News Summary
Louisiana has filed a lawsuit against the Louisiana Oilfield Restoration Association (LORA) for alleged misconduct in managing the orphan well program. The state claims LORA mismanaged funds and neglected its responsibilities related to orphaned oil wells. Concerns arose from an audit revealing improper loans and lack of transparency in financial dealings. Legal action aims to preserve public funds and environmental safety, highlighting the urgent need for oversight and reform in orphan well management.
BATON ROUGE, LA – The state of Louisiana has filed a lawsuit against the Louisiana Oilfield Restoration Association (LORA), alleging serious misconduct related to its management of the orphan well program. The lawsuit, submitted to the 19th Judicial District Court, accuses LORA of mismanagement and self-dealing and aims to protect public funds and the environment.
The lawsuit comes following an audit that raised significant concerns regarding LORA’s spending practices and financial reports, revealing troubling actions such as facilitating a $700,000 “bridge loan” to a former state official for personal real estate purchases. As part of the legal proceedings, Louisiana is seeking a temporary restraining order to prevent LORA and its directors from destroying any business records or further misusing funds.
In its filing, the state asserts that LORA has not plugged most of the orphan wells under its purview, which poses both environmental and public safety risks. The organization is also accused of improperly collecting late fees from operators without reporting these transactions to state authorities, failing to comply with established financial controls, and breaching its fiduciary duties.
The audit discovered that LORA took ten weeks to respond to the state’s request for a complete accounting of its financial activities. This delay, alongside its alleged financial impropriety, has been cited as detrimental to the state’s efforts to manage orphan wells effectively. Although LORA has made a partial payment of $5 million to Louisiana, the total amount of damages sought remains unspecified.
LORA was established in 2019 to tackle the growing issue of orphaned oil and gas wells in Louisiana, estimated to total around 4,971. This situation has escalated from 2,846 wells in 2013 to approximately 4,785 by April 2024, highlighting an urgent need for intervention. LORA had been allowed to collect fees from well operators in exchange for financial security related to plugging these hazardous wells.
Complicating matters, a prior association was identified between Johnny Adams, a former state official, and Van Mayhall III, LORA’s president. Ties among LORA’s directors and Adams have raised concerns regarding potential favoritism, as all five directors are included in the lawsuit. The entities connected to LORA’s leadership, such as Arkus Management Services, Chromos Wealth Solutions, and Willow Lake Well Services, are also under scrutiny.
The recent legal challenges follow increased media attention surrounding a previous investigation into Johnny Adams for potential malfeasance concerning the loan facilitated by LORA. A significant email from June 2022 indicated that Adams guided state employees on procedures for LORA, which has led to ethical concerns over the organization’s operations.
The Legislative Auditor’s review found that a loan amounting to $780,000, facilitated by LORA to Johnny Adams, was issued under dubious conditions, as the mortgage documentation for this loan was never filed in court, undermining its legitimacy. Concerns regarding LORA’s elevated payments to related companies have surfaced as well, suggesting possible financial misconduct.
State audits have pointed out LORA’s lack of sufficient financial controls and oversight from governmental bodies, emphasizing the need for reform in managing orphan wells. The Louisiana Department of Natural Resources has acknowledged that current methodologies are insufficient, prompting the development of new legislation aimed at more effectively addressing the orphan well crisis.
As part of ongoing efforts, the Legislative Auditor’s Office continues to investigate the situation closely. This legal action underscores the state’s commitment to ensuring financial integrity and environmental protection in handling the orphan well program.
Deeper Dive: News & Info About This Topic
- NOLA: Louisiana Sues Orphan Well Company LORA
- Shreveport-Bossier Advocate: Abandoned Louisiana Oil Well Numbers Grow
- The Advocate: LORA Report Finds Red Flags with Loan and Finances
- NOLA: Two Bills Aim to Address Troubled Orphan Well Program in Louisiana
- CBS News: Louisiana Coast Oil Leak Containment Update
- Wikipedia: Orphaned Wells
Author: STAFF HERE NEWORLEANS WRITER
NEW ORLEANS STAFF WRITER The NEW ORLEANS STAFF WRITER represents the experienced team at HERENewOrleans.com, your go-to source for actionable local news and information in New Orleans, Orleans Parish, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as French Quarter Festival, New Orleans Jazz & Heritage Festival, and Essence Music Festival. Our coverage extends to key organizations like the New Orleans Chamber of Commerce and Greater New Orleans, Inc., plus leading businesses in energy, healthcare, and education that power the local economy such as Entergy, Ochsner Health, and Tulane University. As part of the broader HERE network, including HEREShreveport.com, we provide comprehensive, credible insights into Louisiana's dynamic landscape.
