[Senate Hearing 112-595]
[From the U.S. Government Publishing Office]
S. Hrg. 112-595
NATIONAL PETROLEUM RESERVE
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
TO
PROVIDE OVERSIGHT ON REMEDIATION OF FEDERAL LEGACY WELLS IN THE
NATIONAL PETROLEUM RESERVE-ALASKA
__________
JULY 12, 2012
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington MIKE LEE, Utah
BERNARD SANDERS, Vermont RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan DANIEL COATS, Indiana
MARK UDALL, Colorado ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Brower, Charlotte, Mayor, North Slope Borough, AK................ 28
Cribley, Bud, Alaska State Director, Bureau of Land Management,
Department of the Interior..................................... 4
Foerster, Cathy, Engineering Commissioner and Chair, Alaska Oil
and Gas Conservation Commission, Anchorage, AK................. 11
Millett, Charisse, Representative, Alaska House of
Representatives, Anchorage, AK................................. 7
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
APPENDIX
Responses to additional questions................................ 33
NATIONAL PETROLEUM RESERVE
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THURSDAY, JULY 12, 2012
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:36 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK. Why don't we call the hearing to order?
Today, the Committee on Energy and Natural Resources will
have a hearing on the issue of Federal oil and gas legacy wells
in the National Petroleum Reserve-Alaska. This is an issue
that, of course, Senator Murkowski has had a great interest in
and urged us to have the hearing.
The NPRA has an interesting history, having been first
designated as a Naval petroleum reserve by President Harding in
1923 for defense purposes. The U.S. Navy, and subsequently the
U.S. Geological Survey, undertook exploration drilling from the
period 1944 until 1982. As a result, 136 so-called legacy wells
and boreholes are located within the NPRA. Jurisdiction over
the NPRA was transferred from the Navy to the Department of the
Interior by legislation in 1976.
According to information provided by the BLM, of the 136
legacy exploration wells and borehole sites, 41 legacy wells
remain. The agency continues to monitor site conditions.
According to BLM, the agency has done significant work on wells
that have been subject to coastal erosion in an effort to avoid
increased risk to public health and to the environment.
I understand that obtaining the resources necessary to
remediate these sites has been a challenge. In this time of
fiscal constraint, securing adequate appropriations for this
effort is difficult. I am told that the base level of
appropriations for legacy well remediation in the NPRA in
recent years has not been high.
However, I am glad that over $16 million has been made
available under the Recovery and Reinvestment Act to remediate
the Drew Point well site. I know that emergency authority has
also been invoked in the past by the BLM in order to address
problem well sites.
So we thank the witnesses for traveling as far as they have
to offer testimony today. I look forward to hearing from them.
Let me defer to Senator Murkowski for her comments.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I truly
appreciate you scheduling this very important hearing this
morning.
This is important to Alaska, but I think from a larger
perspective it's important because I think it speaks to the
commitment that the Federal Government should have when it
comes into a State and operates and then leaves. I think we all
assume that there is a responsibility to be a, quote,
``responsible operator.'' In this instance, I think we have
seen some failures here, so the opportunity to speak to that
and to what the potential solutions are, I think, is important.
I'd like to take a moment and thank our witnesses that are
here today. We have the BLM Alaska Director, Mr. Bud Cripley.
We have from the State Legislature our Representative, Charisse
Millett, from the Anchorage area. We also have the Alaska Oil
and Gas Commission Chair, Cathy Foerster--all who have traveled
here today to testify before the committee.
I thank you for making the long trek. The good news for you
is it's not as hot now as it was last week. So you'll be able
to survive this brief visit back here.
I also want to take a moment to recognize North Slope
Borough Mayor Charlotte Brower. The mayor couldn't be with us
here today. She is from Barrow, Alaska. But this is, of course,
a very important issue to Mayor Brower and the folks in the
North Slope Borough. The mayor had asked that I read a very
brief statement into the record on her behalf. She states as
follows:
``As a cooperating agency with BLM, the North Slope Borough
must be a part of the process to prioritize and address the
impacts of oil and gas exploration. Just a few months ago, I
was in Washington, DC, and met with then Director Abbey and
raised our issues of concern with this process of cleaning up
the legacy wells left behind after the Navy and USGS
exploration process.
``He stated that BLM is committed to capping these wells,
but it is a, quote, `unfunded mandate,' close quote. The
Federal Government wishes to act as steward of the land in
Alaska, often telling Alaskans and residents what they can or
cannot do on the land. Yet here is an example of the same
government failing to fulfill the most basic of
responsibilities as the landowner.
``Residents want to develop the resources, but they also
want to do so responsibly. The residents of the NPRA and the
North Slope Borough that rely on the planning area for
subsistence must be assured that they are not exposed to
harmful levels of oil development associated contaminants,
contaminants, and that they will be protected against a range
of contaminant associated disorders.
``Reassurance to our communities of continued safety of
subsistence resources will foster the continued viability of
the subsistence diet and way of life. It will also reinforce
our common goal of environmentally responsible development of
the oil and gas resources in the area. This we can do by
working together.''
That's the comment from Mayor Brower.
Mr. Cribley, I really do appreciate you taking the time to
come here today. But I also recognize that you get it. You
understand the situation and the problem in Alaska. It probably
would have been more cost effective for us if we had had some
of the folks from the BLM office here in DC testifying on this
issue.
I know from numerous meetings on this topic that you
recognize the problem. I would be surprised if you told me that
you have not personally pushed for increased funding from your
superiors to remediate these leaking wells. So I think the
message needs to be relayed very clearly that we want to hear
directly from those here in Washington in terms of what they
anticipate the schedule will be.
I want to emphasize to my colleagues how dire the situation
in the National Petroleum Reserve-Alaska really is and, I
think, shed a little bit of light on the hypocrisy hypocrisy
that is on display here in the Federal Government. As the
chairman has noted, there were 136 wells that were drilled in
NPRA over a period of many decades. Only 16 of those 136 wells
have been properly plugged. Seven were taken care of by the
North Slope Borough, not by BLM. The remaining 120 wells are in
various conditions of non-compliance with State law. There's 3
missing wells, one of which is under a land slide at the edge
of the Colville. The two others are at bottoms of lakes where
remediation is going to be tough to get to.
I think we recognize that this is a costly process. It
doesn't come cheap. But, again, when you think about the
standards that others are held to and held accountable for,
it's only right, it's only appropriate that the Federal
Government be held to those same standards.
This is the same Federal Government and Department of
Interior who has held private industry to the highest of
standards with regard to environmental protection, as they
should. Alaskans want responsible development and exploration,
but not at risk of the environment.
I commend the private industry, as they have worked with
the Federal Government to meet the high standards. But the
question really has to be asked: Why, then, should the Federal
Government not have to live up to those same standards?
When you couple this failure in the NPRA with other broken
promises by the Federal Government to Alaskans, I think it
really pushes and strains the relationship that Alaskans have
with our own government. I must say I'm having a bit of a
difficult time reconciling the fact that DOI is unable--they
say they are unable to fund well remediation efforts within
NPRA, even though funding for the Land and Water Conservation
Fund continues to increase. Not only does each land management
agency have staggering maintenance backlogs, but Interior as a
whole, I think, has more pressing needs than purchasing
additional land.
Alaskans are united on this issue. I commend you,
Representative Millett, for taking the lead on this and pushing
it. I know that other members of this committee share my
concern for cleaning up the ongoing environmental pollution
within the NPRA.
Again, I thank you all for being here, and I thank the
chairman for his commitment to work with us on this issue.
The Chairman. All of you have been essentially introduced.
Why don't we start with you, Mr. Cribley? If you'll give us the
BLM perspective on this, and then Ms. Millett and then Ms.
Foerster--we'll be glad to hear from all of you. Each of you
take 5 or 6 minutes, tell us what you think we need to know,
and then we'll have some questions.
STATEMENT OF BUD CRIBLEY, ALASKA STATE DIRECTOR, BUREAU OF LAND
MANAGEMENT, DEPARTMENT OF THE INTERIOR
Mr. Cribley. Thank you, Mr. Chairman. Before I begin my
oral testimony, I would like to take this opportunity to thank
you, Chairman Bingaman and Senator Murkowski, for taking time
out of a very important schedule to recognize the significance
of this issue and take it to a national forum.
I'd also like to recognize State Representative Charisse
Millett and also Chairman Cathy Foerster for the work that they
have done in Alaska to bring this issue up and provide an
opportunity for a dialog on it. It's a very important issue to
us in Alaska and I know nationally to the Bureau. So thank you.
With that, I would like to thank you for the opportunity to
discuss the Bureau of Land Management's role in remediating
legacy wells in the National Petroleum Reserve in Alaska. NPRA
is a 23 million acre roadless area located 200 miles north of
the Arctic Circle. This remote, treeless, and mostly frozen
landscape exists in a sensitive ecological balance. It is rich
in resources and holds significant potential for oil and gas
production.
The Arctic ecosystem supports caribou, water fowl, shore
birds, polar bear, walrus, and other marine mammals. It is home
to a people who have inhabited it for over 8,000 years and
depend upon it for its subsistence. Within the NPRA, the BLM
manages surface and subsurface resources and the legacy wells.
The legacy wells are 136 test wells and boreholes drilled by
the Navy and the United States Geological Survey from 1943 to
1982. They are drilled to evaluate the use of modern petroleum
exploration and production methods in Arctic conditions.
The BLM priority is to protect public health, safety, and
the environment through the remediation of the legacy wells.
The agency actively monitors site conditions and directs
available funding to address sites that pose a potential risk.
The BLM has plugged and remediated 18 legacy wells. In
addition, one well was plugged by the U.S. Navy. Eighteen wells
were partially plugged and currently managed by the USGS to
monitor climate change. Twenty-four have been transferred out
of Federal ownership, and 34 are uncased boreholes drilled for
geologic and permafrost research. The BLM actively monitors
conditions on the remaining 41 legacy well sites.
In 2004, the BLM completed an inventory and analyzed the
risk associated with each of the legacy wells. The report
identified a number of wells that posed a potential risk and
determined other sites present no significant threat. The
information from the inventory guided the BLM's BLM's decision
to direct funding to plug wells at sites that posed the greater
risk, including a series of wells located near Umiat, a town on
the southeastern boundary of the NPRA. Umiat's proximity to an
airstrip, fuel supplies, and camp facilities and other
infrastructure significantly reduced the cost to bring people,
equipment, and materials into the area for a remediation
project.
The BLM also responded when a series of Arctic storms
caused a large area of coastal shoreline to calve into the
ocean and placed 4 legacy well sites in danger of eroding into
the Beaufort Sea. The BLM secured emergency funding and plugged
the wells threatened by coastal erosion, including the JW
Dalton legacy well site, where more than 300 feet of shoreline
had eroded, exposing the well head.
Moving forward, the BLM will continue to monitor legacy
wells and will plug and remediate wells that present a
potential risk. To guide our efforts, BLM will complete an
updated legacy well summary report and strategic plan in this
fiscal year. The plan will outline the agency's potential for
plugging the remaining legacy well sites.
In preparing the updated report, the BLM is working with
the Alaska Oil and Gas Conservation Commission to come to a
common understanding of the status and condition of the wells
and to consider their recommendations on priority sequencing.
The BLM has shared individual legacy well file information with
the AOGCC and expects to receive the results from their review
in September.
In the meantime, BLM has developed cost estimates and a
proposed plan to plug the Iko Bay Well No. 1 and two other
wells. The BLM is also developing a draft multi-season strategy
to address an additional 13 legacy wells over 3 seasons.
The BLM recognizes the importance of remediating legacy
wells in the NPRA. The agency remains committed to directing
available funding to plug and remediate the remaining legacy
wells in order to protect health, safety, and the environment.
The agency also recognizes the importance of working
collaboratively with the State of Alaska, native corporations,
tribal governments, and other partners, including the Alaska
Oil and Gas Commission, to accomplish this strategy.
I'll be glad to answer any questions. Thank you.
[The prepared statement of Mr. Cribley follows:]
Prepared Statement of Bud Cribley, Alaska State Director, Bureau of
Land Management, Department of the Interior
Introduction
Thank you for the opportunity to discuss the role of the Bureau of
Land Management (BLM) in the remediation of legacy wells in the
National Petroleum Reserve in Alaska (NPR-A). The BLM is responsible
for the management of 136 test wells and reserve pits in the NPR-A that
were drilled, but not closed, by the U.S. Navy and Federal civilian
agencies from 1943 to 1982. The BLM's priority is to protect human
health and the environment through the remediation of the legacy wells.
The agency actively monitors site conditions and directs available
funding to address sites that pose a potential risk.
Background
The NPR-A is a 23 million-acre roadless area located 200 miles
north of the Arctic Circle. This remote, treeless, mostly frozen
landscape exists in a sensitive ecological balance. It is rich in both
renewable and nonrenewable resources, including one of the most
prolific geologic systems on the North American continent. Portions of
the NPR-A hold high potential for oil and gas production. The area also
features recreational and cultural values, including more than 1,000
historic and prehistoric sites, and Arctic wetland ecosystems, riverine
habitats and upland areas that support caribou, waterfowl, shorebirds,
polar bear, walrus, and other marine mammals. Furthermore, the area is
home for a people who have inhabited it for 8,000 years and depend upon
it for subsistence.
Petroleum exploration in the NPR-A has been ongoing for nearly 100
years. In the early 1900s, field geologists from the United States
Geological Survey (USGS) exploring the North Slope of Alaska found
several oil seeps in this area. Their discovery prompted President
Warren G. Harding to set aside this portion of Alaska's North Slope as
an emergency oil supply for the U.S. Navy. President Harding
established the Naval Petroleum Reserve No. 4 (NPR-4) by Executive
Order in 1923. During early exploration programs, the U.S. Navy (1944-
1953) and the U.S. Geological Survey (1975-1982) drilled 136
exploratory wells and boreholes at depths ranging from 100 to 20,335
feet. Now called ``legacy wells,'' these exploratory wells and
boreholes were drilled to establish the feasibility of using modern
petroleum exploration and production methods in Arctic conditions.
Naval Petroleum Reserve No. 4 was renamed the ``National Petroleum
Reserve in Alaska,'' and administration of the area was transferred
from the U.S. Navy to the U.S. Department of the Interior, under the
Naval Petroleum Reserves Production Act of 1976 (P.L. 94-258, 90 Stat.
303).
The BLM, an agency of the Department of the Interior, is
responsible for protecting the resources and managing the uses of our
nation's public lands, which are located primarily in 12 Western
states, including Alaska. Within the NPR-A, the BLM is responsible for
the management of the surface and subsurface resources which includes
the legacy wells and reserve pits.
Since 1952, 19 wells have been plugged. The U.S. Navy plugged 1
well in 1952. The BLM began its plugging efforts in 2002 and has
plugged 18 wells, remediated contaminated soils where necessary, and
removed surface debris; another 18 wells are partially plugged and are
used and managed by the U.S. Geological Survey (USGS) as climate change
monitoring wells; 24 are on land that has been transferred out of
Federal ownership; and 34 are uncased or partially cased boreholes
drilled for geologic strata and permafrost research On the remaining 41
legacy well sites, the BLM actively monitors site conditions.
Inventory, Assessment & Remediation
In 2004, the BLM completed an inventory and reviewed the condition
and analyzed the risk posed to humans and the environment from the
legacy wells. The inventory identified a number of legacy wells that
posed a potential risk to public health, safety and the environment,
and determined that many other sites presented no significant threat.
The information from the assessments allowed the BLM to direct funding
and attention to plug wells and remediate surface soils at sites that
posed the greatest risk, while continuing to monitor conditions at the
other sites. Costs for remediation vary dramatically depending on the
proximity to infrastructure and the level of soil remediation
necessary.
Umiat
Based on the priorities identified in the 2004 report, the BLM
plugged a series of wells located near Umiat, addressing concerns with
surface contamination and well condition. Umiat's proximity to
infrastructure, including an airstrip, fuel supplies, and camp
facilities, significantly reduced the cost to bring people, equipment,
and materials into the area and to remove contaminated soils and
surface debris from the area. In 2012, the BLM plugged two legacy wells
near Umiat for $3.5 million.
Response to Coastal Erosion
The BLM monitors wells adjacent to the ocean annually to determine
if coastal erosion or other changes pose an increased risk to health
and the environment and takes appropriate action as necessary. The BLM
has responded to several emergencies. After a series of Arctic storms
caused severe coastal erosion, including the calving of large swaths of
coastal shoreline, four legacy well sites were in imminent danger of
eroding into the Beaufort Sea. The BLM responded to the emergencies at
these four sites in the following manner:
JW Dalton--More than 300 feet of shoreline eroded near the
JW Dalton well site during the 2004 winter season, exposing the
well head. The BLM spent $8.9 million to plug the JW Dalton
well site.
East Teshekpuk--The East Teshekpuk well remediation was
completed by the end of 2008 for $13 million. The high cost was
due to the remote location of the site and the need to
excavate, transport, and dispose of contaminated soils and
solid waste.
Atigaru--Remediation of the Atigaru well site was completed
in April 2009 at a total cost of $18.7 million. The high cost
of this remediation was also due to the need to excavate,
transport, and dispose of contaminated soils and solid waste.
Drew Point--The BLM removed 13,500 gallons of diesel fuel
from the wellbore prior to plugging the well and removed
approximately 5,000 cubic yards of petroleum-contaminated mud
from the reserve pit. The contaminated mud was hauled 35 miles
overland from Drew Point to a disposal site. The project was
completed in 2010 with $16.8 million in American Recovery and
Reinvestment Act (ARRA) funding.
Moving Forward
Moving forward, the BLM's strategy is to continue monitoring the
legacy wells and to first plug and remediate those wells that present a
potential risk, while prioritizing future plugging and remediation
based upon available funding. The BLM also recognizes the importance of
working collaboratively with the State of Alaska, Native Corporations,
Tribal governments, and other partners including the Alaska Oil and Gas
Conservation Commission (AOGCC) to accomplish this strategy.
To guide future efforts, the BLM expects to complete an updated
Legacy Well Summary Report and a Strategic Plan in late 2012. The BLM
monitors wells annually to determine changes in site or well
conditions. The BLM uses the information gathered during inspections to
assist in prioritizing the wells for future actions. The updated
Strategic Plan will outline the agency's priorities for plugging the
remaining legacy well sites. In preparing the updated Legacy Well
Summary Report and Strategic Plan, the BLM is working closely with the
AOGCC to come to a common understanding of the status and condition of
the wells. The BLM has shared individual legacy well file information
with the AOGCC. The BLM expects to receive the AOGCC recommendations on
priority sequencing in September.
In the meantime, the BLM has developed cost estimates and a
proposed plan to plug the Iko Bay #1 well and two other wells in close
proximity to Iko Bay during the winter of 2013, pending funding
approval. The BLM also developed a draft multi-season strategy to
address 13 legacy wells over three seasons.
Conclusion
The BLM recognizes the importance of remediating the legacy wells
in the NPR-A. The BLM remains committed to directing available funding
to plug and remediate the remaining legacy wells in order to protect
health, safety, and the environment. I will be glad to answer any
questions.
The Chairman. Thank you very much.
Representative Millett, go right ahead.
STATEMENT OF CHARISSE MILLETT, REPRESENTATIVE, ALASKA HOUSE OF
REPRESENTATIVES, ANCHORAGE, AK
Ms. Millett. Thank you, Chairman Bingaman, Ranking Member
Murkowski, and members of the committee. I am Alaska State
Representative Charisse Millett and a lifelong Alaskan.
Thank you for the opportunity to communicate a message from
the citizens of Alaska over their frustration on this 70-year-
old problem and advocate for a solution. With this committee's
help, I believe we can get the Federal Government to clean up
its mess and be good stewards of our land as our mission
States.
During the 2012 Alaska Legislative Session, I sponsored
House Joint Resolution 29. It has been submitted to the chair
for this hearing, and I ask that it be submitted for the
record.
The Chairman. We'll be glad to include that in our record.
Ms. Millett. Thank you. This resolution urges the Bureau of
Land Management, the BLM, to plug legacy wells properly and to
reclaim the legacy well sites as soon as possible in order to
protect the environment in the Arctic. It passed the House
unanimously. In fact, every member of the Alaska House of
Representatives signed on as a co-sponsor.
From 1944 to 1982, the United States Navy and the United
States Geological Survey drilled 136 wells in or near the
National Petroleum Reserve-Alaska, NPRA. NPRA is part of the
northern Arctic coastal plain that includes Prudhoe Bay, the
Arctic National Wildlife Refuge, ANWR, and stretches all the
way to northern Canada. These areas are similar in biology,
geography, and oil and gas potential.
The NPRA was a test bed, not just for oil and gas
exploration practices in the Arctic, but also presented a
significant opportunity to test Arctic engineering practices.
Nearly every site has a variation on the surface and the
subsurface as different technologies were tried.
The BLM is now the custodian responsible for the surface
and subsurface property, including the custody of the abandoned
wells now referred to as legacy wells. Only 16 of the 136 wells
have been properly plugged and abandoned. Of those 16, 7 were
plugged not by the BLM but by the North Slope Borough.
The remaining 120 wells are in various conditions of
flagrant non-compliance. The drill sites, many of which have
rusting barrels filled with contaminants--and may still be. We
just don't know. Two of the 120 wells are currently, and may
have been for up to 30 years, leaking hydrocarbon gas into the
atmosphere.
Three other wells can no longer be found. Of those 3
missing wells, one well is under a land slide at the edge of
the Colville River, the same river that a bridge permit for a
private operator was delayed for over 5 years due to
environmental concerns. Two others are at the bottom of lakes
where remediation will be very difficult and very expensive.
As you can see by the shockingly graphic pictures presented
today, we should agree that remediation is long overdue.
Allowing these unsafe and unsightly wells to litter Alaska's
wilderness while threatening wildlife, human safety, and
damaging the pristine Arctic environment is unacceptable.
These legacy wells have been an issue for over 60 years.
Many administrations have failed Alaskans, responsible
operators, and by extension, all Americans. However, the
current Federal Government has the opportunity now to take
action and solve this problem. Let's stop the out-of-sight,
out-of-mind mentality.
The Federal Government has received approximately $9.4
billion from lease sales in the NPRA and the outer continental
shelf of Alaska. Of that $9.4 billion, there has not been one
penny used to plug the abandoned or reclaim the legacy wells.
The State of Alaska cannot impose fines on the Federal
Government like we would on our private operators. But if we
could, the fines would exceed $8 billion. If the statute of
limitations were removed, $40 billion. While the Federal
Government rightfully demands proper environmental stewardship
on development in Alaska and often uses its administrative
powers to delay, stop our responsible developers in the name of
environmental protection, it turns a blind eye to its own
environmental disaster.
This hypocrisy outrages Alaskans and should outrage all
Americans. It adds insult to injury. Alaskans take pride in how
we hold developers to the highest environmental standards in
the world. Yet the Federal Government, responsible for
protecting America's land, is the worst offender in Alaska.
Currently, the Federal Government is rewriting the
management plan for the National Petroleum Reserve. It just
finished with the public comment portion. Amazingly enough,
enough, environmental NGO's submitted over a thousand pages of
comments, stating they supported the most restrictive plan that
would provide the most protection to the environment of the
NPRA. So it's ironic that not one of those NGO's has felt any
similar urgency to come to the aid of the legacy wells and the
damage already inflicted by the Federal Government.
This goes to the fundamental question of why land should be
removed from potential exploration when the true test is one of
management. On this level, both the Federal Government and the
environmental groups have misplaced their priorities.
The Alaska BLM receives about $1 million a year toward this
cleanup effort. The last 3 wells they remediated cost $2
million each. At that pace, my 2-year-old grandson will only
see half of these well sites cleaned up in his lifetime. The
rest would pollute into the next century.
Now for solutions. The administration is planning more
offshore Alaska and NPRA lease sales. Let's use a portion of
those revenues and plug the abandoned wells and clean up the
Arctic tundra.
Another option is to lease the well sites to private
operators to clean up as a lease requirement those well sites.
Last, convey the lands back to Alaska. We'll take
responsibility. We'll clean up those lands. Let's help keep
Alaska clean.
Thank you for your consideration and time, and I'm
available for questions.
[The prepared statement of Ms. Millett follows:]
Statement of Charisse Millett, Representative, Alaska House of
Representatives, Anchorage, AK
Chairman Bingaman, Ranking Member Murkowski, and members of the
committee.
Thank you for the opportunity to communicate a message from the
citizens of Alaska over their frustration on this 70-year-old problem
and advocate for A solution. With this committees help I believe we can
get the federal government to clean up its mess, and be good stewards
of our land as their mission states.
During the 2012 Alaska legislative session I sponsored House Joint
Resolution 29. It has been submitted to the Chair for this hearing. The
resolution urges the Bureau of Land Management (BLM) to plug legacy
wells properly and to reclaim the legacy well sites as soon as possible
in order to protect the environment in the arctic. It passed the House
unanimously; in fact, every member of the Alaska House of
Representatives is a co-sponsor of this legislation. Attached to my
written testimony is a copy of the Resolution. (Attachment 1*)
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* All attachments have been retained in committee files.
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From 1944 to 1982 the United States Navy and the United States
Geological Survey drilled 136 wells in or near the National Petroleum
Reserve-Alaska (NPR-A). NPR-A is part of the northern Arctic coastal
plain that includes Prudhoe Bay, the Arctic National Wildlife Refuge
(ANWR) and stretches all the way to the Northern Canada. These areas
are all similar in biology, geography and oil and gas resource
potential. Attached you will find a map of current map of current,
relinquished and expired tracts for NPR-A, and a map of locations of
the legacy wells. (Attachment 2)
The NPR-A was a test bed not just for oil and gas exploration
practices in the Arctic, but also presented a significant opportunity
to test Arctic-engineering practices. Nearly every site has a variation
on the surface and underground as different technologies were tried.
The BLM is now the custodian responsible for the surface and sub-
surface property, including the custody of the abandoned wells, now
referred to as the legacy wells. Secretarial Order Nos. 3071 and 3087
were issued in 1982. With the abolishment of the Conservation Division
of the USGS in 1982, the NPR-A became under sole jurisdiction of the
BLM.
Only sixteen of the 136 legacy wells have been properly plugged and
abandoned. Of those sixteen 7 were plugged not by the BLM but by the
North Slope Borough.
The remaining 120 wells are in various conditions of flagrant non-
compliance. The drill sites, many of which are contaminated by wood,
metal, plastic, glass and concrete debris are also littered with
rusting barrels once filled with contaminants and may still be, we
don't know.
Two of the 120 wells are currently, and may have been for 30 years
leaking hydrocarbon gas into the atmosphere. Three other wells can no
longer be found. One well is under a landslide at the edge of the
Colville River, the same river that a bridge permit for a private
operator was delayed for over five years due to environmental concerns.
Two others are at the bottom of lakes where remediation will be
very difficult and expensive.
Allowing these unsafe and unsightly wells to litter Alaska
wilderness while threatening wildlife and human safety and damaging the
pristine arctic environment is unacceptable.
In June of 2001 an EPA pollution report was filled by the North
Slope Borough (NSB) received a report that Simpson Well #31 was leaking
crude oil from a private citizen. NSB confirmed this report on a site
visit performed June 4, 2001. An estimate provided by North Slope
Borough Officials indicates that there is 40--50 gallons of crude oil
on the ground around the wellhead. On June 7, 2001, BLM was notified by
the NSB and reported the situation to the NRC and ADEC. On June 8, a
BLM Petroleum Engineer and Petroleum Engineering Technician visited the
site and confirmed a minor leak. The master valve was not completely
closed and the wellhead was leaking at a swedge (pipe reduction
coupling) above the master valve, and the master valve may be leaking.
The total volume that has leaked from the well is unknown, but it was
estimated that the well is leaking at a rate of about one gallon per
day. This report went to 8 different people. The BLM responded,
however, this well is 40 miles from Barrow and there is much human
activity that takes place near Barrow in the form of subsistence
hunting and fishing, There are many wells within the NPR-A that are
only visited by wildlife and the sporadic visits to monitor the wells
by the BLM. My worry and the worry of many Alaskans there are more
wells like Simpson 31 that have, or are currently polluting the
environment. I attached the full EPA report. (Attachment 3)
The legacy wells have been an issue for over 60 years. Many
administrations have failed Alaskans, responsible operators, and by
extension all Americans on this problem, however the current federal
government has the opportunity to take action now and solve this
problem. Lets stop the--out of sight out of mind mentality on this
issue.
The federal government has received approximately $9,400,000,000.00
from lease sales in the NPR-A and the outer continental shelf of the
Alaska. Of that $9.4 billion dollars there has not been one penny has
been used to plug, abandon or reclaim legacy wells in NPR-A.
The State of Alaska cannot impose fines on the federal government
like we would on our private operators for violating our State
regulations, if we could the fines would exceed $8,000,000,000.00. If
the statute of limitations were waived, the fines would exceed
$40,000,000,000.00
While the Federal Government rightfully demands proper
environmental stewardship on development in Alaska, and often uses
administrative powers to delay or stop responsible development in the
name of environmental protection. It turns a blind eye to its own
festering environmental disaster. This hypocrisy outrages Alaskans, and
should outrage all Americans. It adds insult to injury. Alaskans take
pride in how we hold all developers to the highest environmental
standards in the world, yet the federal government responsible for
protecting America's lands is the worst offenders in Alaska.
Currently the federal government is rewriting the management plan
for the NPR-A. It just finished the public comment portion. Amazingly
enough the Environmental NGO's submitted over a 1000 pages of comments
stating they supported the most restrictive plan that would provide the
most protection to the environment of the NPR-A. So it is ironic that
not one of those NGO's has felt any similar urgency to come to the aid
of cleaning up the damage already inflicted by the federal government's
legacy wells. This goes to the fundamental question of why lands should
be removed from potential exploration, when the true test is one of
management. On this level, both the federal government and the
environmental groups have misplaced their priorities.
The only media coverage on this problem has been from the local
Alaska, in the media reports we get mixed messages from the local BLM.
I have attached a few samplings so you can get the feel for the
frustration Alaskans have over the inaction of the federal government
(Attachment 4)
I have also included a link to an extensive data base of pictures
of legacy wells, the BLM Legacy Well Summary Report; National Petroleum
Reserve-Alaska--November 2004, and other pertinent documents: http://
video.housemajority.org/index.php?dir=BLM+Legacy+Wells%2F
Now for solutions: The Administration is planning more offshore
Alaska and NPR-A lease sales. Lets take a portion of those revenues and
plug those wells and clean up the waste left on the tundra around these
legacy wells.
Upcoming planned lease sales in the NPR-A could target these legacy
wells and as part of a lease agreement the leasee could as a condition
of their lease take responsibility of remediation.
The Federal Government could hand over the land to the State of
Alaska, and in State of Alaska ownership we would remediate the legacy
wells.
The Alaska BLM receives about a million a year toward this clean up
effort, the last three wells they remediated cost two million dollars
each. At that pace my two-year-old grandson would only see half the
sites properly contained in his lifetime. The rest would pollute into
the next century.
I was in DC last spring admiring the monuments, the reflecting
pool, the National Mall, ``Americas front yard'' and all the history
this great District has to offer. I came upon a beautification project
managed by the Department of the Interior for the National Mall; it is
$250,000,000.00 project just to ``spruce things up''. I know the
Department of the Interior has it's priorities, and respect that things
here in DC need attention now and then, but I and many Alaskans are
asking please--please clean up your mess in our ``backyard'' now before
more wells are lost and the damage to the pristine Arctic worsens.
Lets help keep Alaska clean.
Thank you for your time and consideration.
The Chairman. Thank you very much.
Ms. Foerster.
STATEMENT OF CATHY FOERSTER,ENGINEERING COMMISSIONER AND CHAIR,
ALASKA OIL AND GAS CONSERVATION COMMISSION, ANCHORAGE, AK
Ms. Foerster. Thank you. Chairman Bingaman, Ranking Member
Murkowski, and members of the committee, I'm Cathy Foerster,
the Chair of the Alaska Oil and Gas Conservation Commission,
the regulatory agency that oversees oil, gas, and geothermal
exploration and production activities for the State of Alaska.
Of the 136 legacy wells, only 16 have been properly plugged
and abandoned to Alaska's standards. I'm here representing the
Governor of the State of Alaska, who has asked me to tell you
that we expect the Federal Government to obey Federal and State
laws by cleaning up each and every one of these wells and doing
it properly.
We have serious problems with the 120 wells that have not
been properly addressed. Unfortunately, the Interior Department
has only provided us data for the downhole condition of 61 of
those wells, and 55 wells we've got the surface condition for.
As much as I would love to talk about all 120 wells, I will
limit my discussion to those wells for which I have up-to-date
data. But we have no reason to believe that the remaining wells
don't have similar problems.
A well that is plugged and abandoned to Alaska's
requirements has surface re-vegetation and remediation
sufficient that the site blends in with the natural
environment. Within a few summers, there should be no
indication that there was ever a well there. All but two of the
well sites for which we have surface data have some manmade
blemish marring the surface. Some of these, in my opinion,
should be considered crimes against the environment.
Twenty-six wells have been left open to the atmosphere and
were left filled with drilling fluids. Several of them also
encountered oil or gas. There has likely been significant
contamination of the surrounding tundra and atmosphere by these
various fluids escaping into the environment.
Wood, metal, plastic, glass, and concrete debris litter 44
of the sites. Forty-nine have metal piping sticking out of the
ground, and 10 have open cellars, creating hazards for human
and animal travelers.
Seventeen wells were left filled with diesel. Diesel is the
fluid that the EPA has prohibited operators from putting into
wells. These wells also remain unremediated at the surface.
They are environmental eyesores, at best, and potential sources
for hazardous fluid contamination, at worst.
Two of the wells leak hydrocarbon gases. Three can no
longer be found. Twenty-nine are partially re-vegetated at the
surface, but have unknown downhole conditions, making them
landmines. The Interior Department considers these wells no
longer of a concern because they're fixed at the surface. Some
of these wells do still have surface remediation issues, in our
opinion.
Let's leave the surface for a minute and look at the
downhole problems. In front of you should be well sketches for
some actual legacy wells. We couldn't make them into posters. I
apologize for that. For each pair of well sketches, the sketch
on the left shows the well's existing condition, and the sketch
on the right shows what it would look like if it were properly
plugged.
First is the East Simpson Test Well No. 2. At least 18
wells are in this condition. On the left, we see the existing
situation, a well that was drilled to about 7,500 feet, cased
to a little below 6,400 feet, and has a series of cement plugs
staged with drilling mud. Above that last plug, the well is
left filled with diesel. But there is no guarantee that the
diesel is still there after 32 years of neglect.
On the right, we see the same well if it were plugged
properly. The diesel would be safely removed and replaced with
a water-based fluid. Then a cement plug would be placed at the
surface and the pipe cutoff below ground level with a marker
plate identifying the well in case of future excavations. The
second well, Simpson Core Test No. 27, is a well that is
representative of at least 28 wells that were drilled deep but
cased shallow. The Interior Department considers these wells to
be of low concern.
You might ask why we're worried about decades-old holes
like this that the Interior Department isn't concerned about.
They re-entered a well just like this earlier this year, the
Umiat No. 6. However, when they got below the casing, they lost
control of the well, and it started to flow on them. That's
called a blowout. Fortunately, they were able to regain control
of the well. But that's why we worry about these holes.
For the sake of time, I'll skip over the other two wells
that I was planning to discuss. But I want to make a brief
comment on one of them. It's the Iko Bay No. 1, which the local
residents, the natives that live in a village nearby, have
nicknamed the whistling well, because they can hear it leaking
natural gas constantly.
The Interior Department has no documented standards for
plugging and abandonment procedures. But the State of Alaska
does, and the Interior Department is required by law to comply
with those standards. The Interior Department is, however, very
clear on the time limits for plugging a well. It must be done
within 1 year. Extensions can be granted but only for good
reasons. Lack of budget and lack of lack of interest are not
good reasons.
Senators, I can't express my disappointment and shame at
the Interior Department's failure to address these
environmental ticking time bombs, these 120 messes. It's long
past time for them to take responsibility and clean them all
up. My agency knows exactly what needs to be done, and we stand
ready to help address these wells now.
Thank you for allowing me to testify. I am available to
answer questions.
[The prepared statement of Ms. Foerster follows:]
Statement of Cathy Foerster, Engineering Commissioner and Chair, Alaska
Oil & Gas Conservation Commission, Anchorage, AK
Chairman Bingaman, Ranking Member Murkowski, and members of the
committee. From 1944 to 1981, the Federal Government drilled 136 wells
in the western half of northern Alaska, in an area comparable to ANWR--
in plants, animals and geography as well as in oil and gas resource
potential.
The Bureau of Land Management (BLM) within the Department of the
Interior operates these wells for the Federal Government. Every one of
the wells has been out of compliance with Alaska regulations at one
time or another, and most still are.
I am here representing the Governor of Alaska. He has asked me to
tell you that we expect the Federal Government to obey Federal and
State Laws by cleaning up every one of these wells, promptly.
Total well count is 136. Of the 136, only 16 are properly plugged
and abandoned. Of those 16, 7 were plugged by a local Alaska government
body.
Five more wells have been considered plugged and abandoned by the
BLM, but not by the AOGCC because they do not meet our safety and
environmental requirements.
Twenty-nine wells are holes in the ground. They never had any
casing placed in them. BLM does not consider these wells to be a
concern, but they have yet to convince the AOGCC of this. The downhole
conditions of these wells are unknown and some of the wells still have
surface remediation issues.
Seventeen of the wells are allegedly being used for temperature
monitoring by the United States Geological Service (USGS). However,
USGS has provided no evidence to the AOGCC that (1) they are truly
using the wells and (2) the wells are in a safe condition, even though
Alaska law requires that they do so.
Seventeen of the wells have been transferred to Alaska native
ownership and are no longer a concern to the BLM. But they are still a
concern to Alaskans.
Two of the wells are leaking greenhouse gases.
The remaining wells are also out of compliance but just don't fit
nicely into another category.
AOGCC is working to get from BLM accurate data on the condition of
the wells, but we don't yet have accurate downhole data on 75 of the
wells nor do we have surface data on 81 of the wells; so I will limit
my descriptions to the specific problems that we know we have with the
61 for which we have good downhole data and the 55 for which we have
good surface data. However, we have no reason to believe the remaiining
wells do not have similar problems.
At least 26 wells are open to the atmosphere and were left filled
with drilling fluids. There has likely already been significant
contamination of the surrounding tundra by these fluids swapping out
after years of snow and snow melt. Further, several of the wells
encountered oil or gas, and there is no way to guarantee that those
fluids are escape.
Wood, metal, plastic, glass, and concrete debris litter at least 44
of the sites. It's embarrassing, no it's pathetic, that the Federal
Government will give the BLM enough money to rent a helicopter, fly
people up to the North Slope, and take pictures of these messes, but
not enough to clean them up.
At least 17 are filled with diesel. They are an environmental
eyesore at best and a source of contamination at worst.
At least three can no longer be found. One is under a landslide at
the edge of the Colville River and two are in lakes. Since they can no
longer be found, we have no way to confirm their surface or downhole
conditions, essentially making them underwater mines and possible
drinking water contaminators.
At least two leak greenhouse gases. The leaks are at very low rates
but have been allowed to continue for well over thirty years, thus
having a substantial cumulative impact.
Twenty-nine are partially re-vegetated at surface but have unknown
downhole conditions, making them landmines. And some of them still have
surface remediation issues.
At least 49 have metal piping sticking out of the ground, which
creates a hazard for local travelers (and not just of the human
variety), especially in winter with snow cover. Ten have open cellars,
which create a trip-and-fall hazard for human and animal travelers.
The State of Alaska requires proper plugging and abandonment of
wells to protect public safety, sources of drinking water, and the
environment.
A properly plugged and abandoned well has sufficient cement and
other plugs placed in the hole to ensure that underground fluids cannot
migrate. Only 16 of the 136 wells meet this requirement.
A properly plugged and abandoned well has the casing and all other
protrusions cut off at least 3 feet below ground level so that they
cannot create a hazard or become a problem during subsidence or other
normal earth movement. Only 16 of the 136 wells meet this requirement.
A properly plugged and abandoned well has sufficient surface
remediation that the site blends in with the natural vegetation. Within
a few summers, there should be no surface indication of the well's
location. All but two of the wellsites for which we have data have some
unaddressed man-made blemish marring the surface.
The pictures you've seen so far have demonstrated the problems at
the surface, but now let's turn our attention to the downhole problems.
The next two sets of sketches are for actual legacy wells. I've chosen
these two wells because they show real problems that exist in many of
the wells. For each pair of well sketches, the sketch on the left shows
the well's existing condition and the sketch on the right shows what it
would look like if it were plugged properly.
The first well is the East Simpson Test Well #2. At least 18 wells
are in similar condition. The sketch on the left shows the existing
situation, a well that was drilled to about 7500 feet, was cased to a
little below 6400 feet, and has a series of cement plugs staged with
drilling mud. Above the last plug, at about 2100 feet, the well is
filled with diesel (the fluid that EPA has prohibited operators from
pumping into wells). Actually it is more accurate to say that the top
2100' held diesel in 1980. There is no guarantee that the diesel is all
still there after 32 years of neglect.
The sketch on the right shows what the well would look like if
plugged properly. The diesel would be safely removed and replaced with
a water-based drilling fluid. Then a 150-foot cement plug would be set
at the surface, and the pipe cut off at least three feet below ground
level with a marker plate identifying it in case of future excavations.
This work should cost less than $500,000 per well.
The second well is the Simpson Core Test #27. At least 28 other
legacy wells are similar but 25 of them are worse because they have no
wellhead. Thus the drilling fluids left in these wells have been open
to the environment for between 30 and 68 years. It is likely that some
or all of these fluids have escaped to and damaged the surrounding
tundra.
The sketch on the left shows the existing situation, a 1500-foot
deep open hole with about 100 feet of casing in the hole and sticking
out at the surface. The hole was left filled with oil-based drilling
fluids and no plug on top.
The sketch on the right shows what the same well would look like if
it were properly plugged and abandoned. The oil-based drilling fluids
would be safely removed, the open hole section filled with cement
through all depths that showed oil or gas potential--to ensure no
migration of reservoir fluids. (This is important, since the well
encountered discreet oil sands between 278 and 380 feet.) The cement
plug would be carried to the top of the casing and the casing would be
cut off at least three feet below ground level with a marker plate
identifying it in case of future excavations. Again, this work should
cost less than $500,000 well.
You might ask why we're worried about old holes that have been open
since 1951. Certainly you would expect that the hole has healed itself
below the casing. Well, that's what the BLM expected when they plugged
the Umiat #6 last year. However when they got about 200 feet below the
end of the casing, they lost control of the well and it started to flow
on them. Fortunately they were able to regain well control and avoid a
blowout, but that's why we worry about these wells.
The third well is the Iko Bay #1, which is called the whistling
well by the native residents of the area because its wellhead leaks
hydrocarbon gas. I included this well as an example of a well that
might be more expensive to clean up, since a rig would be required to
pull existing tubing out of the well before it could be abandoned.
However, a big part of the rig cost would be for mobilization and
demobilization and that cost could be shared by other wells if this
were cleaned up as part of a larger program.
The sketch on the left shows the existing situation, a 2700-foot
open hole with casing set from 1200 feet to surface. There is no cement
at the surface in several of the casing annuli; these annuli are
supposed to have cement at the surface to prevent reservoir fluids from
flowing and building up dangerous pressure at the surface. The open
hole is plugged with cement from 2035 feet to 2200 feet. Above that, a
slotted liner runs from within the casing down to about 1950 feet. A
slotted liner is pipe with slots (holes) in it to allow fluids to flow
through. No drilling fluids were left in the tubing or casing, which
means the reservoir fluids from the open-hole section are in direct
communication with the wellhead. And the open-hole section encountered
several intervals with hydrocarbon gas potential. Thus, once the
neglected wellhead developed a leak, this became the whistling well.
The sketch on the right shows what the well would look like if
properly plugged and abandoned. The tubing would be removed from the
well. The entire slotted liner section would be plugged with cement to
prevent any further migration of reservoir fluids. A 150-foot plug of
cement would be set at surface. The previously un-cemented annuli would
be filled with cement. Again, all casing strings would be cut off at
least three feet below the surface and a marker plate would be placed.
The last well is West Dease Test #1. I've included this well simply
because it is representative of the 17 wells allegedly being used for
temperature monitoring by USGS. I use the word ``allegedly'' because
the USGS has not provided the required documentation to demonstrate
that the wells are actually being used. They have also failed to
provide the required information to demonstrate that the wells have
mechanical integrity. For proper abandonment, these seventeen wells
would simply need the diesel to be cleaned out of the hole (which
should be done anyway), a 150-foot cement plug placed on top, the pipe
cut off to at least three feet below ground level, and marker plates
installed. All seventeen of these wells could be plugged for less than
five million dollars.
Out of curiosity, I looked up the BLM requirements for proper
plugging and abandonment. The BLM requires an operator to plug and
abandon a well promptly and according to an approved plan, whatever
that means. In other words there are no documented BLM standards for
plugging and abandonment. (Interestingly the National Park Service has
very specific guidelines for onshore wells within their jurisdiction,
as does BSEE for offshore wells.) However, even if BLM has no specific
plugging and abandonment requirements they are still obligated to
follow the laws of the State of Alaska and follow our regulations.
Although BLM has no documented standards for plugging methods, they
are very clear on time limits for plugging a well that is not in use.
It must be plugged within ONE YEAR. Extensions can be granted for no
more than one more year at a time, but the operator must demonstrate a
good reason for the delay (And lack of budget or interest is not a good
reason.) and must resubmit the request annually.
Allowing these unsafe and unsightly wells to litter Alaska's
wilderness while threatening both human safety and the environment is
unacceptable. Nonetheless, BLM has properly addressed only 9 of the 136
wells and well sites and Alaskans have taken care of another seven.
If an oil company operated these wells, the AOGCC along with
several Federal agencies would force compliance with our regulations
and impose fines for non-compliance. And if we didn't, the public
outcry would be deafening.
When it comes to the Federal Government as operator, we can find
them to be in violation of our regulations but, unfortunately, we have
no legal authority to force them into compliance. And we shouldn't have
to. Adequate funding should be specifically designated for the purpose
of bringing these wells into compliance with Alaska's--Federal--
regulations.
As a regulator I am aghast, along with my fellow Alaskans, that the
BLM consistently fails to offer a plan to deal with these environmental
ticking time bombs. It is long past time to take responsibility for and
clean up these 120 messes. My agency has a thorough understanding of
what is required to plug and abandon wells properly and in compliance
with Alaska law. We want to work with the BLM to develop and implement
a plan to accomplish this as soon as possible.
The Chairman. Thank you all for your testimony. Let me
start with a few questions.
Mr. Cribley, Ms. Foerster just testified that the AOGCC--
that's the Alaska Oil and Gas Conservation Commission--is
working to get from the BLM accurate data on the condition of
the wells, but they do not have accurate downhole data on 75
wells, nor do they have surface data on 81 of the wells. Is
there data that the BLM has that it is refusing to make
available to the AOGCC?
Mr. Cribley. The Bureau is working very closely with the
AOGCC right now, and we have provided to them all of the
records that we have on the legacy wells in the NPRA and are
ready to discuss with them the disposition or the condition and
status of those wells. So we have shared everything that we
have in our records.
The Chairman. So you do not have information or data about
wells that you have failed to provide to the AOGCC?
Mr. Cribley. No. We had just recently gone through and
searched all of our records and provided additional records
that we had not shared with them previously. But we have shared
with them everything that we have in our files right now.
The Chairman. Let me ask you about this strategic plan that
you folks are developing, as I understand it. When is that
going to be completed?
Mr. Cribley. Right now, we've provided all of our
information to AOGCC, and they're scheduled to get back with us
in September to have a discussion on the characteristics of the
136 wells. Our intent is to try to have that plan completed by
the end of this year, calendar year 2012.
The Chairman. Will that plan include an estimated cost of
doing complete remediation or necessary remediation on the
remaining wells?
Mr. Cribley. What the Bureau is working on right now is a
5-year strategy on how we would most efficiently approach
remediation of the highest priority wells. One of the things
that we need to do or we want to do is sit down with the
Commission and also with tribal interests in the North Slope
Borough as far as priorities of the wells. We don't have that
done yet, but that would be factored into that strategy as far
as what we would do in the near term.
The Chairman. But, now, are you implying there that you've
got a 5-year strategy to identify what needs to be done on the
highest priority wells, but at the end of the 5 years there
will still be un-remediated wells? Is that what I understand?
Mr. Cribley. That 5-year strategy won't address the
remediation of all of the wells, no. It will be just the ones
that we feel that we can do within that 5-year period.
The Chairman. So you're not trying to do a proposed
strategy for fixing this problem. It's just a strategy for what
can be done over the next 5 years. Is that right?
Mr. Cribley. We're looking at the near term. Yes, sir.
The Chairman. It seems that there is a disagreement about
such a basic thing as how many wells have been plugged. I
noticed that you say, Mr. Cribley, in your testimony that since
1952, 19 wells have been plugged. The U.S. Navy plugged one
well in 1952. The BLM began its plugging and has plugged 18
wells since then.
Then when I get over here to the testimony of the other two
witnesses, it doesn't seem that there is agreement on that.
Representative Millett says only 16 wells have been properly
plugged. What explains the difference in opinion about the
facts that we're dealing with here?
Is there a reason, Ms. Foerster, why you do not believe
that the 19 wells have been plugged that Mr. Cribley says have
been plugged?
Ms. Foerster. Chairman Bingaman, a well is considered
properly plugged and abandoned to my satisfaction if it
complies with the regulations of the State of Alaska. Only 16
wells do that, and 7 of those wells were wells that aren't
considered in that list of 19 that Mr. Cribley addresses. Seven
of those wells he's classified in the 24 that were transferred
in the land swap. So that's one of the problems.
He's also considering the 34 re-vegetated wells as properly
abandoned. However, nothing has been done to address those
wells. The Interior Department has written those wells off
simply because there's nothing left at the surface.
Now, it is possible that the Interior Department could come
back to us and demonstrate to us that those wells are of no
concern. But that is the operator's responsibility to come to
this agency and say, ``Here is the technical data and the
scientific proof that those wells are safe and secure.'' No one
has done that. We're open to them to do that.
But there are at least 5 wells that they've written off as
properly plugged and abandoned, but none of those wells meet
State of Alaska requirements. This is part of that getting on
the same page that we need to do.
But, I'm sorry, for the State of Alaska to consider a well
plugged and abandoned, it has to meet our requirements. Our
requirements were put in place to protect the environment, to
protect human safety, to prevent migration of downhole fluids,
and to protect ground waters that people waters that people
might use. Only 16 of the wells meet all of those requirements,
and 7 of those are ones that aren't part of his 19 because
they're in the land swap.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. I want to
continue on this issue of the data that has been conveyed.
Mr. Cribley, you've indicated that you've gone through
everything and have conveyed that, and now you're waiting for a
sit-down with AOGCC. I like sitting up here, because I can read
the body language of not only the people that are testifying
but oftentimes those that are in the audience who have a little
bit of knowledge about what is going on, too. What I saw with
the body language was there is real disagreement as to whether
or not the full data has been conveyed, whether or not there is
a good working relationship between BLM and AOGCC.
The Chairman, I think, has appropriately queried on the
issue of what has been satisfactorily plugged and abandoned
according to State standards. So I'd like to spend just a
little bit of time understanding where we are with the two of
you on either side of the table.
Ms. Foerster, do you feel that you have the data that you
need at this point in time to sit down with BLM and map forward
a schedule, not only going forward, but addressing those wells
that BLM considers to be complete and, in fact, the State of
Alaska has said, ``We don't have the information to be able to
sign off on that?''
Ms. Foerster. Ranking Member Murkowski, the short answer is
no. But the longer answer is we only have data on the wells
that I described in my written and oral testimony.
Senator Murkowski. That was how many?
Ms. Foerster. But----
Senator Murkowski. How many wells was that that you
described then?
Ms. Foerster. We have downhole data on 61 wells and surface
data on 55, and what that tells me is, at best, something in
the process of transferring data has failed. When we get back
to Anchorage, we'll fix that, and the data that I'm missing,
I'll get. But the worst case scenario for that is they have
given us all the data they've got. How can they assure us that
wells that they have no data for aren't a problem? That's what
really worries me.
Senator Murkowski. Mr. Cribley, do we have situations where
we simply don't have data on certain wells?
Mr. Cribley. That's probably true, yes. I mean, everything
that we have is based on wells that have been been drilled for
a large number of years, and a lot of those a long time ago. We
don't have all of the records, or we--well, what we have does
not characterize fully everything that has been drilled out
there.
Senator Murkowski. So whose responsibility is that?
Mr. Cribley. Ultimately, right now, it's the Bureau of Land
Management's responsibility. But we have, as far as we know,
captured all the data that is available on those wells, and
some of those where it isn't complete.
Senator Murkowski. If you've captured the data that is
available, I can understand that. You have some wells that were
drilled back in the mid to late 2040s.
Mr. Cribley. Yes.
Senator Murkowski. But you also have a responsibility,
then, to ensure that whatever activity that was conducted,
however long ago it was, is then properly plugged, abandoned,
and the government can walk away from that. Now, the fact that
you don't have the data doesn't mean that you get to walk away
from the responsibility. So how do you collect the data to
provide to the State so that you can give the assurance that
this has been properly remediated?
Mr. Cribley. That's what we're trying to go through right
now--is sharing all of the data that we do have and then
sitting down with the Commission and having a dialog on the
status of all the wells so that we both have the same
information and are in agreement with the numbers and the
status of all those wells. One of the challenges that we have
right now is that we haven't come to agreement on that, and
that's why there's a discrepancy and we need to resolve that.
It is our commitment to work with the State on that issue, and
if additional information needs to be collected, and we come to
agreement on that, we'll do everything we can to try to achieve
that.
Senator Murkowski. I appreciate your words. But I also
recognize that it is literally taking an Act of Congress to get
the Department of Interior, to get BLM to step up to its
responsibility. That ought not to be the case. You know, I have
brought this up to every secretary since I've been here in the
Congress.
Through the good work of Representative Millett and just
pushing the legislature, we have managed to get the attention,
but now we're sitting here. We've got a hearing--and, again, I
really appreciate what the chairman has done--and now we're
sitting down with a plan.
But, you know, to be at a point where it is decades after
the liability has been incurred--I mean, the regulations, the
law, requires that you go in, you explore, you drill, you
leave, you plug it and abandon it within 1 year. This just
continues, the failed and broken promises that this Federal
Government has made to the State of Alaska and just walked away
from the promise. You leave it there sitting on the tundra, and
you say, ``Well, the budget doesn't allow for it.''
But our budget is able to allow for other things within the
department that other people place priorities on. As Alaskans,
we place a priority on taking care of our land. When the
Federal Government comes in, they've got an obligation to work
with us to make this happen.
I don't mean to pile on you, because I do believe that you
have been working in good faith to try to make some progress
here. But we've got some folks within the department that have
not yet woken up to the responsibility, and we're going to keep
on them.
Mr. Chairman, my time is up, but I've got some more
specific questions. I'll let my colleague from West Virginia
proceed.
The Chairman. Senator Manchin.
Senator Manchin. Thank you, Mr. Chairman and Ranking Member
Murkowski. As West Virginians, we have a lot of sympathy for
Alaska trying to do all they can to provide energy for this
great country and then being treated like a second class
citizen. So we understand very well your frustration. With
that, I know the royalties, or the severance tax that the
Federal Government receives--I'm sure it's quite substantial
from Alaska.
Is that correct, Ms. Millett?
Ms. Millett. Senator Manchin, yes, $9.4 billion for
offshore and NPRA lease sales since they've been leasing.
Senator Manchin. So the wells that we're talking about,
basically--does anyone have a total cost of what it would cost
to plug these wells?
Mr. Cribley. We have not made an estimate of the total
cost.
Senator Manchin. What type of formations are you in, or how
deep are these wells? Are they all varied?
Mr. Cribley. They vary. Some of them are shallow. Some of
the wells were as much as 20,000 feet deep.
Senator Manchin. But as far as casing, the cost of casing,
or cementing them in is about the same, no matter how deep or
not, because you don't--you're basically going down below the
surface to do that, correct? It's all about the same.
Mr. Cribley. Yes.
Senator Manchin. So it would probably be a very
insignificant cost compared to the resources and revenue you
receive. The only thing I would say and the frustration I would
have--and I know that Senator Murkowski and other people who
have a lot of natural resources in our State--resources in our
State--is why is the government allowed to be treated
differently than the private sector? If this would be a private
company that has done what has been done by our own government,
what do you think EPA would have done by now?
Ms. Foerster.
Ms. Foerster. I love this question, because if this--so
thank you. If this situation--well, this situation would not
exist if these wells had been drilled by a private company,
because there is not an operator in Alaska that operates this
way. However, let's pretend that there were. An operator----
Senator Manchin. Would they be banned for life from doing
business in Alaska?
Ms. Foerster. The would be fined out the yah-zoo. Excuse
me. They would be fined excessively, and we would refuse to
approve permits to drill for them. They would never be allowed
to operate. Then the landowner would likely be the State of
Alaska, and the Department of Natural Resources would step in
and take the land back away from them.
Senator Manchin. Are any more exploratory wells being
drilled by the government in Alaska?
Ms. Foerster. The BLM and the USGS drilled a couple of
wells near the city of Wainwright a few years ago. But as as of
now, no.
Senator Manchin. You, as the State, have no jurisdiction
over the Federal Government preventing them----
Ms. Foerster. Yes, we do.
Senator Manchin. Can you prevent them from drilling until
they plug the others? I know you would do that with a private--
with a private company, you would do that, correct?
Ms. Foerster. With a private company, we would do that. So
with the Federal Government, we would do everything we can.
However, my attorneys tell me that the Feds trump State, and
while we can find them to be in violation of our laws, we
cannot fine them. We cannot exert our authority over them. All
we can do is embarrass them in the court of public opinion and
ask them nicely to be compliant.
Senator Manchin. Have you asked the EPA to use all of their
influence to try to get this corrected?
Ms. Foerster. We have, and we've even spoken with an
investigator for the EPA's environmental crime section. He says
that the statute of limitations has expired on these wells. I
find that hard to believe since they're still a problem, but
that's what we've been told.
Senator Manchin. Do you have any comparison to how a
private company has been treated, whether it be in Alaska
Alaska or anywhere else in the country, and the statute of
limitations allowed to expire, but they still go after them?
Have you been able to compare that to what you're getting told?
Ms. Foerster. We don't have an operator in Alaska who
behaves this way. But if they did, I guarantee you I would
exert every bit of power and attention and energy I could to
fixing the problem.
Senator Manchin. I think you all can understand our
frustration, especially in West Virginia, and what we go
through every day with our own government. We just want a
little partnership. I think that's what the senator from
Alaska--all of us--just work with us. We'll be the best partner
you've ever had. But, boy, when you've got to fight your
government every day, it just--the frustration just grows and
grows.
So with that, I yield whatever time I might have back to my
good friend from Alaska.
The Chairman. Let me just make the obvious point that this
is an issue that cries out for an earmark. Would my colleagues
agree with that? I think anyone who is opposed to earmarks
hasn't been sitting in on this hearing.
I'll just defer to Senator Murkowski for her additional
questions.
Senator Murkowski. Thank you, Mr. Chairman. I look forward
to working with you on that one.
Ms. Foerster has presented and, I think, Representative
Millett has also presented a couple of different options here.
We will await the plan for how you approach the next 5 years.
But there have been some suggestions that, as one course, you
could transfer these wells to the State. You could provide
through a leasing arrangement with a remediation requirement.
Are there any serious discussions about these as possible
action plans, Mr. Cribley?
Mr. Cribley. We haven't had discussions with the State up
to this point as far as looking at alternatives or options for
dealing with this. I know that Ms. Foerster has presented this
at different meetings and such, but we haven't had a dialog
specifically on that, no.
Senator Murkowski. Ms. Foerster or Representative Millett,
do you care to comment?
Ms. Millett. I actually did come down here in March and
meet with local BLM officials and gave them all the options
that we spoke of today, first with having them lease the land,
retain ownership, and as a part of the lease agreement have the
companies, the operators that lease the land, remediate the
wells. It was a win-win. The revenues from the lease would go
to the Federal Government. It would create jobs, and it would
create a stable energy supply for stable energy supply for
America. They didn't want to have anything to do with that.
I also asked them to convey the lands to the State and we
would take care of the remediation, and they weren't interested
in that, either. So we've reached out to the BLM locally. We've
reached out to them here in DC. At every turn, there is nothing
but a plea of poverty about these wells, which is incredibly
frustrating for me. We've given options. They seem realistic.
They seem reasonable. So we just haven't had any traction.
Senator Murkowski. Mr. Cribley, do you know anything
about--you say you haven't been involved in any of these
conversations. Do you know why the BLM would just reject out of
hand any of these other options?
Mr. Cribley. No. Like I say, I haven't been directly
involved with any of those conversations, and so I can't really
respond to what our response would be to those. But I am open
to sit down with the State and also with our Washington
representatives to have discussions on this as far as looking
at what our options are within our authorities. I mean, we can
only do so much with the authority that we have currently.
Senator Murkowski. It does cause me to question, though,
that if you were to do this, either to turn it over to the
State or turn it over through a leasing situation, if if then
you wouldn't have the 1-year requirement to kick in and have,
you know, an almost impossible task to remediate within the
time period before whoever takes it over gets fined. The
Federal Government has been able to sit there for 40 years.
There's no fine. There's no consequence. There's no nothing.
But if you are able to find a fix, whoever might be willing
to step forward could then be subject to a level of fine
because they haven't remediated it. Again, it goes to kind of
the double standard that Senator Manchin has spoken to. Only
the Federal Government can get away with this.
So, Ms. Foerster, are you aware of whether there's been any
further conversations about other options?
Ms. Foerster. The conversations that Representative Millett
has had are the only ones I'm aware of. So no.
Senator Murkowski. All right.
Mr. Cribley, I want to go back to a question that the
chairman had asked about the 5-year plan. I have interpreted
your comments to mean that you are going to work with AOGCC to
identify what you believe to be the highest priority wells to
move on first. You've indicated that 13--you've got a plan for
13 wells over the next 3 seasons. So does your 5-year plan
incorporate these 13 wells over 3 seasons, so you're really
only working on 2 years after that?
Mr. Cribley. Actually, you probably just corrected me, and
my plan is 3 years, not 5 years. But what we're looking at is
looking at what we can do within the next 3 funding cycles and
putting that together.
Senator Murkowski. What you can do within the next 3
funding cycles, assuming you don't ask for anything more than
you've typically asked for in the budget process, in the
president's budget?
Mr. Cribley. What we will be doing is putting together a
plan on how and what we would do and what that cost would be.
Then we would go through our budget process as far as
submitting and trying to get support for funding of those
remediation actions.
Senator Murkowski. So 13 wells over 3 years out of 120. I
think people can do the math. We're going to be sitting here
for a long while. You mentioned you've got a 2-year-old
grandson. Do you think that this is a reasonable schedule?
Mr. Cribley. I guess we're framing it within what we feel
are reasonable capabilities or reasonable amounts of funding to
ask for to do the work. Up to this point, since 2002, the
Bureau has spent over $85 million, or almost $86 million, in
the remediation of 18 wells. The cost of remediation on the
North Slope, as you well know, is know, is significant, and
we're trying to stay within reason as far as what we're asking
for from a budget perspective, especially considering the
environment that we're working in right now with our budgets
potentially declining.
I mean, we can put a plan together as big as the sky. But,
you know, the reasonableness of being able to secure that level
of funding is probably remote, at least from our perspective.
Senator Murkowski. I might be more sympathetic if you
hadn't received $9.4 billion from the lease sales within the
NPRA. I mean, it just seems to me that you've got some money
coming in, and you're not willing to spend it on this. You're
willing to spend it in other budget categories. But where the
responsibility lies--after you come in and take, you're not
willing to clean it up, even though you've gotten the lease
sales. Maybe if we hadn't seen some lease sales up there, it
would be a different picture.
But I don't buy into this, you know, ``Oh, poor us. We've
got tough budget problems.'' We've been helping you out in
Alaska in considerable ways, and you're walking away from the
responsibility, and we're not going to allow that.
My time is over. I don't know whether----
Senator Manchin. Just one quick question.
The Chairman. Go ahead, Senator Manchin.
Senator Manchin. Thank you, Mr. Chairman.
I think, Ms. Foerster, you might be able to help me on this
and maybe Ms. Millett on this, too, from the State Legislature.
Ms. Millett. Yes.
Senator Manchin. I don't know how your money flows, because
in West Virginia, we don't have federally owned resources. Most
of them are privately owned. Does your money flow basically
from the Federal budget? Does it come directly to the State,
and the Atate forwards on a check to the Federal Government for
the severance tax you receive? If there was ABC Drilling
Company leasing from the State on Federal land, how does that
money flow?
Ms. Millett. Senator Manchin, the Federal money flows from
the operator to the Federal Government on Federal lands. From
the State government--if an operator is on State land, it flows
to the State government. So we never receive any revenue
streams from the Federal Government on drilling or activity
that's on our Federal lands. So the money flows from----
Senator Manchin. I don't think that's correct. I don't
think that's--the reason I say it's not correct--I don't think
that anywhere else in the country that happens. I think that,
basically, you do get resource--you should you should get
revenue----
The Chairman. You get--50 percent of the revenue from
Federal leases go to the State of Alaska.
Ms. Millett. Right. So the Federal money--so are we talking
about----
Senator Manchin. I'm just trying to follow the money here.
Ms. Millett. OK.
Senator Manchin. If you're getting a 10 percent royalty----
Ms. Millett. Yes.
Senator Manchin. OK. If a 10 percent royalty comes off, and
ABC Drilling Company owes $1 million, does $500,000 go directly
to the State and $500,000 to the Federal Government? Does $1
million go to the Federal Government and $500,000 back to the
State? Or does $1 million go to the State and you forward on
$500,000?
Ms. Millett. The taxes go from--the portion that is owned
by Alaska--50 percent, so 50 percent and 50 percent--they each
go to each entity. So the State would get 50 percent, and the
Federal Government would get 50 percent.
Senator Manchin. Let me ask Ms. Foerster.
Ms. Foerster. I think you're talking about royalties, and
there's no Federal land that's getting royalties. Is that what
you were asking about?
Senator Manchin. The Federal Government doesn't get
royalties on----
Ms. Foerster. There's no production on Federal land.
Ms. Millett. Right.
Senator Manchin. This is all on State land, then.
Ms. Foerster. It's all on State land, so there----
Senator Manchin. Let me ask you this, then. The only thing
I'm saying is it doesn't look like the government is going to
come forward in any type of an expedient manner to fix the
environmental problem that they caused. If the State took it
upon itself to go forward with this and use your resources then
withheld, basically, you're basically front-loading it. But
you're going to take care of an environmental--I don't think
there's a court in this country that you would lose--to get
your money back from the Federal Government if you have to go
out and do it.
But if you sit here and wait, you're going to do 3 a year
or--it's just not going to happen. You're going to have to, if
you can--and if we can support you some way, we'll do it.
Ms. Foerster. Senator Manchin, as good as that sounds and
as eager as I am to fix this problem, the precedent that that
would set is just horrifying, because then any operator who
wanted to use the time value of money would say, ``State, you
go plug my wells, and when I've got a budget, I'll pay budget,
I'll pay you back.'' We just can't set a precedent of fixing
other people's problems.
Senator Manchin. I would assume that a private entity--
you're going to get bonding on that. They have to bond on the
front end. If they don't do it, then you use their bonding
money--I would assume that's how you all do your business. If
not, I hope you do. I would encourage you to----
Ms. Foerster. The bonding that we have right now would not
be sufficient to----
Senator Manchin. Then, you need to raise that.
Ms. Foerster. We do. Yes, sir. You are exactly right.
Senator Manchin. I can tell you there's a way to fix that.
I'm just trying to get you in a position to clean up for the
sake of the country and the sake of Alaska a horrible
environmental problem that's not your fault.
Ms. Foerster. Yes, sir. Again, I just hate to set
precedents that would allow others to abuse.
Senator Manchin. I got you. I understand. I'm just trying
to--if we can get it figured out, because--Mr. Cribley?
The Chairman. Mr. Cribley.
Mr. Cribley. Just a point of clarification as far as
receipts that have been received from oil and gas lease sales.
The $9 billion figure they're talking about includes both
offshore leasing and leasing within the NPRA. In the last 10
years, in the leasing that we have been doing in the NPRA, we
have received $250 million of lease sales, and 50 percent of
those funds go directly to the State.
So, in fact, the Federal Government has received $125
million. Of that $125 million, the Federal Government has spent
$86 million on remediation of the legacy wells in the NPRA.
Now, the funds that come back from lease sales go directly to
the Treasury, and then the Congress then appropriates those
dollars. But as far as moneys received and moneys expended in
the NPRA, we have expended significant resources to do the work
that we've been able to do up to this point.
The Chairman. Now, do the numbers that you just recited
include the bonus bids?
Mr. Cribley. I believe so.
The Chairman. Because the State gets 50 percent of those
bonus bids, just as it gets 50 percent of the royalty from the
production in the NPRA.
Mr. Cribley. Right. The other point of clarification is
that there is no production at this date within--of oil and gas
resources on Federal leases in the National Petroleum Reserve--
--
The Chairman. But there have been some bid sales.
Mr. Cribley. Yes. We have done sales. We've been doing
sales for the last 10 years, and we have done extensive
exploration work. But nothing has gone into production yet.
The Chairman. Right. But the bonus bids that have been
received--the State is entitled to 50 percent of that----
Mr. Cribley. Yes, sir.
The Chairman [continuing]. Has received it.
Mr. Cribley. Yes, sir.
The Chairman. Senator Murkowski.
Senator Murkowski. I have 3 more questions, and, hopefully,
these will be quick.
I believe it was you, Representative Millett, that
mentioned that the price of remediation of these wells--there's
some discrepancy here, that BLM says it costs roughly $2
million to plug one of the wells, and North Slope Borough says
it costs roughly $700,000. Why the discrepancy--the very wide
discrepancy between the two? Can you speak to that, or maybe
Ms. Foerster?
Ms. Millett. Ranking Member Murkowski, $86 million for 18
wells is what the BLM testified to today. The North Slope
Borough did 7 wells at the cost of about $300,000 each well. So
there is a big discrepancy, and I think that's an incredibly
good question to ask the BLM--why their costs are so high when
private sector can go out and plug wells for just a fraction of
that.
Senator Murkowski. Mr. Cribley.
Mr. Cribley. The records that we've got right now--the
costs for remediation vary anywhere--the highest is about $25
million, anywhere down to $1.4 million for individual wells.
The reason for the discrepancy is that the wells that the
borough are remediating are within driving distance or can be
accessed easily from the borough, and they can do that year
round. Most of the wells that we are remediating are in very
isolated regions of the National Petroleum Reserve, and most of
the work that we do out there can only be done during the
winter. As any oil and gas company will tell you, production
cost on the North Slope is extremely expensive and is very time
sensitive. It involves stationing or positioning equipment, and
then getting in and doing the work during the wintertime, and
then positioning so you can take out hazardous materials, and
then transporting them by barge, you know, through the Arctic
Ocean down to the West Coast for proper disposal.
So the work that we're doing is very difficult and very
challenging. I think we have done a very excellent job in the
work that we've done up to this point. But our challenge and
part of the problem is just the isolation and the conditions
that we operate in on the North Slope.
Senator Murkowski. When you determine which well to move to
next in terms of the remediation and setting forward this
plan--you've got your 13 wells proposed over the next 3 years--
are you prioritizing them based on the hazards or the threats
that they present to the environment, or are you prioritizing
them because you've got a few that are closer together where
you can get some efficiencies with your costs as you work to
plug them? Do you prioritize them because you can do one
cheaper than the next and not use up your whole budget? You can
click off 1 or 2 because they're easy, and you save the tough
ones for later that may be a greater environmental threat?
Mr. Cribley. I think, actually, it's both. The first
priority, as far as when we're selecting wells, is based on the
environmental or health and safety risks, and those are the
ones that we deal with or treat first. As we identify those, we
try to see if there are any wells adjacent to or associated to
those that we can also deal with while we're in that area just
to try to reduce our overhead cost and try to be as efficient
as possible and try to basically get the biggest bang for our
buck when we are mobilizing on the ground in the NPRA.
But the primary driver is the risk involved, and those are
where we're going first. That's one of the things that we need
to come to agreement on with AOGCC--is which ones--what that
list looks like so that we're focusing on what everybody agrees
are the most important wells.
Senator Murkowski. Ms. Foerster.
Ms. Foerster. Thank you, Ranking Member Murkowski. I'd like
to add a little bit. First, at the working level, the AOGCC and
the BLM staffers have a very good working relationship. That
was questioned earlier. We're all Alaskans and we're all trying
to achieve the same goal, I think.
But there are some strategies that we can employ that have
not been employed in the past that I think contribute to the
high relative cost of the BLM's cleanup. First, mobilization
and demobilization of equipment is a large portion of the cost.
So if you pick one well at a time, and you do that mobe and de-
mobe on that well and ignore the wells that are nearby and say,
``Get you later,'' then you will incur those same mobe and de-
mobe costs every time you go out, whereas if you can get every
well in the area, all of those wells can share that cost.
That's one of the things that the North Slope Borough did,
and that's one of the reasons that their costs were so much
lower. They used a rig that they had in the area to do all of
the work.
Another thing that will lower the cost is if you don't wait
until you have a crisis, if you don't wait until the well is
about to fall into the Arctic Ocean, or something like that
that just astronomically adds to the cost, then you can cut
down your cost. If you don't go in assuming that a particular
type of well is not going to be a problem and then get
surprised when it is, and then you start to have to fight a
blowout, then you can reduce your cost.
So there's a lot of things that we can do. If we work
together, get a good understanding of what the condition of
those wells is, we can drive down the cost.
Another example--some of these wells can likely be
remediated using a coiled tubing unit rather than a drilling
rig. Coiled tubing units are cheaper.
My agency is anxious to work with Mr. Cribley's, and we
will work on the schedule that he has outlined. I promise you
we're going to do everything we can to do it right, to do it
safely, and to do it as efficiently and effectively and cost
consciously as possible.
Senator Murkowski. Do you think that 13 wells over the next
3 seasons is reasonable?
Ms. Foerster. It depends on your definition of reasonable.
Putting my hat on as a regulator, heck no, it's not reasonable.
If an operator were to come to me and say, ``We've got 120
wells that are out of compliance with your your regulation, and
we think it's reasonable to spend the next 5 years doing 13 of
them, and we'll follow that schedule until you're dead,'' no, I
would not consider that reasonable.
Senator Murkowski. Mr. Cribley, one further question for
you. As you're aware, the public comment period on the NPRA
management plan has just closed out. There's 4 alternatives.
Some of them have some proposals within the alternatives that
place some serious restrictions on activity within the
Petroleum Reserve.
Is it your understanding whether or not the NPRA management
plan, as is being considered, would have any impact or restrict
BLM's ability to move in and do any of the remediation or the
cleanup on any of these outstanding wells?
Mr. Cribley. There won't be any decisions in the plan that
would limit us or prevent us from doing remediation on legacy
wells.
Senator Murkowski. So regardless of what happens with the
NPRA management plan, BLM is assured that--not only what we're
talking about here today, with a proposal of 13 wells over 3
seasons--that you wouldn't be restricting or limiting in any
way this cleanup?
Mr. Cribley. Yes.
Senator Murkowski. I thank the chairman for the focus that
he has given this issue this morning. I am very hopeful that as
a consequence of what has been shared today we will have an
accelerated process to identify the priorities in a way that
the State, through the AOGCC, is satisfied, that the BLM
recognizes that there is an imperative, that there is an
urgency to this, because from the Alaskans' perspective, this
is the absolute height of hypocrisy when we hold our private
operators to the highest of standards and our Federal
Government can not only reject those standards but literally
walk away from their level of responsibility.
It reflects poorly on us as a government. I think, as a
State, we've got an obligation to stand up, to push back, and
make this right. I don't think it's the responsibility of the
State to pick up the tab on this if the Feds did this, and so
how we work it out is going to be critically important.
I am not one who is willing to have to drag folks into a
committee hearing on an annual basis to say, ``Where are we?''
I'm still doing that with our land conveyances 50 years after
statehood, because that's another promise that was not kept.
The reason they say they can't do it is because we don't have
the budget. You know, easy come, easy go.
It's not acceptable, and I think we all recognize it's not
acceptable. So I will work on the appropriations side to do
what I can, but I need this administration to place a priority
on it, to place the priority in the budget and make good on its
obligations.
So I would hope that we could get a report back from your
offices, Mr. Cribley, and working with you, Ms. Foerster,
sometime after September after you have advanced a schedule.
But I think we need a game plan on this, because up to this
point in time, it's been absolutely insufficient, inadequate,
and an embarrassment to the Federal Government.
So with that, I thank you again, all of you, for making the
flight back. We'll see you back in Alaska.
Thank you, Mr. Chairman.
The Chairman. We thank you all for coming, and that will
conclude our hearing.
[Whereupon, at 10:46 a.m., the hearing was adjourned.]
[The following statement was received for the record.]
Statement of Charlotte Brower, Mayor, North Slope Borough, AK
Chairman Bingaman, Senator Murkowski, members of the committee. I
want to thank you for the opportunity to provide comments for your
hearing on ``Remediation of Federal Legacy Wells in the National
Petroleum Reserve--Alaska.''
Thank you, Senator Murkowski, and staff of the Energy and Natural
Resources Committee for your tireless efforts to address an issue that
has been of concern to our people for almost 70 years--the cleanup and
remediation of exploration activity in the NPR-A.
I also want to thank the Alaska House of Representatives for their
unanimous passage of House Joint Resolution 29, calling on the federal
Bureau of Land Management to fulfill its mission of protecting public
land by plugging and remediating more than a hundred oil wells in
northern Alaska.
These wells, known as the ``Legacy Wells,'' were drilled between
1944 and 1982 by the federal government in an attempt to locate
commercial quantities of oil and natural gas. The U.S. Navy and U.S.
Geological Survey drilled 136 wells in Northern Alaska over the span of
five decades, which are now abandoned. Only a handful of the 136 wells
have been plugged and cleaned up by State of Alaska standards. The
Sponsors of the bill, specifically Representative Millett recognized
that these wells pose significant risk to ground water, vegetation,
waterfowl, land and sea mammals, and fish which the people of the North
Slope have depended on for thousands of years.
This issue is of concern to the entire State and I look forward to
working with the legislature, our Governor, and of course you, Senator
Murkowski, and this committee regarding the remediation of the legacy
wells.
I was recently elected to this office but I've been a resident of
the North Slope for 40 years. This week the North Slope Borough is
celebrating its 40th Anniversary as a local municipal government. I am
the wife of a whaling captain and grandmother to 23 grandchildren. My
family and my people rely on the land and waters of the North Slope for
our survival. My experience tells me that the best approach to solving
problems is to work together.
In that vein, my administration is based on three simple concepts:
The people of the North Slope need a seat at the table in
Arctic planning;
The people of the North Slope deserve a fair and stable
share of the revenues generated from the development; and
The development must find ways to preserve the culture and
communities of the North Slope.
As a cooperating agency with the BLM in the current EIS process
that will determine the future management of the NPR-A, the North Slope
Borough must be a part of the process to prioritize and address the
impacts of oil and gas exploration. Just a few months ago, I was in
Washington DC and met with then-Director Abbey and raised our issues of
concern with this process of cleaning up the ``legacy wells'' left
behind after the Navy and USGS exploration process. He stated that BLM
is committed to capping these wells, but it is an ``unfunded mandate''.
The Federal government wishes to act as steward of the land in Alaska,
often telling our people what they can or cannot do on the land, yet
here is an example of the same government failing to fulfill the most
basic of responsibilities as the land owner. Residents want to develop
the resources, but they want to do so responsibly.
Recently the State of Alaska's Oil and Gas Conservation Commission
(AOGCC) made the following comments:
All legacy wells are or have been out of compliance with
multiple Alaska regulations.
Although by no means exhaustive, the following summarizes the
most troubling issues:
Proper plugging and abandonment of wells is governed by
Article 2 of the AOGCC's regulations, 20 AAC 25.105, et seq.
The purposes of properly plugging and abandoning wells include
public safety, protection of the environment, and protection of
sources of drinking water.
Delaying the plugging and abandonment has already caused
several of the wells to be ``lost'' due to subsidence and other
normal earth movement. Two wells are at the bottom of what
subsidence and snow melt have now turned into lakes and a third
has been buried in a landslide. Additional wells simply can no
longer be found, with no explanation for why. Postponing
abandonment of the remaining wells puts them at risk of also
becoming ``lost.''
Allowing these unsafe and unsightly wells to litter Alaska's
wilderness while threatening both public safety and the
environment is unacceptable. Nonetheless, BLM has only plugged
and abandoned approximately ten of the 137 wells.
If these wells were operated by an oil company, the AOGCC
would force compliance with its regulations and impose fines
for any non-compliance. While the AOGCC can find BLM to be in
violation of AOGCC regulations, the AOGCC has no legal
authority to force the Department of the Interior into
compliance.
The Federal Government should provide adequate funding
specifically designated for the purpose of bringing the legacy
wells into regulatory compliance.
Additionally, two weeks ago, a spokesperson for the BLM said that
the Iko Bay #1 well near Barrow is leaking gas and is at the top of the
agency's list of wells that need to be plugged. We believe that BLM is
responsible to do this work, but in their 2004 ``Alaska Legacy Wells
Summary Report: National Petroleum Reserve-Alaska'' it states that 33
wells conveyed to the North Slope Borough under the Barrow Gas Field
Act of 1984 or to Arctic Slope Regional Corporation are out of BLM's
jurisdiction. We believe that the BLM is also responsible for these
legacy wells too. This is an issue that needs to be addressed. And we
can resolve it by working together.
Inupiat on the North Slope have always viewed the world through a
different cultural lens, and sometimes that has led to a conclusion
that we are anti-development. When we express a concern regarding local
development (past or present) it's for the same reasons that any other
community might have when development occurs in their backyard. In the
past we have aggressively supported opening many of the areas that were
closed to development, in fact we continually assist with visits by
political and media delegations. We have accommodated NPR-A
development, except in an area around Teshekpuk Lake, where valuable
wildlife habitat and subsistence activities have historically taken
precedence. We supported the bridge over the Niglik channel and see it
as a gateway to further NPR-A development. We also recognize that NPR-A
development could be a large contributor to future North Slope
production, but we must be partners in maintaining the integrity and
vitality of all resources.
Just the other day, Secretary Salazar issued a press release
related to the Norway Arctic Roundtable. He said the Arctic ``is a
place development can only safely expand if we also expand our
understanding through science and experience.'' He went on to say that
that is why the Arctic demands it own approach. ``We have to listen to
each other as global partners and we must listen to local communities.
We have to cooperate in our planning. And we must always put caution
and safety first.''
Let me be clear, my administration supports responsible oil and gas
development, and the broad goal of the North Slope Borough is to
maintain a healthy environment supporting Inupiat subsistence practices
while at the same time promoting economic growth and responsible
resource development. We support responsible development, particularly
when reasonable mitigation measures are applied to minimize subsistence
and socio-cultural impacts.
The abandoned wells can have a real and direct effect on the health
and welfare of all of our residents, and especially the youth in our
communities. In the past, we've seen the scars left behind on the
tundra and the waste generated from early development littering the
areas we rely on. There is a connection with subsistence hunting and
the negative impacts related to decreased hunting success. The passage
of the subsistence way of life to younger generations hinges on
successful hunts, and the presence of a healthy stock to hunt. It is
both a safety hazard and a health hazard.
We have had many good examples of working together to open the NPR-
A to oil and gas development. You may recall the issue of a bridge
across the Colville River at the Niglik channel to CD-5,
ConocoPhillip's western expansion of the Alpine field development.
Working together with residents of Nuiqsut, local corporations, the
Federal and State agencies, a solution was found.
The 2004 report mentioned above offers an example of a future
opportunity to work together--the concept of building staging areas
with airstrips and storage pads to facilitate development of
infrastructure in remote areas of the leased acreage. These staging
areas would have the potential to also allow BLM's future remediation
work associated with the legacy wells. By working with our Departments
of Planning and Wildlife Management, we could assist in making
recommendations for the location of these staging areas, continuing our
support of environmentally responsible development of the NPR-A and
expediting the cleanup of the legacy sites.
There have also been cases that didn't work out as well as planned.
In 1994, the Umiat area was considered ``cleaned up'' and was the
subject of a proposed FONSI. The NSB just happened to have students and
staff at Umiat that summer. At the time, witnesses recorded on video,
barrels of waste sloughing out of the river bank, proving the cleanup
was not yet complete. Had it not been for our insistence that the job
was not yet done, the wells around Umiat might very well remain hazards
to the environment and our food supply. For nearly a decade following
this event, residents of Nuiqsut feared contamination of the fish they
rely on from the Colville River.
When BP and Arco were proposing a merger in 1999, many issues came
up about commercial concerns, but we raised issues about environmental
and community concerns. ``Orphaned sites'' were identified for clean up
and industry agreed to work with State and local representatives to
collaboratively address our concerns. The downside to the cleanup
efforts, just like the legacy well program, was that it was subject to
limited funding--$10 million. A cleanup/restoration project should not
be limited by its expense alone, particularly when human health impacts
have been identified. What cost do we place on our health and safety?
The 2006 Northeast NPR-A Supplemental IAP/EIS identified key issues
including ``control of contaminant-related health risk''. A new
stipulation was set out requiring an initial survey that should examine
species and habitat potentially impacted by contaminants by lessee's
proposed developments. This addressed new development. We need the BLM
to apply the same standard to all historic activity--including the work
done by the Navy, Air Force, USGS and Husky Oil under contract to the
federal government as part of the original NPR-A exploration efforts.
``Contaminant containment monitoring'' and ``Mitigation of
contaminant impacts on subsistence'' are not negotiable for us. The
Federal government must find a way to provide funding to accomplish
this effort, and it should not affect the NPR-A Impact Aid grant
program. The BLM retains 50% of the revenues from rents, bonuses and
royalties associated with NPR-A leasing and development. These funds
only account for annual revenue of about $4.5 million. Additional
funding is necessary to do this right.
The residents of the NPR-A (and the North Slope Borough) that rely
on the planning area for subsistence must be assured that they are not
exposed to harmful levels of oil-development associated contaminants,
and that they will be protected against a range of contaminant-
associated disorders. Reassurance to our communities of continued
safety of subsistence resources will foster the continued viability of
the subsistence diet and way of life. It will also reinforce our common
goal of environmentally responsible development of the oil and gas
resources in the area. This we can do--by working together.
Quyanaqpak (Thank you very much) for the opportunity to address you
today.
APPENDIX
Responses to Additional Questions
----------
Response of Representative Charisse Millett to Question From
Senator Lisa Murkowski
Question 1. There was some confusion during the hearing as to
whether Alaska receives royalty payments from the NPR-A. Please state
for the record whether, and to what extent, federal leases have yielded
royalty payments to the State of Alaska and whether any revenue is
derived from lease sales, bonus bids, or production royalties.
Answer. Under federal law 42 U.S.C. Chapter 78, Section 6506a,
revenue from lease sales from the National Petroleum Reserve-Alaska are
equally divided between the federal government and the State of Alaska.
Alaska's portion is deposited into the NPR-A Impact Mitigation
Program. Created by the Alaska Legislature in 1984 (AS 37.05.530), the
program provides grants to communities most directly impacted by oil
and gas development. Funds we also distributed to the Alaska Permanent
Fund, the Public School Trust and the General Fund.
As a result of a lawsuit (Barrow v. State) brought against the
state by Barrow, Wainwright and the North Slope Borough, the state was
required to rework the distribution formula to make the impacted
communities first priority.
Because there is no oil or gas production in the NPR-A at this
time, the State of Alaska does not receive any production royalties.
______
Response of Cathy Foerster to Question From Senator Murkowski
Question 1. There was some confusion during the hearing as to
whether Alaska receives royalty payments from the NPR-A. Please state
for the record whether, and to what extent, federal leases have yielded
royalty payments to the State of Alaska and whether any revenue is
derived from lease sales, bonusbids, or production royalties.
Answer. The State of Alaska receives from the Federal Government a
portion of the revenues for lease sales, bonus bids, production
royalties and rentals on federal lands within the state. This portion
varies, depending on the location, as follows:
Three to six miles offshore: 27%
Beyond six miles offshore: 0%
Onshore Cook Inlet: 90 to 100%
NPR-A: 50%
There is production, and thus royalty payment, from the offshore
three-to-six-mile area and from federal lands onshore Cook Inlet. There
is no production, and thus no royalty payment, from NPR-A or offshore
beyond six miles.
______
Responses of Bud Cribley to Questions From Senator Bingaman
Arctic Conditions
Question 1. Are there any aspects of operating in the Arctic
environment that make it more difficult to remediate the legacy wells?
Answer. Yes. These wells are located in remote parts of Alaska
where work is performed in extreme conditions. These sites can be
several hundred miles from the town of Deadhorse, which is the
principal supply depot and nearest developed community. Access into the
NPR-A for well-plugging and remediation activities is limited to
overland travel in the winter to protect tundra vegetation and because
the tundra bog will not support overland travel or infrastructure in
the summer months. However, winter temperatures routinely reach -40
degrees Fahrenheit, there is very little daylight during this season,
and mobilization efforts during the winter months are extremely
difficult. Self-sufficient camps are transported to these sites via ice
roads, offshore sea ice, and snow packed roads. Fuel and provisions
require constant resupply, and all specialized equipment needs to be
winterized for arctic conditions.
Funding
Question 2. Can you please describe for us the Federal funding
available for the remediation of the legacy wells?
Answer. To date, $85.9 million has been spent to plug and remediate
18 legacy wells. As shown in the table below, funding for this work has
come from the annual appropriations of the Department of Defense and
the Department of the Interior and from supplemental appropriations
under the American Recovery and Reinvestment Act of 2009 (ARRA). In FY
2005 and FY 2009, the Secretary of the Interior used emergency transfer
authority to fund these activities. The FY 2013 President's Budget
includes $1.0 million for the legacy wells.
----------------------------------------------------------------------------------------------------------------
Year Activity Amount Source
----------------------------------------------------------------------------------------------------------------
2002 Army Corps of Engineers plug and $25 Million Defense
abandon Umiat #2 and #5 Appropriation
----------------------------------------------------------------------------------------------------------------
2004 BLM plugged Umiat #3, #4, #8 and $1.4 Million Interior
#10 Appropriation
----------------------------------------------------------------------------------------------------------------
2005 BLM plugged the J.W. Dalton Well $8.9 Interior
Million(including Appropriation
$7.5 Million
emergency
transfer)
----------------------------------------------------------------------------------------------------------------
2006 BLM plugged 5 wells in the $1.8 Million Interior
Simpson Peninsula Appropriation
----------------------------------------------------------------------------------------------------------------
2008 BLM plugged the East Teshekpuk $12 Million Interior
Lake well Appropriation
----------------------------------------------------------------------------------------------------------------
2009 BLM plugged the Atigaru Point #1 $14 Million Interior
well (including $8.9 Appropriation
Million emergency
transfer)
----------------------------------------------------------------------------------------------------------------
2010 BLM plugged the Drew Point #1 $16.8 Million ARRA
well
----------------------------------------------------------------------------------------------------------------
2011 BLM plugged the Umiat #9 well $2.5 Million Interior
Appropriation
----------------------------------------------------------------------------------------------------------------
2012 BLM is plugged Umiat #6 and #7 $3.5 Million Interior
wells Appropriation
----------------------------------------------------------------------------------------------------------------
Question 2a. How much money would be necessary to remediate the
remaining NPR-A legacy wells?
Answer. To date, $85.9 million has been spent to plug and remediate
18 legacy wells. The cost of plugging and remediating individual well
sites varies due to the location and type of work needed to plug a well
or remediate the site, and has ranged from several hundred thousand
dollars to $16.8 million. Project costs include cleanup, transport and
disposal of reserve pit and other solids waste in addition to the costs
of actually plugging wells, especially those threatened by coastal
erosion. In circumstances where well sites are in extremely remote
locations, the costs of transporting equipment and wastes collected at
these sites and disposing of it properly is very expensive.
In 2004, the BLM completed a comprehensive assessment and report of
the legacy wells in the NPR-A. This report was shared with the Alaska
Oil and Gas Conservation Commission (AOGCC). The BLM prepared a
strategic plan to prioritize the remediation of the priority wells
identified in the report, in addition to those wells being threatened
by coastal erosion. With the completion of the upcoming Iko Bay
project, which is anticipated for the winter of 2013-2014 (pending
availability of adequate funds), all high priority wells that were
identified in the 2004 report will be plugged. The BLM is preparing an
update to the report based on field inspections over the last several
field seasons, and is working closely with the AOGCC to come to
agreement on the actions needed or warranted for the remaining wells.
The AOGCC is reviewing BLM well file information, with a goal of
completion in the next few months. Once the BLM receives feedback from
the AOGCC, the BLM can develop a reasonable cost estimate for the
remaining work.
Number of Legacy Wells
Question 3. Your testimony indicates that of the original 136 wells
and boreholes, there are 39 unplugged wells, as well as 2 that have not
been located. However, Commissioner Foerster's statement indicates that
only 9 of the 136 wells and well sites have been properly addressed by
the BLM. Could you please explain for us the discrepancy in these
numbers?
Answer. The following table is the current BLM accounting of the
136 legacy wells:
------------------------------------------------------------------------
Status Tally Action
------------------------------------------------------------------------
Wells that are plugged *19
Not under BLM's jurisdiction 24 No BLM Action
Not under BLM's jurisdiction (USGS) 18 Final disposition to
be determined
Uncased geologic core tests 34 No BLM Action
Wells without accurate GPS coordinates 2 Monitoring area
Remaining unplugged wells 39 Monitoring and
Prioritizing
Well Total 136
------------------------------------------------------------------------
* Includes one well plugged by the U.S. Navy in 1952 and two wells
plugged by the Army Corps of Engineers. BLM has plugged 16 wells,
including remediating contaminated soils where necessary and removing
well site debris.
The BLM has plugged 16 wells, the Army Corps of Engineers plugged
two wells and one well was plugged by the U.S. Navy in 1952. Nine of
these wells were permanently plugged as Commissioner Foerster notes.
The BLM has plugged an additional nine wells with surface plugs. These
plugs prevent migration of any material to the surface and ensure that
no materials are introduced in the well bore. The AOGCC considers these
temporarily plugged. The BLM continues to meet with the AOGCC to
discuss technical issues, share data, and work towards an agreement on
the status of the wells and develop future actions.
Commissioner Foerster's numbers do not take into account 24 wells
that were transferred out of Federal ownership to the North Slope
borough or to Native Corporations as part of the Barrow Gas Field
Transfer Act of 1984 (P.L. 98-366); the one well plugged by the U.S.
Navy in 1952; 18 wells that are partially plugged and currently
operated by the U.S. Geological Survey (USGS) for monitoring efforts;
and 34 uncased geologic bore holes and foundation test holes drilled by
the U.S. Navy in the 1940s.
Question 3a. How many wells have been plugged and remediated to
date?
Answer. A total of 19 wells have been plugged. Of that number, the
U.S. Navy plugged one well in 1952, the BLM plugged 16 wells, including
remediating contaminated soils where necessary and removing well site
debris, and the Army Corps of Engineers plugged 2 wells. An additional
18 wells are partially plugged and are used and managed by the USGS as
climate change monitoring wells.
Question 3b. Please also describe for us the wells that are used
currently by the USGS.
Answer. There are 18 wells that were drilled in the late 1970s and
early 1980s. These are generally the deeper drilled wells that range
from a depth of 4,000 to 20,000 feet deep. These wells have been
properly plugged back to a depth of approximately 2,000 feet deep. USGS
uses the unplugged interval from the surface to 2,000 feet to monitor
changes in depth of permafrost as part of their climate change
research. These 18 wells are scattered throughout the NPR-A, but are
predominately in the northern portion of the reserve.
Work with the State of Alaska
Question 4. Are you making efforts to work with the State of Alaska
on this issue? If so, please describe.
Answer. Yes. The BLM invites state inspectors on all annual surface
inspections of the legacy wells, and BLM has asked the AOGCC to provide
any input on priorities for site visits. The BLM also invites the AOGCC
to witness all plugging efforts conducted by the BLM. The BLM has
shared all available well file information with the AOGCC to reach
concurrence with the AOGCC on the number of wells present, the current
status of these wells, and the status of the wells outside BLM's
jurisdiction.
As a matter of practice, the BLM provides Sundry Notices to the
AOGCC on all plugging and abandonment efforts to ensure that the BLM is
in compliance with state regulations. (A Sundry Notice is a form to
evaluate proposed changes to the operation of a well after it has
already been permitted.)
For matters where there is a technical question or opinion
concerning the final plugging of the well, as in the case of the nine
wells that the state considers ``temporarily plugged,'' BLM meets with
AOGCC to discuss the well condition and future actions that may be
warranted.
The BLM anticipates a hearing with the AOGCC to review the status
of 34 uncased or partially cased boreholes drilled for geologic strata
and permafrost research. The geologic and foundation core tests are
uncased and are shallow (from less than 50 feet deep to 1,600 feet)
boreholes. Core tests are naturally reclaimed and are indistinguishable
from the natural environment. The BLM intends to request that the AOGCC
remove the boreholes from their list of legacy wells.
The BLM is preparing an updated report that summarizes site visits
and risk assessments conducted over the past two field seasons, which
will be provided to the State once finalized. The BLM has solicited
State input concerning prioritization of wells and upcoming projects.
Failure to Remediate
Question 5. Why has the BLM failed to remediate the NPRA legacy
wells to date?
Answer. BLM has not failed to remediate all legacy wells: this
process is ongoing. The BLM has adopted a risk-based approach to
remediation of the most critical legacy wells and conducts an active
monitoring program to determine if well or environmental conditions
have changed at these sites. The BLM's 2004 Strategic Plan and the
soon-to-be completed Strategic Plan Update are both risk-based
approaches that consider technical issues and availability of funding.
BLM's active monitoring program is also an important element in
addressing the legacy well issue and BLM has taken action quickly when
the on-the-ground situation warranted immediate action to prevent
catastrophic failure that would threaten health and safety and harm the
environment. For example, BLM's periodic monitoring efforts showed that
several wells were threatened by coastal erosion, the J.W. Dalton (in
2005) and the Atigaru well (in 2009), and needed immediate remediation.
As the remediation work for these two wells was costly and there was
not time to request money through the normal appropriations process,
the Department used an emergency funding transfer mechanism authorized
by the Interior Appropriations Act. This rarely-used mechanism allows
the Secretary to transfer funds from other BLM and DOI accounts only in
very specific emergency situations, and other projects were delayed
because of the transfer.
As discussed in the answer to the second part of question 2, the
BLM has taken a risk-based approach to the issue. In 2004, the BLM
completed a comprehensive assessment and report of the legacy wells in
the NPR-A. The BLM prepared a strategic plan to prioritize the
remediation of the priority wells identified in the report, in addition
to those wells being threatened by coastal erosion. Pending available
funding and timing of contracting, completion of the Iko Bay project,
which is anticipated for the winter of 2013-2014, all high priority
wells that were identified in the 2004 report will be plugged.
Additionally, the BLM has remediated all reserve pits that remained as
a result of legacy well drilling activity consistent with Federal and
State regulations.
In 2010, BLM determined that an update to the 2004 report was
warranted and has revisited the sites of all the legacy wells during
2010-2012. The new report, which BLM expects to complete by the end of
2012, will provide comprehensive updated well and site condition
information and provide the basis for further strategic planning of
legacy well remediation in coordination with AOGCC.
The efforts to plug and remediate abandoned wells are
extraordinarily expensive due to the fact that the wells are located in
remote parts of Alaska where work is performed in extreme conditions,
often several hundred miles from a primary supply depot and nearest
developed community. To date, BLM has spent $85.9 million to plug and
remediate 18 legacy wells with the cost of plugging and remediating
individual well sites ranging from several hundred thousand dollars to
$16.8 million. Securing adequate and timely funding to complete
remediation efforts in extreme arctic conditions is the limiting factor
to proceeding more quickly with additional remediation efforts.
Question 5a. What are your plans to address this problem going
forward?
Answer. The BLM expects to complete an updated Legacy Well Summary
Report and a Strategic Plan in the next few months. The updated
Strategic Plan will outline the agency's priorities for plugging the
remaining legacy well sites. In the meantime, the BLM has developed a
short-term strategy to address 13 legacy wells over three seasons. The
first step in the short-term strategy will be the remediation of the
Iko Bay well and two nearby wells over the winter of 2013-2014, pending
availability of adequate funds to complete the project.
Abandoned Wells in the Lower 48
Question 6. While I understand that in the Lower 48 the wells were
not drilled by the Federal Government, there are many orphaned and
abandoned wells on Federal lands in states such as New Mexico that need
to be plugged. How much funding does BLM have available for this
purpose on an annual basis?
Answer. The BLM refers to an abandoned well as a non-producing well
that has been properly plugged, the site reclaimed to its original
condition, and abandoned for purposes of oil and gas development. The
BLM refers to an orphaned well as a non-producing well on Federal land
that is not associated with a responsible or liable party and for which
there is not sufficient bond coverage for plugging and surface
restoration costs.
The BLM has worked diligently with industry and state and local
governments to assure that non-producing wells are properly remediated
and the site reclaimed by the responsible party. The BLM works with our
cooperators including existing lease holders, oil and gas producers,
and local and state governments in partnership to minimize orphaned
well occurrence and mitigate orphaned well conditions.
The BLM works on a case-by-case basis to address the issue of
orphaned wells. The amount expended by the BLM for the isolated cases
of orphaned well remediation and site reclamation varies from year to
year but ranges from approximately $75,000 to $125,000 annually of
appropriated funds to cover operation needs of well plugging and
abandonment. Additional funds for orphan well remediation come from
industry, state funds raised through permit fees for orphaned well
remediation, and forfeited bond revenues.
Response of Bud Cribley to Question From Senator Murkowski
Question 1. What regulatory and legal mechanisms are available to
the BLM in cases where a leaseholder or operator maintains operations
in a manner which is out of compliance with environmental standards in
a chronic or repeated manner on multiple oil or gas wells?
Answer. The BLM's regulations for management and oversight of oil
and gas operations are contained in 43 CFR 3160, Onshore Oil and Gas
Operations. Subpart 3163 of these regulations addresses Noncompliance,
Assessments, and Penalties. As noted in these regulations, the
establishment and forfeiture of the oil and gas bond may be used for
addressing repeat violations. Without a bond, a lessee may not operate
a Federal or Indian oil and gas lease.