LA Oil, Gas Well Regulation ‘Inadequate’

Tuesday, June 10, 2014 @ 02:06 PM gHale

Over 50 percent of the oil and gas wells in Louisiana did not get an inspection within a three-year guideline set by the state, and more than 2,800 orphaned wells did not end up plugged as of July 2013, a state audit found.

Those are among the findings of an audit that cites the state Department of Natural Resources (DNR) Office of Conservation for inadequate management of oil and gas well regulation.

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The audit also found a failure to collect fines and a lack of information from well owners. The audit ended up released last Monday by the Louisiana Legislative Auditor’s Office.

The report said the state doesn’t require all operators to put up a financial security on their oil and gas wells, with only about 25 percent of all current wells required to do this. In addition, the financial security required is not enough to cover the cost of plugging a well if it ends up abandoned.

In a response to the audit, Commissioner of Conservation James Welsh wrote the office agrees with the findings, noting it has been struggling with how to write rules to require a financial security without leading to a large number of wells ending up abandoned.

“The concern was you would create a wave of orphans,” said Patrick Courreges, DNR spokesman.

Wells are orphaned when investigators cannot find a responsible owner or if the owner fails to maintain the structure.

For the most part, the Office of Conservation agrees with the audit findings and said the report highlights challenges the office has been trying to address.

“We see this as a validation and justification for getting into some new rule-making,” Courreges said.

In addition, the report outlines issues such as data management and developing a more formalized approach to inspections, enforcement and information tracking.

The report will add to what the Office of Conservation will find in a study of orphan well regulations and rules called for by House Concurrent Resolution 102, which passed in the most recent legislative session, he said.

The audit also points to a problem with the timeliness of inspections, finding 53 percent of oil and gas wells from fiscal years 2008 through 2013 did not have an inspection within the three-year guidelines set by the commissioner.

About a quarter of oil and gas wells did not have an inspection \at all during this time.

Courreges said the priority is to look at risk when assessing where inspections should take place, and the boom in drilling in the Haynesville Shale meant more effort went there instead of trying to meet the three-year inspection guidelines. Actively drilling wells pose more of a potential problem than wells that already exist, he said.

According to the report, the Office of Conservation says its ability to meet inspection goals ended up affected by budget cuts, loss of staff, hiring freezes, hurricanes, the Haynesville Shale boom and the BP oil spill.

The report outlines another potential reason for the inspection problems: The office hasn’t been effectively managing the inspection process or monitoring districts to make sure the goals of an inspection every three years.

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