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State Requires Higher Bond For Reuse Of Orphaned Natural-Gas Wells

spyglass_well.jpg
SD DENR
One of the orphaned Spyglass natural-gas wells.

A company that wants to use 19 orphaned natural-gas wells has agreed to post a higher bond with the state. 

The company is Highwire Energy Partners, of Wyoming. The wells are in the northwest corner of South Dakota near Buffalo. 

A bond is required so the state can capture the money if something goes wrong with the wells while the company is financially unable to plug them. 

A new state law says the minimum bond is $100,000. But the company is agreeing to post a $190,000 bond if it uses all 19 wells. 

“This is voluntary on their behalf,” said Mike Lees, administrator of the state’s Minerals and Mining Program. “It’s above and beyond the normal $100,000 blanket bond.” 

The 19 wells are part of a broader 40-well project. A Texas company, Spyglass Cedar Creek, went broke not long after drilling the wells 15 years ago. 

State laws at the time required $30,000 in bonds. That was not enough to plug the wells, so the state used taxpayer money. Lees said the state recently plugged 21 of the wells and reclaimed a compressor site at a total cost of $301,000.  

The plugging stopped when Highwire Energy Partners expressed interest in the remaining 19 wells. 

The company views the natural gas as a cheap power source for an unusual project. The gas will fire generators hooked to shacks full of computers, and the computers will run 24 hours a day solving complex numerical problems that bring new bitcoins into existence. Bitcoin is one of several digital currencies known as cryptocurrencies.