Cashing In: States to Receive Influx of Funding for Plugging Wells

State environmental regulators have spent years trying to find wells and fund plugging of Pennsylvania’s abandoned oil and gas wells. With the passing of the REGROW Act, Pennsylvania will now have a massive budget to work with. The challenge: How to spend it.

Kurt Klapkowski, a bureau director in Pennsylvania’s Department of Environmental Protection’s (DEP) oil and gas office, called it “once-in-a-lifetime type funding.”

Grants: An Immediate Impact

States have six months to apply for initial grants dispersed by the U.S. Department of the Interior. Pennsylvania expects to receive $25 million, more than 33 times the well plugging program’s budget in 2020. “Remember, we spent $40 million over 30 years. We’re talking about $25 million in 365 days,” said Seth Pelepko, environmental program manager at the oil and gas bureau.

The next, larger stage of funding will be trickier to manage.

Formula grants based on state orphan well counts and oil and gas job losses could bring $300 million and grants up to $70 million if Pennsylvania dedicates more money to plugging and preventing wells from being abandoned.

The Pennsylvania DEP budget for plugging orphan wells has never exceeded $3.5 million, when it plugged 250 wells. Based on those numbers, if Pennsylvania receives the funding it expects the DEP would be able to plug over 28,000 additional wells.

“It’s something to be positive about, absolutely,” said Seth Pelepko, environmental program manager at the oil and gas bureau. “But it is something to really focus on — how we can do everything possible to prepare for a smooth transition into this era of greater funding. We’re really in uncharted waters.”

Regulators are hoping the $4.7 billion in national funding coupled with concerns about fugitive methane emissions entices larger oil and gas companies to take on additional plugging projects while encouraging smaller conventional oil and gas companies to pivot from production to plugging.

But it’s not going to be easy. Scaling these programs looks to be a real challenge — with notable issues being administration and finding workers.

“I think it’s going to be a real challenge for the states to put together a program that spends the money wisely but still gets it spent,” said Steve Plants, president of a well service and plugging firm. “Well plugging, although it’s not sexy, it’s an art,” he said. “There are a lot of things you can do [wrong] that doubles and triples the cost of a project.”

There’s no formal training program for plugging professionals, Mr. Plants said, and training is expensive and time consuming. “There’s going to be a real shortage of contractors, a lack of equipment, a lack of people, and certainly a lack of skill.”

Cement: A Flawed Fix

Plugging a well costs $20,000 to $145,000 according to estimates from the U.S. Government Accountability Office. For modern shale wells, costs are closer to $300,000 and can balloon to over $1 million for wells that prove particularly difficult.

Cement is the standard option for plugging wells, but can fail to penetrate smaller leakage pathways. Scientists and engineers debate the lifespan of cement but estimates typically range from 50 to 100 years and deep within a well where temperatures and pressures are extreme a plethora of other issues arise.

This initiative is an unprecedented opportunity to make our nation and the world a better place for generations to come. It is imperative that states spend this money wisely, plugging as many wells as possible, while ensuring leaks are eliminated permanently so wells don’t require future remediation.

BioSqueeze® has proven to be significantly more effective than remedial cement and other options like resins and micro-cements. Our biocementation process uses a low viscosity naturally occurring formula that penetrates even the smallest leakage pathways, forming a permanent inorganic mineral barrier stronger the existing rock.

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