Abandoned Oil & Gas Wells in Kansas

Abandoned oil and gas wells without responsible parties in KS are dealt with depending on their abandonment date - before or after 1996.  Why 1996?  The industry and the legislature locked horns over the problem and it was by mutual agreement that the state would handle the older abandoned wells (before 1996) which most often were old enough that the primary responsible parties (PRPs) were either out of business or gone.  The industry agreed to handle all well abandonments after 1996.

To do all this, the legislature created two funds:  The Abandoned Well / Site Remediation Fund that is to cover the costs of the pre-1996 wells (state responsibility); and a Well Plugging Assurance Fund which the industry would use for post-1996 wells.  The state's fund is pre-set to sunset on June 30, 2016.  The industry fund is supposed to be permanent.  Both funds are administered by KCC.

The state's fund consists of 4 sources and receives about $1.6 million annually, although the actual funding has been somewhat erratic of late, with the state general fund and state water plan fund having contributed zero dollars of late due to the state's economic conditions.  The industry fund is from 4 industry sources and currently has a cash balance of $3.966 million and a non-cash balance of $3.296 million.

The KCC reported on September 9, 2011 the following total program gains from the state funded program (July 1, 1996 - June 30, 2010):  8,200 wells have been plugged (pre-1996 wells) and 5,475 remain on the inventory list to do.  Moreover, 209 additional wells were added to this list during FY 2011.  All the available state funds have been spent each year.  The KCC asked that the state general fund and state water plan funding be reinstated.  They also noted that the average plugging cost per well has been increasing over time, so with the same funds, fewer wells will get plugged as this cost rises.  They said this was due primarily to the contractor costs increasing - as they contract with industry personnel and equipment to do this work.  WOW, Sweet deal - the industry gets out of their responsibility for these wells and then cuts a deal to get paid to do the very same work with the taxpayers footing the bill.  Gotta shake your head, sometimes.

The KCC also reported that no funds have yet been spent from the industry fund (post-1996 wells).  Yikes, does this raise any red flags?  And when this was noted, no committee member asked "Why?"

While it is comforting to know that abandoned oil and gas wells with PRPs are taken care of by the responsible parties, and that such wells without PRPs can also get taken care of, it is not so comforting to know that it's going to take an estimated 40 years to address the currently known list, and that the fund created to do this is slated for sunset in 2016.  Of course, it's already been extended once - so maybe a couple more times won't be asking for too much.  I gotta tell, you, it sure appears to me that the industry has been coddled in Kansas.  I hope I'm wrong.  But I guess, when you carry a purse as big as theirs, you have to be careful how you deal with 'em.

Hydraulic Fracking in Kansas - 2

A little more light on Kansas hydraulic fracking (HF) history and activities.  I attended a joint Legislative Committee session today in which several presentations were made on HF in the state - one by the Kansas Corporation Commission (KCC) and one by Kansas Independent Oil & Gas Association (KIOGA).  According to both presentations HF is well regulated in the Kansas.

KIOGA strongly opposes EPA regulating the practice, so touted KCC regulation as very sufficient.  KCC said they regulate many phases of the practice, but had to admit that they have never generated any statutes or regs that specifically apply to, or even mention the HF process.  All their regulations which they claim adequately protect Kansas are covered by their existing general oil & gas regulations.  These would include surface pipe; production casing; and well cementing regs; and their intent to drill and pipe permitting processes and reporting requirements.  Excuse me, but just how effectively do these old original regulations deal with the new issues of HF when the process never even appears in the statutes?

The joint committee did get the closest look yet at Kansas activity.  As I wrote on February 2, 2011 (here), HF was first done in 1947 in Grant County, Kansas.  Moreover, the KCC reported that probably 80% of all oil & gas and coalbed methane wells in the state have been fracked.  The good news was that Kansas has just over 19,000 injection wells readily available to take all the flowback fluids, so this waste stream in Kansas is 100% injected.  This of course was to ease water treatment concerns that are a huge issue in other parts of the US.  They regionalized some crude figures on HF water use and injection pressures.  From lows of 200 bbl of water per well and 300-1000 psi injection pressures in SE Kansas, to 2700-5000 bbl of water per well and 2500-3600 psi injection pressures in NW Kansas.

I have to admit, they were pretty convincing, but then again, they weren't challenged very hard with probing questions.  They made a big deal out of the FracFocus.com web-registry for fracking chemicals used, but never mentioned that Kansas operators rarely use this voluntary site.  Remember, in February, 2011  I queried for every Kansas well in the entire registry and got two returns.  They made huge pitches for the KCC regulation of HF, yet just an hour earlier they reported on several KCC rulings that made it more unlikely that the industry (or anyone else) would ever be held responsible for older abandoned oil & gas wells.  They touted again that not a single case of groundwater contamination in the US has yet been verified from HF.  They criticized all the anti-fracking materials, from the New York Times series to the Gasland documentary.  And they mentioned three times that the industry is all about transparency, yet never mentioned how they have fought chemical disclosure.  Quite frankly, I sensed them being just as radical and entrenched in defense of the practice as they accused the environmental groups of being in opposition to it.

All this leads me to believe the real answer is somewhere in the middle, which is essentially what I said back in February.  I do wish the committee would have asked more questions, though.  They were far too polite.  I would think that Kansas should consider a set of regulations specifically for HF that include at least:  1) full disclosure of HF chemicals and injection pressures; 2) full disclosure of flowback fluid injections; 3)  full disclosure of engineering work-ups on the fracking plans used; and 4) a remediation fund should any problems occur.  Now, if your activities are 100% safe and will never cause a problem, why would you oppose these basic requirements?