financial security shallower wells

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  • 7/30/2019 Financial Security Shallower Wells

    1/1

    January 4, 2013

    Attn: Draft HVHF Regulations CommentsNew York State Department of Environmental Conservation625 Broadway

    Albany, NY 12233-6510

    Dear Commissioner Martens:

    I am writing to comment on the revised HVHF regulations. My comments are given under protest, as Iam convinced that the issuance of the revised regulations by the DEC without prior publication of thefinal SGEIS is a severely flawed procedure. I reserve the right to comment on the draft regulationsagain after the final SGEIS has been issued. Notwithstanding this, I offer the following commentsregarding the amount of financial security for wells less than 6,000 feet deep.

    The provisions Part 555.5(a)(1 through 5) on the method of plugging wells apply to all wells covered byParts 550 through 556 and 560 without regard to the depth of the well.

    In the first sentence of the revised Part 551.6 the Department has required The owner of an oil, gas orsolution mining, storage stratigraphic, geothermal or disposal well that exceeds or is expected toexceed 6,000 feet in true measured depth must file financial security for that well in an amount basedon the anticipated costs of plugging and abandoning that well to the satisfaction of the department inaccordance with Part 555 of this Title.

    This requirement of Part 551.6 assures that the Department can require financial security sufficient tocover the cost of plugging the well. However, Part 551.5 Amount of financial security: wells up to 6,000feet deeprequires fixed amounts per well with no relationship to the anticipated plugging costs. It alsoputs a total dollar limit on the amount of financial security that an owner would have to provide, so thatthe total amount of security for several wells may be less than the total cost of plugging all of thosewells. This provides owners with a volume discount on the amount of security they have to provide, so

    that the total amount of security may be significantly less than the actual total cost of plugging the samenumber of wells. Such a weak system of financial security exposes New York taxpayers to the cost ofplugging wellsan expense that is rightfully the responsibility of the owneror to the risk of unpluggedwells.

    Part 551.5 should be rewritten to provide that financial security for all wells up to 6,000 feet(True Measured Depth) must have financial security sufficient to cover the anticipated cost ofplugging each well such that all wells are to have the full amount of financial security.Alternatively, Parts 551.5 and 551.6 could be combined with these same security provisions.

    In addition, the Department should adjust financial security requirements annually to accountfor any anticipated increase in the cost of plugging wells. This adjustment is needed to protect

    the taxpayers and residents of New York from the expense of plugging cost escalation over theperiod from when the well is drilled until it is plugged.

    Yours truly,