Why Oklahoma Gets a Bill When the Oil and Gas Industry Abandons a Well

Why Oklahoma Gets a Bill When the Oil and Gas Industry Abandons a Well by Joe Wertz, November 26, 2012, State Impact NPR
To drill an oil, gas or disposal well in Oklahoma, operators have to post a bond with the Corporation Commission. But the financial requirements to drill in Oklahoma are the lowest in the region — too low to cover the risk of abandoned wells, the Journal Record’s Sarah Terry-Cobo reports. Currently, a single operator can cover all its wells by posting a $25,000 bond. The highest bond — for particularly risky wells — is $100,000. Terry-Cobo writes: If the [drilling] company goes out of business, the state is responsible for safely capping the wells with cement, and each can cost as much as $55,000.

Oklahoma has 559 abandoned wells. One cent of every $100 of oil and gas produced goes into a well-plugging fund. The Corporation Commission says it could cost tens of millions to seal them all. The problem: “There is only $1.3 million in the account,” the paper reports.

The agency and State Rep. Seneca Scott, D-Tulsa, want to raise the bond requirements to drill in Oklahoma. A representative of the oil and gas industry says increasing the bond amounts — which haven’t been changed since 1986 — isn’t necessary, the paper reports: The Oklahoma Independent Petroleum Association represents thousands of producers, and spokesman Cody Bannister wrote in an email that the industry has a record of environmentally responsible production. Increasing the surety is unnecessary, he wrote.

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