Written By Kennedy Metcalf July 19, 2023
I recently had the opportunity to meet with Adam Peltz, Senior Attorney at the Environmental Defense Fund. We discussed federal policy regarding orphaned wells and the development and application of funds from the IIJA. In this guest blog, I will share some insights I've gained through studying the policy and regulatory environment of orphaned oil and gas wells.
Introduction:
The policy landscape involving orphaned wells is still in its early stages. The Environmental Defense Fund (EDF) has reported approximately 120,000 documented orphaned wells spanning 30 states. Oklahoma is one of these states that has approximately 17,112 documented orphaned wells (OCC 2023). Due to the scale of this issue, many states have developed regulatory approaches that seek to address this problem. In 2021 the Infrastructure Investment and Jobs Act (IIJA) was signed, which awarded the Department of the Interior (DOI) $4.7 billion to plug orphaned wells across the United States (DOI 2022). This federal approach to addressing the widespread presence of orphaned wells has not only benefitted states’ strategy of undertaking orphaned wells but also raised public awareness of this issue.
This graphic from the Ohio River Valley Institute lays out where IIJA funds are allocated.
Orphan Well Policy in Action Near Me:
Oklahoma is one of the states with the most orphaned wells in the United States. Documentation and exact data are difficult to find, which means that there are only estimates on exactly how many there are within the state. Oklahoma received $25 million in initial funding from the DOI to plug just under 1,200 high-priority orphaned wells (DOI 2022). The cost of plugging an orphaned well is significant and based on many factors, ranging in Oklahoma from $25k to $40k on average; some can cost as much as $1 million to plug (Connelley 2023). Oklahoma officials are prioritizing wells that pose a risk to human health and safety as they utilize the initial funds from the DOI (Connelley 2023).
The IIJA’s Initial Impacts:
The $4.7 billion investment was awarded to the DOI to invest in 24 States (DOI 2022). Upon the initial investment, each of the 24 states received $25 million to go toward high-priority wells. Prioritization varies from state to state with some states setting their focus on wells near drinking water sources, or wells that are near disadvantaged areas (DOI 2022). 15 states have committed to using the funds from the IIJA to measure methane from orphaned wells, and 6 states committed to begin methane measurements before and after capping (DOI 2022). Another key impact of the IIJA is the focus and emphasis on job creation, especially for small businesses. Many states including Pennsylvania have seen declines in jobs within the oil and gas industry with Pennsylvania citing a 14% loss of jobs from 2020 to 2021 (PA Gov 2021). Utilizing grant funds to bolster this industry and job creation can be a huge economic benefit for these states. In our discussion, Peltz emphasized how these funds are going to be used for job creation and creating new economies of scale that will continue well-plugging initiatives long after the federal funds have been dispersed.
Although initial funding is meant for the highest priority wells within the state, how each state uses the IIJA funding varies. The consideration for what is a high priority well is also varies. California Geologic Energy Management (CalGEM) division under the California Department of Conservation is managing the state of California’s orphaned well-plugging mission, including the IIJA funding. CalGEM published a systematic approach to determining the prioritization of the over 5,000 orphaned wells in their state. The methodology focuses on the location of orphaned wells and the condition of the wells (CalGEM 2022). Wells closer to vulnerable communities or environmental assets will be higher on the priority list. California is a great example of prioritization determinations for orphaned wells as many other states list similar markers for determining which orphaned wells should be plugged first.
This image displays an orphaned well in Texas. Source: U.S. Department of the Interior.
Conclusion:
The policy and regulatory landscape is still in its early stages regarding orphaned wells both on the state and federal level. Funding from the IIJA to the DOI has raised public awareness about the number of high-priority orphaned wells across the country. Additionally, creating jobs in this industry is seen as a cornerstone of the beneficial impact these funds are going to have on states. The investment from the federal government to address this problem has been a huge benefit not only to the orphaned well problem but also to the economic need that many of these states’ industries are experiencing today. The initial funding from the DOI is going toward helping states prioritize dangerous wells and as states receive more funding, more orphaned wells across the country will be plugged.
References:
California Department of Conservation. 2022. “California Geologic Energy Management (CalGEM) Final Orphan Well Screening and Prioritization Methodology” Accessed June 30. 2023. https://www.conservation.ca.gov/calgem/Documents/Final%20Orphan%20Well%20Prioritization%20Methodology.pdf
Connelley, Beck. 2023. “First Steps Taken to Address Oklahoma’s Orphaned Well Problem”. Enid News and Eagle. Accessed June 24, 2023. https://www.enidnews.com/news/first-steps-taken-to-address-oklahoma-s-orphaned-well-problem/article_496c0602-3ea1-11ed-96c3-eb2c9fd631c2.html
Environmental Defense Fund. 2022. “Plugging Orphan Wells Across the United States”. Accessed June 22, 2023. https://www.edf.org/orphanwellmap#:~:text=This%20updated%20map%20shows%20a,of%20a%20documented%20orphan%20well.
Pennsylvania Department of State. 2021. “Pennsylvania Energy Employment Report”. Accessed July 7, 2023. https://files.dep.state.pa.us/Energy/Office%20of%20Energy%20and%20Technology/OETDPortalFiles/2021EnergyReport/2021_PAEER.pdf
U.S. Department of the Interior. 2022. “Through President Biden’s Bipartisan Infrastructure Law, 24 States Set to Begin Plugging Over 10,000 Orphaned Wells”. Accessed June 22, 2023. https://www.doi.gov/pressreleases/through-president-bidens-bipartisan-infrastructure-law-24-states-set-begin-plugging
