UPDATE: Louisiana Department of Conservation and Energy Secretary Dustin Davidson has issued a press release about the LLA report released Monday.
“LLA has been working for more than two years to fully understand what went wrong within LORA and what went wrong within the agency prior to this administration. The lack of accountability and oversight that the LLA reported was frankly shocking,” Davidson said. “The work of Legislative Auditor Mike Waguespack and his team has been invaluable to us as we work to repair the damage done to the agency and to the operators who trusted LORA. The department will continue to build out a financial security framework for the future that is reliable and protective of the interests of our people and the environment.”
Here's the original story:
The Louisiana Legislative Auditor took a look at LORA, the company that was tasked with clearing up the state's orphan wells - and found a list of issues.
To read the full audit for yourself, including responses from LORA and an involved attorney, scroll down.
The Louisiana Oilfield Restoration Association was contracted to address orphan wells; it has now been sued by the state and some connected to the deal are reportedly targets of criminal investigations.
Here's the LLA's summary of the findings:
Auditors investigated the Office of Conservation’s Orphan Well Pilot Program that was run by the Louisiana Oilfield Restoration Association (LORA). They found that the then Office of Conservation (OC) attorney supervisor (later assistant commissioner) helped three personal associates seeking selection for the pilot program to plug orphan wells; an increase in the administrative fee paid to a management company owned by LORA’s directors exceeded the contractual cap; and improper loans were made to the OC assistant commissioner, two of his family members, and three of LORA’s owners. In addition, LORA contracted with a related party for investment services that resulted in little financial return; the assistant commissioner’s two adult children were employed by entities funded by the Cooperative Endeavor Agreement between the OC and LORA; and the OC released site-specific trust account funds to LORA in exchange for a letter of credit.
Included in the full report are emails and other documents used in the analysis, as well as responses from LORA and the OC attorney named.
Part of the LORA response urges the auditor to include additional information, including this:
"Finally, the report references Conservation’s termination of the Cooperative Agreement and request that LORA remit funds in the Reserve Account. For the sake of completeness, the report should also state that LORA complied with the termination notice, terminated its operations (including ongoing well-plugging operations at the Poydras wells per Conservation’s specific demand), and wired $5,000,000 from its Reserve Account to Conservation. LORA believes that the report could include additional facts relevant to the subject matter of the report, including without limitation the positive effects that LORA had on the oil-and-gas industry in Louisiana, including keeping many operators in business while simultaneously plugging well over 100 orphaned wells," states a letter from Kean Miller, attorneys for the company.
The state's database of known orphaned wells has more than 6,300 pages of them. To see it, click here.
Here's the full audit:
