Maralex Resources and its sister company, Maralex Disposal, were fined a total of $45,000 on Monday by the Colorado oil and gas regulatory arm for violations at two production sites in La Plata County.
The enforcement actions occurred at the Colorado Oil and Gas Conversation Committee's commission meeting in Denver. Maralex Resources is an oil and gas operator and Maralex Disposal handles produced water; both are based in Ignacio.
The penalties in La Plata County involving Maralex, along with another $60,970 fine for a violation in Garfield County, were approved 8-0; Commissioner John Benton abstained.
According to state documents, COGCC staff inspected a Maralex Disposal site south of Durango on County Road 310 on July 30, 2015, and found produced water was leaking from an earthen containment berm. Produced water is left over water from oil and gas production, the chemistry of which varies from well to well.
It is unclear how much produced water leaked at Maralex Disposal's site. COGCC staffers were in a meeting and public records online did not include that information.
Regardless, state records show Maralex Disposal was told Aug. 31, 2015, to take corrective actions no later than July 15, 2016. However, during a July 19 inspection, a COGCC staffer reported "no work has been done" to make the containment berm safer.
COGCC staff issued a "Notice of Alleged Violation" on Aug. 26, "for the failure to maintain the berm in good condition and ensure that the secondary containment was sufficiently impervious."
Maralex president A.M. O'Hare wrote a Sept. 6 response to the violation to the COGCC, disputing the agency's allegation that no work had been conducted.
"Not only has Maralex completed this work, it has gone above and beyond the requirements," O'Hare wrote. "Maralex has committed significant manpower and resources to the upgrading of the . facility to prevent future spills . we respectfully request that the (violation) be vacated."
O'Hare told The Durango Herald on Monday that the state inspector refuses to recognize the improvements made at the site, which he claimed were completed prior to the commission's issuance of a violation.
"We're befuddled by that," O'Hare said. "We think that is very indicative of the out-of-control attitude COGCC has with regard to the industry. They seem to have no inclination to accept the work that was done despite the proof we've submitted."
COGCC spokesman Todd Hartman said oil and gas regulators were preoccupied with a meeting Monday and unable to comment.
COGCC commissioners approved the $30,000 fine to Maralex for that matter on Monday.
The other incident involved Maralex Resources, which resulted in a $15,000 fine.
According to state documents, Maralex Resources "discovered and stopped a produced water release due to a leak in the gathering line" on March 5, but did not report the leak within 24 hours, a state mandate.
Maralex Resources reported the release on March 8, and the next day when a COGCC inspector visited the site northeast of Ignacio, it was found "the release had impacted waters of the state by reaching Ute Creek," a tributary of the Los Pinos River.
It's unknown how much produced water was released into Ute Creek, according to state documents. O'Hare wrote that the produced water is clean enough to be considered "usable" by the Environmental Protection Agency, and claimed the leak had no adverse impact on water quality.
On June 21, COGCC issued a Notice of Alleged Violation in that incident.
O'Hare said another operator that uses the pipeline exceeded the pressure limitations of the line, resulting in the spill. He said proper actions have been taken to prevent any future incidents.
O'Hare admitted the spill was not reported to the state within 24 hours, but said it was contained upon discovery. He said employees are now instructed to report any leaks within 24 hours to COGCC staff.
He had requested the state "waiver of any penalties associated with these alleged violations," claiming there was no adverse impact to the environment or human health and safety and that the spill was not caused by Maralex's direct actions.