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.
Nov 05, 2021
Global leaders at the Glasgow climate summit pledged to sharply curtail methane emissions, with President Biden saying the U.S. would tighten regulations on oil and natural-gas production to reduce leaks of the potent greenhouse gas....
Tags: P&A | Producing | Offshore | Orphan Wells
Feb 04, 2022
The White House announced it will send $1.15 billion to states to clean up thousands of methane-emitting orphaned oil and gas wells, the first tranche of allotments from the $4.7 billion that congress approved for orphaned well cleanup in the recent infrastructure package....
Tags: P&A | Orphan Wells | New Mexico