EPA fines Hilcorp $180K for methane leaks, reporting violations in Alaska

Oil company Hilcorp Alaska has paid fines totaling $180,580 for nearly three dozen Clean Air Act violations at its facilities across the state, according to a statement from Environmental Protection Agency Region 10 officials.

EPA regulators determined Hilcorp did not promptly repair leaks of methane and volatile organic compounds when the issues were discovered; failed to inspect for leaks at a new facility; and did not accurately report leak inspections and repairs from 2018 through 2020, according to the agency’s statement.

The cumulative penalty is for 35 individual violations at the Prudhoe Bay and Milne Point oil fields on the North Slope and at several of Hilcorp’s properties in the Cook Inlet basin. A consent agreement dated Feb. 7 and signed by Hilcorp Alaska Senior Vice President Luke Saugier and EPA Region 10 Enforcement and Compliance Director Ed Kowalski lists all 35 violations.

“The public needs to be able to depend on a major facility owner like Hilcorp obeying the rules for providing accurate and honest reporting of maintenance activities. Requirements to conduct emissions monitoring and timely repair or replacement of the (leak) sources should be at the top of this company’s priority list,” Kowalski said in the EPA statement.

Houston-based Hilcorp Energy, which operates with a business model that focuses on rejuvenating oil and gas production from mature fields, has become a major player in Alaska after buying several Cook Inlet properties from Chevron and Marathon about a decade ago.

Hilcorp is now the primary supplier of natural gas to Southcentral utilities, and took over the iconic Prudhoe Bay field from BP in 2020 as part of a $5.6 billion deal for the London-based major’s remaining Alaska assets.

Many of the individual violations stem from not repairing identified leaks within 30 days of discovery. Several were fixed within 40 days, but others took up to 150 days to receive proper attention based on the consent agreement.

The agreement alleges that an annual leak inspection and repair compliance report Hilcorp Alaska submitted to EPA for 2018 omitted information regarding the dates and times of leak detection and repairs; and the 2019 and 2020 reports indicated numerous instances of delayed repairs at both Cook Inlet and North Slope facilities.

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The terms of the agreement specify that while Hilcorp agreed to pay $180,580 in fines, the company “neither admits nor denies the specific factual allegations contained in the consent agreement.”

A portion of the Prudhoe Bay violations occurred while the large oil field was still under BP’s control in 2019 and early 2020, according to the dates in the settlement document.

“Hilcorp is committed to safely and responsibly developing Alaska’s resources. We have implemented procedures to strengthen our air emission monitoring and reporting processes to ensure we timely and accurately report our completed inspections,” spokesman Luke Miller wrote via email.

Some local environmental groups have been sharply critical of Hilcorp since the company entered Alaska, alleging its emphasis on extracting additional production from older facilities lends to more frequent environmental problems.

The EPA’s enforcement actions against Hilcorp Alaska follow three fines totaling $74,000 the producer has accrued from the Alaska Oil and Gas Conservation Commission since late November.

In early 2017, natural gas leaked from a 50-plus-year-old central Cook Inlet subsea pipeline owned by Hilcorp for several months before sheets of pan ice dissipated in spring, allowing divers to repair the leak. Hilcorp leaders said at the time they could not completely shut off the gas source for fears residual oil that the pipeline once carried could leak out instead. Hilcorp was not fined by state or federal agencies for the 2017 gas leak.

AOGCC chair Jeremy Price told the Journal in January that state regulators are concerned with the company’s recent regulatory compliance issues.

The state commission issued six enforcement orders with fines in 2021; three of them were issued to Hilcorp.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.