Abandoned wells lead to record state fine

An energy company that abandoned eight wells in Rio Blanco County has been hit with by far the largest total fine ever imposed by state oil and gas regulators.

Meanwhile, a second company stands accused of similar actions in the case of wells in the Rifle area in Garfield County.

At its meeting this month, the Colorado Oil and Gas Conservation Commission levied $940,000 in total fines on West Hawk Energy (USA) LLC for some 90 rule violations involving eight wells northwest of De Beque. Commission inspectors say some of the violations include: wells that haven’t been properly tested or plugged; spilled exploration and production fluids; and pits with liners in poor condition, oil in them and other problems.

The fines were the maximum amount allowable under the commission’s rules, said Rob Willis, the commission’s acting hearings manager.

The previous largest total fine imposed by the commission was $423,300, against Williams. That was for a leaking pit that the state says contaminated a spring northwest of Parachute in 2008, sickening a man who drank the spring water. At a July hearing last year, the commission hit Oxy USA with separate $390,000 and $257,400 fines for two cases of pit leaks contaminating springs, and in one of the instances a creek, also northwest of Parachute.

Willis said collecting the West Hawk fine likely will be difficult. Commission staff have been unable to contact West Hawk or company official Gonzalo Torres Macchiavello. This month the commission is scheduled to consider banning oil and gas operations by West Hawk or other entities involving Macchiavello until the fine is paid.

“The unfortunate thing is there are certain operators that don’t do what they need to to be responsible. This is one of those circumstances,” Willis said.

Puckett Land Co. has land and mineral interests where the wells are located. Encana Oil & Gas (USA) has agreed to take over plugging and reclamation work involving the wells due to a contractual obligation with Puckett. Encana had farmed out the gas leases involved to West Hawk.

Also at its Sept. 19 meeting, the oil and gas commission will consider finding that Dolphin Energy Corp. violated well testing, reclamation, plugging and other rules at about a dozen wells and pads.

Willis said it’s the understanding of commission staff that Dolphin Energy is bankrupt.

The staff may ask the commission to claim bonds posted by Dolphin Energy to offset costs for plugging the wells and reclaiming the well sites.


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