Citizen activists in the natural gas drilling hotspot of western Garfield County, Colo., apparently caught Halliburton employees on tape working in and around a cloud of hydraulic fracturing sand emanating from tanker trucks near a Williams natural gas well pad in Parachute last week.

Video (below) shot by Dave Devanney of Battlement Concerned Citizens appears to show Halliburton workers without respirators, although observers say breathing fracking sand can be very dangerous because it contains silica, according to a story in the Grand Junction Daily Sentinel.

The Sentinel story quotes a Silt Mesa resident and former contract worker named Carl Mc Williams, who claims he was sickened by hydrogen sulfide while working on a Noble Energy gas well. Noble now acknowledges it is finding hydrogen sulfide in the majority of its gas wells on the nearby Piceance Basin, although the potentially deadly chemical was previously thought to be rare.

“They have been telling us all along that there is no H2S [hydrogen sulfide] in this area,” Devanney wrote in an email to members in which he also included a link to his Halliburton video.

David Neslin, director of the Colorado Oil and Gas Conservation Commission, told the Sentinel the state is investigating the Noble hydrogen sulfide situation. Both Halliburton and Williams told the paper they’re looking into the fracking sand emissions.

The contractor Mc Williams worked for when he claims he was sickened in 2009 was fined $2,000 by the Occupational Safety and Health Administration. A Noble spokesman acknowledged the company has been regularly encountering the gas ever since then, using “biocides and other methods to eliminate it.”

“It’s a concern, but it’s not one that we’re inexperienced in dealing with,” a Noble spokesman told the Sentinel.

In early 2008, two separate releases of hundreds of thousands of gallons of chemically laced hydraulic fracturing fluid and other natural gas drilling fluids spilled into Garden Gulch on the Roan Plateau north of Parachute, forming a spectacular frozen icefall of contaminated water.

Nearly three and a half years later, the Colorado Oil and Gas Conservation Commission (COGCC) – the state regulatory agency that oversees oil and gas drilling to protect public health and the environment – has finally struck a deal with the two companies responsible for the spills and will likely levy fines at a hearing next week.

The Garden Gulch spill icefall.

“The bottom line here is justice delayed is justice denied because the fines are inconsequential to most of the companies,” said Steve Torbit, regional executive director for the National Wildlife Federation. “Whose interest is served by delay, delay, delay? Is the public interest served? Absolutely not. So I would argue that the COGCC is not doing its job. They are not protecting the variety of public interests and it works to industry’s advantage.”

Torbit argues the initial outrage sparked by Garden Gulch faded over time as media coverage waned, allowing oil and gas operators to quietly strike backroom deals with state regulators that are largely off the public radar.

“Delaying the justice distracts and makes the public picture very fuzzy so the public is out of the loop to a large degree and unable to say [the COGCC] is serving the public interest,” Torbit said. “People lose track of things; it’s quietly resolved.”

But even industry representatives were caught off-guard by the amount of time it took the state to resolve these fairly straight-forward enforcement actions.

“We were a little surprised to receive the (hearing) notice after more than three years had lapsed since we last communicated with the commission,” Davis O’Connor, Berry Petroleum vice president and general counsel, told the Grand Junction Daily Sentinel last month.

While testing by the companies and regulators did not find dangerous levels of chemicals resulting from the spills – more than 100,000 gallons of drilling fluids by Berry and more than 1.2 million gallons of hydraulic fracturing fluid by Marathon – those tests came more than two months after the initial spills and were conducted during peak spring runoff. Still, the companies admitted their guilt and took steps to mitigate the impacts.

And unlike the case of Prather Springs, in which local outfitter Ned Prather guzzled benzene-laced water from his cabin’s drinking water well, the Garden Gulch spills didn’t require extensive investigation to determine which operator was responsible. Prather Springs, also in 2008, resulted in a record $423,000 fine against Williams, breaking the old state mark of $390,000 levied against Oxy USA last year in the Cascade Canyon spill.

COGCC Executive Director David Neslin last week declined to discuss specifics of the deals worked out with Berry and Marathon, including possible fine amounts, but did say he hopes to release the terms of proposed final settlement agreements later this week. He said the Garden Gulch spills have taken so long to resolve because of an overall backlog of enforcement matters, not the complexity of the investigations.

“It’s a question of working through other matters in the queue,” Neslin said. “Enforcement cases generally involve significant effort to investigate the alleged violations, to negotiate with the operators, to prepare necessary documentation. They’re time-intensive, so I don’t think it was a question of these two cases being particularly difficult but these two cases being part of a backlog of enforcement matters that have consumed substantial time and effort in the past year.”

In an interview with the Colorado Independent last year, Neslin said the backlog was unacceptable and that steps had been taken to resolve old cases as quickly as possible. Neslin in the past said staffing shortages were at least partly to blame, but he added that changes had been implemented to make enforcement the agency’s top priority in 2010.

In an interview in April, Neslin set a target of resolving all enforcement cases more than one year old by the end of June. At the beginning of the current fiscal year (July 1, 2010) the COGCC had 48 enforcement cases that were more than a year old – some of them dating back to 2006.

As of the last hearing in May, 31 of those cases had been dealt with, and Neslin said the agency hopes to resolve five more – including the two Garden Gulch cases – at the June hearing. That leaves 12 unresolved cases that are more than a year old, and Neslin said the COGCC hopes to resolve eight of those by the August meeting.

“I agree that we need to make better progress and we need to be more timely in our enforcement actions where we can, and that’s something we’re working hard at doing,” Neslin said. “I think we’ve made good progress over the past year. We’re not yet where we want to be, but we’re much closer than we were a year ago.”

Neslin says focusing on enforcement and prevention of spills – including pit liner and pipeline leaks and faulty cement casings of natural gas wells – will do more to protect the environment than proposed federal legislation that would require national disclosure of the chemicals used in hydraulic fracturing, or fracking. That’s been a push by Colorado Congresswoman Diana DeGette and her Fracturing Responsibility and Awareness of Chemicals (FRAC) Act.

Treasured by sportsmen, environmentalists and outdoor recreation enthusiasts, the Roan is a scenic plateau in gas-rich Garfield County that for years has been the subject of intense debate and litigation. Now the lawsuit challenging the record $114 million BLM lease sale in 2008 will be decided by a federal judge.

“After multiple rounds of settlement negotiations and diligent efforts by all parties, settlement negotiations are not at an impasse,” U.S. District Court Judge Kristen Mix wrote Wednesday. “Given that the issues in the case are fully briefed and ripe for resolution, the matter will be resolved in due course and in consideration of the District Judge’s overall docket.”

The 10 conservation groups – including the Colorado Environmental Coalition, Colorado Trout Unlimited, National Wildlife Federation, the Sierra Club, Colorado Mountain Club, Rock the Earth, Center for Native Ecosystems, the Wilderness Society, Wilderness Workshop and National Resources Defense Counsel – offered to continue negotiations but also promised to continue litigating to protect the Roan.

The groups, which contend the BLM did not fully analyze the potential impacts of drilling on the Roan, including considering a no-drilling alternative, called on the Obama administration to intervene and come up with a plan for drilling in the area that fully protects wildlife habitat.

“The drilling proposed for the Roan Plateau would devastate the elk, mule deer and native trout living there and deal a real blow to the region’s hunting and fishing economy,” Steve Torbit, Regional Executive Director of the National Wildlife Federation, said in a release. “As long as we protect wildlife habitat, western Colorado’s outdoors economy won’t have to suffer through the boom-and-bust cycles that the energy industry is infamous for.”

Four energy companies – Bill Barrett, Williams, OXY USA and Antero Resources – are named as defendant-intervenors in the case.

“The plaintiffs were holding the position the leases would be canceled,” Bill Barrett Vice President Duane Zavadil told the Denver Post. “We believed it was unlikely they would be canceled. The gap [in negotiations] remained too great.”

Gov. Bill Ritter touts wildlife deals with nine oil and gas companies at the Capitol in Denver Tuesday. Photo by Joe Boven

Republican gubernatorial primary candidates Scott McInnis and Dan Maes have hammered on Ritter for his role in passing the amended drilling regulations that went into effect in the spring of 2009. The new rules and regs give higher priority to air and water quality, public safety and wildlife habitat, requiring a Colorado Divisions of Wildlife consultation on drilling permits.

Tuesday’s deal provides for upfront CDOW approval for drilling plans in the Piceance Basin, which will streamline and speed up the permitting process operators must go through with the Colorado Oil and Gas Conservation Commission.

Ritter said the downturn in natural gas drilling in Colorado that began late in 2008 was a product of the global recession and decline in prices, not the implementation of amended regulations needed to balance the state’s energy demands with its tourism and outdoor recreation-based economy.

“People have tried to politicize the job loss and the downturn of the market, but all the while the industry and the oil and gas commission was trying to figure out how best to work though the permitting process so that it was industry-friendly,” Ritter said.

McInnis and Maes have both promised to revisit if not outright gut the amended regulations, which they have persistently tried to tie to job losses in energy producing counties like Garfield and Weld. Both candidates have also tried to link Ritter’s policies with presumptive Democratic gubernatorial nominee John Hickenlooper, the mayor of Denver who stepped in when Ritter pulled out of the race late last year.

Hickenlooper, a former oil and gas engineer who was laid off in the 1980s and went into the brew-pub business, has said some of the regulations should be tweaked, but in May he told the Colorado Independent he was not in favor of reopening the rulemaking process.

McInnis, who originally hails from the heart of the gas patch in Glenwood Springs and has served as attorney for the oil and gas industry, has been slightly more circumspect than Maes, who said he would hand out pink slips to anyone with an environmental bent on the oil and gas commission board. Still, McInnis has been plenty critical of the rules, saying they’ve pushed jobs to Pennsylvania and Texas, even though the evidence shows Colorado is ahead of its regional neighbors in permitting and drilling activity.

“It would be a bad idea to roll back the rules,” Ritter said. “Those who are in favor of [a rollback] are merely looking at it as a political issue. They are not looking at this upturn in the economy and our ability to have this balance.”

Asked about the timing of the announcement, in which nine operators – EnCana, Antero, Noble, Williams, Gunnison Energy, Exxon Mobil, Black Hills, Delta and Marathon – announced wildlife mitigation plans or comprehensive drilling plans, Ritter said it’s a sign the industry is onboard with the new regs no matter the political landscape.

“The industry could have just taken an oppositional view and waited it out to see what the election brought, but they didn’t,” Ritter said. “They have been working with us and now we see an upturn in the activity and the kind of announcement we are making today … wouldn’t have happened without the industry.”

Conservationists praised the deals, which will provide habitat protections for elk, deer, raptors, sage grouse and cutthroat trout over 550 square miles of land.

“These plans make good sense because they provide economic certainty for energy developers and habitat stability for wildlife,” said John Gale, the National Wildlife Federation’s regional representative for Colorado. “Like hunting and fishing, energy development is part of life in Colorado. These plans make sure drilling is done the right way and in the right places to protect wildlife.”

COGCC director David Neslin, who has previously said the new wildlife rules were not proving onerous to the industry, on Tuesday said the new wildlife agreements “will allow for development of needed energy supplies while protecting some of our most iconic wildlife species.”

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Oil and gas drilling near the Roan Plateau. (Photo/Ecoflight.info)

But critics say those same companies – specifically EnCana and the Williams Companies – have a different standard when it comes to hydraulic fracturing, or “fracking,” in Colorado.

Kathryn Klaber, executive director of the Marcellus Shale Coalition, recently told the Scranton Times Tribune that the industry is “absolutely supportive of full disclosure” of fracking chemicals to the Pennsylvania Department of Environmental Protection – including the names of the chemicals and the total volume – to landowners, emergency responders and local governments.

That goes beyond what the Colorado Oil and Gas Conservation Commission approved in its amended rules that went into effect in the spring of 2009. The Colorado rule requires operators to keep a chemical inventory on-site at each well and make that information available to emergency responders and local governments within 24 hours in the event of a spill.

Operators in Colorado, including Williams – the largest natural gas producer on the Western Slope – have opposed efforts by Colorado Democratic Congresswoman Diana DeGette to remove a federal exemption for the process under the Safe Drinking Water Act that was granted by the Bush administration in 2005.

A growing number of incidents involving groundwater contamination have led to calls for greater regulation of the process, which injects mostly water and sand at very high pressures deep into wells to fracture tight geological formations and free up gas. Chemicals ranging from food additives to toxic benzene are included in the mix in relatively small quantities.

States such as Wyoming and Pennsylvania have followed Colorado’s lead in stepping up regulation of the process that’s critical to opening up greater natural gas reserves across the country, and operators have begun discussing self-disclosure to head off U.S. Environmental Protection Agency regulation.

But residents of areas of Colorado impacted by heavy natural gas drilling during the last boom cycle that ended in 2008 are worried that the next big upswing in drilling could expose them once again to potential drinking water contamination.

“It is curious to note that some operators like EnCana and Williams are willing to give full disclosure out East but not in the West,” Frank Smith, director of organizing for the environmental group Western Colorado Congress told the Colorado Independent. “As EnCana and Williams edge closer to Battlement Mesa, it is especially worth highlighting their disparate disclosure practices in public fashion.”

Battlement Mesa is a community of more than 5,000 on Colorado’s Western Slope that’s facing a proposed 200-well project in the heart of town and a growing number of wells encroaching on the outskirts of town.

Doug Hock, a Colorado-based spokesman for the Canadian company EnCana, told the Colorado Independent, “Our overall stance on the issue is support for increased disclosure of information regarding the composition of the fluids we use for hydraulic fracturing and active encouragement of our fluid suppliers, the owners of this information, to improve their public disclosure of fluid formulation information.”

Oil and gas service companies such as Halliburton produce and distribute fracking fluids to operators, prompting U.S. Rep. Jared Polis, D-Colo., a co-sponsor of DeGette’s bill, to say it would close the “Halliburton loophole.” Many operators and drilling services companies don’t want full disclosure because they consider the formulas proprietary information that gives them a competitive edge.

“Colorado increased disclosure by requiring an inventory of any chemical exceeding 500 pounds in quantity that is for ‘down-hole’ use,” Hock said. “Information on these chemicals must be provided in case of emergency – including the proprietary formula. And last month Wyoming passed regulations calling for more detailed disclosure of hydraulic fracturing fluids. EnCana favored both these measures.”

Still, the EPA is preparing to embark on a two-year study of the process and, in the wake of British Petroleum’s offshore spill in the Gulf of Mexico, federal intervention in the onshore drilling world is gaining momentum in several forms. Full public disclosure is even included in the Kerry-Lieberman climate bill called the American Power Act.

And more and more operators, including Texas-based Range Resources and Chesapeake Energy Corp., are taking preemptive action by offering up limited forms of disclosure, mostly on a well-by-well basis.

“One company in one region is a good start, but any community where fracking is occurring deserves similar information,” DeGette told the New York Times last week. “It is my hope that Range Resources and other companies engaged in fracking will support our efforts to create a more systematic and comprehensive method of disclosure.”

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But the Grand Junction Daily Sentinel on Wednesday reported that Williams, the Western Slope’s most productive natural gas drilling company, is enjoying remarkable success – and savings – recycling the pit liners for plastics and for use in asphalt plants.

Still, the company supports a push by the Colorado Petroleum Association to get the Colorado Oil and Gas Conservation Commission – the state agency in charge of regulating drilling activities – to drop the new requirement that pit liners be removed and disposed of in offsite locations such as landfills. The Garfield County landfill has stopped taking the liners because of concerns about toxicity and that the number of liners coming in could be overwhelming.

Williams wants other operators to get involved in recycling of pit liners but still backs changing the pit liner rule because it’s difficult to remove and recycle pit liners containing drilling cuttings.

[Photo of Pennsylvania fracking waste pit via un-naturalgas.org]

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The chemical makeup of proprietary fracking fluid is off limits even to emergency personnel (donnan.com)

Oxy, along with the Western Slope’s largest natural gas producer, Williams, has also been implicated in a 2008 spill that contaminated a spring near the cabin of Ned Prather in Garfield County, fouling his drinking water well and sending him to the hospital after he guzzled benzene. Both companies deny responsibility.

That case, along with a half a dozen other instances of water or soil contamination linked to drilling operations conducted by at least six different companies, remains unresolved, according to COGCC records. Some of the cases date back to 2007.

The COGCC earlier this month accepted the terms of the Oxy settlement, which included $390,000 for pit-leak contamination in the Cascade Canyon area and another $257,400 for a leak at Rock Springs. But the Prather case and several other high-profile spills remain unresolved, with no fines levied more than two years after they occurred.

Spills and unresolved cases

On Jan. 31, 2008, Marathon Oil reported a defect in a pit liner that caused the release of nearly 32,000 barrels of water that was “flow-back” from a hydrofracture job being stored in a reserve pit to be used in another “frack” job. The water, according to state documents, “infiltrated the subsurface, moved laterally, and discharged from a cliff above Garden Gulch” and into the Parachute Creek drainage.

That same month, Berry Petroleum reported a similar defective pit liner resulting in the release of an unknown quantity of drilling fluids into Garden Gulch. But the company hadn’t reported two previous spills that occurred earlier in 2008 and in November of 2007.

The Berry and Marathon cases were both reported by the Colorado Independent and other media outlets dating back to early 2008, and the incidents resulted in the COGCC reworking its regulations for pit liners on the Roan Plateau. But neither company has been fined.

“You’re right, some of [the cases] date back several years, and I don’t want to make excuses, that shouldn’t be the case,” said David Neslin, executive director of the COGCC, which is charged with permitting and regulating natural gas and oil drilling in Colorado. “We do need to do a better job at bringing timely enforcement matters, and we’re committed to doing so.”

Neslin said enforcement is the agency’s top priority for the remainder of 2010 and that he hopes to have some resolution on the Prather Springs case by mid-summer.

Deep underground detectives playing dodge ball

But while Marathon self-reported and Berry came clean after a third spill in the Garden Gulch area, no company has stepped forward to claim responsibility for the Prather Springs case. Investigators have narrowed it down to Oxy or Williams, but Neslin said multiple operators in one area contribute to delays in enforcement actions.

“These are really tough cases,” Neslin said. “You’re talking about what happened thousands of feet below the surface, and in some situations you have multiple operators or multiple facilities in an area, and so simply investigating and developing the case is difficult and very time-consuming.”

Leslie Robinson of the grassroots Grand Valley Citizens Alliance commended Oxy for coming forward in the Cascade Canyon and Rocks Springs cases, but said too many operators prefer to play “dodge ball” when it comes to admitting responsibility for spills.

“Although proof may obviously point to a company’s offense, they can claim ‘reasonable deniability’ about the event, making COGCC staff prove chemically that an XYZ frac waste or whatever contaminant actually came from a certain site,” Robinson said.

Trademark-guarded chemicals

“The big problem is frac chemicals are a secret and Colorado doesn’t believe in tagging wells, so it takes COGCC staff months, if not years, to shovel through layers of company lawyers, engineers and scientists to finally agree on what happened and what should be the financial settlement – if any.”

Both the Garfield County commissioners and Ned Prather have expressed dismay his case has taken so much time to resolve. The commissioners drafted a resolution rebuking the state for taking so long and Prather spoke to the Denver Post:

“I’ve always stuck up for oil and gas, but now when we need them to stand up and do what’s right, they won’t,” Prather told the paper last year. “If I was asked what has made me the maddest in all this, it’s the oil and gas commission not doing what they are supposed to do.”

The complexity of cases such as Prather Springs will continue to make enforcement a time-consuming process, Neslin said.

“We have a number of such cases, and so it’s partly a staffing issue – we only have so many environmental specialists and they can only do so much – and it’s partly the difficulty that these cases present, factually and scientifically and forensically,” Neslin added.

EnCana held the previous dubious record for the highest COGCC fine to date – $371,000 for a faulty concrete job that led to methane and benzene contaminating West Divide Creek near Silt. But state records show the company still has an unresolved violation involving improper reclamation of a waste pit dating back to September of 2007 and another violation for a pit spill in June of 2007.

Denver-based Antero Resources, which wants to drill up to 200 new wells in and around the Battlement Mesa community, was hit with a tank spill violation that “created an unsafe work environment” in December of 2007. But that case remains unresolved, according to the COGCC.

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According to the Grand Junction Daily Sentinel, Williams, the largest natural gas producer on the Western Slope, questioned the need for such reporting and said the associated costs would be substantial.

“Will this have any impact on climate change? I say no. Is the regulation necessary? I don’t think so as an industry person,” Williams air quality practice manager Rick Matar told the paper.

The Sentinel reported EPA estimates that the “industry’s greenhouse-gas emissions are the second-largest source of human-made methane emissions in the United States,” and that “pound for pound, methane is more than 20 times as effective as carbon dioxide in trapping heat in the atmosphere.”

But Matar countered with statistics showing humans account for just 3.4 percent of all greenhouse gas in the atmosphere, and that the EPA believes the oil and gas industry accounts for only 5 percent of that.

Jeremy Nichols, climate and energy program director for the WildEarth Guardians, said the EPA merely wants to find out for sure: “I would think industry would want to embrace this.”

In other Western Slope energy news, the Pitkin County commissioners Wednesday delayed action on stiff new drilling regulations that would exceed those enforced by the Colorado Oil and Gas Conservation Commission (COGCC).

Industry representatives wanted an opportunity to provide input before the county tightens its regulations, according to the Aspen Daily News.

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In a special work session, the commissioners said some of the $17 million in oil and gas mitigation funds collected from the recent natural gas boom could be dedicated to funding a baseline air quality study as well as health assessment of the 5,000 residents of Battlement Mesa, according to the Glenwood Springs Post-Independent.

“Why wait for a grant?” commissioner John Martin said at the meeting, referring to a Robert Wood Johnson Foundation and Pew Charitable Trusts Health Impact Assessment.

Members of the Battlement Concerned Citizens are worried about air and water quality pollution, as well as the traffic, noise and light impacts of the Antero plan, and they first broached the idea of such a study – reportedly unique to the state – with county health officials.

While supportive of the idea, the commissioners were uncertain such a study could be conducted before they must make a decision on Antero’s plan under the land-use regulatory authority they maintain because the county approved the original Planned Unit Development for the former Exxon company town. The state also must approve a Comprehensive Drilling Plan for the project.

In a bit of bad news for the Battlement Concerned Citizens, the county commissioners earlier in the week voted to allow the Williams gas drilling company to continue operations from a well pad operating inside the PUD without proper county permits for nearly 20 years. The Williams’ violation was discovered when Antero first presented its drilling plan, but the commissioners decided it was an innocent oversight.

According to the Glenwood Springs Post Independent, the commission set some fairly stringent conditions for recommending approval of special use permits for the wells, now owned by Williams Production RMT Co., but members of the local activist group Battlement Concerned Citizens (BCC) were far from pleased.

“We have been distressed since the May 27, 2009, meeting that announced plans for 10 well pads and up to 200 natural gas wells within our community,” BCC’s Dave Devanney wrote in a letter to the planning commission. “Our feelings of outrage and frustration were further heightened when we later learned that another operator, Williams Production RMT Company, had already been drilling within the PUD (planned unit development) – without the required Special Use Permit (SUP) – for nineteen years!”

According to the Post Independent, the wells were originally drilled by Barrett Resources Corp. in 1990 and should have obtained special use permits because the Battlement Mesa PUD – home to 5,000 people – falls under county jurisdiction. There is still active drilling from one of the well pads, while the other is in production mode, although it could see drilling in the future.

Members of Battlement Concerned Citizens were asking the planning commission to require the county planning staff to conduct an internal audit to see how many wells obtained “after-the-fact” permits and whether there should be changes to the permitting process to make sure it doesn’t happen again. BCC also wanted a plan for environmental monitoring of air and water supplies, as well as quarterly rather than yearly reporting by Williams.

BCC members told the Colorado Independent their requests were largely ignored, possibly because some of the planning commission members – volunteers appointed by the Garfield County board of commissioners – have existing business relationships with Williams.

According to the Post Independent, planning commission member John Kuersten revealed that his company does work for Williams, but he did not recuse himself from voting in favor of recommending approval of the special use permits. The county commissioners will likely make a final determination on the application on Dec. 14.

The BCC also wants the county to seek an outside Health Impact Assessment before approving Antero’s drilling plan.

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