Department of Commerce, Community, and Economic Development
Alaska Oil and Gas Conservation Commission
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HomeMy WebLinkAboutO 1641.
July 24, 2019
2.
August 12, 2019
3.
August 13, 2019
4.
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5.
November 1, 2019
6.
November 26, 2019
Other Order 164
Enforcement action Missing Meter Performance Reports
BPXA response and request for informal review
AOGCC scheduling of informal review
CONFIDENTIAL information held in secure storage
BPXA response to order
BPXA wire payment letter
ORDERS
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
333 West Seventh Avenue
Anchorage Alaska 99501
Re: Missing Meter Performance Reports ) Other Order 164
Custody Transfer Meters ) Docket Number: OTH-19-024
Prudhoe Bay Unit )
Natural Gas Liquids Sales ) October 30, 2019
DECISION AND ORDER
On July 24, 2019 the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of
Proposed Enforcement Action (Notice) to BP Exploration (Alaska), Inc. (BPXA) regarding
Prudhoe Bay Unit natural gas liquids (NGL) custody transfer meters based on BPXA's failure to
submit required meter performance reports. The Notice proposed specific corrective actions and
a $30,000 civil penalty under AS 31.05.150(a). BPXA requested an informal review. That review
was held August 20, 2019.
Summary of Proposed Enforcement Action:
The Notice identified violations by BPXA of the conditional approval letter dated August 30, 2018
for the NGL sales to ConocoPhillips Alaska Inc.'s Kuparuk River Unit. The Notice proposed a
civil penalties totaling $30,000 as follows:
- $15,000 for the initial violation — failure to provide meter performance report as
specified in condition of approval 3; and
- $15,000 for the initial violation — failure to provide required notification for AOGCC
witness as specified in condition of approval 6.
The Notice also proposed that BPXA submit the required information and describe how it will
prevent recurrence of this violation.
Violation - Failure to Submit Required Custody Transfer Meter Performance Reports:
The custody transfer measurement equipment used for the sale of Prudhoe Bay Unit NGL was
conditionally approved by AOGCC on August 30, 2018. Requirements imposed included the
meter prove frequency (monthly), notification to AOGCC for opportunity to witness meter proves,
required actions before making changes to the custody transfer measurement equipment, and
reporting obligations following proves.
BPXA initiated NGL sales to the Kuparuk River Unit in September 2018 and immediately
encountered mechanical problems that prevented the use of meter proving equipment. Approval
to continue the sales of NGL to the Kuparuk River Unit was granted by AOGCC after agreeing to
an alternate means of demonstrating an acceptable level of accuracy for the Prudhoe Bay Unit
NGL meter. On April 6, 2019 AOGCC was given verbal notice of the initial NGL meter prove
which was witnessed on April 7, 2019. BPXA performed subsequent monthly meter proves of the
Prudhoe Bay Unit NGL meter in May, June, and July 2019.
Condition 3 of the approval letter requires that BPXA "must provide information (table and graph)
used to validate meter performance each month". Condition 6 of the approval letter requires that
BPXA must give 24-hour notice to AOGCC for the opportunity to witness meter proves. No notice
Other Order -164
October 30, 2019
Page 2 of 3
was provided for meter proves in May and July 2019, and no meter performance reports were
submitted following meter proves in April, May, June and July 2019.'
By letter dated August 12, 2019 BPXA acknowledged receipt of the Notice, requested an informal
review of the matter, and provided the current meter factor control chart for the NGL custody
transfer meter. The informal review was held August 20, 2019 during which time BPXA asked
several clarifying questions and provided an updated NGL custody transfer meter proving
procedure, a BPXA organizational management -of -change, and an excerpt from BPXA's
Compliance Task Management System showing key personnel responsibilities related to the NGL
custody transfer meter.
Mitigating Circumstances:
The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. BPXA's
lack of good faith in its attempts to comply with the imposed conditions and need to deter similar
behavior are the factors which most heavily influence AOGCC's decision and the penalty being
assessed:
- The failure to submit information related to meter performance — e.g., prove reports,
meter factor control charts, meter curves, meter factor comparisons — cannot be
characterized as a good faith attempt to comply with the AOGCC's conditional
approval letter.
- During the meter application review, BPXA confirmed to AOGCC its standing
instructions for monitoring and reporting meter performance. There was nothing
different required in the conditions of approval and nothing ambiguous about the
approval conditions requiring submittal of meter prove results. Reliance on recognized
practices found in API Manual of Petroleum Measurement Standards was confrrmed.2
- The absence of equipment performance tracking information such as the required meter
factor control charts compromises the ability of AOGCC to make informed, fact -based
decisions about how frequently to witness meter proves.
Mitigating circumstances considered in the assessment of the proposed civil penalty include
BPXA's submittal of information identified as missing by the AOGCC in the Notice, demonstrated
acceptable performance of the NGL meter as shown in the meter factor control chart, and no injury
to the public. Further, AOGCC has significantly reduced the penalty by not invoking per -day or
per -month assessments for the violations.
Findings and Conclusions:
The AOGCC finds that BPXA violated the August 30, 2018 conditional approval of custody
transfer measurement equipment used for the sale of Prudhoe Bay Unit NGL to ConocoPhillips
Alaska Inc.'s Kuparuk River Unit. Mitigating circumstances outlined above were considered in
the Notice and the AOGCC assessment as to the appropriate civil penalty. BPXA has neither
disputed the findings in the Notice nor the penalty proposed by AOGCC. Since receiving the
Notice, BPXA has provided proper notice and results of each meter prove as required in the
conditional approval letter. AOGCC had also confirmed performance of the Prudhoe Bay Unit
NGL meter with witnessed meter proves.
BPXA measurement personnel in the field were made aware of the need to notify AOGCC for the opportunity to
witness meter proves based on June 10, 2019 email and follow-up notice on June 15, 2019.
2 Incorporated by reference into AOGCC regulations at 20 AAC 25.228
Other Order -164
October 30, 2019
Page 3 of 3
Now Therefore It Is Ordered That:
After application of the criteria set forth in AS 31.05.150(g) to the evidence presented, BPXA is
assessed a civil penalty in the amount of $20,000 for violating the August 30, 2018 conditional
approval of custody transfer measurement equipment used for the sale of Prudhoe Bay Unit NGL
from the Prudhoe Bay Unit to ConocoPhillips Alaska Inc.'s Kuparuk River Unit. If BPXA 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 10 days of the date of the AOGCC's final decision, BPXA
shall provide a detailed written explanation that describes how it intends to prevent recurrence of
this violation.
As an Operator involved in an enforcement action, BPXA is required to preserve documents
concerning the above action until after resolution of the proceeding.
Done at Anchorage, Alaska and Dated October 30, 2019.
J em Price Jes ie L. Chmielowski
Chair, ommissioner Commissioner
cc: AOGCC Inspectors
Phoebe Brooks (AOGCC)
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.
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Domestic Return Receipt
Bernie Karl Gordon Severson Penny Vadla
K&K Recycling Inc. 3201 Westmar. Cir. 399 W. Riverview Ave.
Fairbanks,, AK 99711
P.O. BoxAAnchorage, AK 99508-4336 Soldotna, AK 99669-7714
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P.O. Box 13557 P.O. Box 39309 P.O. Box 60868
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INDEXES
Chris Wyatt
Senior Counsel
Phone: 907-564-5674
Email: chris.wyatt@bp.com
November 26, 2019
Jessie L. Chmielowski, Commissioner
Alaska Oil and Gas Conservation Commission
333 W. 7'h Avenue
Anchorage, AK 99501-3572
Re: Docket No. OTH-19-024
Missing Meter Performance Reports
Prudhoe Bay Unit NGL Sales
Dear Commissioner Chmielowski:
BP Exploration (Alaska) Inc.
900 E. Benson Boulevard
Anchorage, AK 99508
P.O. Box 196612
Anchorage, AK 99519-6612
VIA FACSIMILE
BP Exploration (Alaska) Inc. (BPXA), operator of the Prudhoe Bay Unit, has received the
commission's October 30, 2019, Decision and Order in the referenced matter, in which the
commission assessed a civil penalty in the amount of $20,000.00.
Please accept this letter as confirmation that BPXA has elected to not contest the assessed
civil penalty. BPXA has sent payment via bank wire in the amount of $20,000.00 to the
commission's designated bank account.
Thank you for your consideration.
Sincerely,
Chris Wyatt
cc: Jack Griffin, CP
Barbara Fullmer, CP
Sara Denton, Chevron
Daniel Walker. EM
, , `
NOV 2 7 2019
,AOGCC,
5
Carlisle, Samantha J (CED)
From:
Carlisle, Samantha 1 (CED)
Sent:
Wednesday, October 30, 2019 12:44 PM
To:
'AOGCC-Public-Notices'
Subject:
Other Order 164
Attachments:
otherl 64.pdf
Missing Meter Performance
Reports
Custody Transfer Meters
Prudhoe Bay Unit
Natural Gas Liquids Sales
Samantha Carlisle
Executive Secretary III
Alaska Oil and Gas Consemation Commission
333 West 71n Avenue
Anchorage, AK 99501
(907) 793-1223
CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information firm 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 Samantha Carlisle at (907) 793-1223 or Samantha.Carlisi(yitalaska.sov.
Carlisle, Samantha J (CED)
From: Carlisle, Samantha I (CED)
Sent: Wednesday, October 30, 2019 12:47 PM
To: DOA AOGCC Prudhoe Bay, Brooks, Phoebe L (CED)
Subject: Other Order 164
Attachments: otherl64.pdf
Missing Meter Performance Reports
Custody Transfer Meters
Prudhoe Bay Unit
Natural Gas Liquids Sales
Samantha Carlisle
Executive Secretary III
Alaska Oil and Gas Conservation Commission
333 West 711 Avenue
Anchorage, AK 99501
(907) 793-1223
CONFIDENTMLITYNOTICE: This e-mail message, including any attachments, eontains uiformation 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. 1'7te unauthorizedreview. use or disclosure, of such information may violate state or federal law. Ifyot are an
unintended recipient of this e-mail, please delete it, without first saving or foiwarding it, and, so that the AOGCC is aware of the mistake
in sending it to you, contact Samantha Carlisle at (907) 793-1223 or Samantha.Cariistotielaska.z ov.
November 1, 2019
Mr. Jeremy Price, Chair
Alaska Oil and Gas Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Subject: Docket Number: OTH-19-024
Missing Meter Performance Reports
Dear Commissioner Price:
Kollin.Fencil
BP Exploration (Alaska) Inc.
900 East Benson Boulevard
P.O. Box 196612
Anchorage, Alaska 99519-6612
RECEIVED
NOV 0 4 2013
AOGCC
On October 30, 2019, BP Exploration (Alaska) Inc. (BPXA) received a Decision and Order note
from the Alaska Oil and Gas Conservation Commission (AOGCC) regarding failure to report NGL
sales meter performance. The letter requested that BPXA provide AOGCC with a detailed
written explanation that describes how we intend to prevent recurrence of this violation. BPXA
has implemented the following to prevent recurrence:
1. BPXA has amended our reporting procedure to include guidelines on how to prove the
NGL meters at Skid 50 and the reporting requirements and accountabilities.
2. BPXA has added specific monthly tasks into our Compliance Task Management (CTM)
system to ensure completion.
3. BPXA has added the notification requirement to the accountabilities of the East Offtake
Center (ECC) board operators' responsibilities. The requirement details the process to
notify AOGCC through its web -based system before all meter proves 24 hours in
advance.
Please contact me at 907-564-5384 with and any follow-up questions.
Sincerely,
Kollin Fencil
Area Operations Manager
BP Exploration (Alaska) Inc.
cc:
Mr. Jim Regg, Senior Petroleum Engineer AOGCC
4
Confidential, held in secure storage
3
THE STATE
°fALASKA
GOVERNOR MIKE DUNLEAVY
August 13, 2019
Sent by Email Kollin.Fencil@bp.com
Mr. Kollin Fencil
Area Operations Manager
BP Exploration (Alaska), Inc.
PO Box 196612
Anchorage, AK 99519
Re: Docket Number:OTH-19-024
Informal Review
Missing Meter Performance Reports
Prudhoe Bay Unit NGL Sales
Dear Mr. Fencil:
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279.1433
Fax: 907.276.7542
www. oogc c.al as ka.gov
As part of the informal review process, BP Exploration (Alaska), Inc. (BPXA) has the opportunity
to submit documentary material and make written and oral statements regarding the Notice of
Proposed Enforcement Action for Docket Number OTH-19-024, Missing Meter Performance
Reports.
There will be no formal record kept of the review and the review will not involve the presence of
counsel, either for the AOGCC or the operator.
The informal review is scheduled for August 20, 2019 at 9:00 am in the AOGCC's Anchorage
office located at 333 West 7th Avenue.
Copies of all written submissions and summaries of any oral statements planned by BPXA should
be provided to the AOGCC no later than August 19, 2019.
Sincerely,
� sis k
ess Chmielowski
Commissioner
2
August 12, 2019
Jessie L. Chmielowski
Commissioner
Alaska Oil and Gas Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Subject: Docket Number: 0TH-18-032/OTH-19-024
Custody Transfer Measurement
Dear Commissioner Chmielowski:
Kollin.Fencil
BP Exploration (Alaska) Inc.
906 East Benson Boulevard
P.O. Box 196612
Anchorage, Alaska 99519-661-2::m@
�a'
Tel E
AUG 13 2019
0GC
On July 29, 2019, BP Exploration (Alaska) Inc. (BPXA) received a Notice of Violation dated July
24, 2019 from the Alaska Oil and Gas Conservation Commission (AOGCC) regarding the
reporting of NGL sales meter performance. The letter requested that BPXA provide AOGCC with
a detailed written explanation that describes how we intend to prevent recurrence of alleged
violations under 20 AAC 25.535(b)(3) concerning meter performance.
BPXA has a reporting procedure that addresses 20 AAC 25.535(b)(3) and is intended to establish
guidelines on how to prove the NGL meters at Skid 50. This procedure will be amended to
include reporting requirements and accountabilities. Additionally, we will be adding specific
monthly tasks into our Compliance Task Management (CTM) system to ensure completion.
Per instructions of the August 30, 2018 application to reinstate and operate the Prudhoe Bay Unit
(PBU) natural gas liquids (NGL) export metering system, BPXA is providing the monthly meter
performance charts. Please find attached charts for April, May, June and July 2019 as requested
in your letter dated July 24, 2019. Additionally, we respectfully submit August 2019.
Finally, condition 6 of 20 AAC 25.535(b)(3) requires "24-hour notice for the opportunity to
witness meter proves" on a monthly basis. BPXA will add the notification requirement to the
accountabilities of the East Offtake Center (EOC) board operators' responsibilities and document
that accordingly. The requirement will be to notify AOGCC through its web -based system before
all meter proves 24 hours in advance.
Furthermore, BPXA is requesting an informal review of this violation to discuss findings and
mitigations.
Please contact me at 907-564-5384 with questions and to schedule the informal review.
Jessie L. Chmielowski
August 5, 2019
Page 2
Sincerely,
Kollin Fencil
Area Operations Manager
BP Exploration (Alaska) Inc.
cc:
Mr. Jim Regg, Senior Petroleum Engineer AOGCC
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THE STATE
July 24, 2019
°fALASKA
GOVERNOR MIKE DUNLEAVY
CERTIFIED MAIL —
RETURN RECEIPT REQUESTED
7018 0680 0002 2052 8900
Mr. Kollin Fencil
Area Operations Manager - Anchorage
BP Exploration (Alaska) Inc.
P.O. Box 196612
Anchorage, AK 99519-6612
Re: Docket No.OTH-19-024
Missing Meter Performance Reports
Prudhoe Bay Unit NGL Sales
Dear Mr. Fencil:
Alaska Oil and Gas
Conservation Commission
333 West Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907,279.1433
Fax: 907.276.7542
vv w.aogcc.aIaska.gov
Pursuant to 20 AAC 25.535, the Alaska Oil and Gas Conservation Commission (AOGCC) hereby
notifies BP Exploration (Alaska) Inc. (BPXA) of a proposed enforcement action.
Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(11).
BPXA has violated the provisions of the conditional approval letter for Prudhoe Bay Unit (PBU)
natural gas liquids (NGL) custody transfer measurement equipment.
Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)).
Custody transfer measurement equipment for BPXA's NGL sales to ConocoPhillips Alaska Inc.'s
Kuparuk River Unit was conditionally approved by AOGCC on August 30, 2018. Requirements
imposed include the meter prove frequency, notification to AOGCC for opportunity to witness
meter proves, required actions before making changes to the custody transfer measurement
equipment, and reporting obligations following proves. Condition 2 of the approval letter requires
monthly proving of the meters; condition 3 requires that BPXA "provide information (table and
graph) used to validate meter performance each month"; and condition 6 requires "24-hour notice
for the opportunity to witness meter proves". BPXA has failed to submit meter performance
reports for April, May, June, and July 2019. BPXA has also provided no evidence that it completed
the required meter proves on May and July 2019.
Docket Number: OTH-19-?
July 24, 2019
Page 2 of 3
Proposed Action (20 AAC 25.535(b)(3))
For violating provisions of the August 30, 2018 conditional approval letter for the PBU NGL
custody transfer measurement equipment, the AOGCC intends to impose a civil penalty on BPXA
under AS 31.05.150(a) in the amount of $30,000.1 In determining the amount of the penalty,
AOGCC has considered the criteria in AS 31.05.150(g), with emphasis on the extent to which
BPXA was acting in good faith in attempting to comply, the extent to which BPXA acted in a
willful or knowing manner, the extent and seriousness and actual or potential threat to public health
or the environment, injury to the public, the need to deter similar behavior by BPXA and others
similarly situated at the time of the violation or in the future, and BPXA's history of compliance
issues.
In addition to the imposed civil penalty, AOGCC intends to require BPXA to provide
- a detailed written explanation that describes how it intends to prevent recurrence of this
violation; and
- the missing meter performance information within 10 days of this order.
As an operator involved in an enforcement action you are required to preserve documents
concerning the above actions until after resolution of the proceeding.
Ri¢hts and Liabilities (20 AAC 25.535(b)(4))
Within 15 days after receipt of this notification — unless the AOGCC, in its discretion, grants an
extension for good cause shown — BPXA may file with the AOGCC a written response that concurs
in whole or in part with the proposed action described herein, requests informal review, or requests
a hearing under 20 AAC 25.540. If a timely response is not filed, the proposed action will be
deemed accepted by default. If informal review is requested, the AOGCC will provide BPXA an
opportunity to submit documentary material and make a written or oral statement. If BPXA
disagrees with the AOGCC's proposed decision or order after that review; it may file a written
request for a hearing within 10 days after the proposed decision or order is issued. If such a request
is not filed within that 10 -day period, the proposed decision or order will become final on the l la'
day after it was issued. If such a request is timely filed, the AOGCC will hold its decision in
abeyance and schedule a hearing.
If BPXA does not concur in the proposed action described herein, and the AOGCC finds that
BPXA violated 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; (ii) suspension or revocation of a
permit or other approval; and (iii) imposition of penalties under AS 31.05.150. In taking action
after an informal review or hearing, the AOGCC is not limited to ordering the proposed action
' Penalty amount arrived at considering two violations: failure to submit required meter performance reports, and
failure to notify for opportunity to witness proves of the NGL sales meter —each $15,000.
Docket Number: OTH-19-
July 24, 2019
Page 3 of 3
described herein, as long as BPXA received reasonable notice and opportunity to be heard with
respect to the AOGCC's action. Any action described herein or taken after an informal review or
hearing does not limit other actions the AOGCC may take.
Sincerely, y�
aC �--
J sie L Chhmielowski
Commissioner
cc: Scott Provolt
Flow Measurement Engineer
BPXA
Phoebe Brooks, AOGCC