As 2021 draws to a close, I wanted to add one last post to the blog here about an issue concerning the oil and gas industry that bears remembering for its possible effect on all citizens of Colorado: the potential of O&G well abandonment in Colorado, and the possibility of state taxpayers having to pay for it — instead of the O&G industry.
That possibility was made all too clear in an interview that the radio station KUNC did on November 19, 2021 with Andrew Forkes-Gudmunson, who is the deputy director of LOGIC, the League of Oil and Gas Impacted Coloradoans. This was part of the station’s excellent news show about local issues, the Colorado Edition that airs at 6:30pm. You can still listen to the interview on their website at
To get to the chase, after all of the state data was analyzed by LOGIC, using data from the COGCC website, LOGIC came to the conclusion that about 70 per cent of the active wells in the state produce less than one barrel of oil a day, and that the majority of those wells are owned by small operators, not by a major oil company. It is within reason to also infer that many of these low producing wells are never going to increase their production since they are “played out”; and then to conclude that the operators have not yet abandoned them because of the cost of doing so. When a well operator tells the COGCC that they are going to abandon a well, the well needs to be plugged before the operator can abandon it, i.e. cease to have any legal connection or obligation to it. And to plug a well carries a certain cost. Though it basically means pouring cement down the oil bore and letting it dry, it can be more or less expensive depending on the type of well, how deep it is, and other environmental factors that might entail additional measures.
Long story short, looking at the data carefully seems to indicate that the COGCC has allowed a lot of small operators to keep their played out wells in the “active” category simply because the operators don’t want to declare them to be in need of being plugged before abandoning them. This is, unfortunately, the sad end of allowing an industry to effectively self-regulate itself, going back over seven decades.
Thus, when looking at a range of estimates for plugging a well, there is an all-too-real possibility of the total price tag for plugging all these wells that should have been abandoned before now coming in at something like $7 BILLION! To put that figure in perspective, the 2019-20 state budget was about $32.5 billion; or that for 2021 state population, would be about $1,100 for every man, woman and child in the state.
It is because of this possibility that the COGCC is holding its final phase of rulemaking for SB-181 via public hearings about Financial Assurance during January and February. “Financial Assurance” basically means holding the O&G industry to account for the cost of plugging abandoned wells. See this other blog post for the calendar of events about that, and if you would like to express your opinion. The COGCC would love to hear from you! 🙂
Please keep this in mind as we enter 2022…Happy New Year, everybody!
