Several Groups Promote Using Stimulus Money to Plug Gas Abandoned Wells
Abandoned and orphaned gas and oil wells are an expensive problem facing states in Appalachia and around the country.
Now there are concerns that the COVID-19 pandemic could add to the problem if small operators go out of business due to the economic downturn in the industry and don’t have the resources to plug wells.
A coalition of oil-producing states has asked the Trump administration for economic stimulus money to hire laid-off oil and gas workers to plug abandoned wells. It’s seen as a way to keep workers employed during the current economic freefall in the oil industry, while also addressing a big environmental concern.
The Interstate Oil and Gas Compact Commission, made up of 31 states including Pennsylvania, made the request to the federal Department of Energy, a Reuters article stated. The idea has also been promoted by several state energy regulatory agencies and environmental groups.
There are between 2.3 million and 3 million abandoned gas wells across the U.S., according the Environmental Protection Agency. If not properly plugged, they can leach pollutants into groundwater and allow methane and other contaiminants to escape into the atmosphere.
In Pennsylvania alone, there are between 100,000 and 560,000 abandoned oil and gas wells. The cost of plugging a single well can range from the tens of thousands to more than $100,000, according to a statement from the Department of Environmental Resources spokeswoman Lauren Fraley. DEP uses an estimate of $33,000 per well for plugging.
“Conservative estimates indicate that as many as 200,000 wells may need to be plugged, at a cost that could approach more than $6 billion,” Fraley wrote in an email.
Yet the requirements set by the Oil and Gas Act of 2012 are a bond of $2,500 per conventional well or $25,000 for all wells owned by an operator. Conventional wells drill vertically into a reservoir of oil or gas. Bonds for unconventional wells, which involve drilling horizontal laterals from a vertical shaft and using hydraulic fracturing, are set on a sliding scale from $10,000 per well to a blanket bond of $600,000.
“Unfortunately bond – in particular blanket bonding – amounts prescribed under state law are woefully inadequate to plug an abandoned oil or gas well,” said DEP Secretary Patrick McDonnell in a press release late last year. Pennsylvania has spent about $1.25 million a year to plug wells.
While there has been no decision on whether stimulus funds will be provided for plugging work, “DEP is supporting of efforts to find more resources for plugging orphan and abandoned wells, and has had some discussions with industry groups about possible funding sources, but our discussions haven’t been focused on a particular policy or legislative vehicle,” Fraley said in her email.