Saturday, July 18, 2009

Exxon faces $1 billion fine for sabotaging Texas oil wells


ExxonMobil’s sabotage of some 100 Texas oil wells in the past 17 years — going so far as to plug up some wells with explosives — means the world’s largest oil company could be liable for penalties of up to $1 billion, the Texas General Land Office says.

Jerry Patterson, commissioner of the state’s land office, released a report earlier this week asking the Texas Railroad Commission — which regulates the state’s oil industry — to investigate “ExxonMobil’s intentional sabotage of oil wells in Refugio County as well as the company’s fraudulent reports covering up the damage.”

“Exxon committed irrefutable, intentional and flagrant violations of state rules regulating the oilfield,” Patterson said in a statement (PDF).

The allegations stem from a lease the company signed with a Texas family, the O’Connors, back in the 1950s to exploit oil fields on the family’s land. When the relationship “went sour,” Patterson states, the energy giant had the oil wells plugged up in such a way that no one else could use them.

Patterson says the company’s reports on the sealing of the oil wells was “fraudulent.”

“When the relationship turned sour in the 1990s, Exxon-Mobil terminated the lease and plugged the wells,” states Patterson’s report. “As per state rules, Exxon filed paperwork with the Railroad Commission outlining its well-plugging procedures and filed sworn affidavits as to the final condition of the wells. The O’Connor family soon learned those reports to the Railroad Commission were fraudulent.

“When an independent producer, Emerald Oil, attempted to capitalize on new legislative incentives to reopen abandoned wells, they found the old Exxon-Mobil wells hadn’t been plugged but sabotaged — filled with junk, cut well casings, contaminated oil tank sludge and even explosives. Many of the wells were left unrecoverable.”

Under Texas state rules, ExxonMobil could be fined as much as $10,000 per sabotaged oil well, or some $1 billion in all.

“The allegations paint a false and misleading picture of Exxon Mobil’s involvement in the O’Connor oil and gas leases,” ExxonMobil spokeswoman Margaret Ross stated in a Bloomberg article. “The area in which the wells are located has a water table very close to the surface. It was critical that Exxon protect the groundwater by plugging the wells solidly and thoroughly.”

The Wall Street Journal reports that the Texas Railroad Commission’s attorney “sent a letter to Exxon Mobil’s attorney, asking the company to reply to the complaint by July 31 and stating that the agency would take no action pending receipt of the response.”

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