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Wednesday, October 6, 2010

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee


$1.27 MILLION CLEAN-UP COSTS AND CIVIL PENALTIES PAID IN SETTLEMENT RELATING TO OLIVER SPRINGS OIL WELL EXPLOSION

KNOXVILLE, Tenn. -Daniel F. Potts and Walden Resources, LLC, of Petros, Tenn., and ZTX Drilling, LLC, of Ft. Myers, Fla., have entered into a settlement with the United States resolving claims of the National Pollution Funds Center, an agency of the Coast Guard charged with administering the Oil Spill Liability Trust Fund, for payment of removal costs pursuant to the Oil Pollution Act and claims of the Environmental Protection Agency (EPA) for civil penalties under the Clean Water Act, U.S. Attorney Bill Killian announced today.

The settlement resolved pending litigation over clean-up costs from the March 2008 explosion of the Parten #5 oil well in Oliver Springs, Tenn. The United States had filed suit in the United States District Court for the Eastern District of Tennessee at Knoxville to recover clean-up costs of the EPA arising from the explosion and resulting discharge of oil and natural gas.

Daniel Potts was the primary owner and operator of Walden Resources, which held an oil and gas lease for the Parten #5 well. ZTX Drilling was conducting drilling operations at the site under a drilling contract with Walden Resources when the well’s blow-out preventer failed on March 18, 2008. The well caught fire, resulting in a large explosion, and approximately 2,000 barrels of crude oil flowed into a secondary retention pond and into nearby Indian Creek and Wright’s Creek, a navigable waterway.

The EPA alleged that several vacuum trucks operated by contractors hired by Walden Resources were observed extracting the oil-water solution from the containment pond and exiting the site, with at least one truck observed dumping its load onto the ground away from the site. Upon learning of the improper clean-up by the contractors, the EPA then took over clean-up at the site.

Potts and Walden entered into an agreed judgment under which they will pay $270,000 for clean-up costs and penalties under the Clean Water Act. A separate settlement with ZTX and its liability insurance companyBituminous CasualtyCorporation resulted in the payment of $1,000,000 to settle the government’s claims against ZTX.

U.S.Attorney Bill Killian expressed his satisfaction at recovering the clean-up costs, “Today, we help to re-fill the coffers of the Oil Spill Liability Trust Fund, which is essential in funding cleanup of oil spills across the country.”

The settlement was the result of coordinated efforts between the United States Attorney’s Office for the Eastern District of Tennessee, with Suzanne H. Bauknight, Assistant U.S. Attorney representing the United States; the Department of Justice Environment and Natural Resources Division; the United States Coast Guard; the National Pollution Funds Center, and the EPA.

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