State agency plans to increase plugging abandoned wells
CARLSBAD, N.M. (AP) — The New Mexico agency that regulates oil and natural gas development has a plan to start plugging more of the hundreds of abandoned wells located across the state.
The state Oil Conservation Division is seeking to plug 41 wells on state land and 19 on private land during the current fiscal year, the Carlsbad Current-Argus reported last week.
State Land Commissioner Aubrey Dunn challenged the division last month to form a plan that increases plugging the 600 wells he said are abandoned on state trust land. The remediation for an abandoned well and the reclamation of the land costs about $100,000 for each, he said.
Many of the 600 wells are compliant, said Ken McQueen, secretary of the state Energy, Minerals and Natural Resources Department.
“Just because a well is non-producing doesn’t make it non-compliant,” McQueen said. “Operators are allowed to have a number of non-producing wells.”
The state allows some smaller wells to be temporarily abandoned when they become non-economically viable, McQueen said.
The division notifies the well owner when a well stops producing for 15 months. If the operator becomes non-compliant, the division will negotiate an agreement to have the well plugged.
If the operator ignores the agency, McQueen said legal proceedings will then begin.
“When we don’t get a response, OCD moves into compliance mode,” McQueen said. “Some of the wells are in fact orphaned. In that case, OCD would move to get a plugging order.”
The state might then file a lawsuit against the operator, aiming to recoup the cost of plugging, said Allison Marks, the division’s deputy director.
“We will go ahead and plug the wells, then we have the opportunity to pursue the operator in court,” Marks said.
The division will draw from state Oil and Gas Reclamation Fund to cover some of the well expenses if it has exhausted all options to collect from the operator, McQueen said.
The division is committed to continuing to monitor the wells and to address the problematic operations, McQueen said. The issue might be mitigated as the industry recovers from the recent downturn.
“The inventory of wells kind of wanes and waxes. We’re just coming out of a down cycle — that always generates more abandoned wells,” McQueen said. “Now that we’re seeing better prices, we’re hoping more wells will be coming back on line.”