Kathleen Sgamma, Western Energy Alliance gives an overview of three different states and their orphan well programs. From North Dakota to Ohio to Pennsylvania, how each state handled their industry aftermarket.
“”There have been a lot of shut ins, which are not abandoned or orphaned, that’s just shut in of oil production,” Sgamma said. “Because literally we were in the situation the last couple of months where if you ran out of storage, you couldn’t find a buyer to take away your barrel of oil. So producers had to shut in many wells.”
Sgamma explains how North Dakota is using CARES Act funds to supplement the oil and gas industry to plug shut in wells. She believes this will help North Dakota’s economy recover as the world economy recovers.
The east coast, however, tells a different story. The lack of oversight and understanding of the environment from centuries ago left behind quite a few environmental clean up opportunities.
“Let’s go back 150 years ago or so when wells were first drilled in Pennsylvania and Texas. This was way before state regulated oil and gas,” Sgamma said. “There were hundreds of thousands of wells by companies who have been off the face of the map for decades if not a century. Literally no one knows where most of those wells are.”
Sgamma also discussed the fact there is an asset involved.
“Assets just do not go away. If a company does become insolvent and actual shut its doors, it doesn’t mean those wells are just abandoned,” Sgamma said. “First of all what a company in distress is going to do is sell assets, so there is almost always a company that is acquiring. When one company is in trouble that presents opportunities for other companies. In general, assets are then sold or picked up by another company who is responsible.”
Sgamma cautions that this is not an one-size fits all type of issue. There are some instances where special attention is needed, and more importantly given.
“There was an issue in Wyoming where coal bed methane wells just became totally non-economic with the price crash in 2008, and that is a specific issue that Wyoming is working through,” Sgamma said. “That was specific to coal bed methane, I mean nobody drills coal bed methane wells anymore.”
The Crude Life Podcast can be heard every Monday through Thursday with a Week in Review on Friday.
Spread the word. Support the industry. Share the energy.
