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Conservation groups petition BLM to raise oil and gas bonding rates

GILLETTE, Wyo. — The Western Organization of Resource Councils, Taxpayers for Common Sense and the Natural Resources Defense Council this morning petitioned the Department of the Interior and the Bureau of Land Management to update the bonding requirements for federal onshore oil and gas leasing and development.

In the petition, they said BLM never developed a regulatory framework for oil and gas operators on federal land to meet requirements of the Mineral Leasing Act, 30 U.S.C. § 226(g) and BLM’s implementing regulations at 43 C.F.R. § 3104.1.

“Rather, BLM has put in place a requirement for minimum bonds that are insufficient to ensure plugging and reclamation of federal wells,” the petition said.

Under current regulations, minimum individual lease bonds are $10,000, statewide bonds are $25,000, and nationwide bonds are $150,000. The statewide and nationwide leases were set by the BLM in 1951 and the individual leases were set in 1960, according to a U.S. Government Accountability Office report. The parties said that based on inflation and the increasing depth and complexity of modern wells and infrastructure, the bonds’ amounts should be higher since the bonds are supposed to cover the cost of cleaning up wells after operations end or when the company declares bankruptcy and orphans its wells.

“Today, the taxpayer is bailing out the richest industry on the earth with over $4 billion dollars in taxpayer monies allocated to pay for the plugging and reclamation of idle oil and gas wells – wells that have given the industry billions of dollars in profits from public minerals,” former Powder River Basin Resource Council Executive Director Jill Morrison said in a news release.

The $4.7 billion appropriation in the Infrastructure Investment and Jobs Act to plug and reclaim orphan wells only covers a small portion of the potential taxpayer liability for these sites while not addressing the root cause of the crisis, according to the petition.

“While the investments in the Infrastructure Investment and Jobs Act will go far toward remedying the many harms caused by orphaned wells across this country, taxpayers should simply not be on the hook for dealing with these messes,” Natural Resources Defense Council Senior Policy Advocate Josh Axelrod said in the release. “It is far more fiscally sustainable and environmentally responsible to ensure that bonding rates are set at levels that ensure timely and complete remediation of these drilling sites.”

The cost to fully plug and reclaim a well site varies, with estimates ranging from $82,500 per well in Colorado to $150,000 in North Dakota, the release said.

“A single $150,000 bond could be all that an oil and gas company is required to put down as their share for the clean up of potentially thousands of wells across the country,” the release said. “Any shortfall means the wells remain uncapped or the bill to clean them up lands directly on taxpayers. The estimated current cost to taxpayers for orphan wells clean-up on federal lands is more than $6 billion, according to the Center for Western Priorities.”