The company with the most active presence in the Piceance Basin gas drilling business has been fined what may be a record amount for contaminating a spring northwest of Parachute, sending a man to the hospital in 2008.
The Colorado Oil and Gas Conservation Commission on Thursday approved a settlement reached between the COGCC staff and Williams Production RMT Co., ordering Williams to pay a $423,300 penalty.
The maximum possible fine against the company, according to documents on the COGCC website, amounted to $498,000.
But the amount was reduced by 15 percent because Williams "demonstrated a prompt, effective and prudent response to the violations," and because Williams reportedly has spent a combined total of $9.8 million on investigating the contamination and on "basin-wide efforts to enhance the management of fluids including Produced Water," according to the COGCC.
The COGCC's investigation concluded that Williams' gas drilling activities, and particularly a leaking liner used in a pit to contain water laced with hydrocarbons and chemicals, contaminated the spring in question. The investigation revealed the presence of benzene, a carcinogenic chemical known to be used in some of the procedures involved in gas exploration.
A DeBeque-area outfitter, Ned Prather, in May 2008 drank from a faucet at his outfitting cabin, which receives water from the same spring.
Williams denies that its activities were responsible for the contamination, arguing that there were other gas drilling rigs in the area at the same time, but an investigation by the COGCC determined that Williams was at fault.
Williams has declared that it is signing onto the settlement as a way to avoid spending more money and resources on the continuing investigation, and to get on with the business of drilling and extracting natural gas.
Richard Djokic, Prather's attorney, confirmed on Thursday that the settlement had been approved by the COGCC, and added, "We have no position on the regulatory settlement."
Prather has filed two lawsuits over contamination of the springs on his property, one against Williams and the other against Nonsuch, two of the companies that were operating wells in the area of the springs in 2008.
The fine against Williams is the latest in a string of penalty amounts levied against gas companies by the COGCC, starting with a 2004 fine of $371,000 against EnCana Oil and Gas (USA) over the Divide Creek Seep.
More recently, Oxy, another company working the Piceance Basin gas reserves, was fined twice in April for contaminating two springs northwest of Parachute in roughly the same area as the Prather spring.
One fine against Oxy came to $390,000, reduced from a maximum possible fine of $500,000; and another came to $257,400, reduced from a maximum possible fine of $330,000.
According to Dave Neslin, director of the COGCC, the agency continues to investigate the contamination of what is officially known as Spring 2 on the Prather property.
When asked if the fine imposed on Williams is the largest ever levied by the COGCC, Neslin declined to say, but remarked, "We thought that this was a responsible and appropriate resolution of this matter."
Williams officials did not respond to calls for comment.