Oil firm seeks restitution from Texas Railroad Commission

Texas Gov. Rick Perry signed Senate Concurrent Resolution 72, allowing Gulf Energy Exploration Corp. to pursue a claim against the Railroad Commission of Texas (RRC) for plugging the wrong gas well (OGJ Online, May 19, 2009).

Jun 25th, 2009

By OGJ editors
HOUSTON, June 25
-- Texas Gov. Rick Perry signed Senate Concurrent Resolution 72, allowing Gulf Energy Exploration Corp. to pursue a claim against the Railroad Commission of Texas (RRC) for plugging the wrong gas well (OGJ Online, May 19, 2009).

“By signing this resolution, Gov. Perry is standing behind his commitment to protect private property rights,” said Bill Rhea, former Gulf Energy president and chief executive officer and now a senior consultant for the company.

Gulf Energy, a small privately owned oil and gas exploration company based in Austin, has lease rights in the Gulf of Mexico.

An abandonment contractor for RRC plugged the wrong well, which Rhea said is not easily rectified. The two choices to rectify the situation are to either unplug that well or drill a new well. The cost estimate for either option is $2.5 million.

Gulf Energy said it made an agreement with RRC for plugging some neighboring wells with no future use, but clearly specified the wells to leave out of the contract, such as Well No. 5 on Matagorda Island Block 708.

Gulf Energy says the contractor used wrong coordinates and plugged the No. 5 well and left a useless well unplugged.

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