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North Dakota May Reconsider Inactive Well Policy

North Dakota, home to the Bakken Shale, may revise its policy for inactive oil and gas wells, which now allows one year before penalties can be imposed on operators.

Lynn Helms, director of the Department of Mineral Resources (DMR), said earlier this month he may recommend that the Industrial Commission (IC) revise the one-year period allowed for abandoned wells.

"We're looking at whether the one year makes sense," Helms said. "We really hate for a well to go inactive and then hit abandoned status.” For example, a rule violation imposed in January may require companies “to deploy a well workover crew when it is 20-below outside."

North Dakota allows inactive well status for one year, after which wells are considered abandoned and a well-plugging requirement is triggered. When wells are under “inactive status, they can linger for two years," Helms said. "That is why I think we have seen the inactive number grow, and that is one of the rules we are going to take a look at."

When oil prices crashed four years ago, the IC revamped rules to allow for inactive waiver extensions.

Helms said he expected the inactive well numbers to decrease. However, companies "are deploying their resources for drilling and hydraulic fracturing, they are not deploying their dollars to return inactive wells to production."

The state may have entered "a new normal" where 850-900 drilled but uncompleted wells and 1,500 inactive wells become the norm. "Those are not the type of numbers a regulator wants to see, so we have already had our field staff in to meet last week and discuss the issue. One of the big concerns on the mind of the field inspectors is the rising number of inactive wells."

North Dakota is not the only state struggling with high inactive well counts. "Almost every state I have talked with is struggling with the same problem, and some of the Canadian provinces have it tenfold -- what we are dealing with,” he said. “Stay tuned. We are all thinking collectively on how to deal with the problem and it is frustrating."

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