2+ Million Abandoned O&G Wells Pollute Land, Water And Climate: Cleanup Funding At +/- 2% Of What Is Needed
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There are more than 2 million unplugged oil and gas wells that will need to be cleaned up, and the current production boom and windfall profits for industry giants have obscured the bill’s imminent arrival. More than 90% of the country’s unplugged wells either produce little oil and gas or are already dormant. By law, companies are responsible for plugging and cleaning up wells. Oil drillers set aside funds called bonds, similar to the security deposit on a rental property, that are refunded once they decommission their wells or, if they walk away without doing that work, are taken by the government to cover the cost.
But an analysis by ProPublica and Capital & Main has found that the money set aside for this cleanup work in the 15 states accounting for nearly all the nation’s oil and gas production covers less than 2% of the projected cost. That shortfall puts taxpayers at risk of picking up the rest of the massive tab to avoid the environmental, economic and public health consequences of aging oil fields.
The estimated cost to plug and remediate those wells if cleanup is left to the government is $151.3 billion, according to the states’ own data. But the actual price tag will almost certainly be higher — perhaps tens of billions of dollars more — because some states don’t fully account for the cost of cleaning up pollution. In addition, regulators have yet to locate many wells whose owners have already walked away without plugging them, known as orphan wells, which states predict will number at least in the hundreds of thousands.
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The industry’s household names — Chevron, ExxonMobil and others — often reap the biggest profits from any given oil field. As the booms fade and production falls, wells are sold to a string of ever-smaller companies, many of which let the infrastructure fall into disrepair while violations and leaks skyrocket. The number of idled wells soars too, as companies warehouse them to avoid costly cleanup. By this point, regulators’ hands are tied because the bonds states demand to use as leverage are so small. Seeing little incentive to plug wells and get their tiny bonds back, companies slip into bankruptcy court, where executives are protected from their environmental liabilities. When the dust settles, the government is on the hook for the now-orphaned wells. The practice is so tried-and-true that researchers and activists call it “the playbook.”
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https://www.propublica.org/article/the-rising-cost-of-the-oil-industrys-slow-death
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