State Oil Regulators Fine Southern California Company $12.5 Million for False Reporting, Safety Violations

News Release #2018-02
April 11, 2018

SACRAMENTO – State regulators today issued a $12.5 million fine against a Southern California oil company for major safety violations related to its operation of the Richfield oil field in Orange County.

The Department of Conservation’s Division of Oil, Gas and Geothermal Resources (DOGGR) detailed the violations against Greka Oil & Gas, also known as HVI Cat Canyon Inc., in an order filed against the company. The 1,466 violations include false reporting and failure to comply with testing and operational requirements from January 2017 to December 2017.

The state also ordered the company to stop injecting water into the field northeast of Anaheim until it comes into compliance and required the company to secure a $39 million bond to guarantee that cleanup costs are not passed to taxpayers if the company folds.

“Companies doing business in California must follow the rules, and if they don’t, we’re going to take proactive steps to stop potential disasters before they happen,” said State Oil and Gas Supervisor Ken Harris, who also heads DOGGR. “The magnitude of this penalty reflects the company’s violations and poor practices, and the potential harm it could cause to surrounding communities, the environment, and groundwater.”

The penalty is being assessed under a 2016 state law (Assembly Bill 2756, Thurmond) that increased DOGGR’s enforcement powers. The new penalty structure allows DOGGR to assess penalties in line with the harm caused and allows each day to be treated as a separate violation if the issue is not repaired. 

The 1,466 major violations filed against the Santa Maria-based company (and the associated penalties totaling $12,569,712) include:
  • Incidents of false reporting, $3.6 million.
  • Incidents of failure to perform tracer surveys, $3.5 million. 
  • Incidents of failure to perform annular pressure tests, $4.5 million. These tests, along with the tracer
  • surveys, demonstrate a well’s integrity.
  • Failure to maintain accurate, operating pressure gauges, $818,000.
  • Twelve incidents of failure to provide required records and data, $88,000.
​​If the company appeals today’s filing, the formal order will go to an administrative law judge for adjudication. 

This is not the first action the state has taken against this company. DOGGR placed a $583,000 lien on the company in 2017 after it failed to pay its annual production assessment. Because the company has previously violated the Public Resources Code and has outstanding liabilities to the state, DOGGR is requiring HVI Cat Canyon to acquire a $39 million surety bond to cover the cost of permanently sealing all of its wells and shutting down its production facility in case the company stops doing business.

Don Drysdale
(916) 323-1886