DEP’s records show the practice of abandoning wells without plugging them is routine in the industry, and not an isolated event.
From 2016 through 2022, DEP issued NOVs for abandoning wells without plugging them to not just to a few companies, but to 256 separate conventional oil and gas companies.
Click Here the list of 256 conventional oil and gas companies issued NOVs.
Sixty of those companies abandoned more than 10 wells in one year-- some in several years-- and some abandoned hundreds of wells without plugging them, according to DEP’s records.
Click Here for 60 conventional companies issued 10 or move NOVs in one year.
In nearly all cases, NOVs for failure to plug a well are not the only NOVs issued to these conventional operators.
Other violations like failure to manage drilling wastewater safely, not notifying DEP of spills, failure to submit annual well integrity and waste disposal reports, failure to operate the wells to meet environmental protection standards and many more go along with NOVs for failure to plug wells.
Conventional oil and gas operators racked up 4,386 violations of environmental regulations in calendar year 2021 alone. Read more here.
It is also clear the 4,270 NOVs do not document all the wells conventional operators have abandoned in the last six years.
In an October 2020 presentation to the Climate Change Advisory Committee, DEP said in 2018 two conventional oil and gas well operators abandoned approximately 2,750 oil and gas wells between them.
DEP’s 2018 records accounted for only 767 NOVs between the two likely companies, meaning 1,983 abandoned wells were not accounted for in DEP’s system through NOVs.
So, the total number of newly abandoned conventional oil and gas wells could be over 6,200-- or more.
It is also important to note, these are the abandoned conventional wells DEP is able to document through inspections. There are likely to be many more recently abandoned wells in the oil fields DEP knows nothing about.
On February 15, DEP recommended an increase in the per-well permit application fees that fund oil and gas enforcement activities.
DEP reported conventional oil and gas drillers only paid $46,100 of the $10,600,000 it costs DEP to regulate the industry. The suggestion was made by industry that taxpayers may pick up the difference. Read more here.
DEP also reported it has only 190 staff of the full complement of 226 staff needed in the Oil and Gas Program due to revenue shortfalls. Read more here.
Enforcement
DEP’s records frequently do not document what happens after NOVs are issued, so it is not clear if all the wells were plugged that were given NOVs-- unlikely-- or if operators were penalized for not plugging a well after being given a chance to plug it.
It is likely some of these wells were plugged, and DEP has taken enforcement action against several operators during this period--
-- Range Resources paid a $294,000 penalty for delaying the plugging of 42 conventional wells in February, 2021. Read more here.
-- CNX agreed to plug 141 conventional coalbed methane and gas wells and 5 unconventional wells in October 2019. Read more here.
-- In March 2018, DEP announced a settlement with Diversified Oil and Gas and Alliance Petroleum that covered the plugging of over 1,400 conventional oil and gas wells. Read more here.
--In July 2018, DEP issued orders to Alliance Petroleum Corp., XTO Energy and CNX to plug 1,058 abandoned conventional oil and gas wells. Read more here.
DEP has also been trying to come up with a plan to get more than 1,600 wells abandoned in the Allegheny National Forest by ARG Resources (a.k.a. Resources Preservation, which is owned by the same man who owns the ARG conventional oil refinery in Bradford). Read more here.
These actions, however, are not keeping up with the hundreds of NOVs issued for new abandoned wells every year, as documented in DEP’s records.
Who’s Protecting Taxpayers?
The thousands of newly abandoned wells become the responsibility of taxpayers to plug in the absence of any follow-up enforcement actions or agreements.
The thousands of new abandoned conventional oil and gas wells represent a potential taxpayer liability of over $100 million, even if just half of them remain unplugged-- given the average cost to safely plug a well is about $33,000.
Taxpayers are also liable to pay the cost of the 200,000+ older oil and gas wells conventional operators have abandoned in the past in Pennsylvania.
The taxpayer cost to cleanup these wells is estimated by DEP to be about $1.8 billion. Read more here.
A new federal program under the Bipartisan Infrastructure Law will allocate an estimated $395 million in taxpayer funds to Pennsylvania over the next 15 years to plug these wells. Read more here.
Taxpayers are also on the hook to clean up active conventional wells drilled before April 18, 1985 because-- by state law-- the operators that own and operate these wells are not required to have any bonds or financial assurance to pay for plugging those wells if they abandoned them.
Pre-1985 wells account for the majority of the 100,508 active conventional wells now operating, according to DEP. Read more here.
The Pittsburgh Post-Gazette reported DEP only has $15 per well onhand through bonding and finance assurances to plug the 100,500 active conventional wells, if the operators walk away-- which is exactly what many are doing, according to DEP’s records. Read more here.
There are no proposals pending to deal with the taxpayer liability for plugging the pre-1985 wells because that exemption is in state law. The law would have to be changed.
By any measure this is more than inadequate and with DEP’s own compliance numbers showing hundreds of new NOVs being issued for conventional oil and gas wells being abandoned every year-- just the ones we know about-- this problem is growing.
Increasing Bond Amounts
In November, the Environmental Quality Board accepted a petition to increase the bonding amounts for conventional oil and gas operators for study. Read more here.
The current bond amount for conventional wells is $2,500 per conventional well, with the option to post a $25,000 blanket bond for an unlimited number of wells. These are the same amounts enacted in the 1984 Oil and Gas Act.
The petition asks for conventional well bonds to be increased to $38,000 per well.
DEP is expected to report back to the Environmental Quality Board on what it recommends at an upcoming meeting.
Conventional Industry Opposes Change
At a February 7 House Environmental Committee informational meeting, Arthur Stewart, representing the conventional oil and gas industry, opposed efforts to increase bonding and adopt new environmental protection standards for the industry. Read more here.
“Let's be careful to not squeeze the conventional industry out of business,” said Stewart. “You're gonna need a robust industry because even when this federal program is done, there are going to be many abandoned wells remaining.” Read more here.
“If we do get $300 million [in federal funds], at the end of the day, we'll still have a hundred thousand plus [abandoned and orphan] wells to solve, which is not necessarily a disaster,” said Stewart. Read more here.
“And remember, we have a hundred thousand-plus wells that we currently operate,” added Stewart. “We don't want to see those go into the abandoned category and make the situation worse [sic]. We wanna plug those responsibly, while the industry is robust and alive to do it.” Read more here.
Stewart also said part of the $395 million in new federal well plugging money should be sent their way.
“The conventional industry is a logical place for the plugging resources that we've talked about,” said Stewart. “We're the logical go-to industry for at least a significant share because we already have the equipment, we already have the workforce, we already have the knowhow. And for those difficult wells, we're the only industry that I'm aware of that has that rare equipment.” Read more here.
Actually, there are lots of other alternatives and new equipment can be made any time in light of the expected demand for plugging services. Read more here.
Arthur Stewart is from Cameron Energy and represented conventional oil and gas drillers and the PA Grade Crude Oil Coalition at the Committee informational meeting. He also serves on DCED’s PA Grade Crude [Oil] Development Advisory Council.
Stewart was the former owner and founder of D&I Silica, the largest independent provider of hydrofracking sand during the first 10 years of the Marcellus Shale natural gas boom in Pennsylvania. Read more here.
D&I Silica was sold to Hi-Crush Partners in 2013 for $125 million. Read more here.
At the Committee information session, DEP promised that none of the new federal money would go to conventional companies that had unresolved environmental violations. Read more here.
“I feel pretty confident that we would not be issuing [plugging] contracts to operators that had significant outstanding violations either on the contracting side of things or on the environmental protection side,” said Kurt Klapkowski, Director, Bureau of Oil and Gas Planning and Program Management. Read more here.
Obviously, DEP’s Oil and Gas Compliance Reporting system is filled with unresolved environmental violations, in particular for hundreds of conventional companies that continue to abandon wells without plugging them.
Conventional oil and gas operators racked up 4,386 violations of environmental regulations in calendar year 2021 alone. Read more here.
Bottom Line
The only thing that stands between thousands of new abandoned conventional oil and gas wells and hundreds of millions of dollars of taxpayer-funded cleanup liability is the Department of Environmental Protection.
But they need state lawmakers to understand taxpayers will pay the bill for even more new wells abandoned by conventional operators as well as the older ones if they don’t--
-- Close the pre-1985 well bonding exemption;
-- Have real bonding for all active conventional wells that reflect today’s costs for plugging; and
-- Have a DEP that is adequately funded to accomplish their mission.
If you want to protect taxpayers, contact your state House and Senate member on this issue: Click Here to find them.
If you don’t want to protect taxpayers, have $33,000 handy to pay for every new conventional oil and gas well that’s abandoned.
(Written by David Hess, former Secretary of DEP. Comments should be sent to: PaEnviroDigest@gmail.com.)
Reference Links:
-- 2016 DEP Oil & Gas Compliance Report*
-- 2017 DEP Oil & Gas Compliance Report*
-- 2018 DEP Oil & Gas Compliance Report*
-- 2019 DEP Oil & Gas Compliance Report*
-- 2020 DEP Oil & Gas Compliance Report*
-- 2021 DEP Oil & Gas Compliance Report*
-- 2022 DEP Oil & Gas Compliance Report*
-- 256 Conventional Companies Receiving NOVs - 2016-2022
-- 60 Conventional Companies Receiving More Than 10 NOVs A Year
-- DEP’s Oil and Gas Compliance Reporting System (Check compliance records yourself.)*
[*Note: Watch for double entries in DEP’s database. Earlier years are worse than more current ones. Always look for the unique violation number.]
Related Articles - New Abandoned Wells:
-- New Abandoned Wells: 256 Conventional Oil & Gas Companies Issued NOVs For Abandoning Wells Without Plugging Them
-- New Abandoned Wells: 60 Conventional Oil & Gas Companies Issued 10 Or More NOVs For Abandoning Wells Without Plugging Them In Any One Year
Related Articles:
-- Conventional Oil & Gas Drillers Pay Only $46,100 Of The $10,600,000 It Costs DEP To Regulate That Industry; Taxpayers May Be Asked To Pay The Difference
[Posted: February 23, 2022] PA Environment Digest
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