OKLAHOMA CITY – A company that claimed it has contracts to plug several hundred abandoned oil and gas wells in Oklahoma, Texas and New Mexico jumped the proverbial gun, officials in all three states told the Southwest Ledger.
NextMart, identified as a Delaware corporation, issued a press release on Sept. 9 announcing it would be adding “a new oil field service in the plugging of abandoned wells” for Oklahoma, Texas, and New Mexico.
NextMart reported it would be “initially contracted to service and plug” 500 wells for the State of Oklahoma, 500 for the state of Texas and 100 for the state of New Mexico.
The Biden administration’s 2021 Infrastructure Investment and Jobs Act contains $4.7 billion over the next nine years for states, tribes and the U.S. Bureau of Land Management to clean up some of the damage left behind by the oil/gas exploration/production industry.
According to the Department of the Interior, there are more than 130,000 documented unplugged orphaned wells in the United States, and perhaps an additional 800,000 undocumented orphaned wells.
The Oil & Gas Conservation Division of the Oklahoma Corporation Commission documented 17,895 abandoned oil/gas wells in Oklahoma as of Nov. 15, 2021, according to Brad Ice, field operations manager of the OGCD.
The wells are classified as abandoned because no individual or company responsible for them can be found, said Matt Skinner, the commission’s public information manager.
The Ledger contacted Skinner after receiving the NextMart press release and was told, “We have no knowledge of this company. No well-plugging contract has been awarded to any company yet under the federal program. Also, NextMart is not a licensed well plugger in Oklahoma.”
The Sooner State potentially could receive more than a quarter of a million dollars from the federal government to plug several thousand abandoned oil and gas wells throughout the state. Oklahoma has received an initial payment of $25 million from the U.S. Department of the Interior, Skinner said.
Nevertheless, “We and other states still have a lot of questions that have to be answered” before the well-plugging program gets under way, he said.
The Ledger contacted officials in Texas and New Mexico, and both said that, like Oklahoma’s regulators, NextMart has no well-plugging contracts with the state.
The Texas Railroad Commission, which regulates the energy industry in the Lone Star State, “does not have any contract with NextMart to plug wells,” said commission spokesman Andrew Keese.
“The State of New Mexico has yet to sign a contract with NextMart, or any other company, to plug wells using funds from an Inflation Reduction Act grant,” wrote Sidney Hill, public information officer for New Mexico’s Energy, Minerals and Natural Resources Department.
The New Mexico State Purchasing Division recently issued an Invitation to Bid for companies seeking to contract for well plugging and environmental cleanup that will be funded with a recently awarded $25 million federal grant, Hill said.
“The deadline for responses to the ITB from potential contractors is October 3rd. Therefore, no contracts have been awarded,” he said.
EMNRD’s Oil Conservation Division “has a contract in place for plugging wells and a second contract for environmental cleanup around those well sites,” Hill said. “However, that work is funded through an Oil Conservation Division Reclamation Fund. And NextMart is not one of the companies doing that work.”
NextMart is not on New Mexico’s approved well-plugging vendor list, either.
NextMart’s chief executive officer and president, Oscar Maldonado, was quoted in the press release as saying, “The average payment for the capping of wells will vary between $20,000 USD to $40,000 USD each dependent on the depth of the well to be serviced.” Maldonado also claimed that the cost to plug abandoned wells “will run around $3,000 USD to $5,000 USD per well.”
Consequently, he said, NextMart “will add on a conservative basis over $20,000,000 USD in top line revenue with a profit margin of a minimum of 50%-70%.”
Where Maldonado got those cost estimates is unknown.
During a presentation last year, Ice estimated that the average cost of plugging oil/gas wells in Oklahoma varied widely:
• District 1 – $9,000 per well. That district encompasses 18 counties: Adair, Cherokee, Craig, Creek, Delaware, Kay, Lincoln, Mayes, Muskogee, Noble, Nowata, Ottawa, Pawnee, Payne, Rogers, Tulsa, Wagoner and Washington.
• District 2 – $32,000 per well. The 19 counties in D2 include Alfalfa, Beaver, Blaine, Canadian, Cimarron, Custer, Dewey, Ellis, Garfield, Grant, Harper, Kingfisher, Logan, Major, Oklahoma, Roger Mills, Texas, Woods and Woodward.
• District 3 – $20,500 per well. The 19 counties in D3 are: Beckham, Caddo, Carter, Cleveland, Comanche, Cotton, Garvin, Grady, Greer, Harmon, Jackson, Jefferson, Kiowa, Love, McClain, Murray, Stephens, Tillman and Washita.
• District 4 – $20,500 per well. Those counties include Atoka, Bryan, Choctaw, Coal, Haskell, Hughes, Johnston, Latimer, LeFlore, McCurtain, McIntosh, Marshall, Okfuskee, Okmulgee, Pittsburg, Pontotoc, Pottawatomie, Pushmataha, Seminole and Sequoyah.
(Osage County is the lone outlier. The Corporation Commission has no jurisdiction over energy exploration/production in that county. Minerals beneath the surface throughout Osage County still are owned by the Osage Nation. The energy industry and others doing business underground in Osage County are regulated by the U.S. Bureau of Indian Affairs and the U.S. Environmental Protection Agency.)
The Corporation Commission spent $6.15 million in Fiscal Years 2017-21 to plug 462 abandoned oil/gas wells – an average of $13,320 per well – agency records show.
The Corporation Commission, which regulates the oil/gas industry in this state, estimates it would cost almost $251 million to plug all the 17,895 abandoned oil/gas wells scattered across this state, and the Oklahoma Energy Resources Board calculates it would cost them $250 million to restore those sites to their original condition, Ice said.
The Ledger was unable to contact anyone at NextMart for comment.
A press release dated July 1 announced that NextMart had acquired Two Brothers LLC, a New Mexico-based oil field services provider in the Permian Basin, and Maldonado, the owner of Two Brothers, had been named the CEO of NextMart.
Clicking on the internet website for NextMart went to Emco Oilfield Services based in Carlsbad, New Mexico, but no one answered a telephone call listed on the website. NextMart announced Jan. 21 that it acquired a controlling interest in Emco.
A call was placed to another telephone number, in Arlington, Texas, but that was answered with a recorded message stating the recipient “does not accept incoming calls.”
Yet another telephone call was placed to a number in New Mexico, but that was answered with a recorded message informing the caller that NextMart’s voice message mailbox has not been set up yet.