Chronicle of an abandoned oil and gas well — one of millions

By Jonathan Thompson

Even from a distance it’s clear that an oil and gas well called “State Senate #2” in New Mexico has seen better days. The pumpjack sits idle, tumbleweeds surround the once-moving parts, and the earth smells of crude saturating the soil.

According to state records, this well last produced oil in 2007, and even then it was at a rate of about 25 to 50 barrels per year. Though the state inexplicably lists the well’s status as “active,” it’s not. And the listed owner is a company that no longer exists in any solvent form.

In other words, State Senate #2 meets the criteria for an “orphaned” oil and gas well. It’s just one of more than a million such wells nationwide, which are a growing environmental threat resulting from decades of policy failure by state and federal regulators.

“Orphaned” is an inaccurate term. The parent companies that originally drilled and profited from these wells mostly didn’t die—they fled. Once the wells stopped making money, they were sold to smaller, less solvent companies that then vanished into a haze of bankruptcy. The unplugged wells were left to ooze methane and other nasty stuff with no one around to clean it up.

It’s abandonment, plain and simple.

The State Senate #2, for example, was originally drilled by Standard Oil Co. of Texas — yes, that Standard Oil — back in 1960, but the hole was dry, so workers plugged it and moved on. Two decades later, Raymond E. Sitta, Jr., took over the lease and applied for a permit to reopen the well. When oil came bubbling out, he named it State Senate #2.

After Sitta died in 2008, his estate sold the well to BIYA Operators, a local mom and pop company, which sold it in 2014 to Colorado-based Diversified Resources.

Three years later, Diversified filed for Chapter 7 bankruptcy and abandoned its interest in all the mineral leases in the Horseshoe Gallup field. That’s how State Senate #2, along with some four-dozen other wells and a leaky pipeline network, became wards of the state.

It’s a common story. The Horseshoe Gallup field is rife with such stories. Another group of wells down the road changed hands several times before being acquired by Chuza Oil, owned by the Dallas producer of a reality television show called Cheaters. Now Chuza is bankrupt, and its wells and assorted other detritus are a methane-oozing mess.

The pattern repeats across New Mexico, Colorado and Utah. Wyoming has at least 1,500 “orphaned” wells.

In theory, the companies took care of the cleanup tab as a condition of their drilling permit. In reality, the required bond amounts don’t get close to covering the costs. The Bureau of Land Management, for example, requires an operator to put up just $10,000 per individual well. Bigger operators can take out a single, $150,000 blanket bond that covers all of their wells — whether it’s five or 500 — on public lands nationwide.

Yet the average cost to plug and reclaim a single oil and gas well, according to a 2021 study, is a whopping $76,000, with costs for deeper wells shooting up into the hundreds of thousands of dollars. That would add up to a $3.8 million cleanup bill for Chuza Oil’s 50 wells in the Horseshoe Gallup field.

Court records show the company’s reclamation bonds with the Navajo Nation and federal government add up to less than $130,000, or about $2,500 per well. That means federal taxpayers — you and me — are on the hook for the remaining $3.7 million and change. And that’s just for one company’s wells in one location.

Equally maddening is that the regulators must have seen the warning signs but didn’t — or couldn’t — act to make the responsible parties take responsibility while they were still somewhat solvent.

The 2021 Infrastructure Investment and Jobs Act authorized $4.7 billion in federal funds for cleaning up abandoned oil and gas wells. On the one hand, it’s necessary to end this massive threat to the climate, the environment and public health.

But the truth is that it’s also a corporate bailout.

The antiquated federal royalty rate of 12.5% must be jacked up considerably — 25%, anyone? — to bring it in line with what states charge. A portion of the royalty should also go into a reclamation fund so that corporate owners pay to clean up the messes they leave.

Jonathan Thompson is a contributor to Writers on the Range, writersontherange.org, an independent nonprofit dedicated to spurring lively conversation about the West. He is the editor of the Land Desk and a longtime Western journalist.

Abandoned well, Jonathan Thompson image

This column was published in the following newspapers:

03/06/2023 Vail Daily Vail CO
03/06/2023 Montrose Daily Press Montrose CO
03/06/2023 Steamboat Pilot Steamboat Springs CO
03/07/2023 Carlsbad Current-Argus Carsbad NM
03/07/2023 Salt Lake Tribune Salt Lake City UT
03/07/2023 Denver Post Denver CO
03/07/2023 Boulder Daily Camera Boulder CO
03/07/2023 Yahoo sunnyvale ca
03/08/2023 Sierra Nevada Ally Carson City NV
03/08/2023 Greeley Tribune Greeley CO
03/08/2023 Kingman Daily Miner Kingman AZ
03/07/2023 Lake Powell Chronicle Page AZ
03/08/2023 Wyoming Tribune Eagle Cheyenne WY
03/09/2023 Sky-Hi News Granby CO
03/06/2023 Marinscope community newspapers Marin County CA
03/09/2023 Aspen Daily News Aspen CO
03/10/2023 St. George Spectrum St. George UT
03/09/2023 Moab Times Independent Moab UT
03/10/2023 Idaho Mountain Express Ketchum ID
03/09/2023 Twin Falls Times News Twin Falls ID
03/11/2023 Four Points Press Garryowen MT
03/12/2023 Summit Daily frisco co
03/09/2023 Cortez Journal Cortez CO
03/16/2023 The Daily Yonder Whitesburg Ky
03/23/2023 Pagosa Springs Sun Pagosa Springs CO
03/09/2023 Durango Herald Durango CO
03/07/2023 Craig Daily Press Craig co
03/14/2023 Arvada Press Arvada Co
03/14/2023 The Golden Transcript Golden Co
03/14/2023 Jeffco Transcript Jefferson County CO
03/12/2023 Bandon Western World Bandon OR
03/16/2023 Del Norte Triplicate Crescent City CA
03/19/2023 Curry Coastal Pilot Brookings OR
03/21/2023 Clear Creek Current Idaho Springs Co
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T. Lee Brown
11 months ago

Very interesting article. The way our country is completely hamstrung by Big Oil, our blood full of microplastics, our landscapes dotted with dead oil wells… it’s just awful. I think Step #1 toward improvement would be getting the Citizens United decision repealed or having Congress pass legislation specifying that corporations are not “people” with rights pursuant thereto…

Kathleen O'Connor
11 months ago

So infuriating…

Pete rozowski
11 months ago

The title of the article is at best misleading, at worst wrong. There are only 1.2 MM oil and gas wells in the US, a little less than 1 MM operating and less than 130,000 abandoned. This is still a lot. https://thehill.com/policy/energy-environment/588398-interior-us-has-twice-as-many-abandoned-oil-and-gas-wells-as/

the specific well discussed was clearly articulated by the author that the company that drilled it followed the desired procedure and plugged the well (typically pumping cement into the well 6” steel casing) to blocked any potential flow from the ground to surface. What looks to be an individual bought the lease, received a permit from the state and drilled out that plug and produced oil for some time. This is not “big oil”.

this is not meant to excuse operators of the wells from monitoring emissions both during operations and after being idled/shut in. Gas stations across the country have potentially even a worse issue since they tend to be in urban areas. Many auto body shops have used solvents for 10s of years and likely have soil contamination.

while is easy to vilify “big oil” remember it is all of us that buy and use the products that they provide us.

Pete rozowski
11 months ago
Reply to  Dave Marston

The U.S. has more than double the amount of abandoned oil and gas wells than previously thought, according to a preliminary analysis by the Interior Department.

In a memo Wednesday, the department said there are currently more than 130,000 documented abandoned, or orphaned, wells. Comparatively, a 2019 report from the Interior documented a total of 56,600 orphaned wells across 30 states. Across the entire country they found that the number of abandoned wells in that report ranged from zero to 13,226.

Pete rozowski
11 months ago
Reply to  Pete rozowski

The reference for the Reuters article is this. https://www.epa.gov/sites/default/files/2018-04/documents/ghgemissions_abandoned_wells.pdf

there is a lot of guesswork in that study, I would not trust it. Let’s do some simple math. 2014 was one of most prolific years for well drilling in the US. 30,000 wells were drilled. I can guarantee very few wells drilled in the last 10 years have been abandoned. While the technology did not exist even in the last 50 years, let’s assume that from 1914 to 2014, 30,000 wells were drilled every year. That amounts to 3,000,000 wells. 3.3 Million if you count the last 10 years. Subtract 1 million current operating and you have 2.3, which is what EPA is claiming. That is nonsense. I do agree that the 160,00 quoted in the hill article from the Dept of interior seems low but it may be in the definition of what is considered abandoned. Most operating units have large amounts of non operating wells at any given time but they are monitored and maintained, not abandoned with no owner.

Dave Marston
11 months ago
Reply to  Pete rozowski

The first oil well was drilled in Titusville Pennsylvania in 1859.

Dave Marston
11 months ago
Reply to  Pete rozowski

The first natural gas well was drilled in 1821, Fredonia, Chautauqua County, New York. 200 years of drilling for natural gas.

Do you want to redo your above calculus?

Meanwhile, the United States was the biggest oil producer in the world until the 1920s. Why did you leave out early history? Would that skew your math?

Pete rozowski
11 months ago
Reply to  Dave Marston

No, it wouldn’t, just like counting cars produced before 1900 in the total population of cars. The first oil well you refer to was less than 100 ft deep and took several months. Now they go down 10,000 ft, turn 90 deg and go a few miles horizontally in less time. So, not counting the few wells before 1914 does not matter much. In 1920, the US produced about 1.5 MM bbl/day. Today we produce over 13 MM. my 3 mm number was already extremely over conservative as there was no way we were drilling more than 10,000 wells/day even 50 years ago.

Dave Marston
11 months ago
Reply to  Pete rozowski

In 1981, there were over 90,000 wells drilled in the US. The US was the top oil producer in the world until the late 1970s. We drill a fraction of the wells we drilled in the 1940s, 1950s, etc. Everyone is entitled to their own opinions but not their own facts. https://www.eia.gov/totalenergy/data/annual/showtext.php?t=ptb0405

Pete rozowski
11 months ago
Reply to  Dave Marston

Great investigative journalism, Mr Marston! I wonder if the author of this article did the same? Note, your googling skills do not match the reality of the situation. 1) dry holes (25% of early wells) do not constitute a high threat, 2) non operating wells are different than abandoned wells, 3) good practice would include cementing of the non operating wells (as noted in the article was done for this specific well). I stand by my “opinion” that “millions of abandoned wells” is overstating the reality

Ted
11 months ago

Great article. Tell it like it is. Currant administration is destroying our county.

Lori Bryan
11 months ago

My name is Lori Bryan I live in Durango Colorado. I’ve just read your article in the Durango Herald on the abandon oil and gas well – one of millions. I forwarded this article to our county commissioners along with several others. We are having a planning commission meeting tomorrow regarding setbacks for our county for oil and gas wells. I have pushed hard for strict setbacks and regulations here in La Plata County, I was wondering if you live anywhere near here and would be able to make this meeting tomorrow? Or contact our counselors, Marsha Porter-Norton, Matt Salka, Clyde Church, and encourage them to use this moment in time to make a huge statement to regulate and reign in the gas industry. The meeting is tomorrow at 6 PM in downtown Durango at 1101 E. 2nd Ave.
I’ve already spoken once at the last planning commission meeting and I plan to speak again I’m a member of San Juan Citizens Alliance and have been for as long as they’ve been a nonprofit here in Durango.
thank you again for writing such an insightful article and laying bare the greed and lies of the gas industry.
Lori Bryan
970–759–9220
rivercat62@gmail.com

John B
11 months ago

Thank you and continue the great reporting!

Writers on the Range: Chronicle of an abandoned oil and gas well — one of millions | SummitDaily.com
11 months ago

[…] story is from WritersOnTheRange.org. Jonathan Thompson is a contributor to Writers on the Range, an independent nonprofit […]

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