Fines rare for breaking Colorado drilling rules
FORT COLLINS, Colo. – Colorado has issued few fines against oil and gas companies that violate rules under a state law that prohibits any energy company from being fined more than $1,000 for a single violation per day.The total fine is capped at $10,000, but the Colorado Oil and Gas Conservation Commission that regulates the industry can increase that amount if it deems the violation to be reckless, but that rarely happens.According to a study by the Fort Collins Coloradoan ( http://tinyurl.com/cry48md ), state regulators have issued more than 3,800 violation notices since 1996, but only about 270 of them have resulted in fines so far.Of the fines the state has levied in the past 17 years, 112 have been for $2,000 or less.The average oil and gas fine is about $22,000 since 1996. Only 12 fines have been $100,000 or higher, nearly all of which were levied for violations in the Piceance Basin of Rio Blanco and Garfield counties, the highest of which were related to serious groundwater contamination. Three of the fines were levied for violations in far eastern Colorado. None were levied in Northern Colorado counties.Colorado lawmakers are trying to increase the maximum fine from $1,000 to $15,000 per day a violation exists. They also want to impose a minimum $5,000 fine for a serious oil and gas violation that has a significant impact on public health and the environment.In 2011, toxic hydrogen sulfide gas was found in 78 oil wells surrounding the northern Weld County town of Grover. The company operating the wells, Noble Energy, waited nearly eight months to make a required report about the hydrogen sulfide to the state. Just a few breaths of hydrogen sulfide in high concentrations can be fatal, but in lower concentrations the gas can cause vomiting, dizziness and eye damage.Instead of being fined, Noble, which did not respond to requests for comment, was rewarded for cooperating with the commission, which required the company to create a $50,000 hydrogen sulfide awareness program.Todd Hartman, spokesman for the Colorado Oil and Gas Conservation Commission that regulates the industry, said in some cases it is better to make companies spend money to increase public awareness of state regulations and also use it to train regulators.”Noble and the (commission) mutually agreed a better use of a $50,000 penalty was to develop an industry awareness and first-responder training program. We think this is an important outcome and will bring great public benefit,” commission spokesman Todd Hartman said.Lobbyists for the industry said oil and gas regulations must work to both protect the environment and the business climate by encouraging best practices without being punitive.Colorado Oil & Gas Association spokesman Doug Flanders said the industry supports more than 100,000 Colorado workers.Often regulators claim a company’s well-plugging or financial assurance bond instead of imposing a fine, or settles with a company for dramatically reduced fines, sometimes cutting six-figure penalties by tens of thousands of dollars.In November, an oil company operating in Weld and Adams counties called Texas Tea LLC was fined $170,000, but the company and the state commission settled on a $110,000 fine for 49 violation notices since 1999, according to the Coloradoan.The commission then ordered Texas Tea to pay $40,000 of that, suspending the remaining $70,000 for as long as the company remained compliant with state regulations. Texas Tea has since failed to comply with state orders, and the matter is scheduled to be heard before the commission in May.A company spokesman could not be located for comment.
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