Exxon Mobil facing $1b fine for alleged sabotage of wells

• Source: Xinhua
• [11:10 July 19 2009]
• Comments

Exxon Mobil Corp., the largest US oil company, could face more than 1 billion US dollars in penalties for alleged sabotage of abandoned oil wells to prevent producers from reviving them, authorities said Friday.

Jerry Patterson, commissioner of the Texas General Land Office, said in a statement that Exxon Mobil intentionally damaged the wells, filling them with trash, sludge and explosives, to prevent other producers from exploiting them, according to Dow Jones report.

"Exxon committed irrefutable,intentional and flagrant violations of state rules regulating the oilfield," Patterson said in the statement.

Patterson asked the Texas Railroad Commission, which regulates the state's oil and gas production, to hold hearings on the allegations, which stem from a lawsuit between Exxon Mobil and a Texas family that leased land to the company in the 1950s.

Exxon Mobil plugged about 100 wells it had drilled in the land of the O'Connor family, a Texas oil dynasty, in 1992 when their relationship "turned sour", the Texas General Land Office, which oversees the state's lands and mineral rights, said.

Several courts ruled in favor of the O'Connor family, but the Texas Supreme Court reversed the ruling on grounds that too much time has passed, according to the agency's statement. Patterson had asked the supreme court to rehear the case.

Exxon Mobile spokeswoman Margaret Ross said the allegations are "groundless" and "paint a false and misleading picture" of the situation.

Under the rules of the Texas Railroad Commission, Exxon Mobil could be fined 10,000 dollars per well per day, which could add up to more than 1 billion dollars in penalties on wells that Exxon Mobil abandoned in 1991 after a disagreement over royalties with the O'Connor family.