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Feds Raid Offshore Driller QuarterNorth Energy’s Louisiana Office Amid Oil Spill Probe

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September 14, 2022

By Rachel Butt, Jennifer A. Dlouhy and David Wethe (Bloomberg) —

Federal investigators raided a deep-water oil explorer’s Louisiana office last week as part of a probe into an offshore spill, a rare escalation for a US environmental case.   

QuarterNorth Energy LLC’s office in Lafayette, Louisiana, was searched by investigators from the US Interior Department, Bureau of Safety and Environmental Enforcement and the Environmental Protection Agency for materials related to the loss of well control last year, according to people with knowledge of the situation.

Loss of well control is industry jargon for a leak, blowout or other unintended release of crude or natural gas. Representatives at QuarterNorth didn’t respond to multiple requests for comment. 

Last year, a QuarterNorth well off southeast Louisiana released crude oil into the Gulf of Mexico, said the people, who asked not to be identified because the information isn’t public. The spill may have violated a promise of good behavior that QuarterNorth’s predecessor company, Fieldwood Energy LLC, signed with federal prosecutors in February 2021 in response to previous pollution incidents, one of the people said.

The Justice Department has been stepping up enforcement of non-prosecution and deferred-prosecution agreements since last year.  

The department will “urge prosecutors to be bold in holding accountable those who commit criminal conduct,” Deputy Attorney General Lisa Monaco told an American Bar Association forum in October. Where companies “do not live up to their obligations, we will hold them accountable.”

Under Fieldwood’s two-year deal, the US Attorney’s Office for the Eastern District of Louisiana agreed not to prosecute the company or any of its officers or directors for alleged criminal liabilities over Gulf spills that occurred in 2015 and 2018. In exchange, the driller was fined $2 million and promised to conduct activities in a safe and workmanlike manner, and also to cooperate with law enforcement. 

Representatives of the Interior Department, the Bureau of Safety and Environmental Enforcement and the Environmental Protection Agency didn’t respond to messages seeking comment.

Last year’s spill occurred after Fieldwood unsuccessfully attempted to cap an initial leak, the people said. Responsibility for the well shifted to Hess Corp. when the bankruptcy court approved Fieldwood’s plan in June 2021, public filings show. 

Under federal law, previous operators can be held liable for cleaning up aging offshore wells if the current operator cannot afford to do so. A Hess spokeswoman declined to comment for this story.

QuarterNorth — a reference to the 25th parallel north that bisects the Gulf — was one of the entities that emerged when Fieldwood exited bankruptcy in August 2021. 

–With assistance from Chris Strohm and Tom Schoenberg.

© 2022 Bloomberg L.P.

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