Who Will Clean Up An Estimated $1.6 Billion In Abandoned Oil Wells & Tanks In NM? It Won't Be The Oil Companies

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The two holes, the stink and a few massive piles of dirt were about all that remained of a facility — known as a tank battery — that treated oil from 30 nearby wells for decades. In addition to the separator and sludge pit, the site was home to seven cylindrical green tanks the size of small grain silos, a decades-old tanker truck with flat tires, several plastic barrels and dozens of ruptured, unlabeled, cube-shaped tanks leaking mystery chemicals. That’s mostly gone now, except for the white and yellow chemical staining on the ground where those cubical tanks leaked. “I can’t believe they didn’t dig that all out,” Fosdeck said.

For a few years, all of this belonged to Chuza Oil, which went bust in 2018, leaving the wells, tank battery and other equipment to bake in the high desert sun. In 2022, Fosdeck, Mike Eisenfeld of the San Juan Citizens Alliance and local rancher Don Schreiber identified the remote site covered in abandoned wells and leaking equipment and began nagging federal and state officials to do something about it. This spot in the Hogback exemplifies a worrying, expensive trend in New Mexico’s changing oilfield remediation landscape, where well operators declare bankruptcy and abandon highly contaminated and dilapidated facilities for state and federal agencies to clean up. It’s a national trend that sweeps from the country’s first oilfields in Pennsylvania to the California coast.

Currently, New Mexico pays contractors as much as $165,000 to plug an old oil well, according to the Oil Conservation Division, the state’s primary oil and gas regulator. That’s $65,000 more than the Division reported paying just three years ago. A recent report by the state’s Legislative Finance Committee warns that New Mexico could be on the hook for up to $1.6 billion in cleanup costs in coming years from bankrupt oil and gas companies and rising plugging costs. (The report also gave the Oil Conservation Division a tongue lashing over “inconsistent cost control” in its oilfield remediation contracts.) And while the report does talk about cleaning up tank batteries — and describes three very expensive examples — it doesn’t mention how many more may be lurking in the state’s oilfields, or what they could cost the state in the future.

Well plugging involves pulling old equipment out of the ground and scraping and flushing the wellbore before sealing it. So when a contractor arrives on site, often, “Nobody knows what they’re dealing with because it’s subsurface,” said Jason Sandel, the president of Aztec Well Servicing. Pipes rust. Pipes break. Wells might be shallower or deeper than recorded. After the pipe comes out, the contractor injects a series of cement plugs underground to keep oil, gas and other contaminants from migrating to water-bearing formations. A tank battery has none of that, so at first glance cleaning one up looks like the easier task. But that’s not necessarily the case. The Chuza Oil tank battery site covers only about half an acre, and according to the Oil Conservation Division, the cleanup operation is on track to cost more than $650,000, much of that incurred because it was necessary to dig out and truck away the contaminated soil where the separator leaked at the remote location.

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https://capitalandmain.com/new-mexicos-billion-dollar-oilfield-orphans