Plugging wells could lead to jobs
Concept promoted to keep industry afloat
Proposals to fund plugging of abandoned old oil and gas wells are gaining support across the U.S. as a way to restore jobs for oil workers displaced during the pandemic-driven price crash.
The concept is being promoted by state regulators, industry trade groups and environmental organizations as a way to sustain employment while cleaning up a longstanding environmental problem that has been drastically underfunded.
Across the country, states have identified more than 55,000 ownerless wells left unplugged during past waves of oil and gas drilling. Estimates of existing but unidentified wells swelled to 750,000 or more nationwide.
Pennsylvania alone has 8,500 verified orphan and abandoned wells, plus an estimated 200,000 that have not been identified.
The decaying wells can leak oil and gas into water, soil and sometimes nearby homes, creating an explosion hazard. Collectively, they are a significant source of climate-warming methane emissions.
In recent weeks, the idea of paying oil workers to plug wells has been endorsed by energy regulators in North Dakota and Oklahoma; the environmental groups Greenpeace and Earthworks; the Natural Resources Committee in the Democratic-controlled U.S. House; and the Interstate Oil and Gas Compact Commission, a consortium of 31 oil and
gas-producing states, including Pennsylvania.
“We know we need to plug these wells, we know that plugging the wells provides environmental benefits, and at the same time we know that there are lots and lots of oil and gas workers, and lots and lots of equipment owned by oil and gas companies, that are sitting idle,” said Daniel Raimi, a researcher with the think tank Resources for the Future.
States have existing, but underfunded, regulatory programs set up to plug orphan wells, he said, “which means that the money could flow relatively quickly and you could get people to work relatively quickly.”
Canada recently committed $1.7 billion in Canadian currency for plugging orphaned wells to aid struggling oil producers and address a problem Prime Minister Justin Trudeau said has been “festering for years or even decades.” In Alberta, the funding is expected to maintain 5,200 jobs, he said.
Mark Cline, president of the Pennsylvania Independent Petroleum Producers Association, said that with oil around $20 a barrel, “A lot of people are going to be going out of business if we don’t find some way to keep busy and make some money. Why not plug abandoned wells?”
Companies in Pennsylvania’s traditional oil and gas industry have the skills, equipment and knowledge to plug wells, he said, but those assets will be wiped out if small producers don’t survive the downturn.
“We’re not asking for a handout. We’re asking to go to work. Find us the money to do this and we’ll keep working,” he said.
U.S. Rep. Glenn Thompson, R-Centre, who represents a large part of Pennsylvania’s traditional oilproducing region, said he has discussed the idea with the Department of Energy as well as his liaison at the White House.
The proposal has not been attached to any particular coronavirus response or stimulus bill in Congress, he said last week, “but we want to be ready when the opportunity is here.”
“This would be an absolute win-win as a part of any type of economic recovery package,” he said.
The Center for American Progress, a left-leaning think tank, estimated that a $2 billion orphan well cleanup fund in the United States could support 14,000 to 24,000 jobs in energy-producing states.
“This is an opportunity for Congress to take action in a way that will mitigate the impacts of the oil bust on communities and workers,” said Kate Kelly, the center’s director of public lands.
But environmental advocates want lawmakers to tie plugging funds to stronger financial assurance requirements so operators of current wells do not walk away from their cleanup obligations in the future.
“Any efforts to address orphan wells must be linked with strengthening bonding requirements so that we are not facing this problem again down the line,” she said.
Steve Plants, whose Shinglehouse-based company Plants and Goodwin specializes in well plugging, cautioned that safely sealing off old orphan wells requires different expertise than drilling and fracking modern shale oil and gas wells.
Orphan wells are commonly many decades or a century old, so gaining access to them is challenging, records are scarce and the structures underground can be significantly decayed.
“I absolutely do” think a large-scale plugging program could succeed, he said.
“It is going to require some thought. The solution isn’t just to throw people out there and say we’re working at it. If we have to go back in on wells that were plugged wrong, it is way more expensive.”
Pennsylvania regulators have been in discussions with the state’s oil and gas trade groups to find possible funding sources for abandoned well plugging, Department of Environmental Protection spokesman Neil Shader said.
“DEP is supportive of efforts to find more resources for plugging of orphan and abandoned wells,” he said.
So far, he said, the discussion has not focused on a particular policy or bill.