Our current best estimates for the number of abandoned and orphaned gas wells fall far below the true inventory, yet the stakes for the public are high: an improved understanding of these wells could help create jobs, reduce methane emissions, and improve public health. New research from RFF Fellow Daniel Raimi and Columbia University coauthors describes how a federal well plugging effort can help achieve these goals, particularly if policymakers have access to the information they need.
In many ways, the modern oil and gas industry is built on precision. Engineers design, build, and operate mind-bogglingly complex structures that can survive harsh temperature extremes or sit stably atop swelling seas, seeking out a needle of oil in a haystack of earth.
But it wasn’t always thus.
In the early days of the oil industry—starting around 1860—wells were drilled by brute force through pounding a steel rod into the ground over and over, creeping slowly into the unknown subsurface. And although many think of Texas as the birthplace of the US oil industry, most of those steel rods were pounding out earth in the hilly forests of Pennsylvania, New York, Ohio, and West Virginia. Around the turn of the twentieth century—as California, Texas, and Oklahoma began to emerge as oil powerhouses in the United States—thousands of wells were still being drilled across the lesser-known oil regions of Arkansas, Kansas, Wyoming, and elsewhere.
And who was keeping track of all those holes? The owners, yes, but rarely anyone else, including the government. In most cases, public oversight and regulation of these wells ranged somewhere between minimal to nonexistent.
Eventually, all oil wells stop producing, and some—the dry holes—never yield any black gold in the first place. When the owners walk away, as they often would without consequence in the early days of the industry, those wells become “orphaned” and are wards of the state. (I like to think of them as Little Oily Orphan Annies.) Because no one has been keeping track of these wells, hundreds of thousands—perhaps more than a million—have become orphaned over the years.
State governments—the primary regulators of oil and gas development in the United States—reported an inventory of roughly 57,000 orphaned wells as of 2018. This number represents the orphans that states have identified, catalogued, and evaluated for public health and environmental risks. But that number leaves out the hundreds of thousands of additional undocumented orphaned wells that remain.
These orphaned wells aren’t as benign as their freckled, red-headed counterpart. Many emit methane, a powerful greenhouse gas; some contribute to groundwater contamination; and some can pose trip or fall hazards for hikers or hunters in the hills of Pennsylvania and elsewhere.
Perhaps the most important thing to know about orphaned wells is that we know very little about them. Because most remain undocumented, we simply don’t know how much methane they’re emitting, how many drinking water sources they might be contaminating, and what other hazards they may pose. The famed statement from Socrates—“I know that I know nothing”—encapsulates the problem confronted by researchers and policymakers who focus their attention on orphaned wells.
An Undocumented Opportunity?
The oil and gas industry—and, let’s be honest, pretty much everyone else—had a rough 2020. Producers were facing challenges prior to the onset of COVID-19, but the oil bust of 2020 greatly exacerbated those challenges, leading 30 oil and gas companies to declare bankruptcy in the first three quarters of the year. Roughly 100,000 jobs have been lost just in the “upstream” part of the industry (Figure 1), which encompasses the commercial exploration for and production of hydrocarbons.
Figure 1. US Upstream Oil and Gas Employment
Data source: US Bureau of Labor Statistics. “Support activities for mining” mostly consists of workers who provide support services for oil and gas extraction, such as well drilling, hydraulic fracturing, and other services
As policymakers look for options that can provide economic relief to struggling families, several proposals have emerged to put these oil and gas workers back on the job. But instead of drilling new wells, these proposals have focused mostly on plugging orphaned wells, sealing them with cement to eliminate methane emissions and other hazards, and restoring the well site by cleaning up any polluted soil and remaining equipment. Broadly speaking, the skills required to plug wells are similar to those of the existing oil and gas workforce, making this option an appealing match.
In the US Congress, the 2020 Moving Forward Act, which passed the House but was not put to a vote in the Senate, earmarked $400 million for plugging wells. Colorado Senator Michael Bennet (D-CO) proposed a bill to update financial assurance requirements for oil and gas development on federal lands and allocate $1.25 billion for plugging and reclaiming well sites across the United States. President Joe Biden, in his “Build Back Better” effort, has proposed creating “250,000 jobs plugging abandoned oil and natural gas wells and reclaiming abandoned coal, hardrock, and uranium mines.”
Some governments already have been using stimulus funding to plug wells and employ oil and gas workers. North Dakota devoted roughly $50 million from the Coronavirus Aid, Relief, and Economic Security Act to this purpose in 2020. In Canada, the federal government has allocated $1.3 billion (C$1.7 billion) to clean up orphaned and abandoned wells, primarily in the province of Alberta.
In a recently published report, I estimate with Columbia University coauthors Jason Bordoff and Neelesh Nerurkar that a federal program to address the known inventory of 57,000 orphaned wells could plausibly cost between $1.4 billion and $2.7 billion and create roughly 13,000 job-years. Intuitively, scaling the program to plug larger numbers of wells would employ more people, reduce more pollution, and cost more money. We estimate that plugging 500,000 wells could create more than 120,000 job-years, though practical challenges likely apply at this scale of effort, particularly the capacity for state regulators to oversee such a large effort.
Getting the Hole Job Done
If public dollars will be spent on plugging orphaned oil and gas wells, how can the government get the best bang for its buck? The policymaking process would be greatly enhanced by a better understanding of the benefits and costs of cleaning up these sites.
First, we need to develop a better understanding of the environmental and health benefits of plugging wells. Very little work has been done on this topic, particularly for the undocumented examples that make up the bulk of orphaned wells. Several recent studies have measured methane emissions from these sites, but more extensive measurement would help paint a better picture of which wells are most likely to be most leaky. Even less is known about the extent of groundwater contamination, health risks, and other hazards of orphaned wells.
Second, we need to know how much it will cost to plug these wells. While some can be plugged for just a few thousand dollars, others are far more expensive—in some cases costing hundreds of thousands of dollars. Work currently underway at Resources for the Future (RFF) by me, Alan Krupnick, Jhih-Shyang Shih, and Alexandra Thompson seeks to answer this question by analyzing data on the costs of plugging thousands of wells across five US states. Our early analysis shows that—unsurprisingly—deeper wells are more expensive to plug. But we’d also like to quantify how other factors shape plugging costs, such as the proximity to population centers, water bodies, and coal seams, along with other location-specific information.
Figure 2 highlights the wide variation in costs associated with plugging wells. To simply plug a well (Figure 2A), the median cost in our data set is about $14,000, but costs increase with well depth, and a few wells cost more than $1 million each to plug. (Note that all axes in Figure 2 are logarithmic in scale.) To plug a well and remediate the surface (Figure 2B), the median cost is $48,000—but again, some wells can be much more costly.
Figure 2: Costs of Well Plugging
Data sources: State regulator data from Kansas, Montana, Pennsylvania, and Texas. Private operator data from Texas and New Mexico
With these two key pieces of information—benefits and costs—policymakers can reach informed decisions about how much to spend while working down the backlog of undocumented orphaned wells. The benefits of plugging certain wells (e.g., where methane emissions or risks to groundwater are high) likely will outweigh the costs, especially if those costs are in the five-figure range. But what about a well where methane emissions are low or zero? It may not make sense to spend $1 million to plug that well, but it might be sensible if the cost were closer to $10,000. Would it be wise to spend public dollars on helicopter- or drone-based surveys to map the full inventory of the hundreds of thousands of currently undocumented wells?
Until researchers at RFF and elsewhere can gain a better understanding of these variables, policymakers will likely focus on the most valuable currency in the political arena: jobs. And one thing that’s clear is that unemployed oil and gas workers are a good fit for plugging and restoration jobs. As a result, expect to see more proposals on this topic in the months ahead.
A version of this article appeared in print in the Winter 2021 issue of Resources magazine.
