WyoFile Energy Report

It’s one thing to be enthusiastically open-for-business when it comes to energy development in Wyoming. It would be quite another to stand idly by when a company breaks the rules.

This week the Wyoming Oil and Gas Conservation Commission took action against two oil and gas companies for failure to comply with environmental, reporting and bonding requirements. It was encouraging that the five-member commission — which includes Gov. Matt Mead — voted unanimously to impose the maximum monetary penalties allowable under the agency’s current rules, because there’s been an awful lot of industrial spilling in Wyoming in recent years.

One company, Utah-based Pure Petroleum, LLC, allegedly failed to meet compliance despite months of urging from state inspectors. Spilled oil and improperly maintained water pits persisted until federal regulators — U.S. Fish and Wildlife, and the U.S. Environmental Protection Agency — finally became involved.

That’s a source of embarrassment, said commissioner Donald Basko.

“The commission has always been able to pride itself on being able to handle its own problems. … Now we have EPA and U.S. Fish and Wildlife Service involved. Based on that I’m not willing to give them any more leeway or time,” Basko said during a commission hearing in Casper on Tuesday.

The commission voted to impose the maximum allowable $5,000 fine on Pure Petroleum for each of three violations; failure to report a spill, and two counts of failure to properly maintain and clean up a pit. The violations occurred at an oil well location on the outskirts of Moorcroft.

In addition, Pure Petroleum will be required to post an additional $281,565 in idle well bonding (for a total $374,610) due to allegations that some of its coal-bed methane gas well locations in the Powder River Basin have been neglected.

Also at the Tuesday hearing, the commission voted to cash in $25,000 in bonding posted by Sonoma Energy Corp. for persistent violations at three of its well locations in Carbon County. The money will be used to plug and abandon the wells.

Neither company could be reached for comment.

State Geologist Wallace Ulrich, who also serves on the Oil and Gas Conservation Commission board, said during the hearing that most oil and gas companies comply with the state’s environmental rules and dutifully address spills and regulatory violations when they’re spotted.

“When so many of our other producers across the state excel at that, this is an embarrassment,” Ulrich said of the Pure Petroleum case.

That the commission took a hard stance this week against two bad actors is commendable. But it can also be argued that the state is paying today for past leniency toward the industry during boom times.

Wyoming is currently dealing with an oil spill into Emigrant Creek south of Rawlins and oil sheens in the North Platte River near the old Amoco refinery site in Casper. Last spring, a CBS News investigation found that Wyoming — by a long shot — was responsible for the highest volume of oil and gas spills in the United States — 10.3 million gallons in 2010 compared to a distant second Texas at 4.5 million gallons.

A major contributor to that 10.3 million gallons figure were un-permitted water discharges in the coal-bed methane gas industry, according to Wyoming Department of Environmental Quality officials. The prolonged low price of natural gas is taking a toll on small companies that dove headlong into the Powder River Basin coal-bed methane gas industry in the early 2000s, and the state remains prone to neglected facilities there.

Last year, the state had to plug and abandon — and “partially reclaim” — 122 coal-bed methane gas wells in the basin at a cost of $867,700, according to Oil and Gas Conservation Commission supervisor Tom Doll. Of that, $321,000 came from bonds posted by the responsible permittees to the state. The remainder, $546,700, came from the state’s orphan well fund (which is funded through a “conservation” mill levy).

The state continues to plug and reclaimed orphaned wells in the region. So far, the orphan well fund is healthy enough to handle the steady drip of wells left by bankrupt operators in the Powder River Basin, according to Doll.

Among those in the oil and gas industry, Wyoming state government is respected for understanding — more than other states — how the industry works, and for insisting on a tough set of rules. Producing oil and gas can be a risky endeavor, and the state isn’t to blame for every company that’s found itself in bankruptcy and with wells it cannot properly maintain. But the recent spate of spills and bankruptcies should remind us of why we require bonding and environmental regulations in the first place.

— Dustin Bleizeffer, WyoFile editor-in-chief, has covered Wyoming’s energy industry for 13 years. He can be reached at 307-577-6069 or dustin@wyofile.com.

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Dustin Bleizeffer is a Report for America Corps member covering energy and climate at WyoFile. He has worked as a coal miner, an oilfield mechanic, and for 25 years as a statewide reporter and editor primarily...

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  1. Thanks for the article, Dustin. If citizens are interested in changing the way things work in Wyoming, I would encourage them to support reform to the “blanket” bond approach used by the state and federal governments. In contrast to the coal industry, which is required to post site-specific bonds designed to cover the full cost of reclamation, oil and gas companies can post a small amount to cover any problems for their wells state or nation-wide. A larger bond amount encourages responsible development because if the company defaults, it will forfeit the bond. For those interested, there was a recent GAO report on this that was quite good: http://www.gao.gov/products/GAO-10-245

  2. It is often hard to see the “teeth” in Wyoming’s regulatory policies, and I think the fines should be much higher, given the ecological impacts and long-term implications of the extraction practices. Nonetheless, I am pleased to hear that the commission took such a strong stance on this issue, which is all too common. Thank you.

  3. “Wyoming — by a long shot — was responsible for the highest volume of oil and gas spills in the United States — 10.3 million gallons in 2010 compared to a distant second Texas at 4.5 million gallons.” This is a pathetic record.