Official considers raising bond for oil, gas companies after well cleanup falls to Wyoming


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CASPER, Wyoming — Wyoming's top oil and gas official said Monday that he's considering boosting the amount of money developers must put up to cover the costs when they abandon their wells and the state becomes responsible for plugging and cleaning them up.

One option would require companies with more wells to post a higher bond, Mark Watson, supervisor of the Wyoming Oil and Gas Conservation Commission, told a legislative committee.

At the same time, Watson said he wants to avoid penalizing companies who idle their wells because they are no longer profitable.

"It's a fine line to come up with a bonding amount that we don't end up in this situation again, but also we have a lot of good operators," Watson told the Joint Minerals, Business and Economic Development Committee on Monday.

Well abandonment has become a serious issue in northeast Wyoming's coal-bed methane industry. Coal-bed methane boomed in the Powder River Basin starting in the late 1990s but over the past few years has gone bust amid soft gas prices and dwindling reserves.

This year, the oil and gas commission embarked on an effort to plug more than 1,200 wells that companies have abandoned in the basin. Last winter, the Wyoming Legislature authorized $3 million for the effort after it became apparent that bonding for the wells was insufficient.

Petroleum industry officials say they support higher taxes on production and higher bonding on idle wells, the Casper Star-Tribune reports (http://bit.ly/1lObbrw ).

Higher bonding on new wells isn't needed, Petroleum Association of Wyoming President Bruce Hinchey said.

The two biggest coal-bed methane operators in the state plugged 800 wells last year while the state plugged 353.

"One rule cannot fit all," Hinchey said. "You have to be flexible."

Any change to bonding would need to go before the five commissioners for approval, Watson said.


Information from: Casper (Wyo.) Star-Tribune, http://www.trib.com

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