Oil & Gas News

Abandoned wells lead to lawsuit by landowners in Colorado

In Colorado, abandoned oil wells have sparked lawsuits from fed-up landowners against Denver-based oil company HRM Resources.

Story By Leslie Sattler | TCD, via Yahoo News | In Colorado, abandoned oil wells have sparked lawsuits from fed-up landowners.

What’s happening?

A group of Colorado property owners and farmers is suing Denver-based oil company HRM Resources for allegedly transferring hundreds of depleted oil wells to a shell company to avoid millions in clean-up costs, according to the Guardian.

The wells were transferred to Texas-based Painted Pegasus Petroleum, which the lawsuit claims was designed to go bankrupt, leaving landowners and taxpayers on the hook for plugging the wells.

Cindy and Randy McCormick, plaintiffs in the suit, have an aging well sitting abandoned on the edge of the property they purchased in 2020. When the couple tried to get information about the overdue clean-up, they learned Painted Pegasus had gone under, and the well was now the state’s problem.

“They said the well was orphaned and was now the responsibility of the state, and so it would be years probably before anything could be done to assist with our situation,” said Cindy McCormick.

Why are abandoned wells concerning?

The McCormicks’ predicament points to a much larger problem. Across the U.S., an estimated 117,000 oil and gas wells sit “orphaned” — uncapped, unproductive, and with no clear owner to manage pollution risks.

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These wells don’t just mar landscapes. Researchers have found unplugged wells leak toxic, even carcinogenic chemicals into the air and soil. One analysis from Resources of the Future put the median cost to plug and restore the land at $76,000 per well.

When operators declare bankruptcy, those costs fall to states and taxpayers. The price tag to clean up all abandoned U.S. wells could hit $19 billion.

Then there’s the toll on our atmosphere. In 2021 alone, nonproducing wells released 295,000 tons of methane — a potent toxic gas — equivalent to pollution from 1.8 million cars, according to the Environmental Protection Agency. Plugging wells can slash that pollution a hundredfold.

What’s being done about abandoned wells?

Frustrated landowners want accountability and action. The Colorado lawsuit seeks to establish plaintiffs’ right to collect clean-up costs from HRM Resources, the company accused of the fraudulent well transfers.

“If this case is successful, it could be a huge step in ensuring that the costs of cleaning up these wells are paid by the oil and gas companies who profited from them,” said Camille Sippel, an attorney representing the plaintiffs.

The litigation coincides with a boost in federal orphan well funding, which has already begun using some of the funds to begin work across many states.

The Bipartisan Infrastructure Law earmarks $4.7 billion to cap abandoned wells nationwide, which is a far cry from the aforementioned $19 billion it’s projected to cost to address all wells but will nonetheless allow much-needed work to address the worst cases.

For the McCormicks and countless others, such steps can’t come soon enough.

“We need the oil and gas companies to be accountable,” Cindy McCormick said. “When you first come up against them, you think there’s nothing you can do. That shouldn’t be the case.”

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