LLA Wins NLPES Award for Report on Oil and Gas Wells

The Legislative Auditor has been selected as a winner of a National Legislative Program Evaluation Society (NLPES) award for the office’s reporting of how the Office of Conservation regulates and inspects oil and gas wells.

LLA’s 2014 report Regulation of Oil and Gas Wells and Management of Orphaned Wells: Office of Conservation - Department of Natural Resources was selected by NLPES for a Certificate of Impact. LLA was chosen because of the office’s “demonstration of significant impact on state government,” according to a letter from NLPES announcing the award.

In the May 28, 2014, report, auditors determined that the state Office of Conservation had not always been effective in regulating and inspecting the state’s 57,819 oil and gas wells and had not properly managed a growing number of “orphaned” wells in the state. Orphaned wells are oil and gas wells that have been abandoned or neglected by operators. The audit said that when compared to other oil- and gas-producing states – like Texas, Oklahoma and California – Louisiana had not required all operators to provide a bond or other financial security when they drill wells.

The report went on to say that the Office of Conservation had not developed “an effective enforcement process” that consistently addresses noncompliance and “deters operators from having subsequent violations.” Also, because the conservation office did not always identify and effectively regulate inactive wells, “the current orphan well population may grow in the future.” The report identified 9,415 inactive wells that “can be considered at risk of being orphaned.”

The report recommended that lawmakers increase production fees and identify “other sources of funds” to generate money to reduce the current population of orphaned wells. “The current production fee is not sufficient to address the current population of orphaned wells,” the report said.