A federal program that helps states plug thousands of abandoned oil and gas wells — some of which are leaking into groundwater and soil — is in limbo.
The Trump administration paused funding for the $4.7 billion orphaned well program earlier this year, according to state officials. Though funds have begun flowing again for some projects, state officials say the Interior Department has said little about the program’s future.
“We’re still in a hurry-up-and-wait pattern,” Oklahoma Corporation Commission Executive Chair Brandy Wreath said at a public meeting last month. “No one can give any real guidance or information about if and when that money will start flowing for the next round.”
The program, created in the 2021 bipartisan infrastructure law, aims to tackle a nationwide problem of abandoned oil and gas sites that can leak planet-warming methane into the air and potentially harmful chemicals into drinking water. Congress directed Interior to disburse the funding in three tranches: an initial grant of $25 million for each state; formula grants based on the number of orphaned wells states report; and performance grants tied to state funding for plugging wells and increasing industry accountability.
Some states had begun receiving formula and performance grants when President Donald Trump entered office and directed agencies to pause all funding from the 2022 Inflation Reduction Act and the infrastructure law. That forced states to stop plugging projects already underway, according to a Feb. 12 letter from the Interstate Oil and Gas Compact Commission to Interior Secretary Doug Burgum.
Funds have started flowing again in recent weeks, said Adam Peltz, a director and senior attorney with the Environmental Defense Fund’s energy transition efforts.
“I think there was a big sigh of relief when those funds were unfrozen,” Peltz said. “So the department’s Orphaned Well Plugging Office is trying to get back up to normal operations and get through the lengthy backlog of formula grant applications that are in front of it.”
Still, Peltz worries that some of the performance grants, which account for $1.5 billion of the program’s funding, may be nixed altogether. Those grants require states to take action — including more stringent insurance requirements for oil and gas companies.
In response to questions about the program’s future from POLITICO’s E&E News, officials in Interior’s press office wrote that the department prides itself on “first class customer service.”
“The staff within the Orphaned Wells Program Office are committed to stakeholder engagement and communication. The engagement from our team has remained consistent across many different administrations and will always do so,” they wrote.
Waiting pattern
States, for the most part, have already spent the initial $25 million they were each given in initial grant funding, although some struggled to get their orphaned well plugging programs off the ground, and concern arose that some states may have undercounted how many orphaned wells dot their areas.
States submitted applications for the formula funding late last year, but many state agency heads complained that the requirements were too onerous.
Those requirements included monitoring for methane at each orphaned well head; hiring cultural monitors to oversee some plugging sites to ensure compliance with the National Historic Preservation Act; and having Interior agree with the state’s determination that endangered species do not live nearby.
The Kansas Corporation Commission plugged a whopping 2,405 orphaned wells with the $25 million initial grant money — more than twice as many as any other state.
Ryan Hoffman, conservation division director for the KCC, said the state’s ability to use those initial funds as it saw fit was a big help, enabling it to develop a system to group wells that were constructed in similar ways and in similar areas so it could put multiple wells under single contracts.
But that quick pace could be slowed by some of the additional requirements for the formula funds, Hoffman said. Ultimately, the department opted not to include information about how it would conform to those requirements in its application for formula grant funding.
“When we started looking at what it would cost to do some of the extras that were being required, you’re talking 20 to 50 percent of what it costs to plug a well,” Hoffman said. “It seemed like we were not going to be nearly as effective as we could be if we did conform to those requirements.”
Texas’ oil and gas regulator has also seen costs rise to comply with the formula grant requirements. Bryce Dubee, a spokesperson for the Texas Railroad Commission, said the agency plugged 45 percent fewer wells with the formula grant funds than it did with the initial grant funds, which had few rules.
Hoffman hopes the Trump administration will lessen the requirements for those grants — particularly when it comes to methane monitoring. But he hasn’t heard much from Interior since Trump took office; his agency was last told by the Biden administration to apply for a second round of formula grant funding after not receiving funding in the first round.
“Where we are right now is we haven’t heard very much directly from Department of Interior yet, but we are hopeful that we will hear in the near future because we are working on putting packages together for that $33.6 million,” Hoffman said.
New Mexico is also waiting on Interior to move forward with its well plugging plans. The Oil Conservation Division within the New Mexico Energy, Minerals, and Natural Resources Department still hasn’t spent a $25 million formula grant, said acting director Gerasimos Razatos.
“We haven’t spent much money on that because we’re still waiting for the DOI’s answer on if our proposed plan to deal with [the Endangered Species Act] and [the National Historic Preservation Act] is agreeable to them,” Razatos said.
In an email to E&E News, Interior said it was reviewing grant guidance, including reporting requirements, as part of Trump’s “Unleashing American Energy” executive order. That order directed agencies to nix regulations and policies that “impose an undue burden” on the fossil fuel industry.
“Any changes will ensure consistency with the Administration’s policy priorities that promote the advancement of energy development and fiscal responsibility,” Interior officials wrote in the email.
Burgum’s support?
Perhaps the funds most up in the air are the $1.5 billion set aside for the program’s regulatory improvement grants. Interior told E&E News that “regulatory improvement grant related activities are undergoing policy review.”
The grants require states to improve their plugging standards, appropriate more funds to orphaned well plugging, and create new insurance requirements for oil and gas operators to prevent wells from being orphaned in the first place.
The page containing final guidance for how states can apply for those grants is no longer available on Interior’s website.
“I don’t think it’s a bad thing to reward states that come up with innovative ideas for doing this work,” EDF’s Peltz said. “I think that every state can be made eligible for these awards because they are all thinking about ways to reduce future orphans.”
Interior told E&E News in an email that the Orphaned Wells Program Office has thus far awarded $16.5 million in matching grants to three states and is reviewing another six state-submitted applications.
State officials said they were optimistic that even if Interior changes how it runs the program, most or even all of the program’s $4.7 billion will be spared the cuts the Trump administration plans for other programs funded by the climate and infrastructure laws. The Department of Energy, for example, is mulling the elimination of hydrogen production hubs — but only those in Democratic-led states — and carbon capture hubs.
Burgum, Interior’s secretary, has been supportive of orphaned well plugging programs in the past.
As governor of North Dakota, Burgum used CARES Act funding from the first Trump administration’s Covid-19 response to plug orphaned wells in his state. As chair of the Interstate Oil and Gas Conservation Commission, he also spearheaded drafting legislation that ultimately became part of the federal orphaned well program.
“There’s a good reason why North Dakota has been a leader in this space,” Peltz said. “There’s a long-standing history of current DOI leadership being invested in solving this problem.”
Razatos, with the New Mexico EMNRD, said federal funds have given the state’s orphaned well plugging program a shot in the arm. The department, on average, would plug about 50 wells a year before the grant, Razatos said. With the initial round of federal funding, the agency was able to plug 130 and reclaim some sites that had major pollution issues.
“It behooves us to make sure that these wells are properly plugged, not just for us now, but also for the future,” Razatos said. “The state has funds that have been allocated to help in the plugging and remediation and reclamation, but these extra funds definitely help us be able to tackle that task in a more efficient and in a better way so that we can be able to get more wells in a year.”
