Several groups are petitioning the federal government to change the bonding requirements for federal onshore oil and gas leasing, which could potentially cost industry companies more money.
When a company leases federal land for oil and gas development they are required to put up a certain amount of money, or bonds. It is basically a financial guarantee that the company will follow their contract and clean up after they are done with the area.
Three national groups, Western Organization of Resource Councils, Taxpayers for Common Sense and Natural Resources Defense Council, are petitioning the U.S. Department of the Interior (DOI) and the U.S. Bureau of Land Management to increase the bonds. Currently, companies can put up a ‘blanket bond’ of $150,000 that covers all operations nationwide, but the groups say it can cost almost that much just to restore a single site, let alone thousands.
“The purpose of a bond is to protect taxpayers from liabilities associated with the cleanup of abandoned and orphaned wells, and this is not happening,” Autumn Hanna, the vice president of Taxpayers for Common Sense, said. “The system is broken and the federal government needs to fix it immediately.”
If the well sites are not reclaimed, some say it is not only unsightly but dangerous. Jill Morrison, the recently retired executive director of the Powder River Basin Resource Council, spoke on the issue at a recent press conference.
“I witnessed firsthand the problems caused by 1000’s of idle and orphan wells,” Morrison said. “And what I saw was trash and junk left behind by oil and gas operators, which littered the landscape. These included rusted tanks sometimes leaking, left behind unfenced blackened pits, metal pipes, sucker rods, rusted barrels, plastic pails, broken pump jacks, contaminated soil that was either barren or only growing with noxious weeds.”
Morrison said it is a failure of the BLM to not require the oil and gas industry to promptly plug up the wells and reclaim the sites.
But Pete Obermueller, the president of the Petroleum Association of Wyoming (PAW), said the goal of the petition is more about halting the oil and gas industry.
“To ask for so-called full cost reclamation is more of an effort to try to make it so expensive in Wyoming to do business that business will go elsewhere,” he said.
Obermueller pointed to Wyoming’s successes with reclamation. According to the Wyoming Oil and Gas Conservation Commission, 4,713 orphaned well sites have been reclaimed in the last eight years. As for development on state land, Wyoming has increased the amount of bond money required of companies, and it also requires ‘full-cost bonds’ from high-risk companies.
“With respect to plugging and reclamation in Wyoming, we have a best-in-class program,” Obermueller said. “We already do it better than really anywhere else.”
The petitioners are requesting the BLM and DOI consider the following:
- Eliminate blanket bonds for new drilling
- Require oil and gas companies to put down a “full cost bond” that matches the real amount needed to reclaim and clean up wells for any new drilling on federal lands
- Include the costs of surface reclamation in bonds
- Phase in “full cost” bonds for existing drilling sites on federal lands
- Ensure these proposals apply to leases on tribal lands
- Update reclamation standards so clean-up is comprehensive and restorative
- Review required bond amounts periodically for inflation and other factors.
The advocacy groups argue that updating the bonding requirements, which has not happened in more than 60 years, is time sensitive, as a federal onshore lease auction is scheduled for the spring.
The BLM said it does not have comment on the issue at this time.
This story has been updated Nov. 18 to reflect that Jill Morrison said "rusted tanks" not "rescue tanks."
