South Dakota Files a Lawsuit against the Texas Oil Company

South Dakota has issued a lawsuit against Spyglass Cedar Creek, a gas and oil company based in San Antonio, Texas. Scroll down to find out more!

The Dispute

The South Dakota Department of Environment and Natural Resources has sued the Texan oil and gas company for discarding 40 natural gas sources. The DENR demands from the company, as well as March Kimmel and Kevin Sellers—its two general partners—to bring the abandoned wells into function. Apart from that, the company has to pay $15.5 million in penalties for deserting the natural wells.

The period of four years (2006–2010) saw the drilling of 40 wells in total. Plugging all 40 of them would amount to almost $900,000, which South Dakota State will have to pay.

The Complaint

Some details of the lawsuit that South Dakota filed go as follows:

According to its permit application, Spyglass Cedar Creek issued two bonds amounting to $20,000 and $10,000 respectively. However, back in July, the previous year, the South Dakota Attorney General’s Office discovered that Kevin Sellers, one of the general partners, liquidated the bond amounting to $20,000. This act left South Dakota with a deficit of $10,000 to deal with the wells.

The State concluded another agreement with the Texan company. According to it, the company had to post a bond amounting to $200,000 until January. At that time, the South Dakota Board of Minerals and Environment began abolishing the company’s permits from the previous year. However, no funds have been materialized thus far. The board then decided to discard the licenses. In March, it requested Spyglass Cedar Creek to pay $15.5 as the penalty.

The Issues

The first problems emerged back in February 2012. Nine wells stopped producing natural gas, so the DENR instructed Spyglass Cedar Creek to deal with the wells. The company had three options: to restart using the wells, to plug them or to demand brief abandonment. Spyglass Cedar Creek refused to respond to any of these requests.

Shortly afterward, landowners from South Dakota started complaining to the DENR about the abandoned wells. The state investigators discovered abandoned equipment along with some debris on questionable locations. Also, the company left pipelines and access paths in a terrible state. Spyglass Cedar Creek refused to regulate any of the issues that investigators discovered.

By the end of July 2012, 20 out of the 40 wells were left abandoned. By 2014, all the wells were deserted. The State performed investigations only to discover that natural gas was leaking from some of these wells.

In 2015 and 2016, landowners complained about the oozing tanks and remains. Again, the DENR instructed Spyglass to bring the wells into function. However, the company never responded. All the mails that the DENR sent during this period returned to the sender.

Two years ago, March Kimmel, the company’s general partner, submitted a plan for improving the current situation. Unfortunately, a few months later, the DENR discovered that the company did not perform, nor complete, any work. Eventually, South Dakota State delivered a notice of violation to Spyglass Cedar Creek and initiated the process of abolishing the permit.

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