Williams agrees to settlement in contamination case near Parachute
August 6, 2010
A proposal to fine the Williams gas drilling company more than $400,000, for contamination of the water supply to a backcountry outfitting camp near Parachute, will go before the state agency that oversees the industry next week.
The Colorado Oil and Gas Conservation Commission, at its meeting on Aug. 12-13 in Adams County, will review a settlement proposed by the COGCC’s administrative staff and Williams Production RMT Co., concerning the 2008 contamination of a spring owned by DeBeque outfitter Ned Prather and his family.
Williams has agreed to the settlement, and payment of a $423,300 penalty, according to documents available on the COGCC website, although the company disputes the findings of the agency’s investigation.
“First of all, benzene should never be found in drinking water. We all agree on that,” declared a statement released by Williams, adding that, “While Williams does not agree with the findings of the COGCC, we have mutually agreed with the COGCC to settle this and move on. With the area’s difficult geologic conditions and additional time and expense required to prove a source, Williams has agreed to pay the fine in lieu of paying legal expenses to fight the allegation.”
But the company is still faced with litigation costs, following the filing of two lawsuits against Williams by the Prathers, in the Glenwood Springs district court (see related story).
After spending more than $1.3 million on its own investigation of the contamination issue, the company maintained, “Williams and its experts do not believe its operations were the source of this contamination. There are at least three other natural gas operators in the vicinity of the spring.”
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As part of the settlement, the company will continue monitoring and testing the spring water “until the water has returned to drinking water quality,” and will continue to provide water to the Prather cabin.
According to an investigation by the COGCC, toxic hydrocarbons leaked out of a lined “produced water” pit at a well site north of I-70, which was located uphill from the spring that feeds the water system for the Prather cabin.
In May 2008, Ned Prather became ill after drinking water from the spigot at a sink in his cabin, and had to be hospitalized.
The documents provided by the COGCC staff indicate that Williams, which operates more wells in the Piceance Basin region than any other company, built the pit cited as the source of the contamination without the proper state permits.
Use of the pit started in October 2007, according to the COGCC, roughly seven months before Prather was poisoned by the water coming from his cabin plumbing.
The documents note that “the exact date of the release or releases of the Produced Water from the pit … and the volume of Produced Water released … are not known, and the causes … remain under investigation.”
As part of the settlement, Williams has agreed to pay $1,000-per-day fines per violation of several COGCC regulations, violations which the agency’s staff believes ran from Oct. 1, 2007, when the pit in question went into use, to Oct. 9, 2008, which is when Williams submitted a belated permit application.
But the number of days in the settlement calculation have been reduced from 375 days (Oct. 1, 2007, to Oct. 9, 2008) to 122 days of “alleged violation,” primarily because of the uncertainty about how long the fluids were leaking from the pit.
The agreement also includes a $10,000 penalty for one violation, for a total possible fine of $498,000 based on the 122-day calculation.
But the agency’s staff agreed to reduce the fine by 15 percent, to $423,300, “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” as a consequence of the incident.
Ned Prather declined to comment on the proposed settlement, referring a reporter to his attorney, Richard Djokic of Denver.
Djokic also declined to say much about the settlement itself. But he noted that he and the Prathers are hoping to be able to comment on details of William’s mitigation plan for the area. That plan is due to be submitted to the COGCC within 60 days, according to the settlement.