The Number of Abandoned Oil and Gas Wells Is on The Verge of Exploding. What Happens Now?
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Bobby Wright says the seed of the idea was planted about a year and a half ago when he and his dad, Bob, were out on his grandparents’ ranch in Carter County, Oklahoma. Wright’s grandfather, Troy Lewellen, once grew pecans and raised cattle on the ranch, but at 83, he was retired and wanted to tie up any loose ends in his affairs. And sitting on his property, about a quarter of a mile from his house, were some very loose ends: three old oil wells.
One was still in operation with a pumpjack attached. The other two hadn’t been touched in years. They looked like rusty old pipes sticking out of the ground. A few feet away from one were three large tanks with oil still pooled inside. If any leaked out, it would run down the hill and into a nearby lake. Lewellen wanted the whole mess cleaned up. So he called his grandson and son-in-law, who work in the oil and gas industry helping companies acquire leases and negotiate with landowners.
Lewellen was lucky—the company that owned the wells on his property were still in business. Wright and his father worked with state regulators to get the company to plug the two idled wells with cement and remediate the property. But old wells are everywhere in southern Oklahoma, and Wright and his dad knew that other landowners might not be as lucky. They might have uncapped wells and old equipment on their property, abandoned by companies that went bankrupt long ago. “They have no recourse to have anyone other than the state to come in and clean it up,” Wright said.
In that case, a landowner might be waiting a long time. The state currently has just over 800 wells on its list of plugging projects, according to a spokesperson for the Oklahoma Corporation Commission, the state agency that regulates the oil and gas industry, and more than 12,000 more on its list of “orphaned” wells. (In Oklahoma, that term refers to abandoned wells that could technically be “adopted” and pumped again—but the spokesperson said “many of them” are fated to move over to the state’s plugging list.) In 2019, the state plugged just 138 abandoned wells.
This isn’t just a problem for Oklahoma. There were more than 50,000 wells on state cleanup lists across the country in 2018, and states estimated there were somewhere between 200,000 to 750,000 more abandoned wells that weren’t in their records. If you include wells that are “idle,” meaning they may still have an owner but haven’t produced any oil or gas in years—and are at risk of getting thrust into state hands if their owners go bankrupt—the count reaches around 2.1 million, according to the U.S. Environmental Protection Agency.
When wells are left unsealed, they can become pathways for oil, gas, or briny water to migrate into groundwater and soil. The equipment is a hazard for wildlife, livestock, and unsuspecting humans. But increasing attention is being paid to another risk—an unknown number of unplugged wells leak methane, a powerful greenhouse gas, 86 times more effective at heating up the planet than carbon dioxide over the first 20 years it’s in the atmosphere. At high enough concentrations, methane carries a risk of explosion, and it’s often accompanied by other chemicals that are dangerous to human health, like benzene, a known carcinogen linked to leukemia and low birth weights.
After helping Lewellen, the Wrights became interested in the problem of abandoned wells—which started to look, to them, like an opportunity. Plugging them was something they had the skills and contacts to facilitate, if they could raise the money to do it. It would also be a way for them to give back to their community and the environment after careers working in oil and gas. In April, they filed for nonprofit status. But they weren’t the first. At least two other nonprofits, Native State in Texas and the Well Done Foundation in Montana, both also founded by oil and gas industry insiders, have formed in the past year with the same mission. The Wrights named their organization OAP Fund, short for “Orphaned and Abandoned well Plugging Fund.”
“In hindsight,” Wright said, “maybe we should not have put it as ‘fund.’ That tends to make people think we already have the money.”
Money is at the heart of the abandoned wells problem. The number of wells has already ballooned far beyond what state budgets and manpower can handle, and experts say it’s on the verge of multiplying. “The numbers are staggering,” Greg Rogers, a senior advisor at the financial think tank Carbon Tracker, told Grist. “There’s no war chest at the corporate level or the state level to pay for that.”
There’s interest in bankrolling solutions at the federal level, but it’s unclear whether the money will ever come through. In July, the House of Representatives passed a bill that would provide states with $2 billion over five years to create jobs plugging abandoned wells. Its approval came with almost no Republican support, and the legislation has since stalled in the Senate.
In the meantime, the Wrights and others like them are searching for other funding streams to support their mission—and they’re trying to figure out whether there may still be ways to extract value from the holes themselves.
Curtis Shuck used to be president of an oilfield services company in North Dakota. But it wasn’t until he had left the industry to start his own consulting firm that he got his first glimpse of the abandoned well problem. He was visiting farmers in Toole County, Montana, trying to source grain for the Port of Northern Montana—an inland logistics hub where trains and tractor-trailers exchange goods and machinery—when he learned that they were dealing with hazardous old oil equipment left behind on their land.
“This is not right at any level,” he thought. So last fall, Shuck started the Well Done Foundation with the goal of raising money to plug wells. Knowing some of them were leaking methane, he thought he might be able to fund the projects, at least in part, through the carbon market. That thinking led him to Eric Ripley at the American Carbon Registry.
The American Carbon Registry, or ACR, is a nonprofit that develops standards for carbon offsets and maintains a list of accredited projects. Companies or individuals looking to neutralize their contribution to climate change can purchase credits through the registry, helping to fund projects that reduce emissions, like forests that are managed to store more carbon, or dairies that capture the methane from their manure pits. Ripley, ACR’s director of industrial programs, had already been thinking about abandoned wells before connecting with Shuck. He wasn’t convinced that the potential revenue from carbon credits—which are tied to the amount of methane a project mitigates—would be enough to cover the cost of the project itself. But Shuck’s nonprofit, mission-based model changed that math, since Shuck could raise the rest of the required funding through donations. “The carbon finance piece could just be one leg of a stool to get these projects financed,” Ripley said.
Now ACR is developing a new methodology that will standardize the way abandoned well projects can participate in the registry, enabling the Well Done Foundation, OAP Fund, and others to sell credits through it. Well Done has already plugged three wells in Toole County through a mix of early fundraising success and some out-of-pocket spending by Shuck. But he has ambitions to expand to other states, and thinks the carbon offset market could be a game-changer. “We’re hopeful that by this time next year we’ll be out there doing our thing under a carbon finance program,” Shuck said. “Our vision is to be able to do this at a much larger scale.”
How useful the carbon offset program will be in addressing the scale of the problem is unclear. The cost of plugging an oil or gas well varies, but states report average costs between $3,500 and $80,000 per well. (Wright said the average cost of plugging in Oklahoma is around $25,000.) Shuck’s goal is to raise $30,000 per well in Montana, which includes the cost of remediating the land afterward. These numbers are for mostly older, shallower wells — there’s little data on the cost of plugging modern shale wells, where the holes tend to be deeper and may even cut horizontally under the earth. Based on a small handful of plugging reports for deeper wells in Wyoming, Ohio, and Australia, Carbon Tracker found that costs grew exponentially with well depth.
Wright’s father told Grist he knew of a recent plug job in Oklahoma that ended up costing $800,000. “Each well is kind of a one-off,” Bobby, or the younger Wright said. “You don’t know what’s going to happen down in the hole until you get in it.”
You also don’t know how much methane is coming out of the hole until you measure it—and that’s what will determine the amount of funding Shuck or others might be able to raise through carbon credits. Many projects won’t be eligible, since not all abandoned wells leak methane. Of those that do, many are emitting at such low rates that they wouldn’t generate enough credits to make sense as an offset project. Ripley said the best candidates will be the abandoned wells that researchers call “super emitters.” About 16 percent of leaks account for 98 percent of emissions from abandoned wells, according to one study.
Based on published emissions data and current offset prices, Grist estimates that the credit sales from even the largest emitters may only generate a few thousand dollars. However, Ripley told Grist that based on unpublished field data, ACR believes it’s possible some wells could be worth tens of thousands.
Scientists Grist interviewed for this story agree that it’s possible there are much larger emitters out there that they haven’t discovered yet. Mary Kang, a leading researcher on abandoned wells who is also helping ACR develop its offset methodology, told Grist that there are only about 600 published measurements of methane from abandoned wells in the U.S. and Canada. Considering there are millions of wells nationwide, “You can see how small that sample is and how likely it is that we might be missing some information,” she said. There are not yet any published measurements from Texas or Kansas, states that are home to a large percentage of the nation’s abandoned wells.
A carbon offset program could create a market-based incentive to find the wells that are the worst emitters and plug them up. It could also prove to be a boon for science, helping to scale up monitoring of abandoned wells and improve greenhouse gas emissions models. And despite its limited application, there’s hope that it might also help stanch the tide of new abandoned wells ending up on state plugging lists to begin with.
Originally, Brett Bennett’s plan for Native State, the Texas-based nonprofit, was to create a “Drill One Plug One” campaign. The idea was that companies that were actively drilling in a community could donate to plug abandoned wells in that same community, as a way to give back. Bennett currently works as vice president of an oil and gas operating company. In his mind, abandoned wells should not be the legacy that the industry leaves behind. He wants it to lead on fixing the problem. “One of our tag lines is, ‘Texas has been good to us, let’s return the favor,’” he said.
But just when he was starting to engage with companies about Drill One Plug One, COVID-19 hit. The downturn in the industry made that model unviable, at least for now. Bennett is still optimistic that it could work, but in the meantime he’s also worried about the problem getting worse. He said he’s watched as, even before the pandemic, the state plugging program essentially treaded water, plugging wells at about the same rate new ones were being added to the list, and never chipping away at the total.
Technically, oil and gas companies are required by state and federal law to plug their own wells after they’re done pumping them. Thousands of the uncapped wells sitting around predate those rules, and the number continues to grow due to several major flaws in present-day regulations. When a company applies for a permit to operate a well, state and federal laws require that it put up a deposit, or bond, to ensure there’s money to eventually plug the hole and remediate the land. But the companies pay so little upfront that the bonds don’t incentivize cleanup or come close to covering the costs of plugging. For many operators, it’s easier to let their wells sit idle, leaving open the distant possibility that they might decide to pump them again, or sell them to another operator, than to pony up the rest of the cash to plug them. Rules vary, but many states allow operators to keep their wells idle without plugging them for years.
One of two things can happen next: The company might go bankrupt. Or the company might eventually have more “idle” wells than producing ones, making it basically impossible to earn enough revenue to cover the costs of plugging. Either way, the state ends up on the hook. In a recent overview of the issue, Carbon Tracker found that reduced demand for oil and gas due to the COVID-19 pandemic has led companies to temporarily idle tens of thousands of wells. They predict that because the transition to cleaner sources of energy is also speeding up, many of them will never be reactivated. The number of abandoned wells could be on the verge of exploding.
Perhaps the most obvious regulatory solution, and one that environmental advocates are pushing, is for governments to increase bond requirements. However, that would likely only apply to new leases. Daniel Raimi, a senior research associate at the nonprofit think tank Resources for the Future, said it’s possible new bonding rules could be applied retroactively, but that efforts to do so could get tied up in court.
As far as preventing the explosion of new abandoned wells that Carbon Tracker warned about, Raimi said he was interested in an approach California is testing to get companies to plug more of their idled wells. In 2016, the state adopted new regulations requiring operators either to pay an annual fee for each of its idled wells or instead to adhere to a management plan requiring them to plug a certain percentage of them each year. During the first year the rules were in place, about 7 percent of the state’s idled wells were plugged, and 76 operators opted to follow management plans, out of more than 1,000 operators with idled wells.
Bennett noted that oil companies are starting to make commitments to reduce their methane emissions to net-zero, citing Occidental Petroleum’s recent pledge to get to net-zero, which will create more of an incentive for firms to get some of these idled, methane-emitting wells off their books. He’s also optimistic that the carbon market could help stem the flow of wells falling into state hands.
Ripley told Grist that ACR’s offset standards will primarily target older wells that have already become a government liability. But he said it’s also considering ways to include some subset of idle wells that still have a solvent operator associated with them. This option would be reserved for those wells that have been idle for years, and operators would likely have to transfer ownership to an entity like Native State that would plug them right away.
“I fully expect to get some degree of criticism for this,” Ripley said. That’s because the potential standards impinge on a slippery rule for carbon offsets called additionality: When you purchase a carbon credit, the idea is that you’re making up for your own emissions by reducing them somewhere they wouldn’t otherwise be reduced. But if the project you’re paying for is something that would have happened anyway—say, because the government says it’s supposed to—then no new reduction is being made.
But to Ripley, governments are falling woefully short, demonstrating that they’re simply not requiring these wells to be plugged in a timely manner, and leaving them to potentially emit methane for decades. “I think people have to look at this realistically and say, ‘Do you want to achieve methane mitigation, or do you want the status quo?’ This is where the environmental community needs to ask itself a question about, ‘Do we want the perfect to be the enemy of the good?’”
The rules and standards for ACR’s new carbon offset program for abandoned wells will go through a public comment period, followed by a peer review by academic and industry experts, before anyone can sign on. Ripley expects it to be ready by next June.
For now, Bennett and the Wrights are exploring any and every potential solution for the wells. Both spoke about the possibility of repurposing some wells to tap into geothermal energy, the latent heat beneath the earth’s surface, to generate electricity. Bennett said there may also be a way to turn wells into energy storage systems, which will be needed to store excess solar and wind energy that can then be fed back into the grid when the sun isn’t shining and the wind isn’t blowing. Some companies are developing novel ways to store energy by pumping water underground at high pressure, and then releasing it back to the surface to spin a turbine and generate electricity later.
While the technology to retrofit abandoned wells for the energy transition may be years away, groups like Native State and OAP Fund could work with landowners and oil companies to help researchers and start-ups gain access to abandoned and idled wells for demonstration projects. Amy Townsend-Small, an assistant professor at the University of Cincinnati who studies abandoned wells told Grist that access is a major barrier for scientists to learn more about them. And there’s still so much we need to learn about abandoned wells that could help inform solutions—like how many there are, a better understanding of the risks they pose, how much methane is coming out of them, and how effective plugging them with cement actually is.
For Bobby Wright, that’s part of what drives him to work on this problem. “Not just anybody’s going to be able to walk in and know how to go about doing what we and the Well Done Foundation and Native State are trying to do,” he said. “It takes people that are within this industry, that have an understanding of not just the technical aspects of it, but of how the industry works, to get it done.”
It’s unclear how much of a dent groups like OAP Fund will be able to make on the abandoned wells problem, but one thing is clear: If they do manage to raise enough money to get started, there’s enough work to last a lifetime.
“The scale of this problem is what I think doesn’t get translated real well sometimes—people just can’t really wrap their head around it,” Wright said. “Even if all of us were doing 100 or 200 or 300 or 500 wells a year, we’re still not gonna…you know, my grandkids could be doing this.”