ARG Resources bought its position in the Allegheny National Forest in 2001 after earlier operators in the field — Warren-based Pennsylvania General Energy and Pennzoil — had already drilled more than 1,300 wells since the 1950s.

The companies recovered oil from the 2,200-foot-deep Kane Sand using a method called a water flood. Oil doesn’t flow freely to the production wells here after the initial rush, so a mixture of freshwater and the oilfield’s brine is pumped down special injection wells. That frees the oil and flushes it toward production wells.

The project is located in the middle of a national forest because the surface land and the buried oil have different owners. Courts have ruled the right to extract the oil overrides the right to preserve the forest, even when the surface landowner is the federal government.

ARG Resources drilled 420 wells in the decade and a half after it took control of the field — plugging wells behind it as it explored the boundaries of the buried reservoir. When oil prices climbed, its corner of the forest became a little city.

“Ten years ago … there were people, cars — this place was just booming,” said Steve Lencer, a DEP oil and gas inspector supervisor for the northwest region.

In 2014, ARG drilled 24 wells through the end of August. Then it stopped abruptly. It has not drilled another well since.

By the following year, the depth of the company’s trouble was obvious.

A 2015 presentation prepared by DEP oil and gas supervisor Chad Meyer noted ARG Resources’ costs to produce a barrel of oil were $46, above the selling price at the time.

“At current oil prices, ARG is breaking even at best and any further drop in price will cause them to lose money on every barrel of oil produced,” he wrote.

“We may not have much time to come up with solutions.”

In slides charting the company’s years of healthy revenues, Mr. Meyer made clear that the plugging and restoration costs should not have been insurmountable. He calculated that ARG Resources had likely earned $225 million before expenses on the oil and gas pulled from the field since buying it in 2001 — more than enough to clean up the company’s messes.

Since 1991, gross earnings for the field were probably $345 million across the three operators, he said, not counting the peak production years between 1974 and 1990 for which DEP has no data.

“The taxpayers should not be on the hook” for the cleanup, he concluded.

The company had posted a $200,000 bond as part of an agreement with DEP over well plugging in 2012. But as oil prices continued their slide, ARG began to fall farther behind.

In November 2017, ARG Resources’ general manager James Bolinger alerted the U.S. Environmental Protection Agency that the company did not have the money or manpower to correct leaks at 24 of its injection wells in the field by an EPA deadline.

If it couldn’t finalize a deal with AquaPower Chemicals “in the very near future,” he wrote, the company would be forced to shut down.

While the Pennsylvania DEP has primary authority for regulating production wells, the federal EPA has primary authority for injection wells — an arrangement that carries an additional benefit in this case because federal rules required ARG Resources to set aside $1.8 million for plugging its injection wells.

By February 2019, with a deal still not signed, an attorney for ARG Resources told EPA that it was in a “dire financial condition” and couldn’t comply with the agency’s mounting orders. Although the company had repaired or plugged many of the wells EPA had ordered it to fix, it was shutting down its operation without addressing nearly 60 more.

Most of those are wells that ARG had already paid to plug once, but it turned out its contractor did not complete the job. He was sentenced to jail for six months for falsifying records, but the company was forced to replug wells that had been sealed off only halfway.

Mr. Bolinger said in an interview in March that oil prices would have to be above $80 per barrel to make it profitable to operate the wells while keeping up with the cost of the company’s state and federal environmental obligations.

Oil has not been above $80 per barrel since 2014. On Tuesday, American Refining Group’s posted prices for Pennsylvania Grade Crude ranged from $14 to $19 per barrel.

“I believe every well in the state is uneconomical at this price,” Mr. Bolinger said. “We’re not gonna be the only people with this problem.”

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