CASPER, Wyo. — The Wyoming Oil and Gas Conservation Commission approved tougher bonding requirements for oil and gas wells Tuesday in response to a bust that has littered the Powder River Basin with thousands of abandoned coal-bed methane wells and left the state responsible for plugging and cleaning many of them.
The rules include a couple suggestions from the petroleum industry. Among them is retaining petroleum developers’ right to submit a plan to the state to address their idle wells in lieu of having to post additional bond, a provision sought by the Petroleum Association of Wyoming.
Companies would need to either plug or return to operation at least 10 percent of their idle wells each year under those plans submitted to the commission, Wyoming’s regulatory agency for the petroleum industry.
The rules also would establish a $100,000 blanket bond for companies with more than a small number of wells. That’s more than the current $75,000, less than the $150,000 proposed in the draft rules, and the same as the amount proposed by the petroleum association.
North Dakota requires $100,000 and Colorado up to $100,000, association Vice President John Robitaille wrote the commission last month.
The goal of requiring companies to post of bond up front is to keep taxpayers off the hook for cleaning up any mess industry might leave on the landscape. So far, a program to plug and clean up coal-bed methane wells abandoned in northeast Wyoming over the past five years has cost less than expected, state Oil and Gas Supervisor Mark Watson told the five-member commission led by Gov. Matt Mead.
Two years ago, commission staff estimated that addressing 1,200 abandoned wells would take four years and cost $30 million. Contractors for the commission over the past year and a half has plugged and cleaned up just over 1,000 coal-bed methane wells at a cost of $4.7 million, Watson said Tuesday.
“So basically we’ll plug those wells we originally had at a fraction of what the original cost estimate was,” he said.
Currently, instead of posting a blanket bond, companies with only a small number of wells currently may opt to post $10,000 bond for each well less than 2,000 feet deep and $20,000 for each well deeper than that. That will change to a flat rate of $10 per foot of the well bore distance under the new rules.
The new rules also will enable the state oil and gas supervisor to require an additional bond of up to $10 per foot for any idled well — a requirement sought by landowner and environmental groups.
The cost to the state to plug and clean up the recent glut of abandoned coal-bed methane wells has been between $6 and $7 per foot, Watson said.
Coal-bed methane wells are simpler and less expensive to plug and state officials struck good deals with contractors for the work during the downturn, Watson told the commissioners.
A typical coal-bed methane well in Wyoming targets methane in water-saturated coal seams no more than 1,000 feet deep. Gas wells in western Wyoming often are 10 times or more that deep.
The rules should begin to take effect early next year. Companies would have another year after that to meet the new bonding requirements.
This article was written by Mead Gruver from The Associated Press and was legally licensed through the NewsCred publisher network.