Louisiana Record

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Gulf of Mexico oil producer fined $4 million for violating federal regulations

By Taryn Phaneuf | May 10, 2016

NEW ORLEANS — After pleading guilty to violating offshore oil production safety and environmental regulations, a district court judge sentenced Energy Resource Technology GOM (ERT) to three years of probation, and ordered the company to pay a $4 million fine and a $200,000 community service payment last week.

ERT, which operates offshore oil production facilities in the Gulf of Mexico, pleaded guilty to two felony counts of violating the Outer Continental Shelf Lands Act and two felony counts of violating the Clean Water Act, according to the U.S. Attorney’s Office in the Eastern District of Louisiana. The violations occurred on several platforms.

Such cases are a growing trend, Keith Hall, an associate professor in the Louisiana State University Law Center and director of the Mineral Law Institute, told the Louisiana Record.

“Criminal prosecution for regulatory violations historically has not been common, but the U.S. Department of Justice (DOJ) has put an increased emphasis on using prosecutions as a tool to promote safety and environmental protection,” Hall said. “And I think this is a trend that will continue.”

In November 2012, ERT contractors on a platform known as Ship Shoal 225 violated a regulation that prohibits performing “hot work” within 10 feet of a well bay unless production in that area is shut in. Hot work refers to an activity, such as welding, that uses tools that could cause a spark or open flame, and it’s regulated strictly because of the fire risk involved.

Around the same time, on the same platform, ERT didn’t properly test its blowout preventer system. This valve or device seals, controls and monitors oil and gas wells. A blowout occurs when pressure control systems fail, and oil or gas is released uncontrollably from the well. The system should be tested at regular intervals and every piece has to be working properly. The tests and outcomes are logged on a chart and signed by an onsite representative. 

A test on Nov. 27 found that one of the seven required components wasn’t tested and workers didn’t re-test the system after the chart showed failures. Bureau of Safety and Environmental Enforcement inspectors found the violation during a routine inspection a couple days later.

The DOJ also says the company tampered with the collection of monthly samples that are used to test for oil and grease content in discharged water, which violates the Clean Water Act. 

In spring 2014, the company “became suspicious,” believing contract operators could be manipulating the monthly tests by filtering samples through coffee filters ahead of time. It investigated over a two-month period and found that several platforms violated the monthly discharge allowances under a federal permit. Those platforms included High Island 557A, South Marsh Island 107A, Ship Shoal 225, Ship Shoal 224A, East Cameron 346A, Eugene Island 302C, South Timbalier 63A, and Vermilion 331A and 171A. ERT self-reported the results of the investigation to the federal government.

Additionally, in June 2015 — ERT’s most recent violation — two contract operators on Vermilion 195A were working to bleed pressure from the production casing on a plugged well. During such an activity, operators are supposed to take precautions against discharging pollutants into the Gulf, well bore fluid, acid and hydrocarbon/oil residue. But, in this case, no precautions were taken. The workers simply attached a hose to the valve and put the other end at the edge of the platform.

The case was handled by the Office of Inspector General in the Department of Interior. The Bureau of Safety and Environmental Enforcement and the Environmental Protection Agency also helped.

“It’s imperative that energy extraction be done responsibly, and in ways that doesn’t put human health and the environment at risk,” Ted Stanich, acting director of the EPA’s criminal enforcement program, said in a news release. “When oil and gas operators cut corners and break the law, EPA will work with its law enforcement partners to hold them accountable in order to protect human health and the Gulf Coast ecosystem from harm.”

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Louisiana State University U.S. Attorney's Office in the Eastern District of Louisiana U.S. Environmental Protection Agency (EPA)

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