Watchdog: Accountability

Audit: State regulation of wells inadequate

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News,Business,Watchdog,Accountability

BATON ROUGE, La. (AP) — More than half the oil and gas wells in Louisiana were not inspected within a three-year guideline set by the state, and more than 2,800 orphaned wells in the state have not been plugged as of July 2013.

The Advocate reports (http://bit.ly/1hvJUui ) those are among the findings of an audit that cites the state Department of Natural Resources Office of Conservation for inadequate management of oil and gas well regulation.

The audit, released Monday by the Louisiana Legislative Auditor's Office, also notes a failure to collect fines and a lack of information from well owners.

The report says the state doesn't require all operators to put up a financial security on their oil and gas wells, with only about 25 percent of all current wells required to do this. In addition, the financial security required is not enough to cover the cost of plugging a well if it ends up abandoned.

In a response to the audit, Commissioner of Conservation James Welsh wrote that the office agrees with the findings, noting the office has been struggling with how to write rules to require a financial security without leading to a large number of wells just being abandoned.

"The concern was you would create a wave of orphans," said Patrick Courreges, DNR spokesman.

Wells are considered orphaned when a responsible owner can't be found or if the owner fails to maintain the structure.

For the most part, the Office of Conservation agrees with the audit findings and said the report highlights challenges the office has been trying to address.

"We see this as a validation and justification for getting into some new rule-making," Courreges said.

In addition, the report outlines issues such as data management and developing a more formalized approach to inspections, enforcement and information tracking.

The report will add to what the Office of Conservation will find in a study of orphan well regulations and rules called for by House Concurrent Resolution 102, which was passed in the most recent legislative session, he said.

The audit also points to a problem with the timeliness of inspections, finding that 53 percent of oil and gas wells from fiscal years 2008 through 2013 weren't inspected within the three-year guidelines set by the commissioner.

About a quarter of oil and gas wells weren't inspected at all during this time.

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Information from: The Advocate, http://theadvocate.com

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