As states set their sights on using $4.7 billion in federal funding to close a record number of orphan wells, the supply of pluggers able to do the work is struggling to keep up. The result, hyperinflation with no end in sight.
The total number of documented orphan wells across the U.S. is approximately 120,000, with some estimates placing the true number in excess of 1 million and counting. Initial plans for closure are much more limited, with WV, PA, and NY collectively planning to plug 327 wells in 2023.
However, this already represents a massive increase in plugging activity that the industry is struggling to keep up with. In Appalachia, pluggers are nearing capacity and struggling to keep existing equipment working (average service rig produced between 1960 and 1980). New equipment requires investment in excess of $1 M per rig and with increased demand for new equipment those costs are likely to increase as well.
Further compounding the problem is the unpredictability of the price and time to plug a well. While many wells are straightforward to plug, others can be extremely difficult.
The cost to plug a well commonly ranges from $20,000 on the low end to over $400,000 for particularly difficult wells, with the average being somewhere around $130,000 and 33 days on site. While some difficult to seal wells can be identified beforehand by records indicating gas migration, poor cement, corrosion, and difficult access, there is little to no information available on most orphan wells making bidding on these projects a nightmare.
Fortunately, innovative new technologies in the market are helping to control costs. Biomineralization technology provides much needed certainty to plugging operations. Where other technologies often require multiple attempts to eliminate gas flow resulting in increased costs and time on-site, biomineralization seals leaks with just one application over two days at a single flat rate. By reducing uncertainty, non-routine abandonments responsible for inflating the average closure cost of orphan wells can be decommissioned at a much lower and more predictable cost.
Jul 12, 2023
On July 6th the EPA released a proposal to amend the Greenhouse Gas Reporting Program (GHGRP) source category requirements for Petroleum and Natural Gas Systems. Once the proposal is published in the Federal Register, there will be a 60-day public comment period....
Oct 27, 2021
With 3 million abandoned wells across the United States (2 million are still unplugged, according to the EPA), some states are creating programs to reduce greenhouse gas emissions. Capping abandoned wells, which emit millions of metric tons of methane, can cut these emissions by 99%. But federal funding is critical to addressing the issue....