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Colorado to accelerate cleanup of ‘orphaned’ oil, gas wells

July 18, 2018

DENVER (AP) — Colorado’s governor ordered state regulators on Wednesday to accelerate the cleanup of inactive oil and gas wells whose owners have walked away.

Gov. John Hickenlooper also told regulators to study whether the state requires companies to post a big enough bond before they start drilling. The bonds are designed to cover the cost of plugging inactive wells and cleaning up the sites if the company fails to do it.

Colorado has about 260 wells considered “orphans” because no owner can be found, or the owner is unwilling or unable to deal with them. About 110 other oil and gas sites without wells on them are also orphaned.

Hickenlooper, a Democrat, said that number will increase because some energy companies go out of business and previously unknown orphaned wells are being discovered.

He signed an executive order directing the Colorado Oil and Gas Conservation Commission to categorize each orphaned well and site as high, medium or low priority and aim to clean up the high and medium priority sites by July 2023.

The priority will be based on how many people live nearby, the environmental impacts of the site, how many spills the site has had and other factors.

Hickenlooper told the commission to produce the list by Aug. 1 and update it yearly. Newly added sites should be cleaned up within two years if they are high or medium priority, he said.

Hickenlooper said it could cost around $25 million to plug and clean up the known orphaned wells and sites.

The Colorado Legislature changed a law this year to allow the oil and gas commission to spend more money on plugging and remediating orphan wells and sites. Previously, the annual limit was just $445,000, and now it is $5 million, said Julie Murphy, director of the commission.

The money comes from a tax on oil and gas production.

Hickenlooper said he ordered a review of the bonding requirement because the state doesn’t have enough money for orphaned wells.

Currently, drilling companies have two options for ”plugging bonds ,” one for each well or a blanket amount for all their wells statewide.

Bonds for individual wells are currently $10,000 or $20,000, depending on well depth. Blanket bonds cost $60,000 for fewer than 100 wells statewide and $100,000 for more than that.

Hickenlooper wants new bonding requirements in place by September 2019.

The Colorado Petroleum Council said it is willing to work with the oil and gas commission on new regulations.

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