The Oklahoma Bar Journal May 2024

N atural R esources L aw

Overcoming Oklahoma’s Orphaned and Abandoned Well Problem By Niles Stuck

O IL AND GAS-PRODUCING STATES, including Oklahoma, are dotted with aban doned wells that risk the health and safety of those who live and work near them. Oklahoma Statutes create a regulatory framework intended to balance the interests of oil and gas operators who manage marginal wells with the public’s interest in ensuring those wells do not pollute the environment and are ultimately plugged. The Oklahoma Corporation Commission (the Commission) is tasked with enforcing these 30-year-old laws, but as we will see in the case study below, their ability to prevent the abandonment of wells is limited by statute. While Oklahoma law has struggled to discourage operators from abandoning wells, new and inventive efforts to plug these abandoned wells have been promoted both in legislation and at the Commission. 1

by the Commission. Provided, however, the Commission shall not order any oil or gas well to be plugged or closed if the well is located on an otherwise produc ing oil or gas lease as defined by the Commission, unless such well poses an imminent threat to the public health and safety which shall be determined by the Commission after conducting a public hearing on the matter. 3 Statute further requires all oper ators to post a $25,000 Category B surety that is intended to ensure funds are available to satisfy plugging costs. 4 The Commission is

authorized to augment the surety solely upon demonstrating good cause concerning pollution or improper plugging, following an application initiated by the director of the Oil and Gas Conservation Division and subsequent to notice and hearing. 5 Category B sureties are capped at $100,000. 6 In the event a well poses the risk of pollution and the responsible operator cannot be found or is financially unable to pay for plugging, the Commission may plug that well using its plugging fund. 7 As a practical matter, the plugging liability of most opera tors is greater than $25,000. The

There are 16,978 wells listed on the “Orphan Well List” available from the Oklahoma Corporation Commission. 2 These are wells that have been managed by operators, but those operators have either ceased to exist or the Commission has ordered their surety forfeited. Oklahoma law provides: The Corporation Commission is hereby authorized to pro mulgate rules for the plugging of all abandoned oil and gas wells. Abandoned wells shall be plugged under the direction and supervision of Commission employees as may be prescribed

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

30 | MAY 2024

THE OKLAHOMA BAR JOURNAL