Tuesday, July 19, 2022

DEP Concerned About Impact Of New Law Blocking Conventional Oil & Gas Well Bonding On New Federal Well Plugging Funds, Regulating Waste Injection Wells

On July 19, Joe Adams, Acting Executive Deputy Secretary For Programs, told the
DEP Citizens Advisory Council “certainly there are concerns” about how the new law blocking increases in conventional oil and gas well bonding will impact the funding Pennsylvania is in line to receive under the new federal Bipartisan Infrastructure Law to plug abandoned conventional oil and gas wells.

Kurt Klapkowski, Acting Deputy for Oil and Gas Management, said the new state law may also have an impact on whether DEP can meet federal requirements for regulating oil and gas drilling wastewater injection wells.

On July 18, Gov. Wolf let House Bill 2644 (Causer-R-Cameron) become law without his signature.  It is now Act 96.

The bill blocks any increase in conventional oil and gas well plugging bonds for 10 years, continues exempting pre-1985 wells (which is most of the 100,500 active conventional wells) from any bonding leaving taxpayers liable for $5.1 billion in cleanup costs.  Read more here.

A spokesperson for Gov. Wolf’s office told the Pittsburgh Post-Gazette-- “The [Wolf] administration is currently exploring the next steps to ensure the [conventional oil & gas] industry is held accountable in order to protect the environment and that we don't lose out on millions of dollars in federal funding for well plugging.”   Read more here.

Federal Funding

In response to questions from John Walliser, PA Environmental Council, Acting Executive Deputy Secretary for Programs Joe Adams told the Council-- “Certainly there are concerns on our end related to how we can integrate the requirements that are contained within the [new state] law with the requirements that are set forth by the [U.S.] Department of the Interior and the federal government for actually receiving the [conventional oil and gas well plugging] grant money.”

Pennsylvania may receive up to $395 million from the Bipartisan Infrastructure Law over the next 15 years to plug oil and gas wells abandoned by conventional oil and gas drillers in the state.

About $20 million of that funding would be available only if Pennsylvania meets federal requirements to adopt measures to prevent oil and gas drillers from abandoning more wells.

DEP records show conventional oil and gas companies were issued over 4,270 notices of violation for abandoning oil and gas wells without plugging them between 2016 and 2021.  Abandoning wells is pervasive in the industry.  Read more here.

During the second quarter, DEP’s Oil and Gas Compliance System reports conventional oil and gas drillers were issued 82 notices of violation and unconventional shale gas drillers 21 NOVs for abandoning oil and gas wells without plugging them for a total of 103-- 20 percent more than in the first quarter.   Read more here.

Kurt Klapkowski, Acting Deputy for Oil and Gas Management, explained to the Council the federal language says to qualify for the funding states need to take steps to reduce new well abandonments through “financial assurance reform, alternate funding mechanisms for orphan well programs and reforms to programs relating to well transfer for temporary abandonment.”

“I think that there are still options available to the Commonwealth to make improvements to our programs that don't necessarily specifically relate to increases in bonding amounts,” said Klapkowski. 

“That's certainly, I think the most straightforward pathway to qualifying for that grant but I do believe that there are alternative pathways up there and it really is what it's kind of depend upon is what guidance we get from the [U.S.] Department of the Interior about [how] states qualify for and apply for these grants,” said Klapkowski.

“I'm not giving up hope. My attitude about the Infrastructure Act is I want to make sure Pennsylvania gets everything we possibly can out of this Act.

“I think we all recognize that the burdens of the work on an abandoned [conventional] well plugging in the Commonwealth Pennsylvania far exceeds even the total funding available under the Infrastructure Act nationally for the state and federal tribal programs combined. 

“So, we're working very aggressively to try to ensure that Pennsylvania qualifies for the maximum amount of funding under this law and I think this is certainly an area where we're gonna try to be creative in the wake of this [new] legislation.

“They have taken one tool out of our toolbox, but they haven't eliminated all of the tools,” Klapkowski said.

In an April presentation to DEP’s Oil and Gas Technical Advisory Board, Klapkowski said there is also a provision in the Bipartisan Infrastructure Law that prohibits the rollback of any enhancements made to plugging, bonding and financial assistance requirements to prevent new abandoned oil and gas well for the full 15 years of the program.  Read more here.

Injection Wells

Klapkowski, who was at the Council meeting to give a presentation on carbon capture and sequestration, said DEP is evaluating what it would take for the state to meet federal requirements to regulate injection wells under the U.S. EPA.  Read more here.

Injection wells are a key facility needed for the permanent storage of carbon dioxide in geologic formations.

Klapkowski said a critical federal requirement is meeting the financial assurance and bonding requirements for injection wells, which are defined as conventional wells and would come under the new law’s cap on bonding amounts.

“There are significant financial assurance requirements in the federal regulations for injection control wells that are significantly above the $2,500 and the $25,000 blanket fund now [in] the cap of our authority in Act 96,” said Klapkowski. 

“So I think that's a discussion that's going to be very interesting when we start to move down that process with regard to these wells for program authorization [from EPA].”

“Maybe we could look at the Solid Waste Management act as a possibility. I made that analogy earlier to the waste disposal facilities, and maybe we ought to regulate a class six or a class two [injection] well under the Solid Waste Management Act that would be something separate from what's authorized under the Oil and Gas Act,” said Klapkowski.

Rulemaking Petitions

House Bill 2644 was introduced to head off  rulemaking petitions accepted for study by the Environmental Quality Board in November to increase the well plugging bonding amounts for both conventional oil and gas and unconventional shale gas drillers to what it now costs taxpayers to plug a well when operators walk away from their obligations.  Read more here

Klapkowski said, “The department and the Environmental Quality Board can only exercise the authority that we are granted by the Legislature and this is a pretty black and white removal of that authority. 

“So, we are gonna have to take that back and take that into consideration with regard to the conventional oil and gas well bonding petition.”

“We are working with our legal counsel to try to figure out what this means in terms of our regulatory authority for the conventional bonding petition.”

“I will note that the legislation basically left intact the Act 13 requirements and Section 3225 relating to unconventional gas wells and so the department and EQB retained that authority [to increase bonding amounts] even after the passage of Act 96 of 2022,” said Klapkowski.

For more information and available handouts, visit the DEP Citizens Advisory Council webpage. Questions should be directed to Keith Salador, Executive Director, ksalador@pa.gov  or 717-787-8171.


-- Post-Gazette - Laura Legere: As PA Faces ‘Looming Crisis’ Of New Abandoned Oil & Gas Wells, State Law Will Freeze Well Bonding Rates For A Decade   

-- Capital & Main - Audrey Carleton: PA Bill Jeopardizing Millions In Oil Well Cleanup Funding To Be Passed By Governor, Say Sources

Related Articles This Week:

-- Gov. Wolf, Senate, House Republicans Again Fail To Hold Conventional Oil & Gas Drillers Accountable For Protecting The Environment, Taxpayers On Hook For Billions [PaEN]

-- PA Environmental Council: Without A Veto Of HB 2644, PA's Abandoned Oil & Gas Well Problem May Be All But Permanent

-- Guest Essay: Gov. Wolf, Don’t Give Money To The Oil Industry - By Rev. Mitchell Hescox & Kim Anderson, Evangelical Environmental Network [PaEN]

Related Articles - New Abandoned Conventional Wells:

-- New Abandoned Wells: DEP Records Show Abandoning Oil & Gas Wells Without Plugging Them Is Pervasive In Conventional Drilling Industry; Who Is Protecting Taxpayers?  [2.23.22]

-- 12 Unconventional Shale Gas Drillers Issued DEP Notices Of Violation For Abandoning Wells Without Plugging Them At 35 Well Pads In 17 Counties [3.2.22]

-- DEP Issues 20% More NOVs To Oil & Gas Well Drillers For Abandoning Wells Without Plugging Them In 2nd Quarter [PaEN]

-- DEP Federal ‘Orphan’ Well Plugging List Includes 7,300 Active Conventional Wells With Identified Owners; DEP Says Cost Recovery A Priority  [5.23.22]

PA Environment Digest:

-- Links To Conventional Oil & Gas Drilling Articles

[Posted: July 19, 2022]  PA Environment Digest

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