Methane Mandates: Growing Concerns About Methane Emissions
The recent announcement of new U.S. Environmental Protection Agency (EPA) rules around methane emissions and talk of emissions at the COP28 meeting in Dubai show that environmental groups, government officials, and the oil and gas industry are taking methane emissions more seriously. In the United States, state agencies are continuing their progress in plugging orphan oil and gas wells.
Although states have been plugging orphan wells for years, work has been slow in the past due to limited funds and personnel. Federal money made available through the Bipartisan Infrastructure Law and additional grant programs have accelerated well plugging efforts, though some express concerns about what will happen when those funds have been spent.
New York
New York’s Department of Environmental Conservation (NYDEC) recently announced the first plugging of a gas well using federal funds. The well plugged using federal funding is in Erie county, one of a handful of New York counties that have thousands of oil and gas wells. The state has already plugged many wells, including nearly 300 in one county alone, since 2017.
West Virginia
West Virginia’s Department of Environmental Protection (WVDEP) is planning to plug about 1,700 orphan oil and gas wells in the state thanks to federal money. West Virginia is one of the states awarded additional grant money, with $25 million in the first round. The state expects to receive $117 million in total grant funding, with the possibility of an additional $70 million later. Plugging 1,700 wells would be a notable increase in well-plugging work for the agency; which plugged six wells in fiscal year 2022, and 22 wells in fiscal year 2023. However, plugging 1,700 wells would only account for roughly one-fourth of the orphaned wells in the state.
Kansas
The State of Kansas has also been making progress in plugging orphaned wells after delays due to the COVID-19 pandemic. Officials in Kansas started plugging orphaned wells decades ago in the 1990s, primarily relying on fees from oil and gas operators in the state. However, much like other states, Kansas expects to dramatically speed up the process with a $25 million federal grant. Kansas’ well plugging program has plugged just over 1,700 wells to date, with 93 plugged in fiscal year 2023 alone. By early 2024, Kansas expects to have plugged around 2,500 wells in total.
Indiana
Indiana is another state that has seen its well-plugging work accelerate thanks to federal funding. Since receiving an initial $25 million in federal money, the state’s Department of Natural Resources (InDNR) has plugged around 200 wells. The agency projects that it will be able to plug an additional 360 orphaned wells by the end of 2024. This is a dramatic increase from the 15 to 20 wells the state could plug in a typical year. Additional rounds of federal grants amounting to more than $30 million could help Indiana plug a majority of the state’s remaining orphaned wells.
Louisiana
The Lousiana Department of Natural Resources Office of Conservation (LDNR) has contracted plugging of approximately 500 wells this year and recently finalized new rules to prevent additional orphan wells from accumulating in the state. The new rule puts limitations on extensions of future utility status and increases fees on wells that have been inactive/unplugged for five or more years. The rule is intended to encourage plugging of some ~ 17,000 non-productive wells in the state that are currently registered as having future utility. The new rule also reduces fees for operators that plug 10 or more wells each year, in an effort to incentivize increased abandonment activity. By enacting the new rule Louisiana is now eligible for up to $70 million more in federal funding.
