Last week Colorado’s political elite and their camp followers proclaimed the new $4.7 billion federal bailout for the oil industry to plug its old wells a “win-win” for the taxpayers. It is not. Clearly, this is public money that can’t therefore be put toward deeply needed public purposes, the list of which is embarrassingly long, but it is a win for the oil industry and people like Senators Bennet and Hickenlooper. These two of course are suddenly everywhere proclaiming the nation’s abandoned well problem solved, or nearly so, and praising themselves for their visionary part in it.
Bennet, a weathervane fiscal conservative, used to say, when he opposed some form or other of public spending, that he’d conferred with his young daughters, and they had told him they “didn’t want to pay for that.” Apparently, the kids do want to pay for Uncle Phil Anschutz’s old dried up wells–Bennet once worked for Anschutz as a corporate lawyer before being infected with the political virus.
Hickenlooper when he was governor was fond of saying he didn’t want to be the oil industry’s regulator. He wanted nothing adversarial, that he hoped for a friendly business partnership with the industry. His hopes have been realized, for the taxpayers are now partners with the oil industry, and will help cover the costs of closing the industry’s old, played out wells, whether they want to or not. The political class has spoken.
The cost of closing all the unplugged wells in this country has been conservatively estimated to be over $280 billion, so the chance this nascent plugging program will grow into another giant oil and gas subsidy program is great. Add to this that almost every politician, near and far, is singing its praises and you’ve got a corporate winner for sure.
As announced in most papers this week, Colorado is going to get $79 million, perhaps $39 million in the near term, from of the great $4.7 billion pot in the sky. This has caused some to wonder what the state will do with the remainder since the COGCC only asked for $47 million to close the roughly 500 orphaned-wells in its inventory. Wonder not, the state admits quietly that there are another 19,000 wells out there that produce nothing or nearly nothing and that if required to close these wells many of the owners would not or could not comply.
Governor Polis’s new 5-person professional commission picked to oversee oil and gas activity in the state has a plan for your money. They’re hell bent on creating an ” amnesty program” for the owners of the 19,000 zombie wells in the state spewing methane and toxins into the air. Many of these wells have gone through several ownerships as their production steadily declined. Still the present owner may have made millions in sucking the last drop from these wells, but never saved enough or never intended to close the wells when the faucet ran dry. Under their plan, these amnesty seeking deadbeats can just walk into the commission’s offices, give them the keys to their worthless wells, and the slate will be wiped clean. Some may think that amnesty is a thing granted criminals.
The Marc Rich case from the ‘80s comes to mind. A commodities trader indicted by a grand jury for 50 counts of wire fraud, racketeering, and $48 million in tax evasion, he’d been on the lam for almost 2 decades shuttling back and forth from his chateau in the Swiss Alps to his mansion on the Spanish coast. Bill Clinton pardoned him in the last days of his presidency. Rich had primed the pumps by giving millions to the Democratic Party, the Clinton Foundation, and Swiss, Spanish, and Israeli causes.
A more recent case is Donald Trump’s pardon of his son-in-law’s father, Charles Kushner. The elder Kushner had plead guilty to 18 counts of filing false tax returns, of lying to the Federal Election Commission, and of retaliating against a federal witness, who just happened to be his own brother in law.
Governor Polis’s new commsionsers will not require millions in payola to a political candidate, party, or foreign country, and a connection by marriage or blood to the Governor and his family will not be required to enjoy the fruits of the State’s proposed oil mogul amnesty program. To get Colorado’s proposed get-out-of-jail-card, millionaire oilmen who want to retire and save themselves all cleanup costs associated with their dirty business need only apply. Is there a penalty you ask? Well, yes, they’ll have to promise the state they won’t do it again. (The industry scam of not paying costs, just wringing out the last ounce of profits, is explained in all its lurid details in a Bloomberg article from last October entitled, It Pays not to Pay Your Debts.)
The new commissioners at the COGCC claim amnesty for oil field deadbeats is being considered so as to reduce the agency’s work load and sidestep the ugly business of going to court and seeking some payment by claiming other deadbeat assets. It’s more accurately a trope to hide the fact that under their watch tens of thousands of wells have become zombies producing nothing or next to nothing, and the State, out of either lassitude or stupidity, has never required adequate insurance or cash bonding to cover well closing and reclamation as required by law.
As for the 19,000 wells that the COGCC fears may become public wards, the cost to close them is at least $1.9 billion, even using the state’s average closing cost of $100,000 per well. If we use North Dakota’s averaged well closing costs of $280,000 per well, the cost is a Power-Ball like $5.6 billion. $79 million won’t even cover the bottom of the money pail. Don’t get too happy, there are another 32,000 wells out there just waiting for a caring home.
Citizens continue to exhort the new professional commission to raise bonding rates so that each well is bonded to at least the $100,000 level, and to inaugurate some sort of legacy fee to help cover the cost of closing those zombie wells that are already being quietly recognized as a public burden. The big operators such as Chevron, which raked in $13 billion in net profits last year, said it could make better use of that money. Several commissioners agreed, so full, individual well bonding and the formation of an adequate legacy fund are not in the cards. The law passed in 2019 requiring the public be protected on all matters oil and gas is rarely referenced as controlling in the debates between the state and the oil and gas interests. The climate crisis right outside their windows is never mentioned at all. Theirs is a world unto itself.
So Miss Brill, don’t buy that new coat just yet, you’ve got a lot of oil wells the COGCC thinks you should pay to plug.