Creating jobs and protecting the environment by cleaning up and plugging wells

Creating jobs and protecting the environment by cleaning up and plugging wells

To begin, workers and communities in oil and gas producing regions have been hit hard in recent months, as falling energy prices quickly translate into lost jobs, struggling businesses, and plunging tax revenue. A federal program to plug orphaned oil and gas wells has the potential to support these workers and communities while also providing environmental benefits.

The problem of orphaned oil and gas wells is widely known but not well quantified. The Interstate Oil and Gas Compact Commission, or the IOGCC, has documented roughly 56,000 orphaned wells in the US, but this is far below the true number. In Pennsylvania alone, regulators estimate that up to 560,000 orphaned wells exist, but are not documented (IOGCC 2019). The EPA estimates that there are 2.1 million unplugged abandoned oil and gas wells in the US (US EPA 2020).

Environmental Risks of Orphaned Oil and Gas Wells

These wells pose several environmental risks. They can endanger above- and below-ground water resources. They also release methane, a greenhouse gas that, pound for pound, is roughly 30 times as powerful as carbon dioxide over a 100-year time period (IPCC 2013).

The EPA (2020) currently estimates that unplugged abandoned wells emit 280,000 metric tons of methane each year,[1] equivalent to roughly 9.5 million metric tons of carbon dioxide.[2] For reference, that’s about as much CO₂ as all of the power plants in Massachusetts.

Costs of Plugging Wells

The costs of plugging and restoring well sites vary widely. Some wells pose greater risks to groundwater, meaning that plugging operations are more complex. Some are easily accessible, while others are in hard-to-reach places or found on a steep hill. And some wells are deeper than others, requiring additional time and resources.

Recent estimates provided to the IOGCC (2019) range from over $100,000 per well in Utah to less than $4,000 in Kentucky. The national average is roughly $24,000 per well. Using this average, the cost of plugging and restoring 56,000 wells would be $1.4 billion.

Cost-Effectiveness of Methane Emissions Reductions

As with all policies, it is appropriate to consider the cost-effectiveness of this approach.

If we plug 56,000 wells at a cost of $1.4 billion, use EPA’s methane estimates, and assume that the cement plug prevents emissions for 100 years, we arrive at a cost of roughly $5,600 per ton of methane emissions prevented. This is equivalent to a cost of $168 per ton of carbon dioxide.[3]

These abatement costs are higher than the US government’s 2016 estimate for the social cost of methane and social cost of carbon (Interagency Working Group on Social Cost of Greenhouse Gases 2016b; 2016a), but similar in magnitude to some estimates published recently in the peer-reviewed literature

By Daniel Raimi, Resources for the Future