As Fracking Companies Falter, Industry Now Claims That Cleanup Would Make Things "Uneconomic"

[hatrack]

In over their heads with debt, U.S. shale oil and gas firms are now moving from a boom in fracking to a boom in bankruptcies. This trend of failing finances has the potential for the U.S. public, both at the state and federal levels, to be left on the hook for paying to properly shut down and clean up even more drilling sites. Expect these companies to try reducing their debt through the process of bankruptcy and, like the coal industry, attempting to get out of environmental and employee-related financial obligations.

The Bankruptcy of EP Energy

In October, EP Energy — one of the largest oil producers in the Eagle Ford Shale region in Texas — filed for bankruptcy because the firm couldn't pay back almost $5 billion in debt, making it the largest oil and gas bankruptcy since 2016. EP Energy hasn’t produced a profit since 2014 and Bloomberg reported that the company would need oil to be at “a price closer to $70 per barrel” for EP to be profitable. Oil has not come close to averaging over $70 a barrel since 2014.

Despite its financial struggles at current low oil prices, the company plans to continue operating after restructuring and eliminating up to $3 billion in debt. However, EP has not identified any funds that it would be setting aside for well cleanup, which is not unusual for an oil and gas company. In response, as part of the bankruptcy proceedings, the U.S. Department of the Interior filed a document arguing that EP Energy is still responsible for its obligations to assure the “decommissioning, plugging, and abandonment” of any of the EP Energy wells that are located on leased federal and tribal lands.

Ideally, that would mean EP Energy sets aside funds for the proper cleanup and end-of-life processes for its oil and gas wells, which number more than 800 in the Eagle Ford region. However, the federal government hasn't even named a number yet for how much that should be. The Bureau of Land Management and Bureau of Indian Affairs “are currently still assessing the status of reclamation and plugging and abandonment obligations across the Debtors’ onshore federal and Indian leases,” writes the Interior Department.

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EDIT

https://www.desmogblog.com/2019/12/20/fracking-oil-gas-bankruptcies-cleanup-costs-regulators

[rampartc]

1. if cleanup is uneconomic

the entire practice is uneconomic. were these billionaires born in a barn? do their mothers still pick up after them?

[bitterross]

3. They are the corporate raiders of fossil fuels - Like Romney, but with natural resources.

They don't give a damn about the clean up. It is part of their plan to take the profits from the resources and leave the mess to the rest of us. It's just like Romney and others buying up corporations, taking huge fees and saddling them with debt before declaring bankruptcy and running out on the clean up. In that case, employee pensions and creditors. In this case, the environmental mess they leave behind.

It's not an oversight on their part. It's the plan. Given our current administration, they will get away with it.

[appalachiablue]

2. responsibility & obligation mean zip to plenty, shame on them

[Wellstone ruled]

4. As somone who has followed

Fracking since Halliburton shot their first well. Engineers and Geologists were screaming about how you can not put this Genie back in the bottle and Environmental impacts will be beyond Economic repair.

Cheney led the charge to pass laws protecting Drilling and Exploration Companies from any Public reprisals.

And there is another associated Industry going through similiar walk away disaster. And that is the Frack Sand Mines that are not being addressed. Pits are shut down will zero remediation whats so ever. Contamination to adjacent Water Wells,blowing sand,as well as pits filling up with water.

[Finishline42]

6. One of the key protections they got from Cheney

Was to keep secret the chemicals that were being used with the sand in fracking.

There are also filters that have to be replaced quite often that are being contaminated by radon making them radioactive waste.

edit >>> radium not radon

[Wellstone ruled]

8. Well aware of the Radium effect.

Watch for Cancer Clusters start to be reported out of the West Slope of Colorado,especially Rifle to Grand Junction. We saw first hand the exploding well water taps east side of Rifle.

[2naSalit]

5. That's what they always say.

It's why they have been given grandfathered deals in the laws and a million other excuses. In a capitalist society, eventually everything is okay as long as someone can make money from it. Once they might have to be responsible for damages then it costs too much and thus the argument of the unfairness of such cost is acceptable and wins the argument.

Complaining that clean-up or some kind of compliance is too costly has always worked for them.

[VMA131Marine]

7. The current price of WTI Crude is $61/barrel

This company is losing $9 on every barrel of oil they sell if they need $70/bbl to break even. The saying “lose money on each item, but make it up in volume” was supposed to be a joke, not a business plan to emulate.