In normal daylight, the big tanks used to store Noble Energy Inc.’s petroleum looked solid enough. But when regulators examined them through thermal cameras, they made a startling discovery: Noxious pollutants escaped from the tanks like smoke from a chimney.
“You look at them and you see absolutely nothing,” said John C. Cruden, head of the Justice Department’s environmental enforcement division, “but through the camera it’s billowing off the tanks.”
The surprise finding in early 2012 led environmental officials to document a major, yet hidden, source of air pollution in the Denver area, one that contributed to the region’s high levels of smog. The investigation culminated with an announcement Wednesday of what Cruden described as a “first-of-its-kind” legal settlement: an estimated $73.4 million agreement aimed at stopping the leaks and improving air quality in Colorado and perhaps far beyond.
The settlement, announced jointly by U.S. and Colorado officials, includes what Justice Department officials estimate to be about $60 million for equipment upgrades at thousands of storage tanks to prevent leaks. Noble Energy, the Texas-based energy company, also consented to a nearly $5 million civil penalty and agreed to contribute $8.5 million to environmental remediation projects.
Justice Department officials said Noble was unaware of the problem, and when shown the evidence, agreed to a costly retrofitting that will reduce future emissions from its operations in oil and gas fields in central Colorado. “We’re hoping this sets a good example for other companies,” Cruden said.
The settlement was one of two announced by Justice officials timed with Wednesday’s Earth Day observance. The second involved a $5 million agreement by ExxonMobil’s pipeline subsidiary resulting from a crude oil spill near Mayflower, Ark.
The Noble settlement stems from a long-running effort by the Environmental Protection Agency and Colorado’s state environmental regulator to find the sources of air pollutants known as volatile organic compounds, or VOCs. The Denver area has long been in violation of federal standards for VOCs, which are major contributors to smog. VOCs are byproducts of numerous man-made chemical processes, include fossil-fuel combustion.
In 2012, field teams began looking at potential sources of VOCs around Denver, using infra-red thermal imaging cameras. At one point they pointed the devices at storage tanks used by Noble and other companies for temporary storage of liquid condensates from their oil and gas fields.
“We identified that they had a problem with VOCs coming from those tanks,” Cruden said. “To [Noble’s] credit, they stepped up.”
Noble Energy spokeswoman Reba Reid said the company agreed to explore system-wide emissions problems after the initial discovery of leaks involving a “relatively small number of older tank batteries.”
“We take environmental compliance seriously and entered into this agreement to further reduce our emissions,” Reid said.
She noted the agreement does not specifically outline the exact amount dedicated for upgrades.
The technical retrofits being implemented as part of the settlement will be accompanied by monitoring equipment that will help detect future leaks. Federal regulators are hoping that other companies will voluntarily make similar changes to avoid being targeted.
Cynthia Giles, the EPA’s assistant administrator for enforcement, said the agreement is important because it showcases a “common-sense” fix to a significant pollution problem while helping spur the development of pollution-control technologies that can benefit the entire industry, as well as the communities nearby.
“As domestic energy development grows, we all have a stake in making sure it’s done responsibly,” Giles said.
In the ExxonMobil case, two subsidiaries of the oil giant agreed to pay $4.19 million in civil penalties and nearly $1 million in environmental restoration projects related to a March 2013 rupture of the Pegasus Pipeline in Mayflower, a town northwest of Little Rock.
The pipeline, carrying Canadian crude from Illinois to Texas, spilled 134,000 gallons in a residential neighborhood, forcing evacuations and contaminating a nearby creek.