Wyoming split-estate law to be tested

A Johnson County rancher will be the first landowner to use Wyoming’s new split-estate law to challenge oil and gas development on his ranch.

Steve Adami is scheduled to take his case before the state Oil and Gas Conservation Commission Dec. 6 in Casper.

In a letter Nov. 2, Adami asked the commission to increase the amount of bond money Gillette-based Kennedy Oil must put up for reclamation of off-channel water pits related to natural gas wells on his ranch east of Buffalo.

“The appeal to the Oil and Gas Commission is not whether to build the pits but whether the bonds are adequate,” Adami said.

Kennedy Oil owner John Kennedy maintains Adami’s claims are off-base and any reclamation will be properly done no matter the amount of bond money.

Reclamation has “always been taken care of and always will be taken care of in the future regardless of what bonds are being put up,” Kennedy said.

Kennedy Oil has posted $500 of bonding with the commission under the split-estate act for the off-channel pits that will be used for water from the wells, said Ruth Reile, who operates the permit for Kennedy Oil. A split estate is when the surface land and the minerals underneath have separate owners.

Adami wants the bonding level closer to $100,000 per well, a figure Kennedy said is too high.

“The reason it’s $500 is because we’ve already posted reclamation bonds,” Reile said. “The only thing that’s left out there is the value of the grazing because there’s no tangible improvements or growing crops.”

Adami counters that the cost of reclamation is higher. Documents Kennedy filed with the commission show reclamation costs to be $83,809.

The Oil and Gas Commission approved separate reclamation bonds for that amount on Sept. 29. It covers the cost of reclaiming the six pits.

Don Likwartz, director of the Oil and Gas Conservation Commission, said the question that will be brought before the five-member commission in December is whether the $500 blanket split-estate bond is adequate.

Adami can challenge the commission’s decision to the District Court, Likwartz said.

The water pits are on hold until the issue between Adami and Kennedy is resolved, Reile said.

—The Associated Press