STORY BY Mark Jaffe, THE COLORADO SUN. Vic Behrens drives the dusty, dirt roads of Adams and Arapahoe counties in Colorado looking after other people’s oil wells. Behrens used to have his own wells but his business ran aground and his wells ended up in the state’s orphan well program.
FEATURED PICTURE: Vic Behrens, an oil pumper and former oil and gas producer, tends oil wells and drilling sites for small operators in Adams County, Colorado. On a recent hot September day, Behrens climbs stairs to the top of a set of oil storage tanks to measure the depth of the oil held inside. After finishing his measurements, Behrens heads back to his pickup truck with his oil gauging tape measure in hand. (Kathryn Scott, Special to The Colorado Sun)
Behrens was also left with a $165,000 tab to repay to his bonding company, so now he serves as a “pumper,” checking the oil tanks at wells and when they are full, pumping them into a tanker truck to take to market.
“I wanted to retire the first of the year,” said Behrens, 75, “but I am still here.”
The stroke that set Behrens Resources LLC asunder was the 2018 move by Anadarko Petroleum to shut down the Third Creek gathering system, a network of small pipelines that collected natural gas from wells in Adams, Arapaho, Elbert and Denver counties.
Most of these wells were low-producing, stripper wells run by small companies and the system’s closure — which Anadarko said it did for safety reasons — swept through the oil field putting companies out of business and in its wake leaving orphan wells for the state.
About a quarter of all the state’s orphan wells appear to have been on the Third Creek system with the bulk of them in Adams County.
“There are 298 orphan wells in Adams County and 75% were connected to the Third Creek system,” Adams County Commissioner Eva Henry said. “This creates a high risk for the county.”
Sixteen spills or releases in the county have been associated with those orphaned wells since July 2021. “We have been sounding the alarm for years,” Henry said.
The Colorado Oil and Gas Conservation Commission doesn’t have a tally on how many of the 981 wells and sites in the state’s orphan well program are on the Third Creek system, Megan Castle, a commission spokeswoman, said.
Based on interviews with operators on the system, local officials and a review of the state list of orphan wells, it appears that somewhere between 230 and 250 of the orphans are Third Creek wells.
Changing regulations, industry consolidation stranded wells
The story of the closure of the Third Creek system and the small oil and gas companies it left stranded is one of the changing natures of the Colorado oil and gas industry.
Colorado oil operations are consolidating into larger companies. For example, three Colorado drillers in November merged to form Civitas Resources, now one of the largest producers in the state. In May, PDC Energy acquired privately held Great Western Petroleum for $1.3 billion.
At the same time, the rules governing wells from drilling to production to handling waste have gotten more stringent as result of Senate Bill 181, the 2019 law that puts protecting public health and welfare and the environment ahead of promoting oil and gas development.
Left out of the corporate maneuvers and overwhelmed by the new regulations are many of the stripper wells nursed along by small operators. The 29,000 stripper wells — each producing no more than 15 barrels of oil a day — make up more than half of all the wells in Colorado.
In October, under new rules required by Senate Bill 181, operators must file financial assurance plans showing how they will plug and remediate their wells when they cease operations.
At an Aug. 23 briefing, Greg Dean, the Adams County oil and gas liaison, told commissioners that COGCC officials expect the financial assurance rules to swell the list of orphan wells in the county.
Since 2018, the number of orphan wells and well sites in the state has nearly tripled, according to COGCC reports.
While the new rules may be challenging to small companies, Kate Merline, an attorney handling oil and gas issues for the environmental group WildEarth Guardians, said the regulations are necessary.
“We need operators to operate safely and have a plan to plug their wells at the end of their lives,” Merlin said. “I don’t know who thought it was a good idea that a large-scale industrial operation should be a mom-and-pop business.”
Third Creek shutdown started with a fatal explosion in Firestone
Although miles from Third Creek, it was the April 27, 2017, explosion in Firestone that leveled a house killing two people and badly injuring a third — an explosion caused by a faulty gathering line — that marked the beginning of the end for the system.
A National Transportation Safety Board investigation determined that a 1-inch, plastic flow line or gathering line from a shut-in well had been cut and leaked natural gas into the basement of the house.
Anadarko, the well’s owner, was hit with an $18.5 million fine, the largest ever levied by the COGCC.
In the wake of the Firestone tragedy, the oil and gas commission adopted a series of new rules on flowlines and piping systems, including registering and mapping all flowlines, integrity tests for both active and inactive flow lines and locking and marking flowlines not in use or abandoned.
Anadarko began evaluating all its gathering and pipeline systems after the accident and quickly identified the Third Creek system as another risk.
The approximately 30 producers using the system were told in late 2017 that Third Creek would be shut and a few led by Ed Ingve, the owner of Renegade Oil and Gas Co., which has 130 wells on the system, sought help from the Colorado Public Utilities Commission and the COGCC.
The hope, Ingve said, was to help facilitate the sale of the system to a new operator or enable at least some of the wells to get on to another gathering system operated by Anadarko in the same area.
“There is some legitimacy,” Ingve said. “The system was pretty old and was put together in bits and pieces, some steel, some poly pipe, and it doesn’t have the platting that is now required.”
Yet with some upgrades and repairs the system could have continued and enabled hundreds of oil wells to continue producing, Ingve argued before the oil and gas commission.
State regulators declined to intervene in Occidental’s business decision
The PUC dismissed the operators’ complaint and the COGCC, Castle said, does not get involved in what is a purely company decision.
For Anadarko, which was acquired by the Occidental Petroleum Corp. in 2019, the Third Creek system was small potatoes accounting for less than half of one percent of the company’s total gathering capacity in the Denver-Julesburg Basin.
“We went to the commission and tried to get some help,” Behrens said. “They listened to us, but that’s all it was.”
The frustration was that no one seemed to care about the fate of the small operators on the system or their hundreds of wells. “No one wanted to deal with it,” Ingve said. “All they wanted to do was put it in a box and bury it.”
On May 28, 2018, Anadarko began closing down the system, which also included compressors, pipelines and valves, and within four days it was shut leaving small operators marooned.
“After closely assessing the system, we took the Third Creek gas gathering system permanently out of service,” Jennifer Brice, a spokeswoman for Anadarko, said in a statement at the time. “Given the very small volumes currently handled by the system, permanently shutting the system down is the safest and most appropriate decision.”
“We recognize this may create hardships for some producers that utilize the system; however, our commitment to safety and the environment must take precedence,” Brice said.
Occidental did not respond to The Sun’s request for comment.
The wells on the Third Creek system produce mainly oil and a little bit of gas, but the oil can’t be produced unless something is done with the gas. The Third Creek gathered those small amounts of natural gas and sold them into an interstate pipeline.
Without a way to market or use natural gas, oil wells must be shut in
Colorado regulations forbid the gas from being vented or burned, known as flaring, so without some other way to put the gas to use wells have to be closed.
“Ninety percent of what we had was on the Third Creek system,” Behrens said. “Behrens Resources LLC lost 65% of its revenue and 95% of its resources.”
Behrens began in the oil business in 1971 and like many of the operators on the system specialized in buying older wells with declining production that larger companies were no longer interested in. Some of the orphan wells are now as much as 50 years old.
In addition, Behrens served as the pumper for nine other companies, covering 125 wells. “We had a hell of a deal going there for a while.”
Almost all of that ground to a halt with the loss of the Third Creek system.
“I ended up turning my wells over to the state to the orphan well list, which I did not want to do, but I saw no way out,” Behrens said.
In addition to the 38 wells, the state seized the company’s $165,000 in plugging and remediation bonds, money Behrens says he now has to pay back to the bonding company because he defaulted.
“A lot of companies we pumped for did the same thing,” Behrens said. The companies Behrens is now servicing are mainly west or east of the Third Creek territory.
On a recent day, Behrens drove his truck up to a weathered tank battery surrounded by hot, dusty fields and climbed the scaffolding to the top of the tanks. Pump jacks, coated with a patina of rust, sat atop the old wells in fields slowly filling the tanks.
Although there were five 15-foot-tall tanks, only two were being used to collect oil. Behrens opened a hatch on the top of one tank and dropped in a tape measure, called a gauge line, attached to a copper plumb bob.
The oil in the tank measured 11 feet, 11 inches. “It’s about time to call for a truck,” Behrens said. When oil reaches 12 feet in a tank, equal to 190 barrels, a tanker trucks it away.
These days Behrens is pumping between 10 and 20 wells.
The Third Creek shutdown rippled well beyond its boundaries. Denver-based PetroHunter Operating Co. went out of business, abandoning six orphan wells in Adams County and five in Rio Blanco and Weld counties. The state took over its $120,000 in bonds.
Houston-based Painted Pegasus Petroleum orphaned 90 wells in Adams, Elbert and Arapahoe counties, and another 108 wells across Broomfield, Archuleta, Cheyenne, Delta. Fremont, Garfield, Jackson, La Plata, Mesa, Rio Blanco and Weld counties.
The demise of Painted Pegasus, however, may not solely be attributed to Third Creek as it was facing COGCC enforcement actions, having received five notices of violations in 2020 and seven in 2021. The company filed for bankruptcy in November.
The orphaning of wells in the Third Creek system may not be over. Scott Goodwin is a pumper, who bought eight stripper wells in Adams and Weld County for cash – making his first purchase 18 years ago. The loss of the gathering system forced the closure of four of his wells.
“The doggy wells were still running, but the good wells were shut,” Goodwin said. “We are keeping the wells maintained, doing the housekeeping, doing all the requirements, but with no income. We are hanging on by a thread.
“These orphan wells were supposed to be my retirement,” said 68-year-old Goodwin.
Between 2017 and 2019 annual oil production for Goodwin Energy Management dropped 60% to 1,102 barrels, according to COGCC data.
Goodwin’s pumping business was also hard hit by the closure. “The day the pipeline shut down my little company’s gross income for pumping dropped 75% to 80% overnight,” Goodwin said. He estimated that the pumping business had been generating $38,000 to $40,000 a month
Goodwin had been servicing close to 200 wells, now he is pumping 10, and he said there is no future in that business either. “All the drilling is being done now by big companies who do their own pumping.”
“The thing that keeps us going is that we don’t owe any money,” Goodwin said. “If it wasn’t for the state of Colorado and all the new regulations they keep coming up with, we could hang on for another five or six years, but it won’t be long now.”
Ingve, who first bought his first Third Creek wells in 1987, is still looking for ways to keep his operation running. Sixty-five percent of his company’s 201 wells are on the Third Creek system
After the system was shut down, but before the COGCC adopted rules banning flaring, Renegade obtained permits to use combustors to burn the gas coming out of 47 wells.
The company has applied to the oil and gas commission for a variance to continue to use the combustors while it finds other beneficial uses for the gas. The commission has granted such variances to two other companies.
Ingve has also installed cryptocurrency mining apparatus at two wells and is using the gas to run a generator powering the currency computers. He said he has purchased the equipment for a third well.
In addition, Ingve said he is exploring other possibilities such as using the gas to heat greenhouse operations or generate electricity to sell onto the grid.
Still, annual oil production for Renegade is down 70% between 2016 and 2021 to 18,686 barrels, according to state figures.
Ingve is also trying to persuade Occidental to allow wells to hook up to the Wattenberg gathering system, which is in the same area. “At least half of shut-in wells could be brought back on line with access to the Wattenberg system,” Ingve said.
“There was a time when the Third Creek system served 400 to 500 wells, but most of them went broke,” Ingve said. “I am pretty much the last man standing.”
Key Words: Colorado, orphan wells