A Review of the Nigerian Energy Industry

Report: US spills draw very few fines

Pegasus spilled 5000 barrels - ExxonMobil18 July 2013 – Oil and gas operators in the US report thousands of onshore fluid spills per year to state regulators while only a small fraction of those spills draw fines or other punishment, according to a report.
Online news site E&E Publishing conducted a four-month review of state records on blowouts and spills of oil, brine and other drilling fluids and put together what it calls “the most comprehensive report available on the spills that result from the nation’s booming oil and gas industry”.

E&E found that fines from spills are rare.

“There are no national figures on oil and gas spills or enforcement. But where state records are available, they show agencies pursue fines against oil and gas producers in only a small minority of spill cases,” the reports said.

In Wyoming, the Department of Environmental Quality recorded 204 spills from oil and gas production sites, and pursued fines against 10 producers, E&E reported.

In Texas, the top hydrocarbon-producing state, just 2% of some 55,000 violations in the last fiscal year (not all of them spills) led to some sort of enforcement, the data showed.

The state of Pennsylvania, home of the giant Marcellus shale, levied fines in 13% of cases where inspectors found violations, E&E reported.

Regulators in New Mexico, which tallied 735 spills last year, have not levied fines since 2009 when a court ruled that the state Oil Conservation Division does not have authority to do so.

The number of spills in the US increased by roughly 17% between 2010 and 2012, while drilling activity rose by 40% in states where data was available, according to E&E.

The news site tallied a total of more than 6000 reported spills in 2012.

Some states, like Texas and Oklahoma, take a “compliance-based” approach to regulation, choosing to make sure operators are operating according to guidelines rather than punishing slip ups.

Environmentalists say this approach does not effectively deter repeat violations.

Officials at the regulatory Texas Railroad Commission take a different view.

“The commission’s compliance-based approach serves the public safety of the state’s citizens, the state’s environment, and the state’s economy well,” the commission told E&E.

A more aggressive, “rules-based system” would not necessarily make drilling safer or more environmentally friendly, the commission said.

Landowners like Kristi Mogen disagree. Morgan and her family own an organic farm in Wyoming near the site of a well blowout last year operated by Chesapeake Energy. The incident covered her farm in a thick mist and left a sheen of petroleum in water used to feed her cattle, she told E&E.

She claims the incident left her young daughter with nosebleeds for the next 29 consecutive days, and that she and her husband were found to have dangerously low levels of oxygen in their blood as a result of the blowout, according to E&E.

The blowout and resulting claims of contamination were ultimately deemed a “non-incident” by state authorities, despite findings of human failing. Chesapeake faced no disciplinary action.

While state farmers are slapped with fines for selling raw milk or green leafy vegetables, due to contamination concerns, “oil and gas companies are allowed to put chemicals in our air and in our soil”, Mogen told the new site.

Some violations do lead to fines. In North Dakota, which recorded the most spills of any state in 2012 with 1129, officials charged Newfield Exploration more than $100,000 for a blowout and spill near Watford City in December. Newfield, which makes that much money approximately every 22 minutes, is contesting the fine.

The North Dakota Department of Mineral Resources is also seeking a $75,000 fine against Slawson Exploration for a blowout in December 2012 blowout near the banks of Lake Sakakawea, as well as a $300,000 penalty for failure to disclose hydraulic fracturing fluid ingredients as required. Slawson is also contesting.
*Luke Johnson, Upstreamonline.

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