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A Colorado Oil Company Allegedly Caused Dozens Of Spills And Leaks. Now It's Headed To A Trial

Courtesy of Gary Hladky
An aerial view of Gary Hladky's farm in Fort Morgan taken in June 2021. The former well site still hosts several disconnected flowlines that have damaged the surrounding soil, according to Hladky.

FORT LUPTON Black and brown sludge still bubbles up on Gary Hladky’s cornfield, but no one comes to stop it.

Since 2019, Hladky has watched as oil pipelines and abandoned wells sporadically leak onto his farm in rural Weld County. Crops won’t grow in some areas. Makeshift fencing is all that keeps livestock away from contaminated soil and pools of murky water.

The culprit behind the alleged spills? A Denver-based oil producer called K.P. Kauffman Company, Inc., he says.

“I have worked with eight different oil companies in my time, but none as bad as KPK,” Hladky wrote in a public comment he sent to the Colorado Oil and Gas Conservation Commission (COGCC) in July.

His is one of dozens of complaints and state violations lodged against the Colorado operator in recent years. The state’s top energy regulator, the COGCC, is set to begin a three-day trial on Tuesday to examine eight of the most serious situations, including the spills on Hladky’s property, and levy up to a $3.7 million fine against the company.

In the most extreme outcome, the commission could revoke K.P. Kauffman’s license to operate in Colorado altogether.

crusty well.png
Gary Hladky
A photo Gary Hladky took and shared with the COGCC ahead of the this week's trial shows a leaky oil well on his property in Fort Morgan. It's just one of several issues the farmer has found in recent years.

It’s one of the biggest enforcement cases to come in front of the new COGCC, which is made up of five full-time members. Gov. Jared Polis appointed the group last year as a part of the implementation of Senate Bill 181, the historic oil and gas safety legislation passed in 2019.

“This is an unusual and uncommon situation,” said Megan Castle, communications director for the commission. “We don't want fear mongering that every single oil and gas facility inside out there is like this. It’s not every operator.”

The eight allegations against K.P. Kauffman, called Notices of Alleged Violation (NOAVs), range from ignored flowline leaks and oil spills to lax cleanup efforts. All took place in Weld County.

COGCC staff bundled the incidents together into one case so the commissioners could “see the pattern of violation and order KPK into compliance,” according to a prehearing statement filed last week. “This matter represents the most significant series of allegations the newly constituted commission has seen to date,” it read.

The company plans to “vigorously” defend itself against the charges, said Ross Watzman, K.P. Kauffman’s general counsel.

“KPK is working diligently to remedy all COGCC concerns at its facilities and return to full compliance to the commission’s substantially revised regulations,” Watzman said in an email to KUNC. “KPK takes its responsibilities as an oil and gas operator very seriously.”

A map from the COGCC's April 2021 order shows the locations of dozens of K.P. Kauffman wells it ordered shut in. The company faces fines and the possible loss of its operating license this week due to eight specific violations in recent years.

The eight violations at issue during this week’s trial are just a few of the company’s recent run-ins with state regulators.

In April 2021, the commission issued an order demanding K.P. Kauffman shut in 87 wells associated with various spills over the years. At least 29 spills were active at the time the order was issued (they have since been addressed, according to the COGCC).

In many cases, private landowners or local government officials reported the spills.

"Across the industry in Colorado, this is very unusual," Julie Murphy, the COGCC's executive director, wrote in the April order. "In COGCC's experience, oil and gas operators usually find and report their own spills to COGCC before surface owners or third parties do."

Farmers say the spills have caused long-term damage their operations. In the town of Frederick, a spill in the summer of 2019 covered a major roadway in front of the local high school.

Crews had to close the road in order to clean it up. Jennifer Simmons, a planner with the town, said there aren’t many ongoing impacts, but it’s still concerning.

“I’ve been here 16 years,” Simmons said. “I’ve only seen two instances where oil came to the surface, so it’s not common at all.”

In a couple other incidents, farmers or residents discovered failed flowlines leaking gas. A leaking pipeline was the cause of a major home explosion in the town of Firestone in 2017 that killed two people and injured several others.

Courtesy of Gary Hladky
Black sludge flows out of a damaged flowline onto farmer Gary Hladky's property in Fort Morgan. According to Hladky, the company did not respond to his calls to come clean up the spill. The incident is a part of a three-day trial underway at the COGCC this week.

Farmer Gary Hladky says he wants to see the state and company take further action to get his property cleaned up.

“I hope the commission can see that KPK is not a responsible operating company and should not be operating in this state,” Hladky wrote. “Could this result in another Firestone event since no one has proven they’ve been disconnected and abandoned their flowlines properly?”

Once the trial, which will be held virtually, gets started on Tuesday, commissioners will hear arguments from both state and K.P. Kauffman attorneys around each of the eight violations, as well as witness testimony from some of the people impacted by them.

The goal is to have a ruling by the end of the week, but that could be delayed if the commissioners need more time to examine the evidence.

I cover a wide range of issues within Colorado’s dynamic economy including energy, labor, housing, beer, marijuana, elections and other general assignment stories.
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