HARRISBURG — The House Environmental Resources and Energy Committee was warned earlier this week of the lurking taxpayer cost for plugging orphaned and abandoned wells.
While current policy caps bonds on conventional oil and gas wells at $2,500, the actual cost of plugging an abandoned one is much higher — $30,000 or more.
“For too long, the conventional industry has been held back by their own fundamental belief they can only do things one way to survive,” said David Hess, a former secretary of the Department of Environmental Protection. “A business practice based on abandoning hundreds of wells a year … is simply not sustainable. It leaves taxpayers stuck with the bill for plugging and clean-up, and no one responsible for operating the wells.”
Pennsylvania has numerous orphaned and abandoned wells, with estimates ranging from 200,000 to 800,000 wells. An orphaned well tends to be an older one with no record of an owner, whereas an abandoned well hasn’t been operated in 12 months, but isn’t classified as active.
Kelsey Krepps, senior campaign representative for the Sierra Club, argued that the current law is flawed.
“Current policies in Pennsylvania … actively encourage operators of today to leave non-producing wells uncapped,” Krepps said. “The influx of federal dollars doesn’t address the ongoing practice of operating companies failing to clean up after themselves … they mar communities, reduce property values, and depress the local tax base, and in many cases these wells become the responsibility of the state to plug.”
Though state and federal money has increased in recent years to plug wells, the money has lacked oversight to ensure it’s being spent on high-priority wells. Some private initiatives, too, have plugged wells at a lower cost, as The Center Square previously reported.
The majority of Pennsylvania’s active conventional wells require no bond, Krepps noted, because they were drilled before 1984, when the commonwealth mandated bonding.
“The result of Pennsylvania’s under-bonding is staggering,” Krepps said. “It would cost $14.5 billion to plug all wells in Pennsylvania, and the state only has $50 million in bonding available to plug these wells.”
One solution that has been advocated by environmentalists is to raise the bounded amount required by the DEP.
Rep. Greg Vitali, D-Philadelphia, and chair of the Environmental Resources and Energy Committee, has proposed legislation that would restore the authority to the DEP and the Environmental Quality Board to increase bonding amounts.
Raising the required bond on conventional wells, which are vertical wells (as opposed to non-conventional wells that are horizontally drilled), though, wouldn’t solve the issue, according to one conventional driller.
Arthur Stewart, president of Cameron Energy Company, noted that most conventional wells were drilled decades ago, before bonds were required. The orphaned wells needing to be plugged are inherited from the early 20th century — and 19th century.
“Over 60% of Pennsylvania’s conventional wells were drilled before bonding was required,” Stewart said. “That number is even higher for Pennsylvania’s abandoned wells. Of those 1,836 wells on DEP’s abandoned list, 1,715 were drilled before bonding was required — that’s over 93%.”
“Increasing Pennsylvania’s bonding amount, which pertains to only post-1984 wells, will have no impact — zero impact — on 93% of Pennsylvania’s abandoned wells,” Stewart said.
Requiring pre-1984 operators to bond their wells, he argued, would threaten the viability of “mom and pop” conventional operators, who are not leaving wells behind.
“Orphaned wells … they’re the shared responsibility of all of us in this room,” Stewart said. The wells “stoked the Industrial Revolution and powered us through World War I.”
Rather than today’s resource extraction, the problem is an inherited one.
“The freedoms and infrastructure we enjoy today … were built with energy from orphaned wells,” Stewart said. “In that sense, we all profit from our forefathers’ legacy and we all share that legacy’s responsibility.”
