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Landowners' report warns of 'looming' costs of North Dakota's orphaned oil wells, criticizes well plugging program

In a report summarizing some 70,000 pages of public records, the Northwest Landowners Association argued that a North Dakota program planning to use $66 million in CARES Act funding to reclaim old oil wells has been rushed and cut corners.

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A crew works on plugging Federal 3-32X, an abandoned oil well confiscated by the state of North Dakota. The well, first drilled in 1978, is southwest of the town of Watford City, in the Little Missouri National Grasslands. The state devoted $66 million in CARES Act money to plug abandoned wells and reclaim polluted land. (Erika Bolstad/Pew Charitable Trusts/TNS)

BISMARCK — A coalition of North Dakota landowners released a trove of public records Tuesday, Oct. 26, that they argue reveals worrisome shortcomings of a North Dakota program that put tens of millions of dollars in federal coronavirus relief money toward cleaning up old oil wells.

In a report on the findings, the Northwest Landowners Association, a small group that successfully overturned a 2019 state law backed by the oil industry earlier this year, said the shortcomings of a state program planning to use $66 million in CARES Act funds to plug and reclaim abandoned oil wells proves the state has underestimated the magnitude of environmental damages that are being left behind by oil companies.

“There is a large, looming problem on the horizon. If you do not address it, you will leave the landowners holding the bag,” said Northwest Landowners Association President Troy Coons in a press conference on his group's findings Tuesday.

Coons’ organization drew on some 70,000 pages of records it obtained on the well plugging program, which he said revealed a pattern of unfinished jobs and mounting evidence that the state's old oil wells' problems are "a lot more expensive than was being admitted to.”

In the early months of the pandemic, a small group of North Dakota leaders and lawmakers approved the use of tens of millions of dollars out of the state’s $1.6 billion in CARES Act funding to plug and reclaim old oil wells , many of which were drilled decades ago. State leaders and oil industry officials pitched the program as a way to address a longstanding, unresolved issue in legacy oil fields while also putting people to work in western North Dakota, where many lost their jobs in the wake of 2020's oil price collapse.

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While the Northwest Landowners argued that the idea was well-intentioned, they said it took oil companies off the hook for responsibilities to the farmers and other property owners they lease land from in western North Dakota and failed to address underlying regulatory problems that allowed for the accumulation of orphaned oil wells in the first place.

The North Dakota Oil and Gas Division, which oversees the well plugging program, did respond to a request for comment by Tuesday afternoon. A year ago, Oil and Gas Director Lynn Helms said longer-than-expected timelines left the the CARES Act program short of its original goal to plug and reclaim 380 oil wells before the onset of winter weather. Lawmakers approved a reallocation of some of those funds for fracking grants .

Under North Dakota law, the state can issue “blanket bonds” to oil companies, insurance that companies will pay for cleanup when they are done with a well. But the landowners said their report found the plugging and reclamation process is often significantly more expensive than the price on the bonds, making North Dakota's situation a warning for the "hundreds of millions or billions" of dollars in liabilities wrapped up in old oil wells around the country.

The state said it still has about $33 million of reclamation work to do, according to the report, but the Landowners Association argued that figure likely underestimates the true costs ahead.

And though the program was originally aimed at plugging “orphaned” wells — wells that no longer have an owner, leaving cleanup to the state — the report found many of the wells plugged and reclaimed have owners that are still operating. That allowed financially solvent companies to relinquish their environmental responsibilities to the state and to taxpayers, the report argues.

The group also found that, in some cases, old oil wells targeted by the CARES Act program have not been fully reclaimed. The report states some property owners reported having their land only partially restored from the presence of old wells, with companies telling them that they are not there to remove contamination from the ground.

“The future does not look very good if we’re not going to do the regulation,” added Bob Grant, treasurer for the Northwest Landowners. “Oil and ag can get along together, but you have to follow certain regulations.”

Just how frequently these jobs have been left unfinished is not clear from the report. The Northwest Landowners published all of the records it obtained on its website , and Coons said they are hopeful that think tanks, policymakers and journalists will comb through the findings to reach their own conclusions, as well.

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With North Dakota lawmakers slated to distribute another allotment of hundreds of millions of dollars in federal pandemic aid next month, Coons questioned how much of that funding will again go to benefit oil companies.

Readers can reach reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com .

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