North Dakota officials are attempting to address the nagging problem of abandoned oil wells at a time when robust Bakken Shale growth continues unabated.
The three-member Industrial Commission headed by the governor last week approved a series of draft rules by the Department of Mineral Resources (DMR). The rules are set for hearings in October, with the plan to implement regulations by April.
DMR Director Lynn Helms stressed that in most cases the problem revolves around uneconomic wells that operators may sell. Under existing rules the sold wells must be fully bonded by the buyer.
The North Dakota Energy and Environmental Research Center’s John Harju, vice president for strategic partnerships, said abandoned wells for the most part are legacy conventional wells completed before unconventional drilling techniques took hold.
More than three decades ago North Dakota established a restoration fund for abandoned well plugging sites to cover cases in which no responsible party could be identified, Harju told NGI's Shale Daily. In 2013, the statewide fund was further augmented by including revenue from a portion of state-collected oil and gas production taxes.
Many of the wells are "temporarily abandoned," but the assets hold potential for carbon dioxide capture and enhanced oil recovery (EOR) techniques, said Harju.
"The notion of preserving that potential asset, especially in those areas that hold promise for EOR is easily accommodated," he said.
It could be prudent for the state to require operators’ plans "regarding the use of a seven-year time frame," Harju said. It would also "better inform key stakeholders regarding individual wells' and oilfields' futures."
Two of the draft changes to the rules would increase bond coverage to $100,000/well and add a fourth eligible category of "temporarily abandoned" for more than seven years.
The rules also provide regulations on dry hole wells not properly plugged, properly plugged wells on sites that have not been reclaimed properly, as well as on abandoned wells not properly plugged and sites improperly reclaimed.