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Oil & Gas Inspections Falling Further Behind

 


With new data showing that state and federal oil and gas agencies are not keeping up with the rise in oil and gas drilling, members of the Western Organization of Resource Councils (WORC) and Northern Plains Resource Council are calling attention to the need for states and the federal governments to fund more inspectors and increase penalties for violating public health, safety and environmental laws.

“Although Montana’s Board of Oil and Gas inspectors do the best they can, they are woefully overworked and understaffed,” said Pat Wilson, a Northern Plains member and land and mineral owner from Bainville. “Montana has not increased the number of inspectors since 2004, even though the number of producing wells has shot up exponentially. And even if infractions are found, the fines levied are either wrist slaps or non-existent.”

The 2013 update of “Law and Order in the Oil and Gas Fields” analyzes state inspection data from five western oil-producing states—Colorado, Montana, New Mexico, North Dakota and Wyoming—as well as the federal Bureau of Land Management (BLM) data in the same states. The findings include:

Growth in the number of oil and gas wells continues to outpace increases in the number of state inspectors. In Montana, each state inspector is responsible over 1,550 active oil and gas wells. Nationwide, BLM inspectors are responsible for just over 3,000 wells each.

The average number of inspections per Montana inspector was 599 in 2011.

BLM and four of the five state agencies studied do not have enough inspectors to inspect each active well at least once a year. Wells are inspected once every 2.6 years on average in Montana and once every 4.8 years by BLM nationwide.

All agencies studied take very few enforcement actions, and fines and penalties are infrequent and trivial. BLM collected less than $150 per violation on average.

“With more and more wells in the Bakken, it is vital that we increase our funding and staffing for inspection and enforcement,” said Charyn Ayoub, a Northern Plains member from Helena. “Currently, a 2011 legislative audit on the Board of Oil and Gas found that the division had not inspected 58% of active wells in at least five years. This absolutely needs to be fixed.”

A 2011 Montana Legislative Audit Committee reported that the Montana Board of Oil and Gas gave oil and gas operators at least four opportunities to come into compliance before taking action. At least 65% of the violations were resolved. The audit, however, raised concerns that mandated timelines are inconsistently applied, particularly timelines for prompt cleanup. The audit recommended adoption of a formal policy providing guidelines for corrective actions and specifying length of time to comply.

Recommendations include:

BLM and all state agencies should adopt inspection goals that ensure all wells are inspected at least once a year, all complaints are promptly investigated, and high-risk operations, operators and sites are inspected more frequently.

BLM and all state agencies should have the authority to implement an annual inspection fee to fund the number of inspectors needed to fulfill these inspection goals, including the ability to pay the salary range needed to attract and retain professionals.

BLM and all states should review and update their fine and penalty structures to ensure fines and penalties are sufficient to deter future violations.

Where agencies do not have the clear authority to implement these recommendations, legislators, including Congress, should take prompt action to grant clear authority.

“Our Board of Oil and Gas commission should at least comply with the recommendations of the 2011 Legislative Audit, and they should at least have the ability to inspect each well within one year,” Wilson said. “Moreover, if infractions are found, the penalties must have enough teeth to change behavior. Now, it would seem easier for companies to just pay the fines and resume business as usual.”

Previous “Law and Order” reports were issued by WORC in 2004 and 2009. The updated report is available at http://www.worc.org.

 

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