American Oil and Gas Reporter - March 2023 - 73

SpecialReport: ESG Best Practices
Funding
Accelerates Efforts
To Plug Abandoned Wells
By David Palmerton
Across the United States, the U.S. Environmental
Protection Agency estimates,
there are around 3.7 million abandoned oil
and natural gas wells. Although many of
these wells have yet to be documented,
that is changing with the growing interest
in addressing them. Citing applications for
funding to plug wells, the U.S. Department
of Interior puts the number of documented
orphaned or abandoned wells around
130,000. Nearly half are in Appalachia.
Most abandoned and orphaned wells
are ancient history, and current operators
have no connection to them. Nevertheless,
many companies drilling new wells today
are plugging old wells voluntarily.
These companies recognize that fluid
or gas migration from abandoned or orphaned
wells can contaminate surface
water, groundwater or drinking water. The
wells also may emit hazardous air pollutants
such as hydrogen sulfide, as well as greenhouse
gasses. By plugging them, operators
can protect their employees and neighbors
while strengthening their reputations.
As an environmental consultant from
2005 to 2015, I managed the plugging of
nearly 1,000 wells in Pennsylvania, New
York and West Virginia. Shell Oil Co. and
other conscientious operators plugged many
of these wells after learning they had acquired
them through land transactions.
Unfortunately, for every responsibly
plugged well, many remain abandoned
or orphaned.
Well Origins
There are several common ways
through which wells become abandoned
or improperly plugged. One of the primary
causes is loss of ownership. According
to regulations, the last entity to receive
economic benefit from a well is responsible
for plugging it. However, if the last entity
cannot afford to plug the well, the responsibility
falls on the prior owner or
operator. Orphan wells' ownership, in
most cases, has been lost through death,
bankruptcy or abandonment.
Inadequate plugging is another common
issue. In the early days, oil and gas
regulatory frameworks focused on protecting
oil and gas resources more than
the environment. Before the 1950s, many
wells either were left unplugged or plugged
inadequately. When wells were plugged,
the process often involved throwing in
tree stumps, brush, wood and rocks alongside
a sack of cement.
Inadequate plugging prevailed for some
time. As we cleaned out old wells from
the 1950s and '60s, the downhole junk
we found included a deer skull, tools,
brush, wireline and other trash.
World War II exacerbated the issue.
Steel was in such short supply that people
would pull and sell the surface casing from
old wells. In some cases, this left behind a
hole big enough to swallow a man.
Moreover, wells that were drilled using
cable tools often did not cement in casings,
leading to gas releases.
It does not help that plugging a well
can be daunting and expensive. The financial
assurance companies are required to meet
often falls below plugging costs, which
range from several thousand to hundreds
of thousands of dollars for each well.
According to the Interstate Oil and
Gas Compact Commission, the risk of a
well becoming an orphan grows when it
is transferred at an old age. Because
wells' production declines over time, they
tend to go to operators who have fewer
resources than their previous owners.
Sometimes the buyers lack the resources
to properly operate or plug the wells and
eventually abandon them.
Funding P&A Work
This unplugged well is leaking oil. Other
abandoned or orphaned wells pose less
obvious but equally unwelcome risks.
Fortunately, cleaning up wells is becoming
easier thanks to funding from government
agencies and private organizations.
The Pennsylvania Department of Environmental
Protection estimates that it
will cost $1.8 billion to plug the 27,000
abandoned and orphaned wells identified
on state and private property. The department
adds that there may be as many
as 200,000 unidentified wells, many of
which were abandoned 50-100 years ago.
In recognition of the environmental
and safety risks abandoned wells can
pose, HR 3684, the " Infrastructure Investment
and Jobs Act " that Congress
passed in November 2021, allocated
$4.7 billion to create a new federal program
to address orphan wells. Nearly
every state with documented orphaned
wells submitted a notice of intent expressing
interest in applying for a formula
grant to address orphaned wells
and well sites.
Twenty-two states applied for initial
grant funding to plug wells. Kansas identified
2,352 wells for the initial grant, and
at the other end of the spectrum, Alaska
listed 12-18 wells. Each state developed
a methodology for how many wells to
list, including plugging and administrative
costs, among other factors.
MARCH 2023 73
American Oil and Gas Reporter - March 2023

Table of Contents for the Digital Edition of American Oil and Gas Reporter - March 2023
