Government wins legal fight over abandoned 20-year old well

A six-year legal fight with the Interior Department over a 20-year old well that’s never produced has resulted in another loss for Cibola Energy Corporation, a firm based in Albuquerque, New Mexico.

Oklahoma energy companies don’t normally have to deal with the federal government in drilling new wells, but if you’re in New Mexico, it’s sometimes a far different matter.

The U.S. 10th District Court of Appeals has ruled the Interior Department’s Board of Land Appeals had the legal right to ask for casing tests in a well completed in 1990 but never had production.

Over the years, Cibola performed casing integrity tests as it sought to maintain the lease on the Ysletano Canyon Federal well.   But between 2004 and 2011, the energy company did not seek “temporarily abandoned’ status for the week. Then in 2011, the Board of Land Appeals notified Cibola that in order to maintain the lease, it must contain a well capable of producing oil or gas in paying quantities.

The government asked for another casing test and Cibola appealed. The Denver federal appeals court ruled the Bureau of Land Management, given the passage of time had the authority to require casing integrity and production tests to demonstrate the present conditions of the well.

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