Raising new concerns on a little-examined dimension of the fracking debate, Environment Colorado Research & Policy Center today released a report analyzing financial assurance requirements for oil and gas drilling operations in Colorado. As federal officials consider allowing fracking near Colorado’s national parks and right inside its national forests, Who Pays the Costs of Fracking? shows how federal (and state) bonding requirements are completely inadequate to cover the cost and range of damage from dirty drilling.
“Colorado has some of the most beautiful parks and forests in the country,” observed Lauren Rooney from Environment Colorado. “The appalling lack of financial assurance for environmental damage is yet another reason that we are urging the Obama administration to keep these places off-limits to dirty drilling.”
Just reclaiming a fracking site can cost hundreds of thousands of dollars. And the damage done by fracking – from contaminated groundwater to ruined roads – can cost millions of dollars. As shown in Environment Colorado’s report, the BLM’s bonding requirements do not even come close to covering these costs:
- Drilling operators are generally required to secure only $10,000 in bonds per lease or a blanket bond of only $25,000 covering all their drilling sites in Colorado.
- The bonds are only for site reclamation, with no forfeiture provision for pollution or violation of environmental laws.
- BLM releases the drillers from even this paltry assurance after a site is reclaimed and the well is plugged, leaving impacted residents, communities, and taxpayers on the hook for longer-term damage.
The BLM is currently considering new rules for fracking, but the agency is not proposing any changes to these bonding requirements. Colorado’s bonding requirements for single wells very by depth from $10,000- $20,000 and have blanket bond amounts that vary by number of wells from $60,000- $100,000.
Today’s report comes as the oil and gas industry is seeking to frack near Colorado’s national parks and right inside our national forests. White River National Forest, for example, is the most visited national forest in the country and hosts 4,000 miles of streams, which provide water to several local communities and the Colorado River itself.
“It’s bad enough to think that fracking could damage some of Colorado’s most beautiful places,” said Julia Gumper, Centennial Canoe Outfitters. “To add insult to injury, we could wind up paying the cleanup bill as well.”
Environment Colorado believes that the best solution is for the BLM to implement a key recommendation of the administration’s advisory panel on fracking - “[p]reservation of unique and/or sensitive areas as off limits to drilling . . .” - including places like White River National Forest.
Today’s report is the second in a series. In the first report – The Costs of Fracking (2012) – Environment Colorado provided documented examples of the dollar and cents costs related to the myriad environmental impacts of fracking – from replacing contaminated drinking water to fixing ruined roads to treating illness from air pollution.
Of particular concern for financial accountability are the long-term costs of fracking. According to the report, across the nation by 2006 there were already 59,000 abandoned oil and gas wells and at least another 90,000 whose status is unknown. The potential cost for just plugging these wells exceeds $780 billion.
“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” observed Rooney. “BLM’s weak bonding requirements are yet another reason why we need to keep fracking out of our national forests and away from our national parks.”
 SEAB Shale Gas Production Subcommittee 90 Day Report at 3 and 4 (August 11, 2011)