BAKERSFIELD, Calif. (CN) - Chevron is to blame for a failing slope that made a smaller company stop work and spend millions of dollars on environmental remediation, the smaller company claims in court.
TRC Operating Company, which owns more than 200 wells in Kern County, sued Steven Bohlen, the State Oil and Gas Supervisor, challenging an emergency order requiring it to stop its injection operations at 42 wells near Taft, at the southern end of the Central Valley.
TRC also has litigation pending against Chevron, claiming that the oil giant's failure to take care of its wells resulted in the death of a Chevron employee and the issuance of orders forcing TRC to stop its production.
TRC operates a cyclic steam injection project in Kern County. It sued Chevron on July 17, 2014 and the state's Division of Oil, Gas and Geothermal Resources on May 22. Cyclic steam injection is similar to, but different from fracking, which involves forced injection of massive amounts of liquids.
"The process is known as 'cyclic steaming' because it is a cycle of steaming and then producing," said TRC's attorney, Jean Pledger, with Ehrlich Pledger Law. "The same wells that have steam put into them are the wells that will produce the oil and, of course, the water associated with the steam."
TRC is close to three other cyclic steam operators, Chevron, Linn Energy and Freeport-McMoRan, all of which have surface expressions that must be maintained.
"Surface expressions are the flowing of oil to the surface outside of a wellbore. Sometimes such flow is naturally occurring - think La Brea tar pits," Pledger said. "In connection with cyclic steam operations, however, surface expressions can occur when a wellbore is damaged and the flow of oil is not contained in the wellbore. If a wellbore is damaged it can be a conduit for steam from wells close by to cause oil to come to the surface."
Beginning around 2007, oil and related fluids began appearing on the surface of Chevron's property near one of its wells, Well 20, and Chevron did not take adequate measures to eradicate or control these surface expressions, TRC says.
On June 21, 2011, Chevron employee David Taylor was inspecting Well 20 in connection to the steaming of a nearby well and its effect on the surface expression when a sinkhole opened beneath him and he fell in and died.
In the weeks after the accident, thermal activity at the site increased significantly and two large eruptions of steam, water, oil and rocks occurred, according to a Department of Conservation, Division of Oil, Gas and Geothermal Resources (DOGGR) report on the accident.
The DOGGR issued emergency orders to Chevron and TRC to stop all steam injection operations in the vicinity of Well 20. The property lease line dividing Chevron and TRC is about 100 feet from Well 20's surface expression area, according to the DOGGR.
During the past four years, while under the emergency order, TRC has "expended millions of dollars to locate and remediate surface expressions on its property," Pledger said. "TRC has worked on numerous wells and taken all precautions to locate and eliminate surface expressions, including the plugging and abandonment of a significant number of wells."
TRC's lost profits attributable to the lost production since 2011 is approximately $70 million, according to the company's complaint against Chevron.
And the company says it has spent more than $10 million in out-of-pocket costs in connection with well testing, grading, earthmoving, and other actions taken as a result of the Chevron Well 20 surface expression and resulting DOGGR emergency orders.
In April of this year, the DOGGR issued TRC another emergency remedial order requiring it to stop injection operations, stabilize failing slopes, maintain a safe zone near failing slopes, and conduct a geotechnical study.
Surface expressions are the stated reason for the issuance of the emergency order to cease and desist steaming operations, but TRC's attorney says the order is not well founded.
"There is nothing about TRC's operations that differs in any manner from all of the other operators that conduct cyclic steaming in the Midway-Sunset field. The only difference is that TRC is adjacent to Chevron's property that contains 'complex, damaged wells' that Chevron has refused to fix and that oil from at least one of these wells is flowing onto TRC's property," Pledger said.
Pledger noted that Chevron identified wells on its property as "complex, damaged wells" in August 2011, including Well 20, but has failed to complete a re-abandonment that it began in 2008 because of the alleged conditions of these wells. In the past six years, Chevron has not attempted any further action regarding Well 20, she said.
Despite this and the fact that Pledger sent a complaint letter to Supervisor Bohlen concerning Well 20 and its harmful effects on TRC's property, "DOGGR has failed and continues to fail to require Chevron to fix its problem wells, opting instead to shut down TRC's operations," Pledger said.
DOGGR ordered TRC to shore up a slope that has recently begun to fail due to oil and water coming through the side of the hill. But TRC's investigation showed that the source of the oil and water was Chevron's property, Pledger said.
"Essentially, TRC is being ordered to shore up a failing slope that is failing due to Chevron's oil and water coming through the side of the slope," she said.
Instead of helping TRC identify the source and stop the flow of oil to fix the failing slope, DOGGR decided that the surface expressions on TRC's property are not allowed but that any flow from Chevron's property does not need to be located nor does the flow need to be stopped, Pledger said.
In addition to costing TRC money, the emergency order "is costing jobs to both TRC's workers, since TRC cannot keep all of its workers when there is nothing to do, and to oil field services' workers," Pledger said.
TRC had to lay off 10 percent of its workforce in response to the emergency order, she said.
"In addition, since other cyclic steam operators - who also have surface expressions but who are not ordered to cease and desist operations - continue to produce oil in close proximity to TRC's property, such could result in permanent loss of TRC's oil by drainage of TRC's oil by these operators," Pledger said.
TRC seeks a temporary restraining order and preliminary injunction preventing the enforcement of the emergency order.
In its complaint against Chevron, TRC seeks $80 million in damages.
A spokesperson with the Department of Conservation said the department does not comment on pending litigation.
Chevron did not immediately respond to a request for comment.
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