State: No fine for company it suspects violated pressure limits on disposal well

GREELEY – The Colorado Oil and Gas Conservation Commission will not fine a company that it suspects exceeded pressure limits around the time that quakes were occurring near Greeley last summer.

The state oil commission reviewed records showing volume and pressure measurements from NGL Water Solutions DJ LLC’s well for disposal of fluids used in hydraulic fracturing. Hand-written pressure records showed “several days” where NGL appeared to exceed its permitted pressure limit of 1,500 pounds per square inch, state oil commission director Matt Lepore told BizWest in a phone interview.

“We had a conversation about that with them,” he said. “Their response to that was the well has an automated pressure gauge on it that is set below the limit.”

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The state oil commission later reviewed additional records from NGL that indicated the company had only very small exceedances of its pressure limits. The state oil commission concluded it was “not worth the effort” to fine the company, he said.

“If this well was linked to the earthquake, it was a function of the bottom of the well being highly fractured and the cumulative effect of a lot of water injected into that well over a period of months,” Lepore said. “There was no single day that suddenly caused the earthquakes.”

NGL neither violated its permit from the state Oil and Gas Conservation Commission nor broke the state agency’s rules, an investigation by the state of Colorado has concluded. NGL senior vice president Doug White has said, “NGL maintains all of its operations in strict compliance with regulatory and safety standards.”

The state oil commission said this week that it granted a request by NGL to boost by 20 percent, to 12,000 barrels per day, the amount of wastewater the company can inject into its well, known as C4A, near Greeley.

The decision to allow NGL to increase its disposal volume follows low-level quake activity captured by a state monitoring program.

Since injections were temporarily suspended at the well in June following two tremors that shook the region, additional smaller earthquakes have occurred near the 10,400-foot-deep well in every month. At least one was nearly as large as the event that triggered a state investigation.

Anne Sheehan, geophysics professor in the Department of Geological Sciences at CU-Boulder and fellow in the Cooperative Institute for Research in Environmental Science, said Friday that researchers have continued to record small earthquakes near the well.

“The patterns increase and decrease with time and we are still evaluating the results,” she said. “Levels of seismicity have been low.”

Researchers set up earthquake monitoring equipment near Greeley in early June following an earthquake with a magnitude of 3.2 that occurred in the Greeley area May 31. Another earthquake with a magnitude of 2.6 occurred June 23. NGL then temporarily suspended activity at the well at the urging of state regulators.

In July, NGL resumed injection activity, gradually increasing the amounts of wastewater it injected into the well. The company also sealed off the bottom portion of the well, a step regulators believe will reduce the risk of future earthquakes.

Wastewater companies provide the state oil commission monthly reports of pressures and volumes for all injection wells. Roughly 30 injection wells are operating in Weld County. NGL operates about one third of them.

Most injection well operators have equipment that monitors the injections on at least a daily basis, and the commission can obtain those records by law.

In Oklahoma, new regulations took effect in September requiring some operators to submit weekly reports following concerns about earthquakes in the state, said Matt Skinner, spokesman for the Oklahoma Corporation Commission, which regulates oil and gas development.

Those reports can help officials study whether injection of wastewater into underground wells causes earthquakes, which have occurred in greater numbers in areas with oil and gas wastewater injection activity.

“That data is given to the state’s seismologists, and they are trying to find correlations between seismic activity and injection activity,” he said.

In areas near geologic faults, wastewater injection wells can only be approved after a more rigorous review by state officials and approval by commission members.