BP Oil Fined $5.2M for Ripping off Colorado Tribe

(9AM EST – promoted by Nightprowlkitty)

While this was first posted at Yubanet back on June 30,  it’s still highly relevant in establishing that BP Oil Company does not have a stellar reputation for many reasons besides the Deepwater Horizon oil spill happening now in the Gulf of Mexico, besides the explosion at the Texas City oil refinery in 2005 which killed 15 and injured 170.  And it shows they have a previous, recent history of deliberately misstating and lowballing the amount of petroleum and gas product being produced.  This is relevant now, because BP and the Federal Government have been steadily revising the estimated amount of oil gushing out from the ruined well upwards as they install more oil collection devices which are still not, obviously, collecting ALL of it.  Yet documents obtained from BP by Rep. Markey, show that BP did have a “worst case scenario” of 60,000 to 100,000 barrels of oil per day very early in the disaster when the the government was saying it was only 1000 to 5000 barrels.  The lower the official amount of oil spilt, the lower the Federal fines, obviously.

Oh, and in case you’re wondering how the ocean touches the Indigenous beaches of landlocked Colorado….  the “Bureau of Ocean Energy Management” is the new name for the old Minerals Management Service, or MMS.  MMS, now BOEM, leases out Federal lands for drilling and mining production.  A picture of the lovely area in southwest Colorado may be seen here:  http://buffalopost.net/?tag=so…  

BP is the second largest producer of natural gas in Colorado, per full data last available in 2008.


DENVER June 30, 2010 – The Department of the Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) announced today that BP America Inc. has been assessed a civil penalty of $5.2 million for submitting “false, inaccurate, or misleading” reports for energy production that occurred on Southern Ute Indian Tribal lands in southwestern Colorado. The civil penalty announced today is not related to the BP oil spill in the Gulf of Mexico.

  The Southern Ute Tribal auditors and MRM found that BP reported incorrect royalty rates and prices for royalty purposes, and reported well production on leases other than those to which the production is attributable.

After receiving audit issue letters and an order, the company agreed with the auditors’ concerns and repeatedly promised to correct the problems, which they attributed to errors in their automated files.

As part of its investigation, MRM and Tribal auditors examined later production reports to determine if BP had resolved the issues, as it had agreed. Bromwich said the same reporting errors were found in the later reviews, “leading us to conclude that BP’s continued submission of erroneous reports was knowing or willful.”  

BP reported well production on other leases ?!

The director of the BOEM, Bureau of Ocean and Energy Management, Michael R Bromwich, said in a Rigzone.com story


“It is simply unacceptable for companies to repeatedly misreport production, particularly when it interferes with the auditing process,” said BOEM Director Michael R. Bromwich. “We are committed to collecting every dollar due from energy production that occurs on Federal and American Indian lands, and accurate reporting is crucial to that effort.”

Bromwich praised the work of Southern Ute Tribal auditors who initially discovered the errors during an audit and which the Tribe first brought to BP’s attention August 2, 2007. The Tribe’s audit was conducted as part of a cooperative agreement with BOEM’s Minerals Revenue Management program (MRM). The Tribe was instrumental in documenting the ongoing errors.

From the Los Angeles Times, we learn that BP Oil Company made an incredible 25,949 violation days (that’s 71 rotations of the Earth around the Sun….) on the leases it held on the tribe’s land.    BP’s spokesperson Toby Odone displayed a sense of humor by attempting to attribute it to a “coding error.”  


The amount of the fine, though small in relation to BP’s multibillion-dollar annual revenue, nonetheless represents a serious response from Interior, which in 28 years has levied only $35 million in civil fines to the oil and gas industry.

The Southern Ute tribe and BP formed a partnership in 1999 to extract methane from coal beds located near Durango, Colorado, after a 10 year legal battle.  The Southern Utes own 32% share and BP owns 68%.  According to Indian Country News, the Dept of the Interior said that BP was not taking more natural gas than reported, but was  reporting the wrong royalty rate and using the one for “natural gas” instead of “coal bed methane gas” which has a different royalty schedule.  A spokesperson for BP, Daren Beaudo, said the error caused an underpayment of about $200,000, which has been repaid.   http://indiancountrynews.net/i…

Thad Allen, the retired Coast Guard Admiral in charge of the disaster response, says that if the relief wells, currently ahead of schedule if the weather remains perfect, do not work there is another plan to actually pipe the oil coming from the Macondo Deepwater Horizon blown out well under the sea by pipeline to other non producing oil wells miles away. http://news.yahoo.com/s/ap/us_…

Mr. Allen would have you believe that they are going to take that stuff and put it back down another well for storage.

You’ve all seen the webcam gushers or the still shots.  I’m curious as to how one does that with the methane gas.

Producing oil out of a different well than the original-   sounds like BP has had lots of practice.  


  1. http://www.mcclatchydc.com/201

    ADMIRAL ALLEN: First of all, thanks for the question, because I’m happy to clarify if there’s a misunderstanding about what I said. What I said yesterday is not in conflict with anything I said all the way along. The current philosophy or the concept associated with the current containment cap is that it’s not a perfect fit and we do not have a perfect seal. Because of that, if we don’t have some oil that’s leaking out, water will come in, form hydrates, which will cause the cap to become dysfunctional as the first cap was, when seawater met with the natural gas and formed hydrates.

    So even if we get to the optimum production out of the current containment cap, there will still have to be a small amount of oil that’s coming up through that rubber seal to maintain a positive pressure out of the- the reservoir so the water does not come in. That has been the case since we put the cap on. There was never going to be a perfect seal; that is the reason we are looking at second containment cap, which would actually bolt on to the flange to create a perfect seal.

    Q: Yes. Can you place any kind of percentage on what the decision would be to replace the cap at this point? Would you think you’re 50/50 or are you still leaning 80 percent, 90 percent toward actually coming up with the tighter cap?

    ADMIRAL ALLEN: We are still reviewing the technical specifications that were provided to us by BP on not only that cap, but several other options. The procedures on how it would be done, the amount of time at which the well would be open for discharge of some amount of oil, and the weather window that it would take to do that, and that is all under review right now inside the administration, and I wouldn’t want to attach a percentage right now.

    “Several other options…. ”

    this current system now of the LMRP CAP #4 and the hose hooked up to the choke line on the BOP, with the oil/gas going to the Discoverer Enterprise and the Q4000,  is collecting maybe 25,000 barrels of oil a day on a good day with no violent weather or other technical problems.  The problem is that the well could be leaking 60,000 to 80,000 barrels a day, per Tony Hayward in June. The majority of the oil is still on the loose.  What I have not seen mentioned anywhere yet, is when they have had the collection cap bounce off during heavy storm wave action on the surface, and they then ended up removing it for a reset, the condition of the cut off riser pipe under neath looked worn and that may be deteriorating.  The cap is literally sitting on the top of the riser crooked.  

    this is a nice link for viewing multiple webcams that will not crash your browser because it is a still picture that refreshes every 60 seconds


    I am sure if you made them back up and light up one of those views you’d see a big plume.

    The Oil Drum had a write up with good illustrations on the relief well activities  http://www.theoildrum.com/node

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