Breaking Wyoming’s sage grouse rules cost an oil and gas firm $20,000 and a stern lecture from Gov. Matt Mead in a Tuesday hearing before the Wyoming Oil and Gas Conservation Commission.
Ballard Petroleum Holdings LLC was facing a tight deadline in late February to drill a well in the Powder River Basin. The well would lie within a two-mile buffer of a sage grouse mating ground. As a condition of its permit to drill near the bird, Ballard could not operate between March 15 and June 30.
But it did anyway.
The company faced a number of complications, explained Mike Perius, director of engineering and operations for Ballard. A storm delayed a rig move. Drilling did not go smoothly.
Though aware that it was violating the terms of the permit, Ballard continued drilling until March 17, when it hit total depth. Ballard then spent five days plugging the well and moving the rig from the site. The well was dry.
Perius was penitent before commissioners Tuesday. He has worked for Ballard for nearly 40 years and the company has never been called before the commission, he said.
“We took a risk when a rig showed up late due to a storm,” Perius said. “I stand in violation. We are extremely sorry that we have done this.”
Though the firm was not drilling in one of Wyoming’s core habitats, which carry heavier protections for the sage grouse, Ballard’s disregard of the rules was not taken lightly by the commission.
Mead pressed Perius to confirm that company officials knew about the stipulations. When the operations director answered in the affirmative, Mead appeared frustrated.
“So somebody made a decision to just go ahead and violate it?” he asked.
The governor is one of the most influential sage grouse leaders in the West, and balancing the bird’s conservation with Wyoming’s fossil fuel industries has been a key responsibility during his eight years as governor.
Ballard’s violation comes at a tenuous political time regarding sage grouse and energy in Wyoming.
Two years ago, federal and state protection plans assured that sage grouse would not be put on the endangered species list. It was a relief for Wyoming. The state is home to 30 percent of the sage grouse habitat in the West, and its drilling and mining industries would be greatly impeded by an endangered species listing.
Now, the federal plans are currently at the center of a wide controversy. Suggested changes to the plans by the Interior Department have alarmed environmental and land advocacy groups, who argue that the federal government is capitulating to energy developers. A number of lawsuits have been filed against the Interior Department over the bird’s protections.
Mead has walked a fine line during this period: acknowledging that some changes are necessary in the federal plans; promoting the underlying efforts from Wyomingites that staved off an endangered species listing; and cautioning against changes that will risk a listing down the line.
Addressing Ballard’s representative and lawyer, Mead noted the significance of choosing to break rules that play a key role in preserving industry.
“You put a risk on other oil and gas development,” the governor said.
Commissioner Ken Hendricks, formerly of Anadarko Petroleum, was sympathetic to the decision Ballard faced.
The issue to Hendricks wasn’t the choice to keep drilling after the deadline, but in choosing to begin the project in the first place.
“Once the well was drilled and the well needed to be plugged, you had no recourse really. You would be exposing sage grouse and everything else to more risk had plugging not occurred,” he said. “I think front-end decision making probably was the problem.”
Perius said the company had expected it would be able to complete the job in time.
Ballard’s fine could have been up to $40,000, Wyoming Assistant Attorney General Michael Armstrong told commissioners — $5,000 for each day of activity past the March 15 cutoff. But, Ballard’s long history of compliance in Wyoming, potential penalties from the Bureau of Land Management and the company’s agreement to buy 10 sage grouse mitigation credits reduced that fine, he said.
“We thought there should be some give and take,” he said.
Mead supported the proposed fine due to Ballard’s good history, but noted the commission’s need to be aware of the spotlight on sage grouse rules.
“For the commission, we have to be very sensitive to this issue,” he said. “It is at times under attack from different sides.”