New wildcat oil and gas wells sought in SDNew company seeks permission to drill near Wasta.
By: Bob Mercer, Republic Capitol Bureau
PIERRE -- State regulators want additional financial safeguards from a months-old company seeking to drill two deep wells for oil and gas in Pennington County.
The wildcat wells would be attempted west of Wasta south of Interstate 90. They would be 9,700 feet deep and reach into the Precambrian formation.
State oil and gas regulators said wells of that depth need significant site preparation and large drilling rigs. They said wells have been drilled to 9,700 feet in South Dakota and neighboring states but stopped short of the Precambrian formation.
“The Precambrian formation is a geological formation from which neither oil nor gas has been discovered in economic quantities in South Dakota or neighboring states, and is not a formation traditionally associated with the discovery of oil and gas,” the state minerals and mining office said in its application response.
The state Board of Minerals and Environment is scheduled to hold a hearing Thursday on whether to allow the project to proceed and whether to impose additional financial requirements.
State regulators said the company, Quartz Operations, hasn’t provided any documentation or information substantiating that oil or gas is likely to exist in economic quantities.
They said the company doesn’t have any history of drilling for oil and gas or producing oil and gas. The cost of drilling is estimated to be at least $3 million per well.
Company officials filed invalid mineral leases and “substantially incomplete applications” according to state regulators. The company hasn’t identified a drilling contractor to state officials.
The company filed a $20,000 surety bond to cover drilling statewide. Regulators estimate the reclamation costs at $130,000 per well. They want the state board to impose a surety of $130,000 per well in addition to the $20,000 already filed.
They also want a variety of environmental safeguards placed in the permit requirements if the board gives the company the green light.
Natali Ormiston and Craig Perry, both of Deadwood, filed the organizational paperwork Nov. 8 for a limited liability company called Quartz Operations.
Ormiston also is the registered agent for a Nevada company called Quartz Oil Exploration that filed the same day as a limited liability company in South Dakota.
Quartz Oil Exploration received its Nevada certificate of existence May 16.