Millions flow to plug orphaned oil and gas wells

The Wyoming Oil and Gas Conservation Commission, which oversees facilities on state and private lands, lists 1,307 well sites in its orphaned well program and is set to receive $25 million from the bipartisan Infrastructure Investment and Jobs Act.

The Bureau of Land Management, which oversees facilities that tap federal minerals in Wyoming, estimates more than 1,000 orphaned wells in the state. The federal agency will tap into $250 million set aside for federal orphaned well remediation nationwide.

“Orphaned wells are a legacy that we must address, as they can release methane, pollute groundwater, and pose a hazard to people and wildlife alike,” BLM Director Tracy Stone-Manning said in a press release.

For its part, Wyoming BLM estimates the cleanup work on federal wells in the state will create or sustain up to 300 industry-related jobs. Meantime, the WOGCC expects the federal funds to clean up state and private facilities will support what’s already a robust orphan-well-remediation program. The state has cleaned up more than 4,713 orphaned well sites since 2014, according to the agency. Of those, 186 were converted to water wells for nearby ranchers.

The federal push to clean up more orphaned wells is long overdue and will benefit landowners and others who suffer the environmental risks, according to advocacy groups. But, they say, the cost of clean up shouldn’t fall to American taxpayers.

“The people who drill the wells and profit from them are responsible for cleaning them up,” Powder River Basin Resource Council and the Western Organization of Resource Councils board member Bob LeResche said. The federal government is “doing something good for the environment and surface owners, but they’re doing it with taxpayer money, which is just wrong.”

When it comes to holding operators responsible for cleanup, the state has generally done a better job than the BLM, LeResche said. Of the $32 million the state has spent to remediate orphaned wells since 1997, $21 million was covered by bonds posted by operators, according to the WOGCC. The rest of the expense was covered by a conservation tax applied to all oil and gas operators in the state.

The BLM, however, still allows for a nationwide “blanket bond” of $150,000, just a fraction of actual remediation costs for many operators. The federal agency is also slow to add wells that are known to be inactive to its orphaned well list, LeResche said, sometimes waiting more than six years to pursue responsible parties.

The Powder River Basin Resource Council and others are pushing the BLM to revise its bonding rules to increase dollar amounts and speed up the timeline for remediation work, LeResche said.

Coal-bed methane gas wells, primarily in northeast Wyoming, make up most of the orphaned wells in Wyoming, according to state officials. The industry tanked beginning in 2010, mostly due to low natural gas prices and the proliferation of hydraulic fracking that redirected the industry to shale gas plays outside the state.

For a 20-year period before the coal-bed methane boom, the state had documented 500 orphaned wells. After the coal-bed methane bust, it documented 6,020 orphaned wells, according to the state. The CBM bust and the string of bankruptcies that followed added pressure on state officials to revise Wyoming’s bonding and reclamation rules.

The BLM needs to do the same, LeResche said, otherwise continuing to use federal taxpayer dollars “is bailing out the culprits who were leaving these wells unreclaimed and unplugged.”