The state of Colorado this year will start a massive cleanup of oil and gas wells abandoned by their operators throughout La Plata County, which could end up costing taxpayers upward of $2 million when all is said and done.
In 2018, the Colorado Oil and Gas Conservation Commission, the state’s top regulator of oil and gas, was tasked with taking a serious look at the abandoned sites, known as orphan wells, and coming up with a statewide plan to fix the public health and safety hazard.
A total of 275 orphan wells were analyzed in the state’s study and assigned a priority ranking.
La Plata County had the second most sites on the list, second only to Logan County, accounting for 74 of the sites, according to state records, with the vast majority ranked as a high or medium priority for cleanup.
As of last month, COGCC records show 64 abandoned sites remaining that require remediation, with a project this year planned to plug 10 wells, mostly in the western part of La Plata County.
“This is one of the first big projects,” said Dave Andrews, COGCC engineer manager.
Redmesa oil fieldThere’s several ways wells become orphaned.
Sometimes, the sites were drilled and abandoned before the COGCC was formed in the 1950s, so there wasn’t any oversight and the company is long gone. Other times, an oil and gas operator goes into bankruptcy and disappears, leaving the state on the hook for cleanup costs.
In La Plata County, the majority of wells on the cleanup list – about 50 – are connected with abandoned sites on the Redmesa oil field, located on a sprawling mesa near the Colorado-New Mexico border about 30 miles southwest of Durango.
Most of the wells near Redmesa were drilled in the early 1980s. But the most recent conflict began in the mid-2000s, when Red Mesa Holdings LLC took over a significant portion of the facilities in the field and quickly let the infrastructure fall into disrepair.
The COGCC ultimately ordered Red Mesa Holdings to pay $250,000 for cleanup costs, but the company instead declared bankruptcy. Another operator, Atom Petroleum LLC, stepped in to take over the field, but that company too failed to bring infrastructure up to safety standards.
Atom never paid the full amount of its $240,000 fine by the state and left only its $60,000 bond to help with cleanup costs before disappearing from the region.
State’s cleanup underfundedWhen an oil and gas operator defaults, it’s then up to the state to “plug and abandon” – the term for completely mitigating an orphan well – the sites if there is no other company to take over.
The state’s orphan well cleanup program began in 1990 but for years was chronically underfunded as more abandoned sites demanded attention. In 2017, the program’s budget was less than $500,000 and had no full-time staff, despite 800 wells throughout the state that needed cleanup.
That all changed in 2018, when then-Gov. John Hickenlooper dedicated about $5 million a year to the effort. The increase in funding has allowed the orphan-well program to hire more staff and put more resources into tackling the abandoned sites that pock Colorado’s landscape.
“We were limited with a budget of less than a half million a year,” said Andrews, who said the state had the money to plug and abandon only 10 wells or so annually. “Now, our goal is 38 per year, statewide.”
Five days of workRecently, at an abandoned site tucked into the piñon-juniper forests in southwest La Plata County, crews were at work plugging a well that is part of Red Mesa Holdings.
A typical “plug and abandon” takes four or five days and about $40,000, though it’s more expensive in this part of the state. And sometimes, it can take longer, especially on sites where there’s little background information about where infrastructure may exist underground.
“We might not have one record in our system,” said Shannon Chollet, an orphan-well program engineer with the COGCC. “So it’s a complete mystery.”
The goal, Chollet said, is to return conditions on the ground to their original state as much as possible.
Every well holds its own complications and challenges, Chollet said. Some might have surface water, while others may have flow lines buried underneath.
But when all is said and done, the COGCC says plugged wells should remain safe for an estimated 10,000 years.
“When we leave here, no one should have to come back and plug this well again,” Chollet said.
The COGCC hopes to hit 10 more wells in the Redmesa field this summer, and Andrews said the state would like to increase that annual amount going forward. La Plata County’s sites were ranked so high, he said, because there are homes in the area and the abandoned sites pose a safety risk.
“Just like any other industrial piece of equipment, if sitting there not maintained or used for a long period of time, it tends to deteriorate,” he said.
Financial assurancesAs part Senate Bill 181, a bill that shifts the focus of COGCC from fostering energy development to prioritizing the protection of public health, safety and the environment, regulators are now tasked with coming up with a way to have financial assurances to avoid the issue of orphan wells.
La Plata County Commissioner Gwen Lachelt, who has worked on oil and gas issues for years, said this measure in SB 181 will lessen the burden of future cleanup costs, especially as operators continue to leave the county for more profitable oil-producing regions, giving rise to the potential of orphan wells becoming an even larger issue.
In recent years, major producing companies – BP America Production Co., ConocoPhillips and Williams Partners – have sold their stakes in the region.
“Natural gas prices have been depressed for over a decade,” Lachelt said. “The fees will afford local governments the wherewithal to address orphaned and abandoned wells in the future.”