State inspectors are launching efforts to require oil and gas companies to properly close hundreds of unused wells scattered across Alaska that stopped producing long ago.
Cathy Foerster, the Alaska Oil and Gas Conservation Commission chairwoman, acknowledged that the agency has sometimes been lax about requiring operators to permanently shut down the old wells, some of which date back to the 1960s.
But the agency is initiating a two-part effort that is expected to lead to the permanent shutdown of some wells and requirements for bigger surety bonds to protect the state if the wells aren't properly plugged with cement before they're abandoned.
Some unused wells exist on the giant fields operated by companies with deep pockets, near active wells. Companies such as BP, operator of the Prudhoe Bay oil field, have kept track of old wells and made sure they didn't develop problems, Foerster said. The agency has not always pushed those major companies aggressively to close those wells now because the agency recognizes that the companies could save money by sealing them all at once someday.
But the regulators have grown more concerned about unused wells in general, as small and new operators with limited cash struggle to survive in Alaska. Some have entered bankruptcy proceedings in recent years, as low oil prices have shrunk capital available to launch new projects and boost cash flow.
The AOGCC will hold a public hearing Tuesday on the idle wells, at 10 a.m. at its offices in Anchorage. Last week, it held a similar meeting to begin addressing what Foerster has called the state's "paltry" bonding requirements.
Foerster likened some unused wells to old cars left abandoned beside the road because proper disposal was too expensive.
"We have a lot of cars on the side of the road," she said.
This state effort is separate from the federal Bureau of Land Management's ongoing work to clean up "legacy" wells dotting the 23-million-acre National Petroleum Reserve in Alaska. Federal agencies drilled exploration wells there dating back to the 1940s, often leaving equipment behind.
The AOGCC has pushed to have that work done. This new effort is attacking old wells outside the NPR-A, on state, private or federal land.
There are 725 unused wells more than a year old that have not been permanently closed, said Hollis French, one of the agency's three commissioners. That's up from 516 in 2007, a 40 percent increase in 10 years.
Foerster and French said none of those wells is leaking, as far as they know.
The expense of dealing with each well can vary greatly.
French said the state's surety-bonding requirements are a problem. A company may own several wells but is required to hold only $200,000 in bonding to protect the state if it can't afford to plug and abandon each well, French said.
Some wells may cost millions of dollars to permanently close, others $100,000. Remote locations sharply boost expenses as gear, people and materials are hauled in.
Steps involved in plugging and abandoning include the removal of surface pipe-work, closing wells with cement to prevent leaks, and installing a metal identification plate.
French said the latest report he could find on the problem was produced by the Legislature's budget and audit committee in the early 1990s. Even then, bonding to protect the state was "woefully" inadequate.
"It's been on our to-do list for a long time," he said.
If companies don't have money to pay for the work, the state, currently facing multibillion-dollar deficits, could be on the hook.
"I don't think our budget is in any condition to say, 'Give me another $25 million to plug and abandon these wells on the other side of Cook Inlet that I have to barge equipment to,' " said Foerster.
Plugging and abandoning wells would have been the wrong decision in some cases, Foerster said. Some wells that were not permanently sealed have been re-used, as drilling techniques evolved and operators resumed oil or gas production. But many wells, unused for decades, raise doubts they will ever be reused.
One immediate concern is Aurora Gas, created in 1999 and operating onshore gas fields west of Cook Inlet. The company is currently involved in bankruptcy proceedings, raising questions about whether 19 wells it owns will soon need plugging and abandonment.
Lois Epstein, Arctic program director for The Wilderness Society, is pleased the state is tackling the issue. She said bonding requirements must be set high enough so they don't need to be set again as inflation erodes the value of the bond.
"There are wells in the Gulf (of Mexico) having ongoing leaks, and that probably makes people like Cathy (Foerster) nervous," said Epstein.
Foerster said the agency plans to work with operators on a plan and timeline. Some wells can be kept on standby, with clear plans for their future use.
Foerster said BP, operating Prudhoe Bay on behalf of ExxonMobil and ConocoPhillips, has proposed a plan to plug and abandon some of its wells. The agency is using that as a model for working with other companies, she said.
"The whole purpose is to do our due diligence," Foerster said. "I don't want to leave a mess and have people say, 'Why didn't she fix that?' "