WV Legislative Audit of Office of Oil & Gas Focuses on Three Issues

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EXECUTIVE SUMMARY: Agency Review: WV-DEP, Office of Oil and Gas

The Legislative Auditor has conducted a performance evaluation of the Office of Oil and Gas (OOG) as part of the Agency Review of the West Virginia Department of Environmental Protection (DEP) authorized pursuant to West Virginia Code §4-10-8. The report contains the following issues:

 

Issue 1: The Office of Oil and Gas Is Not Enforcing Statutory Requirements as They Concern Abandoned Oil and Gas Wells Which Is Causing the Number of Abandoned Wells to Increase.

 Currently there are approximately 13,000 abandoned oil and gas wells in West Virginia; 36.1 percent are listed as having no known operator, 44.4 percent are currently registered to known operators that do not have an abandoned well initiative compliance agreement, and 19.2 percent are registered to known operators that are in the 10-year Abandoned Well Initiative program. The remaining 0.3 percent, 34 wells, are in the Bona Fide Future Use Program.

 The OOG is not requiring operators to plug abandoned wells or prove that there is bona fide use for such wells as stated in Code. Data provided by OOG indicates that the number of abandoned wells is increasing, and some wells remain abandoned for 10 or more years.

 Due to the large number of abandoned wells and the difficult-to-get locations, inspections are typically not conducted. Unless an operator applies for a wellwork permit that would require an inspection, or a citizen files a complaint, the well site will go uninspected for potential hazards to the public and the environment.

 The Legislative Auditor conducted a random sample of the OOG’s ERIS database. The analysis revealed that a large number of wells had missing or inconsistent information.

Issue 2: The Office of Oil and Gas Should Develop Performance Measures in Order to Better Gauge Agency Performance.

 The mission statement developed by OOG is fully supported by statute. West Virginia Code assigns the OOG with mandates to regulate oil and gas operations.

 The OOG lists a relevant performance measure in the 2011 Executive Budget Operating Detail; however, other performance measures should be included to better gauge agency performance.

Issue 3: The Office of Oil and Gas’ Website is User-Friendly and Transparent But Could Benefit From Some More Improvements.

 The OOG website, although it is basically user-friendly and transparent, it could improve in both these areas; scoring 9 out of 18 points for user-friendliness and 15 out of 32 points for transparency, resulting in a total score of 24 out of 50 possible points, or 48 percent.

Recommendations

1. The Legislative Auditor recommends that the OOG program the ERIS database to alert it any time a well is out of production for a period longer than 12 months since this is a key determination of abandoned well status set by Code.

2. The Legislative Auditor recommends that when a well is out of production for a period longer than 12 months, the OOG should enforce Code and require the operator to either:

• plug the well,

• place it back into production,

• place it into Bona Fide Future Use, or

• place it into a long-term compliance initiative agreement.

3. The Legislative Auditor recommends that the OOG update its database system an data entry procedures to avoid and eliminate errors such as missing and inconsistent information.

4. The Legislative Auditor recommends that the OOG incorporate performance goals and measures to address its compliance with Code for wells that are out of production longer than 12 consecutive months and place them in the Executive Budget Operating Detail and OOG website.

5. The Legislative Auditor recommends that the Office of Oil and Gas further develop performance measures in order to better gauge agency performance.

6. The OOG should consider providing public access to its performance goals via its website and include the current and historical performance measures, budget information, and other user-friendly and transparency website elements identified by the Legislative Auditor.