|
GAO wants better BLM well oversight
Says agency does not have adequate information regarding its liabilities for well plugging and abandonment; recommends improvements
Alan Bailey Petroleum News
A Government Accountability Office report has recommended that the Bureau of Land Management needs to improve the oversight of its potential liabilities with respect to abandoned oil and gas wells on federal land. The report says that BLM’s liabilities are probably increasing and makes recommendations for improved data collection, to enable a better understanding of liability levels and to enable a better evaluation of the adequacy of bonding requirements for well operators.
Essentially, a well operator is responsible for plugging and abandoning a well that has reached the end of its useful life: The operator must plug the well effectively and reclaim the land around the wellhead. BLM requires the operator to post a surety or personal bond for the well, to cover the estimated cost of plugging and abandonment. But if the operator fails to conduct the plugging and abandonment adequately, perhaps because of bankruptcy, BLM becomes liable for any outstanding plugging and abandonment costs above the level of the well bond. And the well becomes designated as “orphaned.”
Liabilities unclear The GAO report says that, because of inconsistencies in the manner in which different branches of BLM collect data, and because of inadequacies in data management, the agency does not have a clear understanding of its outstanding liabilities. And, in particular because of the growing number of wells on BLM land, those liabilities are likely increasing, the GAO report says.
BLM does not keep comprehensive records of how much money it has spent on reclaiming orphaned wells, nor does the agency keep systematic historical records of the numbers of orphaned or inactive wells, the report says.
And one particular issue is inconsistencies between different field offices in the manner with which officials conduct and record well reviews, given the lack of a documented standard for what a well review means and entails, the GAO report says.
Recommendations GAO has recommended that BLM needs to more thoroughly track the actual costs that the agency incurs for the reclamation of orphaned wells. BLM also needs to maintain a time indexed inventory of orphaned and inactive wells, to enable an assessment of the agency’s potential liabilities. And the BLM director should develop and communicate specifications for what constitutes a well review, for the purpose of annual reporting.
GAO has also recommended improvements to BLM’s data management, including the checking of data quality.
BLM should also ensure that its well bonding policies adequately reflect the overall risks presented by well operators. And the agency should develop a resource management plan to ensure the appropriate availability of resources for conducting bond adequacy reviews and reclaiming orphaned wells - a number of BLM officials had told GAO investigators that, with limited BLM staffing available, priority had to be placed on meeting statutory deadlines for processing well permit applications, rather than on dealing with reviews of bonding adequacy.
Bonding requirements There are also issues with regard to maintaining adequate minimum requirements for bonding amounts: While bonding amounts have not kept pace with inflation over the years, some BLM officials expressed a view that most well operators would not be able to remain in business, were bonding amounts to reflect the total costs of well reclamation, the GAO report says.
The BLM has in general concurred with the GAO findings and has told the GAO that it will take actions to address the areas of concern. However, commenting that it already has an annual work planning process that addresses the allocation of agency resources, BLM requested further information about what GAO envisages as a required resource management plan.
|
