BISMARCK — Hearings are slated for early next week on a host of oil and gas rule changes before the North Dakota Industrial Commission, several of which seek to halt the growing number of abandoned wells.
Statewide, 639 oil wells are considered abandoned, state Mineral Resources Director Lynn Helms said at the Wednesday, Oct. 2, meeting of the Industrial Commission, a three-member panel chaired by the governor. The number has risen in recent years amid low oil prices, as companies decide to stop operating less-profitable wells.
The owners of those wells are ultimately responsible for plugging them and reclaiming the sites. But in extreme circumstances, such as a bankruptcy, a company could shirk its plugging responsibility and cleanup would fall to the state.
Although the owners of the majority of those wells have put up bonds as an assurance that funds will be available for plugging, the money is insufficient to cover the total cleanup cost, which Helms estimates at $150,000 per well.
“In an absolute meltdown, a worst-case scenario, that could become the responsibility of the abandoned well fund,” Helms said, referencing a state fund made up, in part, by oil tax revenue.
The fund has a balance of $22 million, yet Helms estimates the state could potentially be on the hook for a far greater amount.
Landowners have pushed for stronger rules surrounding idle wells so that a well can’t continue to sit for years without being plugged. A well can be classified as “temporarily abandoned” and remain idle so long as it receives permission each year from the Oil and Gas Division.
Helms said about 35% of temporarily abandoned wells have remained on that status for more than seven years.
A 2015 law gave landowners the ability to request that regulators take action on a nonproducing well after seven years, requiring that it be plugged or put back into production.
Several of the rules under consideration today would strengthen bonding requirements. One change would require that when a company wants to temporarily abandon a well, the division would consider the company’s future plans for the site. After seven years, the division could require additional bonding if a well were to remain idle.
Another change would require that abandoned wells sold by one company to another must be fully bonded by the purchaser.
The proposed rules also would double the bond requirement to $100,000 for commercial injection wells used to dispose of saltwater underground. Saltwater is a byproduct of oil production that comes to the earth’s surface at well sites.
“We think that this set of rule changes will tighten this up and prevent any increase in exposure,” Helms said. “I can’t fix where we’re at right now, but we can avoid growing exposure.”
Helms also gave the commission an update on state efforts to remediate saltwater contamination that occurred decades ago when it was common to leave the fluid in an open pit to evaporate. Today, the norm is to inject the saltwater deep underground for permanent storage.
Farmers cannot grow crops where the salt has rendered the soil infertile.
Helms said there are 201 former pit sites that will fall to the state to clean up. Most are in Bottineau and Renville counties. The state is looking to use a remediation technique that a company called Terracon recently piloted in North Dakota and will soon test on a 1.5-acre area. The method involves isolating the soil’s root zone from salt buried lower underground.
Agriculture Commissioner Doug Goehring, a member of the Industrial Commission, cautioned that rather than apply such a technique to all 201 sites, the state consider the best approach for each one.
“Every one of those sites has a different personality, different topography, soil composition, structure,” he said.
Goehring said he felt simpler and less-costly remediation techniques were possible for at least 20 of the sites.
Helms estimated that by using the Terracon method, it would take 10 years to complete reclamation work on all 201 sites for a total cost of $13 million. Money would come from the same fund used for plugging and reclaiming abandoned wells.