- Associated Press - Sunday, April 28, 2019

BUFFALO, S.D. (AP) - South Dakota environmental regulators are trying to figure out how to plug portions of 40 orphaned natural gas wells belonging to a company the state has already fined $15.5 million for abandoning them.

Houston-based Spyglass Cedar Creek drilled the wells in 2006 near Buffalo but the work fell idle as the company’s prospects disintegrated amid lawsuits, a lender’s bankruptcy, and falling natural gas prices. The company initially said it had $22 million in financing.

The South Dakota Board of Minerals and Environment revoked the company’s permits in January and state officials estimate it will cost $887,700 to plug the wells. The Rapid City Journal reports Sunday that getting money from the Houston company could prove challenging because Spyglass was unable to post $200,000 earlier this year to keep its permits.

Last month, regulators levied the $15.5 million fine against Spyglass, imposing the maximum civil penalty of $500 per well, per day for violations regarding the wells’ conditions.

The Department of Environment and Natural Resources said during a meeting with regulators March 21 that plugging some of the wells would be a precautionary measure. The agency said there is no environmental threat and no potential for groundwater contamination.



“But the department’s biggest concern is human health and safety in the event of future gas leaks,” Mike Lees, a DENR official, said during the March 21 meeting, according to the minutes. To help fund the plugging of some of the wells from Spyglass, the agency has proposed using a $130,000 bond from a failed oil-well project near Wasta. The plan would be to focus on the highest-priority wells.

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Information from: Rapid City Journal, http://www.rapidcityjournal.com

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