Todacheene says bonding updates will help San Juan County plug orphaned wells
Tighter bonding rules could shift orphaned-well cleanup costs off San Juan County taxpayers and onto operators. State estimates put about 5,000 wells in the risk pipeline.
San Juan County Commissioner GloJean Todacheene said New Mexico’s updated oil and gas bonding rules should give county governments a better chance to make operators, not taxpayers, pay for orphaned wells across the San Juan Basin.
Legislative materials put New Mexico at at least 121,000 drilled oil and gas wells, mostly in the San Juan Basin and the Permian Basin. The state has been stepping in to plug wells since the 1970s when operators walk away, and there is no consensus on when a well reaches the end of its life.
The Oil Conservation Division, part of the Energy, Minerals and Natural Resources Department, regulates oil and gas activity, gathers production data, permits wells, enforces state oil and gas statutes, and oversees the plugging of abandoned wells and the restoration of land. The division has plugging authority for about 700 wells, the state will likely need to plug about 1,400 inactive wells, and more than 3,000 low-producing wells are at risk of becoming orphaned. Together, that puts roughly 5,000 wells in the state’s cleanup pipeline.
Legislative and department materials put the current and near-future plugging and remediation liability at between $700 million and $1.6 billion. The proposed bonding amendments are meant to require financial assurance that better reflects the actual cost of plugging a well, reduce the chance that a well becomes orphaned, require temporarily abandoned wells to return to beneficial use within a reasonable period or be plugged, and protect the state from risky transfers of wells to weak owners. Orphan wells can contaminate groundwater or cause surface pollution if casing or equipment fails, which leaves landowners and nearby communities exposed while cleanup timelines stretch. New Mexico received a $25 million orphan-well grant that took effect Oct. 1, 2022, and the first plugging under that initiative began Oct. 31, 2022, on a well east of Hobbs in Lea County. New Mexico received $43.7 million through the federal Infrastructure and Jobs Act for orphan-well cleanup.
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