CHARLESTON — The West Virginia Surface Owners Rights Organization is calling for more legislative action to address what it has described as “the most widespread property rights and environmental disaster” in the state.
David McMahon, a lobbyist for the organization, said if oil and natural gas wells aren’t plugged after they’re no longer in use, they can cause problems beyond being eyesores or devaluing property.
If unplugged wells are neglected for long enough, gas or oil can leak into groundwater supplies, which is an issue in some rural communities. Also, the seals on septic tanks can gradually be worn away by oil and gas from leaking wells, which results in septic bacteria contaminating groundwater, as well.
“It’s a huge problem,” McMahon said, adding that about 4,500 wells have gone unplugged for so long they’re orphaned, with no operator or driller to tend them. “It’s one of the most widespread environmental and personal property issues the state faces.”
McMahon said the state currently gets enough money from permit fees to plug only about 10 orphaned wells per year.
He said current state law does not require a plugging or reclamation bond, only a $50,000 blanket bond per driller.
He said it costs anywhere between $25,000-$65,000 per well to plug. Despite the cost required to plug all the wells, McMahon said it is something that can be done and the SORO does not wish for the natural gas or oil businesses to be unsuccessful.
“None of our members have said ‘don’t drill,’” McMahon said. “There’s a lot of money here, enough to do it right.”
Two pieces of legislation have been introduced to address the issue of unplugged wells, H.B. 3065 in the House of Delegates and S.B. 576 in the Senate. Both were introduced on Feb. 12 and remain in their respective energy committees.
McMahon said he hasn’t had the chance to make his case before the energy committees in the Senate or House of Delegates yet. While supportive of the legislation that’s already been introduced, the long term cause needs to be addressed if they’re to have any meaning.
“That is pouring money into a bucket with a hole in the bottom unless we prevent more (unplugged wells),” he said.
McMahon expressed concern that the number of unplugged wells is going to grow faster than they can be plugged even if S.B. 576 and H.B. 3065 become law due Alabama-based Diversified’s acquisition of EQT Corporation’s southern Appalachian midstream production assets last summer which is expected to add another 10,000 unplugged wells in West Virginia by the year 2049.
McMahon suggested that the Legislature stop the transfer of wells that are not producing enough gas to pay for their plugging without requiring the wells to have bonds to cover the costs. He also supported doing away with blanket bonding that result in producers having wells with less than $20 bonding per well, along with requiring previous drillers to plug transferred wells that had problems with the previous driller that owned them.
Charlie Burd, the executive director of the Independent Oil and Natural Gas Association (IOGA) of West Virginia, noted that many of those 4,500+ wells are more than a century old since the state experienced an oil boom before the natural gas industry took off the way it did. Furthermore, there was no modern well permitting system prior to 1929 and many of those wells’ operators have long gone out of business and are hard to track down.
“Those wells are in places that often nobody knows they’re there,” he said. “Those are the wells that would be targeted to be plugged by these special funds.”
Burd said legislation IOGA supported, H.B. 2763, to create a plugging fund address those wells that don’t have a responsible owner, but most companies that do own wells that may not be profitable, such as Diversified, do take care of the assets in their stewardship.
He noted that state money isn’t the only funding source out there to address unplugged wells since many private companies take the initiative.
“To say that a company would want to sell these old wells to shed themselves of the responsibility, I believe, is a bit disingenuous,” Burd said. “I don’t believe that to be the case in any of the mergers I’ve seen.
“A company like Diversified should be praised for coming in and purchasing those wells and doing the due diligence on every single well to see how many of those wells should be placed back into production and taken off the abandoned well list and then find those that are certifiably in such a low production that they can be placed on a list to be plugged even if it means over a course of several years,” Burd said.
Burd said companies like Diversified entered into an agreement with the state when they made the purchase to plug many wells, which puts them in a better position than they would have been otherwise.
As for SORO’s other recommendations, Burd said removing blanket bonds and replacing them with per well bonds retroactively at this stage would be virtually impossible. He said something like that is akin to being offered an insurance policy that covers everything when buying a brand new vehicle but only saying yes after said vehicle hits 150,000 miles.
Original Article: WV News