Fracking Wells Abandoned in Boom/Bust Cycle. Who Will Pay to Cap Them?

January 4, 2014

frackwells

NYTimes:

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.

“The downturn in natural gas prices has forced small operators out of business, and the problem has really accelerated over the last couple of years,” said the governor’s policy director, Shawn Reese. “Landowners would like their land to be brought back to a productive status and have orphaned wells cleaned up.”

Drilling companies in Wyoming typically lease land from the state, private owners or the federal Bureau of Land Management, depending on who owns the mineral rights.

The state’s Oil and Gas Conservation Commission already budgets $1 million a year to plug abandoned wells. And under the governor’s proposal, the commission would appropriate another $3 million over the next four years in an effort to restore property value and reduce the risk of contamination.

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.

One such company, Patriot Energy Resources, which owns about 900 idle wells on state and private land, said in an October letter to Governor Mead that it was $1.9 million short of full bonding on those wells after the bankruptcy filing of Luca Technologies, its parent company.

Patriot has proposed allowing another drilling company to take on a part of its debt, saying it will have to abandon its wells otherwise. “Without this deal or something similar, Patriot will be forced to file for bankruptcy and turn these wells and reservoirs over to the state of Wyoming,” a company official wrote in the letter.

Renny MacKay, a spokesman for Mr. Mead, said the state was weighing the offer.

State Senator John J. Hines, a Republican who represents mineral-rich Campbell and Converse Counties, said it was vital for lawmakers to take up the issue swiftly, because natural gas was so important to Wyoming’s economy.

“All of this just came to a head at once,” said Mr. Hines, who heads the Senate’s minerals committee.

Last spring, Mr. Hines was told by Patriot that the hum of gas drilling activity on his own sprawling cattle ranch would soon grow quiet.

Soon after, the company, which leased parcels of Mr. Hines’s land, disappeared completely — leaving behind more than 40 coal-bed methane wells and a jumble of pipes and pumps.

“They informed me that they were shutting down because they were short of funds,” Mr. Hines said. “All of it, in my opinion, needs to be cleaned up.”

44 Responses to “Fracking Wells Abandoned in Boom/Bust Cycle. Who Will Pay to Cap Them?”

  1. Bob M Says:

    If I am not mistaken, this article is about coal bed methane extraction and distinctly not “FRACKING” as the headline indicates.

    This highlights the risk of latching on to fracking as an evocative way of pointing out the perils of market-driven fossil fuels, within the context of a regulation-averse legal structure. The problem is not specific extraction techniques but a general lack of consideration of long-term consequences and collateral damage in the extraction and delivery process, plus a perilously slow adoption of energy conservation and renewable energy measures that require sacrifice and far more openness to change business-as-usual, including in our personal lives.

    • dumboldguy Says:

      “If I am not mistaken, this article is about coal bed methane extraction and distinctly not “FRACKING” as the headline indicates”.

      It’s not clear—-there is only one specific reference to “40 coal bed methane wells” near the very end. You are pretty much correct in what you say about “highlighting fracking”, although the “left” using it is IMO a far smaller sin and less “truth twisting” than the great majority of the crap the right peddles, and hit the nail well with your closing remarks.

      In the section of The Republican Brain that Mooney devotes to the failings of the “liberal brain”, he mentions fracking (along with vaccines, nuclear energy, and GMO) as “blind spots” for many liberal-progressives.


      • A good part of the Powder River Basin deposit lies under Wyoming, and strangely CBM is the only specific type of well mentioned in the text.  Campbell county is in the northeast WY region.  If there’s anything at all to do with fracking, there’s nothing in the article to suggest it.


      • dumboldguy – both tracking and coal bed methane extraction are going on in Wyoming. I remember newspapers accounts of flaming tap water. That was the first time I ever heard of it.
        http://www.sourcewatch.org/index.php/Wyoming_and_fracking
        Curious that Rush Limbaughs never notices that Mooney covers both sides of the issue. Even more curious that those that have misgivings about GMO or nuclear might be considered “radical”. I say, use your brain. Be responsible. Be careful what you advocate for. It may become the suit you wear. To that end, try to be balanced.


  2. This is human nature driven by unfettered capitalism. We have seen this before. Unbridled growth with no vision for future consequences. So much for learning from history.
    http://www.kcet.org/updaily/socal_focus/history/la-as-subject/photos-oil-extraction-in-socal-history-35788.html
    Natural gas gets the same subsidies as oil. The depletion allowance, etc. The original laws were written for oil and gas drilling. Gas was just an extra byproduct of drilling and sometimes vice versa.

  3. MorinMoss Says:

    “Who will pay to cap them”?

    Probably taxpayers. Socializing the losses has worked quite well for big business; why would they stop now.

    • dumboldguy Says:

      My thoughts exactly. And there is still some money to be squeezed out of the 99%, so they WILL continue until none is left. Isn’t it a great country?


      • It is the country as far as its slavish love of unregulated capitalism. Sustainability means zero growth. Capitalism is borrowing paid back with interest. It demands growth. It is clear why borrowing with interest leads to governments, business, everyone, following growth. From mortgages to national GNP, it enslaves us, particularly if we are unconscious of it. Like the matrix, we do not even know we are in it. It is part of a sea of other concomitant effects, the 1%, the picture of abandoned wells on this article, the rat race, and so on. Lately I think sustainability equals no borrowing with interest. Sustainability means no net growth. Balanced supply and demand. How can we find our way forward?

        • dumboldguy Says:

          “How can we find our way forward?”

          If I thought I knew, and was as big a narcissist as some on this site, I’d confidently write a book about it, promote it shamelessly, and hope it made the best seller list so I could pile up the $$$$. It IS a great country where every D.O.G. can have his day if he is willing to stop being a moocher and pull himself up by his own bootstraps and take showers in the trickle-down, and…. (I have to stop, I’m choking up here…..wave flags)


  4. I suppose, people could stop this, by stopping using gas. instead, use solar kitchen oven, solar heating, use bike. It is outmost hypocrisy to put “carbon taxes” and “green taxes”, to talk about sustainable energies and resources, and on the other hand, to accept such environmental destruction, in order to squeeze the very last reserves from the ground, by methods that obviously affect water suplies, as well as people’s health


  5. Want to see where the wells are?
    http://maps.fractracker.org/latest/?appid=2571cd357d5a47f59e2f2929ad7fe102
    Whats a class II well?
    http://water.epa.gov/type/groundwater/uic/class2/
    However, EPA does have authority to regulate hydraulic fracturing when diesel fuels are used in fluids or propping agents. During hydraulic fracturing, another enhanced recovery process, a viscous fluid is injected under high pressure until the desired fracturing is achieved,
    So is fracturing a class II well? Sounds like it.
    http://deq.state.wy.us/wqd/groundwater/uicprogram/Class%20V%20Injection%20Facilities.asp
    Here’s pay dirt. There are 1,675 orphaned oil and gas wells on Federal Land. For deep details, read this:

    Click to access DRAFT%2BPLAN%2BORPHAN%2BIDLE%2BWELLS.pdf


  6. There are 57000 wells in Wyoming. 19000 are idle. Take a look at the map around Gillette. The wells are closely spaced. The concern is that the state is falling behind on fees to cap wells. Patriot oil went out of business. Some of this is coal bed methane, but the class 2 classification indicates some wells are hydraulic fractured. There has been some talk of companies using coal bed methane as cover for fracturing. Fracturing has definitely been used in the state. The results show. If you drive I 80, you may see some wells.


  7. […] 2014/01/04: PSinclair: Fracking Wells Abandoned in Boom/Bust Cycle. Who Will Pay to Cap Them? […]


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