Wyoming may plug abandoned wells as natural gas boom ends

Estimates cite 1,200 defunct operations with several thousand more expected soon.

NEW YORK TIMES NEWS SERVICEDecember 25, 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.

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

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. Under the governor’s proposal, the commission would appropriate $3 million more 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 soon will be, the money is not expected to go far. The state estimated that closing the 1,200 wells already abandoned would cost about $8 million.

State officials estimate that Wyoming may also have to plug 2,300 wells that are sitting idle but have not been entirely abandoned.

There are also 400 idle wells scattered across land owned by the Bureau of Land Management. State officials said they would need to work with the bureau to help deal with those wells.

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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