About 200,000 abandoned oil and gas wells mark the Appalachian plateaus and the lush forests of Pennsylvania. These wells, which once produced oil and gas but have since been abandoned by their operators, release methane, a potent greenhouse gas, and threaten the environment and public health when they release byproducts toxic. Of the roughly 100,000 active wells in the state, many produce just a few barrels of oil and gas a year and are nearing the end of their life. Fossil energy companies are supposed to clean up these sites as soon as they stop producing, but operators regularly evade these obligations.
To prevent the backlog of abandoned wells from building up, the Environmental Quality Board and the Pennsylvania Department of Environmental Protection have begun looking at ways to strengthen rules requiring companies to post bonds before drilling. These financial guarantees can be claimed by the State if a company goes bankrupt or tries to avoid its environmental obligations. The idea is that even companies that leave town are still liable and taxpayers don’t end up footing the bill.
Those efforts, however, ended last week when Democratic Gov. Tom Wolf failed to veto a bill banning future increases to financial insurance amounts for conventional vertical wells (as opposed to fracked wells). , for the next ten years. Wolf reportedly allowed the bill to pass as part of a deal with Republican lawmakers to secure additional funding for education.
“This is a green light for the conventional oil and gas industry to continue doing what it has been doing, which is to abandon these wells when it feels like it,” said David Hess, former director from the Pennsylvania Department of Environmental Protection, or DEP.
Pennsylvania’s current financial assurance requirements are insufficient to cover the costs of plugging and cleaning wells. The state requires operators to post $2,500 per well or a “general” bond of $25,000 for all wells in a company. For operators with a hundred wells, this can represent up to $250 per well. The DEP has estimated that the average cost of plugging conventional wells is around $33,000 per well, meaning that public funds are an essential safety net if operators fail to plug wells. Nearly 70,000 of the state’s wells were drilled before April 1985 and are completely exempt from bonding requirements. As a result, the state has less than $15 in obligations per operating well.
In recognition of this, in November, the state’s Environmental Quality Board accepted petitions filed by environmental groups to increase bond amounts to cover the actual cost of the cleanup. House Bill 2644, which was sponsored by state House of Representatives Rep. Martin Causer, a Republican from northwestern Pennsylvania, was a direct response to the regulation being considered by the Council .
The new law, which took effect on Wednesday, increases the aggregate bond amount from $25,000 to a maximum of $100,000 for new wells drilled in six months, but it also prohibits the Environmental Quality Board and the DEP to increase or otherwise adjust bond amounts. It codifies the exemption for wells drilled before 1985 and requires DEP to pay 20% of funding provided to it by a well-plugging grant program into the bipartisan Infrastructure Act to “qualified well plugs” – a category that seems to include the same companies that drill and abandon wells in the first place. Pennsylvania is eligible to receive $395 million over 15 years from the federal government to plug abandoned oil and gas wells. The state has received $104 million so far.
The bill defines a “qualified well plugger” as any entity that has drilled or plugged 10 wells or otherwise demonstrates access to the equipment and services needed to plug the wells. Hess fears the new law will allow non-compliant fossil fuel companies to access cleanup funds through the grant program, meaning the money “would go to the bandits in the industry who caused the problems in first place “. DEP has issued more than 4,270 notices of violation to operators for abandoning wells in the past six years, he said, and without proper safeguards, new funding could end up in their hands.
“Automatically set aside 20% of that money to go to [oil and gas companies] with very few restrictions and no bidding, it sets a bad precedent,” Hess told Grist.
About $40 million of bipartisan infrastructure law funding depends on the state’s effort to reduce the number of new abandoned wells through “financial insurance reform, alternative funding mechanisms for programs orphan wells and program reforms relating to the transfer of wells for temporary abandonment”. .” It is unclear whether the new law compromises this funding, as it weakens the bail program as a whole.
“The administration has serious concerns” with the law, DEP spokesman Jamar Thrasher said. “The administration is now exploring next steps to ensure industry is held accountable to protect the environment and that we don’t lose millions of dollars in federal funding to plugging wells.”
In a presentation to a DEP advisory board, Kurt Klapkowski, the department’s acting deputy for oil and gas management, noted there were still options the agency could pursue to secure the additional funds. that did not depend on increasing bond amounts – the option the legislature had just taken off the table.
Although the law prevents the Environmental Quality Council and DEP from increasing bond amounts for conventional oil and gas wells, it does not remove the authority to increase bond for unconventional wells. or hydraulic fracturing, which represent less than 5% of wells drilled in the state historically. Some states have strengthened their bonding programs by adding requirements that oil and gas operators report when planning to retire old wells. These requirements allow state environmental agencies to more closely monitor end-of-life wells that are likely to be abandoned. Some states have also used handover regulations, when operators sell old wells to other companies, as an opportunity to require cleanups.
“They took one tool out of our toolbox, but they didn’t take all the tools out,” Klapkowski said in his presentation.