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California Fines Producer For False Reports, Other Violations

As part of its move to get tougher with day-to-day oversight of oil and natural gas operators, California's chief oilfield regulator levied a $257,800 fine against Bakersfield-based Bennett Petroleum Inc. for admitted falsified reports to the state and other violations.

The state Division of Oil, Gas and Geothermal Resources (DOGGR) said Thursday that the order from state Oil/Gas Supervisor Steven Bohlen, who heads DOGGR, requires that Bennett perform certain tests, submit corrected reports and pay idle well fees or provide bonds for its idle wells.

Bohlen emphasized the seriousness of the case against Bennett because going back a decade, he said, "the operator purposefully and continuously impeded our efforts to collect important and required information." He said civil penalties are assessed "as a last resort" to get compliance.

"We have worked long and hard to bring this operator into compliance and cannot ignore the hundreds of violations that have occurred," Bohlen said.

Bennett has been ordered to file corrected production reports, comply with idle well requirements and perform idle well tests, along with paying the civil penalty, the largest single amount of which is $25,000 for allegedly "fraudulent abuse" of the state's idle well management plan provisions.

DOGGR cited 81 incidents in which alleged failure to comply with idle well requirements took place and another eight violations for failure to perform idle well testing. The state cited 385 incidents of alleged failure to file monthly statements accurately reporting well production information.

Last month, Bohlen said oil/gas operators in California would be under tougher scrutiny as he leads a reorganization at DOGGR (see Daily GPIAug. 26). He is collapsing nine field offices into four regions and giving program supervisors regulatory authority designed to create a more "science-based and transparent" organization to oversee the industry in California, the third largest oil producer in the country after Texas and North Dakota.

Bohlen's 21-page order accuses Bennett of a "widespread pattern of violations" historically involving similar misconduct. He suggested that the violations "should not be considered as isolated mistakes, but rather as part of a calculated and pervasive business practice," a DOGGR spokesperson said.

DOGGR investigated and fined Bennett $15,500 in 2006, and after that the "company appeared to be complying [but] in fact continued to report false production activity," Bohlen said.

The order comes two weeks after DOGGR issued civil penalties of $4,500 each to 30 oil/gas operators that failed to report water use data required under a state law (SB 1281) passed last year (see Shale DailySept. 4). Under SB 1281, about 250 separate pieces of data on water used in producing oil, including the source, treatment and its ultimate disposition, are required on a quarterly and well-by-well basis.

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