EnCana racks up the fines
Ryan Summerlin December 10, 2004
One of Garfield Countys leading natural-gas producers also is leading the state this year in violations and fines.EnCana Oil & Gas was hit with another fine last week in connection with its operations in Garfield County. It has violated state regulations and laws in connection with 17 wells this year and been fined a total of $454,200.Seventeen for this one company is quite a few, said Morris Bell, operations manager for the Colorado Oil and Gas Conservation Commission.But the company promises next year will be different. EnCana spokesman Walt Lowry said this week EnCanas goal is to be issued no notices of alleged violation by the COGCC in 2005.Its a dangerous business. Things do happen, but its our commitment and our goal to ensure that they dont, he said.The COGCC last week found EnCana in violation of drilling a well without a permit, and recompleting seven wells without permits. The COGCC fined EnCana $25,000 for the violation involving the new well; the COGCC staff had recommended a $35,000 fine.The COGCC did not fine EnCana in connection with the recompletion violations because of a clause that exempts companies from fines when they voluntarily report violations.Tricia Beaver, a COGCC hearings officer, said recompletion work can involve going back into a well and perforating it, possibly at a different geological formation, in an attempt to reach new pockets of gas.The bulk of EnCanas fines this year stem from a record $371,200 penalty handed down in August in connection with natural gas that surfaced earlier in the year in West Divide Creek south of Silt.The COGCC has fined EnCana more this calendar year than all oil and gas operators combined in any COGCC fiscal year for at least 15 years. According to state records dating back to 1990-91, the most in total fines the COGCC had previously imposed was $238,250 in fiscal year 1995-96.The COGCCs fiscal year begins in July, and total fines so far this fiscal year are $453,200, in large part due to EnCanas West Divide Creek fine and others against the company.EnCana might have paid more, if not for the COGCCs rules on self-reporting violations. Beaver said the COGCC debated at length over whether the problem involving the recompleted wells was self-reported.It could have been a stretch to say it was self-reported in the strictest sense, she said. It was self-reported sort of generically.The company said it found some recompleted wells in violation and might have some more, Beaver said. Those others turned out to be the seven for which it was found in violation.She said this years gas seep is a lot worse of a violation than EnCanas recent permit mistakes.But any violation of our rules is not a good thing to have happen, she said. Often a company and COGCC staff will agree to a finding of violation rather than the matter being decided by the oil and gas commission. But Beaver said COGCC chairman Peter Mueller insisted that the allegations against EnCana be heard by the commission.I think our commission was very concerned after the seep, Beaver said.Bell noted that EnCanas total violations this year exceed 17, because in some cases it had multiple violations on single wells.The COGCC has issued about a dozen orders this year against Petroleum Development Corp., a company not operating in Garfield County. But many of those were for single violations involving recompleting wells without permits, Bell said.EnCana and Williams Production are Garfield Countys leading natural-gas producers. The COGCC issued one violations order against Williams this year. In July, it was fined $30,000 after a fire burned out of control at a well near Parachute in February.EnCana has been working to address COGCC concerns that have arisen since this years gas seep. Lowry said the company has been adding to its staff to better oversee drilling and regulatory compliance. Were certainly headed in the right direction with our initiatives and commitment to the community and our neighbors and our partners. We care very much about those stakeholders, he said.He said the latest violations by EnCana dont present a danger to the public.Theyre not operationally related, theyre paperwork-related, but we take them very seriously, he said.He said some of the recompleted wells apparently were originally drilled by other operators who may have used different names than EnCana does for some geological formations, and that could have contributed to confusion over the need for new permits. He said EnCana is working to make sure everyone is using the same terminology now.In the case of the new well, the Shideler well south of Silt, EnCana had a permit but it had expired. EnCana changed the well name, moved it to a new location on the well pad and filed for a new permit, but, due to unintentional errors, began drilling before the permit was in place, Lowry said.COGCC staff say EnCana appears to making progress toward better complying with rules and regulations, and it will take time to see if the companys efforts succeed.Bell said hes glad to hear of EnCanas goal of having no notices of alleged violation next year. Thats possible, even with the volume of drilling EnCana does, he said.A lot of companies have no NOAVs in a year. I think they can do it, he said.