The Department of Environmental Quality (DEQ) announced today that a default judgment against Mildco, Inc. was entered by the Ingham County Circuit Court for violations of Michigan's oil and gas regulations.

Mildco drilled two wells to explore for oil and gas in Liberty and Hanover Townships, Jackson County, but the wells were not productive.  Mildco subsequently refused to properly plug the wells after more than 12 months without production as required by state law.  The DEQ took enforcement action, and Mildco entered into a Stipulation and Consent Agreement with the DEQ on April 13, 2005, agreeing to plug or produce the wells by a specified date.

Following the signing of the agreement, Mildco failed to comply with the terms and conditions within it, and the DEQ was ultimately forced to take its own action to properly plug the two wells and restore the well sites.  The DEQ, with the assistance of the Department of Attorney General, then filed a civil lawsuit against the company to recover its costs for plugging the wells.

Michigan's oil and gas regulations require a well to be plugged if it does not produce oil or gas for a period of 12 months or more, as such unplugged wells can pose a threat to the environment or public health and safety because they may eventually leak and cause damage to soils, aquifers, or other underground resources.

The Default Judgment issued by the Honorable Paula J.M. Manderfield requires Mildco, Inc. to pay the DEQ $102,736.19 for the DEQ's costs of plugging and abandoning the two wells; $100,000 in stipulated penalties; and $5,000 in outstanding administrative fines.  In addition, the DEQ was allowed to retain $27,923.55 in proceeds from the sale of production equipment abandoned by Mildco.

Editor's note:  DEQ news releases are available on the department's Internet home page at www.michigan.gov/deq.

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