Oil & Gas News

Kansas Regulators Struggle with Record-High 22k Abandoned Oil and Gas Wells

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By Tim Carpenter, The Hutchinson News ~ EUDORA — Judith Wells brought her car to a slow crawl on a gravel road in Douglas County.

She wasn’t marveling at the beauty of nature or the toil of modern farmers. Nor was she drawn to the sprinkling of lovely rural homesteads.

She was intent on consuming details of crude pooling at the base of a pump jack within shouting distance of Little Wakarusa Creek. Nearby, within the same field, a second jack was surrendering enough thick black oil to scar another slice of ground.

It is the kind of discovery fueling Wells’ mission to convince the oil and gas industry to adhere to state laws, regulations and rules when extracting or depositing energy-related materials in Kansas. It is a quest that put her in conflict with the Kansas Corporation Commission, which is responsible for oversight of the energy sector.

Years ago, she bought a property in Douglas County without being informed it had unplugged abandoned wells on the land. She emerged as a thorn in the side of eastern Kansas operators by injecting herself into the debate about how to deal with operators who abandon wells.

“This is a big ball of worms,” Wells said. “I’m not against oil. I’m against dirty oil.”

Sense of abandonment

The number of deserted oil and gas wells in Kansas blossomed during the past five years to 22,000. The KCC’s annual reports revealed a fund created in 1996 to finance plugging of wells to be inadequate if the objective was to keep pace with demand for plugging.

As of 2018, the state had capped 10,100 wells. Year-to-year plugging peaked at 750 wells in 2002 and stood at 520 in 2009, but slumped to less than 300 from 2015 to 2018. In 2017, the number of forsaken wells in the state’s inventory surged by 3,000.

The annual budget for plugging has drifted between $1.2 million to $2 million for a decade, with the low side of that range common. The fund is supported exclusively by the oil industry.

“The funds barely exist,” Wells said. “If taxpayers aren’t tapped for these problems, the wells will truly sit open and unattended.”

Epicenter of abandonment is a 32-county area of eastern Kansas served by the KCC’s field office in Chanute. More than 19,000 abandoned wells on Kansas’ list reside in that zone. One-fourth have been prioritized as “requiring action” by the KCC, primarily because of risk for groundwater contamination by defunct wells.

Taste of the tension

KCC chairman Dwight Keen, who previously operated an independent oil and gas company and was chairman of the Kansas Independent Oil and Gas Association, said the industry was “pretty responsible” in dealing with orphan wells.

Some discarded wells were drilled decades ago, he said, and it isn’t clear who to blame or what company to hold liable. The KCC doesn’t have staff or resources to chase down every absconder who didn’t have the cash or desire to cap unneeded wells.

Keen said another problem was lack of contractors eager to bid on plugging work in Kansas, in part, because of density of the KCC bureaucracy. Plugging typically costs at least $12,000 for deep wells in western Kansas and around $5,000 for shallow holes in the east.

“It’s a difficult challenge, but it is one that we will master. We have to,” Keen said. “We’re trying as many unique avenues to protect our freshwater resources.”

Joe Spease, of the Kansas Sierra Club, said the problem festered because of the oil and gas industry’s deep political influence in the Legislature and on the KCC, which has three members appointed by the governor.

He said industry profit has been viewed as more important than public safety or environmental preservation.

“That can and must be stopped,” Spease said. “Solutions to the problem are simple. Require oil and gas companies to assume the cost of plugging any well they use. If a company, and the individuals running it, fails to plug a well, they would be forced to immediately stop all business in the state until the well is plugged.”

LLC shell game

Back on gravel roads of Douglas County, Wells offered Butler Petroleum as an example of how companies slipped through the KCC’s hands. The commission issued a $500 fine in March 2017 to the company’s operator, Brad Butler, because he was sitting on unplugged wells despite holding an expired state license.

Wells alleged Butler Petroleum, of Van Alstyne, Texas, walked away from 480 wells in April 2017. She said half were in Douglas County, while Johnson County had 190 and Montgomery and Franklin counties had about two dozen each.

Wells also said none were placed on the KCC’s abandoned-well lists submitted to the Legislature in 2018 and 2019. She’s filed complaints against Butler Petroleum with the KCC and the U.S. Environmental Protection Agency.

Butler’s application for a new license was denied by the KCC, but he teamed in April 2018 with Brandon Parks to form Paradigm Energy, of Lenexa. Leases held by Butler Petroleum were transferred to Paradigm.

Parks said the partnership was designed to make something of 200 oil wells and 100 injection wells that were part of Butler Petroleum’s portfolio, but ongoing state regulatory challenges undermined that effort. He said he recently spent $10,000 to “clean up” the leases and was hopeful of securing state permits to operate fully.

“There weren’t any wells abandoned,” Parks said. “They’re sitting there idled. By no means have we abandoned them.”

Industry perspective

David Bleakley, executive vice president at the oil and gas firm Colt Energy in Kansas, has served 21 years on a KCC advisory board and is preparing to become chairman next year of the Kansas Independent Oil and Gas Association.

He is bullish on the KCC’s commitment to eventually plug the state’s abandoned wells. He said energy-boom years of the 1980s drew disreputable people into the business who left scars on the Kansas landscape before vanishing. When prices plunge, he said, the potential of more orphan wells escalates.

“I’m confident they’ll get plugged,” Bleakley said. “Let’s keep going.”

He said the ability of Kansas operators to run away from problems was reduced once the KCC required each to hold a state license and identify all their wells. New operators in Kansas must have a financial bond or letter of credit from a bank, which could be tapped in the event of abandonment. However, that mandate may not guarantee sufficient funding to plug their discarded wells, and the requirement in Kansas is waived after three years for companies with a clean record.

It is unlikely state legislators will appropriate money to speed plugging, Bleakley said, given state general fund appropriations for the purpose ended in 2003.

Bleakley said damage to the water supply from oil leaks from pump jacks or holding tanks was negligible. Runoff of pesticides and herbicides applied to fields to promote higher crop yields is a greater threat to water quality in the state, he said.

“We have far more problems with chemicals sprayed on farms getting into the water,” he said.

He said some of the industry’s vocal critics were dedicated to ending reliance on fossil fuels. That kind of advocacy won’t help Kansas deal with abandoned wells, he said.

“Just as you’ve got bad actors in the oil and gas industry,” he said, “you’ve got some environmentalists who are not realistic.”

Kansas in trouble

Susan Sykes, of Burlington, routinely cruises parts of eastern Kansas on weekends in search of evidence of environmental damage in the oil patch. She scouts for evidence saltwater or chemical waste was dumped into streams. She is vigilant about documenting and reporting leaks from storage tanks and pump jacks.

Amid recent heavy rains, she discovered a menagerie of jacks partially submerged by flooding near LeRoy on the Neosho River. It raised the question: What were regulators thinking when allowing oil jacks so close to sources of drinking water?

The KCC assured her the wells had shut-off boxes to keep water out and oil in, but Sykes remained skeptical.

She said the KCC’s pro-industry mindset had demonstrated the state’s regulatory system was designed to deter people like herself often viewed by the industry as a nuisance. She isn’t willing to give up.

“Kansas is in trouble,” she said. “I don’t know what the answer to any of it is. You take your little toothpick and bang away.”

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