Scott, Rankin request state data about Hickenlooper’s claim on abandoned wells
Author: Joey Bunch - September 7, 2017 - Updated: September 7, 2017
Before the state raises taxes and fees on an industry, two top legislative Republicans want to know more about the problem with abandoned oil and gas wells in Colorado.
In a Aug. 22 story in the Denver Post by Christopher N. Osher, Gov. John Hickenlooper said he would ask oil and gas companies to help cover the cost of capping 700 to 800 “orphan wells,” whose owners have moved on and refuse to pay. The industry also might be asked to provide in-home methane monitors for nearby homeowners.
The governor laid out a raft of proposals for public safety that day, as the state’s response to a house explosion that killed two people in Firestone in April.
The state’s available budget to cap the hundreds wells would cover about 10 a year, Osher reported.
Sen. Ray Scott of Grand Junction, chairman of a state Senate Select Committee on Energy, and Rep. Bob Rankin, who sits on the Hoint Budget Committee, said they weren’t aware of the size and scope of the problem in a letter to Matt Lepore, the director Colorado Oil and Gas Conservation Commission, Wednesday.
“As members of the General Assembly and the Joint Budget Committee, this characterization is concerning to us,” the letter states. “We are not aware of this matter being raised or discussed in the context of submittals from the Governor’s office or the COGCC in recent budget cycles. Moreover, it is our understanding that existing statutory provisions referenced below are designed to provide the COGCC with the resources necessary to address the problem on a continuous basis.”
Asked about the letter, Scott told Colorado Politics, “It’s imperative that COGCC explain in detail why they ask for more funding when they already have existing funding and laws in place to guide their operations. In these days of tight budgets taxpayers want to know.”
Here is the full text of what Scott and Rankin sent Lepore:
Dear Director Lepore:
We are writing to request your assistance with an informational request regarding the size and scope of the abandoned well situation in Colorado. Recently Governor Hickenlooper suggested 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.
As members of the General Assembly and the Joint Budget Committee, this characterization is concerning to us. We are not aware of this matter being raised or discussed in the context of submittals from the Governor’s office or the COGCC in recent budget cycles. Moreover, it is our understanding that existing statutory provisions referenced below are designed to provide the COGCC with the resources necessary to address the problem on a continuous basis.
- We would appreciate your prompt response to the following questions:
- What is the most accurate, current inventory (number) of abandoned wells or locations that the COGCC is aware of and tracking? In which basin(s) are these wells or facilities located?
- What is the most accurate, current forecast (number) of wells the COGCC anticipates are or may soon be in financial distress and have the potential to become abandoned? What is the COGCC’s timeline for this forecast? In which basin(s) are these wells or facilities located?
- How many wells or locations has the COGCC remediated in each of the past five calendar years and in what basin(s) are these wells or facilities located? What is the aggregate and per project cost for the plugging and abandonment of these wells or facilities?
- How many wells or locations is the COGCC is presently remediating and what are the projected costs for each of these ongoing projects in 2018 fiscal year?
- To what extent has the COGCC utilized the required operator bonding as a funding mechanism to offset the costs of plugging and abandonment? Does the COGCC consider this funding mechanism to be inadequate? If so, does this suggest a need to consider adjustments to current bonding requirements?
- To what extent is the COGCC using existing statutory funding mechanisms necessary to address the abandoned well situation, e.g. §34-60-122 C.R.S.? It would appear this existing statute gives the COGCC with the necessary funding, provided the fund balance is replenished via its share of severance taxes. Furthermore, other existing law makes clear that plugging abandoned wells is well within the ambit of “preventing or mitigating a condition that might result in significant adverse environmental impact”, §34-60-124 C.R.S.
- Finally, has the COGCC examined its internal systems, policies and protocols to determine what, if any, impact staff review times, enforcement activities or other processes may be contributing to operator’s financial distress?
We appreciate your prompt attention to this request and look forward to hearing from you.
Cc: Henry Sobanet, Office of State Planning and Budgeting