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89

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warmane

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Wyoming to speed oil and natural gas well-plugging program in spring

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This spring, the Wyoming Oil and Gas Conservation Commission staff is expected to begin an accelerated program to plug orphaned wells throughout the Cowboy State, a program that could require the commission to increase the conservation tax that producers pay. Orphaned wells are non-producing wells that have been abandoned by their owners, who in many cases have gone out of business, said Grant Black, Wyoming state oil and gas supervisor. Black spoke Monday evening to about 25 people at the Casper chapter of Young Professionals in Energy, an industry networking organization. There are roughly 1,200 orphaned wells in Wyoming, Black said. Most of them are coal-bed methane wells in the Powder River Basin, but there are orphaned conventional oil and gas wells, too. The issue of orphaned wells has been a concern of environmentalist groups for years and recently has reached the Wyoming Legislature. In May, lawmakers on the Joint Minerals, Business and Economic Development Interim Committee spent a day examining the issue. While the state Oil and Gas Conservation Commission staff has been plugging wells each year, the program starting this spring aims to plug them at a faster rate, Black said. The biggest concern is the risk to the environment, Black said. Some people want to use the wells for the water they contain, he said: “Admittedly, there are areas of the state that having those extra water wells available to landowners would be beneficial." Converting an industry well into a water well requires a permit from the Wyoming State Engineer’s Office. In some cases, certain plugs are required to separate water zones from methane zones, Black said. During the fall and winter, Oil and Gas Conservation Commission staffers will create priority lists of wells that should be plugged first, Black said. For instance, plugging a well located in an area frequented by sage grouse, a bird that is threatened but not yet endangered, would be a high priority, Black said. But if there is a well leaking oil and water on the land or in the atmosphere, it may be a higher priority than a sage grouse core area, Black said. Plugging wells will be based on resources, Black said. “If there is a two-township area that we can plug 200 wells in very quickly, then we’ll target that versus bouncing between 4 or 5 counties and plugging 10 wells in each one,” he said. The state needs to get access to the wells from the surface landowners. It needs to figure out who owns any possible surface equipment. The Wyoming Oil and Gas Conservation Commission staff has compiled a list of contractors throughout the state who could plug wells. Plugging the wells will cost on average $10 per foot, Black said, who said he didn’t have an estimate of the program’s entire cost. The amount of bonding the conservation commission had charged producers will not cover the costs of plugging the orphaned wells. Companies paid a $75,000 blanket bond to cover all wells they drilled in an area. Some companies had to pay idle-well bonds if they operated many wells in a field and some quit producing, Black said. To assist the commission in the expenses of the accelerated plugging program, the commission staff will use funds from a conservation tax that producers pay. Some of the conservation staff funds were set aside for orphaned wells. But the conservation tax money may not be enough, and the commission may have to raise it. Currently, producers pay taxes on the value of a barrel of oil or 1,000 cubic feet of gas. The commission has the ability to raise the taxes, Black said. “That is an option,” he said. The Casper Star-Tribune called or emailed five people at the Wyoming Department of Revenue for an explanation of the conservation tax. People either didn’t return messages or referred the newspaper other people in the department, who didn’t return messages. Jill Morrison of the Powder River Basin Resource Council, a Sheridan-based landowner advocacy group, wants producers to pay higher bonds to prevent the state from a similar situation in the future. "Not only is the bond not enough but the [conservation tax] is not enough either because they don’t have enough to accelerate it right now,” she said.

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http://trib.com/business/energy/wyoming-to-speed-oil-and-natural-gas-well-plugging-program/article_4493e699-3458-5cec-be0b-38b3a4002438.html

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08/22/2013