Party That Abandons Oil or Gas Well Must Plug It.

Kansas law (Kan. Stat. Ann. Sec. 55-179(b)) says that one of the parties responsible for plugging an abandoned oil or gas well is the original operator who abandoned the well.  Here, the plaintiff operated 44 wells on a 160-acre tract in southeast Kansas beginning in 1939.  Production ceased in 1989 and the plaintiff did not plug the wells.  In 2008, the plaintiff assigned it's lease to another party (lessor) who entered into an agreement with the Kansas Corporation Commission (KCC) to either plug or being production from at least two wells monthly until all the wells were either producing or were plugged.  The lessor entered into new leases with the mineral owners in 2009 and then assigned the leases to a third party in 2010.  The KCC informed the third party that it would be required to plug the wells or start production.  In 2011, the KCC issued a show-cause order to the plaintiff, the lessor and the third party requiring them to demonstrate why they shouldn't be responsible for plugging the wells (44 in total) that KCC had determined had been abandoned.  The KCC subsequently ordered the plaintiff, along with the other parties, to plug the wells.  The plaintiff argued that it had no responsibility to plug the wells because it had assigned the leases to another party.  The KCC determined that that lessor was responsible for plugging the three wells that they had produced from and that the plaintiff was responsible for plugging the other wells because they had abandoned the wells in 1989 and the wells should have been plugged at that time.  The court agreed with the KCC, rejecting the plaintiff's argument that only one party can be held liable for plugging a well under K.S.A. Sec. 55-179(b).  The court noted that the statute was clear that more than one party can be held responsible for plugging wells.  The court noted that the case did not involve the issue of whether the plaintiff could be entitled to reimbursement from the other parties.  John M. Denman Oil Co., Inc. v. Bridwell, et al., No. 110,861, 2015 Kan. App. LEXIS 3 (Kan. Ct. App. Jan. 9, 2015).  

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