“Orphan” wells now just pump problems
Abandoned by defunct companies that can’t pay to plug them, the sites are a big issue in many states.
WASHINGTON» When Bill West drives his weed sprayer over wheat and hay fields at his ranch northwest of Gillette, Wyo., he bumps into the occasional debris from the more than 100 defunct natural gas wells on his 10,000acre property.
The company that owned the wells went out of business four years ago, leaving behind fuse boxes, internet boxes and thousands of feet of underground pipe.
“They just walked away and left everything sitting,” said West, 85. “It’s up to the state to take care of it now.”
So-called “orphan” oil and gas wells, which have been abandoned by defunct companies that cannot pay to plug them, are a growing problem in many states thanks to a recent slump in energy prices that has forced marginal operators out of business.
Adam Peltz, a senior attorney at the Environmental Defense Fund, said he heard officials from 10 states highlight their work on orphan wells at a spring meeting of the Interstate Oil and Gas Compact Commission. “It’s probably the issue that was raised by the most number of states.”
Peltz said dealing with orphan wells is a cyclical issue — more
wells become the state’s responsibility after a downturn — but it’s getting worse over time, as states struggle with a backlog of wells that dates back decades.
Nobody knows how many orphan and abandoned drilling sites litter farms, forests and backyards nationwide. The U.S. Environmental Protection Agency estimates there are more than a million of them. Unplugged wells can leak methane, an explosive gas, into neighborhoods and leach toxins into groundwater.
Methane leaking from abandoned wells caused explosions at a Colorado construction site in 2007 and at a Pennsylvania home in 2011.
In 2014, an Ohio elementary school had to be evacuated because of a gas leak traced to an abandoned well underneath the gym. Near the West Texas town of Imperial, effluence from decades-old oil wells has created a “lake” of salty, sulfurous water.
Sometimes the cost of plugging a well is covered by bonds that companies post before drilling. Often, it’s not. Costs can range from as little as $5,000 to plug a shallow well, such as the coalbed methane wells on Bill West’s ranch in Wyoming, to tens of thousands for deeper, more complicated projects.
In recent years, state legislatures and oil and gas regulators have increased funding for well cleanup by appropriating more money and increasing bonding requirements. They also have tried to make it harder for companies to walk away from their wells, such as by intervening earlier to prod companies to reactivate or plug wells that are sitting idle.
Wyoming’s oil and gas commission has been plugging 350 to 400 wells a year for the past four years — compared to a dozen or two in previous years. It has about 3,600 to go. Some of the over 30,000 active drilling sites across the state could one day join the list.
Assuming it costs about $5,000 to plug each orphan well, the state could be facing a bill of $18 million.
“If you ask me what keeps me up at night, it’s that all these wells have to get plugged,” said Mark Watson, Wyoming’s oil and gas supervisor.
Bill West said he and his wife, Marjorie, were happy two decades ago to give a Michigan-based company permission to drill for coalbed methane on their land. “We got quite a lot of money out of it, lease money.”
When the wells became less profitable, the company sold them to the operator High Plains Gas. High Plains failed to meet state bonding requirements in 2014 and went out of business, leaving the state responsible for thousands of wells.
“I feel very bad about the landowners out there that are stuck with this,” said Ed Presley, former CEO of High Plains Gas. But now that High Plains has gone out of business, the company can’t do much about it, he said.
West said that many of his neighbors have orphan wells on their land, too. “I wouldn’t say they’re angry, they’re just upset that it’s taken so long to clean it up.”
The surge in orphan wells has led Wyoming regulators to speed up plugging efforts and increase bonding requirements.
Luckily, coalbed methane wells are relatively shallow and inexpensive to plug — it costs $5,000 to carefully fill a well with cement and seal it, on average, according to Watson. Some recent orphan wells have even been converted into water wells.
Between bonding payments and a conservation tax that oil and gas producers pay, Wyoming state regulators have been able to fund hundreds of plugging operations a year — mostly coalbed methane wells but some deeper oil and gas wells too — without burdening taxpayers.
Companies can now opt to either pay $100,000 to cover reclamation costs for an unlimited number of wells in Wyoming or pay $10 a foot of drilling depth to cover the cost of reclaiming each well.
Companies tend to choose a bonding option based on their size and planned operations. Companies also now must pay a one-time, $10-a-foot bond on wells that are sitting idle.
Industry leaders say they’re happy with the cost increase. “We have a pretty workable solution,” said John Robitaille, vice president of the Petroleum Association of Wyoming. He said his organization prefers for companies to pay to plug wells rather than taxpayers.
Bill and Marjorie West were among the landowners who helped push for the changes. They are members of the Powder River Basin Resource Council, a community nonprofit that’s spent years lobbying state and federal lawmakers on the orphan well issue.
In other energy-producing states, the orphan well problem is more of a slow burn.
In Pennsylvania, more than 8,000 orphan and abandoned oil and gas wells need to be plugged. But the state’s orphan well plugging program, which relies on drilling permit fees, could afford to plug just six wells last year, said Seth Pelepko, the manager of the well-plugging program at the Pennsylvania Department of Environmental Protection. The agency is looking for new sources of funding, such as state grants.