Alaska Agency Halves Energy Company's Penalty

The Alaska Oil and Gas Conservation Commission on May 3 imposed a $20,000 civil penalty against Hilcorp Alaska, LLC for failing to test blowout prevention equipment after being use for well control purposes. The equivalent penalty for failing to notify of the use of the equipment was eliminated.

The Alaska Oil and Gas Conservation Commission on May 3 imposed a $20,000 civil penalty against Hilcorp Alaska, LLC for failing to test blowout prevention equipment after being use for well control purposes. The commission eliminated a $20,000 penalty for failing to notify of the use of the equipment, however. Hilcorp Alaska is part of Houston-based Hilcorp, which was founded in 1989 and describes itself as one of the largest privately held oil and natural gas exploration and production companies in the United States.

The original enforcement case with $40,000 in penalties was filed Nov. 16, 2015, prompting Hilcorp to request an informal review that was held Feb. 18, 2016.

Hilcorp claimed the proposed penalties were based on an incomplete understanding of the facts, that the commission overlooked communication the company had with commission personnel, and that the blowout prevention equipment was not used for well control purposes, so no retest was required. The company also disputed the commission's assertion that the failure it cited was emblematic of ongoing compliance problems by Hilcorp; Hilcorp called these assertions "inflammatory," "harsh," and claimed "virtually all" of its operations are fully compliant.

The commission attached a three-page chart titled "Hilcorp Noncompliance History" -- 25 enforcement incidents from April 2012 to October 2015 -- but did acknowledge that Hilcorp did provide notification, although it was "misleading and incomplete," and so eliminated that $20,000 penalty.

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