Weld County

October 8, 2013

Colorado flooding implicates insurance coverage for energy companies

Source: http://www.lexology.com, September 30, 2013
By: John D. Shugrue, Kevin B. Dreher and Emily Garrison, Reed Smith LLP

The damage caused by the recent flooding in Colorado is catastrophic and has evermore changed the lives of many who live in and around the affected communities. As the waters recede, the impact of the destruction is being uncovered. Many roads, houses, and businesses have forever been washed away, and the recovery effort will take years to rebuild what has been lost.

Among the businesses hit the hardest were the oil and gas industry. There are about 20,000 oil and gas wells across Weld County, Colorado, and about 1,900 of them had to be closed off — “shut in” — as the floodwaters poured down from the mountains and spread out across the plains. When the floodwaters reached Colorado’s drilling center, they poured into wells, broke pipes and swept huge oil tanks off their foundations. The state has counted at least a dozen “notable” spills stemming from the catastrophic floods. According to officials, the heavy floodwaters caused more than 37,000 gallons of oil to spill into or near rivers, and the state’s oil and gas industry is racing to assess and fix the damage to wells, pipelines, and storage facilities that occurred during the storm.

While the resulting environmental impact caused by the recent Colorado flooding may pale in comparison to other catastrophic disasters, such as the Deepwater Horizon blowout or the Exxon Valdez oil spill, the physical damage and loss of operations sustained by many oil and gas companies that operate in the affected area will be significant. Fortunately, the affected companies likely have insurance coverage in place to assist with physical repairs to wells, pipelines, and storage facilities, as well as coverage to assist with any environmental cleanup, resultant third-party claims, and loss of business income and production.…

September 27, 2013

Opinion: Energy Industry Liability May Cover Contamination Claims From Colorado Flooding

Source: http://www.insurancejournal.com, September 24, 2013
By: Jared Zola and Clark Schweers

Colorado residents and businesses face devastating water inundation that many are dubbing a one-in-500-years weather event. Early reports confirm nearly 2,400 square miles saturated with water causing massive dislocation and loss of life.

As recovery efforts begin, some environmental groups are turning their attention to the Wattenberg field north of Denver that is home to more than 20,000 oil and natural gas wells in Weld County and parts of Boulder, Adams, Larimer and Broomfield counties—counties that have experienced flooding, washed out roads, and evacuations. Several large oil and gas companies currently operate hydraulically fractured wells in the area.

For those businesses that may face potential liability from environmental contamination claims, liability insurance may be an important asset to help manage defense costs and remediation payments—even if contamination claims prove to be wholly without merit.

According to a Sept. 14 Denver Post article, Colorado flooding: Evacuations, broken oil pipeline in Weld County: “Oil drums, tanks and other industrial debris mixed into the swollen river flowing northeast. County officials did not give locations of where the pipeline broke and where other pipelines were compromised. . . .One pipeline has broken and is leaking . . . other industry pipelines are sagging as saturated sediment erodes around the expanding river.”…

June 25, 2013

PDC Energy to pay $35,000 for February fracking fluid spill

Source: Greeley Tribune (CO), June 18, 2013
Posted on: http://envfpn.advisen.com

PDC Energy on Monday formally agreed to pay $35,000 in response to February’s 30-hour, 84,000-gallon fracking flow back fluid spill north of Windsor.

During the Colorado Oil and Gas Conservation Commission’s meeting in Grand Junction, PDC offered to go above and beyond an otherwise minor fine by entering into an administrative order by consent. Typically, the commission weighs its enforcement options to the tune of $1,000 per violation per day, but in the case of the PDC incident — which was contained to the well pad and largely based on “bad luck” — that would have totalled only about $9,000.

“We understand that there’s a tremendous amount of pressure on the commission,” said Adell Heneghan, vice president of environmental health and safety with PDC. “We also understand that the community is crying out for more enforcement, and we believe that this is the appropriate thing to do.”

In addition to the fine, PDC will also arrange for three Weld County training classes titled “Effective Strategies and Tactics for Municipal Responders,” which will focus on strategies emergency workers can use when responding to an oil or gas well situation. Those classes, hosted by Texas-based Wild Well Control, will be held July 6, July 19 and July 20.…