Ohio Valley states struggle with clean-up costs of abandoned oil and gas wells; new laws may help - Entrepreneur Generations

An orphan well in Kentucky leaks
decades after being abandoned.
(OVR photo by Brittany Patterson)

State regulators across the country are struggling with the costs of cleaning up an increasing number of abandoned oil and gas wells, especially in states with weak regulations requiring well owners to clean up after themselves. Such wells can leak oil and other pollutants into the water and ground or emit methane. A single well can cost from a few thousand dollars to $200,000 to plug, and an Ohio Valley ReSource analysis of state data found more than 8,000 orphan wells in Ohio, Kentucky, and West Virginia, Brittany Patterson reports for Ohio Valley ReSource. 

"The states are pretty good at regulating wells that are being explored, are being fracked, are in production, but they kind of lose interest once that happens," Alan Krupnick, a senior fellow with the nonpartisan environmental think tank Resources For the Future, told Patterson. "There's not enough attention being paid to reducing the risk from these abandoned wells." Experts expect the abandoned well problem to get worse because of the hydraulic fracturing boom, since the lifespan of a fracking well is shorter than that of a conventional well.

Funds for plugging wells in Kentucky and West Virginia come from forfeited bonds, which are collected in a bond and used to plug the worst wells. Kentucky has about $950,000 in its orphan well fund and has plugged 33 wells since 2012, but Kentucky Energy and Environment Cabinet spokesperson Lanny Brannock told Patterson the state is "constantly behind on funding for orphan wells."

"West Virginia’s funding situation is similar. Since 2012, the state has plugged seven wells," Patterson reports. "The West Virginia Department of Environmental Protection can use a portion of each $150 well work permit application fee as well as any forfeited bonds to plug orphan wells. Currently, the fund holds approximately $385,000.

New laws in Ohio and West Virginia devote more money toward plugging orphan wells, though they approach the problem differently. 

The West Virginia co-tenancy law allows oil and gas companies to drill on properties owned by multiple people if at least 75 percent of landowners agree to it. Royalties for mineral rights owners who can't be located will be set aside for seven years and then, if still unclaimed, will be transferred to the orphan well fund. The provision could shunt millions of dollars into the fund. But "while the new legislative fix is helpful, experts say the orphan problem will only get worse because West Virginia and other states do not require drillers to pay adequate bonds. Patterson reports.

"Ohio has taken a different approach to plugging orphan wells. In 1977, the state created an orphan well plugging program. From the beginning it has been funded with 14 percent of the oil and gas fund, which is supported by a modest severance tax on natural gas extraction," Patterson reports. "Later this month, a new law will raise the percentage of the fund that must be directed toward orphan wells to 30 percent.

from The Rural Blog https://ift.tt/2CLB7F4 Ohio Valley states struggle with clean-up costs of abandoned oil and gas wells; new laws may help - Entrepreneur Generations

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