Failed Oil Well Plugs Are Silent Polluters That No One Watches

By Bobby Magill and Drew Hutchinson  March 13, 2024  bloomberglaw.com

Link to full article: https://news.bloomberglaw.com/privacy-and-data-security/failed-oil-...

Some states using federal infrastructure dollars to plug abandoned wells have increased the amount operators must pay upfront to cover future plugging costs—and others have instituted fees for the owners of idle wells that sit unplugged and untouched.

Colorado has some of the nation’s most stringent regulations around plugging orphaned wells, the result of 2022 rulemaking intended to raise about $10 million annually to clean up those sites. Those dollars fund initial plugging, but Colorado doesn’t have a framework for following up in the years ahead.

In the big picture, the 50,000 wells that have been plugged to date far outreach the “handful” of plugged wells that have failed, especially since the average plugged well emits little methane, said Julie Murphy, director of the Colorado Energy and Carbon Management Commission. Still, it’s an important issue, she said.

“We want to continue to be proactive on this, " she said.

New Mexico, the second-largest oil producer behind Texas, is attempting to update its regulations. It already requires well operators to document the quality of concrete they use in plugging. There’s also a post-plugging inspection, said Dylan Fuge, director of New Mexico’s Oil Conservation Division.

Inspectors haven’t seen issues with the more recently plugged wells, Fuge said. But New Mexico used state funds to look at older well plugs—and determined about 10% of them might need to be revisited, he said. A more robust review will be conducted as more funds become available, Fuge said.

The Permian Basin, which straddles the New Mexico-Texas line, is the source of nearly half of all the oil produced in the US and about 20% of all US natural gas. That’s in part thanks to a fracking boom that has transformed a vast swath of the desert there into an industrial zone.

Stephanie Garcia Richard, New Mexico’s Commissioner of Public Lands, said the region was “at the looming edge” of the boom, suggesting the state could see drilling activity decline.

At the same time, the groundwater pumping could jeopardize the integrity of existing plugged wells, she said. “This infrastructure is right where people live,” Garcia Richard said.

While the gap for holding oil and gas companies accountable narrows as the wider public embraces clean energy, concerns over failing plugs still aren’t on most officials’ radars, said Kyle Tisdel, senior attorney and Climate and Energy Program director at the Western Environmental Law Center.

Without a regulatory framework for monitoring plugged wells, the burden will fall to taxpayers, he said. “We are so far away from the state or federal government internalizing that reality,” Tisdel said.

States don’t always have the funding to inspect plugging operations, said Luke Plants, CEO of Pennsylvania-based well plugging company Plants and Goodwin, Inc. Before the 2021 infrastructure law, state inspectors failed to show up for about 25% of the well-plugging jobs his company completed in the Appalachian Mountains region, he said.

“Sometimes they never come out and you’re just signing an affidavit at the end of it saying you did things properly,” Plants said.

The infrastructure law changed that. About 10% of the funding states received can be used for administrative purposes, and now all federally funded plugging jobs are “very well-watched, inspected and regulated,” Plants said.

No Records Kept

The Texas Railroad Commission, the state’s oil and gas regulator, doesn’t keep records of leaking well plugs or even reports of them.

The commission recognizes the potential ground-shifting impact of fracking operations, and it asks landowners to notify staff if they see or smell leaks from old oil wells nearby, said Patty Ramon, another commission spokeswoman. If such a leak is reported, inspectors are dispatched to address the issue.

But Ramon said the commission’s seen “little evidence of a widespread occurrence of previously plugged wells leaking due to failing plug jobs.”

The Antina ranch manager and owner dispute that. Watt and Stogner sent multiple emails to the commission in 2022 and 2023 about the growing number of failed plugged wells on the 22,000-acre ranch.

“Given what has happened on the Antina Ranch and what’s currently happening with the blowout south of 329 please make sure the full regulatory process starts to IMMEDIATELY address the safety hazard these wellbores present,” Stogner wrote in one January 2022 note to the commission, referring to a well blowout near a Texas highway.

Watt said she and her team have reported “every single one of these problems” to the commission.

“They won’t make anyone clean anything up,” Watt said. “In their book, a plugged well cannot fail.”

R.J. DeSilva, another commission spokesman, said no wells on the Antina Ranch are known to violate state oil and gas regulations, except for one leaking oil tank.

Ramon said that Watt has been antagonistic toward the commission and noted she has been “in touch” with Chevron USA, whom Watt blames for the failure of many plugged wells on her property.

In Texas, as in many states, landowners hold the rights to the surface land, but the minerals underground are often owned by someone else. Chevron acquired the old oil field beneath Watt’s land when the company purchased Gulf Oil in 1984.

Watt sued Chevron in December 2022, seeking unspecified monetary damages and a court order for Chevron to plug or re-plug all its leaking wells on her property. A 2021 blowout of a previously plugged well took the company more than 12 weeks to control, according to the lawsuit.

Chevron has denied Watt’s allegations or that many of the wells she found were theirs. The company accepted responsibility for three wells on her ranch but also accused her of excavating plugged wells on her own property without a permit and threatening Chevron employees on her land.

“We have continuously tried to address Ms. Watt’s concerns, but she and her team have made the process difficult,” Chevron spokeswoman Deena McMullen said, adding that the company has followed standard state and industry procedure in addressing plugged wells on the Antina Ranch.

A trial is scheduled for December.

‘Blowouts’ in Old Fields

More than 5 billion barrels of wastewater used in fracking were injected in the Permian Basin in 2022, up from 900 million in 2010, according to the Journal of Petroleum Technology.

Research, including a study by scientists at Southern Methodist University, suggests that wastewater injection is forcing brine and other fluids into derelict wells and contributing to wells blowing out—a practice that also causes earthquakes.

“This wastewater is corrosive because of high salt concentrations,” Townsend-Small, the University of Cincinnati scientist, said.

In the Permian, there are “70-year-old casings, poor cement jobs, or no cement jobs at all—and then you add all this added pressure from the produced water injection around it, and they start popping like pimples,” said Hawk Dunlap, an oil field services specialist working with Stogner.

It’s also critical for plugging efforts to consider the wider implications in a region. Plugging just one or a few orphaned wells in an oil and gas field can increase gas leaks from unplugged wells nearby—including orphaned wells that haven’t been discovered yet—if pluggers don’t adequately assess the geology and state of all the wells in the field, said Arthur, the Tulsa consultant.

Purvis, the Forth Worth adviser, said the oil and gas industry needs to “come to grips with the fact that our dead wells become potential sources of pollution for the long term,” even if doing so isn’t profitable.

New technologies, such as methane-sensing satellites, will help states monitor leaks from plugged wells cheaply because they won’t have to send technicians to inspect the wells in person, said Daniel Raimi, a fellow at Resources for the Future and a lecturer at the Gerald R. Ford School of Public Policy at the University of Michigan.

If satellites prove too expensive, states will have to decide which plugged wells might pose the greatest risk, said Raimi, who, along with Kang and Arthur, serves on the American Association for the Advancement of Science’s working group on orphaned wells.

Kang’s push to monitor plugged wells also comes from all the unknowns around oil and gas wells after they stop producing. That means not only assessing how often plugs fail and what exactly happens to groundwater and other resources when they do, but also how much it benefits the earth to plug wells in the first place.

“We just can’t quantify the benefits,” Kang said. “Not that there aren’t benefits—we know there are benefits—we just don’t have the data.”

But on the Antina Ranch, evidence of what happens when oil and gas wells are left to rot—leaking oil, bubbling methane and other pollution from ignored orphaned wells and poorly plugged wells—is everywhere.

“What I’ve learned in this is wells are forever, and we can’t just drill them, plug them, and walk away,” Stogner said. “We need to be careful and conscientious of where we’re putting holes in the ground.”