State's $100,000+ cost to plug orphan wells 'outrageously enormous'

(The Center Square) — Pennsylvania is pockmarked with orphaned and abandoned oil and gas wells. Drilled decades ago, many of them pre-date the first World War, and some pose hazards to people and nature alike.

State and federal funding has grown in recent years to find and plug them, but taking care of the problem is no simple task.

“Pennsylvania has a long and proud history of energy production,” Sen. Dan Laughlin, R-Erie, said during a Thursday Republican Policy Committee hearing on abandoned wells. “But we have inherited a significant environmental challenge. It is estimated that there are tens of thousands of orphaned and abandoned wells scattered across the state.”

Estimates vary dramatically because precious few records remain of wells from the 1940s or earlier. National estimates place abandoned wells at 3 million, and in Pennsylvania, best guesses range from 200,000 to 750,000. They’re a concern because it’s anyone’s guess which are a problem and which are inert.

“Many of them are unmarked, undocumented, and leaking harmful gasses like methane into our atmosphere,” Laughlin said. “Addressing this issue is not just a matter of environmental stewardship, but a public safety necessity.”

Pennsylvania calls a well abandoned when it’s been dormant for 12 months; an orphan well is one that was abandoned before 1985 and doesn't have a traceable owner. The Department of Environmental Protection counts about 30,000 orphan wells across the state, many of them forming an arc from the southwest border up to McKean County in the northern tier.

Since the formal creation of an orphan well-plugging program in 1989, DEP has plugged about 3,500 wells, said Kurt Klapkowski, DEP Acting Deputy Secretary in the Office of Oil and Gas Management. Since Gov. Josh Shapiro took office, DEP has plugged 255 wells, a dramatic increase over recent years.

Funding, too, has ramped up. Boosted by federal funds sent out through the Department of the Interior, the coming years will bring about $400 million to Pennsylvania.

“It’s 10 times the amount of funding we've had available for the last 35 years to do this work, it’s a monumental opportunity to address the backlog of abandoned oil and gas wells,” Klapkowksi said.

But costs have been high so far. A rush to get contracts out the door – driven by federal rules – has meant plugging a well is much more expensive than when a private company does it on its own.

Abandoned wells vary — it’s difficult to take a standard approach given their age, location (often in rough country and away from roads), and lack of information. Klapkowski noted that DEP is averaging $105,000 per well.

That number didn’t sit right with some conventional well operators.

“That is just outrageously enormous for the cost to plug a typical orphan well,” said Arthur Stewart, president of Cameron Energy Company and secretary of the Pennsylvania Grade Crude Oil Coalition. “They spent $22 million over the past several years to plug 3,500 wells. That works out to be about $6,285 per well, and that is much more in line with what I’m familiar with.”

Stewart said he’s plugged hundreds of conventional wells and noted the DEP average plugging costs are around $17,000. He argued for DEP to cut red tape, break out plugging contracts into smaller packages so smaller pluggers could bid on contracts, and add more flexibility to the program. Onerous rules for strict compliance that require pluggers to use filter socks and gravel roads that go unused drive up costs, he said.

Another issue is using funds to plug wells instead of for “tangents” like finding new ones.

“We don’t need to find another 200,000 wells when the federal money’s not going to come close to plugging the 30,000 wells that we know about?” Stewart said. “DEP doesn't need to spend money finding more orphan wells, they’re out there in abundance. Today is not the day to waste money cataloging more wells.”

Bryce Yeager, vice president for the eastern U.S. for BioSqueeze, argued Pennsylvania needs to embrace new technologies for plugging, modernize existing regulations, and improve training of DEP staff.

Despite the hurdles, officials were upbeat about the future.

“There are a lot of resources out there, especially our conventional operators who have plugging assets of their own but didn’t come into the contracting process for whatever reason — I really think we’ll see a real surge in well plugging over the next years,” Klapkowski said.

Legislators focused on the need to expedite the process and cut down unnecessary costs.

“I think everybody’s goal in this room today is to try to get more of these wells plugged in a cost-efficient manner,” Laughlin said. “We need to put money into the well hole itself instead of red tape.”