HIGHLANDS RANCH, Colo. — Prospect Energy, an oil and gas operator that owes $1.7 million fines, will not have to pay, partly because the company told state regulators it can't afford it.
In exchange for payment, the Highlands Ranch-based company has agreed to stop doing business in Colorado.
The Energy and Carbon Management Commission (ECMC), a state oversight commission, endorsed the agreement. Prospect Energy has a long history of environmental violations in the state. The commission had fined Prospect for violations that included illegal flaring, spills and failing to do well-integrity tests. The agreement won't be finalized until Aug. 27.
The company has 59 wells in Larimer County with 10 located in Fort Collins.
In a meeting on Aug. 14 with the oversight commission, the Attorney General's Office said by forgiving the fines and having the company leave the state, those wells can be put into the state's abandoned wells program before they become problematic.
Colorado's orphan wells program is paid for by a fee charged to other oil and gas operators.
"This is not the ideal outcome, but the provisions will go a long way to ensuring protections for public health, safety and wildlife resources especially those nearest to prospect's operations," Caitlin Stafford, senior assistant attorney general, told the commission.
An additional term of the agreement specifies that Prospect Energy's owner, Ward Giltner, can't own or operate any future oil and gas properties in Colorado without permission from the commission.
Prospect Energy has a separate agreement with Larimer County and the city of Fort Collins to clean up the sites with the leftover money, though the agreement is "contingent upon Prospect Energy’s commitment to cease all operations and safely shut-in all of its wells," according to a release posted from the county.
"This agreement is a significant win for our community," Fort Collins Mayor Jeni Arndt said in the release. "It demonstrates the power of collaboration and our shared commitment to addressing serious violations effectively. By ensuring the safe closure of these wells, we are taking essential steps toward a safer and more environmentally sustainable future for our community."
In addition to the $1.7 million owed to the ECMC, Prospect owes $337,050 in penalties to the Colorado Department of Public Health and Education's Air Pollution Control Division.
The state had issued a cease-and-desist order for the company’s Krause facility in August 2022. Prospect met with the division and finalized an agreement to correct its violations, but the division said follow-up inspections of the company’s facility revealed repeated air quality violations.
In February 2024, Prospect signed an enforcement package with the air division, part of which detailed a list of violations from November 2021 to February 2023. In the package, the company agreed to pay a penalty of $337,050 in four installments. About $200,000 of that would fund projects to benefit communities disproportionately impacted by pollution through the state's environmental justice grant program, as required by Colorado’s Environmental Justice Act. The remaining 40% would go toward the state’s general fund, division spokesperson Kate Malloy told 9NEWS in a written statement.
According to the air division, Prospect failed to complete its installment payment in March. On May 20, 2024, the division said it sent Prospect a request for payment of the penalty in full by May 30, 2024. As of Aug. 16, the company still hasn't submitted any penalty payment.
On Aug. 13, the state Attorney General’s Office filed a lawsuit on behalf of the division seeking compliance from Prospect Energy and Giltner, with the terms of the enforcement agreement.
In addition to paying the remaining penalties, the lawsuit seeks civil penalties for each violation and each day that the company has failed to comply with the agreement it signed in February. This includes paying interest on the existing penalty at a rate of 8% per year.
The division will not comment on the case as the litigation is pending.