Plugging abandoned wells boosts local economies
Energy from oil and gas wells fueled American industrial growth and powered our country through two world wars and two energy crises. But today, many of the wells that were drilled 50, 100, or even more years ago lie abandoned in fields and backyards, from California to Pennsylvania. They can leak greenhouse gases that cause climate change, leak gases and liquids that threaten the health and safety of local residents, and deter local investment in real estate.
Hundreds of thousands of these old wells were owned by firms that have gone out of business and have become the responsibility of taxpayers. With this in mind, a bipartisan group of legislators has introduced the REGROW Act. It would invest $4.7 billion in plugging abandoned wells and remediating the surrounding land to the benefit of local economies and the environment.
Wells abandoned without proper closure — a process known as plugging — can leak toxic gases or liquids into streams, buildings, or the atmosphere. These unplugged wells emit large amounts of methane, a powerful greenhouse gas with a global warming effect many times greater than carbon dioxide. While reducing methane emissions is critical to combating climate change, many ofthe benefits from plugging abandoned wells are not global but local, and are experienced most directly by those living close to the wells.
It can be costly to remediate an abandoned well, and landowners and developers may decide not to build structures near them, either because they tie up land or because they are perceived to be unattractive and dangerous. In a recent study we conducted with our colleague Daniel Berkowitz, we examined how abandoned wells affect local real estate investment in a region near Pittsburgh, which has a long history of drilling. We found that over 50 years, there was half as much development on the land surrounding unplugged wells as the land surrounding plugged wells. Who wants to build their house, their garage, or their barn near wells, tanks or pipes that can leak explosive gases? And who has an extra $25,000 or more to pay for plugging? Although our study focused on one region, there could be over a million orphan wells across the country.
By suppressing construction, the wells also act as a broader drag on the local economy and tax base. We estimate that because they contain less building, properties with unplugged wells have market values that are 12% less than properties with plugged wells. Less building and lower property values mean that the local property tax base is smaller. Over 10 years, we estimate that one local school district lost at least $1,000 per student in foregone property tax revenues — enough to buy every student updated textbooks and a laptop. In addition to living near unplugged wells themselves, local residents pay higher taxes or have fewer public services than they would if the wells were properly plugged.
In Pennsylvania alone, researchers estimate that there are as many as a quarter of a million unplugged abandoned wells. The REGROW Act would prioritize plugging the wells that are causing the most harm, such as those that are leaking or are near schools, homes, or businesses. It also prioritizes-plugging in low-income communities that can least afford the economic and public health damages that abandoned wells create. Versailles, Pa., for example, was the site of a natural gas drilling boom around 1920. Today, its median household income is onethird lower than towns in the surrounding counties. Because abandoned wells are conduits that allow stray gas to accumulate in buildings, residents there must use methane monitors and venting systems to protect against explosions. With money from the REGROW Act, state governments can hire thousands of residents from towns like Versailles to plug wells.
The wells that fueled the economy of past generations now burden their descendants. Targeted well plugging can ensure that such communities enter the next generation’s economy without an obstacle from the past. As the Biden administration and Congress negotiate legislation that would invest in our nation’s infrastructure, we encourage our leaders to include the REGROW Act. Local communities have struggled with these old, leaky wells for long enough, and it is time for Congress to take action to plug them.