LITIGATION: The Abandoned Well ‘Hot Potato’

According to this latest news story, EQT’s transaction with Diversified “freed EQT of about $200 million in plugging and other liabilities.”

On July 25th, reporter Anya Litvak covered this latest story about abandoned wells in our tri-state area in “Lawsuit claims Diversified and EQT played hot potato with abandoned well responsibility.” You might call it the ‘icing on the cake’ after reading my July 21st blog “Another PA Taxpayer Giveaway.”

The lawsuit, filed in the U.S. District Court for the Northern District of West Virginia, calls the two deals between Diversified and EQT, in 2018 and 2020, “fraudulent transfers” under West Virginia’s uniform fraudulent transfer act. It demands that they be voided and that the liability for plugging thousands of abandoned wells turned back over to EQT, which has more means to plug those wells as required by law.

by Anya Litvak – Lawsuit claims Diversified and EQT played hot potato with abandoned well responsibility
Pittsburgh Post-Gazette – July 25, 2022

“EQT is a sophisticated industry player,” the lawsuit states. “It is the largest producer in the United States and second largest well owner in Appalachia, behind only Diversified. As EQT was aware, Diversified could only be profitable by largely ignoring the millions of dollars of asset retirement obligations — namely, plugging and decommissioning costs — that EQT bragged to its shareholders about shedding.”

by Anya Litvak – Lawsuit claims Diversified and EQT played hot potato with abandoned well responsibility
Pittsburgh Post-Gazette – July 25, 2022
The group that filed the lawsuit has an office in Lewisburg, West Virginia and includes this under “OUR WORK”…

“NATURAL GAS – Fracking and other forms of drilling for natural gas is big business in Central Appalachia. That is a big problem for our region’s environment and for the world’s climate. Appalmad challenges fracking operations, gas well waste disposal and, most recently, we are leading the effort to assure that old and abandoned gas wells are plugged. Abandoned wells are one of the Nation’s largest sources of methane, an extremely potent greenhouse gas. State regulators, working hand-in-hand with drilling companies, allow the drillers to leave abandoned wells to leak methane rather than requiring remediation and plugging as the law requires. We are filing cases in federal court to get those wells plugged, keep the methane in the ground, and protect the property rights of small landowners.”

“Our Work” – Appalachian Mountain Advocates
Former CNX gas wells in Washington County, PA are now owned by Diversified

“The lawsuit specifically targets the transfer of more than 700 wells by the EQT Corporation to Diversified Energy in July 2018 and May 2020, alleging that those transfers were fraudulent and improperly designed so that EQT would be able to  evade its cleanup obligations. But the issues raised in the lawsuit regarding methane emissions and property damage from abandoned wells implicate tens of thousands of wells across West Virginia and other oil- and gas-producing regions of the United States.”

by Peter Morgan – New Lawsuit Targets Fraudulent Transfer of Oil and Gas Wells to Evade Cleanup Obligations
Sierra Club – July 15, 2022

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