, , ,

West Virginia’s Orphan Well Problem

Carbon dioxide is by far the largest contributor to climate change, and it comes from recognizable fossil fuel sources such as coal-burning utilities, and automobile tailpipes. Carbon dioxide persists in the atmosphere for hundreds of years, making the climate change it causes not just a current problem, but a future one as well.

But experts say that methane (CH4) is a bigger problem than carbon dioxide (CO2).  While methane dissipates naturally after about 100 years, its pound for pound impact is 25 times greater than carbon dioxide in trapping heat reflected from the Earth’s surface.

Agriculture, including raising of cattle for human consumption and management of animal wastes, is the single largest source of methane. Natural gas and petroleum systems are the second largest source. The U.S. oil and gas industry emits more methane than the total emissions of greenhouse gases from 164 countries combined. These emissions come from leaks in the production and transmission infrastructure, and from leaking unplugged orphan wells.

Drilling Down on Gas Wells

Oil and gas drilling in West Virginia has been ongoing for 140 years. A huge number of wells were drilled and then abandoned before anyone noticed or cared. While the WV Department of Environmental Protection estimates there are 6,500 orphaned wells in the state, that doesn’t account for the tens of thousands of undocumented wells the West Virginia Geological Survey estimates are scattered throughout our hills and valleys.

Neither orphaned nor abandoned wells produce oil or gas. Abandoned wells still have a solvent owner, while orphaned wells do not, often because the operator has gone out of business. In that case, the responsibility of plugging and remediating these wells falls to the state – and to us as taxpayers.

The Biden Administration’s massive Infrastructure Act provides for funding the orphan well problem. West Virginia will receive $25 million in a first tranche, which should be sufficient to plug 160 of the worst problem wells. We can qualify for more later. All this money is to be used to plug existing orphaned wells, but we are on our own when it comes to preventing future orphans.

Future orphan wells are certain to be created because of the economic structure of the industry. There are 3,163 “producing” wells in West Virginia, those that are producing enough to fund proper upkeep. When those wells near the end of their useful life they are often sold to operators lower on the food chain, who strip the final production capacity from them. There are estimated to be 55,823 “stripper” wells in West Virginia. They produce so little that the operator keeps them alive, sometimes for many years, to avoid clean-up costs.

And the clean-up costs for plugging a well are substantial. The DEP estimates the cost for hiring a contractor to plug a well with expandable cement to a significant depth is about $125,000. When depleted wells are transferred from the big solvent operators to the marginal ones, the plugging obligation is also transferred. To get a permit to operate a stripper well, the new operator merely needs to obtain a bond worth $5,000. This makes the economic choice starkly in favor of abandoning the well at the end of its life and forfeiting the bond, rather than undertaking the proper plugging.

Why Can’t the Legislature Fix This? 

Bills to adjust the economic incentives for an operator to plug a well have been introduced at the Legislature each of the last six years, but none of them has even made it onto the agenda of the responsible legislative committee.

This year Del. Evan Hansen (Monongalia) and three others have introduced HB 5414, which would condition the issuance of a permit upon the operator either (1) contributing to a plugging escrow fund from out of the cash flow produced by the well, or (2) posting a bond in an amount set by the DEP sufficient to cover the real cost of plugging. Upon its introduction, HB 5414 was assigned to the House Committee on Energy and Manufacturing, where it now sits with no action taken on it.

The Energy and Manufacturing Committee is a powerful House committee chaired by Del. Bill Anderson (Wood). Parkersburg in Wood County is close to the historic center of oil and gas activity in the state. Two other Wood County Delegates sit on the Committee – Bob Fehrenbacher and Scot Heckert.

Instead of putting HB 5414 on the committee’s agenda, Anderson, Fehrenbacher and Heckert have sponsored HB 5076. This bill would exempt operators from the obligation to plug depleted wells “promptly,” as required by law, if they have entered into an agreement with DEP regarding the schedule and details of plugging.  Most importantly, it would eliminate the possibility of lawsuits brought by landowners and other interested persons to enforce the prompt plugging obligation.

And – surprise! – there just happens to be a lawsuit like this pending against Diversified Energy, a large operator of abandoned wells in the state. The lawsuit alleges that Diversified’s business model involves purchasing many low production wells and then delaying its plugging obligation for years to avoid the costs. Whether HB 5076 would end that lawsuit isn’t clear, but it would definitely prevent any future private legal enforcement.

Instead of being stewards of our environment and our groundwater, and protecting the taxpayers of West Virginia, these legislators seem more interested in protecting big gas business. This is a tragedy that, in one form or another, is replayed in this state year after year.