December 27, 2004
Free Market Miracle #0011
Bonds posted by companies with federal oil and gas leases cover only a small fraction of the projected costs of plugging wells and restoring land once the fuel is extracted, leaving taxpayers with the potential for huge cleanup bills, an Associated Press analysis of federal records shows. The Bureau of Land Management has collected only $132 million in bonds from oil and gas companies responsible for more than 100,000 wells on federal lands. The government estimates it costs between $2,500 and $75,000 to cap each well and restore the surface area.
In the past five years, the bureau has spent $2.2 million to clean up 187 wells where operators defaulted on their bonds.
At that average rate of $13,066 per well, the shortfall between the bonds and the cleanup costs could leave taxpayers with as much as a $1 billion potential liability if companies reneged on their cleanup responsibilities, the analysis found.
But wait, there's more (as if you couldn't have guessed). Here comes the punchline:
The Bush administration quietly shelved an eight-year effort this fall to increase the minimum bond requirements for oil and gas drilling on federal lands.
Posted by Eddie Tews at December 27, 2004 07:31 PM
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