PIERRE, S.D. (KELO) — The Legislature could clarify South Dakota mining laws so a state regulatory panel could more easily use bond money that operators forfeit, its chairman said Thursday.
That was one of the steps the state Board of Minerals and Environment discussed that the Legislature could take in the 2020 session that opens in January.
The board is trying to find ways to more effectively react the next time South Dakotans face “orphaned” oil and gas wells that operators take out of production but don’t shut.
State government filed a lawsuit against Spyglass Cedar Creek LP, based in Texas, and its owners over 40 natural-gas wells in Harding County.
“The litigation is going to take its course,” lawyer and former lawmaker Rex Hagg of Rapid City, the board’s chairman, said.
The board decided last month it won’t tap $130,000 of bonds that Quartz Operations lost after its drill bit broke in the well hole while drilling for oil near Wasta.
Another possible revision under consideration is rewriting bond amounts for oil and gas wells. The Legislature adopted the current laws in 2013.
State mining administrator Mike Lees said he sent a letter July 25 to well operators outlining ideas, including the original 2013 legislation. It would have required $50,000 per well, regardless of depth, or $100,000 for a field.
Lees said he received one reply so far that was “adamantly opposed” to the $50,000 proposal and expects to hear back from more operators in the next two weeks.
He said the state Department of Environment and Natural Resources cabinet secretary — previously Steve Pirner, now Hunter Roberts since August 5 — has authority, since 2013, to sign uncontested permit applications. All previously went to the state board.
“Now 95 percent of the cases are approved administratively because nobody contests them,” Lees said.
Lees agreed with board members that Spyglass was unusual and represented what one described as “a perfect storm.”
“This is uncharted territory for all of us,” he said. “It’s not a frequent occurrence where we have operators abandoning oil and gas wells.”