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DRC: Oil company must be able to cover reclamation

An oil company should have to increase insurance amounts available for cleaning up after it leaves an area to $14 million, according to the Dakota Resource Council.

Because of a past offense, the council requested an increase for Zenergy, Inc. in November, which the Bureau of Land Management Dickinson Field Office denied. So the DRC mailed a letter to the Montana BLM requesting a review over Zenergy's bonds Wednesday.

The required bonds are at $150,000 and cover the cost for plugging wells and reclaiming the land if need be, said Cindy Klein, Dakota Resource Council.

"That's the financial assurance that they post to ensure that they'll clean up," she said.

The council wants the bond increased because of Zenergy's history and because they are a higher risk, said Don Nelson, Dakota Resource Council member and farmer and rancher, referring to a major salt spill that occurred near Alexander in 2006.

"The taxpayer is the one that gets stuck with the bill for cleanup and that's what we're worried about," he said.

Zenergy is operating near Alexander, which is about 20 miles west of Watford City.

"The BLM has the authority to increase the bond for Zenergy, Inc., and it should, in light of the negligent behavior that the company has displayed," Nelson said.

Lonny Bagley, BLM Dickinson Field Office manager, declined DRC's request to increase the bond and said there is no reason for it.

"The bonding that they're requesting for was all the operations within the Foreman Field and the BLM does not manage all of the operations within the Foreman Field," Bagley said.

He added Zenergy has a good compliance record.

"They are following all of the requirements within the standards for BLM and meeting those in a fine fashion," Bagley said.

The saltwater spill occurred on private land, Bagley said, and therefore the BLM does not take it into consideration.

"We only look at compliance records associated with their federal operations," Bagley said.

Klein said the spill was naturally occurring and happened when saltwater was being piped to a disposal and the piping failed.

She said the DRC would be satisfied if the BLM would ask Zenergy to increase its bond to about $7 million.

The Montana State BLM office, which has jurisdiction for North Dakota, Montana and South Dakota, has not received DRC's letter.

"We will wait for the decision from our state director," Bagley said. "They will weigh the factors -- whether we took the appropriate action or not."

Klein said she is unsure what the DRC would do if the Montana BLM office doesn't increase Zenergy's bond.

"We could ask somebody to introduce federal legislation or to promulgate rule- making to try to change the bond structure," Klein said.

Attempts to contact Zenergy were unsuccessful Wednesday.