AOGCC Requires BP to Submit Well Management Plan

The Alaska Oil and Gas Conservation Commission issued an order last week requiring BP Exploration (Alaska) Inc. to submit a plan for managing wells with high outer-annulus pressure, like the well that was the site of the August explosion and fire, according to a report from Reuters report. The agency is considering expanding that order into a full-fledged rule that would give it more direct oversight in the maintenance of such wells, AOGCC commissioner Daniel Seamount said on Tuesday.

"The reason we had the ruling was because their former procedures dealing with annulus pressure obviously didn't work," Seamount said.

Under the order, BP must by February 14 present results of a hazard study it is conducting and by March 3 submit its plan for management of the high-pressure wells. The plan must include schedules for routine monitoring, a procedure for notifying the Oil and Gas Commission about well-pressure problems and classification of Prudhoe Bay wells according to risk, among other provisions.

Expanding that order into a new rule would require more time and a public-hearing process, Seamount said.

Only Prudhoe Bay, which produces about 600,000 barrels a day, has about 1,600 wells and is the nation's biggest oil field, would be governed by the new rule if one is issued, Seamount said.

"It is something that's only applicable to the Prudhoe Bay field, and it's only applicable to BP as the operator," he said. The commission is still investigating the August incident and has made no decision about a penalty, Seamount said.

The AOGCC regulates oil and gas operations in order to ensure efficiency, prevent waste of state-owned resources and protect state interests.

After the August explosion, BP temporarily shut down nearly 140 wells and inspected them before restarting them.

BP has launched improvements in its management of high-pressure wells, beefing up monitoring, worker training and other procedures in ways similar to what the AOGCC order demands, said company spokesman Daren Beaudo.

"A lot of the elements of the order seem to codify most, if not all of the actions that we've already pledged or taken," Beaudo said late Tuesday.

BP had earlier argued that the agency should not formalize the order into a new rule, he said. "Our original position was we didn't think that a rule was necessary," he said. The rule would apply only to Prudhoe Bay, he said, but there are high-pressure wells elsewhere on the North Slope and in other parts of the world. "Our experience is there's really not a prescriptive, one-size-fits-all rule that has addressed all of these kinds of issues," he said.

However, if there is a formal rule put into effect, BP will accept it, Beaudo said. "We will operate under the conditions that the AOGCC puts forth," he said. Another state agency has informed BP that it planned to cite and fine the company for a violation discovered as a result of the well explosion, Beaudo said.

An inspector from the state Division of Occupational Safety and Health last week told BP the company violated "a specific clause" of state law, and that he would recommend a citation and an unspecified penalty, Beaudo said.