News from the Oklahoma Corporation Commission

OKLAHOMA CITY – Low oil prices are slowing the rate of plugging abandoned oil and gas wells with state funds this year, Oklahoma Corporation Commission records indicate.

Through the first nine months of the state’s fiscal year, $154,459 was spent or committed to plug 42 wells. In all of fiscal 1998, there were 188 wells plugged at a cost of $773,371.

State funds are used to plug abandoned wells when no responsible party can be found to pay the plugging costs. The money comes from an excise tax on the wellhead price of petroleum production. Less production and low prices have greatly reduced tax revenue available for plugging abandoned wells.

The commission’s Oil and Gas Division has identified 295 other wells eligible for state-funded plugging at an estimated cost of about $1.2 million, but the state plugging fund had only $186,803 available in mid April, a monthly plugging status report said.

Mike Battles, Oil and Gas Division director, said the low rate of plugging doesn’t pose any environmental threat because emergency funds are kept available for wells that require immediate plugging. The other wells are dormant and must await funds for plugging.

Many of the wells were drilled and abandoned during the oil boom period in the late 1970s and early 1980s by companies that no longer exist, Battles said.

-occ-