```

[Senate Hearing 112-595]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-595

 
                       NATIONAL PETROLEUM RESERVE

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   TO

    PROVIDE OVERSIGHT ON REMEDIATION OF FEDERAL LEGACY WELLS IN THE 
                   NATIONAL PETROLEUM RESERVE-ALASKA

                               __________

                             JULY 12, 2012

                       Printed for the use of the
               Committee on Energy and Natural Resources

                  U.S. GOVERNMENT PRINTING OFFICE
76-612                    WASHINGTON : 2012
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington           MIKE LEE, Utah
BERNARD SANDERS, Vermont             RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan            DANIEL COATS, Indiana
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota                DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia      BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Brower, Charlotte, Mayor, North Slope Borough, AK................    28
Cribley, Bud, Alaska State Director, Bureau of Land Management, 
  Department of the Interior.....................................     4
Foerster, Cathy, Engineering Commissioner and Chair, Alaska Oil 
  and Gas Conservation Commission, Anchorage, AK.................    11
Millett, Charisse, Representative, Alaska House of 
  Representatives, Anchorage, AK.................................     7
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2

                                APPENDIX

Responses to additional questions................................    33

                       NATIONAL PETROLEUM RESERVE

                              ----------                              

                        THURSDAY, JULY 12, 2012

                               U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:36 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK. Why don't we call the hearing to order?
    Today, the Committee on Energy and Natural Resources will 
have a hearing on the issue of Federal oil and gas legacy wells 
in the National Petroleum Reserve-Alaska. This is an issue 
that, of course, Senator Murkowski has had a great interest in 
and urged us to have the hearing.
    The NPRA has an interesting history, having been first 
designated as a Naval petroleum reserve by President Harding in 
1923 for defense purposes. The U.S. Navy, and subsequently the 
U.S. Geological Survey, undertook exploration drilling from the 
period 1944 until 1982. As a result, 136 so-called legacy wells 
and boreholes are located within the NPRA. Jurisdiction over 
the NPRA was transferred from the Navy to the Department of the 
Interior by legislation in 1976.
    According to information provided by the BLM, of the 136 
legacy exploration wells and borehole sites, 41 legacy wells 
remain. The agency continues to monitor site conditions. 
According to BLM, the agency has done significant work on wells 
that have been subject to coastal erosion in an effort to avoid 
increased risk to public health and to the environment.
    I understand that obtaining the resources necessary to 
remediate these sites has been a challenge. In this time of 
fiscal constraint, securing adequate appropriations for this 
effort is difficult. I am told that the base level of 
appropriations for legacy well remediation in the NPRA in 
recent years has not been high.
    However, I am glad that over $16 million has been made 
available under the Recovery and Reinvestment Act to remediate 
the Drew Point well site. I know that emergency authority has 
also been invoked in the past by the BLM in order to address 
problem well sites.
    So we thank the witnesses for traveling as far as they have 
to offer testimony today. I look forward to hearing from them. 
Let me defer to Senator Murkowski for her comments.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I truly 
appreciate you scheduling this very important hearing this 
morning.
    This is important to Alaska, but I think from a larger 
perspective it's important because I think it speaks to the 
commitment that the Federal Government should have when it 
comes into a State and operates and then leaves. I think we all 
assume that there is a responsibility to be a, quote, 
``responsible operator.'' In this instance, I think we have 
seen some failures here, so the opportunity to speak to that 
and to what the potential solutions are, I think, is important.
    I'd like to take a moment and thank our witnesses that are 
here today. We have the BLM Alaska Director, Mr. Bud Cripley. 
We have from the State Legislature our Representative, Charisse 
Millett, from the Anchorage area. We also have the Alaska Oil 
and Gas Commission Chair, Cathy Foerster--all who have traveled 
here today to testify before the committee.
    I thank you for making the long trek. The good news for you 
is it's not as hot now as it was last week. So you'll be able 
to survive this brief visit back here.
    I also want to take a moment to recognize North Slope 
Borough Mayor Charlotte Brower. The mayor couldn't be with us 
here today. She is from Barrow, Alaska. But this is, of course, 
a very important issue to Mayor Brower and the folks in the 
North Slope Borough. The mayor had asked that I read a very 
brief statement into the record on her behalf. She states as 
follows:
    ``As a cooperating agency with BLM, the North Slope Borough 
must be a part of the process to prioritize and address the 
impacts of oil and gas exploration. Just a few months ago, I 
was in Washington, DC, and met with then Director Abbey and 
raised our issues of concern with this process of cleaning up 
the legacy wells left behind after the Navy and USGS 
exploration process.
    ``He stated that BLM is committed to capping these wells, 
but it is a, quote, `unfunded mandate,' close quote. The 
Federal Government wishes to act as steward of the land in 
Alaska, often telling Alaskans and residents what they can or 
cannot do on the land. Yet here is an example of the same 
government failing to fulfill the most basic of 
responsibilities as the landowner.
    ``Residents want to develop the resources, but they also 
want to do so responsibly. The residents of the NPRA and the 
North Slope Borough that rely on the planning area for 
subsistence must be assured that they are not exposed to 
harmful levels of oil development associated contaminants, 
contaminants, and that they will be protected against a range 
of contaminant associated disorders.
    ``Reassurance to our communities of continued safety of 
subsistence resources will foster the continued viability of 
the subsistence diet and way of life. It will also reinforce 
our common goal of environmentally responsible development of 
the oil and gas resources in the area. This we can do by 
working together.''
    That's the comment from Mayor Brower.
    Mr. Cribley, I really do appreciate you taking the time to 
come here today. But I also recognize that you get it. You 
understand the situation and the problem in Alaska. It probably 
would have been more cost effective for us if we had had some 
of the folks from the BLM office here in DC testifying on this 
issue.
    I know from numerous meetings on this topic that you 
recognize the problem. I would be surprised if you told me that 
you have not personally pushed for increased funding from your 
superiors to remediate these leaking wells. So I think the 
message needs to be relayed very clearly that we want to hear 
directly from those here in Washington in terms of what they 
anticipate the schedule will be.
    I want to emphasize to my colleagues how dire the situation 
in the National Petroleum Reserve-Alaska really is and, I 
think, shed a little bit of light on the hypocrisy hypocrisy 
that is on display here in the Federal Government. As the 
chairman has noted, there were 136 wells that were drilled in 
NPRA over a period of many decades. Only 16 of those 136 wells 
have been properly plugged. Seven were taken care of by the 
North Slope Borough, not by BLM. The remaining 120 wells are in 
various conditions of non-compliance with State law. There's 3 
missing wells, one of which is under a land slide at the edge 
of the Colville. The two others are at bottoms of lakes where 
remediation is going to be tough to get to.
    I think we recognize that this is a costly process. It 
doesn't come cheap. But, again, when you think about the 
standards that others are held to and held accountable for, 
it's only right, it's only appropriate that the Federal 
Government be held to those same standards.
    This is the same Federal Government and Department of 
Interior who has held private industry to the highest of 
standards with regard to environmental protection, as they 
should. Alaskans want responsible development and exploration, 
but not at risk of the environment.
    I commend the private industry, as they have worked with 
the Federal Government to meet the high standards. But the 
question really has to be asked: Why, then, should the Federal 
Government not have to live up to those same standards?
    When you couple this failure in the NPRA with other broken 
promises by the Federal Government to Alaskans, I think it 
really pushes and strains the relationship that Alaskans have 
with our own government. I must say I'm having a bit of a 
difficult time reconciling the fact that DOI is unable--they 
say they are unable to fund well remediation efforts within 
NPRA, even though funding for the Land and Water Conservation 
Fund continues to increase. Not only does each land management 
agency have staggering maintenance backlogs, but Interior as a 
whole, I think, has more pressing needs than purchasing 
additional land.
    Alaskans are united on this issue. I commend you, 
Representative Millett, for taking the lead on this and pushing 
it. I know that other members of this committee share my 
concern for cleaning up the ongoing environmental pollution 
within the NPRA.
    Again, I thank you all for being here, and I thank the 
chairman for his commitment to work with us on this issue.
    The Chairman. All of you have been essentially introduced. 
Why don't we start with you, Mr. Cribley? If you'll give us the 
BLM perspective on this, and then Ms. Millett and then Ms. 
Foerster--we'll be glad to hear from all of you. Each of you 
take 5 or 6 minutes, tell us what you think we need to know, 
and then we'll have some questions.

STATEMENT OF BUD CRIBLEY, ALASKA STATE DIRECTOR, BUREAU OF LAND 
             MANAGEMENT, DEPARTMENT OF THE INTERIOR

    Mr. Cribley. Thank you, Mr. Chairman. Before I begin my 
oral testimony, I would like to take this opportunity to thank 
you, Chairman Bingaman and Senator Murkowski, for taking time 
out of a very important schedule to recognize the significance 
of this issue and take it to a national forum.
    I'd also like to recognize State Representative Charisse 
Millett and also Chairman Cathy Foerster for the work that they 
have done in Alaska to bring this issue up and provide an 
opportunity for a dialog on it. It's a very important issue to 
us in Alaska and I know nationally to the Bureau. So thank you.
    With that, I would like to thank you for the opportunity to 
discuss the Bureau of Land Management's role in remediating 
legacy wells in the National Petroleum Reserve in Alaska. NPRA 
is a 23 million acre roadless area located 200 miles north of 
the Arctic Circle. This remote, treeless, and mostly frozen 
landscape exists in a sensitive ecological balance. It is rich 
in resources and holds significant potential for oil and gas 
production.
    The Arctic ecosystem supports caribou, water fowl, shore 
birds, polar bear, walrus, and other marine mammals. It is home 
to a people who have inhabited it for over 8,000 years and 
depend upon it for its subsistence. Within the NPRA, the BLM 
manages surface and subsurface resources and the legacy wells. 
The legacy wells are 136 test wells and boreholes drilled by 
the Navy and the United States Geological Survey from 1943 to 
1982. They are drilled to evaluate the use of modern petroleum 
exploration and production methods in Arctic conditions.
    The BLM priority is to protect public health, safety, and 
the environment through the remediation of the legacy wells. 
The agency actively monitors site conditions and directs 
available funding to address sites that pose a potential risk.
    The BLM has plugged and remediated 18 legacy wells. In 
addition, one well was plugged by the U.S. Navy. Eighteen wells 
were partially plugged and currently managed by the USGS to 
monitor climate change. Twenty-four have been transferred out 
of Federal ownership, and 34 are uncased boreholes drilled for 
geologic and permafrost research. The BLM actively monitors 
conditions on the remaining 41 legacy well sites.
    In 2004, the BLM completed an inventory and analyzed the 
risk associated with each of the legacy wells. The report 
identified a number of wells that posed a potential risk and 
determined other sites present no significant threat. The 
information from the inventory guided the BLM's BLM's decision 
to direct funding to plug wells at sites that posed the greater 
risk, including a series of wells located near Umiat, a town on 
the southeastern boundary of the NPRA. Umiat's proximity to an 
airstrip, fuel supplies, and camp facilities and other 
infrastructure significantly reduced the cost to bring people, 
equipment, and materials into the area for a remediation 
project.
    The BLM also responded when a series of Arctic storms 
caused a large area of coastal shoreline to calve into the 
ocean and placed 4 legacy well sites in danger of eroding into 
the Beaufort Sea. The BLM secured emergency funding and plugged 
the wells threatened by coastal erosion, including the JW 
Dalton legacy well site, where more than 300 feet of shoreline 
had eroded, exposing the well head.
    Moving forward, the BLM will continue to monitor legacy 
wells and will plug and remediate wells that present a 
potential risk. To guide our efforts, BLM will complete an 
updated legacy well summary report and strategic plan in this 
fiscal year. The plan will outline the agency's potential for 
plugging the remaining legacy well sites.
    In preparing the updated report, the BLM is working with 
the Alaska Oil and Gas Conservation Commission to come to a 
common understanding of the status and condition of the wells 
and to consider their recommendations on priority sequencing. 
The BLM has shared individual legacy well file information with 
the AOGCC and expects to receive the results from their review 
in September.
    In the meantime, BLM has developed cost estimates and a 
proposed plan to plug the Iko Bay Well No. 1 and two other 
wells. The BLM is also developing a draft multi-season strategy 
to address an additional 13 legacy wells over 3 seasons.
    The BLM recognizes the importance of remediating legacy 
wells in the NPRA. The agency remains committed to directing 
available funding to plug and remediate the remaining legacy 
wells in order to protect health, safety, and the environment. 
The agency also recognizes the importance of working 
collaboratively with the State of Alaska, native corporations, 
tribal governments, and other partners, including the Alaska 
Oil and Gas Commission, to accomplish this strategy.
    I'll be glad to answer any questions. Thank you.
    [The prepared statement of Mr. Cribley follows:]

  Prepared Statement of Bud Cribley, Alaska State Director, Bureau of 
              Land Management, Department of the Interior

Introduction
    Thank you for the opportunity to discuss the role of the Bureau of 
Land Management (BLM) in the remediation of legacy wells in the 
National Petroleum Reserve in Alaska (NPR-A). The BLM is responsible 
for the management of 136 test wells and reserve pits in the NPR-A that 
were drilled, but not closed, by the U.S. Navy and Federal civilian 
agencies from 1943 to 1982. The BLM's priority is to protect human 
health and the environment through the remediation of the legacy wells. 
The agency actively monitors site conditions and directs available 
funding to address sites that pose a potential risk.

Background
    The NPR-A is a 23 million-acre roadless area located 200 miles 
north of the Arctic Circle. This remote, treeless, mostly frozen 
landscape exists in a sensitive ecological balance. It is rich in both 
renewable and nonrenewable resources, including one of the most 
prolific geologic systems on the North American continent. Portions of 
the NPR-A hold high potential for oil and gas production. The area also 
features recreational and cultural values, including more than 1,000 
historic and prehistoric sites, and Arctic wetland ecosystems, riverine 
habitats and upland areas that support caribou, waterfowl, shorebirds, 
polar bear, walrus, and other marine mammals. Furthermore, the area is 
home for a people who have inhabited it for 8,000 years and depend upon 
it for subsistence.
    Petroleum exploration in the NPR-A has been ongoing for nearly 100 
years. In the early 1900s, field geologists from the United States 
Geological Survey (USGS) exploring the North Slope of Alaska found 
several oil seeps in this area. Their discovery prompted President 
Warren G. Harding to set aside this portion of Alaska's North Slope as 
an emergency oil supply for the U.S. Navy. President Harding 
established the Naval Petroleum Reserve No. 4 (NPR-4) by Executive 
Order in 1923. During early exploration programs, the U.S. Navy (1944-
1953) and the U.S. Geological Survey (1975-1982) drilled 136 
exploratory wells and boreholes at depths ranging from 100 to 20,335 
feet. Now called ``legacy wells,'' these exploratory wells and 
boreholes were drilled to establish the feasibility of using modern 
petroleum exploration and production methods in Arctic conditions. 
Naval Petroleum Reserve No. 4 was renamed the ``National Petroleum 
Reserve in Alaska,'' and administration of the area was transferred 
from the U.S. Navy to the U.S. Department of the Interior, under the 
Naval Petroleum Reserves Production Act of 1976 (P.L. 94-258, 90 Stat. 
303).
    The BLM, an agency of the Department of the Interior, is 
responsible for protecting the resources and managing the uses of our 
nation's public lands, which are located primarily in 12 Western 
states, including Alaska. Within the NPR-A, the BLM is responsible for 
the management of the surface and subsurface resources which includes 
the legacy wells and reserve pits.
    Since 1952, 19 wells have been plugged. The U.S. Navy plugged 1 
well in 1952. The BLM began its plugging efforts in 2002 and has 
plugged 18 wells, remediated contaminated soils where necessary, and 
removed surface debris; another 18 wells are partially plugged and are 
used and managed by the U.S. Geological Survey (USGS) as climate change 
monitoring wells; 24 are on land that has been transferred out of 
Federal ownership; and 34 are uncased or partially cased boreholes 
drilled for geologic strata and permafrost research On the remaining 41 
legacy well sites, the BLM actively monitors site conditions.

Inventory, Assessment & Remediation
    In 2004, the BLM completed an inventory and reviewed the condition 
and analyzed the risk posed to humans and the environment from the 
legacy wells. The inventory identified a number of legacy wells that 
posed a potential risk to public health, safety and the environment, 
and determined that many other sites presented no significant threat. 
The information from the assessments allowed the BLM to direct funding 
and attention to plug wells and remediate surface soils at sites that 
posed the greatest risk, while continuing to monitor conditions at the 
other sites. Costs for remediation vary dramatically depending on the 
proximity to infrastructure and the level of soil remediation 
necessary.

Umiat
    Based on the priorities identified in the 2004 report, the BLM 
plugged a series of wells located near Umiat, addressing concerns with 
surface contamination and well condition. Umiat's proximity to 
infrastructure, including an airstrip, fuel supplies, and camp 
facilities, significantly reduced the cost to bring people, equipment, 
and materials into the area and to remove contaminated soils and 
surface debris from the area. In 2012, the BLM plugged two legacy wells 
near Umiat for $3.5 million.

Response to Coastal Erosion
    The BLM monitors wells adjacent to the ocean annually to determine 
if coastal erosion or other changes pose an increased risk to health 
and the environment and takes appropriate action as necessary. The BLM 
has responded to several emergencies. After a series of Arctic storms 
caused severe coastal erosion, including the calving of large swaths of 
coastal shoreline, four legacy well sites were in imminent danger of 
eroding into the Beaufort Sea. The BLM responded to the emergencies at 
these four sites in the following manner:

   JW Dalton--More than 300 feet of shoreline eroded near the 
        JW Dalton well site during the 2004 winter season, exposing the 
        well head. The BLM spent $8.9 million to plug the JW Dalton 
        well site.
   East Teshekpuk--The East Teshekpuk well remediation was 
        completed by the end of 2008 for $13 million. The high cost was 
        due to the remote location of the site and the need to 
        excavate, transport, and dispose of contaminated soils and 
        solid waste.
   Atigaru--Remediation of the Atigaru well site was completed 
        in April 2009 at a total cost of $18.7 million. The high cost 
        of this remediation was also due to the need to excavate, 
        transport, and dispose of contaminated soils and solid waste.
   Drew Point--The BLM removed 13,500 gallons of diesel fuel 
        from the wellbore prior to plugging the well and removed 
        approximately 5,000 cubic yards of petroleum-contaminated mud 
        from the reserve pit. The contaminated mud was hauled 35 miles 
        overland from Drew Point to a disposal site. The project was 
        completed in 2010 with $16.8 million in American Recovery and 
        Reinvestment Act (ARRA) funding.

Moving Forward
    Moving forward, the BLM's strategy is to continue monitoring the 
legacy wells and to first plug and remediate those wells that present a 
potential risk, while prioritizing future plugging and remediation 
based upon available funding. The BLM also recognizes the importance of 
working collaboratively with the State of Alaska, Native Corporations, 
Tribal governments, and other partners including the Alaska Oil and Gas 
Conservation Commission (AOGCC) to accomplish this strategy.
    To guide future efforts, the BLM expects to complete an updated 
Legacy Well Summary Report and a Strategic Plan in late 2012. The BLM 
monitors wells annually to determine changes in site or well 
conditions. The BLM uses the information gathered during inspections to 
assist in prioritizing the wells for future actions. The updated 
Strategic Plan will outline the agency's priorities for plugging the 
remaining legacy well sites. In preparing the updated Legacy Well 
Summary Report and Strategic Plan, the BLM is working closely with the 
AOGCC to come to a common understanding of the status and condition of 
the wells. The BLM has shared individual legacy well file information 
with the AOGCC. The BLM expects to receive the AOGCC recommendations on 
priority sequencing in September.
    In the meantime, the BLM has developed cost estimates and a 
proposed plan to plug the Iko Bay #1 well and two other wells in close 
proximity to Iko Bay during the winter of 2013, pending funding 
approval. The BLM also developed a draft multi-season strategy to 
address 13 legacy wells over three seasons.

Conclusion
    The BLM recognizes the importance of remediating the legacy wells 
in the NPR-A. The BLM remains committed to directing available funding 
to plug and remediate the remaining legacy wells in order to protect 
health, safety, and the environment. I will be glad to answer any 
questions.

    The Chairman. Thank you very much.
    Representative Millett, go right ahead.

STATEMENT OF CHARISSE MILLETT, REPRESENTATIVE, ALASKA HOUSE OF 
                 REPRESENTATIVES, ANCHORAGE, AK

    Ms. Millett. Thank you, Chairman Bingaman, Ranking Member 
Murkowski, and members of the committee. I am Alaska State 
Representative Charisse Millett and a lifelong Alaskan.
    Thank you for the opportunity to communicate a message from 
the citizens of Alaska over their frustration on this 70-year-
old problem and advocate for a solution. With this committee's 
help, I believe we can get the Federal Government to clean up 
its mess and be good stewards of our land as our mission 
States.
    During the 2012 Alaska Legislative Session, I sponsored 
House Joint Resolution 29. It has been submitted to the chair 
for this hearing, and I ask that it be submitted for the 
record.
    The Chairman. We'll be glad to include that in our record.
    Ms. Millett. Thank you. This resolution urges the Bureau of 
Land Management, the BLM, to plug legacy wells properly and to 
reclaim the legacy well sites as soon as possible in order to 
protect the environment in the Arctic. It passed the House 
unanimously. In fact, every member of the Alaska House of 
Representatives signed on as a co-sponsor.
    From 1944 to 1982, the United States Navy and the United 
States Geological Survey drilled 136 wells in or near the 
National Petroleum Reserve-Alaska, NPRA. NPRA is part of the 
northern Arctic coastal plain that includes Prudhoe Bay, the 
Arctic National Wildlife Refuge, ANWR, and stretches all the 
way to northern Canada. These areas are similar in biology, 
geography, and oil and gas potential.
    The NPRA was a test bed, not just for oil and gas 
exploration practices in the Arctic, but also presented a 
significant opportunity to test Arctic engineering practices. 
Nearly every site has a variation on the surface and the 
subsurface as different technologies were tried.
    The BLM is now the custodian responsible for the surface 
and subsurface property, including the custody of the abandoned 
wells now referred to as legacy wells. Only 16 of the 136 wells 
have been properly plugged and abandoned. Of those 16, 7 were 
plugged not by the BLM but by the North Slope Borough.
    The remaining 120 wells are in various conditions of 
flagrant non-compliance. The drill sites, many of which have 
rusting barrels filled with contaminants--and may still be. We 
just don't know. Two of the 120 wells are currently, and may 
have been for up to 30 years, leaking hydrocarbon gas into the 
atmosphere.
    Three other wells can no longer be found. Of those 3 
missing wells, one well is under a land slide at the edge of 
the Colville River, the same river that a bridge permit for a 
private operator was delayed for over 5 years due to 
environmental concerns. Two others are at the bottom of lakes 
where remediation will be very difficult and very expensive.
    As you can see by the shockingly graphic pictures presented 
today, we should agree that remediation is long overdue. 
Allowing these unsafe and unsightly wells to litter Alaska's 
wilderness while threatening wildlife, human safety, and 
damaging the pristine Arctic environment is unacceptable.
    These legacy wells have been an issue for over 60 years. 
Many administrations have failed Alaskans, responsible 
operators, and by extension, all Americans. However, the 
current Federal Government has the opportunity now to take 
action and solve this problem. Let's stop the out-of-sight, 
out-of-mind mentality.
    The Federal Government has received approximately $9.4 
billion from lease sales in the NPRA and the outer continental 
shelf of Alaska. Of that $9.4 billion, there has not been one 
penny used to plug the abandoned or reclaim the legacy wells.
    The State of Alaska cannot impose fines on the Federal 
Government like we would on our private operators. But if we 
could, the fines would exceed $8 billion. If the statute of 
limitations were removed, $40 billion. While the Federal 
Government rightfully demands proper environmental stewardship 
on development in Alaska and often uses its administrative 
powers to delay, stop our responsible developers in the name of 
environmental protection, it turns a blind eye to its own 
environmental disaster.
    This hypocrisy outrages Alaskans and should outrage all 
Americans. It adds insult to injury. Alaskans take pride in how 
we hold developers to the highest environmental standards in 
the world. Yet the Federal Government, responsible for 
protecting America's land, is the worst offender in Alaska.
    Currently, the Federal Government is rewriting the 
management plan for the National Petroleum Reserve. It just 
finished with the public comment portion. Amazingly enough, 
enough, environmental NGO's submitted over a thousand pages of 
comments, stating they supported the most restrictive plan that 
would provide the most protection to the environment of the 
NPRA. So it's ironic that not one of those NGO's has felt any 
similar urgency to come to the aid of the legacy wells and the 
damage already inflicted by the Federal Government.
    This goes to the fundamental question of why land should be 
removed from potential exploration when the true test is one of 
management. On this level, both the Federal Government and the 
environmental groups have misplaced their priorities.
    The Alaska BLM receives about $1 million a year toward this 
cleanup effort. The last 3 wells they remediated cost $2 
million each. At that pace, my 2-year-old grandson will only 
see half of these well sites cleaned up in his lifetime. The 
rest would pollute into the next century.
    Now for solutions. The administration is planning more 
offshore Alaska and NPRA lease sales. Let's use a portion of 
those revenues and plug the abandoned wells and clean up the 
Arctic tundra.
    Another option is to lease the well sites to private 
operators to clean up as a lease requirement those well sites. 
Last, convey the lands back to Alaska. We'll take 
responsibility. We'll clean up those lands. Let's help keep 
Alaska clean.
    Thank you for your consideration and time, and I'm 
available for questions.
    [The prepared statement of Ms. Millett follows:]

    Statement of Charisse Millett, Representative, Alaska House of 
                     Representatives, Anchorage, AK
    Chairman Bingaman, Ranking Member Murkowski, and members of the 
committee.

    Thank you for the opportunity to communicate a message from the 
citizens of Alaska over their frustration on this 70-year-old problem 
and advocate for A solution. With this committees help I believe we can 
get the federal government to clean up its mess, and be good stewards 
of our land as their mission states.
    During the 2012 Alaska legislative session I sponsored House Joint 
Resolution 29. It has been submitted to the Chair for this hearing. The 
resolution urges the Bureau of Land Management (BLM) to plug legacy 
wells properly and to reclaim the legacy well sites as soon as possible 
in order to protect the environment in the arctic. It passed the House 
unanimously; in fact, every member of the Alaska House of 
Representatives is a co-sponsor of this legislation. Attached to my 
written testimony is a copy of the Resolution. (Attachment 1*)
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    * All attachments have been retained in committee files.
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    From 1944 to 1982 the United States Navy and the United States 
Geological Survey drilled 136 wells in or near the National Petroleum 
Reserve-Alaska (NPR-A). NPR-A is part of the northern Arctic coastal 
plain that includes Prudhoe Bay, the Arctic National Wildlife Refuge 
(ANWR) and stretches all the way to the Northern Canada. These areas 
are all similar in biology, geography and oil and gas resource 
potential. Attached you will find a map of current map of current, 
relinquished and expired tracts for NPR-A, and a map of locations of 
the legacy wells. (Attachment 2)
    The NPR-A was a test bed not just for oil and gas exploration 
practices in the Arctic, but also presented a significant opportunity 
to test Arctic-engineering practices. Nearly every site has a variation 
on the surface and underground as different technologies were tried.
    The BLM is now the custodian responsible for the surface and sub-
surface property, including the custody of the abandoned wells, now 
referred to as the legacy wells. Secretarial Order Nos. 3071 and 3087 
were issued in 1982. With the abolishment of the Conservation Division 
of the USGS in 1982, the NPR-A became under sole jurisdiction of the 
BLM.
    Only sixteen of the 136 legacy wells have been properly plugged and 
abandoned. Of those sixteen 7 were plugged not by the BLM but by the 
North Slope Borough.
    The remaining 120 wells are in various conditions of flagrant non-
compliance. The drill sites, many of which are contaminated by wood, 
metal, plastic, glass and concrete debris are also littered with 
rusting barrels once filled with contaminants and may still be, we 
don't know.
    Two of the 120 wells are currently, and may have been for 30 years 
leaking hydrocarbon gas into the atmosphere. Three other wells can no 
longer be found. One well is under a landslide at the edge of the 
Colville River, the same river that a bridge permit for a private 
operator was delayed for over five years due to environmental concerns.
    Two others are at the bottom of lakes where remediation will be 
very difficult and expensive.
    Allowing these unsafe and unsightly wells to litter Alaska 
wilderness while threatening wildlife and human safety and damaging the 
pristine arctic environment is unacceptable.
    In June of 2001 an EPA pollution report was filled by the North 
Slope Borough (NSB) received a report that Simpson Well #31 was leaking 
crude oil from a private citizen. NSB confirmed this report on a site 
visit performed June 4, 2001. An estimate provided by North Slope 
Borough Officials indicates that there is 40--50 gallons of crude oil 
on the ground around the wellhead. On June 7, 2001, BLM was notified by 
the NSB and reported the situation to the NRC and ADEC. On June 8, a 
BLM Petroleum Engineer and Petroleum Engineering Technician visited the 
site and confirmed a minor leak. The master valve was not completely 
closed and the wellhead was leaking at a swedge (pipe reduction 
coupling) above the master valve, and the master valve may be leaking. 
The total volume that has leaked from the well is unknown, but it was 
estimated that the well is leaking at a rate of about one gallon per 
day. This report went to 8 different people. The BLM responded, 
however, this well is 40 miles from Barrow and there is much human 
activity that takes place near Barrow in the form of subsistence 
hunting and fishing, There are many wells within the NPR-A that are 
only visited by wildlife and the sporadic visits to monitor the wells 
by the BLM. My worry and the worry of many Alaskans there are more 
wells like Simpson 31 that have, or are currently polluting the 
environment. I attached the full EPA report. (Attachment 3)
    The legacy wells have been an issue for over 60 years. Many 
administrations have failed Alaskans, responsible operators, and by 
extension all Americans on this problem, however the current federal 
government has the opportunity to take action now and solve this 
problem. Lets stop the--out of sight out of mind mentality on this 
issue.
    The federal government has received approximately $9,400,000,000.00 
from lease sales in the NPR-A and the outer continental shelf of the 
Alaska. Of that $9.4 billion dollars there has not been one penny has 
been used to plug, abandon or reclaim legacy wells in NPR-A.
    The State of Alaska cannot impose fines on the federal government 
like we would on our private operators for violating our State 
regulations, if we could the fines would exceed $8,000,000,000.00. If 
the statute of limitations were waived, the fines would exceed 
$40,000,000,000.00
    While the Federal Government rightfully demands proper 
environmental stewardship on development in Alaska, and often uses 
administrative powers to delay or stop responsible development in the 
name of environmental protection. It turns a blind eye to its own 
festering environmental disaster. This hypocrisy outrages Alaskans, and 
should outrage all Americans. It adds insult to injury. Alaskans take 
pride in how we hold all developers to the highest environmental 
standards in the world, yet the federal government responsible for 
protecting America's lands is the worst offenders in Alaska.
    Currently the federal government is rewriting the management plan 
for the NPR-A. It just finished the public comment portion. Amazingly 
enough the Environmental NGO's submitted over a 1000 pages of comments 
stating they supported the most restrictive plan that would provide the 
most protection to the environment of the NPR-A. So it is ironic that 
not one of those NGO's has felt any similar urgency to come to the aid 
of cleaning up the damage already inflicted by the federal government's 
legacy wells. This goes to the fundamental question of why lands should 
be removed from potential exploration, when the true test is one of 
management. On this level, both the federal government and the 
environmental groups have misplaced their priorities.
    The only media coverage on this problem has been from the local 
Alaska, in the media reports we get mixed messages from the local BLM. 
I have attached a few samplings so you can get the feel for the 
frustration Alaskans have over the inaction of the federal government 
(Attachment 4)
    I have also included a link to an extensive data base of pictures 
of legacy wells, the BLM Legacy Well Summary Report; National Petroleum 
Reserve-Alaska--November 2004, and other pertinent documents: http://
video.housemajority.org/index.php?dir=BLM+Legacy+Wells%2F
    Now for solutions: The Administration is planning more offshore 
Alaska and NPR-A lease sales. Lets take a portion of those revenues and 
plug those wells and clean up the waste left on the tundra around these 
legacy wells.
    Upcoming planned lease sales in the NPR-A could target these legacy 
wells and as part of a lease agreement the leasee could as a condition 
of their lease take responsibility of remediation.
    The Federal Government could hand over the land to the State of 
Alaska, and in State of Alaska ownership we would remediate the legacy 
wells.
    The Alaska BLM receives about a million a year toward this clean up 
effort, the last three wells they remediated cost two million dollars 
each. At that pace my two-year-old grandson would only see half the 
sites properly contained in his lifetime. The rest would pollute into 
the next century.
    I was in DC last spring admiring the monuments, the reflecting 
pool, the National Mall, ``Americas front yard'' and all the history 
this great District has to offer. I came upon a beautification project 
managed by the Department of the Interior for the National Mall; it is 
$250,000,000.00 project just to ``spruce things up''. I know the 
Department of the Interior has it's priorities, and respect that things 
here in DC need attention now and then, but I and many Alaskans are 
asking please--please clean up your mess in our ``backyard'' now before 
more wells are lost and the damage to the pristine Arctic worsens.
    Lets help keep Alaska clean.
    Thank you for your time and consideration.

    The Chairman. Thank you very much.
    Ms. Foerster.

STATEMENT OF CATHY FOERSTER,ENGINEERING COMMISSIONER AND CHAIR, 
   ALASKA OIL AND GAS CONSERVATION COMMISSION, ANCHORAGE, AK

    Ms. Foerster. Thank you. Chairman Bingaman, Ranking Member 
Murkowski, and members of the committee, I'm Cathy Foerster, 
the Chair of the Alaska Oil and Gas Conservation Commission, 
the regulatory agency that oversees oil, gas, and geothermal 
exploration and production activities for the State of Alaska.
    Of the 136 legacy wells, only 16 have been properly plugged 
and abandoned to Alaska's standards. I'm here representing the 
Governor of the State of Alaska, who has asked me to tell you 
that we expect the Federal Government to obey Federal and State 
laws by cleaning up each and every one of these wells and doing 
it properly.
    We have serious problems with the 120 wells that have not 
been properly addressed. Unfortunately, the Interior Department 
has only provided us data for the downhole condition of 61 of 
those wells, and 55 wells we've got the surface condition for.
    As much as I would love to talk about all 120 wells, I will 
limit my discussion to those wells for which I have up-to-date 
data. But we have no reason to believe that the remaining wells 
don't have similar problems.
    A well that is plugged and abandoned to Alaska's 
requirements has surface re-vegetation and remediation 
sufficient that the site blends in with the natural 
environment. Within a few summers, there should be no 
indication that there was ever a well there. All but two of the 
well sites for which we have surface data have some manmade 
blemish marring the surface. Some of these, in my opinion, 
should be considered crimes against the environment.
    Twenty-six wells have been left open to the atmosphere and 
were left filled with drilling fluids. Several of them also 
encountered oil or gas. There has likely been significant 
contamination of the surrounding tundra and atmosphere by these 
various fluids escaping into the environment.
    Wood, metal, plastic, glass, and concrete debris litter 44 
of the sites. Forty-nine have metal piping sticking out of the 
ground, and 10 have open cellars, creating hazards for human 
and animal travelers.
    Seventeen wells were left filled with diesel. Diesel is the 
fluid that the EPA has prohibited operators from putting into 
wells. These wells also remain unremediated at the surface. 
They are environmental eyesores, at best, and potential sources 
for hazardous fluid contamination, at worst.
    Two of the wells leak hydrocarbon gases. Three can no 
longer be found. Twenty-nine are partially re-vegetated at the 
surface, but have unknown downhole conditions, making them 
landmines. The Interior Department considers these wells no 
longer of a concern because they're fixed at the surface. Some 
of these wells do still have surface remediation issues, in our 
opinion.
    Let's leave the surface for a minute and look at the 
downhole problems. In front of you should be well sketches for 
some actual legacy wells. We couldn't make them into posters. I 
apologize for that. For each pair of well sketches, the sketch 
on the left shows the well's existing condition, and the sketch 
on the right shows what it would look like if it were properly 
plugged.
    First is the East Simpson Test Well No. 2. At least 18 
wells are in this condition. On the left, we see the existing 
situation, a well that was drilled to about 7,500 feet, cased 
to a little below 6,400 feet, and has a series of cement plugs 
staged with drilling mud. Above that last plug, the well is 
left filled with diesel. But there is no guarantee that the 
diesel is still there after 32 years of neglect.
    On the right, we see the same well if it were plugged 
properly. The diesel would be safely removed and replaced with 
a water-based fluid. Then a cement plug would be placed at the 
surface and the pipe cutoff below ground level with a marker 
plate identifying the well in case of future excavations. The 
second well, Simpson Core Test No. 27, is a well that is 
representative of at least 28 wells that were drilled deep but 
cased shallow. The Interior Department considers these wells to 
be of low concern.
    You might ask why we're worried about decades-old holes 
like this that the Interior Department isn't concerned about. 
They re-entered a well just like this earlier this year, the 
Umiat No. 6. However, when they got below the casing, they lost 
control of the well, and it started to flow on them. That's 
called a blowout. Fortunately, they were able to regain control 
of the well. But that's why we worry about these holes.
    For the sake of time, I'll skip over the other two wells 
that I was planning to discuss. But I want to make a brief 
comment on one of them. It's the Iko Bay No. 1, which the local 
residents, the natives that live in a village nearby, have 
nicknamed the whistling well, because they can hear it leaking 
natural gas constantly.
    The Interior Department has no documented standards for 
plugging and abandonment procedures. But the State of Alaska 
does, and the Interior Department is required by law to comply 
with those standards. The Interior Department is, however, very 
clear on the time limits for plugging a well. It must be done 
within 1 year. Extensions can be granted but only for good 
reasons. Lack of budget and lack of lack of interest are not 
good reasons.
    Senators, I can't express my disappointment and shame at 
the Interior Department's failure to address these 
environmental ticking time bombs, these 120 messes. It's long 
past time for them to take responsibility and clean them all 
up. My agency knows exactly what needs to be done, and we stand 
ready to help address these wells now.
    Thank you for allowing me to testify. I am available to 
answer questions.
    [The prepared statement of Ms. Foerster follows:]

Statement of Cathy Foerster, Engineering Commissioner and Chair, Alaska 
            Oil & Gas Conservation Commission, Anchorage, AK

    Chairman Bingaman, Ranking Member Murkowski, and members of the 
committee. From 1944 to 1981, the Federal Government drilled 136 wells 
in the western half of northern Alaska, in an area comparable to ANWR--
in plants, animals and geography as well as in oil and gas resource 
potential.
    The Bureau of Land Management (BLM) within the Department of the 
Interior operates these wells for the Federal Government. Every one of 
the wells has been out of compliance with Alaska regulations at one 
time or another, and most still are.
    I am here representing the Governor of Alaska. He has asked me to 
tell you that we expect the Federal Government to obey Federal and 
State Laws by cleaning up every one of these wells, promptly.
    Total well count is 136. Of the 136, only 16 are properly plugged 
and abandoned. Of those 16, 7 were plugged by a local Alaska government 
body.
    Five more wells have been considered plugged and abandoned by the 
BLM, but not by the AOGCC because they do not meet our safety and 
environmental requirements.
    Twenty-nine wells are holes in the ground. They never had any 
casing placed in them. BLM does not consider these wells to be a 
concern, but they have yet to convince the AOGCC of this. The downhole 
conditions of these wells are unknown and some of the wells still have 
surface remediation issues.
    Seventeen of the wells are allegedly being used for temperature 
monitoring by the United States Geological Service (USGS). However, 
USGS has provided no evidence to the AOGCC that (1) they are truly 
using the wells and (2) the wells are in a safe condition, even though 
Alaska law requires that they do so.
    Seventeen of the wells have been transferred to Alaska native 
ownership and are no longer a concern to the BLM. But they are still a 
concern to Alaskans.
    Two of the wells are leaking greenhouse gases.
    The remaining wells are also out of compliance but just don't fit 
nicely into another category.
    AOGCC is working to get from BLM accurate data on the condition of 
the wells, but we don't yet have accurate downhole data on 75 of the 
wells nor do we have surface data on 81 of the wells; so I will limit 
my descriptions to the specific problems that we know we have with the 
61 for which we have good downhole data and the 55 for which we have 
good surface data. However, we have no reason to believe the remaiining 
wells do not have similar problems.
    At least 26 wells are open to the atmosphere and were left filled 
with drilling fluids. There has likely already been significant 
contamination of the surrounding tundra by these fluids swapping out 
after years of snow and snow melt. Further, several of the wells 
encountered oil or gas, and there is no way to guarantee that those 
fluids are escape.
    Wood, metal, plastic, glass, and concrete debris litter at least 44 
of the sites. It's embarrassing, no it's pathetic, that the Federal 
Government will give the BLM enough money to rent a helicopter, fly 
people up to the North Slope, and take pictures of these messes, but 
not enough to clean them up.
    At least 17 are filled with diesel. They are an environmental 
eyesore at best and a source of contamination at worst.
    At least three can no longer be found. One is under a landslide at 
the edge of the Colville River and two are in lakes. Since they can no 
longer be found, we have no way to confirm their surface or downhole 
conditions, essentially making them underwater mines and possible 
drinking water contaminators.
    At least two leak greenhouse gases. The leaks are at very low rates 
but have been allowed to continue for well over thirty years, thus 
having a substantial cumulative impact.
    Twenty-nine are partially re-vegetated at surface but have unknown 
downhole conditions, making them landmines. And some of them still have 
surface remediation issues.
    At least 49 have metal piping sticking out of the ground, which 
creates a hazard for local travelers (and not just of the human 
variety), especially in winter with snow cover. Ten have open cellars, 
which create a trip-and-fall hazard for human and animal travelers.
    The State of Alaska requires proper plugging and abandonment of 
wells to protect public safety, sources of drinking water, and the 
environment.
    A properly plugged and abandoned well has sufficient cement and 
other plugs placed in the hole to ensure that underground fluids cannot 
migrate. Only 16 of the 136 wells meet this requirement.
    A properly plugged and abandoned well has the casing and all other 
protrusions cut off at least 3 feet below ground level so that they 
cannot create a hazard or become a problem during subsidence or other 
normal earth movement. Only 16 of the 136 wells meet this requirement. 
A properly plugged and abandoned well has sufficient surface 
remediation that the site blends in with the natural vegetation. Within 
a few summers, there should be no surface indication of the well's 
location. All but two of the wellsites for which we have data have some 
unaddressed man-made blemish marring the surface.
    The pictures you've seen so far have demonstrated the problems at 
the surface, but now let's turn our attention to the downhole problems. 
The next two sets of sketches are for actual legacy wells. I've chosen 
these two wells because they show real problems that exist in many of 
the wells. For each pair of well sketches, the sketch on the left shows 
the well's existing condition and the sketch on the right shows what it 
would look like if it were plugged properly.
    The first well is the East Simpson Test Well #2. At least 18 wells 
are in similar condition. The sketch on the left shows the existing 
situation, a well that was drilled to about 7500 feet, was cased to a 
little below 6400 feet, and has a series of cement plugs staged with 
drilling mud. Above the last plug, at about 2100 feet, the well is 
filled with diesel (the fluid that EPA has prohibited operators from 
pumping into wells). Actually it is more accurate to say that the top 
2100' held diesel in 1980. There is no guarantee that the diesel is all 
still there after 32 years of neglect.
    The sketch on the right shows what the well would look like if 
plugged properly. The diesel would be safely removed and replaced with 
a water-based drilling fluid. Then a 150-foot cement plug would be set 
at the surface, and the pipe cut off at least three feet below ground 
level with a marker plate identifying it in case of future excavations. 
This work should cost less than $500,000 per well.
    The second well is the Simpson Core Test #27. At least 28 other 
legacy wells are similar but 25 of them are worse because they have no 
wellhead. Thus the drilling fluids left in these wells have been open 
to the environment for between 30 and 68 years. It is likely that some 
or all of these fluids have escaped to and damaged the surrounding 
tundra.
    The sketch on the left shows the existing situation, a 1500-foot 
deep open hole with about 100 feet of casing in the hole and sticking 
out at the surface. The hole was left filled with oil-based drilling 
fluids and no plug on top.
    The sketch on the right shows what the same well would look like if 
it were properly plugged and abandoned. The oil-based drilling fluids 
would be safely removed, the open hole section filled with cement 
through all depths that showed oil or gas potential--to ensure no 
migration of reservoir fluids. (This is important, since the well 
encountered discreet oil sands between 278 and 380 feet.) The cement 
plug would be carried to the top of the casing and the casing would be 
cut off at least three feet below ground level with a marker plate 
identifying it in case of future excavations. Again, this work should 
cost less than $500,000 well.
    You might ask why we're worried about old holes that have been open 
since 1951. Certainly you would expect that the hole has healed itself 
below the casing. Well, that's what the BLM expected when they plugged 
the Umiat #6 last year. However when they got about 200 feet below the 
end of the casing, they lost control of the well and it started to flow 
on them. Fortunately they were able to regain well control and avoid a 
blowout, but that's why we worry about these wells.
    The third well is the Iko Bay #1, which is called the whistling 
well by the native residents of the area because its wellhead leaks 
hydrocarbon gas. I included this well as an example of a well that 
might be more expensive to clean up, since a rig would be required to 
pull existing tubing out of the well before it could be abandoned. 
However, a big part of the rig cost would be for mobilization and 
demobilization and that cost could be shared by other wells if this 
were cleaned up as part of a larger program.
    The sketch on the left shows the existing situation, a 2700-foot 
open hole with casing set from 1200 feet to surface. There is no cement 
at the surface in several of the casing annuli; these annuli are 
supposed to have cement at the surface to prevent reservoir fluids from 
flowing and building up dangerous pressure at the surface. The open 
hole is plugged with cement from 2035 feet to 2200 feet. Above that, a 
slotted liner runs from within the casing down to about 1950 feet. A 
slotted liner is pipe with slots (holes) in it to allow fluids to flow 
through. No drilling fluids were left in the tubing or casing, which 
means the reservoir fluids from the open-hole section are in direct 
communication with the wellhead. And the open-hole section encountered 
several intervals with hydrocarbon gas potential. Thus, once the 
neglected wellhead developed a leak, this became the whistling well.
    The sketch on the right shows what the well would look like if 
properly plugged and abandoned. The tubing would be removed from the 
well. The entire slotted liner section would be plugged with cement to 
prevent any further migration of reservoir fluids. A 150-foot plug of 
cement would be set at surface. The previously un-cemented annuli would 
be filled with cement. Again, all casing strings would be cut off at 
least three feet below the surface and a marker plate would be placed.
    The last well is West Dease Test #1. I've included this well simply 
because it is representative of the 17 wells allegedly being used for 
temperature monitoring by USGS. I use the word ``allegedly'' because 
the USGS has not provided the required documentation to demonstrate 
that the wells are actually being used. They have also failed to 
provide the required information to demonstrate that the wells have 
mechanical integrity. For proper abandonment, these seventeen wells 
would simply need the diesel to be cleaned out of the hole (which 
should be done anyway), a 150-foot cement plug placed on top, the pipe 
cut off to at least three feet below ground level, and marker plates 
installed. All seventeen of these wells could be plugged for less than 
five million dollars.
    Out of curiosity, I looked up the BLM requirements for proper 
plugging and abandonment. The BLM requires an operator to plug and 
abandon a well promptly and according to an approved plan, whatever 
that means. In other words there are no documented BLM standards for 
plugging and abandonment. (Interestingly the National Park Service has 
very specific guidelines for onshore wells within their jurisdiction, 
as does BSEE for offshore wells.) However, even if BLM has no specific 
plugging and abandonment requirements they are still obligated to 
follow the laws of the State of Alaska and follow our regulations.
    Although BLM has no documented standards for plugging methods, they 
are very clear on time limits for plugging a well that is not in use. 
It must be plugged within ONE YEAR. Extensions can be granted for no 
more than one more year at a time, but the operator must demonstrate a 
good reason for the delay (And lack of budget or interest is not a good 
reason.) and must resubmit the request annually.
    Allowing these unsafe and unsightly wells to litter Alaska's 
wilderness while threatening both human safety and the environment is 
unacceptable. Nonetheless, BLM has properly addressed only 9 of the 136 
wells and well sites and Alaskans have taken care of another seven.
    If an oil company operated these wells, the AOGCC along with 
several Federal agencies would force compliance with our regulations 
and impose fines for non-compliance. And if we didn't, the public 
outcry would be deafening.
    When it comes to the Federal Government as operator, we can find 
them to be in violation of our regulations but, unfortunately, we have 
no legal authority to force them into compliance. And we shouldn't have 
to. Adequate funding should be specifically designated for the purpose 
of bringing these wells into compliance with Alaska's--Federal--
regulations.
    As a regulator I am aghast, along with my fellow Alaskans, that the 
BLM consistently fails to offer a plan to deal with these environmental 
ticking time bombs. It is long past time to take responsibility for and 
clean up these 120 messes. My agency has a thorough understanding of 
what is required to plug and abandon wells properly and in compliance 
with Alaska law. We want to work with the BLM to develop and implement 
a plan to accomplish this as soon as possible.

    The Chairman. Thank you all for your testimony. Let me 
start with a few questions.
    Mr. Cribley, Ms. Foerster just testified that the AOGCC--
that's the Alaska Oil and Gas Conservation Commission--is 
working to get from the BLM accurate data on the condition of 
the wells, but they do not have accurate downhole data on 75 
wells, nor do they have surface data on 81 of the wells. Is 
there data that the BLM has that it is refusing to make 
available to the AOGCC?
    Mr. Cribley. The Bureau is working very closely with the 
AOGCC right now, and we have provided to them all of the 
records that we have on the legacy wells in the NPRA and are 
ready to discuss with them the disposition or the condition and 
status of those wells. So we have shared everything that we 
have in our records.
    The Chairman. So you do not have information or data about 
wells that you have failed to provide to the AOGCC?
    Mr. Cribley. No. We had just recently gone through and 
searched all of our records and provided additional records 
that we had not shared with them previously. But we have shared 
with them everything that we have in our files right now.
    The Chairman. Let me ask you about this strategic plan that 
you folks are developing, as I understand it. When is that 
going to be completed?
    Mr. Cribley. Right now, we've provided all of our 
information to AOGCC, and they're scheduled to get back with us 
in September to have a discussion on the characteristics of the 
136 wells. Our intent is to try to have that plan completed by 
the end of this year, calendar year 2012.
    The Chairman. Will that plan include an estimated cost of 
doing complete remediation or necessary remediation on the 
remaining wells?
    Mr. Cribley. What the Bureau is working on right now is a 
5-year strategy on how we would most efficiently approach 
remediation of the highest priority wells. One of the things 
that we need to do or we want to do is sit down with the 
Commission and also with tribal interests in the North Slope 
Borough as far as priorities of the wells. We don't have that 
done yet, but that would be factored into that strategy as far 
as what we would do in the near term.
    The Chairman. But, now, are you implying there that you've 
got a 5-year strategy to identify what needs to be done on the 
highest priority wells, but at the end of the 5 years there 
will still be un-remediated wells? Is that what I understand?
    Mr. Cribley. That 5-year strategy won't address the 
remediation of all of the wells, no. It will be just the ones 
that we feel that we can do within that 5-year period.
    The Chairman. So you're not trying to do a proposed 
strategy for fixing this problem. It's just a strategy for what 
can be done over the next 5 years. Is that right?
    Mr. Cribley. We're looking at the near term. Yes, sir.
    The Chairman. It seems that there is a disagreement about 
such a basic thing as how many wells have been plugged. I 
noticed that you say, Mr. Cribley, in your testimony that since 
1952, 19 wells have been plugged. The U.S. Navy plugged one 
well in 1952. The BLM began its plugging and has plugged 18 
wells since then.
    Then when I get over here to the testimony of the other two 
witnesses, it doesn't seem that there is agreement on that. 
Representative Millett says only 16 wells have been properly 
plugged. What explains the difference in opinion about the 
facts that we're dealing with here?
    Is there a reason, Ms. Foerster, why you do not believe 
that the 19 wells have been plugged that Mr. Cribley says have 
been plugged?
    Ms. Foerster. Chairman Bingaman, a well is considered 
properly plugged and abandoned to my satisfaction if it 
complies with the regulations of the State of Alaska. Only 16 
wells do that, and 7 of those wells were wells that aren't 
considered in that list of 19 that Mr. Cribley addresses. Seven 
of those wells he's classified in the 24 that were transferred 
in the land swap. So that's one of the problems.
    He's also considering the 34 re-vegetated wells as properly 
abandoned. However, nothing has been done to address those 
wells. The Interior Department has written those wells off 
simply because there's nothing left at the surface.
    Now, it is possible that the Interior Department could come 
back to us and demonstrate to us that those wells are of no 
concern. But that is the operator's responsibility to come to 
this agency and say, ``Here is the technical data and the 
scientific proof that those wells are safe and secure.'' No one 
has done that. We're open to them to do that.
    But there are at least 5 wells that they've written off as 
properly plugged and abandoned, but none of those wells meet 
State of Alaska requirements. This is part of that getting on 
the same page that we need to do.
    But, I'm sorry, for the State of Alaska to consider a well 
plugged and abandoned, it has to meet our requirements. Our 
requirements were put in place to protect the environment, to 
protect human safety, to prevent migration of downhole fluids, 
and to protect ground waters that people waters that people 
might use. Only 16 of the wells meet all of those requirements, 
and 7 of those are ones that aren't part of his 19 because 
they're in the land swap.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman. I want to 
continue on this issue of the data that has been conveyed.
    Mr. Cribley, you've indicated that you've gone through 
everything and have conveyed that, and now you're waiting for a 
sit-down with AOGCC. I like sitting up here, because I can read 
the body language of not only the people that are testifying 
but oftentimes those that are in the audience who have a little 
bit of knowledge about what is going on, too. What I saw with 
the body language was there is real disagreement as to whether 
or not the full data has been conveyed, whether or not there is 
a good working relationship between BLM and AOGCC.
    The Chairman, I think, has appropriately queried on the 
issue of what has been satisfactorily plugged and abandoned 
according to State standards. So I'd like to spend just a 
little bit of time understanding where we are with the two of 
you on either side of the table.
    Ms. Foerster, do you feel that you have the data that you 
need at this point in time to sit down with BLM and map forward 
a schedule, not only going forward, but addressing those wells 
that BLM considers to be complete and, in fact, the State of 
Alaska has said, ``We don't have the information to be able to 
sign off on that?''
    Ms. Foerster. Ranking Member Murkowski, the short answer is 
no. But the longer answer is we only have data on the wells 
that I described in my written and oral testimony.
    Senator Murkowski. That was how many?
    Ms. Foerster. But----
    Senator Murkowski. How many wells was that that you 
described then?
    Ms. Foerster. We have downhole data on 61 wells and surface 
data on 55, and what that tells me is, at best, something in 
the process of transferring data has failed. When we get back 
to Anchorage, we'll fix that, and the data that I'm missing, 
I'll get. But the worst case scenario for that is they have 
given us all the data they've got. How can they assure us that 
wells that they have no data for aren't a problem? That's what 
really worries me.
    Senator Murkowski. Mr. Cribley, do we have situations where 
we simply don't have data on certain wells?
    Mr. Cribley. That's probably true, yes. I mean, everything 
that we have is based on wells that have been been drilled for 
a large number of years, and a lot of those a long time ago. We 
don't have all of the records, or we--well, what we have does 
not characterize fully everything that has been drilled out 
there.
    Senator Murkowski. So whose responsibility is that?
    Mr. Cribley. Ultimately, right now, it's the Bureau of Land 
Management's responsibility. But we have, as far as we know, 
captured all the data that is available on those wells, and 
some of those where it isn't complete.
    Senator Murkowski. If you've captured the data that is 
available, I can understand that. You have some wells that were 
drilled back in the mid to late 2040s.
    Mr. Cribley. Yes.
    Senator Murkowski. But you also have a responsibility, 
then, to ensure that whatever activity that was conducted, 
however long ago it was, is then properly plugged, abandoned, 
and the government can walk away from that. Now, the fact that 
you don't have the data doesn't mean that you get to walk away 
from the responsibility. So how do you collect the data to 
provide to the State so that you can give the assurance that 
this has been properly remediated?
    Mr. Cribley. That's what we're trying to go through right 
now--is sharing all of the data that we do have and then 
sitting down with the Commission and having a dialog on the 
status of all the wells so that we both have the same 
information and are in agreement with the numbers and the 
status of all those wells. One of the challenges that we have 
right now is that we haven't come to agreement on that, and 
that's why there's a discrepancy and we need to resolve that. 
It is our commitment to work with the State on that issue, and 
if additional information needs to be collected, and we come to 
agreement on that, we'll do everything we can to try to achieve 
that.
    Senator Murkowski. I appreciate your words. But I also 
recognize that it is literally taking an Act of Congress to get 
the Department of Interior, to get BLM to step up to its 
responsibility. That ought not to be the case. You know, I have 
brought this up to every secretary since I've been here in the 
Congress.
    Through the good work of Representative Millett and just 
pushing the legislature, we have managed to get the attention, 
but now we're sitting here. We've got a hearing--and, again, I 
really appreciate what the chairman has done--and now we're 
sitting down with a plan.
    But, you know, to be at a point where it is decades after 
the liability has been incurred--I mean, the regulations, the 
law, requires that you go in, you explore, you drill, you 
leave, you plug it and abandon it within 1 year. This just 
continues, the failed and broken promises that this Federal 
Government has made to the State of Alaska and just walked away 
from the promise. You leave it there sitting on the tundra, and 
you say, ``Well, the budget doesn't allow for it.''
    But our budget is able to allow for other things within the 
department that other people place priorities on. As Alaskans, 
we place a priority on taking care of our land. When the 
Federal Government comes in, they've got an obligation to work 
with us to make this happen.
    I don't mean to pile on you, because I do believe that you 
have been working in good faith to try to make some progress 
here. But we've got some folks within the department that have 
not yet woken up to the responsibility, and we're going to keep 
on them.
    Mr. Chairman, my time is up, but I've got some more 
specific questions. I'll let my colleague from West Virginia 
proceed.
    The Chairman. Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman and Ranking Member 
Murkowski. As West Virginians, we have a lot of sympathy for 
Alaska trying to do all they can to provide energy for this 
great country and then being treated like a second class 
citizen. So we understand very well your frustration. With 
that, I know the royalties, or the severance tax that the 
Federal Government receives--I'm sure it's quite substantial 
from Alaska.
    Is that correct, Ms. Millett?
    Ms. Millett. Senator Manchin, yes, $9.4 billion for 
offshore and NPRA lease sales since they've been leasing.
    Senator Manchin. So the wells that we're talking about, 
basically--does anyone have a total cost of what it would cost 
to plug these wells?
    Mr. Cribley. We have not made an estimate of the total 
cost.
    Senator Manchin. What type of formations are you in, or how 
deep are these wells? Are they all varied?
    Mr. Cribley. They vary. Some of them are shallow. Some of 
the wells were as much as 20,000 feet deep.
    Senator Manchin. But as far as casing, the cost of casing, 
or cementing them in is about the same, no matter how deep or 
not, because you don't--you're basically going down below the 
surface to do that, correct? It's all about the same.
    Mr. Cribley. Yes.
    Senator Manchin. So it would probably be a very 
insignificant cost compared to the resources and revenue you 
receive. The only thing I would say and the frustration I would 
have--and I know that Senator Murkowski and other people who 
have a lot of natural resources in our State--resources in our 
State--is why is the government allowed to be treated 
differently than the private sector? If this would be a private 
company that has done what has been done by our own government, 
what do you think EPA would have done by now?
    Ms. Foerster.
    Ms. Foerster. I love this question, because if this--so 
thank you. If this situation--well, this situation would not 
exist if these wells had been drilled by a private company, 
because there is not an operator in Alaska that operates this 
way. However, let's pretend that there were. An operator----
    Senator Manchin. Would they be banned for life from doing 
business in Alaska?
    Ms. Foerster. The would be fined out the yah-zoo. Excuse 
me. They would be fined excessively, and we would refuse to 
approve permits to drill for them. They would never be allowed 
to operate. Then the landowner would likely be the State of 
Alaska, and the Department of Natural Resources would step in 
and take the land back away from them.
    Senator Manchin. Are any more exploratory wells being 
drilled by the government in Alaska?
    Ms. Foerster. The BLM and the USGS drilled a couple of 
wells near the city of Wainwright a few years ago. But as as of 
now, no.
    Senator Manchin. You, as the State, have no jurisdiction 
over the Federal Government preventing them----
    Ms. Foerster. Yes, we do.
    Senator Manchin. Can you prevent them from drilling until 
they plug the others? I know you would do that with a private--
with a private company, you would do that, correct?
    Ms. Foerster. With a private company, we would do that. So 
with the Federal Government, we would do everything we can. 
However, my attorneys tell me that the Feds trump State, and 
while we can find them to be in violation of our laws, we 
cannot fine them. We cannot exert our authority over them. All 
we can do is embarrass them in the court of public opinion and 
ask them nicely to be compliant.
    Senator Manchin. Have you asked the EPA to use all of their 
influence to try to get this corrected?
    Ms. Foerster. We have, and we've even spoken with an 
investigator for the EPA's environmental crime section. He says 
that the statute of limitations has expired on these wells. I 
find that hard to believe since they're still a problem, but 
that's what we've been told.
    Senator Manchin. Do you have any comparison to how a 
private company has been treated, whether it be in Alaska 
Alaska or anywhere else in the country, and the statute of 
limitations allowed to expire, but they still go after them? 
Have you been able to compare that to what you're getting told?
    Ms. Foerster. We don't have an operator in Alaska who 
behaves this way. But if they did, I guarantee you I would 
exert every bit of power and attention and energy I could to 
fixing the problem.
    Senator Manchin. I think you all can understand our 
frustration, especially in West Virginia, and what we go 
through every day with our own government. We just want a 
little partnership. I think that's what the senator from 
Alaska--all of us--just work with us. We'll be the best partner 
you've ever had. But, boy, when you've got to fight your 
government every day, it just--the frustration just grows and 
grows.
    So with that, I yield whatever time I might have back to my 
good friend from Alaska.
    The Chairman. Let me just make the obvious point that this 
is an issue that cries out for an earmark. Would my colleagues 
agree with that? I think anyone who is opposed to earmarks 
hasn't been sitting in on this hearing.
    I'll just defer to Senator Murkowski for her additional 
questions.
    Senator Murkowski. Thank you, Mr. Chairman. I look forward 
to working with you on that one.
    Ms. Foerster has presented and, I think, Representative 
Millett has also presented a couple of different options here. 
We will await the plan for how you approach the next 5 years. 
But there have been some suggestions that, as one course, you 
could transfer these wells to the State. You could provide 
through a leasing arrangement with a remediation requirement.
    Are there any serious discussions about these as possible 
action plans, Mr. Cribley?
    Mr. Cribley. We haven't had discussions with the State up 
to this point as far as looking at alternatives or options for 
dealing with this. I know that Ms. Foerster has presented this 
at different meetings and such, but we haven't had a dialog 
specifically on that, no.
    Senator Murkowski. Ms. Foerster or Representative Millett, 
do you care to comment?
    Ms. Millett. I actually did come down here in March and 
meet with local BLM officials and gave them all the options 
that we spoke of today, first with having them lease the land, 
retain ownership, and as a part of the lease agreement have the 
companies, the operators that lease the land, remediate the 
wells. It was a win-win. The revenues from the lease would go 
to the Federal Government. It would create jobs, and it would 
create a stable energy supply for stable energy supply for 
America. They didn't want to have anything to do with that.
    I also asked them to convey the lands to the State and we 
would take care of the remediation, and they weren't interested 
in that, either. So we've reached out to the BLM locally. We've 
reached out to them here in DC. At every turn, there is nothing 
but a plea of poverty about these wells, which is incredibly 
frustrating for me. We've given options. They seem realistic. 
They seem reasonable. So we just haven't had any traction.
    Senator Murkowski. Mr. Cribley, do you know anything 
about--you say you haven't been involved in any of these 
conversations. Do you know why the BLM would just reject out of 
hand any of these other options?
    Mr. Cribley. No. Like I say, I haven't been directly 
involved with any of those conversations, and so I can't really 
respond to what our response would be to those. But I am open 
to sit down with the State and also with our Washington 
representatives to have discussions on this as far as looking 
at what our options are within our authorities. I mean, we can 
only do so much with the authority that we have currently.
    Senator Murkowski. It does cause me to question, though, 
that if you were to do this, either to turn it over to the 
State or turn it over through a leasing situation, if if then 
you wouldn't have the 1-year requirement to kick in and have, 
you know, an almost impossible task to remediate within the 
time period before whoever takes it over gets fined. The 
Federal Government has been able to sit there for 40 years. 
There's no fine. There's no consequence. There's no nothing.
    But if you are able to find a fix, whoever might be willing 
to step forward could then be subject to a level of fine 
because they haven't remediated it. Again, it goes to kind of 
the double standard that Senator Manchin has spoken to. Only 
the Federal Government can get away with this.
    So, Ms. Foerster, are you aware of whether there's been any 
further conversations about other options?
    Ms. Foerster. The conversations that Representative Millett 
has had are the only ones I'm aware of. So no.
    Senator Murkowski. All right.
    Mr. Cribley, I want to go back to a question that the 
chairman had asked about the 5-year plan. I have interpreted 
your comments to mean that you are going to work with AOGCC to 
identify what you believe to be the highest priority wells to 
move on first. You've indicated that 13--you've got a plan for 
13 wells over the next 3 seasons. So does your 5-year plan 
incorporate these 13 wells over 3 seasons, so you're really 
only working on 2 years after that?
    Mr. Cribley. Actually, you probably just corrected me, and 
my plan is 3 years, not 5 years. But what we're looking at is 
looking at what we can do within the next 3 funding cycles and 
putting that together.
    Senator Murkowski. What you can do within the next 3 
funding cycles, assuming you don't ask for anything more than 
you've typically asked for in the budget process, in the 
president's budget?
    Mr. Cribley. What we will be doing is putting together a 
plan on how and what we would do and what that cost would be. 
Then we would go through our budget process as far as 
submitting and trying to get support for funding of those 
remediation actions.
    Senator Murkowski. So 13 wells over 3 years out of 120. I 
think people can do the math. We're going to be sitting here 
for a long while. You mentioned you've got a 2-year-old 
grandson. Do you think that this is a reasonable schedule?
    Mr. Cribley. I guess we're framing it within what we feel 
are reasonable capabilities or reasonable amounts of funding to 
ask for to do the work. Up to this point, since 2002, the 
Bureau has spent over $85 million, or almost $86 million, in 
the remediation of 18 wells. The cost of remediation on the 
North Slope, as you well know, is know, is significant, and 
we're trying to stay within reason as far as what we're asking 
for from a budget perspective, especially considering the 
environment that we're working in right now with our budgets 
potentially declining.
    I mean, we can put a plan together as big as the sky. But, 
you know, the reasonableness of being able to secure that level 
of funding is probably remote, at least from our perspective.
    Senator Murkowski. I might be more sympathetic if you 
hadn't received $9.4 billion from the lease sales within the 
NPRA. I mean, it just seems to me that you've got some money 
coming in, and you're not willing to spend it on this. You're 
willing to spend it in other budget categories. But where the 
responsibility lies--after you come in and take, you're not 
willing to clean it up, even though you've gotten the lease 
sales. Maybe if we hadn't seen some lease sales up there, it 
would be a different picture.
    But I don't buy into this, you know, ``Oh, poor us. We've 
got tough budget problems.'' We've been helping you out in 
Alaska in considerable ways, and you're walking away from the 
responsibility, and we're not going to allow that.
    My time is over. I don't know whether----
    Senator Manchin. Just one quick question.
    The Chairman. Go ahead, Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman.
    I think, Ms. Foerster, you might be able to help me on this 
and maybe Ms. Millett on this, too, from the State Legislature.
    Ms. Millett. Yes.
    Senator Manchin. I don't know how your money flows, because 
in West Virginia, we don't have federally owned resources. Most 
of them are privately owned. Does your money flow basically 
from the Federal budget? Does it come directly to the State, 
and the Atate forwards on a check to the Federal Government for 
the severance tax you receive? If there was ABC Drilling 
Company leasing from the State on Federal land, how does that 
money flow?
    Ms. Millett. Senator Manchin, the Federal money flows from 
the operator to the Federal Government on Federal lands. From 
the State government--if an operator is on State land, it flows 
to the State government. So we never receive any revenue 
streams from the Federal Government on drilling or activity 
that's on our Federal lands. So the money flows from----
    Senator Manchin. I don't think that's correct. I don't 
think that's--the reason I say it's not correct--I don't think 
that anywhere else in the country that happens. I think that, 
basically, you do get resource--you should you should get 
revenue----
    The Chairman. You get--50 percent of the revenue from 
Federal leases go to the State of Alaska.
    Ms. Millett. Right. So the Federal money--so are we talking 
about----
    Senator Manchin. I'm just trying to follow the money here.
    Ms. Millett. OK.
    Senator Manchin. If you're getting a 10 percent royalty----
    Ms. Millett. Yes.
    Senator Manchin. OK. If a 10 percent royalty comes off, and 
ABC Drilling Company owes $1 million, does $500,000 go directly 
to the State and $500,000 to the Federal Government? Does $1 
million go to the Federal Government and $500,000 back to the 
State? Or does $1 million go to the State and you forward on 
$500,000?
    Ms. Millett. The taxes go from--the portion that is owned 
by Alaska--50 percent, so 50 percent and 50 percent--they each 
go to each entity. So the State would get 50 percent, and the 
Federal Government would get 50 percent.
    Senator Manchin. Let me ask Ms. Foerster.
    Ms. Foerster. I think you're talking about royalties, and 
there's no Federal land that's getting royalties. Is that what 
you were asking about?
    Senator Manchin. The Federal Government doesn't get 
royalties on----
    Ms. Foerster. There's no production on Federal land.
    Ms. Millett. Right.
    Senator Manchin. This is all on State land, then.
    Ms. Foerster. It's all on State land, so there----
    Senator Manchin. Let me ask you this, then. The only thing 
I'm saying is it doesn't look like the government is going to 
come forward in any type of an expedient manner to fix the 
environmental problem that they caused. If the State took it 
upon itself to go forward with this and use your resources then 
withheld, basically, you're basically front-loading it. But 
you're going to take care of an environmental--I don't think 
there's a court in this country that you would lose--to get 
your money back from the Federal Government if you have to go 
out and do it.
    But if you sit here and wait, you're going to do 3 a year 
or--it's just not going to happen. You're going to have to, if 
you can--and if we can support you some way, we'll do it.
    Ms. Foerster. Senator Manchin, as good as that sounds and 
as eager as I am to fix this problem, the precedent that that 
would set is just horrifying, because then any operator who 
wanted to use the time value of money would say, ``State, you 
go plug my wells, and when I've got a budget, I'll pay budget, 
I'll pay you back.'' We just can't set a precedent of fixing 
other people's problems.
    Senator Manchin. I would assume that a private entity--
you're going to get bonding on that. They have to bond on the 
front end. If they don't do it, then you use their bonding 
money--I would assume that's how you all do your business. If 
not, I hope you do. I would encourage you to----
    Ms. Foerster. The bonding that we have right now would not 
be sufficient to----
    Senator Manchin. Then, you need to raise that.
    Ms. Foerster. We do. Yes, sir. You are exactly right.
    Senator Manchin. I can tell you there's a way to fix that. 
I'm just trying to get you in a position to clean up for the 
sake of the country and the sake of Alaska a horrible 
environmental problem that's not your fault.
    Ms. Foerster. Yes, sir. Again, I just hate to set 
precedents that would allow others to abuse.
    Senator Manchin. I got you. I understand. I'm just trying 
to--if we can get it figured out, because--Mr. Cribley?
    The Chairman. Mr. Cribley.
    Mr. Cribley. Just a point of clarification as far as 
receipts that have been received from oil and gas lease sales. 
The $9 billion figure they're talking about includes both 
offshore leasing and leasing within the NPRA. In the last 10 
years, in the leasing that we have been doing in the NPRA, we 
have received $250 million of lease sales, and 50 percent of 
those funds go directly to the State.
    So, in fact, the Federal Government has received $125 
million. Of that $125 million, the Federal Government has spent 
$86 million on remediation of the legacy wells in the NPRA. 
Now, the funds that come back from lease sales go directly to 
the Treasury, and then the Congress then appropriates those 
dollars. But as far as moneys received and moneys expended in 
the NPRA, we have expended significant resources to do the work 
that we've been able to do up to this point.
    The Chairman. Now, do the numbers that you just recited 
include the bonus bids?
    Mr. Cribley. I believe so.
    The Chairman. Because the State gets 50 percent of those 
bonus bids, just as it gets 50 percent of the royalty from the 
production in the NPRA.
    Mr. Cribley. Right. The other point of clarification is 
that there is no production at this date within--of oil and gas 
resources on Federal leases in the National Petroleum Reserve--
--
    The Chairman. But there have been some bid sales.
    Mr. Cribley. Yes. We have done sales. We've been doing 
sales for the last 10 years, and we have done extensive 
exploration work. But nothing has gone into production yet.
    The Chairman. Right. But the bonus bids that have been 
received--the State is entitled to 50 percent of that----
    Mr. Cribley. Yes, sir.
    The Chairman [continuing]. Has received it.
    Mr. Cribley. Yes, sir.
    The Chairman. Senator Murkowski.
    Senator Murkowski. I have 3 more questions, and, hopefully, 
these will be quick.
    I believe it was you, Representative Millett, that 
mentioned that the price of remediation of these wells--there's 
some discrepancy here, that BLM says it costs roughly $2 
million to plug one of the wells, and North Slope Borough says 
it costs roughly $700,000. Why the discrepancy--the very wide 
discrepancy between the two? Can you speak to that, or maybe 
Ms. Foerster?
    Ms. Millett. Ranking Member Murkowski, $86 million for 18 
wells is what the BLM testified to today. The North Slope 
Borough did 7 wells at the cost of about $300,000 each well. So 
there is a big discrepancy, and I think that's an incredibly 
good question to ask the BLM--why their costs are so high when 
private sector can go out and plug wells for just a fraction of 
that.
    Senator Murkowski. Mr. Cribley.
    Mr. Cribley. The records that we've got right now--the 
costs for remediation vary anywhere--the highest is about $25 
million, anywhere down to $1.4 million for individual wells. 
The reason for the discrepancy is that the wells that the 
borough are remediating are within driving distance or can be 
accessed easily from the borough, and they can do that year 
round. Most of the wells that we are remediating are in very 
isolated regions of the National Petroleum Reserve, and most of 
the work that we do out there can only be done during the 
winter. As any oil and gas company will tell you, production 
cost on the North Slope is extremely expensive and is very time 
sensitive. It involves stationing or positioning equipment, and 
then getting in and doing the work during the wintertime, and 
then positioning so you can take out hazardous materials, and 
then transporting them by barge, you know, through the Arctic 
Ocean down to the West Coast for proper disposal.
    So the work that we're doing is very difficult and very 
challenging. I think we have done a very excellent job in the 
work that we've done up to this point. But our challenge and 
part of the problem is just the isolation and the conditions 
that we operate in on the North Slope.
    Senator Murkowski. When you determine which well to move to 
next in terms of the remediation and setting forward this 
plan--you've got your 13 wells proposed over the next 3 years--
are you prioritizing them based on the hazards or the threats 
that they present to the environment, or are you prioritizing 
them because you've got a few that are closer together where 
you can get some efficiencies with your costs as you work to 
plug them? Do you prioritize them because you can do one 
cheaper than the next and not use up your whole budget? You can 
click off 1 or 2 because they're easy, and you save the tough 
ones for later that may be a greater environmental threat?
    Mr. Cribley. I think, actually, it's both. The first 
priority, as far as when we're selecting wells, is based on the 
environmental or health and safety risks, and those are the 
ones that we deal with or treat first. As we identify those, we 
try to see if there are any wells adjacent to or associated to 
those that we can also deal with while we're in that area just 
to try to reduce our overhead cost and try to be as efficient 
as possible and try to basically get the biggest bang for our 
buck when we are mobilizing on the ground in the NPRA.
    But the primary driver is the risk involved, and those are 
where we're going first. That's one of the things that we need 
to come to agreement on with AOGCC--is which ones--what that 
list looks like so that we're focusing on what everybody agrees 
are the most important wells.
    Senator Murkowski. Ms. Foerster.
    Ms. Foerster. Thank you, Ranking Member Murkowski. I'd like 
to add a little bit. First, at the working level, the AOGCC and 
the BLM staffers have a very good working relationship. That 
was questioned earlier. We're all Alaskans and we're all trying 
to achieve the same goal, I think.
    But there are some strategies that we can employ that have 
not been employed in the past that I think contribute to the 
high relative cost of the BLM's cleanup. First, mobilization 
and demobilization of equipment is a large portion of the cost. 
So if you pick one well at a time, and you do that mobe and de-
mobe on that well and ignore the wells that are nearby and say, 
``Get you later,'' then you will incur those same mobe and de-
mobe costs every time you go out, whereas if you can get every 
well in the area, all of those wells can share that cost.
    That's one of the things that the North Slope Borough did, 
and that's one of the reasons that their costs were so much 
lower. They used a rig that they had in the area to do all of 
the work.
    Another thing that will lower the cost is if you don't wait 
until you have a crisis, if you don't wait until the well is 
about to fall into the Arctic Ocean, or something like that 
that just astronomically adds to the cost, then you can cut 
down your cost. If you don't go in assuming that a particular 
type of well is not going to be a problem and then get 
surprised when it is, and then you start to have to fight a 
blowout, then you can reduce your cost.
    So there's a lot of things that we can do. If we work 
together, get a good understanding of what the condition of 
those wells is, we can drive down the cost.
    Another example--some of these wells can likely be 
remediated using a coiled tubing unit rather than a drilling 
rig. Coiled tubing units are cheaper.
    My agency is anxious to work with Mr. Cribley's, and we 
will work on the schedule that he has outlined. I promise you 
we're going to do everything we can to do it right, to do it 
safely, and to do it as efficiently and effectively and cost 
consciously as possible.
    Senator Murkowski. Do you think that 13 wells over the next 
3 seasons is reasonable?
    Ms. Foerster. It depends on your definition of reasonable. 
Putting my hat on as a regulator, heck no, it's not reasonable. 
If an operator were to come to me and say, ``We've got 120 
wells that are out of compliance with your your regulation, and 
we think it's reasonable to spend the next 5 years doing 13 of 
them, and we'll follow that schedule until you're dead,'' no, I 
would not consider that reasonable.
    Senator Murkowski. Mr. Cribley, one further question for 
you. As you're aware, the public comment period on the NPRA 
management plan has just closed out. There's 4 alternatives. 
Some of them have some proposals within the alternatives that 
place some serious restrictions on activity within the 
Petroleum Reserve.
    Is it your understanding whether or not the NPRA management 
plan, as is being considered, would have any impact or restrict 
BLM's ability to move in and do any of the remediation or the 
cleanup on any of these outstanding wells?
    Mr. Cribley. There won't be any decisions in the plan that 
would limit us or prevent us from doing remediation on legacy 
wells.
    Senator Murkowski. So regardless of what happens with the 
NPRA management plan, BLM is assured that--not only what we're 
talking about here today, with a proposal of 13 wells over 3 
seasons--that you wouldn't be restricting or limiting in any 
way this cleanup?
    Mr. Cribley. Yes.
    Senator Murkowski. I thank the chairman for the focus that 
he has given this issue this morning. I am very hopeful that as 
a consequence of what has been shared today we will have an 
accelerated process to identify the priorities in a way that 
the State, through the AOGCC, is satisfied, that the BLM 
recognizes that there is an imperative, that there is an 
urgency to this, because from the Alaskans' perspective, this 
is the absolute height of hypocrisy when we hold our private 
operators to the highest of standards and our Federal 
Government can not only reject those standards but literally 
walk away from their level of responsibility.
    It reflects poorly on us as a government. I think, as a 
State, we've got an obligation to stand up, to push back, and 
make this right. I don't think it's the responsibility of the 
State to pick up the tab on this if the Feds did this, and so 
how we work it out is going to be critically important.
    I am not one who is willing to have to drag folks into a 
committee hearing on an annual basis to say, ``Where are we?'' 
I'm still doing that with our land conveyances 50 years after 
statehood, because that's another promise that was not kept. 
The reason they say they can't do it is because we don't have 
the budget. You know, easy come, easy go.
    It's not acceptable, and I think we all recognize it's not 
acceptable. So I will work on the appropriations side to do 
what I can, but I need this administration to place a priority 
on it, to place the priority in the budget and make good on its 
obligations.
    So I would hope that we could get a report back from your 
offices, Mr. Cribley, and working with you, Ms. Foerster, 
sometime after September after you have advanced a schedule. 
But I think we need a game plan on this, because up to this 
point in time, it's been absolutely insufficient, inadequate, 
and an embarrassment to the Federal Government.
    So with that, I thank you again, all of you, for making the 
flight back. We'll see you back in Alaska.
    Thank you, Mr. Chairman.
    The Chairman. We thank you all for coming, and that will 
conclude our hearing.
    [Whereupon, at 10:46 a.m., the hearing was adjourned.]

    [The following statement was received for the record.]
     Statement of Charlotte Brower, Mayor, North Slope Borough, AK
    Chairman Bingaman, Senator Murkowski, members of the committee. I 
want to thank you for the opportunity to provide comments for your 
hearing on ``Remediation of Federal Legacy Wells in the National 
Petroleum Reserve--Alaska.''
    Thank you, Senator Murkowski, and staff of the Energy and Natural 
Resources Committee for your tireless efforts to address an issue that 
has been of concern to our people for almost 70 years--the cleanup and 
remediation of exploration activity in the NPR-A.
    I also want to thank the Alaska House of Representatives for their 
unanimous passage of House Joint Resolution 29, calling on the federal 
Bureau of Land Management to fulfill its mission of protecting public 
land by plugging and remediating more than a hundred oil wells in 
northern Alaska.
    These wells, known as the ``Legacy Wells,'' were drilled between 
1944 and 1982 by the federal government in an attempt to locate 
commercial quantities of oil and natural gas. The U.S. Navy and U.S. 
Geological Survey drilled 136 wells in Northern Alaska over the span of 
five decades, which are now abandoned. Only a handful of the 136 wells 
have been plugged and cleaned up by State of Alaska standards. The 
Sponsors of the bill, specifically Representative Millett recognized 
that these wells pose significant risk to ground water, vegetation, 
waterfowl, land and sea mammals, and fish which the people of the North 
Slope have depended on for thousands of years.
    This issue is of concern to the entire State and I look forward to 
working with the legislature, our Governor, and of course you, Senator 
Murkowski, and this committee regarding the remediation of the legacy 
wells.
    I was recently elected to this office but I've been a resident of 
the North Slope for 40 years. This week the North Slope Borough is 
celebrating its 40th Anniversary as a local municipal government. I am 
the wife of a whaling captain and grandmother to 23 grandchildren. My 
family and my people rely on the land and waters of the North Slope for 
our survival. My experience tells me that the best approach to solving 
problems is to work together.
    In that vein, my administration is based on three simple concepts:

   The people of the North Slope need a seat at the table in 
        Arctic planning;
   The people of the North Slope deserve a fair and stable 
        share of the revenues generated from the development; and
   The development must find ways to preserve the culture and 
        communities of the North Slope.

    As a cooperating agency with the BLM in the current EIS process 
that will determine the future management of the NPR-A, the North Slope 
Borough must be a part of the process to prioritize and address the 
impacts of oil and gas exploration. Just a few months ago, I was in 
Washington DC and met with then-Director Abbey and raised our issues of 
concern with this process of cleaning up the ``legacy wells'' left 
behind after the Navy and USGS exploration process. He stated that BLM 
is committed to capping these wells, but it is an ``unfunded mandate''. 
The Federal government wishes to act as steward of the land in Alaska, 
often telling our people what they can or cannot do on the land, yet 
here is an example of the same government failing to fulfill the most 
basic of responsibilities as the land owner. Residents want to develop 
the resources, but they want to do so responsibly.
    Recently the State of Alaska's Oil and Gas Conservation Commission 
(AOGCC) made the following comments:

          All legacy wells are or have been out of compliance with 
        multiple Alaska regulations.
          Although by no means exhaustive, the following summarizes the 
        most troubling issues:

          Proper plugging and abandonment of wells is governed by 
        Article 2 of the AOGCC's regulations, 20 AAC 25.105, et seq. 
        The purposes of properly plugging and abandoning wells include 
        public safety, protection of the environment, and protection of 
        sources of drinking water.
          Delaying the plugging and abandonment has already caused 
        several of the wells to be ``lost'' due to subsidence and other 
        normal earth movement. Two wells are at the bottom of what 
        subsidence and snow melt have now turned into lakes and a third 
        has been buried in a landslide. Additional wells simply can no 
        longer be found, with no explanation for why. Postponing 
        abandonment of the remaining wells puts them at risk of also 
        becoming ``lost.''
          Allowing these unsafe and unsightly wells to litter Alaska's 
        wilderness while threatening both public safety and the 
        environment is unacceptable. Nonetheless, BLM has only plugged 
        and abandoned approximately ten of the 137 wells.
          If these wells were operated by an oil company, the AOGCC 
        would force compliance with its regulations and impose fines 
        for any non-compliance. While the AOGCC can find BLM to be in 
        violation of AOGCC regulations, the AOGCC has no legal 
        authority to force the Department of the Interior into 
        compliance.
          The Federal Government should provide adequate funding 
        specifically designated for the purpose of bringing the legacy 
        wells into regulatory compliance.

    Additionally, two weeks ago, a spokesperson for the BLM said that 
the Iko Bay #1 well near Barrow is leaking gas and is at the top of the 
agency's list of wells that need to be plugged. We believe that BLM is 
responsible to do this work, but in their 2004 ``Alaska Legacy Wells 
Summary Report: National Petroleum Reserve-Alaska'' it states that 33 
wells conveyed to the North Slope Borough under the Barrow Gas Field 
Act of 1984 or to Arctic Slope Regional Corporation are out of BLM's 
jurisdiction. We believe that the BLM is also responsible for these 
legacy wells too. This is an issue that needs to be addressed. And we 
can resolve it by working together.
    Inupiat on the North Slope have always viewed the world through a 
different cultural lens, and sometimes that has led to a conclusion 
that we are anti-development. When we express a concern regarding local 
development (past or present) it's for the same reasons that any other 
community might have when development occurs in their backyard. In the 
past we have aggressively supported opening many of the areas that were 
closed to development, in fact we continually assist with visits by 
political and media delegations. We have accommodated NPR-A 
development, except in an area around Teshekpuk Lake, where valuable 
wildlife habitat and subsistence activities have historically taken 
precedence. We supported the bridge over the Niglik channel and see it 
as a gateway to further NPR-A development. We also recognize that NPR-A 
development could be a large contributor to future North Slope 
production, but we must be partners in maintaining the integrity and 
vitality of all resources.
    Just the other day, Secretary Salazar issued a press release 
related to the Norway Arctic Roundtable. He said the Arctic ``is a 
place development can only safely expand if we also expand our 
understanding through science and experience.'' He went on to say that 
that is why the Arctic demands it own approach. ``We have to listen to 
each other as global partners and we must listen to local communities. 
We have to cooperate in our planning. And we must always put caution 
and safety first.''
    Let me be clear, my administration supports responsible oil and gas 
development, and the broad goal of the North Slope Borough is to 
maintain a healthy environment supporting Inupiat subsistence practices 
while at the same time promoting economic growth and responsible 
resource development. We support responsible development, particularly 
when reasonable mitigation measures are applied to minimize subsistence 
and socio-cultural impacts.
    The abandoned wells can have a real and direct effect on the health 
and welfare of all of our residents, and especially the youth in our 
communities. In the past, we've seen the scars left behind on the 
tundra and the waste generated from early development littering the 
areas we rely on. There is a connection with subsistence hunting and 
the negative impacts related to decreased hunting success. The passage 
of the subsistence way of life to younger generations hinges on 
successful hunts, and the presence of a healthy stock to hunt. It is 
both a safety hazard and a health hazard.
    We have had many good examples of working together to open the NPR-
A to oil and gas development. You may recall the issue of a bridge 
across the Colville River at the Niglik channel to CD-5, 
ConocoPhillip's western expansion of the Alpine field development. 
Working together with residents of Nuiqsut, local corporations, the 
Federal and State agencies, a solution was found.
    The 2004 report mentioned above offers an example of a future 
opportunity to work together--the concept of building staging areas 
with airstrips and storage pads to facilitate development of 
infrastructure in remote areas of the leased acreage. These staging 
areas would have the potential to also allow BLM's future remediation 
work associated with the legacy wells. By working with our Departments 
of Planning and Wildlife Management, we could assist in making 
recommendations for the location of these staging areas, continuing our 
support of environmentally responsible development of the NPR-A and 
expediting the cleanup of the legacy sites.
    There have also been cases that didn't work out as well as planned. 
In 1994, the Umiat area was considered ``cleaned up'' and was the 
subject of a proposed FONSI. The NSB just happened to have students and 
staff at Umiat that summer. At the time, witnesses recorded on video, 
barrels of waste sloughing out of the river bank, proving the cleanup 
was not yet complete. Had it not been for our insistence that the job 
was not yet done, the wells around Umiat might very well remain hazards 
to the environment and our food supply. For nearly a decade following 
this event, residents of Nuiqsut feared contamination of the fish they 
rely on from the Colville River.
    When BP and Arco were proposing a merger in 1999, many issues came 
up about commercial concerns, but we raised issues about environmental 
and community concerns. ``Orphaned sites'' were identified for clean up 
and industry agreed to work with State and local representatives to 
collaboratively address our concerns. The downside to the cleanup 
efforts, just like the legacy well program, was that it was subject to 
limited funding--$10 million. A cleanup/restoration project should not 
be limited by its expense alone, particularly when human health impacts 
have been identified. What cost do we place on our health and safety?
    The 2006 Northeast NPR-A Supplemental IAP/EIS identified key issues 
including ``control of contaminant-related health risk''. A new 
stipulation was set out requiring an initial survey that should examine 
species and habitat potentially impacted by contaminants by lessee's 
proposed developments. This addressed new development. We need the BLM 
to apply the same standard to all historic activity--including the work 
done by the Navy, Air Force, USGS and Husky Oil under contract to the 
federal government as part of the original NPR-A exploration efforts.
    ``Contaminant containment monitoring'' and ``Mitigation of 
contaminant impacts on subsistence'' are not negotiable for us. The 
Federal government must find a way to provide funding to accomplish 
this effort, and it should not affect the NPR-A Impact Aid grant 
program. The BLM retains 50% of the revenues from rents, bonuses and 
royalties associated with NPR-A leasing and development. These funds 
only account for annual revenue of about $4.5 million. Additional 
funding is necessary to do this right.
    The residents of the NPR-A (and the North Slope Borough) that rely 
on the planning area for subsistence must be assured that they are not 
exposed to harmful levels of oil-development associated contaminants, 
and that they will be protected against a range of contaminant-
associated disorders. Reassurance to our communities of continued 
safety of subsistence resources will foster the continued viability of 
the subsistence diet and way of life. It will also reinforce our common 
goal of environmentally responsible development of the oil and gas 
resources in the area. This we can do--by working together.
    Quyanaqpak (Thank you very much) for the opportunity to address you 
today.
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

     Response of Representative Charisse Millett to Question From 
                         Senator Lisa Murkowski

    Question 1. There was some confusion during the hearing as to 
whether Alaska receives royalty payments from the NPR-A. Please state 
for the record whether, and to what extent, federal leases have yielded 
royalty payments to the State of Alaska and whether any revenue is 
derived from lease sales, bonus bids, or production royalties.
    Answer. Under federal law 42 U.S.C. Chapter 78, Section 6506a, 
revenue from lease sales from the National Petroleum Reserve-Alaska are 
equally divided between the federal government and the State of Alaska.
    Alaska's portion is deposited into the NPR-A Impact Mitigation 
Program. Created by the Alaska Legislature in 1984 (AS 37.05.530), the 
program provides grants to communities most directly impacted by oil 
and gas development. Funds we also distributed to the Alaska Permanent 
Fund, the Public School Trust and the General Fund.
    As a result of a lawsuit (Barrow v. State) brought against the 
state by Barrow, Wainwright and the North Slope Borough, the state was 
required to rework the distribution formula to make the impacted 
communities first priority.
    Because there is no oil or gas production in the NPR-A at this 
time, the State of Alaska does not receive any production royalties.
                                 ______
                                 
     Response of Cathy Foerster to Question From Senator Murkowski

    Question 1. There was some confusion during the hearing as to 
whether Alaska receives royalty payments from the NPR-A. Please state 
for the record whether, and to what extent, federal leases have yielded 
royalty payments to the State of Alaska and whether any revenue is 
derived from lease sales, bonusbids, or production royalties.
    Answer. The State of Alaska receives from the Federal Government a 
portion of the revenues for lease sales, bonus bids, production 
royalties and rentals on federal lands within the state. This portion 
varies, depending on the location, as follows:

    Three to six miles offshore: 27%
    Beyond six miles offshore: 0%
    Onshore Cook Inlet: 90 to 100%
    NPR-A: 50%

    There is production, and thus royalty payment, from the offshore 
three-to-six-mile area and from federal lands onshore Cook Inlet. There 
is no production, and thus no royalty payment, from NPR-A or offshore 
beyond six miles.
                                 ______
                                 
      Responses of Bud Cribley to Questions From Senator Bingaman
Arctic Conditions

    Question 1. Are there any aspects of operating in the Arctic 
environment that make it more difficult to remediate the legacy wells?
    Answer. Yes. These wells are located in remote parts of Alaska 
where work is performed in extreme conditions. These sites can be 
several hundred miles from the town of Deadhorse, which is the 
principal supply depot and nearest developed community. Access into the 
NPR-A for well-plugging and remediation activities is limited to 
overland travel in the winter to protect tundra vegetation and because 
the tundra bog will not support overland travel or infrastructure in 
the summer months. However, winter temperatures routinely reach -40 
degrees Fahrenheit, there is very little daylight during this season, 
and mobilization efforts during the winter months are extremely 
difficult. Self-sufficient camps are transported to these sites via ice 
roads, offshore sea ice, and snow packed roads. Fuel and provisions 
require constant resupply, and all specialized equipment needs to be 
winterized for arctic conditions.
Funding
    Question 2. Can you please describe for us the Federal funding 
available for the remediation of the legacy wells?
    Answer. To date, $85.9 million has been spent to plug and remediate 
18 legacy wells. As shown in the table below, funding for this work has 
come from the annual appropriations of the Department of Defense and 
the Department of the Interior and from supplemental appropriations 
under the American Recovery and Reinvestment Act of 2009 (ARRA). In FY 
2005 and FY 2009, the Secretary of the Interior used emergency transfer 
authority to fund these activities. The FY 2013 President's Budget 
includes $1.0 million for the legacy wells.

----------------------------------------------------------------------------------------------------------------
                 Year                               Activity                     Amount              Source
----------------------------------------------------------------------------------------------------------------
                 2002                   Army Corps of Engineers plug and  $25 Million          Defense
                                         abandon Umiat #2 and #5                                Appropriation
----------------------------------------------------------------------------------------------------------------
                 2004                   BLM plugged Umiat #3, #4, #8 and  $1.4 Million         Interior
                                         #10                                                    Appropriation
----------------------------------------------------------------------------------------------------------------
                 2005                   BLM plugged the J.W. Dalton Well  $8.9                 Interior
                                                                           Million(including    Appropriation
                                                                           $7.5 Million
                                                                           emergency
                                                                           transfer)
----------------------------------------------------------------------------------------------------------------
                 2006                   BLM plugged 5 wells in the        $1.8 Million         Interior
                                         Simpson Peninsula                                      Appropriation
----------------------------------------------------------------------------------------------------------------
                 2008                   BLM plugged the East Teshekpuk    $12 Million          Interior
                                         Lake well                                              Appropriation
----------------------------------------------------------------------------------------------------------------
                 2009                   BLM plugged the Atigaru Point #1  $14 Million          Interior
                                         well                              (including $8.9      Appropriation
                                                                           Million emergency
                                                                           transfer)
----------------------------------------------------------------------------------------------------------------
                 2010                   BLM plugged the Drew Point #1     $16.8 Million        ARRA
                                         well
----------------------------------------------------------------------------------------------------------------
                 2011                   BLM plugged the Umiat #9 well     $2.5 Million         Interior
                                                                                                Appropriation
----------------------------------------------------------------------------------------------------------------
                 2012                   BLM is plugged Umiat #6 and #7    $3.5 Million         Interior
                                         wells                                                  Appropriation
----------------------------------------------------------------------------------------------------------------

    Question 2a. How much money would be necessary to remediate the 
remaining NPR-A legacy wells?
    Answer. To date, $85.9 million has been spent to plug and remediate 
18 legacy wells. The cost of plugging and remediating individual well 
sites varies due to the location and type of work needed to plug a well 
or remediate the site, and has ranged from several hundred thousand 
dollars to $16.8 million. Project costs include cleanup, transport and 
disposal of reserve pit and other solids waste in addition to the costs 
of actually plugging wells, especially those threatened by coastal 
erosion. In circumstances where well sites are in extremely remote 
locations, the costs of transporting equipment and wastes collected at 
these sites and disposing of it properly is very expensive.
    In 2004, the BLM completed a comprehensive assessment and report of 
the legacy wells in the NPR-A. This report was shared with the Alaska 
Oil and Gas Conservation Commission (AOGCC). The BLM prepared a 
strategic plan to prioritize the remediation of the priority wells 
identified in the report, in addition to those wells being threatened 
by coastal erosion. With the completion of the upcoming Iko Bay 
project, which is anticipated for the winter of 2013-2014 (pending 
availability of adequate funds), all high priority wells that were 
identified in the 2004 report will be plugged. The BLM is preparing an 
update to the report based on field inspections over the last several 
field seasons, and is working closely with the AOGCC to come to 
agreement on the actions needed or warranted for the remaining wells. 
The AOGCC is reviewing BLM well file information, with a goal of 
completion in the next few months. Once the BLM receives feedback from 
the AOGCC, the BLM can develop a reasonable cost estimate for the 
remaining work.
Number of Legacy Wells
    Question 3. Your testimony indicates that of the original 136 wells 
and boreholes, there are 39 unplugged wells, as well as 2 that have not 
been located. However, Commissioner Foerster's statement indicates that 
only 9 of the 136 wells and well sites have been properly addressed by 
the BLM. Could you please explain for us the discrepancy in these 
numbers?
    Answer. The following table is the current BLM accounting of the 
136 legacy wells:

------------------------------------------------------------------------
                Status                    Tally           Action
------------------------------------------------------------------------
Wells that are plugged                       *19
Not under BLM's jurisdiction                  24  No BLM Action
Not under BLM's jurisdiction (USGS)           18  Final disposition to
                                                   be determined
Uncased geologic core tests                   34  No BLM Action
Wells without accurate GPS coordinates         2  Monitoring area
Remaining unplugged wells                     39  Monitoring and
                                                   Prioritizing

Well Total                                   136
------------------------------------------------------------------------
* Includes one well plugged by the U.S. Navy in 1952 and two wells
  plugged by the Army Corps of Engineers. BLM has plugged 16 wells,
  including remediating contaminated soils where necessary and removing
  well site debris.

    The BLM has plugged 16 wells, the Army Corps of Engineers plugged 
two wells and one well was plugged by the U.S. Navy in 1952. Nine of 
these wells were permanently plugged as Commissioner Foerster notes. 
The BLM has plugged an additional nine wells with surface plugs. These 
plugs prevent migration of any material to the surface and ensure that 
no materials are introduced in the well bore. The AOGCC considers these 
temporarily plugged. The BLM continues to meet with the AOGCC to 
discuss technical issues, share data, and work towards an agreement on 
the status of the wells and develop future actions.
    Commissioner Foerster's numbers do not take into account 24 wells 
that were transferred out of Federal ownership to the North Slope 
borough or to Native Corporations as part of the Barrow Gas Field 
Transfer Act of 1984 (P.L. 98-366); the one well plugged by the U.S. 
Navy in 1952; 18 wells that are partially plugged and currently 
operated by the U.S. Geological Survey (USGS) for monitoring efforts; 
and 34 uncased geologic bore holes and foundation test holes drilled by 
the U.S. Navy in the 1940s.
    Question 3a. How many wells have been plugged and remediated to 
date?
    Answer. A total of 19 wells have been plugged. Of that number, the 
U.S. Navy plugged one well in 1952, the BLM plugged 16 wells, including 
remediating contaminated soils where necessary and removing well site 
debris, and the Army Corps of Engineers plugged 2 wells. An additional 
18 wells are partially plugged and are used and managed by the USGS as 
climate change monitoring wells.
    Question 3b. Please also describe for us the wells that are used 
currently by the USGS.
    Answer. There are 18 wells that were drilled in the late 1970s and 
early 1980s. These are generally the deeper drilled wells that range 
from a depth of 4,000 to 20,000 feet deep. These wells have been 
properly plugged back to a depth of approximately 2,000 feet deep. USGS 
uses the unplugged interval from the surface to 2,000 feet to monitor 
changes in depth of permafrost as part of their climate change 
research. These 18 wells are scattered throughout the NPR-A, but are 
predominately in the northern portion of the reserve.
Work with the State of Alaska
    Question 4. Are you making efforts to work with the State of Alaska 
on this issue? If so, please describe.
    Answer. Yes. The BLM invites state inspectors on all annual surface 
inspections of the legacy wells, and BLM has asked the AOGCC to provide 
any input on priorities for site visits. The BLM also invites the AOGCC 
to witness all plugging efforts conducted by the BLM. The BLM has 
shared all available well file information with the AOGCC to reach 
concurrence with the AOGCC on the number of wells present, the current 
status of these wells, and the status of the wells outside BLM's 
jurisdiction.
    As a matter of practice, the BLM provides Sundry Notices to the 
AOGCC on all plugging and abandonment efforts to ensure that the BLM is 
in compliance with state regulations. (A Sundry Notice is a form to 
evaluate proposed changes to the operation of a well after it has 
already been permitted.)
    For matters where there is a technical question or opinion 
concerning the final plugging of the well, as in the case of the nine 
wells that the state considers ``temporarily plugged,'' BLM meets with 
AOGCC to discuss the well condition and future actions that may be 
warranted.
    The BLM anticipates a hearing with the AOGCC to review the status 
of 34 uncased or partially cased boreholes drilled for geologic strata 
and permafrost research. The geologic and foundation core tests are 
uncased and are shallow (from less than 50 feet deep to 1,600 feet) 
boreholes. Core tests are naturally reclaimed and are indistinguishable 
from the natural environment. The BLM intends to request that the AOGCC 
remove the boreholes from their list of legacy wells.
    The BLM is preparing an updated report that summarizes site visits 
and risk assessments conducted over the past two field seasons, which 
will be provided to the State once finalized. The BLM has solicited 
State input concerning prioritization of wells and upcoming projects.
Failure to Remediate
    Question 5. Why has the BLM failed to remediate the NPRA legacy 
wells to date?
    Answer. BLM has not failed to remediate all legacy wells: this 
process is ongoing. The BLM has adopted a risk-based approach to 
remediation of the most critical legacy wells and conducts an active 
monitoring program to determine if well or environmental conditions 
have changed at these sites. The BLM's 2004 Strategic Plan and the 
soon-to-be completed Strategic Plan Update are both risk-based 
approaches that consider technical issues and availability of funding. 
BLM's active monitoring program is also an important element in 
addressing the legacy well issue and BLM has taken action quickly when 
the on-the-ground situation warranted immediate action to prevent 
catastrophic failure that would threaten health and safety and harm the 
environment. For example, BLM's periodic monitoring efforts showed that 
several wells were threatened by coastal erosion, the J.W. Dalton (in 
2005) and the Atigaru well (in 2009), and needed immediate remediation. 
As the remediation work for these two wells was costly and there was 
not time to request money through the normal appropriations process, 
the Department used an emergency funding transfer mechanism authorized 
by the Interior Appropriations Act. This rarely-used mechanism allows 
the Secretary to transfer funds from other BLM and DOI accounts only in 
very specific emergency situations, and other projects were delayed 
because of the transfer.
    As discussed in the answer to the second part of question 2, the 
BLM has taken a risk-based approach to the issue. In 2004, the BLM 
completed a comprehensive assessment and report of the legacy wells in 
the NPR-A. The BLM prepared a strategic plan to prioritize the 
remediation of the priority wells identified in the report, in addition 
to those wells being threatened by coastal erosion. Pending available 
funding and timing of contracting, completion of the Iko Bay project, 
which is anticipated for the winter of 2013-2014, all high priority 
wells that were identified in the 2004 report will be plugged. 
Additionally, the BLM has remediated all reserve pits that remained as 
a result of legacy well drilling activity consistent with Federal and 
State regulations.
    In 2010, BLM determined that an update to the 2004 report was 
warranted and has revisited the sites of all the legacy wells during 
2010-2012. The new report, which BLM expects to complete by the end of 
2012, will provide comprehensive updated well and site condition 
information and provide the basis for further strategic planning of 
legacy well remediation in coordination with AOGCC.
    The efforts to plug and remediate abandoned wells are 
extraordinarily expensive due to the fact that the wells are located in 
remote parts of Alaska where work is performed in extreme conditions, 
often several hundred miles from a primary supply depot and nearest 
developed community. To date, BLM has spent $85.9 million to plug and 
remediate 18 legacy wells with the cost of plugging and remediating 
individual well sites ranging from several hundred thousand dollars to 
$16.8 million. Securing adequate and timely funding to complete 
remediation efforts in extreme arctic conditions is the limiting factor 
to proceeding more quickly with additional remediation efforts.
    Question 5a. What are your plans to address this problem going 
forward?
    Answer. The BLM expects to complete an updated Legacy Well Summary 
Report and a Strategic Plan in the next few months. The updated 
Strategic Plan will outline the agency's priorities for plugging the 
remaining legacy well sites. In the meantime, the BLM has developed a 
short-term strategy to address 13 legacy wells over three seasons. The 
first step in the short-term strategy will be the remediation of the 
Iko Bay well and two nearby wells over the winter of 2013-2014, pending 
availability of adequate funds to complete the project.
Abandoned Wells in the Lower 48
    Question 6. While I understand that in the Lower 48 the wells were 
not drilled by the Federal Government, there are many orphaned and 
abandoned wells on Federal lands in states such as New Mexico that need 
to be plugged. How much funding does BLM have available for this 
purpose on an annual basis?
    Answer. The BLM refers to an abandoned well as a non-producing well 
that has been properly plugged, the site reclaimed to its original 
condition, and abandoned for purposes of oil and gas development. The 
BLM refers to an orphaned well as a non-producing well on Federal land 
that is not associated with a responsible or liable party and for which 
there is not sufficient bond coverage for plugging and surface 
restoration costs.
    The BLM has worked diligently with industry and state and local 
governments to assure that non-producing wells are properly remediated 
and the site reclaimed by the responsible party. The BLM works with our 
cooperators including existing lease holders, oil and gas producers, 
and local and state governments in partnership to minimize orphaned 
well occurrence and mitigate orphaned well conditions.
    The BLM works on a case-by-case basis to address the issue of 
orphaned wells. The amount expended by the BLM for the isolated cases 
of orphaned well remediation and site reclamation varies from year to 
year but ranges from approximately $75,000 to $125,000 annually of 
appropriated funds to cover operation needs of well plugging and 
abandonment. Additional funds for orphan well remediation come from 
industry, state funds raised through permit fees for orphaned well 
remediation, and forfeited bond revenues.

       Response of Bud Cribley to Question From Senator Murkowski

    Question 1. What regulatory and legal mechanisms are available to 
the BLM in cases where a leaseholder or operator maintains operations 
in a manner which is out of compliance with environmental standards in 
a chronic or repeated manner on multiple oil or gas wells?
    Answer. The BLM's regulations for management and oversight of oil 
and gas operations are contained in 43 CFR 3160, Onshore Oil and Gas 
Operations. Subpart 3163 of these regulations addresses Noncompliance, 
Assessments, and Penalties. As noted in these regulations, the 
establishment and forfeiture of the oil and gas bond may be used for 
addressing repeat violations. Without a bond, a lessee may not operate 
a Federal or Indian oil and gas lease.

                                    

      
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