Anadarko, the dominant oil and gas producer on Colorado’s Front Range, topped the list of companies that a recent state audit found had failed to submit required well production reports from 2016 to 2018.
Anadarko’s missing reports totaled 3,942, according to information released Wednesday by the Colorado Oil and Gas Conservation Commission. The monthly well reports provide some of the information used to determine the mineral severance taxes the companies pay.
Noble Energy was second on the list, with 3,742 missing reports, and Bonanza Creek Energy Operating Co. was third, at 1,891 reports.
Altogether, a state audit issued Jan. 28 said 316 oil and gas operators submitted 1,209 incomplete monthly well production reports and/or failed to submit as many as 50,055 reports.
Three operators each had more than 5,000 missing reports, the audit said.
The state Department of Revenue has said that although it reviews the reports, they are not the primary source of information used for figuring severance taxes. The department bases the severance taxes on oil and gas sales, not the production.
The state auditor’s office acknowledged that severance taxes are determined by the income generated by oil and gas, not directly by the amounts extracted. But the amount produced provides a foundation for calculating the tax owed, according to the audit.
The COGCC and the Revenue Department said they have started implementing the audit’s recommendations for more closely monitoring the reports and making sure the equipment used to measure the volumes produced is accurate.
The commission said it notified 135 operators in January that they failed to turn in a total of 2,073 production reports for November 2019. The companies have 30 days to correct the reports.
If the COGCC had imposed the maximum fines for the reports that were missing or incomplete from 2016-18, the penalties would have totaled as much as $308 million, the audit said. If the commission had fined just the three operators with the most delinquent reports, the penalties would’ve been more than $120 million, the auditor’s office said.
No fines were levied.
Colorado Rising, an activist organization that has pushed for tougher oil and gas regulations, asked the COGCC to pursue penalties for the missing reports. However, COGCC Director Jeff Robbins said in a statement Wednesday that under the law, the agency can’t fine a company if the alleged violation occurred more than a year ago.
Occidental Petroleum, which acquired Anadarko in 2019, said in an email that it’s confident that all of its production in Colorado has been reported for tax purposes. The company said it is reviewing its records to make sure everything submitted to the COGCC was appropriate and accurate.
“This year Occidental, and all of its subsidiaries, will pay over $200 million in ad valorem tax to Weld County alone — taxes that fund schools, first responders and critical public services,” Occidental said.
Lynn Granger, executive director of API Colorado, an industry trade group, said in a statement that the state audit and other information, which she said lacked context, have created confusion.
“The report released today by the COGCC suggests that of the 2.5 million required reports, there were 19,393 production reports that were either kicked back for error or missing,” Granger said. “That accounts for less than 1 percent of total required production reports and is a clear indicator that the severity of this is being embellished by those with a political agenda.”
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