State board moves forward on orphaned gas wells in northwestern South Dakota

Capitol News Bureau
KELO Pierre map locator South Dakota

PIERRE, S.D. (KELO) — The State Board of Minerals and Environment made decisions Thursday regarding 40 natural-gas wells orphaned by Spyglass Cedar Creek LP in northwestern South Dakota.

Board members agreed they won’t use $130,000 of bond that Quartz Operations posted for an oil well the company was attempting to drill near Wasta.

They also decided to issue a public notice seeking comments on what might be done with each of the wells in Harding County and explain in a letter what the board can and can’t do.

Some of the wells are on state-owned school and public lands that private parties lease but state government continues to own the mineral rights.

The board also agreed to send a denial letter to a mineral owner, The Acton Group from Hemet, California. George Acton has been seeking compensation from the board for lost production in the matter.

Some board members said the state Department of Environment and Natural Resources should offer measures in the 2020 session of the Legislature. The proposals would request money for the specific issue and ask that state laws on mineral-rights bonds fit together better.

The board received a July 10 letter from the state Office of Attorney General regarding the status of a lawsuit the state board brought against Spyglass and its principals. The company and one of the partners agreed to an August 1 deadline to file their answers, according to the letter, and the other partner’s answer is due in late July.

Spyglass and its partners agreed last year to post a $200,000 bond but didn’t. The board and department issued a notice of violation that threatens fines. The department estimated plugging all 40 wells would cost about $887,000.

The department recommendation is to plug wells on private land and make other changes. That would cost an estimated $138,750.

State Senator Ryan Maher, R-Isabel, introduced legislation this year that was blocked by Governor Kristi Noem, through her administration’s Bureau of Finance and Management. The joint House-Senate appropriations committee voted 12-5 to kill his request for $1 million.

Maher is chairman of the Legislature’s interim Government Operations and Audit Committee that oversees state government’s performance and financial conduct. Board chairman Rex Hagg of Rapid City said Thursday he wrote a letter to GOAC asking for clarification.

Mike Lees, administrator for the state’s minerals and mining program, said Thursday there currently isn’t any environmental threat from the unplugged wells. Inspectors visited the site last month, Lees said, and they’ll continue to check in the months ahead.

People who think the Spyglass wells on their properties might still be viable should post bonds themselves, Hagg said.

“I think we’re lacking information now, and that is something we can move forward on, getting more information,” Hagg said. 

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