The $1 trillion Infrastructure Investment and Jobs Act recently approved by Congress and signed this week by President Joe Biden will provide a historic amount of money for a number of clean-energy projects, including billions for states to plug leaking abandoned and orphan oil and gas wells.
“This is something be excited about,” said Seth Pelepko, Subsurface Activities Division Manager for the Bureau of Oil and Gas Planning and Program Management at the Pennsylvania Department of Environmental Protection, during the Center for Energy Policy and Management’s recent webinar on “Abandoned and Orphan Wells: An Expensive Environmental Legacy.”
The $21 billion federal investment to clean up brownfield and superfund sites, reclaim abandoned mine lands, and plug orphan oil and gas wells, while improving public health and creating jobs, will mean a “big change, a significant shift in the way (the state well-plugging program) has to operate,” Pelepko said.
The state could receive between $95 million and $395 million over the next decade to address thousands of abandoned and orphan wells, requiring the program to ramp up its plugging operations exponentially. To put the challenge in perspective, Pelepko said the DEP has spent $37 million on well plugging over the past 30 years, so the federal money could represent an influx of between two and 10 times that amount over one-third of the total time.
Initial grants have tight time frames for identifying wells and obtaining contracts for plugging, and yearly formula grants, estimated at $300 million over five years, will require program officials to have a good database of orphan and abandoned wells, their geography, emissions, and other characteristics, and a comprehensive list of contractors interested in bidding for contracts.
“We need to focus on how we can prepare for this increased funding,” Pelepko said. “We are in uncharted waters.” He said the number of contracts per year that could be issued for plugging wells could exceed 300, addressing dozens to thousands of wells annually. For comparison, the underfunded program, which now has a budget capped a $3.5 million, executed nine contracts, each addressing an average of 2.7 wells, in the past three years.
Program representatives have been working to develop well information databases that are available to field inspectors and are building a database of contractors interested in taking on plugging jobs. So far, they have received about 80 responses to a contractor survey and are still accepting inquiries.
Thousands of oil and gas wells have been drilled in Pennsylvania since the industry’s birth in 1859. Although owners and operators are legally responsible for plugging wells when oil and gas production ends, this does not always happen. Many of the 8,700 known wells in Pennsylvania’s database are so-called conventional “legacy wells” drilled before regulations on plugging existed and long since abandoned.
Research suggests there could be as many as 200,000 orphan wells in the state. At a conservative cost of $33,000 to plug an abandoned well, DEP’s liability ranges between $280 million to several billion, Pelepko said, and plugging costs have been increasing in the past decade. While the state adds a modest surcharge on drilling permits to fund plugging activities and requires a bond, that amount is inadequate. Leaking wells are an environmental and health hazard, putting the potent greenhouse gas methane as well as chemicals including benzene, toluene, ethylbenzene, and xylenes, into the atmosphere and groundwater.
The state is dealing with a growing inventory of wells and an increasing financial liability, Pelepko said. With the program’s modest budget up to this point, it has been able to address only the “worst of the worst” but he is hopeful the federal well-plugging grants will help Pennsylvania make a large dent in that backlog.