CHEYENNE, Wyo. — Chesapeake Energy Corp., which owns a Wyoming oil well that blew out and forced 50 people to flee their homes, has not been fined 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, even after the commission said human error contributed to the complete loss of control last April 24 over the well 5 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, 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, at the time working under Oil and Gas Supervisor Tom Doll, did not refer the investigation to the five-member panel to consider a fine. King became 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, director of the Office of State Lands and Investments and 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 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,” she 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.”
Chesapeake 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 fines against Chesapeake to $5,000 per violation, per day.
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.
Accidents will happen. I mean, you can't prevent every accident that is going to happen. We don't live in a perfect world.”