Exxon's Oozing Texas Oil Pits Haunt Residents
File photo of Bo Vavrusa taken after his tractor rammed an Exxon Mobil Corp. natural-gas pipe on the Encinitos Ranch near Santa Elena, Texas in 2007. Source: Snapka Law Firm via Bloomberg
A sign at the Exxon Mobile Mc Gill Brothers well no. 541 stands on the Encinitos Ranch near Brooks County, Texas, on Feb. 12, 2010. Photographer: Eddie Seal/Bloomberg
The out-of-service tank battery #3 sits on the Encinitos Ranch in Starr County, near Santa Elena, Texas, on Feb. 12, 2010. Photographer: Eddie Seal/Bloomberg
A burned-out tractor sits at the Encinitos Ranch in Starr County, near Santa Elena, Texas, on Feb. 12, 2010. Bo Vavrusa was using the tractor to heap dirt and sand into the path of a wildfire on the ranch in October 2007 when he rammed an Exxon Mobil Corp. natural-gas pipe hidden in a thicket. Photographer: Eddie Seal/Bloomberg
Workers clean out a storage tank at tank battery #4 at the Encinitos Ranch near Brooks County, Texas, on Feb. 12, 2010. Photographer: Eddie Seal/Bloomberg
Rusting abandoned production flow lines lie above the ground in the Exxon Mobile Kelsey field at the McGill Ranch near Brooks County, Texas, on Feb. 12, 2010. Photographer: Eddie Seal/Bloomberg
Elizabeth Burns, poses for a photo at one of the entrance gates to the Encinitos Ranch near Santa Elena, Texas, Feb. 12, 2010. Elizabeth and her husband Stephen live on the ranch, which is owned by their relatives along with much of the Kelsey oilfield beneath it. Photographer: Eddie Seal/Bloomberg
Bo Vavrusa was heaping dirt into the path of a wildfire on a Texas ranch in October 2007 when his tractor rammed an Exxon Mobil Corp. natural-gas pipe hidden in a thicket. Flames engulfed the tractor, burning his face, arms and hands as he fled.
“I thought I was fixing to die,” said Vavrusa, 28, who was earning $10 an hour to groom the ranch for quail and dove hunters.
Exxon, the biggest U.S. oil producer, has neglected this stretch of Texas since its oil fields began drying up in the 1970s, said Jerry Patterson, the state’s General Land Office Commissioner. Now Patterson and other state officials are urging Texas lawmakers to follow the examples of California and Pennsylvania in cracking down on oilfield practices that have left leaking pipelines, wells and storage tanks.
Oozing chemical pits and Vavrusa’s scarred skin are emblematic of a legacy Exxon has sought to keep buried in court, even as it gears up for a return to active exploration within miles of the ranch through its pending $29.3 billion acquisition of Fort Worth, Texas-based XTO Energy Inc.
Exxon’s renewed focus on North America follows nationalist energy policies in Venezuela and Russia that reduced opportunities to profit abroad. It coincides with fresh scrutiny in the U.S. that is leading Congress to examine whether stricter drilling regulations are needed.
Oil’s ‘Ugly Side’
“This isn’t something the states are proud to advertise,” said Philip Dellinger, chief of the groundwater section in the Austin, Texas, office of the Environmental Protection Agency. “It’s the ugly side of the oil and gas business.”
The EPA says it has no authority to force companies to address contamination on active fields and must defer to Texas regulators, who let oil companies determine if sites need cleanup.
In Pennsylvania, where the petroleum industry was born with Edwin Drake’s 1859 discovery of crude, Governor Ed Rendell more than doubled the number of well inspectors and has asked the legislature to impose more than $400 million in new taxes on companies pumping gas from the Marcellus Shale, a geologic formation that extends from New York to Ohio and holds enough of the fuel to supply the entire U.S. for 15 years.
“I think the whole future of oil and gas in this country depends on the companies having to pick up the last mess,” said Elizabeth Burns, 43, who lives with her family on the Encinitos Ranch where Vavrusa was injured. “Places like Pennsylvania and New York need strong laws or this is what they’re going to get.”
Depression-Era Leases
Relatives of Burns and her husband, Stephen, own the ranch and much of the Kelsey oilfield beneath it. They’ve filed a lawsuit against Exxon and Chevron Corp., which pumps oil and gas on a smaller section of the spread. The suit accuses the companies of damaging tens of thousands of acres and failing to abide by 1930s-era leases they say require operators to keep equipment clear of vegetation.
Irving, Texas-based Exxon said it spent $1.6 million last year on remediation at the ranch and has conducted numerous soil and water tests to mitigate environmental risks.
“We are a responsible operator and refute any accusations that suggest otherwise,” said David Eglinton, an Exxon spokesman. “We currently have crews working to remove unneeded facilities and, where appropriate, remediate affected areas to applicable regulatory standards.”
Chevron, the largest U.S. oil company after Exxon, “denies these unsubstantiated allegations and intends to defend itself in the litigation,” said Mickey Driver, a spokesman for the San Ramon, California-based company.
Expensive Slog
If a judge finds Exxon and Chevron liable, they could be on the hook for hundreds of millions of dollars, based on cleanup costs incurred at other companies’ oil fields in California. The lawsuit is going to be an expensive slog, said Jeff Weems, a Houston-based oil and gas lawyer who has represented BP PLC, Europe’s second-biggest oil company, in Texas courts.
“The legal route is a very long and difficult row to hoe for an individual landowner,” said Weems, a Democrat who’s running in November for a seat on the commission that regulates the Texas oil and natural-gas industry. “They generally don’t have the resources to seriously take on the big oil companies that have legal departments that rival the largest law firms in size and quality.”
The Encinitos spread, located 40 miles from the Mexican border, is dotted with scores of still-active gas pipes obscured by brush and saplings that haven’t been cut. Beneath the dirt, the Burns family has found leaks and dumps they blame for undrinkable water and dead trees.
Defunct Equipment
Pollution from decades-old wells and waste pits isn’t isolated to their ranch or Exxon. There are more than 100,000 old wells in Texas that haven’t been capped and thousands of defunct gas-processing plants, compressor stations and related equipment that have never been dismantled, according to the Texas Land and Minerals Owners Association, which represents 1,200 ranchers, farmers and individuals who own stakes in oil and gas fields.
“It’s a pretty common problem in Texas,” said John B. McFarland, an oil and gas attorney at Graves Dougherty Hearon & Moody in Austin who has represented landowners with claims to 300,000 acres around the state.
In Benavides, a rural town 60 miles north of the Burns’s homestead, local officials sent residents letters in late 2008 warning them their drinking water contains as much as four-and- a-half times as much arsenic as is considered safe by the U.S. EPA. Arsenic can cause skin damage, circulatory problems and cancer, the letter warned.
Contamination Migrates
The contamination may have migrated from a defunct oilfield on the north end of town, where sludge and other waste from wells was dumped in open dirt pits for decades, said J.T. Garcia, president of the Duval County Conservation and Reclamation District. He doesn’t know who operated the field, which stopped pumping crude in the 1970s.
The Burns’s ranch, which covers an area equal to the size of Brooklyn, is just one example of the lingering environmental damage across swaths of south, west and east Texas from what were once regarded as acceptable oilfield practices, said Patterson, the commissioner with the Texas General Land Office, which oversees oil leases that help fund the state’s schools and universities.
“They’d just dig a pit and put the oil in it and then they’d haul it off later, or maybe they wouldn’t haul it off later, depending on the price of oil at the time,” said Patterson. “That was the norm, and nobody said anything about it.”
Heavy Metals
During the 1950s and ‘60s, oil companies filtered out some byproducts at the wellhead and dumped the refuse in dirt pits. That meant contaminants later buried when bulldozers covered the holes had higher concentrations of petroleum-laced substances and heavy metals than they otherwise would have, according to the Burnses and an environmental survey of the ranch carried out by Amistad Environmental LLC at the behest of the family’s lawyers.
Exxon, which pumps more oil than every member of OPEC except Saudi Arabia, Iran and Iraq, declined to discuss the Burns lawsuit. The company has paid the family $19 million over the past two decades in the form of royalties, Eglinton said. Exxon has invested $190 million in development of the field since the lease was signed in 1935, extracting 130 million barrels of crude and 980 billion cubic feet of gas during that time.
The company’s presence in south Texas has enriched ranchers and their communities, Eglinton said. Exxon paid $890 million in taxes and royalties to the state in 2008, and Brooks County, where the largest chunk of the Encinitos Ranch sits, relies on oil and other mineral taxes for 70 percent of its school and local government budgets, he said.
Price of Pollution
Those benefits came with a price measured in pollution that has languished, partly because state laws and regulatory agencies aren’t designed or equipped to police environmental performance in the oil patch, said Weems and other critics.
The Texas Railroad Commission that oversees the state’s oil and natural-gas industry allows companies to hire their own environmental consultants to check for contamination. Tests on the Burns property conducted for Exxon by Netherlands-based Arcadis NV gave the site a clean bill of health, said Ramona Nye, a spokeswoman for the Austin-based commission.
Elizabeth Burns had a different assessment.
“They buried it, muck and all,” she said.
Jeanna Blatt, a Highlands Ranch, Colorado-based spokeswoman for Arcadis, declined to comment.
OPEC’s Predecessor
The railroad commission, created in 1891 to regulate shipping rates, had its authority expanded to the nascent Texas oil industry in the early 1900s, when rampant drilling glutted world markets with crude and prices tumbled.
The commission began restricting how much each well in the state could produce, in a bid to prevent another free-fall in prices. When the Organization of Petroleum Exporting Countries was formed in 1960, the railroad commission was its model, according to the Texas State Historical Association.
“It’s a mistake to have an agency that was originally set up to serve the industry now being asked to police the industry as its environmental regulator,” said McFarland, the oil and gas attorney.
The Texas legislature isn’t inclined to crack down on the oil industry either, said Kelly Mcbeth, a legislative strategist at Texas Energy Lobby, an Austin-based firm that represents petroleum companies. Even wells that produce just a trickle of oil or gas are revenue generators for the state.
‘An Economic Driver’
“Legislators do everything they can to keep those wells on line,” Mcbeth said. “They’re an economic driver for us.”
The EPA doesn’t intervene in pollution cases on active oilfields in Texas, said Dave Bary, a spokesman for EPA Region 6, which encompasses Texas, four other states and 65 American Indian tribes.
“The railroad commission has primacy over active oilfields,” Bary said.
Exxon, which had 2009 sales of $276 billion that dwarfed the economic output of all but 33 of the world’s nations, wants to seal the records in the Burns lawsuit, filed in December 2007. If Judge Richard C. Terrell of Texas’s 79th Judicial District grants the company’s request, it would shield from public view the details of how the company has operated on the land.
“The mindset of a major oil company is that they shouldn’t have to compromise and you should be scared of them,” said Roger S. Braugh Jr., the Sico, White, Hoelscher & Braugh LLC attorney representing the Burns family. “To prove our case, ultimately we’re looking at spending tens of millions of dollars on environmental studies.”
Off the Land
The suit demands unspecified cleanup costs and seeks to kick the oil companies off the land for breaching leases signed in the 1930s, said Braugh, who’s based in Corpus Christi, Texas.
Vavrusa, the former ranch hand who now works for a company that tests pipeline meters, sued Exxon and the ranch for unspecified damages. Exxon failed to cut the vegetation that hid the gas line from view, and the ranch family didn’t warn him the line was there, he claimed in his suit.
Exxon’s Eglinton said it was premature for the company to comment on that suit.
Cleaning up a contaminated oil patch involves either excavating the soil and trucking it away, or fencing off the area to keep people out, said John Evans, chief civil engineer for Cannon Associates, a San Luis Obispo, California-based remediation firm.
California Cleaning
In California, the third-biggest oil-producing state after Texas and Alaska, state agencies and regulators have been pushing oil companies to clean up old fields.
Unocal Corp. was forced to spend $100 million to dig up a half-mile of oceanfront and to demolish and rebuild eight blocks of Avila Beach, California, starting in 1995 after subterranean pipelines leaked crude, gasoline and diesel, said Evans, who worked on the project.
The cleanup stemmed from a lawsuit filed by the California Regional Water Quality Control Board, according to a Unocal filing with the U.S. Securities and Exchange Commission. A yacht club, retail stores and pier had to be rebuilt at the company’s expense. Unocal is now part of Chevron.
At another former Unocal operation in California, the state’s Department of Fish and Game, the water quality board and the Department of Toxic Substances Control successfully sued the company over contamination of the Guadalupe field 160 miles northwest of Los Angeles, public filings showed.
Kerosene Leaks
The cleanup so far has cost $200 million to $300 million since digging began in 1994, Evans said. Before the field was shut in the mid 1990s, Unocal used kerosene to loosen deposits of thick crude. The kerosene pipes leaked, polluting the soil and flowing into the ocean, he said.
Eglinton, the Exxon spokesman, said the Unocal cleanups in California may have little in common with conditions in south Texas. “These are two completely different places,” he said.
In Pennsylvania, the state has responded to a boom in gas drilling by Exxon and others with stepped-up inspections of well sites. The intent is to ensure the holes are properly lined with steel pipe and concrete to protect local water supplies from chemicals used to penetrate rock formations and saltwater that gurgles to the surface with the gas, said John Hanger, secretary of the state’s Department of Environmental Protection.
Pennsylvania Scars
“Pennsylvania’s had a long, long history with natural- resources extraction, going back some 300 years with coal and an oil industry that began in the 1800s,” said Hanger, who before heading the agency was CEO of Citizens for Pennsylvania’s Future, a non-profit group that promotes renewable energy and conservation. “Those industries left some scars on the natural landscape, and we’re still paying considerable sums of money to repair some of that damage.”
From the 1930s through the 1970s, the Kelsey field in south Texas attracted hundreds of roughnecks, engineers and their families. They lived in a work camp that had gardens, a school, swim club and the Cactus Club snack bar that specialized in wood-smoked barbecue, the Burnses said.
Humble Oil and Texaco, which were subsumed into Exxon and Chevron, drilled 555 wells on the ranch and laid thousands of miles of pipe to funnel crude to refineries in other parts of Texas.
Poisonous Toads
Today the Encinitos Ranch, which sprawls across parts of three counties, is home to poisonous Marine toads and rattlesnakes. The fat brown toads, when captured, are tossed into a pond to prevent the household dogs from eating them and dying; rattlesnakes are shot and hung over a fence for good luck. The dogs have scars from fighting with coyotes.
Stephen Burns, 39, wears a holstered handgun around the ranch for protection against drug smugglers who avoid Border Patrol agents prowling the highways by following pipeline routes that crisscross the property.
His wife, Elizabeth, estimates Exxon has damaged 12,000 to 14,000 acres of the 31,000 acres it holds under the 1935 lease by burying wastes left by oil production and allowing byproducts to leak into the soil. Chevron has damaged about 4,000 of the 7,100 acres it operates under a lease that dates to 1934, she said.
Her first clash with Exxon had nothing to do with oil. In October 2006, police discovered that a Mexico-based drug cartel was using the abandoned Cactus Club as a way-station for couriers armed with machine guns. The authorities asked the Burns to have Exxon tear it down.
The company declined the family’s requests, Burns said.
“Exxon Mobil can’t comment on the alleged 2006 request as we don’t have any information about it,” said Margaret Ross, a spokeswoman. “There is no current request from the landowner.”
Bubbling Road
Burns began to focus on the decaying oilfield infrastructure after a second wildfire in March 2008 scorched most of the landscape, exposing the rusty pipes and other aging equipment spanning the ranch. That same month, an asphalt road on the ranch that ran alongside a former oil-storage site began to bubble with petroleum gases. Burns said she complained to Exxon and to the railroad commission.
Four months later, she triggered a radiation sensor clipped to the belt of a U.S. Border Patrol agent at McAllen Miller International Airport before boarding a flight to Houston. The agent determined the culprit was dirt on the soles of her boots laced with old crude and chemicals tracked in from the ranch. Since then, she said, she’s been calling and emailing the railroad commission about twice a week with contamination complaints.
Addressing Concerns
“Commission staff is in regular contact with Elizabeth Burns and has been working with her since November 2008 to address her concerns,” Nye said in an e-mailed statement.
A “majority” of Burns’ complaints have been “addressed and resolved,” Nye said. The five that remain open involve storage tank and pipeline leaks that the commission is monitoring “to assure that cleanups are completed within a reasonable time frame,” the spokeswoman said.
After the Burnses complained, Exxon dug up the road, which crossed a network of 44 pipelines. In October, a 9-foot deep hole about the size of a two-car garage remained, with a pool of brown muck at the bottom that had the smell and tell-tale rainbow sheen of petroleum.
Fifty yards from where the road once ran, Stephen Burns used a backhoe to dig a 6-foot trench in the soil. Within seconds, a clear liquid that reeked of motor fuel trickled down the sides of the hole. A clump of the dirt felt and smelled like the boggy sand that is mined for oil in Alberta, Canada.
Exxon filled in the bubbling-road hole in December and covered it with caliche, Burns said.
Benzene Found
The survey done in 2008 for the family found dangerously high levels of petroleum derivatives such as benzene, as well as mercury and lead, in soil and water samples from the surface to at least 40 feet down.
The family stopped using its tap water after seeing those results. Now they get their water once a week in 5-gallon jugs from a Farm and Ranch store in San Isidro, Texas, about 40 miles away.
Although lighter-weight hydrocarbons can degrade naturally in 40 or 50 years, the heavier molecules “are more persistent and pretty toxic,” said Gregory Miller, project manager at Icon Environmental Services Inc., a Port Allen, Louisiana-based company that cleans up old oilfields. “You have no idea how bad some of these sites are.”
Daunting Task
Patterson said cleaning up a tract as large as the Encinitos Ranch is impossible. Instead, the best solution may be to fence it off and monitor the pollution to ensure it doesn’t migrate underground to other ranches.
“We need to somehow encapsulate it, monitor it, clean up the obvious hazards, whether they’re fire hazards, whether they’re leakage hazards,” Patterson said. “I don’t think you can totally remediate that many acres. It’s not doable. It’s just too big.”
Exxon has installed water-monitoring stations at the ranch, said Eglinton, the company spokesman. He declined to release the results of the tests performed thus far.
Oil companies would be better off cleaning up their old operations in south Texas, Patterson said, rather than waiting for regulators or the state legislature to impose a solution.
“Exxon’s walked away from a lot of this stuff they built here, but the evil lurks,” said Burns, who had planned to raise organic vegetables when she and her husband moved to the ranch with their sons five years ago. “You’d hope your kids can do something with this land, but now it’s worthless.”
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
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