Natural Resources & Energy
3:29 pm
Tue December 10, 2013

Governor releases plan for plugging abandoned oil and gas wells

According to new estimates from the Governor’s office, plugging abandoned oil and gas wells in Wyoming could cost anywhere from $8 to $32 million.

The smaller figure takes into account only wells that the state knows are abandoned. The larger one includes wells owned by bankrupt methane farming company Luca Technologies and the 2300 wells the state considers ‘at risk’ for abandonment.

That number of 'at risk' wells is twice previous estimates. The Governor's policy director, Shawn Reese, says the discrepancy can be traced back to the Oil and Gas Conservation Commission.

“WOGCC has not always been consistent in its reporting or calculation of wells, and even on its website, the numbers that they use are confusing and not reflective of what we think is the actual count,” Reese says.

In a report released Tuesday, the Governor's office says the total number of wells that need to plugged could be as high as 4400.

The report lays out a plan to use the conservation tax that’s levied on oil and gas producers in addition to any forfeited bonds to cover the costs of plugging the wells. But if all of the ‘at-risk’ wells are abandoned, that would still leave the state $9 to $11 million short.

“But there are so many variables and assumptions that have been built into these financial models," Reese says. "It’s frankly very difficult to tell, and it’s again going to require regular financial updates and projections from the Oil and Gas Conservation Commission as we get a better handle on actual costs and the number of wells that we’ll need to take care of.”

The Governor’s plan calls for hiring a project manager to oversee the plugging, and a four-year timeline for getting through all of the wells.