From: Wesley Loy, Anchorage Daily News, Alaska
Published October 30, 2004 12:00 AM

BP Again Accused of Safety Violations in Alaska

Oct. 30—State oil industry regulators have proposed a $117,500 civil fine against BP Exploration (Alaska) Inc. for possibly violating rules on monitoring and preventing dangerous pressure buildup in Prudhoe Bay wells.


The action marks the second time the Alaska Oil & Gas Conservation Commission has proposed fining BP in connection with oil well pressure problems.


The company, which operates the huge Prudhoe Bay oil and gas field, is still contesting a proposed $2.53 million fine stemming from an August 2002 well explosion and fire that badly injured former BP field operator Don Shugak of Anchorage.


After the explosion, the commission developed new rules to prevent pressure buildup in wells. Those rules, contained in Conservation Order No. 492, were issued in June 2003.


A letter this week to BP from commission chairman John Norman accused the company of violating the order in three ways:


—BP failed to record and make available daily well monitoring information on Prudhoe Bay well H-11 for the period of Aug. 19 through Sept. 8.


—BP failed to notify the commission of pressure in the well exceeding 1,000 pounds per square inch during the period of Sept. 9 until Sept. 21.


—BP failed to bleed off pressure before the well was restarted on Sept. 9 following a shutdown.


For the second two alleged violations, the commission is proposing the maximum penalty "in light of the fact that compliance with Conservation Order No. 492 is mandated specifically to avoid the serious consequences of catastrophic well failure that in fact previously occurred" at the well that injured Shugak, Norman's letter to BP said.


For the first violation, a lesser penalty is being proposed "in light of the commission's understanding that the pressures in question were in fact monitored and that the failure to record the observations may have been due at least in part to confusion about the workings of BP's well data recording system," Norman's letter said.


Proposed fines for the violations total $117,500.


Norman's letter also proposes that BP give the commission 24-hour notice of all Prudhoe Bay well restarts "so that the commission will have an opportunity to witness the restart operations."


BP, in a written statement, said it hasn't decided whether to appeal the proposed fine.


Company spokesman Daren Beaudo said BP is conducting an internal investigation particularly into why well H-11 operated for several days above the pressure limit. That violates company policies, which were strengthened after the 2002 well explosion, Beaudo said.


In the meantime, "we've reinforced with the work crew what our expectations are" with respect to both pressure monitoring and adhering to the 1,000 psi limit, Beaudo said.


BP already has determined there was "uncertainty in workers' minds" about how to record well monitoring information into a computer database, according to the BP statement. Operators felt that if data hadn't changed from day to day, no entry was required because the computer would automatically use the previous reading.


"We have since reinforced the need to input this data," the statement said.


Pressure buildup in the space separating the multiple casings in an oil well — the space is known as an annulus — can lead to dangerous piping ruptures, as happened in 2002.


Shugak said he was just about to enter the metal shed covering well A-22 when it blew up, causing severe burns and other injuries that laid him up in a Seattle hospital for three months.


Shugak and BP since have reached a settlement and he no longer works for the company.


Unlike the A-22 well, the H-11 well had no known overpressuring tendencies, Beaudo said. However, H-11 currently is shut down due to the commission action, he said.


Jody Colombie, a commission spokeswoman, said Friday the three-member commission's decision on BP's appeal of a $2.53 million proposed fine in the Shugak case could be issued "very, very soon."


To see more of the Anchorage Daily News, or to subscribe to the newspaper, go to http://www.adn.com.© 2004, Anchorage Daily News, Alaska. Distributed by Knight Ridder/Tribune Business News.


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