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Year after Wyo. blowout, no fines for Chesapeake

Mead Gruver, Associated Press

CHEYENNE, Wyo. (AP) -- A company that owns a Wyoming oil well that blew out and forced 50 people to flee their homes has not been fined in the year since the accident because the Wyoming Oil and Gas Conservation Commission determined none of its rules were violated.

A group of landowners and at least one affected couple were upset by the inaction against Oklahoma City-based Chesapeake Energy Corp., even though the commission said human error contributed to the complete loss of control over the well last April 24 five miles northeast of Douglas.

The commission — the state agency responsible for overseeing oil and gas drilling — imposes fines for rule violations, not because people don't like something that happens, Wyoming interim Oil and Gas Supervisor Bob King said.

"Accidents will happen. I mean, you can't prevent every accident that is going to happen," King said Wednesday. "We don't live in a perfect world."

Investigators estimated the blowout released 2 million cubic feet of natural gas and up to 31,500 gallons of oil-based drilling mud. The gas didn't ignite and nobody was hurt. Specialists with Halliburton subsidiary Boots & Coots plugged the spewing gas three days after the blowout began.

An improperly installed lockdown pin on the wellhead contributed to the mishap after an underground pocket of gas began flowing into the well, according to the commission investigation report dated May 10.

Chesapeake managers promised to make sure employees and contract rig crews got trained on proper installation and maintenance of lockdown pins "as a lesson learned and ongoing best management practice," the report said.

Oil and gas commission staff members, who at the time worked under Oil and Gas Supervisor Tom Doll, did not refer the investigation to the five-member panel to consider a fine. King took over as supervisor after Doll resigned last summer.

Chesapeake cleaned up the mud and offered payments to landowners that included compensation for having to stay in hotels, said Ryan Lance, who as director of the Office of State Lands and Investments is a commission member.

"Have they worked with the surrounding landowners to address concerns that they might have? And generally, if they've cleaned up their mess after an accident, my view is that there isn't a need for penalties," Lance said.

Even so, it's surprising and disconcerting the company hasn't faced any penalties for the dangerous accident that released substantial pollution and affected dozens of people, said Jill Morrison of the Powder River Basin Resource Council.

"Yeah, accidents will happen, but you still have to pay for them," Morrison said. "A blowout is a very serious thing, and evacuating people is a very serious thing. And spewing, you know, all sorts of chemicals and drilling muds a great distance off their well pad is a big thing."

A couple that evacuated with their two children, a relative and eight cattle remained worried that fine droplets of drilling mud driven by strong wind during the blowout may have contaminated their 15-acre property 1.8 miles from the site.

"I'm blown away that it's not against the law to lose control of a well," Kristi Mogen said. "The chemicals that they spew are dangerous."

She said the spewed oil created a sheen on one of her stock tanks, and soil testing on her land later showed diesel fuel-type contamination.

"It's not a huge amount," she said. "But you know what? I can't put chemicals on my neighbor's property. If I went and put chemicals on my neighbor's property, he'd been calling the sheriff, and I'd be in trouble. Chesapeake got in no trouble."

Her husband, Pete Mogen, added, "It's like Chesapeake is above the law, you know, and they can get away with anything."

The couple said they didn't accept an off from Chesapeake to pay $500 if they signed a waiver promising not to seek damages against the company.

Chesapeake has implemented enhanced operating procedures as a result of the blowout, spokeswoman Kelsey Campbell said by email. She referred to a two-page report the company filed with the commission Oct. 22 that outlined new procedures including double-checking that the wellhead parts that failed are installed correctly.

Commission rules would limit any possible fine against Chesapeake to $5,000 per violation, per day. The commission recently levied a $20,000 fine against a company that does seismic analysis for the oil and gas industry, saying it caused ruts in ranchland and failed to communicate with the commission about the problem.

The only other Wyoming state agency that fines polluters is the Wyoming Department of Environmental Quality. However, it lacks jurisdiction in the Chesapeake matter because the blowout happened during drilling.

Department oversight of pollution from oil and gas operations begins after production starts, except when groundwater is involved, agency spokesman Keith Guille said.

The department is satisfied the drilling mud was fully cleaned up, he said.