GOP lawmakers push for details on need for more wells funding
State Sen. Ray Scott and state Rep. Bob Rankin are asking Colorado’s top oil and gas regulator to justify why more funds are needed to pay for plugging abandoned wells.
The two made the request in a letter written Wednesday to Matt Lepore, director of the Colorado Oil and Gas Conservation Commission.
They wrote it after Gov. John Hickenlooper made several recommendations for new laws or regulations in response to the April home explosion in Firestone that killed two men and was linked to gas flowing from an abandoned flowline from a nearby well. One recommendation was the creation of a nonprofit fund to plug and abandon orphan wells and provide refunds for in-home methane monitors. Orphan wells are ones for which no owner or operator can be found, or the owner or operator is unwilling or unable to plug and properly abandon it.
“We are writing to request your assistance regarding the size and scope of the abandoned well situation in Colorado,” Scott and Rankin said in their letter to Lepore. They pointed to what they called Hickenlooper’s suggestion that “the abandoned well problem is so vast in scope that new taxes and fees are necessary to stand up a new organization to address the problem.”
Rankin, R-Carbondale, serves on the legislature’s Joint Budget Committee, and Scott, R-Grand Junction, chairs the Senate’s Select Committee on Energy and the Environment. They called Hickenlooper’s characterization concerning.
“This matter was not raised or discussed in detail in the context of submittals from the Governor’s office of the COGCC in recent budget cycles,” they said. “Moreover, it is our understanding that existing statutory provisions … are designed to provide the COGCC with resources necessary to address the problem on a continuous basis.”
They’re asking for information on things including how many abandoned wells there are and what oil and gas basins they’re in, how many more may soon be in financial distress and might be abandoned, and how many wells the oil and gas commission has remediated in the past five years, where they’re located and what the work has cost.
Scott and Rankin also ask to what degree current required operator bonding is being used and whether it is adequate to cover these costs, and to what degree the oil and gas commission also is using pertinent funding generated by severance taxes.
Lepore said Friday that his agency is working on a response to the letter.
State officials have estimated there are roughly 700 orphan wells the state needs to plug.
“I will tell you that in older fields, like Rangely and Florence, we know there are orphaned wells, but evaluating how many is as much art as science,” Lepore said. “The 700 number includes our best, good-faith estimate of those kinds of wells.”
Lepore said in August at the Northwest Colorado Oil and Gas Forum in Rifle that his agency has been looking at the issue for a year and a half and talking to industry about it. A company currently can post a $60,000 bond covering up to 99 wells, and if the state ever ended up having to plug that many wells, “I promise you $60,000 isn’t enough,” Lepore said then.
The state raised that requirement from $30,000 in 2008.
Scott and Rankin also asked to what degree the oil and gas commission’s own review times, enforcement activities and other processes could be contributing to financial distress among operators.
Scott has been questioning whether the agency devotes too much time to enforcement, and why it takes so much longer to approve drilling permits than in Texas. He said this week he will be calling for a performance audit of the agency to seek answers to some of his questions.