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BME Still in Limbo on Lawsuit and Funding to Cap Abandoned Spyglass Gas Wells

The Board of Minerals and Environment is still trying to figure out what to do about deadbeat drilling company Spyglass, which abandoned forty natural gas wells in northwestern South Dakota and drained its meager state bond on other expenses instead of properly capping those wells. We are suing Spyglass for $15.5 million, but at Thursday’s meeting, the board heard that Deputy Attorney General leading the lawsuit for the state, Rich Williams, is leaving the AG’s office. Spyglass’s principals were supposed to respond to the state’s lawsuit by July 27 and August 1, but no one from the AG’s office joined Thursday’s conference call, so the BME got no update on how Spyglass has responded or anything else pertaining to the effort to plug those geological and budget holes.

The absence of any representative of the AG’s office appears to have left dormant an issue that’s been hanging since March: whether or not the BME can use a bond from Quartz’s abandoned oil well project to cap the Spyglass wells. The BME asked the Attorney General to research that issue at its March meeting; they got no answer in April, and according to the minutes approved last week, the AG still hadn’t answered as of July 18:

Daryl Englund said the board has not heard from the Attorney General’s Office regarding whether or not it is legal to use the Quartz bond for Spyglass. The legislature needs to confirm whether the board can or cannot use the Quartz bond for this project [Board of Minerals and Environment; draft minutes of July 18, 2019 meeting; posted in BME agenda packet, 2019.08.15].

Without an answer, the BME has apparently decided not to press its luck with the Quartz money and focus instead on getting the Legislature to approve a solution.

As noted in Thursday’s meeting, action on the Spyglass issue has been slowed down by the departure of Steve Pirner from DENR. One would think that new DENR chief Hunter Roberts would be able to bring his experience promoting oil and gas to bear on this Spyglass issue relatively quickly, but perhaps moving his office decor up the street.


  1. Donald Pay 2019-08-19 08:56

    What you are seeing with this and in some of the gold mining is the inability of the state to adequately bond, and to enforce the terms of the bonds. Bonds tend to be set by toting up rosy scenarios. Worst cases are not considered. Most operations aren’t going to need to access the bond, because they are highly enough capitalized that they can do the work required. You have to worry about the scam artists and the undercapitalized folks, though. The worst case only has to happen once to blow the bond calculation apart and expose a scam operation.

    There are answers to this. First, don’t allow risky endeavors in known risky environments. Brohm’s Gilt Edge Mine was known to be in an area with lots of risk. It should never have been permitted. Second, bond for worst case scenarios. Third, raise the tax on production of the well or mine and sequester the funding into a state “Superfund” site. We proposed a similar idea in an initiative in 1988, as the gold mining boom was just beginning. It was voted down, but the wisdom of that approach was proved as the Brohm operation went into bankruptcy.

  2. Robert McTaggart 2019-08-19 12:25

    “We won’t have all the minerals we’ll need, but the issue now is that we’re depending on China for our military and 21st-century lifestyle,” she says. “We need to get America mineral-independent.”

    There has been interest in extracting rare earths from coal fly ash instead of from mining. But there continue to be headwinds for the mining or the extraction of the rare earth elements for the technologies that environmentalists say that they want.

    There needs to be a good process in taking care of the environmental oversight for mining, as well as addressing the end-of-life cycle issues for either the mine or the business doing the mining. But we also need the “critical elements” if we truly want more solar, wind, batteries, and other 21st century technologies. #FigureItOut

  3. Debbo 2019-08-19 15:20

    SD isn’t going to demand fair and reasonable bonds because the SDGOP has created a “business friendly” state. What that means is to hell with the environment, neighbors or employees. Just grease our SDGOP palms and get whatever you want.

  4. leslie 2019-08-28 21:22

    Doc, we have a very LONG experience of this kind with mining the Black Hills area for gold, silver and even uranium. Any process is only as good as the science and the “capitalism without regulation/a few jobs/bankruptcy” business plan the Republicans routinely approved, politically, in terms of natural resource extraction is “same old-same old”.

    Good ole’ boys, cronies, maximum profit, minimum environmental protection. Completely untrustworthy. None of them (Wharf?) They can afford the experts at the front end to get the permit. Opponents are essentially volunteers with small checkbooks. The permit agencies are arms of the Governor and Republican legislature.

  5. Robert McTaggart 2019-08-29 10:10

    NPR was at the Minnesota State Fair this morning…Minnesota is having similar issues with mining. On one hand, we need a lot of copper if we truly want a lot of clean energy. But all of those minerals are only coming from new mining at the moment.

    If it is worth doing (which we say it is for the sake of clean energy and sustainability), then it is worth paying for. That includes the bonding issues above, as well as the waste management and recycling systems for renewables. We’ll see if these are addressed as green new deal proposals move toward some type of legislation.

    Being green requires mining, because it requires critical elements you cannot get on the surface. So let’s find a way to do that better.

  6. Porter Lansing 2019-08-29 11:22

    Things you learn reading the LATimes. Nuclear is renewable? Why not?
    Assemblyman Jordan Cunningham, R-Templeton (San Luis Obispo County), on Wednesday proposed a state constitutional amendment that would designate nuclear power as a source of renewable energy. Two-thirds of each chamber in the Legislature would have to approve putting the amendment before voters.

  7. Robert McTaggart 2019-08-29 11:32

    Nuclear is as renewable as solar power if you extract thorium or uranium from seawater. The earth-ocean system will work to renew the concentration over time. That should continue for millions of years.

    If you can get a couple billion years out of that process, by that time the sun may run out too, so no more photons either.

    In general, nuclear should be included in the clean energy portfolio along with wind and solar. My point all along is that we don’t really solve climate change and give people the energy they want without nuclear in said portfolio.

  8. Porter Lansing 2019-08-29 11:39

    McTag … Then, why aren’t you promoting such in your state?

  9. Donald Pay 2019-08-29 11:43

    Former Minnesota Governor Dayton visited the Gilt Edge Mine as he was making decisions about how to proceed with the hardrock mining in Minnesota. They have a long history of taconite mining, but Minnesota has little modern experience with copper or gold mining. My understanding was they weren’t interested in rushing into permitting on the company’s timetable. That is wise. South Dakota had inadequate laws and regulations when they permitted gold operations in the mid 80s to early 90s. The state was not prepared.

    The problem, Dr. McT, is that the federal government under Trump is corrupt. They are relaxing all their regulations and failing to enforce, so states and citizens and the mining industry itself are uncertain they can count of federal standards anymore. For a state to permit a mine right now, under the corrupt Trump Administration, is lunacy.

  10. Robert McTaggart 2019-08-29 11:57

    Hey, I am all for that.

    But in terms of feasibility I doubt new nuclear would be considered in the state until there is a political solution for the nuclear waste issue. And we would be better suited for one of the upcoming small reactors unless we are powering Minnesota, Iowa, or Nebraska.

    In the meantime a good place to start is building the workforce with the capacity to support an excellent safety culture. I will be teaching our health physics class in the Spring 2020 semester, and supporting our health and medical physics emphasis in the BS in Physics. Spring 2021 we will offer the nuclear laboratory and the nuclear engineering course.

    I would like to see us develop a clean energy park, where we grow capabilities for the all of the clean energy industries…including wind, solar, efficiency, geothermal, efficiency, nuclear, etc. That also includes the requisite environmental science and engineering. We don’t need a nuclear reactor in the state for that.

  11. Porter Lansing 2019-08-29 12:06

    That sounds excellent. ADD OIL! (not literally. It’s a Chinese term of encouragement. :)

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