Hello, It's been a couple of years sense I've been here.
I've lived in Alaska for 39 years. I've endured the life changing Exxon Valdez Oil Spill [I'm one of the litigants]. I've witnessed the corruption of Alaska's Legislature's [http://www.pbs.org/now/shows/347/alaska-corruption.html]. I pay some of America's highest prices for gasoline and home heating oil all the while it's being produced about 50 miles from my home.
I own 10 acres, along with the mineral rights, just outside of the Ninilchik Unit, Bartolowitz Pad, Frances1 well in a new gas pool. Under the Alaska Oil and Gas Conservation Commission [AOGCC] rules, I fall within the 3,000 foot notice of a Spacing Exception. I received that along with a lease from Hilcorp. In short, the lease was not in my favor and I've never signed it. That was in early 2014 I believe.
I've spoken with Hilcorp's Landman David Duffy in Anchorage around that time and he explained to me how Hilcorp is an open, honest company. That by signing the lease I would be entitled royalties and that people near me were getting between $300, to as much as $900 in the winter per acre per month. If I didn't sign the money would be put in an escrow account. Sounds good doesn't it, at least $3,000 a month. Remember, I live just outside the Ninilchik Unit. The Bartolowitz Pad is just inside the unit, just next to the unit line. I've never signed a lease.
Thanks to the internet I searched Hilcorp days before I called Mr. Duffy. Jeffery Hildebrand is the founder and CEO. He left Exxon [my sworn enemy] in 1989/1990 to start Hilcorp. "The Stuart Smith Blog" "Not-So-Fine Print: Louisiana’s Largest Oil Producer Tramples on Contractual Obligation to Clean up Toxic Waste" is a good start on how Hilcorp truly works.
From Pennsylvania Hilcorp is relying on forced pooling in the Utica and Marcellus Shale beds. These things I knew when I spoke with Mr. Duffy. A couple of months later as I was going to travel threw Anchorage I called Mr. Duffy to see if he could get together [as he had offered], he was playing gulf that day so I continued on my way.
In July of 2014 Frances1 was tested for gas, I forget how many 10's of millions of cubic feet was produced those 1st 6 days but everybody agrees it was a lot. One of the best gas wells Alaska has seen in years. Around November of 2014 I called Mr. Duffy from the coastal town I'd been in that summer to see how the Frances1 was doing. It was doing much better than expected, billions of cubic feet of gas with more to come. Great, I said, I should have a royalty check then. "No, if you look at your lease, that you signed, once our bore penetrates your sub surface property line Then we owe you money". " That's not how I recall the conversation, I'm away from home for a couple more months I'll call back when I'm with my notes". Everything was fine and I almost went back to my work but was stopped when my phone rang. It was Mr. Duffy, he had looked and seen that I'd not signed the lease yet. "maybe my boss will let me come down, we can go charter fishing and you can sign the lease, maybe we can go on a deer hunting charter and you can sign the lease". His boss, Christine Gaye [retired now], felt it important enough to e-mail the lease to me. It seemed so important that she also mailed it general delivery to the local Post Office and it should be there in about a week.
Hummm, must be something pretty important about me signing the lease!
In the beginning of all of this I search and found the Alaska Oil and Gas Conservation Commission [AOGCC]. On the AOGCC home page, their "Mission" ends with "and the rights of all owners to recover their share of the resource." Seems like a good place to start. I ended up talking with Steve Davies, head geologist, I learned of the Beluga and the Tyonek formations that hold gas in my area. He was quick in finding my land and just as quick with Google Earth finding my home. His e-mails show a great knowledge until I returned home in January of 2015. If Frances1 has now been producing 5 months what about my "correlative rights". Suddenly he can no longer find my property [ I've several e-mails on this]. What's with this commission that is willingly charged with ensuring "and the rights of all owners to recover their share of the resource." Don't dummy up on me, I'll call you out on the World Wide Web and any place else for treating me like a smuck.
Re: THE APPLICATION OF Hilcorp Alaska, ) Docket Number: C0-14-018 LLC for an order for the classification of a ) Conservation Order No. 701 new gas pool and to prescribe pool rules ) for development of the Ninilchik ) Ninilchik Unit ) Beluga/Tyonek Gas Pool, Ninilchik Unit, Ninilchik Field ) onshore and offshore Kenai Peninsula Beluga/Tyonek Gas Pool ) Borough, Alaska Kenai Peninsula Borough, Alaska ) ) ) September 18, 2014
Go to AOGCC homepage. [note: read their mission] Above their drop down bar at "LINKS" you'll see "orders"___click orders___new page, orders and reports___click "conservation orders"___new page, click 700.000-749.000, that section opens, scroll down to CO 701 and CO701A, that's me speaking in 701A [I have the transcript]. So far, I've learned from the AOGCC that I must come up with my own seismic readings no matter how many millions of dollars it cost me. I must also come up with my own experts in geology or any other field to answer questions. Then request a hearing.
Remember their Mission: "and the rights of all owners to recover their share of the resource."
During the hearing on July 2, 2015 that became CO 701A, Mr. Duffy said he doesn't even know how many Billions of cubic feet of gas has been produced but that "it's a lot" Frances1 has been producing for 11 months now. Later, Hilcorp's Geologist testified "1/2 mile east of the well is 100 feet of gas bearing sand".
On my spacing exception the 3,000 foot circle around the well goes through 2 to 3 acres of my land. 1/2 mile East [2640 feet] misses me by about 30 feet, humm, is that 100 feet of gas bearing sand under my feet? If we go 1/2 mile East of bottom hole that moves the circle around 900 feet away from my feet. CO 701 lays out the geography, "Reservoir sandstones within these two formations are lenticular in cross-section and laterally discontinuous,"
Co 701A, page 3 of 5. Affected Area___Township & Range, I'm, 13 West___ Section (s), I'm, 5-8___ Portion(s), I'm, All. So why does the AOGCC want me to spend all those millions of dollars that I don't have if they have an order defining this new gas pool. Why are they protecting Hilcorp's money like it's their own?
Through the next several months I'm e-mailing AOGCC trying to figure this out. One of the last e-mails, Jan.11,2016:
"This matter is
closed. The AOGCC has no evidence that your
correlative rights are being violated. If you feel
your correlative rights
are being violated, you should request a hearing.
Should you request a hearing, it will fall to you to
prove your claims. In addition, state property
records indicate the tract that you claim to own is
owned by someone else."
My reply: Is this the one? It clearly shows: Transfer Date 4/23/2012
Return to KPB Home
Kenai Peninsula Borough, Alaska
Assessing Department Welcome to the AOGCC
Prevent waste of Alaska's oil and gas resources
Protect correlative rights of the mineral interest owner
Maximize recovery of oil and gas for the benefit of Alaska's citizens
I don't like being treated like a smuck AOGCC, don't dummy up on me, I'll call you out on the World Wide Web. I'll find help somewhere on the internet. The more your performance is brought to the world the less likely you'll continue doing it. 2 years ago neither one of us knew the other existed, your ruling in CO 701A says I supplying gas, Range, Section, Portion, in your own writing. I'm NOT going away!
I've meant with Hilcorp's Kevin Tablor, in Anchorage, standard walk through to get me to sign the lease, some of it over my head. One thing that caught my ear is when he offered to put my road in for me. I punched in a 2,000 foot dirt trail a few years ago 14 feet wide, another 700 feet is my driveway, also 14 feet wide. I dream of a road but it's a borough road so Hilcorp would have to put it in close to specks, they're signing their name to the job. 1/4 of a million dollars for a job like that. I'm on the far end, I've dreamed of a road.
$250,000 road, just to sign the contract, HUMMM. And it's not even my road. Now there is money along with the effort getting me to sign.
Dear Readers, I'm almost done. Alaska has around 700,000 people living here, for many of you that's a neighborhood. We have 5 oil and gas lawyers here that I've found. They sometimes work for Hilcorp so it's that conflict of interest thing, one was kind enough to hear me out before telling me, ya right. Resources here are Very Limited to none in me finding help. With the Billions and Billions an Billions of cubic feet of gas produced from this new gas pool in the last 2 years, I truly believe my 10 acre share of the standard 12 1/2 % is now 10's of Millions of Dollars already owed me, not counting the interest. Any interest in me signing a contract is simple. My resources were setting there minding they're own business, You Chose to come after them. Anything that comes out of the hole of value I get my 10 acre share of 12 1/2%, anything not of value is your responsibility with your 87 1/2%.
All that I have to offer is 1/3 of what is already owed me to ANYONE out in Internet Land that can win this thing. I have e-mails and I have the very 1st phone call with David Duffy from 2 years ago. I'm an Exxon Valdez Oil Spill litigant, I've seen the True Filth the State of Alaska is to its people when it comes to the Oil and Gas industry.
This scathing "other order 113" dated Oct 20, 2016 shows, as I read it, shows the AOGCC Doesn't Even KNOW how much gas has been produced!!! How many Billions and Billions of Dollars has the AOGCC Let Walk OUT THE DOOR? It's been proven in a Court of Law, you can buy an Alaska State Legislator for the price of a Girl Scout uniform [Pete Kott]. The AOGCC deals in TRILLIONS of DOLLARS!!!
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
333 West Seventh Avenue
Anchorage, Alaska 99501
Re: Missing Meter Calibration Reports Other Order 113
Ninilchik Unit Bartolowits Pad Docket Number: OTH-15-036
Custody Transfer Meter October 20, 2016
DECISION AND ORDER
On December 16, 2015 the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of Proposed Enforcement Action (Notice) to Hilcorp Alaska, LLC (Hilcorp) regarding the Ninilchik Unit Bartolowits (Bartolowits) Pad. The Notice was based upon Hilcorp’s failure to submit required meter reports for the months August 2014 through December 2015. Hilcorp requested an informal review. That review was held January 21, 2016.
Summary of Proposed Enforcement Action:
The Notice identified violations by Hilcorp of the conditional approval letter for the Bartolowits pad custody transfer measurement equipment, specifically the requirement to provide monthly meter calibration and performance reports. The Notice proposed that Hilcorp provide a detailed written explanation describing how it intends to prevent recurrence of this violation. For these violations, the AOGCC proposed a $170,000 civil penalty on Hilcorp.
An informal review provides opportunity for the recipient of a proposed enforcement action to submit evidence and make written and oral statements regarding the enforcement action in advance of AOGCC issuing a final decision. Hilcorp’s request for an informal review stated it would “submit documentary material in advance of informal review, and make an oral presentation at the informal review.” That same day, Hilcorp forwarded the missing calibration reports and Elster Uniguard Meter Health Check Reports (health check reports) for the Bartolowits custody transfer ultrasonic meter. Hilcorp’s January 4, 2016 submittal was incomplete, missing the following ultrasonic meter health check reports: September 2014; November 2014; February 2015; and October 2015. Also missing was the meter calibration report for August 2014. The missing health check reports were provided on January 7, 2016; the missing meter calibration report has never
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been submitted (discussed below). Review of the health check reports identified numerous times meter alarms were recorded, which raise concerns about the gas measurement system’s accuracy.
Hilcorp’s submittal suggested that AOGCC had inspected the Bartolowits custody transfer meter “three times since its approval” and that “documentation was given directly to the Inspector” after each witnessed test. AOGCC records show only two Inspector-witnessed meter calibrations between the start of production on the Bartolowits pad (July 28, 2014) through December 31, 2015. Hilcorp records provided on January 4, 2016 confirm there were only two AOGCC inspections.1 AOGCC Inspectors were never provided copies of the health check reports for the Bartolowits ultrasonic meter.
Except for the missing meter reports, Hilcorp provided no additional information for AOGCC’s consideration in its proposed enforcement action.
During the informal review, although Hilcorp admitted it had no auditing mechanism of its regulatory tracking system which would have caught its failure to apprise its employees of the reporting requirement, it nonetheless characterized its failure to submit the reports as an honest mistake due to its failure to add the conditions of approval into its regulatory tracking system. According to Hilcorp, because it had no tracking system, it “didn’t know reports were due.” Hilcorp contends that in combination its failures render its conduct a single initial event (failure to submit reports) that carried forward each month since the Bartolowits custody transfer meter was placed in service. Hilcorp characterized the financial penalty as excessive because it disagreed with AOGCC’s proposed enforcement which effectively represented a separate penalty for each monthly failure to report.2.
Review of the meter reports prior to the informal review identified numerous meter alarms in the monthly health check reports, including several that were repeat occurrences during the 17-month
1 August 13, 2015; December 4, 2016
2 August 2014 through December 2015
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period covered by this enforcement action. The meter alarms are significant. AOGCC raised concerns about the performance of this particular ultrasonic meter during the application review due to previous issues at the Kasilof pad where health check reports exhibited some of the same alarms.3,4 The history of this meter at the Kasilof pad was a main factor in requiring the submittal of monthly health check reports for the relocated ultrasonic meter. Hilcorp could not answer AOGCC’s questions about the contents of the reports, specifically the recurring velocity of sound alarms.
In spite of the above, Hilcorp placed part of the blame for its regulatory violations on AOGCC claiming that
- AOGCC is responsible for contacting Hilcorp and educating its personnel about the conditions of approval;
- AOGCC incorrectly accuses Hilcorp of failing to provide required reports associated with two monthly calibrations; and
- AOGCC has “explicitly declined to provide any guidance on ambiguous requirements.”
As evidence Hilcorp cites an August 1, 2014 email that informed AOGCC it understands that the documents attached to the email were the “last submissions necessary for compliance.” The context and timing of the August 1, 2014 email address pre-start obligations that were also included as approval conditions, not the ongoing month-to-month compliance requirements for an operating gas measurement system. Hilcorp claims that the conditions of approval were misread by its personnel. AOGCC bears no responsibility for Hilcorp’s behavior.
Hilcorp notified AOGCC during the informal meeting that it failed to perform the required meter calibration checks in August 2014. Reasons for the missed meter calibration were not provided. This represents an additional violation of the Bartolowits custody transfer meter approval.
3 Bartolowits meter application received May 28, 2014, approved June 26, 2014
4 Operated by Marathon before Hilcorp obtained owner/operator rights in February 2013
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At the close of the informal review, AOGCC provided Hilcorp with an additional opportunity to submit information addressing AOGCC concerns about the gas measurement equipment performance at Bartolowits and corrective actions that have been or are being implemented. Hilcorp’s letter dated January 28, 2016 provided an example of a work order process being implemented that will be used to track required meter calibrations from scheduling through report submittal. Hilcorp’s letter also references in general terms the development of “training modules” without providing details demonstrating how the training will prevent recurrence of the violations identified in the Bartolowits notice.
Health Check Reports:
An ultrasonic flow meter measures the speed (velocity) of the fluid flowing through a known cross sectional area of the meter body. The meter infers the flow of gas (velocity) by measuring the difference in transit time of sound pulses transmitted through the flowing fluid downstream (shorter transit time) and upstream (longer transit time). A commonly used analogy is comparing a kayak crossing a river – faster across when traveling with the current as compared to against the current. Different configurations are used for the sound-pulse transmission path geometry; the Bartolowits meter uses a reflected acoustic path geometry with three sound-pulse transmission paths of known length. Because the ultrasonic meter infers gas velocity, direct meter proving methods are not available which places an increased emphasis on proper system configuration, the use of proper diagnostic software tools, and knowledge of how to interpret the data. A major advantage of ultrasonic meters is the large amount of data produced for diagnosing the meter’s correct operation. Another distinct advantage is the continuous remote monitoring capability of the meter’s health to evaluate trends in the data. Key parameters include composition of gas, velocity of sound (by path), comparison of “measured” velocity of sound to calculations using industry recognized standards5, transducer performance, signal-to-noise ratios, and transducer gain (signal strength). Diagnostics look for changes and out-of-limit events over time on basic parameters such as velocity of sound to verify proper meter performance and provide early
5 American Gas Association Report No. 10
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identification of potential measurement issues. The importance of diagnostics is underscored by comments from ultrasonic meter manufacturers:
- Daniel Measurement and Controls – “if all the diagnostic parameters are normal one can have complete confidence that the meter is working correctly”;6
- Honeywell Elster – “Good, representative samples of gas quality are necessary to facilitate calculation of reference speed of sound values needed to evaluate meter operating conditions”; “Comparisons of meter measured SOS (velocity of sound) may be made against this calculation as a ‘health check.’ Direct correlation between meter accuracy and SOS has yet to be established, but it is known that correct meter function is doubtful if the SOS calculation is in error.”; “Discrepancies between measured and calculated SOS (velocity of sound) indicate a fundamental meter problem.”7
As a result, concerns identified through performance monitoring should trigger additional analysis of the meter system that impact the velocity of sound calculation.
The Bartolowits health check reports are described by Hilcorp as a snapshot (2-3 minutes) of the meter’s performance instead of totals or averages of results over a longer time interval. Roughly half – eight of seventeen – of the reports show alarms triggered for the comparison of measurement to calculated velocity of sound. Hilcorp’s assessment states the eight months where a velocity of sound alarm occurred can indicate a drift in either the meter or the gas analysis and that the snapshot “is typically used to trend drift over a period of time”. Hilcorp’s letter dated January 28, 2016 included a graph of “Average Percent Deviation by Month” for the velocity of sound comparison, concluding that the Bartolowits meter trends “do not indicate a consistent drift from the normal range”. A credible assessment regarding drift is not obtained from a 2 to 3-minute snapshot of meter performance once a month. More problematically, one purpose of requiring the reports is to have AOGCC, not Hilcorp, make that determination.
6 “Diagnostic Ability of the Daniel Four Path Ultrasonic Flow Meter”; K. Zanker, Daniel Measurement and Controls White Papers; www.daniel.com
7 “Ultrasonic Gas Flow Meters for Custody Transfer Measurement”; J. Micklos, Elster
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Hilcorp attributes the alarms for velocity of sound comparisons in five of the seventeen months to dates where the health check report was run coincident to no gas flow through the Bartolowits ultrasonic meter. AOGCC deems a 2 to 3-minute diagnostic “snapshot”, especially one that is captured without gas flowing through the meter, to be of no value in an assessment of meter performance.
The above discussion demonstrates the importance of performance monitoring with the proper diagnostics software and understanding how to interpret the data. Hilcorp’s failure to provide the required health check reports for the Bartolowits ultrasonic meter violated a specific, clearly worded condition of the Bartolowits meter approval and denied AOGCC the ability to review and address questions about health check report alarms in a timely manner.
The AOGCC has considered the factors in AS 31.05.150(g) in its assessment of the violations. Hilcorp admits it failed to submit the required meter performance reports. Hilcorp also admits that it failed to perform the required calibration checks on the Bartolowits meter during August 2014.
There is nothing ambiguous about the conditions imposed by AOGCC for approval of the Bartolowits meters. Hilcorp’s history of noncompliance and its failure to take the rudimentary measure of entering AOGCC’s requirements in its regulatory tracking system preclude any claim that Hilcorp has acted in good faith. Prior to this violation, AOGCC staff had met with Hilcorp on a number of occasions regarding ongoing compliance issues with Hilcorp, including an unprecedented meeting with field operations staff at Hilcorp’s Kenai field office. AOGCC resolved Hilcorp’s earlier violations without enforcement actions. (See Table 1, attached to this Decision.) This approach has had little discernible impact on Hilcorp’s behavior. Hilcorp’s previous commitments to train its personnel have been insufficient to avoid recurrences of regulatory violations.8 Hilcorp’s lack of good faith in its attempts to comply with the imposed
8 October 14, 2016 letter to J. Barnes (Hilcorp) deferring closeout of a notice of violation
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conditions, its history of regulatory noncompliance and need to deter similar behavior are the factors which most heavily influence this decision.
AOGCC agrees with Hilcorp that not adding the Bartolowits meter application conditions of approval into its regulatory tracking system exacerbated the length of its non-compliance. Hilcorp’s ability to provide AOGCC with the missing reports partially mitigates the seriousness of the violation.
Findings and Conclusions:
The AOGCC finds that Hilcorp violated Condition #4 of the approval authorizing the use of an ultrasonic flow meter at Bartolowits for custody transfer measurement of produced gas by failing to submit required meter calibration and health check reports. AOGCC further finds that by its own admission in the informal review, Hilcorp violated the requirement of Condition #2 by failing to a perform meter calibration during August 2014.
Now Therefore It Is Ordered That:
A civil penalty in the amount of $30,000 for violating the conditions of the Bartolowits custody transfer meter application approval dated June 26, 2014 as follows:
- $20,000 for failing to calibrate the Bartolowits meter in August 2014;
- $10,000 for failing to submit the required reports between the months of August 2014 through December 2016.
In addition to the required monthly meter calibration reports, Hilcorp must commence at least daily health checks of the meter and provide the monthly average of the collected data. Average performance data that is outside operating limits must be addressed in the health check report. Hilcorp must maintain the daily health check reports to substantiate the monthly summary reports.
As an Operator involved in an enforcement action, you are required to preserve documents concerning the above action until after resolution of the proceeding.
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Done at Anchorage, Alaska and dated October 20, 2016.
//signature on file// //signature on file//
Cathy P. Foerster Daniel T. Seamount, Jr.
Chair, Commissioner Commissioner