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The transfers could potentially result in one of the most widespread environmental and property rights disasters ever
For Release: Tuesday, November 20, 2018 at 1 pm
Contact: David McMahon, WV Surface Owners’ Rights Organization, (304) 415-4288, email@example.com
(Charleston, WV) EQT and other major Marcellus Shale drillers are trying to dump their responsibility to plug 17,000 outmoded, vertical oil and gas wells located on surface and mineral owners across the West Virginia. They are doing this by selling the wells to a company called Diversified or its affiliates including one called Alliance. We believe that Diversified is going to milk what gas is left for 15 years, and then leave most of those 17,000 wells unplugged.
If wells are not plugged at the end of their productive lives, they can leak gas into the air, leak oil and brine out onto the ground, and leak gas, surface runoff, and non-potable water into good groundwater and other formations. And all of this can devalue surface owners’ property in perpetuity.
Before EQT and other companies’ statutory plugging responsibilities can be transferred to Diversified, the transfer of that plugging responsibility has to be approved by the Department of Environmental Protection (DEP) According to the agency’s rules, interested persons can object, intervene and ask for a hearing on the transfers. The WV Surface Owners’ Rights Organization (WV-SORO) has requested hearings on the transfer of the first 3,865 wells for which approval has already been sought.
“WV-SORO is today publicly urging the DEP to grant our hearing request so we can give the DEP evidence that the transfer of wells by EQT and others to Diversified is a constructive fraud on the surface owners and mineral owners of this State, and that the transfers should not be approved by the DEP,” said David McMahon, an attorney and co-founder of WV-SORO. “Approval of these transfers will pave the way for one of the most, if not the most, widespread environmental and property rights disasters ever in West Virginia, and it is preventable by not approving the transfers and leaving the cost of plugging with the companies that can afford to do so.”
Oil and gas wells make most of their production in their early years. When they need plugged at the end of their useful lives, they are producing only a small fraction of what it costs to plug them. It costs $10,000 to $45,000 or more to plug each well. So drillers do not want to spend the money to plug them. Also they want to use the unplugged wells to hold mineral owners’ antiquated leases in case they want to drill again.
Weak statutes let the drillers avoid state plugging requirements by producing only a few hundred dollars’ worth of gas from a well each year, if that. There are currently 12,000 wells that have not produced any gas for at least a year that should be getting plugged already. However, because the drillers are so irresponsible, and because the laws are so weak, 4,000 of those wells have not been plugged for so long that the companies that operated them have gone out of business and there is no one to plug them. The State only has money to plug fewer than 10 of these orphaned wells a year. The company only has to post a $50,000 bond no matter how many wells it owns. That can be less than $50 a well.
(A photo gallery with examples of orphaned wells is available here.)
WV-SORO believes Diversified is buying up these outmoded, conventional vertical wells to do the same thing. They will milk them for a few years, pay the company owners and their shareholders who bought their stock on the London stock exchange, and then, not have money to plug the wells, and disappear, leaving most of those 17, 000 wells unplugged unless the DEP denies the transfer.
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