Blowout brings scrutiny to energy company

2006-08-22T00:00:00Z Blowout brings scrutiny to energy companyRUFFIN PREVOST Billings Gazette Casper Star-Tribune Online
August 22, 2006 12:00 am  • 

CLARK - People here say last week's gas-well blowout was the kind of incident they have long said state and county health and safety agencies were ill-prepared to handle.

They point to two previous spills and an illegal dumping of drilling fluids in outlining a history of problems with Windsor Energy, the company managing gas exploration around this Park County community.

Windsor chief operating officer Jeff Dahlberg has said the incidents were unrelated. And some Clark residents have praised the company for doing its best to make things right.

But with energy prices continuing to rise, and with Windsor on track to expand operations in the Big Horn Basin and elsewhere, residents and some state and federal regulators are taking a closer look at the company.

Windsor Energy Resources is the parent company of Windsor Wyoming. Formed as a Delaware corporation in December 2005, Windsor Energy plans an initial public offering of up to $175 million in common stock. Dahlberg said there is no firm target date for the offering but that the company hopes to go public as soon as reasonably possible.

The well blowout would not significantly affect those plans, he said, other than a slight delay in the timing. "It won't be a factor as far as financially or politically," he said.

Documents filed in June with the federal Securities and Exchange Commission show Windsor holding leases on 364,200 net acres in Wyoming, Montana, North Dakota, Colorado, Texas, Arkansas and Mississippi.

According to the documents, as of December 2005, the company operated 582 producing wells and had identified more than 1,300 potential new well sites. More than 90 percent of existing wells are for natural gas.

In 2005, Windsor spent $38.7 million on its Powder River Basin operations, which included 479 wells, mostly for coal-bed methane. It expects to spend $23.6 million there this year on 133 new wells.

In Clark, the company spent $14.6 million last year on three wells and a 25-mile pipeline project, and expects to spend $16.9 million this year completing four additional wells and a seismic survey. New wells in the Big Horn Basin cost about $3 million each, according to company filings.

Dahlberg said the company has around 40 full-time employees.

Documents mention field offices in Gillette and Sheridan, but no office or full-time Windsor employees in Clark.

Dahlberg said the company relies heavily on independent contractors, including Nabors Drilling, the company working at the Crosby drill site at the time of the blowout.

Dahlberg said Nabors also ran Windsor's Bennett Creek well site in Clark and described the work there over the past two years as a "disaster." Windsor used Nabors Drilling again after its Bennett Creek work because the company's efforts elsewhere for Windsor had improved and Nabors had the only available drilling rig in the area capable of reaching depths required at the Crosby site, where the well was 8,038 feet deep.

Clark resident Mary Baredda said the use of numerous contractors without strong oversight invited shoddy work.

Cindy Kramer, a Clark resident who said her family has worked in the oil industry, said she had concerns that large companies without strong local ties weren't looking out for the health and welfare of residents and employees.

"What has exposure to that gas for days done to our men working on the rig?" asked Kramer, who said she felt ill during the blowout. "Did they have respirators? Were they protected?"

Don Likwartz, supervisor for the Wyoming Oil and Gas Conservation Commission, said such equipment was not required unless data showed a likelihood of hydrogen sulfide in the area.

Dahlberg said no hydrogen sulfide had been expected and that none was detected during the blowout.

Denny Smith, a spokesman with Nabors Drilling, defended the company's safety record. Based on work time lost to accidents, he said Nabors, the country's largest land-drilling contractor, was second in the industry.

State and federal Occupational Safety and Health Administration records for Wyoming over the past decade show that Nabors was cited for 23 violations, with nine considered serious. During the same period, Halliburton had three.

"They're a service company," said Smith of Halliburton. "We're a rig company. You should compare us to companies like Caza, Patterson and Parker."

For the same period, Caza Drilling had 23 violations, with eight considered serious. Patterson Drilling had 16 and Parker Drilling had one.

Smith said Nabors had roughly 25 drilling rigs in Wyoming but was unsure of how that number compared with the other companies.

Escaped gas

Regarding potential safety concerns in Clark during the recent blowout, Smith initially said the word "blowout" was a "mischaracterization" of the event.

"In 99 times out of a 100, when you have a blowout, the rig burns down," he said. "It's a dangerous situation, so I don't think it was a blowout, which is a sustained, uncontrolled escape of gas."

After checking with his office, Smith, who was traveling, later said he spoke to Nabors personnel in Clark. "Some stuff did leak out and channel through the cement," he said, adding that the cement work "wasn't perfect."

Smith said a "small amount of gas" escaped during the "well-controlled event that people rehearsed for, and everything worked exactly as it should."

DEQ officials estimated that 5 million to 7 million cubic feet of gas was discharged into the air during the 58-hour incident. No state or county safety officials were able to give residents specific numbers for what constituted dangerous concentrations of methane gas, saying they were focused on figures for explosive concentrations.

At no time did readings approach explosive levels, Dahlberg said.

"I can't tell you how many hours I've stood in that fog" without ill effects, Dahlberg said of the elevated methane levels after the blowout. "Not a person has left due to getting scared or feeling sick."

DEQ Director John Corra said his agency was limited in what it could do following oil and gas rig incidents.

"It's a matter of jurisdiction and authority," he said. "On the drill site, that jurisdiction belongs to the Oil and Gas Commission. They can close off that site and we do not go across that line."

DEQ can investigate materials that have left the drill site, he said.

Regarding the Clark blowout, Corra said, "We had assurances from the local emergency planning coordinator and others on the scene that there was no immediate threat."

State Rep. Pat Childers, whose district includes Clark, said the blowout was a serious situation.

"I would consider it a very high emergency," he said. "Not necessarily for potentially harming people on the well, but for losing the rig."

Childers, who worked for Marathon Oil for many years, said the industry as a whole takes safety seriously.

"I don't know a lot about the company," Childers said of Windsor. "But they seem to be trying.

"We've come a long way from the way they used to do it. They used to just let it blow."

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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