Saturday, August 20, 2022

Climate Wire: New Federal Climate, Energy Law Includes New $700 Million Grant Program To Mitigate Methane Emissions From Conventional Oil & Gas Wells

August 19, Climate Wire reported the new federal Climate, Energy and Healthcare bill includes a $700 million grant program to mitigate methane emissions from conventional oil and gas wells administered by the U.S. Environmental Protection Agency.

This funding is in addition to the federal well plugging program established in the federal Bipartisan Infrastructure Law, which is expected to bring Pennsylvania up to $395 million for conventional oil and gas well plugging over the next 15 years.

The new EPA programs is based on one sentence in the new federal law in Section 136--

“Incentives for Methane Mitigation From Conventional Wells.-- In addition to amounts otherwise available, there is appropriated to the Administrator for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $700,000,000, to remain available until September 30, 2028, for activities described in paragraphs (1) through (4) of subsection (a) at marginal conventional wells.”

Climate Wire speculated the provision was added to benefit Diversified Energy Company which owns more conventional oil and gas wells than any other U.S. company.

Companies like EQT drilling have been accused of off-loading their conventional well plugging liabilities to Diversified rather than plug the wells themselves.  Read more here.

A report in April by the Ohio River Valley Institute found Diversified Energy lacks the financial resources to plug the oil and gas wells it owns, including 22,507 in Pennsylvania. Read more here.

In March 2019, the Department of Environmental Protection reached a settlement with Diversified Energy and Alliance Petroleum to hopefully ensure the plugging of over 1,400 conventional oil and gas wells.  Read more here.

The companies also agreed to provide an additional $20,000 to $30,000 in bonding for each new abandoned or nonproducing conventional oil and gas well they acquired in the future. Read more here.

New Abandon Wells

Abandoning oil and gas wells is a pervasive practice in conventional oil and gas drilling. Between 2016 and 2021, DEP issued 4,270 notices of violations for abandoning wells without plugging them. [Read more here]  

In the first half of 2022, DEP issued 159 NOVs to conventional drillers for abandoning wells [Read more here].  

State taxpayers are now on the hook for over $5 billion in conventional oil and gas well plugging costs. [Read more here.] 

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 state 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 DEP Deputy Secretary 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.

On July 30, Gov. Wolf directed the Department of Environmental Protection to conduct an evaluation of how it regulates conventional oil and gas wells to prevent new abandoned wells, tighten review of permit transfers, review compliance with environmental safeguards and make recommendations for changes and actions, including criminal sanctions.  Read more here.

The evaluation is due to the Governor on September 1, but it hasn’t been decided whether it and the recommendations it contains will be a public document.  Read more here.

Related Articles:

-- Climate Wire: Manchin-Linked Company Could Reap Millions From New Climate Law

-- New Federal Climate, Energy, Healthcare Bill Signed Into Law; PA Groups React  [PaEN]

Related Articles - New Abandoned Wells:

-- DEP: Conventional Oil & Gas Driller Compliance Review Will Go Back At Least 5 Years; Whether It Will Be Public Document Not Decided  [8.19.22]

-- Gov. Wolf Announces Evaluation Of How DEP Regulates Conventional Oil & Gas Drilling & The Industry’s Compliance With Environmental Safeguards [7.29.22]

-- New Ohio River Valley Institute Report Shows Conventional Oil & Gas Well Owner Diversified Energy Lacks Resources To Plug Wells, Including 22,507 Wells In PA

-- DEP Reaches Settlement On Diversified Gas & Oil Abandoned Conventional Wells

-- Post-Gazette - Anya Litvak & Laura Legere: Too Big To Fail: How One Oil & Gas Well Company Can Leave A Mark On Pennsylvania

-- Post-Gazette - Anya Litvak & Laura Legere: Diversified Gas Expects To Push Well Plugging Liabilities Decades Into The Future

-- Post-Gazette - Anya Litvak: Lawsuit Alleges Diversified And EQT Played ‘Hot Potato’ With Abandoned Oil & Gas Well Responsibility

-- Bloomberg: Diversified Energy -  An Empire Of Dying Oil & Gas Wells

[Posted: August 20, 2022]  PA Environment Digest

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