Focus: In Colorado, oil firms fix leaky wells ahead of new rules

PDC Energy

14/11/2022 11:00

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      Chevron allocates 16 drill rigs to plug old wells
    

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      Some oil companies see a business sealing others' gas
leaks 
    

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      Proposed EPA rules to encourage methane whistle-blowers   
    

  
    By Liz Hampton
       KERSEY, Colo., Nov 14 (Reuters) - Northern Colorado's
biggest oil producing region is emerging as a test case for
energy companies hoping to tackle the industry's most pressing
regulatory and environmental problems: capping old wells that
leak climate-warming methane and other emissions. 
    In this farming community, oil giant Chevron Corp is sending
crews as part of a state-wide push to seal leaks. Once wells are
plugged with cement and equipment is removed, workers restore
the land to its original state.    
    Colorado, the fifth largest U.S. oil-producing state, has
been in the forefront of anti-drilling sentiment spreading
across the country. Voters have set limits to operations near
homes and schools, banned routine burning of unwanted gas, and
imposed restrictions on fracking chemicals.
        Energy companies are being urged to reduce emissions by
cities, investors and governments. Federal rules that will
require them to monitor and report on climate-warming methane
emissions from larger wells are expected early next year. 
        Last week, U.S. officials pledged to expand those rules
to require firms to find and plug leaks from every well no
matter how small, and to respond to any complaints of
high-volume leaks. 
    Chevron Corp is running 16 "workover rigs" that do  well
removal. It plans to deconstruct and plug some 500 old wells in
Colorado each year. That work, along with new equipment to clean
oil operations, will reduce greenhouse emissions by about
100,000 U.S tons a year, the company said, roughly the same as
21,7000 cars. 
        Chevron estimates it spends between $80,000 to $100,000
apiece to plug and remove a well and leftover gear. 
    'EVOLUTION' IN DRILLING
    Since 2016, Chevron has removed 3,400 wells in the state and
aims to do another 2,200 over the coming years, part of its
effort to make oilfields more green. Companies are also
employing electric- instead of diesel-powered rigs, eliminating
routine flaring and piping production instead of using heavy
trucks.
    "We've got lower emissions, we have lower ground
disturbance. So this is just part of that evolution of what
we're doing out here," said Hodge Walker, vice president of
Chevron's Rockies Business unit. 
    Critics say these initiatives are "green-washing" that
encourage more fossil fuel production that leads to more
emissions.
    Plugging old wells could also become big business for energy
and service firms given the sheer number of abandoned wells and
$1.15 billion in federal funding being made available to states
to seal them.
    In parts of Ohio, West Virginia, and Pennsylvania, natural
gas producer Diversified Energy turned its in-house
well-plugging unit into a for-profit business. It also removed
some 90 of its own at a cost of about $21,000 each in the first
half of 2022. It now aims to cap 200 of its own wells per year. 
        Such plugging program have comforted investors by
addressing wells that could endanger the public and become a
liability, said Diversified CEO Rusty Hutson. 
    But now, he sees a sizeable business from state and federal
monies directed to stopping methane leaks. The operation will
have 15 rigs and has already won contracts from West Virginia
and Ohio to plug orphaned wells that have no identified owners
and can leak methane. 
    Environmentalists say the efforts are overdue.
    "We learn to clean up our own messes in kindergarten. This
isn't something that deserves applause, it should be expected,"
said Anne Lee Foster, a Colorado environmental activist. 
    She said Colorado taxpayers have spent about $5 million a
year since 2018 to subsidize the cleaning up of abandoned wells.
    RESTORING FARMLAND  
    On a sunny October day, a Chevron crew in Kersey was mid-way
through removing a well drilled in 1992 on 78-year-old Bill
Klein's farmland. 
    The well, called the Patriot 16-12, is a vertical well that
pre-dates the shale oil revolution where new drilling techniques
helped propel the U.S. into a world-leading oil and gas
producer. 
    "I've never had any problem with the oil companies," says
Klein, who for 57 years has owned land around where Patriot
16-12 operated and has collected royalties from oil and gas
drilling. He plans to re-farm the land once the wells are safely
plugged. 
    That does not mean the oil industry is walking away from
Kersey. Several hundred feet from Chevron's plugging work, PDC
Energy Inc. is drilling a new, horizontal well, which can span
over 2 miles underground.
    PDC Energy and Chevron regularly share drilling plans to
avoid potential collisions that could provide a way for methane
to reach the surface. 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. unveils crackdown on methane from oil and gas industry    
https://www.reuters.com/business/environment/us-unveils-crackdown-methane-starting-with-oil-gas-rules-2021-11-02/
COP27: U.S. targets methane in 'relentless' emissions focus    
https://www.reuters.com/business/cop/biden-administration-toughens-crackdown-oil-industry-methane-2022-11-11/
Investors warn European companies over clilmate accounting     https://www.reuters.com/business/sustainable-business/exclusive-investors-warn-european-companies-over-climate-accounting-2022-04-04/
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 (Reporting by Liz Hampton in Kersey, Colorado; Editing by Anna
Driver)
 ((Liz.Hampton@thomsonreuters.com; +1 832 571 8115; Reuters
Messaging: Reuters Messaging: liz.hampton.reuters@reuters.net))