Inactive oil and gas wells present an environmental hazard if not properly plugged. Upon drilling a well, operators are required to post a bond, which ensures that the operator has an incentive to plug and abandon (P&A;) at the end of the well’s life, and that, if the state is left with the liability of managing “orphaned” wells, it can cover the cost of P&A.; Using data from 13 state agencies on their orphaned well plugging expenditures, we provide new estimates of P&A; costs in the United States and compare them to bond amounts. Current state bonding requirements are insufficient to cover the average P&A; cost of orphan wells in 11 of these 13 states. These should be reviewed and revised where necessary. We also examine the factors influencing P&A; costs using detailed data on orphaned wells in Kansas. Given the variability of P&A; costs, bonds would be more effective if they varied by factors that are meaningful in explaining P&A; costs, such as well depth, location, and proximity to groundwater. State regulators can use the statistical approach developed in this paper to improve bonding requirements and to better predict the P&A; costs of their orphaned wells.
Media Highlight — Jul 23, 2020
"California still doesn’t have a plan to bring back clean energy jobs lost to COVID-19"
Los Angles Times features report on abandoned oil and gas wells by RFF and Columbia’s Center on Global Energy Policy.
Common Resources — Jul 23, 2020
The Potential for Plugging Abandoned Wells as Green Economic Stimulus
This infographic from a new report by Resources for the Future and Columbia University examines the potential of a federal program to create jobs through plugging orphaned and abandoned oil and gas wells.
Report — Jul 20, 2020
Green Stimulus for Oil and Gas Workers: Considering a Major Federal Effort to Plug Orphaned and Abandoned Wells
This paper, a joint effort between Resources for the Future and the Center on Global Energy Policy at Columbia University, examines the potential to boost US employment in the oil and gas workforce while also reducing pollution through a federal program to plug orphaned and abandoned oil and gas wells.