Replies to This Discussion

Permalink Reply by Steve P on August 26, 2022 at 9:08

I should know the answer to this, but are operators now required to properly P&A their wells, once production ends?  Seems like they could be required to post a bond to secure the cost of the State doing it should the company cease to exist or file for bankruptcy.

Twenty or more years ago, we had an old shallow oil well on our land, and about the same time the well ceased producing, the company stopped drilling and operating most of its wells.  I recall the Department of Conservation taking some enforcement action, and the operator agreed with the State on a schedule for properly P&Aing the wells and cleaning up the well sites.  What I don't know is what happens if the operator doesn't actually take those steps.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 26, 2022 at 9:21

There are a number of problems with LA orphan wells.  The first is that operators are allowed to put inactive wells into Status 33, "Shut In, Future Utility" for years on end.  There have been discussions about limiting how long a well can be Status 33 before requirement to plug and abandon.  The second is the industry wide practice of wells being sold to smaller and smaller operators as they decline.  By the time a well is finally not economic, a small company may choose to go bankrupt and walk.  The "plugging fees" that operators are required to pay on all wells are far too little to plug most wells.  The state keeps a running list and P&As some each year.  Unfortunately in many years, more wells are orphaned than plugged by the state.  The number of orphan wells grows each year.  This is one of those situations where public sentiment would be to follow those bankrupt operators to the end of the world to make them pay for plugging costs.  That does not often work out.  The question of plugging cost is also one of pollution and fugitive methane emissions.  In a quickly warming world, it is more important to plug them than to spend years arguing over who should pay.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 26, 2022 at 10:08

Louisiana to plug more than 250 orphaned oil wells with money from Biden's infrastructure law

Ashley White Lafayette Daily Advertiser August 26, 2022

Louisiana was awarded a $25 million grant that will go toward plugging, capping and reclaiming orphaned oil and gas wells in the state.

The money, which was provided to the state through the Bipartisan Infrastructure Law signed by President Joe Biden, will fund the plugging of 250-900 documented wells near low-income communities, according to a Thursday announcement from the U.S. Department of the Interior. Plugging the orphan wells also will provide training and employment opportunities for energy workers.

An orphan well is an oil line that has been abandoned because the resources were tapped dry or the business became too pricey for the owner. Wells are considered orphaned if the government can't figure out who the owner is, if there is no responsive operator or if the operator went out of business. 

“This initial grant funding will be a strong boost to our ongoing efforts to reduce the number of orphaned well sites in our state,” Louisiana Department of Natural Resources Secretary Thomas Harris said in a statement.

“Through cooperative efforts between the state administration and legislators in the past several years, we have found ways to increase the number of wells plugged by Oilfield State Restoration Program annually, but the problem was one that was generations in the making. The IIJA funding helps us take a bigger bite out of the backlog, while also providing opportunities for companies and workers who suffered from the industry downturns.”

There are about 4,500 orphaned wells in Louisana, a number that's exacerbated by downturns in the price of oil and gas prior to 2022, according to state Department of Natural Resources spokesperson Patrick Courreges.

The OSR program receives about $10 million a year and plugs 120 to 200 wells in that time. The department hopes the grand funding will pay for at least double the number of wells plugged by that program, Courreges said.

Most of the well sites that will be targeted with this grant funding will be in north Louisiana because of its large concentration of orphaned wells, Courreges said. More than 3,100 of the state's 4,500 orphaned well sites are in north Louisiana.

The Louisiana Department of Natural Resources opened its Request for Qualification notices Friday calling for qualified contractors to submit proposals for work on the well sites. The grant requires states to obligate 90% of funding to be under contract within 90 days of receiving the money, which will be Oct. 1.

In addition to plugging wells, some of the grant funding will be used to measure and track groundwater and surface water contamination that may happen as a result of an orphaned well, according to the DOI release.

Equipment used to measure methane to help locate other orphaned wells also will be purchased. Abandoned wells can be difficult to find especially if they are located on private property or in the woods.

The state will commission an academic study of methane emissions from oil and gas wells to help predict which wells are most likely to leak methane, according to the release.

Abandoned oil wells emit greenhouse gases into the environment, contaminate water supplies and alter the structure of any life that grows near that spot, making crops uneatable. Plugging wells helps to prevent those issues.

“President Biden’s Bipartisan Infrastructure Law is enabling us to confront long-standing environmental injustices by making a historic investment to plug orphaned wells throughout the country,” U.S. Department of the Interior Secretary Deb Haaland said in a statement.

“At the Department of the Interior, we are working on multiple fronts to clean up these sites as quick as we can by investing in efforts on federal lands and partnering with states and Tribes to leave no community behind. Today’s announcement is exciting progress toward what we will accomplish together through this historic law.”

• ▶ Reply