Hundreds of millions of dollars dedicated to plugging abandoned oil and natural gas wells could be headed to Texas through the federal infrastructure law approved by Congress.
In August, the Railroad Commission of Texas – which regulates oil and gas activity across the state – announced the Department of the Interior will send $25 million in initial grant funding to plug about 800 “orphaned” wells.
Unplugged wells emit methane into the atmosphere and are prone to leaking toxic chemicals if left unaddressed, according to the department. Texans living near abandoned wells have reported dangerous blowouts that killed vegetation and released volatile organic compounds into the air.
The Railroad Commission defines an orphan well as being inactive for more than 12 months and not having an owner who is in compliance with required reports to the state. Often, the well owner has gone bankrupt and there is no one to hold responsible for plugging the well or cleaning up the drill site.
About 7,400 orphaned wells are on the books across Texas, with 273 located in the 16 counties that make up North Central Texas, according to commission data released in August.
As of July 13, commission staff plugged 1,057 wells in 2022, exceeding the annual target of 1,000. The state began using federal dollars for well cleanups on Sept. 1.
“We will use our established success with workplans, staff expertise and contracting processes to use the grant funding to plug abandoned wells,” Clay Woodul, the commission’s assistant director of field operations for the oil and gas division, said in a statement.
Of the $1.15 billion in funding available to clean orphaned wells, Texas will be eligible for about $344 million – about $138 million less than the state estimated it needs to clean the wells currently documented by the Railroad Commission. The federal funds should help plug about 7,000 wells, including 300 located offshore.
Virginia Palacios, executive director of the environmental advocacy group Commission Shift, said that the federal investment in plugging wells won’t be enough to solve the state’s growing crisis. The federal government estimates there are at least 2.1 million unplugged abandoned wells across the U.S., with a potential price tag ranging anywhere between $20,000 and $145,000 per well.
That number doesn’t include the expanding list of wells that have been inactive for more than a year and are at risk of becoming orphaned, Palacios said. In 2020, the Railroad Commission identified about 146,000 inactive wells concentrated in west and south Texas. Last year, Grist and the Texas Observer estimated another 13,000 wells are likely to be abandoned in the coming years.
“If they continue to take on about 1,500 orphan wells per year, by the time this program is done, they’re still going to have 6,000 orphan wells in the queue,” Palacios said. “They won’t be in a materially different position unless they actually change their policies.”
North Texas is home to 5,642 documented inactive wells, according to the Railroad Commission’s last count in August.
Tarrant County reports zero orphan wells, but 635 unplugged wells that have been inactive for more than 12 months. Johnson County and Palo Pinto County are home to the most inactive, unplugged wells, with 1,132 and 1,014 respectively.
Currently, the Railroad Commissions requires operators to plug inactive wells within 12 months of inactivity. But operators frequently submit plugging extension requests, Palacios said.
“The requirements that they would have to meet to get a plugging extension are very minimal,” she said. “There’s a lot of options that the Railroad Commission allows for them to avoid plugging, and so that’s why you end up with this pile up of hundreds of thousands of inactive wells unplugged.”
In an August opinion piece for the Dallas Morning News, Jim Wright – one of three elected officials who oversee the Railroad Commission – said the vast majority of inactive wells are plugged by operators. Companies with more than 100 wells must also post a bond of $250,000 as a financial assurance that they will plug wells after production wraps up.
But the “boom-and-bust” cycles in the oil and gas industry has led to more bankruptcies and abandonment of wells that become the responsibility of the Railroad Commission, he wrote. Wright supports more dollars to address this “pervasive problem” despite his wariness of federal funding.
“‘Innovation’ and ‘federal government’ rarely appear in the same sentence, which is why it is important that these funds do not come with additional bureaucratic red tape that could increase the cost of plugging wells or that would handcuff individual states from utilizing this federal funding in ways that work best for them,” Wright wrote.
For Palacios, the only path for the Railroad Commission to address the abandoned well crisis is to require oil and gas operators to pay bonds that cover the full cost of well plugging.
That’s one of the recommendations included in a January Commission Shift report pushing the agency to repeal extensions on well plugging requirements and more tightly enforce rules requiring companies to clean their own sites. There is appetite among Texas officials to increase the bond amount for oil and gas operators with more than 100 wells, Palacios said.
While some parts of the state will not experience the negative consequences of methane leaks or gas well blowouts, the stakes are high as the country works to reduce methane emissions, Palacios said. Methane is a serious safety hazard and a significant cause of climate change, according to the Department of the Interior.
“Methane is the real reason why these federal funds are being granted,” Palacios said. “Reducing methane in the short term gives us one of the better chances of reducing the impacts of climate change in the near term.”
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