Wyoming May Act to Plug Abandoned Wells as Natural Gas Boom Ends

In some places, poor people are jailed because they can't pay a fine.

http://www.nytimes.com/2013/12/25/us/state-may-act-to-plug-abandoned-wyoming-wells-as-natural-gas-boom-ends.html?partner=MYWAY&ei=5065&_r=0

By DAN FROSCH
Published: December 24, 2013

Hundreds of abandoned drilling wells dot eastern Wyoming like sagebrush, vestiges of a natural gas boom that has been drying up in recent years as prices have plummeted.

The companies that once operated the wells have all but vanished into the prairie, many seeking bankruptcy protection and "unable" to pay the cost of reclaiming the land they leased. Recent estimates have put the number of abandoned drilling operations in Wyoming at more than 1,200, and state officials said several thousand more might soon be orphaned by their operators.

Wyoming officials are now trying to address the problem amid concerns from landowners that the wells could contaminate groundwater and are a blight on the land.

This month, Gov. Matt Mead proposed allocating $3 million to pay for plugging the wells and reclaiming the land around them. And the issue is expected to be debated during next year’s legislative session as lawmakers seek to hold drilling companies more accountable.

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¶ The money would come from a conservation tax that oil and gas companies pay.

¶ Still, given the number of wells already abandoned and the concern that more will soon be deserted, the money is not expected to go far. The state estimated that closing the 1,200 wells already abandoned would cost about $8 million.

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Governor Mead also wants the commission, which he sits on, to review the conservation tax and bonding requirements for drilling companies to determine whether they are sufficient.

¶ Currently, companies must pay a $75,000 blanket bond to cover all of the wells they operate — often numbering in the hundreds — on state and private land in Wyoming. Once a well stops producing and is deemed idle, the operator must pay up to $10 a linear foot in bonding to offset the cost of reclamation.

¶ But it is at that point that some companies drift into financial trouble and cannot pay the additional fees, leaving the state to scramble to make up the cost.

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“There has been a lot of hand-holding and coddling over the years when it comes to oil and gas operators and their ability to pay the bonding,” said Jill Morrison, an organizer with the group.

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The proposal is also backed by the Petroleum Association of Wyoming, which favors raising the conservation tax to help pay for plugging fees. The group also supports higher bond fees for operators with tenuous finances.

¶ “It’s how you weed out companies that are too risky to go into business with,” said the group’s president, Bruce Hinchey.

¶ But getting drilling companies who claim to be on the verge of collapse to take responsibility for wells they still technically own has proved difficult.

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