On Friday, the Government Accountability Office (GAO) released a report, Oil and Gas Bonds: BLM Needs a Comprehensive Strategy to Better Manage Potential Oil and Gas Well Liability.
The Western Organization of Resource Councils (WORC) said the report confirms their 2005 assertion that bond amounts assessed energy companies are less than potential clean-up costs after a well has gone dry and that reclamation plans rarely cover true clean-up costs.
Donald Nelson, a rancher/farmer from Keene, N.D., issued the following a statement on behalf of WORC in reaction to the GAO report findings. Nelson also sits on the Dakotas citizen-based Resource Advisory Council, which advises the Bureau of Land Management on public land issues. Nelson’s statement said “This report confirms our contention that federal oil and gas bonding program needs an overhaul because bonding levels are too low and present a huge liability for the American taxpayer. Bonding reform would reduce the odds that taxpayers will have to pay for the clean up of oil and gas projects in the event of default by energy companies, and it would help ensure proper reclamation of drilling sites. As a landowner in the oil and gas drilling fields, I strongly encourage the BLM to fully implement the GAO’s recommendations and to ensure that oil and gas companies pay the full cost of reclaiming drilling areas.”
In its latest report, GAO found that the Bureau of Land Management has not consistently implemented its policies for managing potential liabilities from idle, unreclaimed oil and gas wells. For example, 13 of the 33 BLM field offices GAO interviewed reported that “they either did not conduct any reviews or did not know the number of reviews conducted” on the adequacy of bonds set for federal oil and gas leases.
In addition, GAO reported 11 of the respondents had not conducted any reviews of the status of idle or orphaned wells in one or more years out of the last five.
To improve management of potential liability of federal land, GAO recommended that the BLM should develop a comprehensive strategy to increase bonding over time; improve its data system to ensure complete and consistent well records; and better monitor agency performance in reviewing bond adequacy and idle wells.
According to GAO, the BLM has agreed with the report’s recommendations and said the agency has moved to address the completeness and accuracy of its oil and gas data.
The complete GAO report is available at http://www.linkup2.me/oilandgasbonds .