By: Yereth Rosen, Alaska Beacon
Alaska regulators have assessed a $695,900 fine against Hilcorp for violations at two wells in a North Slope oil field that is a satellite of the giant Prudhoe Bay field.
Hilcorp violated regulations for up to two years when it injected enriched gas into the reservoir at the Polaris Oil Pool, which is part of the Greater Prudhoe Bay Unit, the Alaska Oil and Gas Conservation Commission said in a Nov. 24 decision and order.
Hilcorp is a Texas-based private company that now operates the state’s largest oil field. It is the second-biggest fine for the company ever proposed by the AOGCC.
The highest proposed fine was $720,000, which the commission initially assessed against the company in late 2015 for violations that led to an accident earlier that year that nearly killed three workers at the Milne Point oil field.
Ultimately, the AOGCC in 2017 reduced the fine to $200,000, though the commission assessed other fines at about the same time for other violations at Milne Point. Those fines ranged from $20,000 to $80,000.
In its new enforcement action, the AOGCC said the fine for the Polaris field violations is justified by the company’s pattern of violations.
“Hilcorp’s repeated failure to comply with fundamental injection authorization raises the potential for similar behavior with more serious consequences. Hilcorp’s repeated failure to comply with AOGCC rules and regulations combined with ineffective corrective actions, warrant increased civil penalties to deter similar behavior,” the order said.
Also influencing the fine size is the duration of the offenses. At one well, the unauthorized injection continued for 759 days, the AOGCC said. At the other well, the unauthorized injection went on for 480 days.
Enriched gas is sometimes injected into oil fields to boost oil recovery.
The enforcement action has been in the works for several months.
The AOGCC said that in February, it formally notified Hilcorp that it was investigating the use of enriched gas at the two wells. Hilcorp then conducted an internal investigation, responding to the AOGCC in March with an analysis of the root cause and actions to correct the problem and prevent a recurrence.
Because of that response earlier in the year, the AOGCC said it is not requiring Hilcorp to submit any further written explanation.
Hilcorp has the right to appeal the $695,900 fine. If it does not appeal, Hilcorp must pay within 30 days of the decision, the order said.
A company spokesperson said Hilcorp itself brought the violation to light and that it did not result in any safety or environmental problems.
“This issue involved a highly specific and previously unrecognized authorization gap that neither Hilcorp nor prior Prudhoe Bay operators had identified. We discovered it through an internal review informed by recent AOGCC findings, and we immediately notified the Commission and self-reported all details,” Hilcorp spokesperson Matt Shuckerow said by email.
Shuckerow said the use of enriched gas is safe and permitted on many neighboring wells “as part of an effort to increase resource recovery, which results in increased royalty and revenue to the State of Alaska,” he continued.
“It caused no safety risks, environmental harm or impacts to resource conservation. We have completed a comprehensive review of all wells to ensure no similar gaps exist and will continue working transparently with AOGCC to uphold the highest standards of safety, conservation, and regulatory compliance,” he said.
Shuckerow did not address the question of appealing the fine.
Hilcorp entered Alaska in 2011, focusing first on the Cook Inlet basin, where it is now the dominant operator, before expanding to the North Slope in 2014. In 2020, when BP Exploration (Alaska) Inc. sold its remaining Alaska assets to Hilcorp and ended its activities in the state, Hilcorp became the operator of the Prudhoe Bay unit. Prudhoe Bay is now co-owned by oil companies ConocoPhillips, ExxonMobil and Hilcorp.
Since it began operating in Alaska in 2011, Hilcorp has been the subject of 20 AOGCC enforcement orders, including the latest order, according to the commission’s website. Eleven concerned violations on the North Slope and nine concerned violations at Cook Inlet sites, according to the website.
Five of those orders were issued in 2024, including one that assessed a $452,100 fine for unauthorized injections at Prudhoe Bay of a type of gas used to enhance oil recovery.
Different type of enhanced recovery technique gets OK
Although the AOGCC faulted Hilcorp for its unauthorized use of enriched gas at Polaris, it has approved Hilcorp’s plan to try out a different type of enhanced recovery at the field.
The commission on Nov. 25 gave the go-ahead for Hilcorp to use polymer flooding at a different Polaris well for a 12-month test period.
The approval is unrelated to the Nov. 24 order and decision on the enhanced gas violation.
Polymers are natural or synthetic materials, such as cellulose and nylon, that consist of chains of molecules arrayed in a repeated pattern.
Polymer flooding in oil fields injects water-soluble polymers into reservoirs to increase oil recovery. The injected polymers blend with water to better sweep out oil. Polymer flooding is considered an effective technique to boost oil production, but it does not work in all types of reservoirs, according to scientists. The technique is most appropriate for enhanced recovery of heavier oils, according to the U.S. Department of Energy.
Hilcorp pioneered the use of polymer flooding on the North Slope, starting in 2018 with a test project conducted at Milne Point in collaboration with the University of Alaska Fairbanks and the U.S. Department of Energy.
The pilot project was deemed successful, and Hilcorp now uses the technique more widely at Milne Point, where polymer flooding has allowed for much better recovery of the thicker oil that is within that field.
With the help of polymer flooding and other actions, Hilcorp has increased Milne Point production from about 18,400 barrels per day in late 2014 to about 50,000 barrels per day now.
Hilcorp in 2014 acquired 50% ownership in Milne Point from BP and became the operator that year. Hilcorp took full ownership in 2020, after the acquisition from BP was completed.
The company has for years considered expanding some of the practices that have improved production at Milne Point to the parts of the Greater Prudhoe Bay Unit, which also holds some heavier oil. The now-authorized 12-month test at the Polaris well is part of that strategy.
