Update! June 2021
Colorado Oil and Gas Conservation Commission (COGCC) released its draft rules for the 700 Series Rulemaking to assess and update its financial assurance requirements for oil and gas companies. While there are some steps that the COGCC is taking to protect Coloradans, such as requiring full cost bonding when transferring idle wells, they don’t do nearly enough to ensure that Coloradans won’t be cleaning up after the mess that oil and gas companies leave behind.
This will be an opportunity for Colorado taxpayers to demand that the COGCC enact stricter requirements for oil and gas companies, so that the public is not left with an 8 billion dollar tab – the estimated cost of plugging and remediating Colorado’s over 110,000 oil and gas wells. Currently the state has only ~2% of this massive potential liability covered.
Specifically, we must urge the COGCC to 1) eliminate blanket bonds and 2) require single well bonding of at least $282,000 per well (the average cost of plugging, abandoning and reclamation or oil and gas sites). Accomplishing these two objectives would go a long way to ensure that our state has the funds to fully plug and remediate each production site in the case that an operator goes bankrupt.
- Copy and share this post on Social Media: Did you know? Colorado will be on the hook for $8,000,000,000 if the state doesn’t make oil and gas companies clean up their own mess. Tell the state to bond wells now!
- Attend an upcoming COGCC hearing and give public comments in support of appropriate financial assurance from the oil and gas industry. (See sample talking points here.)
- Check out these sample LTE’s for inspiration and learn how to write your own here!
- For more check out our Action Hour Toolkit!
Sample LTE #1:
Financial assurance for orphaned and abandoned wells
Colorado taxpayers face a major financial liability on behalf of oil and gas companies in our state. At present, our state only has financial assurance for 2 percent of the cost of plugging and reclaiming oil and gas production sites. We stand at a point of opportunity to strengthen regulations through an upcoming legislative process on orphaned and abandoned wells in Colorado.
The COVID-19 pandemic caused bankruptcies and worker layoffs for oil and gas companies across Colorado. Even before that, the oil and gas industry in aggregate has never had even one year of positive cash flow, and investors are wising up. As a result, companies have begun abandoning their wells and leaving taxpayers with the burden of paying for the capping and closures of these sites.
The state of Colorado currently has over $8 billion in unfunded liable wells. With only 2 percent of these costs accounted for in bonds, Colorado taxpayers are left with billions of dollars in costs that oil and gas companies are not liable to pay.
It is both morally unacceptable and completely unnecessary for the state of Colorado to put this burden on taxpayers. Far more conservative states, such as North Dakota, have stronger bonding requirements than Colorado. Why isn’t Colorado protecting its citizens from the downfalls of this industry like North Dakota is?
The COGCC (Colorado Oil and Gas Conservation Commission) is beginning its 700 Series rulemaking process to review and update its financial assurance program. Stronger regulations must be enacted that eliminate blanket bonds and require single well bonding at a rate that aligns with the true cost of closing and remediating these wells.
Take action to ensure the citizens of Colorado are not held accountable for these liable wells. Write and call the COGCC (303-894-2100) to urge them to enact stronger bonding requirements for oil and gas drilling in Colorado. Also, participate in the public comment period for the COGCC starting March 31.
Kieran White with 350 Colorado/Boulder
Published in the Boulder Weekly on 3/26/2021
Sample LTE #2:
Colorado must make the oil and gas industry clean up its own mess
The picture Nick Bowlin paints is bleak in his article for High Country News titled “Energy companies have left Colorado with billions of dollars in oil and gas cleanup.”
He reports that cleaning up the nearly 60,000 unplugged wells in our state will cost more than $8 billion and Colorado has collected only 2% of this from the oil and gas industry.
Now that the Colorado Oil and Gas Conservation Commission is undertaking a new 700 series rule-making process for financial assurance, it is time to tackle these drastic costs.
Why not cut out the blanket bonds and simply require a bond on each well? Consider following the lead of North Dakota where oil and gas operators are required to pay a $180,000 bond for each well.
If North Dakota can do it, so can Colorado. We need to prevent the drain of billions of dollars from Colorado coffers for cleaning up a mess that is the responsibility of the oil and gas industry.
Ann Jordan, Lakewood
Make oil and gas companies pay clean-up costs
Boulder Weekly has covered the rising cost of plugging oil and gas wells, due to reduced profitability of oil and gas companies (Re: News, “Footing the bill,” June 18, 2020). Claiming a temporary drop in production, oil and gas companies have demanded — and received from Colorado — extremely low and ultimately ineffective bond payments for cleanup of oil and gas wells. This has left Colorado taxpayers with approximately $8.3 billion in unfunded liabilities and put our communities at risk from methane leaks and toxic substances leaching into groundwater.
The COGCC is currently evaluating new financial assurance rules. I would ask fellow citizens to join me in urging the COGCC to require a much higher bond payment per individual well, such as North Dakota’s requirement for oil and gas firms to pay a $180,000 bond per well. If a company cleans up after itself, it can have the money back. If it goes bankrupt or tries to hide from its responsibility, our state will have the money to properly cap the well, ensuring the health and wellbeing of its taxpayers.
Published in the Boulder Weekly on 4/1/2021