Energy giant agrees to pay record fine

Williams has agreed to pay a record $423,300 fine to resolve a state investigation into a spring-contamination case in which a De Beque man drank benzene-tainted water.

However, the company continues to dispute the contention of Colorado Oil and Gas Conservation Commission staff that a leak from its well pad contaminated water that Ned Prather drank at his cabin northwest of Parachute on May 30, 2008.

The commission is scheduled to consider the settlement agreement between Williams and commission staff during its Aug. 12 meeting.

The fine would be the highest ever imposed by the commission for a single incident. The current record is a $390,000 fine handed down by the commission in April against Oxy USA for another case of spring contamination, also northwest of Parachute.

The same day, the commission levied another fine of $257,400 against Oxy for yet another case of spring contamination in the same area.

An investigation into contamination of a second spring on the Prather property continues. David Neslin, director of the commission, said that’s the subject of a pending enforcement matter involving Oxy.

State investigators say the spring from which Prather drank was contaminated when a lined Williams production pit leaked about 1,500 feet up-gradient of the spring.

Tests on June 4, 2008, found benzene levels that exceeded state groundwater standards by 32 times at the spring and 13 times at the cabin’s kitchen faucet, according to the proposed consent agreement between the state and Williams.

Prather went to the hospital after the incident. A toxicologist hired as a state consultant concluded Prather didn’t seem to face an elevated cancer or other adverse health risk from the water he drank, but the benzene concentration in the water the day he ingested it is unknown, the state says in the proposed agreement.

The investigation found the Williams pad was operating without a state permit that was required because it was in an area vulnerable to groundwater impacts. The pit was used to hold production water from two wells completed in 2007. That water contained dissolved hydrocarbons, the state says.

Proper permitting would have resulted in conditions of approval that would have “greatly reduced” impacts to groundwater and the spring, the state says.

The state also contends the pit wasn’t properly installed or maintained. Williams disputes that allegation, citing tests it conducted in 2009 showing the liner integrity was good.

In December, Williams reported that while closing the pit in question, it had discovered a release of fluids had previously occurred. But the company contends two facts demonstrate its pit didn’t contaminate the spring: Core-hole tests showed hydrocarbon levels declined below cleanup standards at deeper levels, and it didn’t find groundwater 175 feet below the pit.

It is abiding by the consent agreement “solely in the interest of compromise and settling disputed technical and legal allegations made by the COGCC and Mr. Prather,” the agreement says.

Benzene levels in the spring are declining but still exceed state standards. Oil and gas regulators are requiring Williams to submit a monitoring and mitigation plan and give Prather an opportunity to review it, submit comments to commission staff and request a commission hearing before its approval.

Williams also is continuing to provide drinking water to the cabin.

The state says Williams has spent $1.3 million to date on the contamination investigation and about $8.5 million to improve handling of fluids in its operations.

Prather could not be reached for comment Friday.

Williams spokeswoman Susan Alvillar would say only that the company “believes it has reached an agreement in principle” with oil and gas regulators and anticipates the agreement’s approval by the commission Aug. 12.


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