Extra Credit: Potential Funding for Orphan Wells

Billions of dollars in federal grants emphasize the perceived value of slashing methane emissions by sealing orphan oil and gas wells. Yet, with potentially millions of wells to seal, efforts enabled by this first tranche of funding only scratch the surface. However, one Oklahoma company has achieved a new milestone that could pave the way toward a new source of funding for plugging abandoned oil and gas wells.

Oklahoma-based Rebellion Energy Solutions recently announced it had received carbon credits from the leading global carbon crediting program ACR at Winrock International for plugging six orphan wells through its Oklahoma Heartland Methane Abatement & Land Restoration Project. In 2023, ACR released a rigorous set of standards for quantifying, monitoring, reporting, and verifying emissions reductions from plugging orphan wells. This methodology provides requirements and standards for generating carbon credits from plugging orphan wells.

Buy, Sell, or Trade: Carbon Credits and Markets

A carbon credit is a tradable asset representing one metric ton of carbon dioxide equivalent. Companies that take steps to reduce or remove emissions can generate credits through crediting agencies, which can then be sold to other organizations looking to offset their emissions. This can take place through either cap-and-trade markets, where companies have limits placed on their emissions or voluntary markets, where companies buy and sell credits voluntarily. Carbon credits are traded on exchanges like stocks and bonds.

Putting a price on carbon dioxide emissions (or their equivalent) can be a powerful incentive to reduce emissions. Mirroring stocks and bonds, carbon credit relies on validation and regulation to ensure confidence in the market and its products. ACR’s well-plugging methodology outlines the level of scientific integrity that companies must meet to earn credits, thus ensuring credits are earned legitimately.

High and Low: Raising Revenue and Cutting Expenses

Carbon credit prices vary, but currently range around $20 to $40 per credit. Rebellion’s plugging work yielded 80,782 credits, which represents an emissions reduction of 80,782 metric tons and offsets the costs of plugging wells. With the global carbon credit market expected to grow from about $2 billion today; to $10 to $40 billion by 2030, carbon credits represent a potentially sustainable funding source for plugging orphan oil and gas wells.

This additional revenue source is vital both today and, in the future, as even the billions of dollars made available through state and federal funding is not enough to cover sealing thousands of orphan wells scattered across the nation. A 2020 Columbia University report has estimated that plugging even 500,000 wells could cost as much as $24 billion.

Earning carbon credits could make sealing orphan wells financially sustainable, especially if the market for carbon credits continues to rise. Plugging wells can still be a time-consuming, labor-intensive, and expensive process. However, new technologies like BioSqueeze® can cut the amount of time, money, and labor needed to seal wells considerably. BioSqueeze® utilizes biomineralization technology to permanently seal methane leaks that can cause plugging costs to skyrocket. Using natural soil bacteria delivered via low-viscosity fluids, BioSqueeze® forms a permanent gas-tight barrier similar to limestone. BioSqueeze efficiently eliminates methane in the form of sustained casing pressure/casing vent flow/gas migration while leaving the well full ID to ensure efficient and effective remediation.