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Green stimulus for oil & gas decomm
Major US federal effort to plug orphaned wells
$4.7 billion[1] was set aside to safely plug and abandon hundreds of thousands of orphaned and idle O&G wells the in the USA
Scale of issue
Orphan wells are those with no known or viable owner to take responsibility for them, either due to missing records or through operating company insolvency. In addition, there are legacy wells which have been plugged in the past using inappropriate or obsolete methods, whose plugs have failed and now require to be re-abandoned safely. Idle wells are those which are inactive, left to languish unplugged and that are likely to be orphaned soon.
Unplugged, ageing oil and gas wells often sit open, left unmonitored for many years and have potential to impose heavy climate costs, significant environmental risks and public safety concerns as hydrocarbon fluids can leak into local water supplies or emit greenhouse gases polluting the atmosphere.
After 150 years of oil and gas production in the United States and with differing classification of orphaned and abandoned wells across state lines, the exact number of these wells are unknown, but estimates range between several hundred thousand and 3 million[2].
In addition to known wells, the Environmental Protection Agency estimates that there are 1.2 million undocumented, unplugged wells across the US,[3] which makes tackling the issue an even more daunting task for regulators and budget holders.
Abandonment costs and decommissioning economics
The average cost for an idle well abandonment is estimated to be $24,000 per well, while orphaned well abandonments are estimated to be $47,000 per well[4].
Therefore, to permanently abandon the estimated well inventory could cost over $24 billion.
A significant federal program is in place to inject much needed investment into the plug & abandonment industry. It’s estimated that this green stimulus could result in as many as 120,000 new jobs for oil and gas workers.
Energy transition and environmental benefits
Idle and orphaned wells emit 404,000 tons of methane annually[5], a greenhouse gas significantly more potent than CO². EPA estimates this has an environmental effect equivalent to 24 million tons of CO².
A federal green stimulus to permanently decommission idle and orphaned wells could reduce greenhouse gas emissions at a cost within the range of other USA climate policy options for greenhouse gas reduction – estimated to be $170/ton of CO².
It is widely reported that the identification and safe abandonment of these orphaned wells would drastically reduce the costly impact they have on the environment, human heath, and on the economy.[6]
Want to learn more?
In partnership with subject matter experts at Aberdeen Drilling School, we have developed a range of essential short courses for those involved directly or indirectly with Plug & Abandonment Operations:
1-Day Introduction to Plug & Abandonment – an informative overview for supporting services
2-Day Essentials of Plug & Abandonment – essential knowledge for regulators, managers, engineers and operational staff
4-Day Plug & Abandonment Workshop – am engaging customized program for clients with a group of engineers and project planners (min 6 / max 12)
To find out more, please email bookings.us@relyonnutec.com or visit www.aberdeendrilling.com
References
[1] Biven, M.M. & Palacios, V. (2022), ‘Eliminating Orphan Wells and Sites in Texas’ Commission Shift
[2] Raimi, D. Nerurkar, N. & Bordoff, J. (2020), ‘Green Stimulus for Oil & Gas Workers: Considering a Major Federal Effort to Plug Orphaned and Abandoned Wells’, Columbia University CGEP
[3] https://www.epa.gov/sites/production/files/2018-04/documents/ghgemissions_abandoned_wells.pdf
[4] Schuwerk, R. & Rogers, G. (2020), ‘Billion Dollar Orphans: Why millions of oil and gas wells could become wards of the state’ Carbon Tracker
[5] Raimi, D. Nerurkar, N. & Bordoff, J. (2020), ‘Green Stimulus for Oil & Gas Workers: Considering a Major Federal Effort to Plug Orphaned and Abandoned Wells’, Columbia University CGEP