Noble Energy, Colorado’s second-largest oil and gas driller, has agreed to a settlement with state and federal regulators over Front Range air-pollution violations that could involve as much as $73.5 million in upgrades and new programs.
The company’s tank batteries were emitting thousands of tons of volatile organic chemicals a year, contributing to the region’s ozone pollution problem, according to an analysis by regulators.
Houston-based Noble agreed to evaluate its 3,400 tank batteries in the Denver-Julesburg Basin and make needed upgrades.
The basin stretches from Denver to the Wyoming border.
Noble produced the equivalent of 21 million barrels of oil and gas in 2014 from the basin. Only The Woodlands, Texas-based Anadarko Petroleum produces more, according to state data.
“It is a precedent-setting settlement because it takes a basinwide approach,” assistant U.S. Attorney General John Cruden said Tuesday. “It is a systemic solution.”
The complaint and the settlement were set to be filed in U.S. District Court in Denver on Wednesday morning, Justice Department officials said. There will be a 30-day public-comment period before the settlement is final, they said.
“We take environmental compliance seriously and entered into this agreement to further reduce our emissions throughout the D-J Basin,” Noble spokesman Steve Silvers said.
Oil and gas operations account for 54 percent of the volatile organic chemical emissions on the Front Range, or about 576 tons a day, according to state data.
The volatile chemicals are a key ingredient of ozone, a corrosive gas that can impair breath and exacerbate respiratory ailments.
A nine-county area — stretching from Douglas to Larimer and Weld — is failing to meet the ozone health standards under the federal Clean Air Act.
Colorado must come up with a plan to reduce ozone levels.
Inspectors from the federal Environmental Protection Agency and the Colorado Department of Public Health and Environment inspected 99 Noble tanks in 2012.
The data from those inspections were modeled across all of Noble’s operations, said CDPHE executive director Dr. Larry Wolk.
The complaint against the Noble said the company failed to adequately design, operate and maintain vapor-control systems on its tanks.
“This agreement highlights an air-pollution source that is more significant than had been assumed,” assistant EPA administrator Cynthia Giles said.
When shown the results, Noble agreed to undertake a comprehensive evaluation of its tank batteries and address the worst problems first, the Justice Department’s Cruden said.
“The company really stepped up to the plate,” he said.
The steps Noble has agreed to take will cut emissions by more than 2,500 tons a year, the Justice Department said.
In 2014, Colorado adopted tougher oil and gas air-pollution rules, requiring 95 percent capture of emissions. Noble Energy was among the companies that supported the new rules.
“The violations were in 2012, so this is a little bit in the rearview mirror,” CDPHE’s Wolk said. “But it shows the rationale of why we needed new regulations.”
The inspections were of a “relatively small number of older tank batteries,” Noble’s Silvers said. “Noble Energy elected to expand the consent decree to identify additional opportunities to reduce emissions within the D-J Basin.”
Noble, which did not admit any wrongdoing, agreed to system upgrades, monitoring and inspections, which federal officials estimate could cost as much as $60 million. Noble officials said that a exact figure is still to be determined.
The company will spend $4.5 million on environmental-mitigation projects, such as retrofitting diesel engines on drill rigs and pumps used in hydrofracturing, or fracking.
An additional $4 million will be spent by Noble on regional environmental initiatives, such as providing incentives to area residents to switch from gas lawn mowers to electric ones.
A $4.95 million civil penalty will be split between the federal government and Colorado, with the state receiving about $1.5 million.
CDPHE’s Wolk said Noble worked with regulators to develop the settlement.
“We hope it sets a standard for cooperation with companies in the future,” he said.
Mark Jaffe: 303-954-1912, mjaffe@denverpost.com or twitter.com/bymarkjaffe
Updated April 22, 2015 at 10:43 a.m.: This story has been updated to clarify that while the federal officials estimate that upgrading, retrofitting and monitoring at Nobel Energy’s tank batteries to cut pollution will cost the company $60 million, the company has not determined an exact figure.
