Orphan Wells Mitigation Enterprise Board held annual hearing
Denver, CO (Nov. 22, 2024) - Today the Orphan Wells Mitigation Enterprise (OWME) Board unanimously approved a new annual marginal well mitigation fee that is forecasted to generate $5 million annually. Effective April 2025, oil and gas operators will pay a flat fee of $115 per well to fund the plugging of marginal wells in Colorado. The Board also maintained the existing annual mitigation fees to fund orphaned well plugging.
There are approximately 47,042 unplugged wells in Colorado, 962 of which are orphaned wells with private or state ownership. Orphan wells are unplugged oil and gas wells that are inactive and have no owner or operator who can be found or is willing to plug them. Plugging a well is the process of permanently sealing a well to prevent the release of hydrocarbons and other fluids into the environment. Since its inception in 1990, the Orphaned Well Program at ECMC has plugged more than 700 wells. Of those, 234 were plugged in the past three years.
House Bill 24-229 expanded the authority of the OWME program to include the plugging of marginal wells. The bill defines a marginal well as an oil or gas well that presents a high risk of becoming orphaned. Beginning in 2025, operators will be able to volunteer marginal wells to be plugged by the OWME.
The OWME imposes and collects mitigation fees and funds the plugging, reclaiming, and remediating of orphaned and marginal wells in the state. The Board ensures that operators cover the costs associated with plugging, reclaiming, and remediating orphaned and marginal wells in the form of mitigation fees. The Annual Mitigation Fee paid by operators to fund orphaned well plugging supplements federal funding. Through 2030, Colorado expects to apply for a total of $129 million from various grants available from the Federal Infrastructure Investment and Jobs Act to plug orphan wells.
The fees are revisited annually by the OWME Board to allow the funding to increase or decrease depending on the needs and anticipated scale of future orphan well and marginal well work. The Board approved maintaining the current fee structure for orphan wells, which is tiered based on each well’s production.
“Colorado is the nation’s leader in regulating oil and gas production in a protective manner,” said OWME Board Chair Jeff Robbins. “Orphan wells pose a risk of adverse impacts on public health, safety, welfare, the environment and wildlife in our state. The new Marginal Well Mitigation Fee adds to unprecedented funding — a total of $29 million next fiscal year — to plug not only orphan wells but also marginal wells.”
A five-member volunteer Board oversees the Orphan Wells Mitigation Enterprise. In November 2024 the Board welcomed its newest member, Cassie Archuleta, who fills the seat designated for a local government official from a jurisdiction that has oil and gas development. Appointed by Governor Polis,
Archuleta has over 20 years of experience in air quality management. She currently serves as the Lead Air Quality Specialist for the City of Fort Collins, where she manages air quality programs and grants. She previously served as the Local Government Designee to the ECMC on behalf of the City of Fort Collins.
“Cassie’s expertise in air quality management will be an asset to this Board,” said Julie Murphy, ECMC Director and Enterprise Board Member. “I’m grateful for her volunteerism to serve on this Board as we put in place significant funding mechanisms that reduce impacts to Colorado’s environment and citizens, particularly those in communities that have been historically disproportionately impacted by oil and gas operations.”
About the Orphan Wells Mitigation Enterprise
The Orphan Wells Mitigation Enterprise is the State of Colorado’s independent enterprise that oversees an industry-funded orphan and marginal well program with the highest level of environmental protections. The Enterprise uses fees from the oil and gas industry to plug and abandon orphaned and marginal wells and reclaim related sites. The Enterprise was established by SB22-198. The Commission adopted rules implementing SB22-198 in the June 2022 Orphan Wells Mitigation Enterprise Fee Rulemaking.