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Home My WebLink AboutO 156ALA KA OIL A" GAS SERVAJITON COMMSSI01T November I3, 1995 101111 :Mor"all BP Exploration (Alaska). Inc. P.O Bos 196612 Anchorage. AK 99519-6612 Re: GC2. S -pad, M -pad incidents Dear Mr. Morgan: TONY KNOWLES, GOVERNOR 3001 PORCURNE OWE ANCHORAGE. ALASKA 99501-3192 PHONE: (907) 279-1433 FAX: (907) 276-7542 The Commission has determined that operator negligence contributed to the emergency shutdown of Gathering Center 2 (GC -2) on February 3, 1995 as well as the pipe ruptures on S and M pads on February.3 and 5, 1995 respectively. The Commission has decided to classify as waste all gas flared as a insult of the incidents. The amount of gas classified as waste includes all gas released into the atmosphere immediately upon and following the incidents, as well as all gas released while S and M pads were being depressurized for repairs. Also classified as waste is all gas flared as a consequence of facility repair and restart. Total volume classified as waste is 2,005 Mscf. The Commission believes that the actions of several employees during the GC -2 shutdown and the pipe ruptures on S and M pads were negligent and represented a failure to carry out operations in a safe and skillful manner in accordance with industry practices, in violation of 20 AAC 25526, and a failure to act in accordance with good oil field engineering practices and conservation purposes to minimize the volume of gas released or permitted to escape, in violation of 20 AAC 25.235(c). The Commission finds that these incidentswere in large part attributable to human error. On February 3, 1995 the first stage separator pressure transmitter at GC -2 was not properly safed out prior to executing a calibration. The GC -2 operator failed in his responsibility to heed the warning identified on the work order. This introduced a flaring event through the BP flare system During the flare event, a total GC -2 stop production shutdown was initiated. The cause of the GC - 2 stop production shutdown has never been fully determined. A pipe rupture occurred on S -pad during the shutdown at GC -2, causing a gas release. While attempting to restart GC -2, the GC -2 board operator failed to see a firethalon alert on the alarm system which was sent from S -pad. The board operator then sent a signal that opened an equalizing valve at the wellsite, causing a second gas release on 5 -pad. Production Control Center (PCC) personnel seemed aware of the alarms but failed to follow administrative procedures and dose the communication loop with both the wellsite operator and GC -2 personnel. The wellsite operator failed to inform GC -2 personnel to curtail the signal which was opening the equalizing valve. This caused a third gas release when the air compressor was brought back up at the wellsite, supplying air pressure to the equalizing valve. The breakdown in communication between PCC personnel and the wellsitc operator also pmvented the wellsite operator from clearing non- essential personnel from S -pad during the event It is likely that personnel would have been evacuated sooner if PCC bad alerted the wellsite operator of the fircthalon alarms. .' ' ,t - • John Morgan • November 13, 1995 page 2 The Commission also believes that the operator failed to maintain corrosion inspection programs to adequately identify areas of severe wall loss and potential failure. This violated the requirement of 20 AAC 25.200 that all equipment be maintained in accordance with good established industry practice and the requirement of.20 AAC 25.526 that property be maintained at all times in a safe and skillful manner in accordance with industry, practices. The pipe rupture at S -pad occurred aI a Large Diameter Flowline (LDF) collection header. BP Exploration (Alaska), Inc. (BPXA) stated that excess velocities and insufficient corrosion inhibition were the root cause of die pipe rupture at S -pad. The corrosion at S -pad had gone undetected because the piping was never inspected at that point. Pre -1995 well -pad corrosion inspection plans failed to include this arca for inspection. The pipe i all was also of construction below specification and this may have contributed to the event. On February 5, 1995 a pipe rupture at M -pad occurred directly below a scale inhibitor injection point, in a pipe trough on well M-06 flowline. The extensive corrosion found was consistent with chemical attack from the scale inhibitor. The last inspection of the scale inhibitor injection quill failed to scan the trough area of the pipe and did not identify any erosion of that area. The well was shut in for approximately two months after the last inspection, at which time the scale inhibitor injection valve should have been closed and tagged. The Commission was not given any data in support of this. At a meeting with the Commission, BPXA representatives also said that the extensive erosion could not have happened over a short period of time. This leads the Commission to infer that the scale inhibitor injection valve was left open while the well was shut in for an extended duration, leading to the pipe failure. The Commission's determination of waste is made under authority of AS 31.05.030, AS 31.05.150, AS 31.05.170(14)(A) and (H), and 20 AAC 25.235. Under AS 31.05.150(e), the Commission may impose a penalty equal to the fair market value of the gas at the point of waste for all gas determined to be waste. In addition, under AS 31.05.150(a), the Commission may impose a civil penalty of up to $5,000 dollars per day for each day of violation. Among the criteria the Commission considers in determining appropriate penalties under AS 31.05.150(a) are the following: 1) the good or bad faith of the operator in violating the statutes, regulations and orders of the Commission, 2) the injury to the public resulting from the violation, 3) the benefits derived by the operator from its violative activities, 4) the operator's ability to pay a penalty, and 5) the need to deter similar behavior by the violator and others and vindicate the authority ofthe Commission and the integrity of statutes, regulations and orders. The Commission concludes that there was no bad faith, limited public injury (i.e., loss of resource), and no illicit benefit derived by BPXA from the incidents. While BPXA's ability to pay is significant, the Commission acknowledges the expense already incurred by BPXA in lost production and repair of the affected wellsites. The Commission also n cognizes the normally high operational standards of BPXA as well as BPXA's excellent response, thorough investigation into the events, and efforts directed to help prevent a reoccurrence. However, the Commission believes there is a need to deter similar behavior by the operator and others. It was fortuitous that no injuries occurred during these mishaps. Safety is integral to good oil field engineering practices in the State's oilfields. Therefore, the Commission assesses against BPXA a penalty of 55,000 far the series of procedural errors and communication blunders made by BPXA personnel while attempting to restart GC -2 and control the S -pad pipe rupture on February 3, 1995. The Commission will not assess against BPXA any penalty for each day that the scale inbibitor kdectien valve was left opm on the M-06 e ��• . ` Join Morgan • November 13, 1995 page 3 flowline while the well was shut in on M -pad. The Commission requests that the additional checks and procedural enhancements to prevent reoccurrence of these events be made available for review by Commission staff. THEREFORE, IT IS ORDERED that all gas flared or vented as a result of these incidents be classified as waste and the total volume so classified is 2,005 Mscf. A penalty of 51.00 per Mscf is assessed against BP Exploration (Alaska), Inc. for the masted gas under the authority of AS 31.05.150(e). This value is derived from the February. 1995 we ;kited average of S 1.0032Afscf for BPXA's Prudhoe Bay gas as determined by the producer's unaudited ro%alty reports for the month of February, 1995. Tlie Commission's use of unaudited royalty report data for the purpose of assessing this penalty does not constitute a determination of the value of gas for any other source. This penalty of $2.005 is due and payable within 30 days of the date of this Order. BE IT FURTHER ORDERED that a penalty of $5,000 be assessed against BP Exploration (Alaska), Inc. under the authority of AS 31.05.150(a). This penalty of 55,000 is due and payable within 30 days of the date of this Order. DONE at Anchorage, Alaska and dated November 13, 1995. uckerman Babcock, Commissioner AS 31.05.080 provida Im within 20 days afler receipt of written notice of 0a wry of on order, a penton affected by it may dile with the Cormnission on application for reheorirg. A request for vdim ng nnut be received by 430 Ptd on Ute 23rd day follovag the date of the order, or um working day if holiday orwedreld, to he timely filed. Mot Caordsicn atoll Fm or refute the awkwon in wtwk or in part within 10 dry% 'nm Commission ® refute on application by out acting on it widtin the 10 -day period An affeaed person has 30 drys fmm the dare the Commission refuses the appfiction or mails (or otherwise d%mlrmm) an order upon rtharing both being the fwl order of the Convoiaaar4 10 appal Ute derision to superior Court where a regnat for reltemieg is denied by nonaction of the Comnioimt. Ste 30 day period for appeal to superior Cant rum from the due W which the request is da®ed denied (Le. 10th day ader cc: Robert Mintz, DepL of Law John PMdnton, DepL of Revenue Ken Boyd, Dept ofNatural Resources I Inn C. Morgan .-esident, Alaska BP EXPLORATION BP Exploration (Alaska) Inc. 900 East Benson Boulevard P.O. Box 196612 Anchorage, Alaska 995196612 (907) 5645422 November 30, 1995 Mr. David W. Johnston, Chairman Alaska Oil and Gas Conservation Commission State of Alaska 3001 Porcupine Drive Anchorage, Alaska 99501-3192 Dear Mr. Johnston, PBU Gathering Center 2. S -Pad and M -Pad Incidents We acknowledge receipt of your letter dated November 13, 1995 and understand the basis of the Commissions assessment. We appreciate the AOGCC's recognition of BPXA's normally high operational standards, our thorough investigation into the events, and efforts directed to help prevent a reoccurrence. We remain committed to ensuring high standards of operational integrity throughout our North Slope operations and are actively implementing measures recommended by the S & M Pad investigations and required by BP's Operational Integrity Assurance System. As requested in your letter, we attach for your review the additional checks and procedural enhancements intended to prevent a reoccurrence of events surrounding the S & M Pad incidents. We should be pleased to meet with you to discuss these points further and request that you contact Mr. David Woodward, PBU Asset Manager, (Telephone 564- 5121) if you wish to arrange a meeting. A check for $7,005.00 in settlement of the penalty ordered in your letter of November 13th, is enclosed. Please acknowledge receipt by signing and returning the enclosed copy of this letter.