performing the test prior to start-up as evidenced by 10 the documentation provided to the Commission. More 11 importantly CIE's failure to have a witness present did 12 not result in harm or risk of harm to people or the 13 environment. As I will explain further we believe that 14 the documentation provided during the informal review 15 with our request for reconsideration clearly 16 demonstrates that neither of the infractions cited in 17 other order 142 resulted in harm or risk of harm to 18 people or the environment. 19 Upon discovering that the initial MIT was not 20 properly witnessed, CIE performed a root cause analysis 21 to determine why those conducting the MIT did not 22 contact an inspector to witness the test. We 23 identified a communication gap in the field between 24 departments that we have since corrected by 25 implementing additional system processes and Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch, AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 14 1 redundancies. Prior to initiating any new project now 2 all members of the project team are briefed on the 3 requirements applicable to the project. Project team 4 members provide regular compliance reports to the 5 project lead and the project lead maintains oversight 6 to ensure the project team members are satisfying all 7 compliance requirements. 8 Compliance requirements and satisfaction of 9 those requirements are documented in the compliance 10 program which is called TaskOps. CIE currently has 11 only two class II injection wells and the system we 12 have implemented allows us to ensure that operations at 13 these two class II wells comply with all Commission 14 regulations. 15 In consideration of the fact that CIE acted in 16 good faith, the violation did not pose an actual or 17 potential threat to the public or the environment and 18 CIE immediately conducted a witnessed MIT after it 19 realized that it had not fully complied with AOGCC's 20 regulations, CIE respectfully requests the Commission 21 to reduce the proposed $25,000 civil penalty for this. 22 Second the Commission has imposed an additional 23 penalty of $25,000 for failure to notify the Commission 24 of a tubing annulus communication on RU 3A after the 25 well was brought online. At the informal hearing and Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 15 1 1 in our request for reconsideration we explained in 2 detail the circumstances surrounding the event. We 3 also provided raw data to the Commission for in depth 4 review. As stated in the correspondence between CIE 5 personnel and AOGCC staff, the original pressure 6 response was thought to be due to thermal expansion 7 which is often seen in new completions. The leak was 8 so small that CIE was able to pass an AOGCC conducted 9 MIT on December 23rd, 2017. After additional testing 10 was conducted we determined the amount of leak ranged 11 between .025 gallons per day to .9 gallons per day 12 depending upon compressive (indiscernible). CIE 13 informed the Commission immediately upon determining 14 that there was indeed a tubing annulus communication 15 and not simply a temperature anomaly. 16 Once again CIE acted in good faith, was 17 proactive when an issue was identified and implemented 18 automatic shutdown systems to protect the annulus in 19 case the leak increased. These automatic systems are 20 being tested frequently and regularly and included as 21 part of the SVS testing program. Further, CIE 22 recognizes the Commission would like to receive more 23 frequent communication from CIE and is updating the 24 Commission on a monthly basis regarding the status of 25 the well, including any bleeds. Due to the small Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 16 1 nature of the leak there has been no bleed since CIE 2 notified the Commission of a possible communication. 3 Based upon these facts which were presented at 4 informal review and in our request for reconsideration 5 and particularly the fact that CIE immediately notified 6 the Commission when it determined that there was a 7 possible communication, CIE respectfully requests the 8 Commission reconsider this violation and reduce the 9 fines associated with it. 10 We would also like to take a moment to discuss 11 our communication and cooperation with the AOGCC 12 generally. In the months leading up to the 13 Commission's issuance of other order 142 CIE was 14 working one on one with the AOGCC staff to find a path 15 forward on RU 3A. This resulted in the issuance of AIO 16 32-001 which granted CIE approval to keep injecting 17 into RU 3A not withstanding the known tubing annulus 18 communication. In AIO 32-001 the Commission clearly 19 states quote, the well condition does not compromise 20 overall well integrity so as to threaten human safety 21 or the environment, close quotes. Yet in order 142 the 22 Commission asserts that the potential wellbore failure 23 posed an obvious threat to both public health and the 24 environment, a statement which is inconsistent with the 25 Commission's previously issued AIO. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste, 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net i AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 17 1 As previously noted we believe that the 2 documents provided the Commission at the informal 3 review and with our request for reconsideration show 4 that although we failed to strictly comply with all the 5 Commission's requirements there was never a threat to 6 public health or safety. 7 CIE has consistently demonstrated its 8 commitment to working with the Commission to resolve 9 issues that may arise and believed it was working 10 cooperatively with the Commission to provide 11 information about the infractions and resolve the 12 Commission's concerns when other order 142 was issued. 13 As noted earlier we are committed to ensuring that our 14 operations comply with all AOGCC requirements and we 15 hope that we can work collaboratively to resolve 16 concerns that the Commission may have in the future. 17 Finally the Commission requested that CIE 18 provided detailed information regarding CIE's 19 compliance programs, processes and tracking systems 20 addressing not only the UIC program, but also every 21 other AOGCC statute and regulation. As we discuss in 22 our request for reconsideration we believe that CIE's 23 record of safety and compliance in Alaska reflects its 24 ability to manage its internal compliance systems. 25 Nevertheless CIE is willing to provide the Commission Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net i 1 AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 18 1 with a more detailed summary of CIE's compliance 2 processes and tracking systems in order to demonstrate 3 our commitment to working with the Commission. 4 We want to thank the Commission for providing 5 us with an opportunity to discuss our request for 6 reconsideration and shed light on the matters discussed 7 in other order 142. We want to emphasize again that 8 CIE is dedicated to continuing our work with the 9 Commission to resolve the matters discussed in other 10 order 142 and ensure continued compliance with AOGCC 11 generally. We would be happy to answer any 12 questions the Commission may have for us right now. 13 Thank you. 14 CHAIRMAN FRENCH: Gentlemen, I have a couple 15 questions and I think Commissioner Foerster will as 16 well. But what we're going to do first is take about a 17 10 minute recess while we just tag up with staff about 18 a few details of the informal review and so forth and 19 we'll be back and then go on the record and ask those 20 questions. 21 I will let you know ahead of time I'm probably 22 going to ask and will ask you about this so just make 23 sure that the other folks have access to that pressure 24 trend and when we come back we'll talk about it and a 25 couple other things. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 19 1 We'll stand in recess. 2 MR. ELLIOTT: I do appreciate it. 3 (Off record) 4 (On record) 5 CHAIRMAN FRENCH: We'll go back on the record, 6 it's about 1:33 in the afternoon. 7 We're going to break -- we're going to take 8 this topic by topic and the first set of questions will 9 come regarding the failure to perform a witnessed MIT. 10 COMMISSIONER FOERSTER: So I'd like to read 11 rule 6 of AIO 32 under which this well operates. The 12 mechanical integrity of an injection well must be 13 demonstrated before injection begins and before 14 returning a well to service following a workover 15 affecting mechanical integrity. A Commission witnessed 16 mechanical integrity test must be performed after 17 injection is commenced for the first time in a well to 18 be scheduled when injection conditions, temperature, 19 pressure, rate, et cetera, have stabilized. Subsequent 20 tests must be performed at least once every four years 21 thereafter. 22 Did you guys comply with that rule? 23 MR. PASCAL: We did do a -- we did an MIT test 24 before the well was put in service. 25 COMMISSIONER FOERSTER: Okay. So you did the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 20 1 first test? 2 MR. PASCAL: We did the first test. 3 COMMISSIONER FOERSTER: And then there was the 4 second test. 5 CHAIRMAN FRENCH: Go ahead. 6 COMMISSIONER FOERSTER: You did the rig test 7 before the..... 8 MR. PASCAL: We did do a second test, but it 9 was quite late. 10 COMMISSIONER FOERSTER: How late was -- when 11 was it performed? 12 MR. PASCAL: So if you go back to attachment -- 13 give me one second, attachment two for the informal 14 documents which has a timeline of events on it, so the 15 second MIT test was done on the 18th -- on the 23rd of 16 December. I'm sorry. 17 COMMISSIONER FOERSTER: On the 23rd of 18 December. 19 MR. PASCAL: Yes. 20 COMMISSIONER FOERSTER: And when was the well 21 brought on production? 22 MR. PASCAL: The well was brought on production 23 1st of July. 24 COMMISSIONER FOERSTER: The 1st of July. So do 25 you think it took six months for that well to Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net l � AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 21 1 stabilize? 2 MR. PASCAL: No, it did not. 3 COMMISSIONER FOERSTER: That was a rhetorical 4 question, you don't need to answer it. 5 CHAIRMAN FRENCH: Well, actually, I mean, I do 6 have a question about that. How long generally after 7 you bring a well on does it take to have the 8 temperature and pressure conditions stabilize? 9 MR. PASCAL: It depends upon the well exactly 10 because what normally happens in the Cook Inlet is that 11 you're injecting really cold water which is coming 12 across subsea pipelines into relatively warm reservoirs 13 so it takes quite a bit of time for the well to 14 stabilize, probably a quarter or more. A quarter or 15 more. 16 CHAIRMAN FRENCH: Three months? 17 MR. PASCAL: Yeah, depending upon injection 18 rates, pressures, temperatures, conditions and stuff 19 like that. But the point to be taken here is we as 20 Cook Inlet Energy, we never brought a well online, you 21 know, without completely, fully testing it for its 22 mechanical integrity. 23 COMMISSIONER FOERSTER: Okay. So when you 24 state in your testimony that you complied with the 25 regulation, you did not, you did not comply with the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net 1 AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 22 1 rule. The rule says that you will perform a test after 2 the well is brought on injection and has stabilized. 3 And you testified that you complied, but you did not, 4 is that accurate? 5 MR. PASCAL: We have complied by bringing a 6 well online with no mechanical integrity issues, we did 7 not call the AOGCC for witness which was regretted 8 obviously. 9 COMMISSIONER FOERSTER: The regulation -- the 10 rule in the injection order requires that as soon as 11 the well is stabilized you will perform another 12 mechanical integrity test. Did you do that? It's a 13 yes or no question. 14 MR. PASCAL: The answer is yes, but it was 15 late. 16 COMMISSIONER FOERSTER: As -- the question was 17 as soon as. So yes, but we were late is not as soon 18 as. So I'll ask the question again. As soon as the 19 well stabilized did you comply with the requirement to 20 perform a mechanical integrity test and have it 21 witnessed? 22 MR. PASCAL: The answer is no. 23 COMMISSIONER FOERSTER: Thank you. Whoo. That 24 was painful. 25 Do you have any more -- go ahead, that was the Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 23 1 only question I had. 2 CHAIRMAN FRENCH: On that topic, no, I got the 3 answer to the amount of time. Well, let me just ask 4 who is now in charge, is there a single person in 5 charge at Glacier or Cook Inlet in charge of regulatory 6 compliance? 7 MR. PASCAL: That depends upon what regulatory 8 compliances because there is not only AOGCC, there is 9 ADC, there's ETA, so there's several people within the 10 organization who are responsible for compliance 11 depending upon what task it has. 12 CHAIRMAN FRENCH: And how about for our 13 regulations? 14 MR. PASCAL: For AOGCC compliance we have a 15 drilling and production team and it is the joint 16 efforts of both these teams to ensure that AOGCC 17 compliance requirements are met. 18 CHAIRMAN FRENCH: Okay. Then I want to ask a 19 couple questions about the other violation and that's 20 the failure to notify about a pressure communication. 21 And I'm looking at attachment three which you have -- 22 do you have a copy in front of you? 23 MR. ELLIOTT: I do. 24 CHAIRMAN FRENCH: And if I -- it looks to me 25 like there were one, two, three, four, five, six, Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.nel AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 24 1 seven, say eight small pressures up to about 100 pounds 2 and then bleed offs before you really ramped -- allowed 3 the pressure to ramp up to about a thousand pounds, 4 does that look right, about..... 5 MR. PASCAL: That's right. 6 CHAIRMAN FRENCH: .....six, seven, eight bleed 7 offs and then you let the pressure build up to a 8 thousand pounds? This was all taking place -- and the 9 well was brought on in July..... 10 MR. PASCAL: Yes. And just..... 11 CHAIRMAN FRENCH: .....1st of July? 12 MR. PASCAL: .....just to let you know, some of 13 those things may be due to shutting and stopping 14 injection operations into the well. So what happens is 15 when you're injecting cold water you have thermal 16 expansion affects which causes easily a hundred to 200, 17 maybe even sometimes even a 300 psi differences in a 18 well -- while the well is settling up. 19 CHAIRMAN FRENCH: Well, and is that born out by 20 your operation records, were you in fact bringing the 21 well on and shutting it in? 22 MR. PASCAL: Yeah, normally when a new 23 injection well is brought online we take all steps to 24 ensure that we're injecting the right amounts of fluid 25 and we try to optimize our operations between producing Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 25 1 wells and the amount of fluids required to be injected 2 because we are also trying to manage a reservoir 3 here..... 4 CHAIRMAN FRENCH: Sure. 5 MR. PASCAL: .....so depending upon what is 6 replacement ratios and what the well is capable of 7 taking which depends upon permeability and other 8 factors we have to adjust rates. So there's a lot of 9 testing which goes on before we decide on a rate which 10 we have to inject. 11 CHAIRMAN FRENCH: Well, let me stay on this 12 point then for just a minute because you've given me 13 two alternative explanations for these build ups and 14 drop offs in pressures, there were either bleeds or 15 they were operational, bringing the well on and 16 shutting the well in. 17 MR. PASCAL: They're a combination of both. 18 CHAIRMAN FRENCH: So as you sit there today, 19 you know, they were -- were they half and half, half 20 bleeds, half operational shut ins? 21 MR. PASCAL: I don't have the answer right now, 22 but we can get back to you. 23 CHAIRMAN FRENCH: Some combination..... 24 MR. PASCAL: Some combination. 25 CHAIRMAN FRENCH: .....not purely bleeds and Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net i AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 26 1 not purely operational. And it was brought on you said 2 on the 1st of July roughly? 3 MR. PASCAL: I believe that is correct. 4 CHAIRMAN FRENCH: Okay. 1st of July. So July, 5 August, September, three months. So if the well had 6 stabilized after a couple months when the first large 7 pressure build up was allowed to take place from zero 8 to about a thousand psi, that looks to me like it took 9 about a month for that to occur; is that right? 10 MR. PASCAL: That is correct. 11 CHAIRMAN FRENCH: Looking back now at that 12 pressure increase when -- looking back now when do you 13 think you should have let us know about your 14 communication problem? 15 MR. PASCAL: Well, in this case we did our best 16 to collect data and find out if it was a tubing annulus 17 communication. I would like to point out that the 18 whole build up you see right there resulted in less 19 than two gallons of fluid being recovered from the 20 annulus. 21 COMMISSIONER FOERSTER: Did he answer your 22 question. 23 MR. ELLIOTT: But let's clarify that. The 24 first time that there was an anomaly, regardless of 25 what the explanation is, we should have called. That Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH I7-056 Page 27 1 is our forward going process. we thought we had a 2 technical explanation that explained what was going on 3 and it turned out to be incorrect and that's when we 4 called. Going forward it is as soon as we have 5 something that can be explained as a leak, but there 6 are other explanations, that's when we call. And 7 that's when we should have called. 8 MR. PASCAL: And that is why we did two tests, 9 a minimum of two tests to find out what is the amount 10 of leak because it's very impossible to just do one 11 test and find out what is happening. And we realize 12 that, yes, it's a -- it's a leak and it's a really, 13 really small leak and like we said the leak was so 14 small that even today we go and we can pass an MIT test 15 pretty easily. So..... 16 CHAIRMAN FRENCH: I mean, I guess I..... 17 MR. PASCAL: .....that was a time in which we 18 said like, okay, it's a -- we will hand over that 19 information to the AOGCC and work with them to find a 20 solution. 21 CHAIRMAN FRENCH: Right. I mean, you can see 22 it from our perspective, I mean, what's -- there's no 23 downside to reporting a problem, right, there isn't 24 one..... 25 MR. ELLIOTT: Correct. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 28 1 CHAIRMAN FRENCH: .....in fact you stay out of 2 trouble by reporting the problem? 3 MR. ELLIOTT: Look you're absolutely correct 4 and that -- that is the learning that we've taken away 5 from that. 6 CHAIRMAN FRENCH: Right. It may be a 7 temperature anomaly that goes away in a few days when 8 it all stabilizes, but I'm clear because I told the cop 9 we got a prob -- you know, it might be temperature, it 10 might be pressure, I don't know what it is, but it's -- 11 you know, it's getting to be..... 12 MR. ELLIOTT: We fully appreciate..... 13 CHAIRMAN FRENCH: Right. 14 MR. ELLIOTT: .....that. And that's..... 15 CHAIRMAN FRENCH: Right. 16 MR. ELLIOTT: .....that is our operations going 17 forward. 18 COMMISSIONER FOERSTER: Well, I'm troubled by 19 the fact that this is a learning for you because 20 AAC 20 25.402(f), if an injection rate, operating pressure 21 observation or pressure test indicates pressure 22 communication or leakage in any casing, tubing, packer, 23 dah, dah, dah, the operator shall notify the Commission 24 by the next working day. And that rule has been in 25 effect for an awfully long time and it shouldn't be Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 29 1 something that you learned to comply with recently. 2 MR. PASCAL: And the only answer I can give you 3 on that is as soon as we were able to find out what 4 exactly the leak rate was..... 5 COMMISSIONER FOERSTER: That's not what the 6 rule says. 7 MR. PASCAL: .....we notified the Commission 8 the very next day. 9 COMMISSIONER FOERSTER: That's not what the 10 rule says. 11 CHAIRMAN FRENCH: I think the last point I'm 12 just going to make is that with respect especially to 13 the pressure communication, even if we go out to the 14 end of the second build up which I think was terminated 15 around November 5th if I remember that right from your 16 pleadings, the statute gives the authority to impose a 17 $100,000 find and then $10,000 per day after that. So, 18 I mean, I appreciate you guys coming in and asking for 19 us to lower the fines, but $25,00 is a small fraction 20 of that potential liability, I guess I'll just say 21 that. 22 COMMISSIONER FOERSTER: I have one more 23 question on this (indiscernible - simultaneous 24 speech)..... 25 CHAIRMAN FRENCH: Go ahead, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 30 1 Forester. 2 COMMISSIONER FOERSTER: As you know the 3 Commissioners weren't present in the informal review, 4 but the staff that were present took notes and in his 5 notes of your informal review comments, Mr. Regg 6 pointed out that you stated that you were aware of the 7 prob -- that you had a problem in August. Did he take 8 notes correctly or incorrectly? 9 MR. PASCAL: Well, we knew something was 10 happening because the field notified us. I don't know 11 exactly if it was August, but that is when we exactly 12 started doing the test to determine what is going on, 13 to make sure it was not a temperature anomaly. 14 COMMISSIONER FOERSTER: Okay. So that's the 15 point at which 25.402(f) should have kicked in for you 16 is August. And then remind me again when did you 17 report the problem to the AOGCC, what was the date? 18 MR. PASCAL: The problem was reported to the 19 AOGCC on 18th of December..... 20 COMMISSIONER FOERSTER: Okay. So..... 21 MR. PASCAL: .....as soon as the second test 22 was conducted and..... 23 COMMISSIONER FOERSTER: Okay. 24 MR. PASCAL: .....verified. 25 COMMISSIONER FOERSTER: So four months later. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 tTMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 31 1 Four months later. Okay. 2 Do you have any -- are we done with this one? 3 CHAIRMAN FRENCH: I think we're done with this 4 one. 5 COMMISSIONER FOERSTER: Okay. I've got one 6 more. 7 CHAIRMAN FRENCH: Please go ahead. 8 COMMISSIONER FOERSTER: You made the assertion 9 that our statement in our notice of enforcement and our 10 order regarding this issue was inconsistent with our 11 admin approval. That the admin approval had several 12 conditions and requirements for safe operation. Were 13 you operating in compliance with all of those 14 requirements prior to issuance of the administrative 15 approval? And if your answer is yes I'm going to ask 16 you to take them one by one and explain to me that they 17 were..... 18 MR. PASCAL: I..... 19 COMMISSIONER FOERSTER: .....if you were. 20 MR. PASCAL: .....I just want to understand 21 your question because other order 142 was issued way 22 after 32-001 was issued, it was not prior to that. 23 COMMISSIONER FOERSTER: The administrative 24 approval that allowed you to continue to inject was 25 issued in December? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 32 1 MR. PASCAL: Yes, and ever since that came in 2 we have been fully compliant with all the requirements 3 of..... 4 COMMISSIONER FOERSTER: Right. Okay. You're 5 not..... 6 MR. PASCAL: .....other order 32..... 7 COMMISSIONER FOERSTER: .....following me. 8 MR. PASCAL: ......001. 9 COMMISSIONER FOERSTER: Okay. Were you -- were 10 you doing all of those things prior to the issuance of 11 that administrative approval? 12 MR. PASCAL: I will have to check and see what 13 32-001 exactly states. Basically from what I recall 14 32-001 exactly states that you shall report pressures 15 and flow rates to the Commission on a monthly basis 16 which we do normally on a -- on our monthly logs to the 17 AOGCC. And it also asks us to do the next MIT text in 18 2019 which we already have it..... 19 COMMISSIONER FOERSTER: So..... 20 MR. PASCAL: .....on track. 21 COMMISSIONER FOERSTER: .....we don't need to 22 do it here today, but we can keep the record open for a 23 few days so that you can respond to my question. And 24 my question is you -- okay, let me explain why I'm 25 asking it. You made the assertion that our statement Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 33 1 that the way you were operating wasn't safe was 2 inconsistent with our AA which says it's safe. And our 3 AA said it's safe because we have all these conditions 4 and requirements. So my question to you is were you 5 complying with all of those conditions and requirements 6 prior to the issuance of the AA to maintain your 7 statement that it was fully safe. Does that make -- do 8 you understand where I'm going with my question? 9 MR. PASCAL: I understand where you're going 10 with your question..... 11 COMMISSIONER FOERSTER: Okay. So..... 12 MR. PASCAL: .....but the point we were trying 13 to make, ma'am, is that, you know, other order 142 is 14 issued way after all this happened and we've been 15 working with the Commission quite closely and we've 16 been fully compliant with, you know..... 17 COMMISSIONER FOERSTER: You're not 18 answering..... 19 MR. PASCAL: ......32-001. 20 COMMISSIONER FOERSTER: .....you're not 21 understanding my question. You can't make the 22 assertion that what you were doing prior to the 23 issuance of the AA was safe if you weren't complying 24 with all the requirements to ensure that it was safe. 25 That's all I'm saying. And if you can provide me Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net � r AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 Page 34 1 that..... 2 MR. ELLIOTT: We..... 3 MR. PASCAL: I will have to..... 4 MR. ELLIOTT: .....fully understand the 5 question and we'll come..... 6 COMMISSIONER FOERSTER: .....I'd love to hear 7 it and if you can't then we're done. 8 MR. ELLIOTT: .....we will respond to that 9 question. 10 COMMISSIONER FOERSTER: Thank you. 11 CHAIRMAN FRENCH: We'll keep the record open 12 for a week for that piece of information. 13 Other questions, Commissioner Foerster? 14 COMMISSIONER FOERSTER: I'm done. 15 CHAIRMAN FRENCH: I don't have any other 16 questions either. Anything else you guys want to say 17 to wrap up? 18 MR. PASCAL: Thank you. 19 CHAIRMAN FRENCH: It's 1:50 in the afternoon 20 and we're adjourned. 21 (Adjourned) 22 (END OF PROCEEDINGS) 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net � 1 AOGCC 10/24/2018 ITMO: REQUEST BY COOK INLET ENERGY, LLC., Docket No. OTH 17-056 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 35 TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 35 are a true, accurate, and complete transcript of proceedings in Docket No: OTH 17-056, transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. DATE SALENA A. HILE, (Transcriber) Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: OTH-17-056 October 24, 2018 at 1:00 pm NAME AFFILIATION Testifv (ves or no) �PU`tI D>}S Val,- tkt A- �y CS p%tIL tLtAn 1- figL - `PES T So��s �-4-t,A-o � Tpr -6- kw *,to 675A /00 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Docket Number: OTH-17-056 October 24, 2018 at 1:00 pm NAME AFFILIATION Testify (yes or no) >fi-tp pp,s &tr � k,�A— y Cs Plitt, ti,U0 T L -kr SES �4,uko 9 TM -6- 40 k t -v e— s n �r—IS �i� tea— Hca 9 STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT N'VOICE SHOWING ADVERTISNG ORDER NO., CERTIFIED AFFIDAVIT OF PUBLICATION WHA ATTACHED COPY OF ADVERUSMENT. ADVERTISING ORDERNUMBER AO-19-004 FROM: AGENCY CONTACT: Jody Colombic/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 8/2/2018 (907) 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: (907)276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: LEGAL DISPLAY CLASSIFIED OTH E R(S pacify be low) DESCRIPTION PRICE OTH-17-056 Initials of who prepared AO: Alaska Non -Taxable 92-600185 : SUBMIT:PNtliCH SHOWING ADY.ERTIMN 3: :-::OBDERNO.; RERTlF1EOAFFIDAYrT OF.:' .................... _ ... COP. OF :ruecicAnomaTTH:ATTAeHmcoerof333 ... . ... .......:« AOGCC West 7th Avenue Anchorage, Alaska 99501 Pae 1 of ] Total of All Pages $ - REF Type I Number Amount Date Comments I PVN IVCO21795 2 Ao AO.19-004 3 4 FIN AMOUNT SY Act. Tem ate PGM LGR Object FY DIST LIQ 1 19 A14100 3046 19 2 3 4 relies A h e: I e Purchasing Authority's Signature Telephone Number 1. . It and receiAng agency name must appear m ail inwices and documents relating to this purchase. 2. T e state is registered for tax free transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not far le. 17iSTRIBUTION Dlvrsion FrsealfOriglnallQ '..Copies Piilihshor (fssed},llrvLsronFiscal Roeervng . Form: 02-901 Revised: 8/2/2018 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: OTH-17-056 Motion for Reconsideration Redoubt Unit 3A Well Violations Cook Inlet Energy has requested a hearing upon reconsideration of the above docket. The Alaska Oil and Gas Conservation Commission (AOGCC) grants their request. The AOGCC has scheduled a public hearing on the application for October 24, 2018, at 1:00 p.m. at 333 West 7`^ Avenue, Anchorage, Alaska 99501. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than October 20, 2018. Hollis S. French Chair, Commissioner Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: OTH-17-056 Motion for Reconsideration Redoubt Unit 3A Well Violations Cook Inlet Energy has requested a hearing upon reconsideration of the above docket. The Alaska Oil and Gas Conservation Commission (AOGCC) grants their request. The AOGCC has scheduled a public hearing on the application for October 24, 2018, at 1:00 p.m. at 333 West 7`h Avenue, Anchorage, Alaska 99501. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) 279-1433, no later than October 20, 2018. Hsignature on fileH Hollis S. French Chair, Commissioner ANCHORAGE ')A" -'y 'NEWNECOVED AFFIDAVIT OF PUBLICATION AUG 10 2018 AOGCC Account #: 270227 ST OF AK/AK OIL AND GAS Order# 0001425713 Product ANC -Anchorage Daily News CONSERVATION COMMISSION cost $129.50 Placement 0300 333 WEST 7TH AVE STE 100 Position 0301 Aeicunwnrc AV 00501'1580 STATE OF ALASKA THIRD JUDICIAL DISTRICT Joleesa Stepetin being first duly sworn on oath deposes and says that he/she is a representative of the Anchorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on August 05, 2018 and that such newspaper was regularly distributed to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Subscribed and sworn to before me this 6th day of August, 2018 Notary Public i and for The State o aska. Third Division Anchorage, Alaska MY COMMISSION rPIR�E$�� Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Docket Number: OTH-17-056 Motion for Reconsideration Redoubt Unit 3A Well Violations Cook Inlet Energy has requested a hearing upon reconsideration of the above docket The Alaska Oil and Gas Conservation Commission (AOGCC) grants their request. The AOGCC has scheduled a public hearinKK on the application for October 24, 2018, at 1:00 p.m. at 333 VIM 7th Avenue, Anchorage Alaska 99501. If, because of a disability special accommodations may be needed to comment or attend the hearing, contact the AOGCC at (907) neede 33, no later than October 20, 2018. Published: August 5, 2018 //signature on file// Hollis S. French Chair, Commissioner --A �, Notary Public BRITNEY L. THOMPSON State of Alaska My Commission Expires Feb 23, 2019 Colombie, Jody J (DOA) From: Colombie, Jody J (DOA) Sent: Thursday, August 02, 2018 10:11 AM To: Romerdahl, Elena M. (Perkins Coie); Ballantine, Tab A (LAW); Bell, Abby E (DOA); Bixby, Brian D (DOA); Boyer, David L (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Cook, Guy D (DOA); Davies, Stephen F (DOA); Earl, Adam G (DOA); Erickson, Tamara K (DOA); Foerster, Catherine P (DOA); French, Hollis (DOA); Frystacky, Michal (DOA); Guhl, Meredith D (DOA); Herrera, Matthew F (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Laubenstein, Lou (DOA); Loepp, Victoria T (DOA); Martin, Teddy J (DOA); McLeod, Austin (DOA); Mcphee, Megan S (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Rixse, Melvin G (DOA); Roby, David S (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Wallace, Chris D (DOA); AK, GWO Projects Well Integrity; AKDCWelllntegrityCoordinator; Alan Bailey; Alex Demarban; Alicia Showalter; Allen Huckabay; Andrew VanderJack, Ann Danielson; Anna Lewallen; Anna Raff; Barbara F Fullmer; Barbara Kruk; bbritch; bbohrer@ap.org; Ben Boettger, Bill Bredar; Bob Shavelson; Bonnie Bailey, Brandon Viator; Brian Havelock, Bruce Webb; Caleb Conrad; Candi English; Cody Gauer; Cody Terrell; Colleen Miller; Connie Downing; Crandall, Krissell; D Lawrence; Dale Hoffman; Danielle Mercurio; Darci Horner; Dave Harbour; David Boelens; David Duffy; David House; David McCaleb; David Pascal; ddonkel@cfl.rr.com; Diemer, Kenneth J (DNR); DNROG Units (DNR sponsored); Donna Ambruz; Ed Jones, Elizabeth Harball; Elowe, Kristin; Elwood Brehmer, Evan Osborne; Evans, John R (LDZX); Brown, Garrett A (DNR); George Morris; George Pollock; Gordon Pospisil; Greeley, Destin M (DOR); Greg Kvokov; Gretchen Stoddard; gspfoff; Hurst, Rona D (DNR); Hyun, James J (DNR); Jacki Rose; Jason Brune; Jdarlington (arlington@gmail.com); Jeanne McPherren; Jerry Hodgden; Jill Simek; Jim Shine; Jim Watt, Jim White oim4thgn@gmail.com); Young, Jim P (DNR); Joe Lastufka; Radio Kenai; Burdick, John D (DNR); Easton, John R (DNR); Larsen, John M (DOR); Jon Goltz; Joshua Stephen; Juanita Lovett; Judy Stanek; Kari Moriarty; Kasper Kowalewski; Kazeem Adegbola; Keith Torrance; Keith Wiles; Kelly Sperback; Frank, Kevin J (DNR); Kruse, Rebecca D (DNR); Kyla Choquette; Gregersen, Laura S (DNR); Leslie Smith; Lori Nelson; Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark Landt; Mark Wedman; Michael Bill; Michael Calkins; Michael Moora; Michael Quick, Michael Schoetz, Mike Morgan; MJ Loveland; Motteram, Luke A; Mueller, Marta R (DNR); Nathaniel Herz; knelson@petroleumnews.com; Nichole Saunders; Nick Ostrovsky; NSK Problem Well Supv; Patty Alfaro; Paul Craig; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Renan Yanish; Richard Cool; Robert Brelsford; Robert Tirpack; Robert Warthen; Ryan Gross; Sara Leverette; Scott Griffith; Shahla Farzan; Shannon Donnelly, Sharon Yarawsky; Skutca, Joseph E (DNR); Smith, Kyle S (DNR); Spuhler, Jes J (DNR); Stephanie Klemmer; Stephen Hennigan; Stephen Ratcliff; Sternicki, Oliver R, Moothart, Steve R (DNR); Steve Quinn; Suzanne Gibson; sheffield@aoga.org; Tanisha Gleason; Ted Kramer; Teresa Imm; Terry Caetano; Tim Mayers; Todd Durkee; Tom Maloney; Tyler Senden; Umekwe, Maduabuchi P (DNR); Vern Johnson; 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; Casey Sullivan; Corey Munk; Don Shaw; Eppie Hogan; Eric Lidji; Garrett Haag; Smith, Graham O (DNR); Heusser, Heather A (DNR); Fair, Holly S (DNR); Jamie M. Long; Jason Bergerson; Jesse Chielowski; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Keith Lopez; Laney Vazquez, Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Matt Armstrong; Melonnie Amundson; Franger, James M (DNR); Morgan, Kirk A (DNR); Umekwe, Maduabuchi P (DNR); Pat Galvin; Pete Dickinson; Peter Contreras; Rachel Davis; Richard Garrard; Richmond, Diane M; Robert Province; Ryan Daniel; Sandra Lemke; Scott Pins; Pollard, Susan R (LAW); Talib Syed; Tina Grovier (tmgrovier@stoel.com); William Van Dyke, Zachary Shulman Subject: Public Notice Other -17-056 Attachments: Oth-17-056 Public Hearing Mtn for Reconsideration.pdf Please see attached Notice Of Hearing. Docket Number: OTH-17-056 Motion for Reconsideration Redoubt Unit 3A Well Violations Jody J. Co(ombie .AOGCC Specia(.Assistant .A(aska. Oi(andGas Conservation Commission 333 West Tf .Avenue .Anchorage, .A(aska 995oi Office: (907) 793-1221 Fax: (907) 276-7542 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 Jody Colombie at 907.793.1221 or iodv.colombie@alaska.aov. Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 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 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 E 0 u v ,0u'o O ,o yy CY, N O. aNOQ�-C ELI c& > O� UQaG'y o w — a N ¢ N O O O Q! c W RECEIVED JUL 16 20118 AOGCC STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Redoubt Unit 3A (RU 3A) Well Violation Docket No. OTH-17-056 (PTD 2161700) COOK INLET ENERGY'S REQUEST FOR RECONSIDERATION OF OTHER ORDER NO. 142 Pursuant to AS 31.05.080(a), Cook Inlet Energy, LLC ("CIE") hereby requests reconsideration by the Alaska Oil and Gas Conservation Commission ("AOGCC" or "the Commission") of Other Order No. 142 in Docket OTH-17-056, dated June 25, 2018 ("the Order"). In the Order, the Commission failed to acknowledge facts presented at the informal review on April 10, 2018 and rejected CIE's requests that the Commission reduce the civil penalties imposed and revise the scope of its request for information. CIE respectfully requests that the Commission grant reconsideration of the Order and issue a new decision imposing civil penalties that are commensurate with the violations and applicable mitigating factors, and requesting only that information that the Commission is permitted to request under applicable law. Docket No. OTH-17-056 Page 1 of 13 BACKGROUND On March 15, 2018, the Commission issued a Notice of Proposed Enforcement Action ("the Notice") to CIE alleging that CIE violated 1) 20 AAC 25.4020 and the provisions of Rule 8 of Administrative Injection Order ("AIO") 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication leakage or lack of injection zone isolation is indicated in Redoubt Unit Well 3A ("RU - 3A"); and 2) Rule 6 of AIO 32 requiring CIE to perform an AOGCC-witnessed Mechanical Integrity Test ("MIT") once RU -3A commenced injection for the first time. The Notice proposed a civil penalty of $25,000 for each of the two alleged violations and requested information from CIE regarding CIE's internal regulatory compliance programs and tracking systems and a "Root Cause Analysis" for each violation. CIE requested an informal review of the Notice. The informal review took place on April 10, 2018 and was attended by George Morris, Senior Vice President of Engineering and Geoscience, and David Pascal, Production Manager, for CIE; and Senior Petroleum Engineers Jim Regg and Chris Wallace for AOGCC.' Prior to the informal review, CIE provided the Commission with six documents, including: a current wellbore diagram for RU -3A; a timeline of events related to each violation at 1 Affidavit of D. Pascal at ¶ 6. Docket No. OTH-17-056 Page 2 of 13 RU -3A; a graph depicting hourly data of inner and outer annulus pressures at RU -3A; documentation of the initial passed MIT that CIE conducted at RU -3A prior to startup; and hourly data for July 1, 2017 to April 1, 2018 on a compact disk .2 At the informal review, CIE confirmed that it was not contesting the violations alleged in the Notice but requested that the proposed penalties for each violation be reduced based on several applicable mitigating factors and asked that the Commission withdraw its request for information regarding CIE's internal operations. CIE discussed the root cause for the two alleged violations and confirmed that it had mitigated the violations by conducting a successful MIT in April 2017 prior to startup of RU -3A, and by immediately informing AOGCC when it determined that a potential leak existed.' CIE also established that it is "committed to an increased level of oversight and review of established training and process protocols for employees governing injection operations," which will "help prevent further occurrence" of the violations.' On June 25, 2018, the Commission issued its Order formally assessing a civil penalty of $50,000 for violating Rules 6 and 8 of AIO 32 and 20 AAC 25.402, and 2 Id. ' D. Pascal Affidavit at ¶¶ 8-9, 12. ' Order at 4-5. Docket No. OTH-17-056 Page 3 of 13 (D requiring that CIE provide AOGCC with: 1) a detailed descripti of CIE's Z Underground Injection Control ("UIC") regulatory compliance program; 2) details of CIE's tracking system for determining when MITs are required, including contingencies for wells shut in at the time the MIT is due, procedures for notifying AOGCC, and C's processes for determining the MIT due date and identification of past due welUs;33)detailed description of CIE's non-UIC AOGCC regulatory compliance program, including CIE's tracking system for determining when compliance requirements are due; 4) a "Root Cause Analysis" addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day; and 5) a "Root Cause Analysis" addressing the failure to complete an AOGCC- witnessed MIT once the well commenced injection and stabilization was achieved.5 The civil penalties imposed and information requested by the Commission in the Order are identical to the civil penalties imposed and information requested in the Notice. 5 Order at 5. Docket No. OTH-17-056 Page 4 of 13 6 0 U 'L 0 ate,-'�Ci „aj aiorn.c w °crn;v z �u.w N Q N O o�o. 0 ARGUMENT 1. The Commission Failed to Account for Mitigating Factors and Information Presented at the Informal Review When Assessing Civil Penalties Against CIE. The civil penalties imposed by the Order are not supported by the facts discussed in the Order or the information presented by CIE to Mr. Regg and Mr. Wallace at the informal review. The combined amount for the two one-time civil penalties— $50,000—is equal to half of the maximum initial civil penalty the Commission may impose pursuant to AS 31.05.150(a). The Order does not explain the basis for the assessed penalties, does not discuss the mitigating information provided to Mr. Regg and Mr. Wallace during the informal review, and does not consider many of the factors the Commission is required to address when assessing a civil penalty. When determining the amount of a civil penalty, the Commission is required to consider the following: (1) the extent to which the person committing the violation was acting in good faith in attempting to comply; (2) the extent to which the person committing the violation acted in a willful or knowing manner; (3) the extent and seriousness of the violation and the actual or potential threat to public health or the environment; (4) the injury to the public resulting from the violation; (5) the benefits derived by the person committing the violation from Docket No. OTH-17-056 Page 5 of 13 the violation; (6) the history of compliance or noncompliance by the person committing the violation with the provisions of this chapter, the regulations adopted under this chapter, and the orders, stipulations, or terms of permits issued by the commission; (7) the need to deter similar behavior by the person committing the violation and others similarly situated at the time of the violation or in the future; (8) the effort made by the person committing the violation to correct the violation and prevent future violations; and (9) other factors considered relevant to the assessment that are adopted by the commission in regulation.6 — The Order does not address the first two factors or factors 5, 6, or 8, all of which were discussed by CIE during the informal review. The Order does discuss factors 3, 4, and 7 but reaches conclusions regarding these factors that are not supported by the facts stated in the Order or the information presented at the informal review. The Order confirms that "no injury to the public occurred" as a result of CIE's failure to complete the initial post-injection MIT (factor 4), but then states that "the potential wellbore failure posed an obvious threat to both public health and the environment" (factor 3).1 The Order cites no facts to support its conclusion that CIE's 6 AS 31.05.150(g)(1)-(9). ' Order at 4. Docket No. OTH-17-056 Page 6 of 13 delay in obtaining a post-injection MIT resulted in an "obvious threat to both public health and environment." To the contrary, the Order states that a successful AOGCC- witnessed MIT was completed December 23, 2017,8 confirming that no threat to public health or the environment existed as a result of CIE's delay in obtaining the AOGCC- witnessed MIT at RU -3A. In addition, CIE provided AOGCC with documentation confirming that CIE conducted a successful MIT prior to startup of RU -3A on April 14, 2017.9 The assertion that CIE's failure to obtain an AOGCC-witnessed MIT posed "an obvious threat to both public health and the environment" is thus not supported by, and is in fact inconsistent with, the facts stated in the Order and presented at the informal review. The Commission also appears to address factor 7 when it contends that "CIE's failure to comply with fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences."10 Again, this assertion is not supported by any facts in the Order and is inconsistent with other 8 Order at 3; see also D. Pascal Affidavit Exhibit 6. The Commission also issued Area Injection Order No. 32.001 on December 28, 2017 and determined that "water injection could safely continue" at RU -3A if CIE complied with the conditions of that order. Order at 3. 9 D. Pascal Affidavit at 19 and Exhibit 5. The Order does not acknowledge that CIE conducted an MIT prior to startup of RU -3A. 10 Order at 4. Docket No. OTH-17-056 Page 7 of 13 0 U U pp O C U � M Y aj aicCs C rn UQy'� o zsww aF _ a�0 o r N¢N O o c w statements made by the Commission in the Order. The Commission confirms that "CIE has committed to an increased level of oversight and review of established training and process protocols for employees governing injection operations,"11 and finds "CIE's implementation of the proposed actions to be satisfactory to help prevent further occurrence of these violations."12 These statements are at odds with the suggestion that the two one-time violations at issue in the Order "raise[] the potential" for similar more serious violations in the future. The Order also fails to discuss CIE's history of compliance with AOGCC's rules and regulations (factor 6), CIE's good -faith efforts to comply with AIO 32 and AOGCC regulations (factor 1), and the absence of any willful misconduct by CIE (factor 2).13 CIE presented facts during the informal review that are relevant to each of these factors.14 For example, CIE discussed that it has been fully compliant with the requirements of AIO 32.001 issued December 28, 2017, described in detail its good - faith efforts to comply with AOGCC rules and regulations both before and after it was notified of the violations, and provided detailed accounts of CIE's actions leading up 11 Order at 4-5. 12 Order at 5. 13 AS 31.05.150(g)(1)-(2) and (6). 14 See D. Pascal Affidavit at ¶¶ 8, 9, 11, 14 and Exhibits 2-6. Docket No. OTH-17-056 Page 8 of 13 E 0 u ti 0 0 o MY •E?N a a.cn��3 a aio�-c w crn v Z` www �d 9ons — a. 0 N Q N 0 � n � O rn� C _N W to the violations to demonstrate that CIE did not engage in willful misconduct.15 The Order states that the Commission considered two mitigating circumstances when assessing the proposed civil penalty, including the absence of known sources of freshwater in the Redoubt Unit and CIE's "demonstrated urgency in completion of the required MIT and in installation and testing of the required automatic well shut-in equipment" after receiving notification of the violations (factor 8). 16 But there is no explanation in the Order regarding whether or how the Commission accounted for these or any of the other mitigating factors discussed above when establishing the amount of the civil penalties imposed in the Order." CIE therefore respectfully requests reconsideration of the Order to allow the Commission to consider all of the AS 31.05.150(g) factors—including those addressed by CIE during the informal review—and to reduce the civil penalties accordingly. 15 Id. " Order at 4. " The Commission's failure to account for mitigating factors presented at the informal review is supported by the fact that the civil penalties imposed by the Commission in the Order are identical to the penalties proposed in the Notice. Docket No. OTH-17-056 Page 9 of 13 E O U pp O O U Of+1 aj morns UQpG'm Eo Z72 www 2 -0 U � � N N ¢ N0 O rn� c w 2. The Order Requests Information that AOGCC Does Not Have Authority to Obtain. Reconsideration of the Order is also warranted to revise the scope of the information requested from CIE by the Commission. CIE acknowledges that AOGCC has broad authority under its statutes and regulations to collect information from operators. AOGCC "has authority over all land subject to the state's police power [and] regulates to prevent waste, insure greater recovery, protect correlative rights and underground water, and further public health and safety."' 8 Under state statute, the Commission may collect reports, logs, directional surveys, and other subsurface information on wells for which the Commission has issued a permit to drill; oil and gas production records; and plans of development for a field or pool.19 Under AOGCC's regulations, the Commission may inspect detailed daily records from well operators, and may collect from operators well records, production volumes, monthly gas disposition data, reservoir pressure reports, and geologic data and logs.20 The Commission may also request any "information or 18 Gottstein v. State, Dept. of Natural Resources, 223 P.3d 609, 616 n.14 (Alaska 20 10) (citing AS 31.05.005(a); AS 31.05.027; AS 31.05.095; AS 31.05.100; AS 31.05.110; AS 31.05.030) (internal citations omitted). 19 AS 31.05.030. 20 20 AAC 25.230, 20 AAC 25.235, 20 AAC 25.270, 20 AAC 25.071.20 AAC 25.517. Docket No. OTH-17-056 Page 10 of 13 documentation regarding a matter within the commission's jurisdiction.1121 The Commission has broad jurisdiction over state wells, reservoirs, drilling, and production, and broad authority to prescribe through its statutes, regulations, and orders what operating companies may and may not do when operating in Alaska. The Commission does not, however, have explicit or implicit22 authority to regulate how operating companies choose to manage their internal business affairs in order to comply with AOGCC's regulations, orders, and rules. The Order's request for detailed information regarding CIE's regulatory compliance programs, processes, and tracking systems demonstrates an attempt by AOGCC to regulate how CIE chooses to manage its internal business policies and procedures. Such internal policies and procedures are not within the scope of the 21 20 AAC 25.300. 22 The Alaska Supreme Court has held that "administrative agencies have implied powers, relying on the premise that implied powers are sometimes necessary to the exercise of those powers that the legislature has expressly granted." Alaskan Crude Corp. v. State, Alaska Oil and Gas Conservation Comm'n, 309 P.3d 1249, 1255 (Alaska 2013) (internal quotation marks and citation omitted). For example, the court has held that the Commission has the implied power to determine what constitutes a natural gas exploration facility because it is necessary to exercise its express power to determine whether a well at a natural gas exploration facility meets criteria that exempt it from oil discharge prevention requirements. Id. Here, review of CIE's internal procedures and policies is not "necessary to the furtherance" of the Commission's express power because the Commission does not have the express power to regulate an operating company's internal affairs. How CIE chooses to run its business is not necessary for the Commission to know in order for it to exercise its express powers. Docket No. OTH-17-056 Page 11 of 13 Commission's jurisdiction. The Commission may require that CIE comply with AOGCC's regulations and rules, and may penalize CIE for failing to do so,23 but the Commission does not have authority to regulate how CIE elects to organize and manage its internal business affairs in order to meet those requirements. The Commission's request for CIE's internal compliance policies and procedures is thus neither a request for information that AOGCC has explicit authority to request under statute or regulation, nor a request for "information or documentation regarding a matter within the commission's jurisdiction." CIE therefore respectfully requests that the Commission withdraw the first three requests for information in the Order. Regarding the Order's last two requests for a "Root Cause Analysis" of each violation, CIE notes that it provided this information and supporting documentation to Mr. Regg and Mr. Wallace at the informal review .14 Nevertheless, CIE is happy to provide the Commission with this analysis again. 23 AOGCC enforces its statutes, regulations, and orders by issuing violations, obtaining injunctive relief, and imposing civil penalties on operators who fail to comply with those regulations, orders, and rules. AS 31.05.150-160. 24 D. Pascal Affidavit at 112 and Exhibit 3. Docket No. OTH-17-056 Page 12 of 13 CONCLUSION Based on the foregoing, CIE respectfully requests that AOGCC grant reconsideration of the Order to reassess both the civil penalties imposed and the information requested in Other Order No. 142. DATED this 16th day of July, 2018. Docket No. OTH-17-056 Page 13 of 13 PERKINS COIE LLP Attorneys for Cook Inlet Energy, Inc. By: Elena M. Romerdahl, Alaska Bar No. 1509072 Eric B. Fjelstad, Alaska Bar No. 9505020 V c 0 FF STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Redoubt Unit 3A (RU 3A) Well Violation Docket No. OTH-17-056 (PTD 2161700) AFFIDAVIT OF DAVID PASCAL STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) The undersigned, after first being duly sworn, states as follows: I, David Pascal, am over the age of 18, competent to testify, and have personal knowledge of the matters stated in this affidavit. 2. I am the Production Manager at Glacier Oil and Gas Corporation ("Glacier") and its subsidiaries, Cook Inlet Energy, LLC ("CIE") and Savant Alaska, LLC ("Savant'). My business address is 601 W 5th Avenue #310, Anchorage, Alaska, 99501. 3. I have been employed at CIE since September 2013 and have held the position of Production Manager since August 2014. Prior to that, I held the position of Reservoir Engineer. 4. As Production Manager at CIE, I am responsible for day to day production and maintenance operations at all CIE facilities including the Redoubt Unit 5. In March 2018, CIE received a Notice of Proposed Enforcement Action ("Notice") from the Alaska Oil and Gas Conservation Commission ("AOGCC") regarding the Redoubt Unit 3A ("RU -3A") well stating that CIE failed to report to AOGCC within the time required by regulation a pressure communication at RU -3A and failed to complete an AOGCC-noticed Mechanism Integrity Test ("MIT") of RU -3A. The Notice proposed that CIE provide information to AOGCC and a $50,000 civil penalty. AFFIDAVIT OF DAVID PASCAL Docket No. OTH-17-056 -1- 6. CIE requested an informal review of the Notice with AOGCC. The informal review took place on April 10, 2018. My colleague, George Morris, Senior Vice President of Engineering and Geoscience for Glacier, CIE, and Savant, and I both attended the informal review on behalf of CIE. Senior Petroleum Engineers Jim Regg and Chris Wallace attended the informal review on behalf of AOGCC. 7. Prior to the informal review, I submitted five documents and a compact disk with data to AOGCC, including: a current wellbore diagram for RU -3A; a timeline of events related to each violation at RU -3A; a graph depicting hourly data of inner and outer annulus pressures at RU -3A; documentation of the initial passed MIT that CIE conducted at RU -3A prior to startup; and hourly data for July 1, 2017 to April 1, 2018 on the compact disk. The five documents and the transmittal letter dated April 5, 2018 are attached to this affidavit as Exhibits 1- 6. 8. During the informal review, we explained the timeline of events leading up to the December 18, 2017 notice to AOGCC of pressure communication. We explained to Mr. Regg and Mr. Wallace that we reported the pressure communication at RU -3A on December 18, 2017 because that is the date when we determined that the pressure was e to a small leak. Prior to that date, we were carefully monitoring, conducting tests, and assessing the pressure data to ensure the anomalies were not caused duto thermal expansion. 9. We also reviewed with Mr. Regg and Mr. Wallace the internal CIE documentation of the successful MIT that CIE conducted at RU -3A on April 14, 2017 prior to startup. See Affidavit Exhibits 3, 5. The April 14, 2017 MIT confirmed that RU -3A was fully functional and did not present a risk of health or safety to the public. We also discussed with Mr. Regg and Mr. Wallace the fact that the successful AOGCC-witnessed MIT completed on December 23, 2017 confirmed that our internal MIT was accurate, and that RU -3A continued to present no risk to public health or the environment. 10. We also discussed the civil penalty amount proposed in the Notice of Proposed Violation with Mr. Regg and Mr. Wallace. We confirmed that we were not AFFIDAVIT OF DAVID PASCAL Docket No. OTH-17-056 -2- R contesting the proposed violations but requested that the civil penalties be reduced in light of several mitigating circumstances, including: that CIE conducted a successful MIT prior to well startup, that the subsequent AOGCC-witnessed MIT was also successful, that CIE did report the pressure communication at the point that it believed it to indicate a potential problem, and that no injury to the public occurred. 11. We also brought to the attention of Mr. Regg and Mr. Wallace that we acted urgently and completed a state -witnessed MIT test when AOGCC pointed out our deficiency in the witness after we notified them of a possible leak. 12. We also discussed the general timeline of events leading up to the two violations, see Affidavit Exhibit 3, and explained to Mr. Regg and Mr. Wallace the "root cause" of each violation: that we reported the pressure communication at RU -3A to AOGCC immediately after we confirmed that it was indicative of a potential leak; and that we were aware of the requirement in Administrative Injection Order 32 ("AIO 32") to conduct an MIT test but the field failed to notify AOGCC for witness while the initial MIT was conducted. 13. Finally, we briefly discussed with Mr. Regg and Mr. Wallace CIE's internal compliance policies and programs and confirmed that we are aware of and intend to comply with all rules in Injection Order 32 and all AOGCC regulations. We also enquired about AOGCC requirement and overreach on the corrective actions that required information on other programs and internal policies not related to the Administrative Injection Order in question. 14. As the Order confirms, no injury to the public has occurred at or near RU- 3A as a result of the two violations. AOGCC confirmed through its successful MIT and Area Injection Order No. 32.001 issued December 28, 2017 that RU -3A exhibits at least two competent barriers to the release of well pressure and that the well's condition does not compromise overall well integrity so as to threaten human safety or the environment. We also commented that we have been fully compliant with the requirements of Area Injection Order No. 32.001, including the monthly reporting requirement. AFFIDAVIT OF DAVID PASCAL Docket No. OTH-17-056 -3- 15. At the end of the informal review, Mr. Regg and Mr. Wallace confirmed that what we presented during the informal review would be considered in AOGCC's final decision. 16. The AOGCC Decision and Order No. 142 is identical to the Notice of Proposed Violation and does not list, discuss, or take into account any of the information we provided to Mr. Regg and Mr. Wallace during the informal review. DATED: July 16, 2018. Cosa Inlet Energy, LLC 601 West 5th Avenue, Suite 310 Anchorage, AK 99501 Telephone: 907.334.6745 Facsimile: 907.334.6735 Subscribed and sworn to before me this 16 day of��- 2018. AFFIDAVIT OF DAVID PASCAL Docket No. OTH-17-056 &."- 9plltry Pulllic Iri and for Alaska My commission expires: h • 2b 2,V 13 April 5, 2018 Mr. Hollis French Chair, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501-3572 Subject: Re: Docket Number OTH-17-056 Dear Commissioner French, Glacier Oil and Gas as owner/operator of Cook Inlet Energy LLC (CIE) is respectfully submitting the following attachments that will be used in discussion during the informal hearing scheduled for April 10, 2018. I can be reached at (907) 433-3822 or at dpascalcrTglacieroil.com for any further information. Sincerely, David Pascal Production Manger Cook Inlet Energy A Glacier Oil and Gas Company Attachments 1. RU -3A: Current Wellbore Diagram 2. RU -3A: Timeline of Events 3. RU -3A: Graph Depicting Hourly Data of Inner and Outer Annulus Pressures 4. RU -3A: Initial Passed MIT Test 5. RU -3A: AOGCC Witnesses Passed MIT Test 6. RU -3A: Hourly Data in .x1xs format from July 1, 2017 to April 1, 2018 (on disk) D. Pascal Affidavit EXHIBIT 1 Page 1 of 1 GLACIER Attachment 1 RU -03A WI -Current Completion Schematic 10112" Hale 4 1 I %9 518' Liner Hanger TOL ® 7,500' MD Pedora0one MD I TVD 7.700 7.80 6.20-6.219 ].005-].016 6.223-8.233 Top of 7 -5/8"x9 -W" Liner Q 9,103' MD 1z vb^ xol. 812' Hole Pod&stim a ereds PaRlni stini aMD ti MO 1570615997 121p&t2i11 15785-15M0 1582]-1584] 12132-12147 15031-15731 15862-15802 1215&12173 1588&15873 15920.15940 1220-1221] 15925.15973 t 5940.15980 inTr-12233 15945.159M 15052-19772 1230112319 16052-16066 19971hili 8 1232312336 16081.160M 1614418164 12376-12392 1818616155 1239312409 1819046210 1241412435 1625516275 1246512429 16250 16270 1627116295 1248012497 16275-16282 163151035 1251312573 16]7.6.40335 1633618346 1253612538 16356-19378 12546-12563 6 974" Hole Date: 5Ju1-17 Version: Final Tubing hanger- 4.909' MCA Box top mnnedion I 4.5" Geoi Box btm connection -10 3 816' 30" 150#A416 1 260 MO ID -28" Welded 260 TVD 4-112" 15.1# P110 Geomnn - ID 3.832" 7500' MD 13318" 1 6ML40 I 750TMD ID -12.25" I BTC I 3,024' TVD 67" fish left in hole -21' of lower gun,1 coupler 37" gun and bull now Obstrudion tagged @ 16352' 52'fish left to hole -6" of lower gun, 1 miler. 38" bun and bull now 412" 15.18 P-110 116,4112- KID ID -3.832^ GeoConn 12,650'TVD D. Pascal Affidavit EXHIBIT 2 Page 1 of 1 9618^ 4T# L-80 9.335 MD ID -8.60" BTC 41111 TOC (CBL): 12,9]5' MD Window ] 518" 29.M L 82 14,176' 731) ID -6.T5' N 41521 ID,962'Tgi C 67" fish left in hole -21' of lower gun,1 coupler 37" gun and bull now Obstrudion tagged @ 16352' 52'fish left to hole -6" of lower gun, 1 miler. 38" bun and bull now 412" 15.18 P-110 116,4112- KID ID -3.832^ GeoConn 12,650'TVD D. Pascal Affidavit EXHIBIT 2 Page 1 of 1 Attachment 2 RU -3A Timeline 26 March: Well Spud 14 April: MIT Test Aug 14: Annular Pressure 5 psi 6 Nov: Annular Pressure 1,000 psi 1 14 Feb: Automatic Shut -down Test 1 D. Pascal Affidavit EXHIBIT 3 Page 1 of 1 N Q 3,000 2,500 RMI Attachment 3 RU -3A Hourly Annular Pressure Trend 1,000 500 0 May 2, O Inner Annulus Pressure (psi) 0 Outer Annulus Pressure (psi) 1 D. Pascal Affidavit EXHIBIT 4 Page 1 of 1 Cook Inlet Energy_ Operator. Glacier OI and Ga CoraeralNn Attachment 4 T..• R e kee oe,.rw Daily Drilling Report Tel2: UWI: 50-733-2050400.00 Rig: Glacier 35 Well Type: Oil DATE: 14 -Apr -2017 Spud: 26 -Mar -2017 Hr:9:00 rinished Drilling Hr: Rig Release: Hr: Days from Spud: 19.62 Operations at 6:00 : CLEANING PITS Total Days: 71 24 Hour Summa : CLEAN PIT, DISPLACE ANNULAS W/ CORROSION INHIBITOR, LAND HANGER, R/U AND RUN CBL. 24 Hour Forecast: SLICK LINE GAUGE RING, CLEAN OUT 41/2 LINER Surface Location: 1AFE Days: AFE #: 16001":5 Depth at 24:00 16AB2.0Cft Progress: 0.00ft Ground: ft MRCP: psi 0 ow AFE Estimate: $6,491,727 Temp: 53' F POL: I Cut or Fill: ft Last Press Test: Daily Cost: $96.485 Weather: Clear and Calm I Correct-Grd: It Last BOP F/T: 4/5/2017 Cum Cost: $4,907,713 Mud Type: Produced H2O I RT -Ground: It LOT/FIT EMW: 12.8 ppg AFE Other: 0 Mud Co.: MI Swaco I RT: It KT: bbl Total Cost: $4,907,713 TIME I DEPTH DENSITY VIS PV YP GELS ECD WL FC PH (hr) (ft) (Ppg) (e/qt) (cp) (Ib YP 10s/tOm/30m (ppg) (cc) 1/32 in SOLIDS MBT CI Ca++ K+ OIL (A ppb)(Ppm) (%) 90 16482.00 8.4 26 02211 21:00 78482.00 8.4 28 MUD ADDITIVES I AMOUMI Units 11, Deviation Surveys Depth /Inc. /Azimuth BHA O.D. (in) I.D. (in) Length (ft) ruvis sx MI Bar SK me sx Actimul RD sx ®® ersawet SK ® ube 776 sx alcium Chlonde 1 SK u -Vis sK � afe-Garb 20 2 sx eepClean 3 drum Mud losses daily bbl CUM 0 bbl ker 1 Shaker 2 Shaker 3 Shaker 4 Total Length: ft Spm Density HIM gpm Density 00 170 770 Total Weight: Ib Equipment Centrifuge # 1 Centrifuge #VOO verfloW 00 170 170 Wt Below Jar: Ib 00 170 170 ndefflOW 770 BHA Hours: hrs PUMP STROKE LINER SPM VOLUME PRESS EK. Pump Output Slaw Pump Rete Preswre Pressure Pressure Pressure # MODEL Company linl (in) ((mm) loci) (%) Ibbvsut Deplh MhV lad stkl (40 Wk) (50 stk) (60 sa) 7 PZL GD 11 6 60 23265.7374 15W 96 0.092 14175 10.2 510 2 PZL GD 17 6 1 46 1 17837.0653 1125 96 1 01192 1 14175 I 10.2 I 510 TYPE SERIAL NOZZLES (in) EPTH EPT DAY DAY TOTAL OTAL ROP BIT AVG BR CONDITION tN Size(in) Mfgr NUMBER Or TFA(in-) m(6) OUr In) (ft) hire (ft) hrs ft/hr WT RPM 1 0 D L B G O R Bil DP DC Jet Vel HHP h m• No (in) Apv_ m) (in) AV(ftmun) (IUs) f t Hole Dra (PUJSO): Rotary WT/Tor ue: Act. I AIIOW Hook Load: / Ib Ib ( Rib I Ib (static) MOP: Klb TIME BREAKDOWN own 18. . RI Repairs 172 1527.2 SI' 8 Cut Drill Line 45016Drill Stm Tesl 10. surve 3.2517. P u Back 4. RiMove11. WIretine 91.5018. Cemen .. Other PS414. 5.Wailing on 6 Circ 147.5012. Cas' 6 Cementi 4.0 19. Fishi 36.00 . Trouble Time 193.7513. Waft on Cemem O.Oin:ctlonalWork6. 2.0014. Ni e U BOP 5.5021. Waiti on Others OTAL HOURS Vaab.1422 wenman a - Kesource tnwgy SOMIMS /nc. (403) 245-0220 www.resoumeener9yso/u11onS.c0m Apr/ 26 2017 Page 1 o/ 3 D. Pascal Affidavit EXHIBIT 5 Page 1 of 3 Cook Inlet Energy_ Daily Drilling Report Te12 r..,.... �i,�..,. UWI: 50-733.20504-00-00 WELL: RU -03A DATE: 14 -Apr -2017 Remarks: SAFETY/PLANNING NO ACCIDENTS / NO SPILLS OPERATIONS PERSONNEL ON BOARD 2 -GLA 14 -NORDIC 2- BEACON 2 -MI 2-MAGTEC 1 -WAR 1 -BCS i-BRAMMER 9-TIW 2-POL FUEL ON BOARD = 17,657 Gal. FUEL USED= 596 Gal. POTABLE WATER = 19,298 Gal. DRILL WATER= 28,630 Gal. DRILL WATER IN LEGS = 16,422 Gal. Vim fror4 Time to I Hours Code I Comments 00:00 01:00 1 1 6 LID 2 JNTS. OF 4 1/2, R/U TO REVERSE CIRC. PRODUCED WATER 6 CORROSION INHIBITOR. 01:00 05:30 4.5 14E CLEAN PIT 8, VAC SYSTEM DOWN RIG HANDS BUCKET OUT OF PIT WHILE VAC SYSTEM WAS BEING WORKED ON. 05:30 07:00 1.5 5 REVERSE CIRCULATE AND DISPLACE ANNULUS WITH INHIBITED FLUID AT 5 BPM, 450 PSI. 07:00 09:30 2.5 12D LID SINGLE OF CASING AND PICK UP SHORTER JOINT FOR SPACE OUT. M/U HANGER AND PUP JOI INSTALL NEW HANGER SEALS. INSTALL NEW ORING AND WU LANDING JOINT. CONNECT TOP DRIV _ O STRING. DRAIN STACK AND MAKE SURE LOCK DOWN PINS BACKED COMPLETELY OUT. SLACK FF STRING. ROTATE STRING TO GET INTO LINER TOP AND TOP OF PBR. LAND HANGER WITH 35K DOWN ON SEAL ASSEMBLY. PICK UP TO 25K OVERPULL CONTINUE PULLING FOR 50K OVERPULL N LATCH ASSEMBLY. HOLD OVERPULL FOR 5 MINUTES. GOOD PULL TEST. IRELAND HANGER. 145K PICK UP, 110K SLACK OFF. 0930 10:30 1 12D RUN IN LOCKDOWN PINS. PRESSURE TEST VOID TO 5,000 PSI. 5MINUTES. GOOD TEST. 10:30 12:00 1.5 12D RIG UP HIGH PRESSURE LINE TO ANNULUS. PRESSURE TEST ANNULUS SEALS, AND HANGER TO ,500 PSI. 30 MINUTES. GOOD TEST. 12:00 12:30 0.5 12D BREAK OUT TOP DRIVE. RIG DOWN W EATHERFORS CASING EQUIPMENT. 12:30 16:00 3.5 11F HOLD PJSM. R/U POLLARD E -LINE. RIH WITH CBL T/ 10,000'. LOWER E -LINE SHEAVE BECAME MOBIL HEN TAKING PICKUP WEIGHT. SECURE LOWER SHEAVE. POOH, CHANGE LOWER SHEAVE LOCATION. PIECES OF SEAL FROM LATCH ASSEMBLY ON CBL CETRALIZER. 16:00 20:30 4.5 SD IRIH WITH CBL. STARTED LOGGING DOWN F/12,500 - TM6,140' WERE WE TAGGED UP FIRM, PICK ND ATTEMT TO BREAK THROUGH NO GO POOH RID E -LINE UNIT 20:30 23:00 2.5 5D CONTINUE INJECTING DOWN RU -1, HOUSE KEEPING AROUND RIG FLOOR, ASSIST SLICK LINE ON RU -7B. 23:00 23:30 0.5 5D lRIU SLICK LINE ON RU -3A 23:30 00:00 0.5 5D RIH W/ 3.0 GAUGE RING JUNK BASKET - Total 24 - -- -- Version 1422 Wellman 9 - Resource Energy Solutions Inc. (403) 245-0220 w resourceenergysolutions. con; April 26 2017 Page 2 of 2 D. Pascal Affidavit EXHIBIT 5 Page 2 of 3 J UNIT #3 GLACIER PSI 0 3000 11:00 05 :10 Apn�.�w5 PS"r .15 W; i -k SPa l s � n 5,c l leol :20 ...- .. :25 :30 :35 40 45 50 55 12:DD :05 :. _: ._ ..... 10 - 15 :20 25 30 :35 40 :45 50 :55 D. Pascal Af davit XHIBIT 5 P ge3of3 Attachment 5 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Mechanical Integrity Test Submitto: "mrsaa alaskagwAODCCInspecbme0aliakaum, phcebe.brooksisslaske.aov OPERATOR: Gleder Oil and Gas FIELD / UNIT / PAD: Osprey Platform -Redoubt Unit DATE: 12123/17 OPERATOR REP: Lance Anderson AOGCC REP. Brian Bixbv alms.Wallace4alaska pov Well RU -9A Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD 2161]00 Type Inj W Tubing 1970 1970 1985 1965 Type Test P Packer ND 5989 BBL Pump 3.5 IA 425 1 2810 2810 2810 1 Interval 0 Test psi 2500 I BBL Realm 1 3.5 OA 25 1 35 37 37 Result I P Nn4s: Test for anmlnletralive.1smu'al papanka-k In 250) psi. Well Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type Inj Tubing Type Teat Packer ND BBL Pump IA Interval Test psi BBL Return I OA ResMIN New; Well Pressures: Pretest Inkial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type Inj TubingTypa Test Packer ND BBL Pump IA Interval Teat psi BBL Retum OA Result Ilsesa: Wall Pressures: Pretest Initial 15 Min. 30 Mi, 45 Min. 60 Min. PTD Type Inj Tubing Typa Test Parker ND 8131 Pump IA Interval Test psi BBL Return OA Resuft N94£: Wall Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type MI Tubing Type Teat Packer ND BBL Pump IA Interval Test psi BBL Return OA Result Nota: Wall Pressures: Present Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type Inj TubingType Test Packer NO BBL Pump IA Imerval Test psi BBL Return OA Result I&I Well Pressures: Pretest Initial 15 Min. WMin. 45 Min. 60 Min. PTD Type Inj Tubing Type Test Packer ND BBL Pump N Interval Test psi BBL Return On RasuN NI Wall Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type Inj Tubing Type Test Pader NO BBLPump IA Interval Test psi BBL Return OA Result sales. Wine IW COMA W=W m G=Gas Ss Sum 1= mansblal Wa9eaaler N=NCI InIadYq TYPE TEST Colina MTERMLC.. P= P—na Tall 1= Iniul can o=GNH In.. In NOIuI 4=Four Veal rims a'a F¢WiKO N' Va— 0- GNel lasmee In nils) Form 10426 (Revised 01201]) ran Ru U 12-MAe aensa.nnx nanuacaes P=Pau F -Feil D. Pascal Affidavit EXHIBIT 6 Page 1 of 1 7 Colombie, Jody J (DOA) From: Romerdahl, Elena M. (Perkins Coie) <ERomerdahl@perkinscoie.com> Sent: Wednesday, August 01, 2018 4:31 PM To: Colombie, Jody J (DOA) Subject: RE: Docket Number OTH-18-037 Jody, I just heard back from my client regarding a date for the hearing. We would like to request Wednesday, October 24 for the hearing date if that day is still available. Thank you. Elena Elena Romerdahl I Perkins Cole LLP COUNSEL 1029 West Third Avenue Suite 300 Anchorage, AK 99501 D. +1.907.263.6914 M. +1.202.487.8657 E. ERomerdahl(a)oerkinswie.com PeRKINScoie From: Colombie, JodyJ (DOA)[mailto:jody.colombie@alaska.gov) Sent: Wednesday, July 25, 2018 8:42 AM To: Romerdahl, Elena M. (ANC) <ERomerdahl@perkinscoie.com> Subject: RE: Docket Number OTH-18-037 MW From: Romerdahl, Elena M. (Perkins Coie) <ERome rdahICo) perkinscoie.com> Sent: Tuesday, July 24, 2018 4:08 PM To: Colombie, Jody 1 (DOA) <jody.colombie@alaska.aov> Cc: Barbara Kruk <bkruk@elacieroil.com> Subject: RE: Docket Number OTH-18-037 Jody, Thank you. I will confer with my client and be in touch this week. Elena Elena Romerdahl I Perkins Coie LLP COUNSEL 1029 West Third Avenue Suite 300 Anchorage, AK 99501 D. +1.907.263.6914 M. +1.202.487.8657 E. ERomerdahiRverkinwoie.com PeRKwscoie From: Colombie, JodyJ (DOA) [mailto:iodv.colombie@alaska ¢ov] Sent: Tuesday, July 24, 2018 11:06 AM To: Rome?dahl, Elena M. (ANC) <ERomerdahl@perkinscoie.com>; Barbara Kruk <bkruk@Qlacieroil.com> Subject: Docket Number OTH-18-037 Please see attached. Barbara can you please forward this email to Carl Giesler. Jody J• Co(ombie AOGCC Specia(Assistant Alaska Oi(andCGas Conservation Commission 333 'Nest 711 Avenue Anchorage, Alaska 99501 Office: (907) 793-1221 _'ax: (907) 276-7542 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 Jody Colombie at 907.793.1221 or iodv.colombieQalaska.aov. NOTICE: This communication may contain privileged or other confidential information. If you have received it in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. NOTICE: This communication may contain privileged or other confidential information. If you have received it in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. THE STATE 01ALASKA GOVERNOR BILL WALKER July 24, 2018 Elena M. Romerdahl Counsel for Cook Inlet Energy Perkins Coie 1029 West Third Avenue, Suite 300 Anchorage, AK 99501-1981 Alaska (til and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov Re: Docket Number:9�H-�= 7 04 h —sm-gas-1WITteasu W e 1 e reek 3 we s 6'�rar�sid�%r h/Gh- pier Dear Ms. Romerdahl: The Alaska Oil and Gas Conservation Commission is willing to offer you a hearing on your Motion for Reconsideration regarding our Other Order No. 142. If you would like to request a hearing on this matter, please call Jody Colombie at (907) 793-1221 to schedule within five business days. Sincerely, Hollis S. French Chair, Commissioner cc: Carl Giesler, CEO Cook Inlet Energy, LLC 601 West 5h Avenue, Suite 310 Anchorage, AK 99501 l•J GLACIER April 5, 2018 Mr. Hollis French Chair, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501-3572 Subject: Re: Docket Number OTH-17-056 Dear Commissioner French, RECEIVED APR 0 5 20118 Y1OGCC Glacier Oil and Gas as owner/operator of Cook Inlet Energy LLC (CIE) is respectfully submitting the following attachments that will be used in discussion during the informal hearing scheduled for April 10, 2018. I can be reached at (907) 433-3822 or at dpascalna glacieroil.com for any further information. Sincerely, JAN David Pascal Production Manger Cook Inlet Energy A Glacier Oil and Gas Company Attachments 1. RU -3A: Current Wellbore Diagram 2. RU -3A: Timeline of Events 3. RU -3A: Graph Depicting Hourly Data of Inner and Outer Annulus Pressures 4. RU -3A: Initial Passed MIT Test 5. RU -3A: AOGCC Witnesses Passed MIT Test 6. RU -3A: Hourly Data in .xlxs format from July 1, 2017 to April 1, 2018 (on disk) GLACIER Attachment 1 RU -03A W1 -Current Completion Schematic 1011x" Hole 412' X 9510' Liner Hanger TOL @ 7,60T MD Perforations DD ],]80-7BUO 6,2IX1-6.219 7,8054,816 6p23-6,233 Top of 7-&5' x 93/8' Liner @ 9,103' MD 121/6• Hole 81M' Hole Perla bum InWxam POdlntereBN &Imeun 4I91), 4WD MD 1578615200 uNg6m12111 15MS15794 15327-15647 12132-12147 1583145943 15952.15662 1215612173 1599&15079 15920-15940 12202-12217 1592515954 1594615900 12217-12233 15945-15947 16954-1008 12304-12319 19957-16986 1607616096 12323-12336 19081-18000 1614416164 123]8-12392 1616618185 1239512409 16218 1241612435 162]5 1246612-1]9 16266182]0 18295 124661249] 162]51623] r1.3 12513-12529 1F13616335 18346 125361253963]8 1254612563 Date: 5 -Jul -17 Version: Final Tubiig harper -4.909' MCA Box top connection / 4.5' GwConn Box ben connection - ID 3.818' 30" 150#AAB 260'MD ID -28' I Welder! 260 -WO 4-12.15.1# P119 Ge0conn - ID 3.832' 75W MD 133/8^ BB#L20 3,507'MD I0-1225^ BTC 302 WD 9 &e" 478 LA0 8,332' MD ID -8.50" BTC 1,d18'WD TOC (CBLL 12,975' MD Window ji7 518" 1 29.7# LA0 1 14,176' MD ID -6.1&' 1 H dril 521 1 10,962 -WO 67' fish b4 in hole- 21' of Nwer gun, 1 coupler. 37' gun and bull now ObslruMion tagged @ IM52' 52' fish leo in hole - e' of lower gun, 1 collar, 36' Hun aM bull nolo 612^ 1551#P-110 16,482'M. ID -3.632• GeoConn 12,6BP WD RU -3A Timeline 26 March: Well Spud 14 April: MIT Test u 1 July: Well Start u ep ct 17 ov 17' ec � Aug 14: Annular Pressure 5 psi 6 Nov: Annular Pressure 1,000 psi +__ 1IIYi " 14 Feb: Automatic Shut -down Test Attachment 2 3,000 2,500 rm Attachment 3 RU -3A Hourly Annular Pressure Trend 1,000 500 May 23, 2017 Aug 10, 2017 Oct 27, 2017 Jan 13, 2018 0 Inner Annulus Pressure (psi) 0 Outer Annulus Pressure (psi) Apr 2, 2018 Cook Inlet Energy_ Operator. Glacier Oil and Gas Corporation Attachment 4 Reporting To: Stephen Ratcliff Daily Drilling Report Te12: Consultant Josh GupL.ToussaM Telt: UWI: 50.733.20504.00.00 1 Rig: Glacier 35 1 Well Type: Oil DATE: 14 -Apr -2 17 Spud: 26 -Mar -2017 Hr: 9:00 IFinished Drilling Hr. Rig Release. Hr: Days from Spud: 19.62 Operations at 6:00 : CLEANING PITS Total Days: 71 24 Hour Summary: CLEAN PIT, DISPLACE ANNULAS WI CORROSION INHIBITOR, LAND HANGER, R/U AND RUN CBL. 24 Hour Forecast: SLICK LINE GAUGE RING, CLEAN OUT 4 1/2 LINER Surface Location: I AFE Days: AFE #: 160016-0.0 Depth at 24:00 16,482.0(0 Progress 0.000 Ground: D MACP: psi 0 ppg AFE Estimate: $6,491,727 Temp: 53° F IPOL: Cut or Fill: it I Last Press Test: Daily Cost: $96,485 Weather: Clear and Calm Correct-Grd: it I Last BOP FIT: 41512017 Cum Cost: $4,907,713 Mud Type: Produced H2O RT -Ground: 0 LOTIFIT EMW: 12.8 ppg AFE Other: 0 Mud Co.: MI Swaco RT: 8 KT: bM Total Cost: $4,907,71 TIME I DEPTH DENSITY VIS I PVYP GELS (h0 101 (Ppg) IS") Ice) (IW100fe) 10M10mrJOm ECD WL FC PH SOLIDS MBT Cl Ca++ K+ OIL (ppg) Icc) t132m (%) (PDD) (ppm) (%) 09:00 116482.00 1 8.4 28 21:00 116482.00 1 8.4 28 MUD ADDITIVES Amount Units '�. Deviation Surveys Depth Am. lAzmuth BHA O.D. (n) I.D. (in) Length (e) Vis 6th Bar EM mN RD ax I assete776 axcium Chloride 1 sx VN ax (e -C" 20 2 sx epCWan 3 dAm dud braes daily ba ICUM o ba quipment Centrifuge 1111 Centrifuge # 2 Shaker 1 Shaker 2 Shaker 3 Shaker 4 Total Le it 170 gpm Density His gpm Density His 7 1170' Total Weight: b O verflm 170 2 1Wt Below Jar: It, 3 200 170 1 rlderBoo, 1 4 1 200 1 170 BHA Hours: he PUMP STRONE LINER SPM VOLIME PRESSPump Oupul Sbw Pump Rab presses praesuro praBee Preseee # MODEL connov (in) (m) (9Pn) (psi) (%1Ea. (bbVNk) Depth MAV (30atk) 1 (40 sal (50Mk) (60x) 11 PZL I GO 11 6 60 23265.7374 1500 1 96 1 0.092 1 14175 1 10.2 1 510 21 PZL GO 11 8 1 46 1 17831.0653 1125 1 96 1 0.092 1 14175 1 10.2 1 510 SERIAL NOZZLES (in) DEPTH EP DAY DAY TOTAL TOTAL ROP BIT AVG BIT CONDITION N Ses(in Mfw TYPE NUMBER OrTFA(10 W(M (8 (0) M (fl) hrs fl4m WT RPM 1 O D L B G O R BODP DC Jet VN HHP Hob PU/SO: No (in) AV(fdmin) (in) AV(Nmin) (IVs) Rotary WT I Torque: Act. I Allow Hook Load: MOP: Klb ! b Ib I fl4D I No (static) TIME BREAKDOWN n 18.00111. R' ib 17.25115. Pre9ael6 Test BOP 50.50 2. Other 11. 27.25 . S' 8 CN Drill Line 4. 16. DrNI Stem Test 3. Abandonment 10. Su 3. 17. PI Back 4. Mve 11. WleNre 91. 78. Oder W.R12Servim 5.Weill onCkc U7. 12. Ca 8 Cemem 4. 19. Fish TT193.7 13. Wag an Comm Z. 1/. NI U BOP .DimclionalWok 5. 21. Wa ' on OrdeN e. OTALHOURS Version 1422 Wellman 9 -Rem Energy SaMons Inc. (403)2450220 a%wreswwceenergysNu#ona.com APW262017 Page f o13 Cook Inlet Energy_ Daily Drilling Report Tele: i=ce n,yn T„, . Tai: UWI: 50-733-2050400-00 WELL: RU -03A DATE: 14 -Apr -2017 Remarks: SAFETY/PLANNING NO ACCIDENTS / NO SPILLS OPERATIONS PERSONNEL ON BOARD 2 -GLA 14 -NORDIC 2- BEACON 2. hill 2-MAGTEC 1 -WAR 1-BOS 1-BRAMMER 1 - TIW 2-POL FUEL ON BOARD = 17,657 Gal. FUEL USED= 596 Gal. POTABLE WATER = 19,298 Gal. DRILL WATER = 28,630 Gal. DRILL WATER IN LEGS = 16,422 Gal. ime froff Tlme to Hours Code Comments 00:00 01:00 1 6 /D 2 JNTS. OF 41/2 R/U TO REVERSE CIRC. PRODUCED WATER 8 CORROSION INHIBITOR. 01:00 05:30 4.5 14E LEAN PIT 8, VAC SYSTEM DOWN RIG HANDS BUCKET OUT OF PIT WHILE VAC SYSTEM WAS EING WORKED ON. 05:30 07:00 1.5 5 EVERSE CIRCULATE AND DISPLACE ANNULUS WITH INHIBITED FLUID AT 5 BPM, 450 PSI, 07:00 09:30 2.5 12D D SINGLE OF CASING AND PICK UP SHORTER JOINT FOR SPACE OUT. M/U HANGER AND PUP JOI INSTALL NEW HANGER SEALS. INSTALL NEW ORING AND M/U LANDING JOINT. CONNECT TOP DRIV O STRING. DRAIN STACK AND MAKE SURE LOCK DOWN PINS BACKED COMPLETELY OUT. SLACK FF STRING. ROTATE STRING TO GET INTO LINER TOP AND TOP OF PBR. LAND HANGER WITH 35K DOWN ON SEAL ASSEMBLY. PICK UP TO 25K OVERPULL, CONTINUE PULLING FOR 50K OVERPULL N LATCH ASSEMBLY. HOLD OVERPULL FOR 5 MINUTES. GOOD PULL TEST. IRELAND HANGER. 145K PICKUP, 110K SLACK OFF. 09:30 10:30 1 12D UN IN LOCKDOWN PINS. PRESSURE TEST VOID TO 5,000 PSI. SMINUTES. GOOD TEST. 10:30 12:00 1.5 12D G UP HIGH PRESSURE LINE TO ANNULUS. PRESSURE TEST ANNULUS SEALS AND HANGER TO ,500 PSI. 30 MINUTES. GOOD TEST. 12:00 12:30 0.5 12D BREAK OUT TOP DRIVE, RIG DOWN WEATHERFORS CASING EQUIPMENT. 12:30 16:00 3.5 11F HOLD PJSM. R/U POLLARD E -LINE. RIH WITH CBL T/ 10.000'. LOWER E -LINE SHEAVE BECAME MOBIL HEN TAKING PICK UP WEIGHT. SECURE LOWER SHEAVE. POOH. CHANGE LOWER SHEAVE LOCATION. PIECES OF SEAL FROM LATCH ASSEMBLY ON CBL CETRALIZER. 16:00 20:30 4.5 SO RIH WITH CBL. STARTED LOGGING DOWN F/12.500 - T/16,140' W ERE WE TAGGED UP FIRM, PICK ND ATTEMT TO BREAK THROUGH NO GO POOH RID E -LINE UNIT 20:30 23:00 2.5 5D ONTINUE INJECTING DOWN RU -1, HOUSE KEEPING AROUND RIG FLOOR, ASSIST SLICK LINE N RU -7B. 23:00 23:30 0.5 5D VU SLICK LINE ON RU -3A 23:30 00:00 0.5 5D RIH W/ 3.0 GAUGE RING JUNK BASKET Total 24 Verson 1422 Wellmn 9 - Resowce Energy Solutions Inc. (4031) 243-0220 minvneso energysolufionscom April 26 2017 Page 2 of 2 PSI 300[ 1100 -05 :10 15 :20 :25 :30 :35 .45 :50 :w 12:00 :05 10 :15 -20 -25 :30 35 :40 45 :60 15 Attachment 5 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Mechanical Integrity Test Submitb: -i m.reoadta1.skaQov: AOGCCInsaectors®alaska.cov: phoeDe-0moks(dalaska.gQv OPERATOR: Glacier Oil and Gas FIELD / UNIT / PAD: osprey Platfor,Radoubt Unit DATE: IMN17 OPERATOR REP: Lente Aamirson AOGCC REP: Brian Bixby dens Wallecedialaske apv Well RUJA MTERVRLpWn Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. 4=Foy Year LyM F=Fal PTD 2161100 1 Typa Inj WTubing 1=Ir¢rcLa�'e 1910 197D 1985 1966 n=ria tri. g Type Test P Packer TVD 5989 BBLPump 3.5 IA TOA 425 2810 2810 2810 Interval O Test psi 2500 1 Bill-Return3.5 25 36 31 31 Result P H9NSf: Test fwaeminlNretive applwal paperxorkb2500 p1. Well Pressures: Pretest tribal 15 Min. 30 Min. 45 Min. EO Min. PTD Type Inj TubiN Type Tesl Packer TVD BBLPump IA Interval Teat psi BBL Return OA Result Ratae: Well Pressures: Pretest Initial 15 Min. 30 Mrs. 45 Min. BD Min. PTD Type lnj Tubing Type Test Packer TVD BBLPump IA Interval Test psi BBL Ratum OA - Result Nele.: Well Pressures: Pretest Input 15 Mia 30Min. 45 Min. 80 Min. PTO Type Inj Tubing Type Test Packer TVD BBLPump IA In*" Test psi BBL Return OA Result Netee: Well Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PTD Type lnj Tubing Type Test Packer TVD BBLPump IA Interval Test psi BBL Return OA Result It4ffit Wall Pressures: Pretest Initial 15 Min. 30 Min. 45 Min. 60 Min. PID Type lnl Tubing Typa Test Packer TVD BBLPump IA Inrorval Test psi BBL R.W. OA Result NnTas: Well Pressures: Platen Initial 15 Min. 30 Min. 45 Min. BO Min. PTD Type lnj Tubing Type Test Packer TVD BBI -Pump IA Interval Test psi BBL ReturnOA Result Notes: Wall Pressures: Pretest Insist 15 Min. 30 Min. 45 Min. 110 Min. PTD Type lnj Tubirq Type Test Packer TVD BEL Pump w Interval Test psi BBL Return OA Reach Note.: TYPE MJ.. TTE TEST Beep MTERVRLpWn beuapalee W-Wabr P=Pmeun TM 1=lmel Tnl P•Pa. G-Gn 0= 0aer(de.teIn NM n) 4=Foy Year LyM F=Fal a=Nary V=raemM Ly Vanann 1=Ir¢rcLa�'e I.4weval We.. 0=0un(aaurma lnnMnl n=ria tri. g Farm Ip 26 (Revised0112011) MIT M1TE 17 RnaM.xex 5 THE STATE 01ALASKA GOVERNOR BILL WALKER March 15, 2018 CERTIFIED MAIL — RETURN RECEIPT REQUESTED 7015 0640 0003 5185 6403 Mr. David Pascal Production Manager Cook Inlet Energy, LLC. 601 West 5h Avenue, Suite 310 Anchorage, AK 99501 Re: Docket Number: OTH-17-056 Notice of Proposed Enforcement Action Alaska Oil and Gas Conservation Commission Failure to complete a Mechanical Integrity Test (MIT) Failure to report a pressure communication Redoubt Unit 3A (PTD 2161700) Area Injection Order (AIO) 32 Redoubt Shoal Field, Osprey Platform, Redoubt Shoal Unit (RSU) Dear Mr. Pascal: 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.olaska.gov As part of the informal review process, Cook Inlet Energy, LLC. (Cook Inlet Energy) has the opportunity to submit documentary material and make written and oral statements regarding the above referenced Notice of Proposed Enforcement Action. The informal review is scheduled for April 10, 2018 at 10:00 a.m. in the AOGCC's Anchorage office located at 333 West 7ch Avenue. Copies of all written submissions and summaries of any oral statements planned by Cook Inlet Energy should be provided to the AOGCC no later than April 5, 2018. Sincerely, Hollis S. French Chair, Commissioner GLACIER March 20, 2018 Mr. Hollis French Chair, Commissioner Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501-3572 Subject: Re: Docket Number OTH-17-056 Dear Commissioner French, RECEIVED MAR 2 0 2018 AOGCC Glacier Oil and Gas as owner/operator of Cook Inlet Energy LLC (CIE) is respectfully requesting the Commission to conduct an informal hearing in relation to the docket. CIE will be able to address the issues outlined in the docket during the informal meeting and hopes to come to an amicable resolution with the Commission on this matter I can be reached at (907) 433-3822 or at dnascal(cp¢laci� ero;l tom for any further information Sincerely, vo- 3� D id Pascal Production Manger Cook Inlet Energy A Glacier Oil and Gas Company 3 THE STATE °fALASKA GOVERNOR BILL WALKER March 15, 2018 CERTIFIED MAIL — RETURN RECEIPT REQUESTED 7015 0640 0003 5185 6427 Mr. David Pascal Production Manager Cook Inlet Energy, LLC. 601 West 5h Avenue, Suite 310 Anchorage, AK 99501 Alaska Oil and Gas Conservation Commission Re: Notice of Proposed Enforcement Action Failure to complete a Mechanical Integrity Test (MIT) Failure to report a pressure communication Redoubt Unit 3A (PTD 2161700) Area Injection Order (AIO) 32 Redoubt Shoal Field, Osprey Platform, Redoubt Shoal Unit (RSU) Docket Number: OTH-17-056 Dear Mr. Pascal: 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.cogcc.alasko.gov The Alaska Oil and Gas Conservation Commission (AOGCC) hereby notifies Cook Inlet Energy, LLC (CIE) of a proposed enforcement action. Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)). CIE violated the provisions of Rule 6 of Area Injection Order 32 (AIO 32) ("Demonstration of Tubing/Casing Annulus Mechanical Integrity") when it failed to perform an AOGCC witnessed Mechanical Integrity Test (MIT) after injection was commenced for the first time in the Redoubt Unit 3A (RU 3A) well. CIE violated both 20 AAC 25.402 (f) and the provisions of Rule 8 of AIO 32 requiring CIE to notify AOGCC and submit a plan of corrective action when pressure communication, leakage or lack of injection zone isolation was indicated in the RU 3A well. Notice of Proposed Enforcement Action RU 3A Docket Number: OTH-17-056 March 15, 2018 Page 2 of 5 Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)). Failure to Report a Pressure Communication or Leakage. By letter dated December 18, 2017 CIE notified AOGCC that the well was exhibiting potential tubing (T) by inner annulus (IA) pressure communication while injecting water. In its letter CIE provided a 30 -day injection pressure plot. CIE reported that after approximately 78 days of injection the IA pressure began to rise and the field staff bled it down numerous times to keep it below 200 psi. To confirm the communication, CIE let the pressure build to 1008 psi over 79 days, bled down the pressure, and again let the IA pressure build gradually to 590 psi before another bleed on December 18, 2017. CIE ultimately notified AOGCC of this pressure communication via the letter to AOGCC dated December 18, 2017 (received by AOGCC on December 19, 2017) in which CIE requested to continue water injection. AOGCC regulation 20 AAC 25.402 (f) states "Ifan injection rate, operatingpressure observation, or pressure test indicates pressure communication or leakage in any casing, tubing, or packer, the operator shall notify the commission by the next working day... " Rule 8 of AIO 32 states "Whenever any pressure communication, leakage or lack of injection zone isolation is indicated by injection rate, operating pressure observation, test, survey, log, or other evidence, the Operator shall notify the Commission by the next business day and submit a plan of corrective action (on Form 10-403) for Commission approval. The Operator shall immediately shut in the well if continued operation would be unsafe, would threaten contamination of freshwater, or if so directed by the Commission. Monthly reports of daily tubing and casing annuli pressures and injection rates must be provided to the Commission for all injection wells indicating well integrity failure or lack of injection zone isolation. " On December 19, 2017 CIE provided pressure and injection data (pdf format, via email) for RU 3A from June 2, 2017 onwards. CIE's only notice to AOGCC of potential pressure communication occurred via the December 18, 2017 letter. Information provided by CIE demonstrates significant pressure anomalies which were not communicated to the AOGCC. Significant IA pressure increases occurred including the two pressure build up tests: approximately August 18, 2017 to November 5, 2017 (maximum observed pressure was 1008 psi), and November 5, 2017 to December 18, 2017 (maximum observed pressure was 590 psi). In both cases, there is no evidence to suggest the rate of pressure build was subsiding. CIE failed to report to AOGCC pressure communication indicating a potential loss of mechanical integrity on RU 3A by the next working day, a violation of Rule 8 AIO 32 and State regulations. Notice of Proposed Enforcement Action RU 3A Docket Number: OTH-17-056 March 15, 2018 Page 3 of 5 Failure to Perform the Required MIT. A review of the well information provided by CIE shows RU 3A was handed over to injection operations on May 30, 2017, with injection allocated to the well continuously beginning July 1, 2017. In its review of the well history, AOGCC discovered RU 3A was operating without having passed an AOGCC witnessed post-injection MIT. Rule 6 of AIO 32 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. A Commission -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. " In addition to the MIT requirement in AIO 32, the Permit to Drill for RU 3A included the "Post Initial Injection MIT req'd" condition of approval.' CIE operated RU 3A approximately six months without the required MIT. CIE was notified on December 20, 2017 that the well must pass an AOGCC-witnessed MIT to continue on injection. A successful MIT was witnessed on December 23, 2017. Based on information provided by CIE — including the passing of the AOGCC witnessed MIT on December 23, 2017 — AOGCC determined that water injection could safely continue if CIE complied with the restrictive conditions set out in an administrative approval dated December 28, 20172. Approval conditions included monthly reporting of well pressures, injection rates, and pressure bleeds; installation and testing of automatic well shut-in equipment linked to the wells inner annulus pressure; and a more frequent MIT schedule. Proposed Action (20 AAC 25.535(b)(3). Within four weeks of the date of the AOGCC's final decision, CIE shall: (1) Provide a detailed description of its Underground Injection Control (UIC) regulatory compliance program; (2) Provide details of its tracking system for determining when MIT's are required, including the details of contingencies for wells shut in at the time an MIT is due and its procedures for notification to the AOGCC, as well as its processes for determining the MIT due date and identification of past due wells; (3) Provide a detailed description of its (non-UIC) AOGCC regulatory compliance program, including its tracking system for determining when compliance requirements are due (e.g. safety valve testing, custody transfer meter testing, monthly and annual reports etc.); (4) Provide a Root Cause Analysis addressing the failure to provide a notification of a pressure communication to AOGCC within the next business day (Rule 8 of AIO 32); and Permit to Drill # 2161700 dated February 1, 2017. 2 AIO 32.001. Notice of Proposed Enforcement Action RU 3A Docket Number: OTH-17-056 March 15, 2018 Page 4 of 5 (5) Provide a Root Cause Analysis addressing the failure to complete an AOGCC witnessed MIT once the well commenced injection and stabilization was achieved (Rule 6 of AIO 32). For these violations the AOGCC intends to impose civil penalties on CIE as follows3: $25,000 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 32. $25,000 for the initial violation — failure to notify AOGCC of indication of pressure communication or leakage in RU 3A as specified in Rule 8 of AIO 32 and AOGCC regulation 20 AAC 25.402 (f). The total proposed civil penalty is $50,000. The proposed penalty reflects the AOGCC's consideration of the criteria set forth in AS 31.05.150(g). While the penalty does not reflect amounts based on per -day assessment, that decision does not minimize CIE's failure to report the significant repressurization events that occurred four months before notifying the AOGCC of possible serious and substantial issues with the integrity of the RU 3A wellbore. The failure to complete the initial post-injection MIT cannot be characterized as a good faith attempt to comply with the AOGCC's orders and regulations. Although no injury to the public occurred, the potential wellbore failure posed an obvious threat to both public health and the environment. Violations relating to Underground Injection Control Class II well integrity practices warrant the imposition of civil penalties. CIE's failure to comply with the fundamental wellbore mechanical integrity testing requirements raises the potential for similar behavior with more serious consequences. CIE's failure to notify AOGCC of the pressure communication shows disregard or ignorance of CIE's compliance responsibilities. Mitigating circumstances considered in the assessment of the proposed civil penalty include the operator's compliance history, enforcement and notice of violation history, and the absence of known sources of freshwater in the Redoubt Unit. Once AOGCC determined the well was out of compliance, CIE demonstrated an urgency in completion of the required AOGCC witnessed MIT, and in the installation and testing of the automatic well shut-in equipment that AOGCC required be installed as conditions for continued injection in the well. 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 — CIE 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 CIE an opportunity to submit documentary material and make a written or oral statement. If CIE disagrees with the AOGCC's proposed decision or order after that review, it may file a written request for a ' 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. Notice of Proposed Enforcement Action RU 3A Docket Number: OTH-17-056 March 15, 2018 Page 5 of 5 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 1 lth 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 CIE does not concur in the proposed action described herein, and the AOGCC finds that CIE 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 CIE 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: Ryan Gross, USEPA, Region 10 AOGCC Inspectors p Wallace, Chris D (DOA) From: David Pascal <dpascal@glacieroil.com> Sent: Tuesday, December 19, 2017 3:15 PM To: Wallace, Chris D (DOA) Cc: Schwartz, Guy L (DOA); Regg, James B (DOA) Subject: Re: Redoubt Unit 3A (PTD 2161700) Annular Pressure [Docket OTH-17-056] Attachments: RU -3A MIT.pdf; RU -3A Data.pdf (�rP Chris, Please see answers below in Red. Please let me know if you have any further questions David From: "Wallace, Chris D (DOA)' <chris.wallaceCa�alaska gov> Date: Tuesday, December 19, 2017 at 11:15 AM To: David Pascal <dpascalCa)glacieroil.com> Cc: "Schwartz, Guy L (DOA)' <guy.schwartzPalaska.gov>, "Regg, James B (DOA)' <iim.reggPalaska.gov> Subject: Redoubt Unit 3A (PTD 2161700) Annular Pressure [Docket OTH-17-0561 David, AOGCC has received your letter dated December 18, 2017 detailing a tubing/annular communication of RU -3A. It has prompted a review of this well, our regulations, and the Area Injection Order (AIO) #32 that governs injection operations in this well. Our records do not show any mechanical integrity testing for this well? It looks like first injection was in the month of July 2017. Initial testing associated with a new well and additional testing with any mechanical integrity change to the well should have been completed, and once injection has commenced and stabilized as per the permit to drill, sundry applications, and AID 32 Rule 6. Do you have any information on MIT's completed, witnessed or not, rig or separately, and any explanation as to why AOGCC doesn't appear to have these records? MIT was performed on 26th March at 2,500 psi and successfully passed. Please see first attachment AIO 32 is available at htt2://aogweb.state.ak.us/ogc/orders/aio/data/aio32.pdf Rule 5 of AIO 32 details requirements of tubing and annuli pressures being monitored at least daily. Please provide the Tubing, Inner annuli, outer annuli pressures for the last 90 days. Please see second attachment for RU -3A injection and pressure data. Monitored hourly Rule 8 of AIO 32 details the notification requirements (next business day) when a pressure communication is indicated. Please provide when and how AOGCC was notified or if in fact this letter dated December 18, 2017 is the first AOGCC notification? Leak is minor (<0.9 gal/day) and was difficult to quantify/detect. AOGCC was notified as soon as we confirmed our suspicions via the test submitted Thanks and Regards, Chris Wallace, Sr. Petroleum Engineer, Alaska Oil and Gas Conservation Commission, 333 West 7th Avenue, Anchorage, AK 99501, (907) 793-1250 (phone), (907) 276-7542 (fax), chris.wallace@alaska.gov 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 1 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. 1 RECEIVED DEC 1 9 2017 GLACIER AQGCC Dec 18, 2017 Mr. Guy Schwartz, Senior Petroleum Engineer Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, Alaska 99501-3572 Subject: RU -3A Annular Pressure PTD: 216-170 API No: 50-733-20504-01-00 Dear Mr. Schwartz, We have noticed a possible tubing/annular communication in well RU -3A. The annulus pressure started to rise about 78 days after the well was completed. We bled it down several times as it approached 200 psi, but it would not go static. In order to confirm the communication, the annulus was shut-in and except for one 100 psi bleed down the pressue was allowed to build to 1,003 psi over 79 days (13 psi/day). The annulus was bled down to zero and 70 gallons of annular fluid was recovered. The annulus was again shut-in and monitored. The pressure on the annulus during this operation has built up to 474 psi (Dec 18) with a rate increase about 13.8 psi/day We have currently bled down the annulus pressure to 0 psi and will continue to do periodically, so that the pressure doesn't increase beyond 500 psi. At this point of time due to the small amount (-0.9 gal/day) it would be difficult to identify the source of the leak. If the rate of pressure increase exceeds 25psi/day, we would attempt to find the leak with a Sonic log. Glacier Oil and Gas requests the Commission that we continue to operate the well, as it is a critical injector to maintain reservoir pressure and resulting in GLACIER incremental reserves in the Redoubt field. If any additional information is needed, please contact me at dpascal(u)glacieroil.com or at (907) 433-3822 Sincerely, Pascal tion Manager Oil and Gas Attachments 1. Current Wellbore Diagram RU -03 2. Annular Pressure Trend Latest Build-up GLACIER r._ -03A W1 -Current Completion Schematic 18 1/2" Hole 4 1/2' X 9 5/8' Liner Hanger TOL @ ],580'ME) Perforations MD I ND 7,780-7,800 6,203-6,219 ],805-7,818 6,223-6233 Top of 7-5/8' x 9-5/8' Liner @ 9,103MD 12 1/4" Hole 8 1/2" Nole Pei18 Slim Intervals Pert Intervals Stini flMD ft We MD 15780-15800 12096-12111 15785.15794 15627-15847 12132-12147 1583145843 15862-15882 12150-12173 15066=15818 15920-15940 12202-12217 15925-15934 15940-15960 12217-12233 15945-15954 16052-16072 12304-12319 16051-16066 16076-16096 1232312338 16081-16090 16144-16161 12376-12392 16166-16185 12393-12409 16198-16216 12419-12435 16255-16275 1246512479 16260-16270 16275-16295 12460.12497 16275-1628] 1631516335 12513-12529 16326.16335 1633646346 12530-12538 16358-16376 1254&12563 6 3/4" Nole PBTD: Date: 5.lul-17 Version: Final Tubing hanger- 4.909' MCA Box top connection I 4.5" GeoConn Box btm connection - ID 3.816' 30" 1 150# A-36 260' MD I0-28" 1 Welded 1 260' Into 4-1/2" 15.1# P110 Goncourt - ID 3.832" @ ]500' MD 13 318" fib# L -BD 3,507'MD ID -12.25" 1 BTC 3,024'ND 95/8" 1 47# L-80 9,332' MD ID -8.50" BTC 7,416'ND TOC (CBL): 12,975' MD Window ] 5I8" 1 29.7# L40 1 14,176' MO ID -6.]5" N tlri1521 10,962'ND 67' fish left in hole - 21' of lower gun, 1 coupler, 37' gun and bull nose Obstruction tagged @ 16352' 52' fish left in hole - 6" of lower gun 1 collar, 36" Dun and bull nose 4 1/2" 15Co.1# P-110 16,482' MID ID -3.832" Geonn 12,650'ND -If 300 .y CL Iu m N N T 200 a C C C 100 0 11/5/17 RU -3A Annular Pressure 11/13/17 11/20/17 11/28/17 12/5/17