By Vickie Welborn
vwelborn@gannett.com

Thirty-four compliance orders citing a variety of violations have been issued to oil and gas operators working in the Haynesville Shale since March 2009, according to information from the state natural resources department.

Of those, nine civil penalties — three totaling $50,000 each — have been issued on 26 closed cases. Other fines drop to either $1,000 or $400.

Violations range from wells perforated at illegal locations to failure to obtain work permits. Given the number of wells drilled into the productive shale — 1,195 as of Friday — the violations issued by DNR amount to a blip on the radar.

It either means operators in great numbers are complying with the volumes of regulations related to their drilling and completions operations or the violators have not been caught because of the sheer amount of activity that keeps the dozen northwest Louisiana's conservation enforcement specialists busy.

State Rep. Jim Morris, R-Oil City, stays in regular contact with Lt. Gov. Scott Angelle, who is temporarily away from his duties as natural resources secretary, and conservation Commissioner Jim Welsh. And he believes if they were concerned with an inability to adequately monitor shale operators they would be seeking input from lawmakers.

"I've been told by Jim Welsh with the amount of rigs running there, we don't really have a problem with the amount of people overseeing industry," said Morris, who sits on the Legislature's Natural Resources Committee.

Chris Sandoz also is confident in the amount of oversight. The assistant director of engineering for the conservation office said "I think we do a very good job with the resources we have available to us."

Most of the compliance orders issued to Haynesville shale operators result from inspections preformed by the conservation enforcement specialists. Others relate to paperwork requests or are more administrative in nature.

A monetary fine typically is not part of a compliance order. One is usually assessed when an operator fails to comply within a specified deadline, Sandoz said.

A civil penalty matrix is used as a guideline for the fines. State statutes allow Welsh, as the head of the state's conservation office, to fine or regulate an entity up to $5,000 a day per violation. But all fines and any subsequent enforcement action is imposed at Welsh's discretion.

Chesapeake has been assessed the harshest fine — $100,000 — for two separate violations for perforating wells at illegal locations. One was in the Bethany Field in DeSoto Parish and the other in the Lake Bistineau Field in Bienville Parish. Both were reported in January.

Petrohawk also was assessed a $50,000 fine for the same violation in January. The well is in the Grand Cane Field in DeSoto Parish.

The fine is not the first for Chesapeake. The Oklahoma-based company and its contractor Schlumberger Technology Corp. was assessed a fine of $22,000 by the state Department of Environmental Quality for violating state law in connection with the deaths a year ago of 17 cows at a natural gas well site in south Caddo Parish.

"Chesapeake is committed to continuous improvement in every facet of our operations," said Kevin McCotter, senior director of corporate development, concerning the DNR fines.

"Following a thorough evaluation of the tasks associated with the incidents for which we were cited, we adjusted operational practices at our Haynesville Shale well sites to minimize reoccurrences. An example of this is the implementation of industry-leading management practices for handling liquids on all our well sites. Another is enhanced site design and construction methods at Haynesville well sites to ensure the environment is treated with the utmost care and protection. We continue to anticipate needs and modify our operational practices to be as environmentally friendly as the fuel we produce."

Perforating a well at an illegal location is a no-no, as far as the state is concerned, because it opens the door to perhaps draining natural gas from an adjacent unit for which the company has not been permitted. Operators are to designate well bores on surveys and plats presented to Welsh for approval.

Whether the survey was incorrect or the driller bored into the wrong location is unknown. The first point at which oil and gas can be taken from the well bore is to be no closer than 330 feet from a unit boundary.

"Since operators spend so much money to drill the wells, they want the horizontal portion of the well where they take hydrocarbons to extend 330 feet off one unit line to 330 feet off another unit line. They are trying to build this thing 2 miles below the surface; they just got too close. It's just a side effect from the complexity of the construction," Sandoz said.

Failing to close reserve pits within six months of completion earned Chesapeake 10 more compliance orders, but no penalties.

The reason, explained Sandoz, is Chesapeake sent the conservation office a letter requesting an exemption to the six-month requirement because of plans to drill multiple wells at the same pad. The company had to submit a packet of information stating its intent and showing that all waste had been removed. Additionally, the land owner must provide an affidavit signifying authorization to leave the pit open.

"The idea is the reserve pit, the regulations surrounding a reserve pit, are all based on it being a temporary pit," Sandoz said. "It is not lined so it is not to be used for any long-term storage of (exploration and production) waste."

A fine likely would have been levied if there had been discharge from the pit and off the site. Because none was issued "that tells me it did not occur; the operators were responsive and discharges were contained on site."

Seven compliance orders issued against Chesapeake, El Paso E&P Co., Exco Operating Co., Goodrich Petroleum Co., Petrohawk and Samson Contour Energy E&P LLC are pending. They are only closed out after a field agent has re-inspected the site. All orders have a deadline by which the violations need to be corrected.
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Other violators, fines and findings cited by DNR include:
Comstock Oil and Gas, $1,000, well perforated without a work permit, Bethany Field, October.
El Paso Exploration and Production Co., $400, failed to file completion report and well history, Bethany Field, July; $1,000, failed to obtain work order permit prior to completion, Holly Field, December; $1,000, failed to obtain work order permit prior to completion and failed to conduct state potential, Holly Field, January.
Forest Oil Corp., $400, failed to submit well history and logs, Woodardville Field, March 2009.
Goodrich Petroleum, $400, failed to file completion report and well history, Bethany Field, April 15.
All of the compliance orders are considered "serious," said Chris Sandoz, assistant director of engineering for the conservation office. However, violations such as ignoring a discharge from the well site or allowing discharge into a natural stream would be "more serious than say a paperwork issue."