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Home My WebLink AboutO 160of ALASKA TO' [—Fred Boness Assistant Attorney General FYOM: Jack R. Rodericklll Deputy Commissioner ,C r,Lrn I c. ENC f..l ENG 1 2 FNG s ENG DALE . April 29, 1977. ` L SUMCT: Penalty Payments to 3 GEa ReV Assessed Against ARCO 1_16RAF and Shell for Loss o DRE.c - _ - _._i--scc— T ials from Hoyle Hamilton indicate that ARCO's MGI M 11 blew out on June 17, 1976, in the ay area with the loss of approximately 19.6 MMCF volume of gas and 204 barrels of condensate. The Conservation. Commission places a total value of $1,127.00, and recommends- L �,s_� $15,000 as a fine. Shell Oil Company, during a nine -day period in the fourth quarter of 1976 and for 16 days in the first quarter of 1977, flared from approximately 50 MMCF from Platform "A", Middle Ground Shoal, in violation of CO 105-C of the oil and Gas Conservation regulations. The Conservation Commission recommends that they be fined $5,000. Please see Hoyle Hamilton's memo to me of April 22, giving the reasons for the difference in the value of the lost hydrocarbons. Having reviewed the material, Commissioner Le Resche thinks that these two penalities should be imposed against the operators. Please prepare the appropriate notifications to the companies cc: Robert E. LeResche Commissioner 1 --Hoyle Hamilton Director, Division of Oil & Gas Conservation O. K. "Easy" Gilbreth Division of Minerals & Energy Management attachments - - RECEIVED MAY - 21977 . Uivisicm of Ur1 m10 Q; (,mservaUon Ancl;vr•;gu STATE 6'iAa®Y�Y+•,v®�' of ALASKA DEPARTMENT OF NATURAL RESOURCES � Division of Oil and Gas Conservation f �NTI/iA Ta F_ Jack Roderick CONFIDENTIAL under AS 31 until 8/17/78 Acting Commissioner DATE : March 11, 1977 Mft SUBJECT: Hoyle H. Hamilton Hydrocarbons vented During Ar_o Director ., NGI No. 7 Blowout Easy Gilbreth, Director of the Division of Minerals and Energy Management, has advised us that Commissioner Martin intends to require payment for hydrocarbons vented because of the blowout of Arco's NGI No. 7 well and has asked us to provide back-up data from our "Confidential" records. On June 17, 1976, the Arco NGI No. 7 blew out during completion operations and flowed with only partial control until June 20, 1976. I flew to Prudhoe Bay on June 17, 1976 and monitored kill and control efforts until June 20: A copy of my "Confidential" report is attached. Table I estimates volumes of -gas and condensate lost based on our "Confi- dential" reports and an Arco news release. Rates and volumes are very speculative as it was not possible to take measurements and the primary concern was controlling the flow. Based on these estimated volumes, the total value, State production tax and State royalty are estimated in Table II. A value of $5/Bbl for condensate was used as a mid -value between current compensation for net crude through Arco's Prudhoe.Bay topping plant and estimated FV 78 Prudhoe crude wellhead value. A gas value of 30¢/Mcf was used based on an interim agreement between the State and BP Alaska for gas currently being utilized off of a lease on the North Slope. Some.of the information included with this memo Is confidential under AS 31 until August 17, 1978, and should be revealed only with Arco's permission. Attachments HWJCM:bjm ,O*. 563 Table I Arco - NGI No. 7 Estimated Volumes of Gas and Condensate Vented During June 1976 Blowout CONN-IDENTIAL Est. Volume of Condensate (Bbls) = 180 Bbls* X 19.8 MMcf = 204 Bbls 11 (1) Hoyle Hamilton's Memo to File dated 11/10/76 * Arco Mews Release dated 6/17/76 Est. Gas Est. Gas - Duration Rate Volume Date Hrs.) 1 MMcf/D (MMcf Explanation (1) 6/17/76 21.25 17.5 (1) 15.5 Initial uncontrolled flow 6/18/76 16.25 4.4 3.0 Killing and gas bleeding phase to 6/19/76 6/19/76 14 2.2 1.3 Final killing to zero surface to pressure 6/20/76 19.8 Est. Volume of Condensate (Bbls) = 180 Bbls* X 19.8 MMcf = 204 Bbls 11 (1) Hoyle Hamilton's Memo to File dated 11/10/76 * Arco Mews Release dated 6/17/76 J �• Table II Arco - NGI No. 7 Estimated.Value of State Royalty and Production Tax For Hydrocarbons Vented During June 1976 Blowout Total Value Value of Value of Est. Volume - 30d/Mcf & Value of State Roy. & Prod. (MMcf orBbls) $5/Bbl Prod.Tax(1) Royalty Tax Gas 19.8 $5,940 Condensate 204 1,020 TOTALS $6,960 (1) WPI Factor = 1.59 t $208 $743 $951 48 128 176 $256 $871 $1,127 of ALASKA E:encrMIr CP raxit>ivu, ire Division of oil and Gas Conservation ro: r Bob IeF'e3Che Canaissioter - ,,/// DATE I Jute 17, 1977 FROM. O. K. Gilbreth, Jr.CJfy/ scored.: ARCO No. 7 Blow xit Director, DOGC 0 I have received a copy of Fred nonesEls now to you regarding legal ramifications of the subject blowout. I agree with Fred and believe that we should not attetgrt to pursue this particular case to establish .the precedent of collecting for hydrocarbons lost. Unfortunately not enough documentation was atteopted at the tulle of the-blcout to legally pirpoint the cause and responsibility. Ple have talked about this in the department and it would appear that the only way we could prevail in this case we" be to prove that they mere not carrying out .their lease responsibilities in a %urkrmlike manner. Locally ors division has discussed the documentation and in the event any future ,„,..... blomats oars we will startdocuimtatico immediately and completely dozamelt throughout so that ova .can have a legal. trail if needed. In the-maantim we reoamend that efforts be dropped to institute legal action because of the uncertainty and tenuous grounds that we could sue on. We think ERe should wait until we have a better case in order bD try to establish this precedent. Moneywise, the value is negligible in this case. fYSGabjm cc: Joe Green, Direct=, DWM