A cease-and-desist order has been issued to two oil and gas companies for illegally operating 40 wells in La Plata County, which state officials say “constitute an emergency situation posing a significant threat of harm to public health.”
On Feb. 23, the Colorado Oil and Gas Conservation Commission issued the order to Texas-based Atom Petroleum, LLC and Hoshi Energy, LLC, a Colorado operator out of Castle Rock.
According to state documents, the companies purchased the wells in bankruptcy court after the previous operator, Red Mesa Holdings, declared bankruptcy in March 2015.
In October, Atom and Hoshi agreed to pay the state $360,000 in financial assurances, which in turn would allow the companies to operate certain wells in the area.
Those fees have not been paid. Yet both Atom and Hoshi, without the state’s consent, continued to operate at the sites, conducting unauthorized venting and pumping, among other “knowing and willful violations,” the COGCC order says.
A state investigation of the sites in January found numerous and ongoing emergency 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 the operator removing the hatch.
“The NOAV (Notice of Alleged Violation issued Feb. 11) and the numerous inspection reports cited ... evidence of a pattern by Atom of disregarding important COGCC rules,” the order said.
COGCC director Matthew Lepore determined Atom’s and Hoshi’s continued operations at the wells pose a risk of “significant adverse environmental impacts to public health, safety and welfare, including environment and wildlife resources.”
The COGCC, the state agency responsible for regulating the oil and gas industry, ordered Atom and Hoshi to immediately cease all operations at the sites. Within seven days of the order, the companies were commanded to clean up leaks and implement repairs to prevent spills.
Todd Hartman, a spokesman for the COGCC, said Tuesday the agency is in the process of ensuring compliance with the order. The two operators are subject to daily fines, he said.
In February, The Durango Herald spoke to Atom representative Tom Stover, who said one of the wells issued a violation was no longer in operation, and the company was exploring whether it would be profitable to make the well active again.
On Feb. 22, the Herald visited the site, which was actively producing, had undergone surface construction and contained an open oil pit.
Stover did not return calls for comment on this story.
Contact information for Hoshi could not be located, and the company is not a registered operator with the COGCC. The agent on file for Hoshi is listed as “Brent Chicken.”
Chicken, a natural resources attorney with Fox Rothschild LLP in Denver, said Tuesday he could not comment on the matter.
Red Mesa last year was issued a NOAV for 18 abandoned wells, fined $75,000 and ordered to pay $270,000 in financial assurances. Hartman said the fine still applies, but the issue of financial assurance would be the responsibility of the current operator.
jromeo@durangoherald.com
The caption accompanying this article has been updated to correct the name of the elementary school.
