Regulators Slapped Colorado Oil And Gas Companies With $5 Million In Penalties Last Year

June 4, 2019
Photo: Weld County Oil And Gas Near Homes 2 HV
A pump jack near homes on Berwick Avenue in Firestone, April 2, 2019.

State oil and gas regulators issued $5.2 million in oil and gas fines last year. That’s a 31 percent decline from 2017, even as oil production rose 37 percent to record levels in 2018, according to a review of state records.

The Colorado Oil and Gas Conservation Commission said there’s no particular reason that fines fell last year. Fines posted one year, for instance, could be related to issues in a previous year.

Fines for oil and gas operators have been on the rise since 2013, when Colorado lawmakers lifted penalty caps and gave the COGCC wider authority to crack down on the industry. Since then, the commission has issued $24.4 million in fines and revoked the drilling privileges of a handful of companies, most of them smaller operators.  Until this year, the smallest oil and gas drillers racked up the biggest fines.

Now, fines are hitting some of Colorado's biggest producers who focus on oil drilling on the Front Range. In the last 12 months, the largest operators have received the most expensive penalties.

Chart: Fines Accrued By Colorado Oil And Gas Companies 2014-18

Noble Energy, Colorado’s second biggest driller by oil volume, incurred the largest fine — a $1.6 million penalty for not maintaining and pressure testing a host of shut-in wells, or wells not currently producing. Pressure testing helps verify the integrity of the well and check for possible leaks to protect workers and the environment.

According to COGCC records, Noble alerted the commission of potential violations. The size of the fine came from a combination of the number of wells, and the duration of violations. In some cases, maintenance was overdue by more than a year, and Noble incurred a penalty of up to $5,000 for each day.

Earlier this year, Extraction Oil & Gas was ordered to pay a $803,800 penalty for failure to perform pressure testing on wells in Larimer and Weld counties. The commission said Extraction has implemented a series of significant changes to prevent future violations.