Noble Energy Inc. has agreed to pay more than $73 million and update equipment in Colorado’s Denver-Julesburg (DJ) Basin in a Clean Air Act settlement with the U.S. Environmental Protection Agency (EPA), the Department of Justice and Colorado regulators.
The settlement follows a joint federal/state investigation in which the EPA said Noble failed to adequately design, size, operate and maintain vapor control systems on its condensate storage tanks, which resulted in illegal emissions of smog-creating volatile organic compounds (VOCs). The agency said the VOC emissions primarily resulted from undersized vapor control systems.
Noble agreed to spend about $60 million on system upgrades and monitoring throughout its DJ Basin footprint; $8.5 million on environmental mitigation projects, and would pay a $4.95 million civil penalty.
"Noble Energy's efforts to reduce emissions from its production facilities will benefit communities in an area of the Front Range that is currently not meeting the national air quality standard for ozone pollution," said EPA Regional Administrator Shaun McGrath.
The settlement covers all of Noble's condensate storage tanks -- about 3,400 -- that serve exploration and production activities north of Denver.
Noble said the EPA and Colorado's investigation was based on a "relatively small number of older tank batteries," but it elected to expand the settlement to identify opportunities to further reduce emissions in the basin. The company is Colorado's second largest oil producer behind Anadarko Petroleum Corp. In the fourth quarter, Noble produced 315,000 boe/d, with more than 108,000 boe/d produced in the DJ Basin.
"By working together with the federal government and the state of Colorado to reduce emissions, we are doing the right thing," said Noble Executive Vice President of Operations Gary Willingham. "We're implementing a serious action plan through which we will evaluate tank batteries throughout our DJ Basin operations, remove the tank batteries that should be removed, improve others and implement enhanced environmental strategies."
Noble agreed to evaluate its vapor control systems and provide public reports on its VOC emissions reductions. The monitoring and system upgrades are expected to continue through 2019, the company said.
As part of the $8.5 million in environmental mitigation projects, Noble agreed to retrofit its drilling rigs and hydraulic fracturing (frack) pumps with engines that run on natural gas. It would also upgrade its control systems for transferring hydrocarbons from storage tanks to tanker trucks and provide funding for Front Range air quality programs, including residential incentives to change out wood-burning stoves and gasoline-powered lawn mowers, among other things.