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Attorney
23 February 2024
Across the United States, oil and gas corporations have abandoned more than two million wells that continue to leak toxins long after the companies stopped extracting fuel from them. These 'zombie wells' — wells that pollute the planet long after corporations have deserted them — are poisoning drinking water, contaminating the air, and sticking taxpayers with a cleanup bill that should belong to the corporations that walked away. In Colorado, we're representing property owners in a lawsuit to force these companies to finally clean up the mess they left behind.
When corporations walk away from these wells without plugging them, toxins seep into the soil and groundwater that supplies drinking water to nearby homes. Methane and other pollutants escape into the air, forming ozone linked to serious respiratory illness and premature death. And it's lower-income communities and communities of color who bear the brunt, as they are disproportionately likely to live near the infrastructure that oil and gas corporations have neglected.
This pollution is also accelerating the climate crisis. Abandoned wells emit methane — a greenhouse gas more than 80 times more powerful than carbon dioxide over 20 years — at 100 times the rate of properly plugged wells. In 2021 alone, deserted wells spewed enough methane to match the annual emissions of 1.8 million cars.
When a well stops producing, the company that drilled it has a legal obligation to plug it. This involves sealing it properly so it doesn't leak toxins into the surrounding community. The cleanup costs can be $100,000 or more per well and can be substantially higher in populated areas.
But oil and gas corporations have found a way to pocket those savings instead. Rather than honor their commitments, the industry's largest players systematically transfer aging wells to smaller companies destined to go bankrupt or dissolve. When those companies inevitably vanish, there's no one left to pay for the cleanup. The well becomes an "orphaned well" and the corporation that drilled it and profited from it walks away scot-free.
It's a shell game and American communities pay the price. The cleanup burden shifts to state governments. Taxpayers foot the bill. And families are left with toxic, leaking wells in their backyards.
Of the 3.7 million oil and gas wells that have stopped producing across the US, corporations have failed to plug 2.1 million of them.
Lawsuits have proven to be one of the most effective ways to force oil and gas corporations to pay for the damage they cause. Courts have ordered hundreds of millions of dollars in cleanup costs when corporations break the rules. Now we're bringing a new legal approach to this fight.
We're representing a group of Colorado property owners whose land has been burdened by wells that oil and gas corporations abandoned without cleaning up. Through a series of calculated transfers, wells on their properties were shuffled from major corporations — including Chevron, via its acquired entity Noble — down through smaller companies until they landed with a firm that went bankrupt. Our clients were left with leaking wells on their land and no one to hold responsible.
The lawsuit argues that cleanup costs should follow the chain of ownership back to a solvent corporation that profited from the well. If the court agrees, it won't just mean justice for the Colorado families we represent. It will establish a legal pathway for communities across America to pursue the oil and gas corporations that deserted wells in their neighborhoods, potentially unlocking hundreds of billions of dollars in cleanup costs.
There are millions of active oil and gas wells across the United States that will run dry over the next decade. Unless we can use the law to force corporations to honor their obligations, many more will be abandoned, putting more drinking water at risk, poisoning more communities, and deepening the climate crisis.
This lawsuit is about holding wealthy corporations accountable for the the mess they left behind. It's about protecting the health of American families. And it's about making sure that when oil and gas corporations profit from our land, they can't simply walk away when it's time to clean up.
When asked for a response by the Financial Times, HRM Resources declined to comment. Chevron said it follows state regulations when transferring ownership of wells and operates an active plug, remove and reclaim programme in the area.
The plaintiffs allege that when the oil and gas wells on their lands were nearly depleted, instead of plugging the wells -- a costly process that involves securely sealing the well to prevent the escape of harmful pollutants into the environment -- the company operating them knowingly sold the oil and gas wells to a privately owned shell company that was designed to go bankrupt and shed the liability.
Consequently, the plaintiffs were left with approximately 200 polluting abandoned wells on their properties and with no one to pursue for the clean-up costs. The property owners are asking the court to establish their right to pursue clean-up costs from the company they allege fraudulently sold the wells.
In this case, the plaintiffs are suing HRM Resources and Painted Pegasus Petroleum.
The company that owns the well is legally responsible for the well’s clean-up costs. However, if the company goes bankrupt or otherwise dissolves, it leaves no one responsible and forces the government to step in and plug the wells and taxpayers to pick up the bill.
This case alleges that the oil and gas companies named in the lawsuit participated in fraudulent transactions in order to shirk liability for plugging the wells.
The complaint alleges the oil and gas company sold the wells to an entity that was designed to go bankrupt and shed the liability. These transactions were fraudulent because the values of these wells were upside down: the associated liabilities of the well (i.e. the clean-up costs) were greater than the amount of money that a company could expect to make from the well.
If the court agrees with the plaintiffs, it could establish that previous owners of oil and gas wells can be legally pursued for the clean-up costs that they had dodged using fraudulent transactions.
The case was filed in Adams County, Colorado.
Abandoned wells emit methane – a toxic gas 28 times more powerful than carbon dioxide at warming the planet. In 2021 alone, abandoned oil and gas wells released more than 295,000 tons of methane into the atmosphere, the carbon equivalent of the annual emissions of 1.8 million cars on the road.
Experts estimate that methane pollution is responsible for up to 30% of the current human-induced global warming that is overheating our planet and causing extreme weather events such as heatwaves, floods and forest fires.
In addition to the climate impacts, zombie wells also can harm the people who live near them. Wells are often abandoned on people’s property or in their communities. The methane pollution from the well forms ozone which is linked to serious health issues and premature deaths for people nearby. Lower-income communities and communities of color often bear the brunt of this pollution as they are more likely to live near oil and gas infrastructure. Methane is also explosive under certain conditions and can cause zombie wells to explode if the gas is ignited.
The plaintiffs are supported by ClientEarth, an environmental non-profit and law firms Richards Carrington, LLC and Borison Firm, LLC.
You can read the legal complaint here.