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Colorado Lawmakers Pass Bill to Support Orphan Well Cleanup

A bill to save and direct excess environmental-related state funds for the long-term mitigation of abandoned oil and natural gas wells has passed the Colorado legislature and is awaiting action by Gov. John Hickenlooper. The measure becomes law immediately when signed by the governor, which he is expected to do.

"We'll review the final version, but barring any unforeseen changes it's anticipated that he'll sign it," the governor's spokesperson told NGI’s Shale Daily on Tuesday.

House Bill (HB) 18-1098 focuses on an ongoing account for addressing adverse impacts from oil and gas activities in the state that is administered by the Colorado Oil and Gas Conservation Commission (COGCC). HB 18-1098 mandates that any excess funds in the account at the end of each fiscal year be kept in place and not diverted to the broader fund.

"In recent history, the orphan well line item within the Environmental Response Fund has been $445,000 annually, but there are larger projects that will require larger amounts," said a spokesperson for the Colorado Oil and Gas Association (COGA), which supported the legislation.

The new law gives COGCC "the flexibility to roll over funds from one year to the next [in the specific account] and plan its budget to properly reclaim those sites for which it has responsibility."

At the end of the last full fiscal year (2016-17), the environmental response account accumulated $1.3 million and the larger overriding Oil and Gas Conservation and Environmental Response Fund had an overall unspent balance of $6.9 million, according to a Colorado Legislative Council fiscal analysis.

Under existing practice, the COGCC retains the balance of the resource account without transferring it to the larger overall fund, the council staff report noted. "Since this bill merely codifies current practice, the bill is assessed as having no fiscal impact."

This bill could be the only measure related to oil and gas to make it through the state Assembly this session, which began Jan. 10 and is slated to conclude by May 9.

Separately, COGCC most recently has dealt with flowline issues from inactive wells, and two years ago the agency ordered the closure of 40 troubled wells that changed hands during the start of the commodity price crash and went into a bankruptcy sale in western Colorado. They were declared a threat to public health. Taking a rarely used action, the COGCC determined that the wells were operating illegally in La Plata County, creating "an emergency situation.

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