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Colorado Orders 40 Illegally Operating Wells Shut

Forty troubled wells that changed hands last year in a bankruptcy sale in western Colorado have been ordered closed as a threat to public health by the state Oil and Gas Conservation Commission (OGCC).

Taking a rarely used action, the OGCC determined that the wells were operating illegally in La Plata County, creating "an emergency situation posing a significant threat of harm to public health." On Feb. 23 the commission took the action against Texas-based Atom Petroleum LLC and Hoshi Energy LLC, a Colorado-based operator.

The operating companies found themselves at odds with the state regulators late last year after not following through with payment of $360,000 to the state for financial assurances needed to continue operating the wells purchased from Red Mesa's bankruptcy proceeding. Atom and Hoshi earlier had told the OGCC they would pay the amount due.

OGCC officials have said the fees have not been paid and the two companies continue operating the wellsites, including unauthorized venting and pumping.

State investigators at the sites in January found numerous health risks, including active crude oil leaks, exposure of oily soils not properly remediated, uncontrolled waste, and venting from crude oil storage tanks as a result of hatches being removed, OGCC officials said, characterizing what they found as "evidence of a pattern of disregard."

Within seven days of the OGCC order, the operators are mandated to clean up leaks and implement repairs.

The two operators are subject to daily fines. Last year before its bankruptcy filing, Red Mesa had been issued a notice of alleged violation for 18 abandoned wells and fined $75,000, along with being ordered to pay another $270,000 in financial assurances. A commission spokesperson said these fines were still unpaid.

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