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Wyoming seizes idle coalbed methane wells

World Coal,

The US state of Wyoming has seized almost 3000 idle coalbed methane (CBM) wells from High Plains Gas. The CBM company failed to come up with a US$ 6.8 million bond. High Plains had been given 120 days to find additional bonding.

The seizure of the idle wells was, to a degree, the expected outcome of what has been a long-running saga. However, last week High Plains surprised many onlookers when it released a statement vowing to keep hold of its wells, saying it had procured the necessary funds to do so.

The validity of the company’s statement now seems in question, as the Wyoming state oil and natural gas regulator said High Plains ultimately failed to meet the terms of an order issued by the regulator in the summer.

Ed Presley, the CEO of High Plains, repeatedly told reporters and Wyoming state officials that the company was waiting on an unidentified silent partner to finalise a letter of credit. The state, for its part, extended the bond payment deadline because a payment appeared imminent.

The move by the Wyoming Oil/Gas Conservation Commission (WOGCC) and supervisor Mark Watson means the state will pull nearly US$ 8 million in bonds that High Plains already had in play with the state. Officials indicated those funds will be applied toward the cost of plugging the High Plains Gas wells.

Company officials have been unavailable for comment, although Presley has intimated previously that, in the event of any seizure of wells, he could begin a lawsuit against the state. He argues that statement by Wyoming officials expressing doubts about the company hurt its ability to raise money.

Wells plugged

Among the High Plains wells, there are 2200 fee and state wells that the WOGCC is responsible for plugging, Watson said. There are 46 injection wells under the jurisdiction of the Wyoming Department of Environmental Quality and 721 federal wells. He said the state would “begin plugging these wells after the original 1,200 orphan wells are plugged.”

Oil and gas companies in Wyoming are required to pay bonds on wells they drill to cover reclamation costs. If a well stops producing, the state seeks an additional bond because the likelihood of bankruptcy is higher.

Bruce Hinchey, president of the Petroleum Association of Wyoming (PAW), said after repeated efforts by the state to give High Plains more time, officials said, "that's it." PAW supports the statewide effort to plug abandoned wells and for members pay a tax to support the effort. "We definitely support the ongoing tax until all of these wells are plugged,” he said.

Edited from various sources by Sam Dodson

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