The Energy and Carbon Management Commission on June 26 denied a broad request from the local governments of Dacono and Frederick to order the plugging and abandonment of a large group of KPK wells, but approved forced plugging and abandonment, remediation within 12 months and subsequent reclamation for three individual wells: UPRR 43 Pan Am I-25 (Dakota), Milton Nelson F-1 (Frederick) and Thomas Russell D-2 (Frederick).

The commission’s split decision followed several days of evidentiary hearings on docket 240900228 and extended deliberations June 26. Commissioners said the record shows widespread regulatory compliance problems by operator KPK, but most commissioners concluded the applicants did not meet the high statutory and regulatory standard for broad site closure under rule 2.11.

Commissioner Cross, a member of the Energy and Carbon Management Commission, said the applicants bear the burden of proof and criticized KPK’s failures to file required remediation reports and to perform mechanical integrity tests. “The applicant bears the burden of proof in this matter,” Commissioner Cross said, and later described one operator argument as “one of the most disreputable arguments I have ever heard.” He declined to apply a blanket closure but identified three wells that, in his view, met the rule 2.11 standard and should be ordered plugged and abandoned.

Why it matters: rule 2.11 allows the commission to require plugging, abandonment, facility closure, remediation and reclamation only when those measures are “reasonable and necessary” to protect public health, safety, welfare, the environment or wildlife resources. Commissioners repeatedly said the rule is intended for rare instances and requires concrete evidence that lesser regulatory and enforcement steps are insufficient.

Deliberations and decision-making: Commissioners debated how to apply the combined “used or useful” standard in the rules, the weight to give production trend and discounted cash-flow valuations, and whether costs to plug, remediate and reclaim must be included when assessing a well’s remaining economic value. Several commissioners criticized KPK for not submitting required forms and not conducting mechanical integrity testing (MITs), which the commission’s staff testified could be carried out and would provide material evidence. Staff witnesses (including the engineering manager referenced in the hearing) told the commission that ECMC is the arbiter of whether remediation is complete and that missing filings prevent staff from verifying remediation or integrity.

The commission first voted on a motion to deny the applicants’ request for closure for the majority of wells but to preserve relief as to three specific wells nominated by Commissioner Cross. That motion passed 3–2 (Commissioners Ackerman, Cross and Robbins voted yes; Commissioners Messner and Oth voted no). The commission then took three separate votes ordering plugging and abandonment, remediation within 12 months, and any necessary subsequent reclamation for each of the three wells. The UPRR 43 Pan Am I-25 motion passed 4–1 (Messner opposed); the Milton Nelson F-1 and Thomas Russell D-2 motions each passed unanimously, 5–0.

Key points from the record:
- Regulatory standard: Commissioners repeatedly cited rule 2.11 and the commission’s statement of basis and purpose (SBP) as requiring that plugging and abandonment under 2.11 be “rare” and that both parts of the phrase “used or useful” be evaluated together (production, remaining economic viability, plugging/ remediation/ reclamation costs, failure to use or develop a facility, and other relevant evidence). The applicants—Dacono and Frederick—relied on those standards when alleging wells were no longer used or useful and posed threats to public health, safety, welfare, the environment or wildlife resources.
- Operator compliance: Multiple commissioners described a pattern in the record of KPK failing to file required remediation updates, failing to perform MITs on shut-in wells, and having numerous outstanding remediation sites and enforcement actions pending in district court. Commissioners said ECMC staff has historically denied form 20-7 submissions from multiple operators and that KPK has not remedied the procedural gaps.
- Valuation disputes: Commissioners discussed competing valuation methods—comparable transactions, discounted cash-flow analyses (DCA), and replacement-cost approaches. Several commissioners expressed concerns about using developer buyout or plug-and-abandonment agreements as determinative of fair market value because such transactions may bundle liabilities and surface rights considerations and may reflect constrained bargaining rather than an open market price.
- Future beneficial use claims: KPK presented potential future uses (refracturing, enhanced oil recovery, carbon capture and sequestration). Commissioners found those claims inadequately supported by well-by-well evidence, financing commitments, or technical feasibility, and said decade-old pricing decks and generalized viability studies did not prove an identified, probable future beneficial use.

Votes at a glance:
- Motion to deny broad closure request except as to three named wells (motion carried): yes 3 (Ackerman, Cross, Robbins) | no 2 (Messner, Oth).
- Order to plug, abandon, remediate within 12 months and reclaim UPRR 43 Pan Am I-25 (Dakota): passed 4–1 (yes: Ackerman, Cross, Oth, Robbins; no: Messner).
- Order to plug, abandon, remediate within 12 months and reclaim Milton Nelson F-1 (Frederick): passed 5–0.
- Order to plug, abandon, remediate within 12 months and reclaim Thomas Russell D-2 (Frederick): passed 5–0.

What comes next: The hearings officer will prepare a written order reflecting the commission’s directives and vote counts. Commissioners and staff said existing ECMC enforcement tools, pending compliance plans, 901(a) orders and judicial review proceedings remain in place for other wells and sites not ordered closed today.

Ending: Commissioners emphasized that rule 2.11 is a high bar and should remain a limited remedy; several said they share the local governments’ frustrations with the pace of remediation but concluded the record did not support blanket closure for the majority of wells.