SB 22-198

Senate Bill 22-198, known as the Orphaned Oil and Gas Wells Enterprise Act, aims to address abandoned oil and gas wells in Colorado. The bill sets up a system where companies that drill but don't properly close their wells will pay fees to help clean up these orphaned wells. These fees range from $125 to $225 per well depending on the company's production levels. The money collected goes into a special fund used specifically for cleaning up and reclaiming abandoned wells, ensuring that companies contribute to the costs of cleanup rather than taxpayers. Since the bill has been signed into law, it is now in effect and being implemented by the Colorado Oil and Gas Conservation Commission.

Official Summary

The act creates the orphaned wells mitigation enterprise (enterprise) in the department of natural resources for the purpose of: Imposing and collecting mitigation fees; Funding the plugging, reclaiming, and remediating of orphaned wells in the state; Ensuring that the costs associated with the plugging, reclaiming, and remediating of orphaned wells are borne by operators in the form of mitigation fees; and Determining the amounts of mitigation fees. On or before August 1, 2022; on or before April 30, 2023; and on or before April 30 each year thereafter, each operator shall pay a mitigation fee to the enterprise for each well that has been spud but is not yet plugged and abandoned, in accordance with rules promulgated by the Colorado oil and gas conservation commission (commission), in the following amounts: For operators with production that is equal to or less than a threshold to be determined by rules of the commission, $125 for each well; or For operators with production that exceeds a threshold to be determined by rules of the commission, $225 for each well. Money collected as mitigation fees is credited to the orphaned wells mitigation enterprise cash fund (fund), which is created in the act. The act also creates the orphaned wells mitigation enterprise board (enterprise board) and requires the enterprise board to administer the enterprise and, at least annually, to: Consider whether the mitigation fee amounts should be increased or reduced, based on current circumstances and reasonably anticipated future expenditures from the fund; If the enterprise board determines that an increase or reduction of the mitigation fee amounts is warranted, adjust the mitigation fee amounts; and Advise the commission of the outcome of the enterprise board's deliberations. The commission may promulgate rules as necessary to implement the enterprise. (Note: This summary applies to this bill as enacted.)

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