While calling the behavior of oil and gas operator K.P. Kauffman “disreputable,” “recalcitrant” and “negligent,” state oil and gas regulators balked at issuing a broad order to plug marginal wells in two Weld County towns.
The town of Frederick and its neighbor Dacono sought to use a revised provision in state oil and gas rules to have the Energy and Carbon Management Commission order the company, known as KPK, to plug and abandon 42 wells.
While declining to issue an order for all the wells, the Colorado Energy and Carbon Management Commission ordered KPK to plug and abandon two wells in Frederick and one in Dacono within the next 12 months.
“Today’s decision falls gravely short in addressing the full scope of concerns, including public health implications and potential long-term financial impacts on our communities,” Frederick Mayor Tracie Crites said in a statement.
Initially, the towns asked for 45 wells to be plugged, but their final petition listed just 42.
An attorney for KPK said the company is reviewing the commission’s decision.
This is the second time the two communities have tried to get KPK to plug its wells. In 2023, they tried to use the commission’s new financial assurance rules to get 95 wells plugged. The wells, they said, hampered development. They were unsuccessful.
The initial commission vote was 3 to 2 with commissioners John Messner and Trisha Oeth pushing for an order to plug 26 wells, nine in Frederick and 17 in Dacono.
“I was persuaded and did find that the way in which they are conducting operations does present a threat to public health, safety and welfare,” Oeth said.
”I have heard a lot of evidence in this hearing that leaves me with significant concerns about the way this operator is conducting business here in Colorado,” Oeth said. “I think the evidence in the record shows them to be chronically noncompliant and recalcitrant.”
Denver-based KPK is facing a $1.9 million fine for violations, with 148 violation notices since 2020, according to state records — and has been legally sparring with the ECMC for the past three years.
“The unabashed admission of failure to adhere to our rules to which all operators are subject in this state is a glaring depiction of this company’s contempt for responsible oil and gas development rather than following the rules KPK makes excuses,” Commissioner Mike Cross said.
Still, the commissioners said that many of these issues must be dealt with in other enforcement actions and proceedings with KPK.
Wells no longer “used or useful”
The Frederick and Dacono wells, some dating back to the 1970s, had produced little or no oil and gas in the last three years and some were close to a park, a school and housing subdivisions.
The municipalities, taking advantage of a rule change that enabled local governments to seek well closures, argued the wells were no longer “used or useful” and that they posed a threat to public health, safety and welfare.
When a well is no longer used and useful, under state rules, it should be plugged and the site remediated. The commission determined that the three wells it ordered were no longer used and useful.
Much of the multi-day hearing focused on whether the wells actually had economic value with KPK witnesses providing data showing that there were still oil and gas reserves in the wells and raising the possibility that they could be used for other economic activities such as carbon capture storage.
The operator said that some wells are shut not by choice but under ECMC enforcement orders.
The two municipalities presented their own experts to show that in some cases the wells weren’t even covering their operating costs.
Still, Commissioner Brett Ackerman said that even though the rule, Section 211, had been changed to allow local governments to seek wells plugged there is “a very high bar” for using it.
“I interpret this regulation being used rarely, to mean that the commission does not use the authority of 211 lightly, but will use it in circumstances where all other reasonable avenues have been exhausted,” Ackerman said.
ECMC Chairman Jeff Robbins said, “the precedent we have in using it has much more significant immediate threats to public health and welfare.”
“And while KPK as an operator, is negligent and does a poor job and doesn’t get things cleaned up and is recalcitrant and doesn’t file forms,” Robbins said, “I do not find that the burden of proof was met that it is necessary to close these wells in order to protect public health, safety, welfare in the environment.”
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