Extraction sues contractor for alleged role in 2017 Windsor explosion

DENVER — Extraction Oil & Gas Inc. (Nasdaq: XOG), a Denver-based energy firm, is suing one of its contractors, alleging that Colter Energy Services USA Inc. failed to provide proper safeguards in advance of a 2017 explosion at a Windsor well site. Colter denies the allegations and is countersuing.

The fire, which occurred Dec. 22, 2017, sent a Colter employee to the hospital, where he was treated for his injuries and released. 

That employee, court records claim, was performing flow-back activities at Extraction’s Stromberger drilling facility in Weld County when an improperly placed generator “ignited natural gas vapor in the area near the flowback tanks.”

Because “Colter’s placement and use of the generator violated Extraction’s policies and instructions, as well as Colter’s own policies,” Extraction is filing a breach of contract suit in U.S. District Court in Denver, court documents show. 

“Under these unambiguous [contractual] terms, Colter was responsible for the safe operation of its work,” the complaint said. “Colter breached these obligations.” 

Colter representatives did not respond to BizWest’s requests for comment Thursday.

The lawsuit alleges that the “improper” use of a generator violated Extraction and Colter policies, and also violated Occupational Safety and Health Administration and Colorado Oil and Gas Conservation Commission regulations.

“On Aug. 27, 2018, OSHA issued a citation to Colter for a violation of OSHA regulations governing flammable liquids, and entered a settlement with Colter in exchange for payment of a fine,” court documents show. “In contrast, OSHA closed its investigation of Extraction without issuing any citations to Extraction.” 

Even without a citation for Extraction, “the negative impact caused to Extraction’s regulatory relationship with the COGCC and municipal entities is immeasurable,” the complaint argues. “Extraction’s reputation has been severely damaged.”

A post-incident report compiled by Extraction identified a series of corrective actions that should be implemented at the Stromberger site. Those included “additional field management levels for specific flowback activities” and “enhanced hotwork planning and setback procedures,” the report said. The report does not include any direct references to Colter. 

Extraction’s suit demands unspecified damages, court costs and other fees.

Colter’s response to the suit lays blame for the breach of contract at the feet of Extraction.

“Colter is not legally responsible for the alleged breach of contract because performance

of the contract was made impossible or impractical by events not caused by Colter,” court documents say. The breach “was induced by words or conduct, or both, of Extraction’s representatives.” 

Colter is countersuing with claims that since the explosion Extraction refused to pay invoices for equipment rentals and services provided.

“Following the fire, Extraction requested that Colter continue to provide services and keep

the separator equipment at the wellsite,” according to Colter’s countersuit. “… Colter invoiced Extraction for the separator equipment and for the services it provided during December 2017 through August 2018. Extraction has refused to pay those invoices.”

Extraction has yet to file a response to the countersuit.

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