Gunnison Energy has agreed to pay nearly $350,000 in penalties for two pipeline leaks in the upper North Fork Valley.

The Colorado Oil and Gas Conservation Commission approved the $349,125 fine this week as part of a settlement agreement over rules violations by the company.

The enforcement actions stem from leaks that occurred in 2017 and 2018 — the second of them being discovered as a result of the company's stepped-up pipeline inspection efforts following the first incident.

The first leak occurred in the Deadman Gulch area west of Paonia Reservoir. On July 27, 2017, Gunnison Energy personnel discovered that a valve on a riser from an underground pipeline had leaked.

The pipeline transports wastewater for disposal in nearby injection wells.

Gunnison Energy estimated that between five and 100 barrels, or 210 to 4,200 gallons, had leaked, affecting an area about 200 feet long and 20 feet wide where sagebrush and other vegetation had been killed. It removed about 10.6 tons of soil to clean up the spill.

The company told the COGCC in a supplemental report "that, in order to prevent future spills, it had purchased a drone and established a schedule for visual surveillance of pipelines, established a schedule for monthly inspection of all pipeline risers, and established an operator training program to train pumpers in pipeline maintenance and monitoring," according to a staff memo.

The drone monitoring led to the discovery May 16 of dead and stressed vegetation in a path leading from a vent valve on a produced water line in the Narrows area north of Deadman Gulch and west of Colorado Highway 133. Gunnison Energy later estimated that the leak occurred in mid-April, likely due to water freezing in the valve and causing it to break.

An estimated 85 yards of soil were removed in that cleanup.

Soil testing from the spills found contamination including sodium chloride and hydrocarbons. Salar Nabavian, general manager of Gunnison Energy, said most of the contamination consisted of chlorides.

The fine included a 30 percent discount for settling rather than contesting the matter, and 5 percent for the company's response, including taking steps to find the second leak.

"Gunnison Energy cooperated extensively with (COGCC staff) in resolving the violations, and demonstrated a prompt, effective, and prudent response to the violations upon discovery," the memo from staff said.

The potential for spills to contaminate watersheds has been one concern North Fork Valley activists have cited in opposing more oil and gas development there. Nabavian said the spills didn't occur near water.

He said the company has responded proactively by adopting more robust inspection efforts, and spent considerable money, including by digging up some pipeline risers and installing "cans" with hatches that allow for visual inspection of the risers.

"We really did go above and beyond" in responding to the leaks, he said.

The company proactively redesigned and replaced 18 risers and valves, the COGCC memo said.