Small fortune is lost when oil giant’s well collides with family business by Gayathri Vaidyanathan, October 24, 2013, E&E News
Naomi Parker and her ex-husband, the proprietors of Parko Oil LLC, own 10 oil wells in the San Juan Basin of Sandoval County, N.M. It may seem an unusual retirement investment, but with the price of oil hovering around $100 a barrel, the wells have provided the couple with a cushy income. That was the case until Sept. 30, when the Parkers found themselves with a mess on their hands. On that day, a hydraulic fracturing job by Encana Oil & Gas (USA) Inc. at a nearby well pad affected a Parko Oil well, causing a spill of 200 barrels of oil and fracking fluid. Of the contaminants, just 75 barrels was recovered.
The Parkers are now spending more in cleanup than they are earning. “Encana seems to think this is a very minuscule problem, but when you are retired, a few small wells makes a pretty good retirement income,” Parker said. The spill was caused by a “frack hit,” where the fractures of two adjacent wells communicate. An EnergyWire investigation this year found that frack hits are common but unregulated by both federal and state agencies. The hits are unrecorded by regulators until there is an oil spill, at which point the agencies ask for remediation and the companies jostle to figure out who pays the bills (EnergyWire, Aug. 5).
The threat is to groundwater, where well bores can rupture and allow fracking fluids to directly contaminate aquifers.
In the case of the Parko wells, the Parkers noticed and reported five frack hits to the New Mexico Oil Conservation Division (OCD) before the sixth caused a spill. The Bureau of Land Management and the OCD recorded only the sixth event in their databases. As such, five warning signs of a future spill were ignored by the authorities.
The Parko Oil and Encana wells are on federal land, but they are administered jointly by BLM and the OCD. The problems for the Parkers began when Encana moved into the area and bought up leases encircling Parko Oil’s wells and began fracking in July. Encana was using a fracking fluid mixture containing millions of gallons of water, nitrogen gas and chemicals to blast apart shale rock and release trapped oil and gas.
… Depending on the geology, some fractures can travel more than a mile, creating a channel of communication between adjacent wells drilled into the same formations. The fracking fluid, pumped in at high pressures of up to 10,000 pounds per square inch, crosses underground and goes up the well bore of the older well, usually constructed to withstand just 250 psi of pressure. Like a thin-walled balloon filled with too much gas, the pressure differential could, in the worst-case scenario, find an explosive exit by cracking the drill casing and contaminating groundwater aquifers.
Every time Encana fracked its wells, it would inform the Parkers. And initially, the oil major would dispatch a rig to the Parko wells to shut them in, an expensive process that would protect the older wells from frack hits, Parker said. Encana did not confirm whether it had dispatched rigs to shut down its neighbor’s wells. Once Encana finished fracking, the Parkers would resume operating their wells.
Then on Sept. 10, BLM assembled the oil and gas operators and discussed the issue of frack hits. There, “it was agreed upon and understood” that the operators of at-risk wells would be responsible for any damage, said Douglas Hock, a spokesman for Encana. The implication is that Parko Oil is responsible for dealing with any unintended consequences of Encana’s fracking operation. Parko Oil was not present at the meeting, Hock said.
On Sept. 13, Encana informed Parko Oil by letter that it would be fracking, but this time it did not shut in the Parko wells. On Sept. 29, the Parkers noticed the pressure was increasing at two of their wells. And at 2:30 a.m., Naomi Parker got a call from a neighboring driller. One wellhead had ruptured and was spewing oil, nitrogen gas and wastewater.
BLM’s New Mexico office was closed due to budget battles in Washington, D.C., so federal inspectors were not on site to monitor the cleanup. State inspectors took their place and oversaw remediation of the soil. The well has been nonfunctional since Sept. 30. The Parkers trucked off the contaminated soil and wastewater, and they don’t yet know the damage to their well bore, said Ernest Padilla, the attorney representing Parko Oil. The well was constructed in 1956 and reaches 5,600 feet into the ground. It is cased in steel and cemented, but cement has a shelf life, usually of about 30 years. The well was past its prime. The OCD said it is “highly unlikely that this incident caused an impact to groundwater.” The division’s reasoning is that groundwater is 100 feet below the surface, which makes it unlikely that a spill on the surface would contaminate the supplies. The OCD did not comment on the possibility of the casing being ruptured, which would allow Encana’s fracking fluid to directly contaminate groundwater.
Parko Oil is considering suing Encana for its lost production, Padilla said. The 10 Parko Oil wells were producing an average of seven barrels of oil a day, which provided about $200,000 in monthly income to the Parkers. For a tiny company, they were operating at a profit. But since the frack hits, some of their wells have had to be shut down, and they are paying for well remediation, Padilla said. “They are not making any oil, and they are hauling water,” he added. Encana has offered the Parkers $3,000 to $5,000 per well, he said, a value that Encana declined to confirm. Encana believes the affected operators must protect their own wells. “We provide prior notification of our well stimulation operations, and it is incumbent upon nearby operators to take responsibility for monitoring pressure on their wells,” Hock of Encana said.
Because the OCD and BLM do not regulate frack hits, companies often must reach an agreement among themselves. The fight can assume a David vs. Goliath character when bigger players like Encana tussle with smaller, local companies such as Parko Oil. When the affected companies do report frack hits — often witnessed as an increase in pressure in their well bores — to the OCD, their complaints are ignored unless there is a spill of wastewater or oil. Scott Dawson, deputy director of the OCD, told EnergyWire that his agency will step up its monitoring of frack hits and take the reports of communication seriously. [Emphasis added]
[Refer also to:
When Frackers Frack Other Frackers They Break The First Fracking Commandment: Thou Shall Not Frack Another Fracker by Chip Northrup, October 20, 2013, No Fracking Way
It can get pretty testy. Encana fracked somebody else’s well – in yet another case of “involuntary stimulation”
WATCH: Encana’s fracking fluid blows out nearby oil well, Cleanup costs, competing technologies at issue by Tina Jensen, October 18, 2013, KRQE News 13
More than 200 barrels of fracking fluid, oil and water blew out of a traditional oil well on BLM land in the San Juan Basin in late September raising questions about risk who is responsible for the spill. State regulators say the blowout on a Parko Oil well happened because of pressure from nearby fracking operations run by Encana Oil.
“The spill has been contained,” said Jim Winchester, spokesperson for the New Mexico Energy, Minerals and Natural Resources Department, which houses the state regulator Oil Conservation Division. “Fluids from the spill were removed by a vacuum truck quickly after the release.”
On Sept. 30, one of Encana’s fractures reached Parko’s neighboring vertical well on leased Bureau of Land Management land. The pressure was too much for the older well to handle. “Our highest pressure is around 150 pounds,” said Parko Oil pumper Johnny Aragón. he pressure we were experiencing is in excess of 2,000 pounds, which is a lot more than what the wells are designed to hold.”
Encana’s operations were approximately 0.5 miles from the Parko well that had the blowout. “An Encana well, undergoing stimulation operations, may have communicated with the well of a nearby operator,” said Encana spokesperson Doug Hock. “That operator’s well became over-pressurized resulting in the release of fluid from both the wellhead and a nearby tank.”
“When Encana was made aware of the situation, it immediately ceased its own operations.”
Screen captures from KRQE News clip
Well Spacing Concerns
New wells are springing up quickly. Some fracking operations are installing wells as close as 800 feet from traditional vertical wells. “I don’t understand why the state or the BLM or anyone else is letting them get so close to other wells,” said Parker. “Encana’s encircling our field entirely.” New Mexico has no minimum spacing requirement between wells. But Drangmeister says he doesn’t believe the proximity of the Encana and Parko wells caused the blowout. “From my understanding of these very rare cases of well communication, the issue is one of local underground geology, not spacing or the age of wells,” he said. But others say New Mexico could be facing huge problems ahead with the close proximity of high-pressure fracking operations and aging wells.
The Encana-Parko well hit resulted in soil contamination but no groundwater pollution, according to the state’s Oil Conservation Division. But there’s a big risk when fracking fluid meets up with a traditional, aging well. Fracking fluid includes water and toxic chemicals. Some chemicals are disclosed, but in New Mexico the OCD doesn’t require the reporting of “proprietary, trade secret or confidential business information.”
Even Parker says aging wells are prone to cracks. If fracking operations hit one of those wells, it could have devastating consequences, he said. “If you had a crack in your casing or something like that, their fluid may go into the water reserve,” he said. …
The Cost and Responsibility of Cleanup
The half-mile stream of chemicals and soil contamination from the blowout was left for Parko to cleanup. “The release was on their well,” Hock said. “They took charge of the cleanup and shut-in of their well.” So far, Parko Oil has had to pay for the cleanup, too. Parko Oil president Floyd Parker estimates current damages at $100,000 and says this isn’t the first time Encana’s operations have impacted his own. “They said they’d pay the bills,” he said. “They haven’t paid any of the bills, and they haven’t paid anything on this mess either.” State oil regulators don’t have the authority to say who should pay for these messes, so the companies have to work it out, or go to court. [Emphasis added]
[Refer also to:
Curran says that since the ERCB began monitoring interwellbore communication this year, there have been 21 incidents….
Source: Thompson, Suzi. December 20, 2012. ERCB: New rules coming for fracking and unconventional resources Fast Forward Weekly
Workers – without respirators – take a closer look while cleaning up the Innisfail, Alberta frac communication event or “Frack Hit,” January 13, 2012.