Is scofflaw energy operator trashing a Utah wildlife area?
After years of second chances for Gordon Creek Energy, state officials seek to plug idled wells, shut down producing ones if company fails to act on financial obligations.
In what amounts to a three-way crackdown, regulators overseeing Utah wildlife, school trust lands and the state’s extraction industries are jointly targeting the operator of a gas field west of Price.
Gordon Creek Energy has been ordered to plug several of its idled wells amid accusations the Canadian company lacks adequate insurance bonding for its 37-well field and has failed to meet its obligations for reclaiming the land, after years of second chances and complaints from state wildlife officials.
Twelve wells of its wells are sited on the Gordon Creek Wildlife Management Area. The 15,644-acre patch of state-owned habitat has been degraded by the company’s failures to live up to its agreements, allowing roads and utility lines to erode the landscape and spread weeds, according to state Division of Wildlife Resources (DWR) officials. The firm has chronically failed to repair and reclaim these sites, the agency said.
“The problem tracks with Gordon Creek Energy,” said Bill James, DWR’s habitat section chief. “There seems to be a disregard for basic rules of paying for and getting authority to do things they want. They were willing to cut corners and make assumptions that have proven destructive for the wildlife and their habitat.”
The wildlife-management area, which serves as winter range for 5,000 mule deer and spring forage for a few hundred elk, is a favorite hunting spot. But the damage DWR decries is a mere side issue addressed in the petition regulators brought this month to the Utah Board of Oil, Gas and Mining, which addresses idled wells and bond deficiencies.
“The Division [of Oil, Gas and Mining] has made numerous requests that Gordon Creek rework or plug its non-producing wells and provide increased bonding, but Gordon Creek has repeatedly failed to do so,” regulators wrote.
The matter was to be heard Wednesday, but was settled at the last minute with a pledge from Gordon Creek Energy to plug several wells, close waste pits, increase its bonding by $50,000 and walk away from seven approved wells that have yet to be drilled. Failure to meet these commitments will result in severe sanctions, according to Assistant Attorney General Meg Osswald.
“We hope this allow Gordon Creek to continue producing from its successful wells, but will not leave division open to future potential liability from having that operator under-bonded,” Osswald told the oil and gas board Wednesday.
Little in the settlement, though, addresses the problems identified by wildlife officials.
Action against the firm, formerly known as Thunderbird Energy, was halted back in 2014 when the Calgary-based company agreed to a timeline for gradually increasing its bonding and fixing its wells.
But after two more years of inaction, regulators’ patience was exhausted, prompting the Division of Oil, Gas and Mining to seek an order to forfeit Gordon Creeks’ bond and plug its nine idled wells. According to state filings, most of the company’s idled wells are now past the window allowed by state law, which requires such wells to be plugged and reclaimed after five years.
Environmental regulators have previously fined Gordon Creek for a 2013 pipeline breach that it failed to report, even though it discharged production water into a creek for a few days.
Company CEO Rupert Evans did not respond to an e-mail from The Salt Lake Tribune and the firm’s Utah lawyer Brian Taylor did not return a phone message.
But in e-mail exchanges with state regulators, Evans wrote the firm was having trouble with rival groups of investors with differing views on where the company should direct its resources: Reworking shut-in wells versus abandoning them in favor of drilling new wells. Evans maintained that the company had been working to fix berms and reclaiming waste pits.
“There are no leaks on any of the well and water trapment devices have been installed on all pumping wells,” Evans wrote in his last e-mail dated May 29, in which he also conceded that royalties the company owed to the Utah School and Institutional Trust Lands Administration (SITLA) had been recorded incorrectly.
Making matters worse, the $360,000 bond Gordon Creek Energy has posted to ensure adequate reclamation of the site is about half what it needs to be, documents said. So state oil and gas regulators had sought a deadline for the firm to bond to post an adequate bond. After 60 days, the company’s 12 producing wells would have to be shut down, which would cut off the company’s revenue stream.
In the deal reached Sept. 26, the company agreed to increase its bond by $50,000, but it must plug and reclaim seven wells by then end of next June and not pursue another seven permitted well locations.
The firm is already in hot water with creditors and Carbon County tax collectors. Three contractors have sued the company to seek payment for services and the firm hasn’t paid local property taxes for the past five years on its two major holdings in the county. According to tax records, Gordon Creek owes Carbon County about $230,000 on its land and gathering lines.
Listed among Gordon Creek’s corporate directors is petroleum engineer Alan Walker, whom the Utah governor’s office appointed five years ago to run the newly created Utah Energy Research Triangle set up to coordinate research at the state’s major universities to advance innovation and energy development.
Walker left that post to serve as a senior oil and gas regulator in California, where he was hired despite his role as a top officer with an energy company mired in state compliance issues.
Formerly an affiliate scientist with the University of Utah’s Energy and Geoscience Institute, Walker became a supervising engineer at the California Division of Oil, Gas and Geothermal Resources in 2015. He made news when documents surfaced showing he intervened on behalf of the company responsible for a catastrophic gas leak that persisted for four months and displaced hundreds of residents.
According to a May 2016 AP news story, documents indicate a company executive complained to Walker that the state’s pollution-abatement order would be “absolutely crippling.” Walker allegedly countered with an offer to ask the governor’s office to quash the order.
Walker did not respond to a phone message.
Six of the nine idled Gordon Creek wells tap minerals leased from SITLA, which endorses the request by oil and gas regulators to plug them. Wildlife officials, meanwhile, insist the company is violating with various land-use agreements, including one requiring it to control erosion and invasive weeds.
“All of the well pads and access roads on DWR [land] currently have state listed noxious weeds and there are no signs of weed management,” DWR director Fowlks wrote in his letter to oil and gas regulators. Spreading weeds, Fowlks wrote, are displacing native plants, damaging both wildlife forage and the area‘s appeal for public recreation.
In 2012, Gordon Creek approached wildlife officials about burying a high-voltage power line within its right of way for a gas pipeline, according to Fowlks’ letter. The wildlife agency sent the firm a proposed lease agreement, but never received back a signed copy or any of the required fees.
Then two years ago, wildlife officials discovered the company had proceeded with its plans without permission. Resulting soil erosion in the years since has left “washed out gullies with exposed power line hanging across the gaps,“ wrote Fowlks, creating what he called “untenable dangerous conditions.”