US states want idled workers to plug orphan wells

Oil and gas drilling crews that have lost work because of the slowdown across industry could find work plugging abandoned wells, if a coalition representing oil producing states can find funding.

US operators this week have idled more than half of the 796 drilling rigs that were in operation at the start of the year, amid a collapse in crude prices that has left thousands of oil workers unemployed. State officials say by plugging "orphan" wells, which lack a viable owner, it could keep workers employed and reduce environmental problems associated with abandoned wells.

The Interstate Oil and Gas Compact Commission, an organization that represents 31 states, says it has been asking the US Department of Energy (DOE) to consider giving states funds to implement the idea. The group in a report last year estimated there were more than 56,000 documented orphan wells, which can pose hazards such as leaking fluids and high methane emissions.

"We understand DOE is considering a variety of ways to help keep oil and gas crews working during the current crisis and the ensuing recovery period," the state group said. "Providing funds to states for plugging orphan wells would support this effort while also serving to protect the environment."

The DOE did not respond to a request for comment.

Canada has already pursued a similar idea, offering up to $1bn through from its Covid-19 economic response plan for a well site reclamation program that will offer grants to oil service contractors for remediation work. The program is meant to get workers back to work, accelerate reclamation efforts and protect the environment.

The number of orphan wells could increase if low crude prices cause producers to go out of business. North Dakota officials say that of its 751 wells that have not produced in more than a year, 549 are at risk of becoming orphan wells. The state has previously set aside $25mn in an abandoned well fund, but an average estimated cost of $150,000 per well, the state could only afford to plug and reclaim 167 orphan wells.

Environmentalists have urged states to require operators to post enough in bonds to cover the costs of reclamation before drilling new wells. Oil and gas producers are required to post bonds of just $25,000 in Pennsylvania, $50,000 in Oklahoma, $100,000 in North Dakota and $250,000 in Texas, regardless of how many wells they drill in those states, the Interstate Oil and Gas Compact Commission said in its report last year.

By Chris Knight