Oil company with checkered history hit with $12.5M fine

LOS ANGELES — A California oil company with a long history of safety violations and regulatory lapses was hit with a record $12.5 million fine by state regulators Wednesday for nearly 1,500 violations in the past year at an oil field in Orange County.

Greka Oil & Gas falsified results in more than 350 reports, failed to conduct regular pressure testing at dozens of wells and didn’t maintain operating pressure gauges, according to the state’s Department of Conservation.

“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,” said Ken Harris, supervisor of the Division of Oil, Gas and Geothermal Resources.

A Greka lawyer did not immediately respond to an email request for comment.

State oil and gas regulators have long been criticized for taking a lax approach toward holding petroleum producers accountable. In recent years, the division’s leaders have acknowledged failings and vowed to get tougher.

Lawmakers equipped the division with increased enforcement powers and stiffer financial penalties, which led to the largest fine ever issued by the division, spokesman Don Drysdale said. The fine surpassed the previous record of $257,000 against Bennett Petroleum in 2015 by nearly 50 times.

The state also ordered the company to stop injecting water into its Richfield oil operation northeast of Anaheim until it complies with state orders. It is also required to get a $39 million bond that would be used to cover cleanup costs if the company goes bankrupt.

Bonding is of particular concern for the state because a former Greka subsidiary, Rincon Island Limited Partnership, filed for bankruptcy and California is now on the hook for a cleanup that is expected to exceed $50 million.

Tiny Rincon Island, built to drill for oil off the Ventura County coast, had been cited by the state for dozens of violations and being in a “severe state of disrepair” when the subsidiary folded.

The state will have to plug wells and decommission the operation. Expected costs don’t include removing the man-made island.