Wyoming oil and natural gas regulators are attempting to head off well operators that violate state rules and forfeit their bonds by making it more difficult to allow them to operate under different corporate names.
Individuals that have a history of insolvency or have failed to meet their state responsibilities attempting to launch another oil and gas company now have to notify the Wyoming Oil and Gas Conservation Commission (WOGCC). The state may require additional assurance bond coverage for the would-be operator.
The commission is applying the tougher approach under its discretion granted in the Wyoming Conservation Act, which seeks "to encourage responsible operators and discourage those that are not," a WOGCC spokesperson said.
Problematic operators are a small minority among the state’s exploration and production companies.
"Even though it is not a growing problem, this is a situation we want to avoid as much as possible," said Petroleum Association of Wyoming Vice President John Robitaille.
WOGCC applied the more rigorous approach last February in a case involving the principal of Enpro LLC, which was considered to have a poor track record with its operations within the Medallion Exploration unit. The Enpro/Medallion unit was subject of several show-cause orders. Enpro was fined $55,000 and ordered to perform mechanical integrity tests or plug 11 idle wells.
Ultimately, the orphaned well sites have to be fixed using conservation tax monies collected from other operators, so to the extent that mitigation work is needed, most of the state's operators are subsidizing the poor performers, Robitaille said. "So this is a way to protect [the industry and state] and to proceed with caution with some companies that we know are not as good stewards as we would like them to be."
Wyoming’s orphan well population is stable and maybe even shrinking overall. "It is still a situation we want to avoid," Robitaille said. The state's goal is to have zero orphan wells.
"Anytime we have to go plug a well, we use the tax monies, and if that fund gets low, the levy has to be raised, so we're trying to head this off before it gets out of hand," he said.