Abandoned Spyglass natural-gas wells get new owner

Capitol News Bureau

FILE: $100 bills. (NEXSTAR)

PIERRE, S.D. (KELO) — A Wyoming company is taking over 19 of the 40 natural-gas wells in South Dakota that were orphaned by their owner.

The South Dakota Board of Minerals and Environment received an update Thursday from Mike Lees of the state Department of Agriculture and Natural Resources.

The new operator is Highwire Energy Partners of Casper, Wyoming.

Lees said Highwire agreed to provide bond coverage of $110,000 so far for 11 wells and would submit additional bond coverage of $10,000 per well as more come online.

“This is above and beyond the normal $100,000 blanket bond,” Lees said.

He said the $10,000 would cover state government’s cost for plugging a well if Highwire doesn’t follow through.

The 19 wells are on various sites that have an assortment of federal, state and private mineral rights. Highwire plans to bring a group of wells online this year and a second group in spring 2022, according to Lees.

The Legislature in 2020 approved SB 17 appropriating $727,000 to plug the 40 wells that Spyglass Cedar Creek walked away from in 2012. The money came from the department’s petroleum release compensation fund.

Lees said 21 of the wells were plugged, including two deep wells and the least financially viable ones, and compressor sites were reclaimed, at a cost of $301,000.

The board in March 2019 directed the state attorney general’s office to file a civil suit against Spyglass for $15.4 million. Lees said the attorney general’s office hasn’t been able to make contact with the defendants.

The board’s chairman, Rex Hagg, a Rapid City attorney, asked Lees to arrange for an update from the attorney general’s office at a future meeting.

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