In an unprecedented move, the towns of Frederick and Dacono in southern Weld County are petitioning the Colorado Energy and Carbon Management Commission (ECMC) to force oil and gas operator K.P. Kauffman (KPK) to plug and abandon 45 wells that the communities say pose serious safety risks.
The municipalities have identified these wells as no longer being ‘used or useful’ and have expressed concerns that they threaten public health, safety, and overall welfare.
This legal mechanism came into play when the ECMC revised its rules in 2022, allowing local governments to petition for the closure of wells, a power previously reserved solely for the commission itself.
Set to begin hearings soon, this bold strategy marks the first time local governments have sought to enforce the rule.
Last year, Frederick and Dacono attempted to use the new financial assurance rules to get 95 KPK wells plugged, but their efforts were ultimately unsuccessful.
Currently, KPK is facing a hefty $1.9 million fine for multiple violations and has accrued 148 violation notices since 2020.
In the wake of these issues, KPK has been engaged in legal disputes with the ECMC for the past three years over its operations.
In its prehearing statement, KPK contended that the application of Section 211 was being misapplied and that an order to plug the wells would effectively strip the company of its valuable assets without just compensation.
Furthermore, KPK claimed that the municipalities’ oil and gas consultants underestimated the value of the wells and overestimated the costs associated with well abandonment.
The company suggested that the municipalities coordinated with developers to focus on wells that were obstructing potential surface development, thus rendering their application as improper under Rule 211.
According to KPK, the wells in question hold significant value and do not pose the environmental threats claimed by the municipalities.
Frederick is home to 95 KPK wells that produce little to no oil, while Dacono has 59 KPK wells.
The municipalities are specifically targeting 26 wells in Frederick and 19 in Dacono that are closest to residential areas, schools, and parks.
Frederick has reported 45 KPK spill incidents since 2018, with one particularly concerning a cluster of spills occurring within just two weeks in January.
Alarmingly, 20 of the targeted wells are located within 500 feet of homes.
In some cases, entire neighborhoods—76 homes, in particular—are in close proximity to a well, increasing concerns among residents.
A critical focus of the upcoming hearings will be the assessment of each well’s current status.
Dacono’s oil and gas consultant evaluated KPK’s Cosslett A 4 well, located near a rapidly developing area by Interstate 25 and Colorado 52.
According to the evaluation, this well has not produced oil or gas in three years and has incurred operating losses during that time, thus classifying it as no longer ‘used and useful’ under state rules.
However, KPK has disputed these findings, asserting that the well possesses a total proven value of $143,400 and asserting that the lack of production stems from a closure order imposed by the ECMC.
In the interest of transparency, the municipalities cited that other oil and gas operators, like Occidental Petroleum, Civitas, and PDC Energy (now part of Chevron), have proactively plugged numerous wells in the area.
In stark contrast, KPK has only plugged a small number of wells, typically opting to do so only when compensated.
The municipalities expressed frustration, stating, “KPK should have plugged and abandoned its old wells years ago,” adding that the company demands exorbitant fees—often $250,000 or more—to undertake such actions, profiting from its liability obligations at the public’s expense.
As the hearing unfolds, the outcome may set a significant precedent for how local governments can influence oil and gas operations within their jurisdictions, especially in terms of public safety and community development.
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