Kansas energy regulators and the state's largest oil-and-gas association Wednesday endorsed a package of legislation designed to clarify legal ambiguities in the law and streamline use of funds set aside to plug thousands of abandoned wells across the state.
The Kansas Corporation Commission's campaign to secure nonfunctional wells in an attempt to reduce environmental problems has been hampered by plugging companies that viewed the bidding process as daunting, noncompetitive compensation offered to plugging contractors and the extensive list of wells that long ago were left behind by owners or operators.
The state has more than 100,000 operational wells, KCC officials said. About 10,000 of the state's abandoned wells have been plugged during the past quarter century, but the commission's priority list exceeds 5,000 wells.
Ryan Hoffman, director of the conservation division at the KCC, told an interim House and Senate budget committee at the Capitol the 2020 Legislature would be urged by the KCC and the Kansas Independent Oil & Gas Association to consider three reform bills related to improving the state's response to abandoned wells.
One bill would administratively combine two remediation funds, one for historical wells drilled before 1996 and the other for modern wells created since that year, into a singular account. If the transition were to occur immediately, the account balance would be about $7.5 million.
"We think the July 1, 1996, date distinction between the two funds is a distinction without a difference," Hoffman said. "An abandoned well is an abandoned well and we should be able to plug it."
Rep. Kyle Hoffman, R-Coldwater, and a member of the budget committee, said combining the state plugging funds would be reasonable given the post-1996 account had been used three times in more than two decades. The problem would be if fees paid by companies to support plugging operations were raised to take care of the large reservoir of the older abandoned wells, he said.
"I want to make sure we do not get into the situation where companies that are drilling now that are doing what they're supposed to be doing ... get hit up for higher fees in order to take care of a bunch of past mistakes," the legislator said.
In addition, a separate bill would clarify in state law how the KCC assigned responsibility for plugging wells. Frequently, KCC field staff must refer people to commission attorneys to resolve confusion about regulations.
"Wells that were drilled in the 1930s or '40s, it might be extremely difficult to locate who the operator is or was," said Rep. Troy Waymaster, a Bunker Hill Republican leading the House Appropriations Committee.
Another bill to be proposed by the KCC would grant authority for the commission to begin reimbursing farmers, landowners or others for taking the initiative to cap wells as long as that person wasn't determined to be the legally responsible party for the wells.
Ed Cross, president of the Kansas Independent Oil & Gas Association, said it was important for the state to maintain a viable program to support plugging of wells.
"The KCC proposal to consolidate industry-funded abandoned well plugging funds will help ensure more dollars from these funds are directed toward plugging abandoned wells," Cross said.
He said the KCC's recommendation to clarify responsibility for wells would enhance "operational certainty across the state."
Sen. Carolyn McGinn, the Republican chair of the Senate Ways and Means Committee, said the Kansas Water Authority had been asked to finance a study assessing the risk of abandoned wells leaking into water supplies in the region of Reno and Sedgwick counties.
"It sounds like we have wells that are starting to deteriorate," McGinn said. "Why isn't the KCC involved in this?"
"No one has asked us," said Hoffman, of the KCC.
"I'm going to ask you," McGinn said. "What I'm hearing is we can work together."
She expressed concern not enough was known about wells capable of damaging the Equus Beds, which is part of the High Plains aquifer. She said Wichita invested $250 million in sustaining Equus Beds providing drinking water to 700,000 Kansans.