County battles with Oil & Gas over seized property

BY SARAH PRIDGEON 

County Treasurer Mary Kuhl locked horns with the Wyoming Oil & Gas Commission last week over the sale of distrained equipment from an oil company that was delinquent on its taxes to the tune of over $150,000, including interest. Although the county had priority lean on the equipment, the commission removed and sold it, forcing the county to demand its return.

“Oil & Gas had no receipt for the equipment or paperwork of ownership when I called them to ask, so they had no choice but to return it,” says Kuhl. “They may have assumed the county didn’t want to be a participant, which happens in some counties, we’re not sure.”

The equipment in question included water and oil storage tanks, compressors, chemical and water pumps and associated fittings and parts, located at the company’s drilling site within the municipal boundary of Moorcroft.

“They didn’t open the sale to the public, so they sold the lot for $15,000,” says Kuhl. “We did advertise the sale and made $50,000 in total, so we did at least get 50 cents on the dollar on the taxes.”

Pure Petroleum came to the attention of the commission, as well as the county and the Department of Revenue, following the discovery of environmental problems at the site, including spill cleanup issues and problems with the fencing and netting of production pits. The Oil & Gas Commission immediately revoked the company’s bond, preventing further drilling.

During the process, it was discovered that the company had not been reporting its production since 2007. “Wyoming is a self-reporting state,” says Kuhl. “It took a while when they dropped off the radar to see that they hadn’t been paying their taxes.”

Taxes owed include severance tax, payable to the Department of Revenue, ad valorem and personal property taxes, payable to the county, and conservation tax, owed to the Oil & Gas Commission. In total, Pure Petroleum owed $111,487.01, with interest of $46,443.19.

“At the very least, what should come out of all this is a better process and better communication between government agencies,” concludes Kuhl.

Pure Petroleum LLC was given notice of the county’s intent to distrain equipment due to delinquent taxes at the beginning of May. Sale of the equipment took place as scheduled on May 25 in Moorcroft.