A recent state Department of Environmental Protection (DEP) report spelled out the “troubling” record of the conventional oil and gas industry for its failure to adhere to environmental laws, particularly in regard to abandoning wells.
“Overall performance is so poor among operators with 11 or more conventional oil and gas wells that the failure to report seems to be an industry-wide rule rather than the exception,” the Nov. 29 report states.
The report was prepared at outgoing Gov. Tom Wolf’s direction in July, when he allowed a bill to become law without his signature that will keep bonding for conventional wells at the current low rate of $2,500, a fraction of the cost of plugging a well when it is no longer producing natural gas.
Conventional wells are drilled vertically into a reservoir of oil or gas, and the operators tend to be smaller companies. These wells are shallower and produce much less than horizontally-drilled unconventional wells that are also hydraulically fractured.
The most frequent violation of state environmental laws over a five-year period was operators failing to plug wells that have reached the end of their economic life, instead abandoning them with the remediation responsibility then potentially falling to state taxpayers. A total of 3,123 notices of violation were issued to operators.
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.
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 abandoned 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, and plugging costs have been increasing in the past decade.
The report indicates that the DEP issued 16,568 violations for 4,083 wells to 503 operators over the five-year period, representing one-third of those doing business. Other compliance issues noted included failure to report how much well waste is generated and where it is being disposed of, and failure to report on the mechanical integrity of wells.
“The widespread reporting noncompliance by the conventional oil and gas industry denies DEP and the public critical information about the operating status of individual wells, the overall industry, and, in the case of mechanical integrity assessments, may pose a threat to public health and safety and the environment,” the report states.
The report recommends that DEP take steps to more aggressively enforce environmental rules, and indicates that proper oversight can accomplished through the use of administrative orders, permit denials, civil penalties, liens, and criminal referrals if needed. It also notes that DEP is now working on two rules to bring regulation of conventional wells in line with “modern standards.”
But that enforcement cannot be done without more resources, the report notes. The DEP oil and gas office program is now funded primarily through permit fees paid by operators, which is inadequate to meet the workload. New funding sources would require legislative or regulatory action.
“Developing a stable funding source to fund these efforts will be critical to successfully altering the current course or widespread noncompliance in the conventional oil and gas industry in Pennsylvania,” the report concludes.