Biden’s well cleanup plan: Climate solution or gift for oil?

By Mike Lee, Heather Richards | 04/01/2021 07:28 AM EDT

If President Biden wanted to see the implications from his proposed infrastructure plan, he could have looked out the window yesterday on the way to his speech.

A legacy oil and gas well in Pennsylvania.

A legacy oil and gas well in Pennsylvania. Pennsylvania DEP

If President Biden wanted to see the implications from his proposed infrastructure plan, he could have looked out the window yesterday on the way to his speech.

His motorcade passed by several abandoned oil and gas wells on the way from Pittsburgh International Airport to a union hall in the wooded hills outside Pittsburgh.

Biden wants to spend $16 billion to clean up abandoned oil and gas wells, coal mines, and hard rock mines. Pennsylvania is home to hundreds of thousands of wells that were left unplugged before the state required companies to clean up their sites. Allegheny County, which includes Pittsburgh, has at least 297, according to the state Department of Environmental Protection.


"It’s a once-in-a-generation investment in America, unlike anything we’ve seen or done since we built the Interstate Highway System and the space race decades ago," Biden said yesterday, adding his infrastructure plan would be the biggest investment in the U.S. since World War II.

It’s an open question, however, how far $16 billion would go to fix abandoned oil and gas wells — and whether Biden’s plan would clash with existing state efforts to plug wells.

Nationwide, as many at 3 million orphan wells are dotted across states from Appalachia to California, and most oil patch states don’t have enough funds to plug them. Unplugged oil and gas wells can leak methane, oil and brine, and they’ve contributed to air and water contamination around the country.

A McGill University study on the methane impacts of orphan wells published last year said abandoned wells are the least understood contributor to climate-warming emissions in the U.S.

"We don’t have a good sense of if they are leaking, what their impacts are. Compared to so many other things, we know so little," said McGill professor Mary Kang, one of the scientists in the study. She stressed that the proposed cleanup from this administration is a good opportunity to fill in the blanks.

Conservative states like Texas are considering reforming their laws to cut down on the number of abandoned wells. Environmentalists generally approve of Biden’s spending proposal, although they caution that the Biden administration shouldn’t give the oil industry a free pass on cleaning up its legacy.

Most states didn’t require companies to clean up their old wells until the middle of the 20th century, and abandoned oil wells are covered by a patchwork of rules that vary from state to state. Today, oil and gas companies are typically required to post a bond intended to cover cleanup costs and to permanently plug wells that are no longer producing.

Some states like Texas also collect a dedicated oil field cleanup fee from production companies, but others like Pennsylvania don’t have nearly as much funding.

Critics say that the bond amounts are too low across the board and that state efforts are inadequate. Texas, for instance, set its bond amounts in 1989, although a bill in the state Legislature would allow regulators to adjust the requirement annually based on the actual cost of plugging wells.

Likewise, the Bureau of Land Management, which oversees oil production on federal land in the West, has been criticized for its low-bonding requirements. A 2018 report by the Government Accountability Office found that BLM lacks funding to plug and clean up abandoned oil and gas sites on federal property.

A major question posed by Biden’s $16 billion proposal is whether to allow states to spend the money or create a federal program that identifies and cleans up legacy wells, analysts say.

Daniel Raimi, a researcher at Resources for the Future, said he had a "hunch" it would be the former, since many states have well-plugging programs but simply don’t have enough people or money to find and plug wells.

There are downsides to a state-led program, he said. They depend on contractors in the oil and gas sector who may need plugging work when oil and gas prices are low but will become increasingly expensive and hard to hire when prices rise.

That perceived reliance on the oil and gas sector has also inspired fierce criticism, particularly among those pushing for a transition away from fossil fuels.

Megan Biven, a former policy analyst at the Bureau of Ocean Energy Management, has been making that argument for years. Biven said an orphan well program that just gives out money to states is like a stimulus boost for a long-term problem.

Giving funds to existing state programs would give the oil and gas industry a lot of leverage at a time when the federal government should be helping wind down oil and gas reliance, she said. Industry groups are part of funding cleanup through taxes on production and often sit on boards that oversee or consult for these programs.

Biven also said the administration would fail in its promise to generate well-paying jobs with good benefits if it doesn’t provide those jobs directly.

"I don’t see an abandoned well program as a discreet thing, but a necessary precondition of a managed wind down of the [federal oil and gas program]," said Biven.

Gale Norton, who helmed the Interior Department for George W. Bush, said the value of the orphan well funding depends on its application.

Now a consultant on federal policy for the private sector, Norton criticized the kind of federal program that climate advocates say is needed.

"If the new infrastructure proposals significantly increase the amount of funding, the states should still maintain overall responsibility," she said in an email. "It doesn’t make sense to create a new federal bureaucracy to duplicate state programs or hire new federal workers to take over jobs now done by state or private workers."

Biden’s plan yesterday was endorsed by the American Petroleum Institute, although the group says the number of abandoned wells is smaller than the Biden administration and many researchers have said.

"We share the administration’s goals of safety and environmental stewardship, and API has strong standards and practices in place to ensure safe and successful well execution," API Vice President Frank Macchiarola said in a statement. "Our industry is fully committed to complying with existing state and federal requirements for abandoned wells and reclaiming wells sites, and we will continue to support efforts to plug these wells and further reduce methane emissions."

‘Extraordinary opportunity’

Across the country, the number and costs associated with abandoned wells varies.

The Texas Railroad Commission, which oversees the oil industry, cleaned up more than 1,400 wells last year and has exceeded its well-plugging goal for the last four years, but still faces a backlog of 6,200 abandoned wells. And there are another 19,000 wells that have been nonproductive for at least a year, putting them at risk of abandonment, according to a state report.

"If additional federal funding or other assistance becomes available for oil and gas cleanup initiatives, the RRC would certainly review the details for such assistance and make decisions that are best for all Texans," a spokesperson for the commission said.

In California, the Sierra Club estimated that the cleanup bill for just one oil company could hit $900 million. That worst-case scenario didn’t come to pass, but the company, California Resources Corp., had 18,000 wells when it declared bankruptcy last year, and it typically costs $50,000 to plug a well in the state (Energywire, Oct. 9, 2020).

In New Mexico, the third-biggest oil-producing state, the state Oil Conservation Division has only plugged 56 wells statewide in the last two fiscal years. State Land Commissioner Stephanie Garcia Richard (D), who oversees oil production and cleanups on state land, said she welcomes the federal funding proposal.

"If the funding makes it through Congress, it should go a long way towards cleaning up the messes left by bad actors on our federal public lands, while also paving the way for new job creation in rural New Mexico communities," Garcia Richard said in a statement.

In Wyoming, state regulators have enough funds from operators’ taxes to cover the roughly 2,000 orphan wells "on the books," said Mark Watson, supervisor for the state Oil and Gas Conservation Commission.

"Any funding offered by the federal government would certainly be welcome by the states, and would also help some small operators plug uneconomic wells," he said, noting he’d need to see specific policy to be sure.

In swing states like Pennsylvania, which Biden carried by less than 1 percentage point, the plan could wind up being popular if it succeeds in providing blue-collar jobs in rural areas.

"It’s hard to come up with more bipartisan appeal," said Rob Altenburg, director of the energy center at the environmental group PennFuture, which has advocated for more aggressive well plugging.

Pennsylvania regulators say they’re already preparing for an influx of funds. The Keystone State likely has more abandoned oil and gas wells than any other state — researchers have estimated between 100,000 and 500,000 — and it spends far less than other states on plugging them.

The first oil well in the country was drilled in Pennsylvania in 1859, and the state has become the second-biggest gas-producing state since the fracking boom opened up the Marcellus Shale field.

The state Department of Environmental Protection has only plugged 63 wells since 2016, although other agencies have also plugged some wells with outside funds.

The Biden proposal would be "an extraordinary opportunity to tackle a pressing environmental issue while creating good paying jobs," a DEP spokesman, Jamar Thrasher, said in an email. "Ultimately, with additional resources, DEP’s program would be able to scale up to many orders of magnitude more wells plugged immediately and begin to make significant progress on the highest priority wells that have been identified."

Reporter Lesley Clark contributed.