On July 7, Senate and House Republicans, at the request of conventional oil and gas industry, passed House Bill 2644 (Causer-R-Cameron) blocking any increase in conventional oil and gas well plugging bonds, exempting pre-1985 wells (which is most of them) from any bonding leaving taxpayers liable for $5.1 billion in cleanup costs.

The bill now goes to Gov. Wolf for his action to sign or veto the bill.

House Bill 2644 was introduced to head off a proposal accepted for study by the Environmental Quality Board in November to increase the well plugging bonding amounts for both conventional oil and gas and unconventional shale gas drillers to what it now costs taxpayers to plug a well when operators walk away from their obligations.  Read more here.

Conventional oil and gas drilling industry-- which is responsible for leaving Pennsylvania with over 200,000 abandoned and orphan wells-- continues to walk away from their obligations because of inadequate or no bonding requirements.  Read more here.

Sen. Comitta’s Comments

Sen. Carolyn Comitta (D-Chester), Minority Chair of the Senate Environmental Resources and Energy Committee, said this about House Bill 2644 on the floor of the Senate--

“I am voting no.

“Oil and gas wells are a big problem – both for our environment and for our taxpayers.

“They are the 10th largest contributor to methane emissions – a greenhouse gas that’s up to 86 times more potent in its warming potential than carbon dioxide.

“They carry a tremendous liability for taxpayers.

“The cleanup of existing abandoned oil and gas wells in Pennsylvania could cost an estimated $5 billion – that’s about half our budget surplus.

“Current efforts to plug abandoned wells in Pennsylvania may not be sustainable, but this bill makes an untenable solution even worse.

“It does so by locking in bonding amounts that are already insufficient at the very time that the Environmental Quality Board is looking at increasing those amounts.

“And while the federal funds are a significant benefit, this bill is not the way to administer them.

“If we want to pursue a sustainable plan for plugging Pennsylvania’s abandoned oil and gas wells, we need to:

-- Take steps to prevent the continued abandonment of wells – which appears to be prevalent in the oil and gas industry.

-- Hold operators accountable with bonding that is more realistic and more in line with the actual costs of plugging.

-- Support DEP’s efforts with the staff and resources it needs to adequately do its job.

“This bill goes in the opposite direction – it sets into law bond amounts to better accommodate the oil and gas industry – an industry that has created the very environmental crisis we are facing today.

“Again, I ask for a no vote.

“We can do better when it comes to addressing abandoned oil and gas wells in Pennsylvania.”

Exempts Pre-1985 Wells From Any Bonding

House Bill 2644  again puts in law a provision exempting oil and gas wells drilled prior to April, 1985 from being required to have any plugging bond.  An overwhelming majority of the over 110,000 active oil and gas wells in Pennsylvania were drilled before April 1985.

Oil & Gas Operators Continue To Abandon Wells

DEP records show conventional oil and gas companies were issued over 4,270 notices of violation for attempting to abandon oil and gas wells without plugging them between 2016 and 2021.  Abandoning wells is pervasive in the industry.  Read more here.

During the second quarter, DEP’s Oil and Gas Compliance System reports conventional oil and gas drillers were issued 82 notices of violation and unconventional shale gas drillers 21 NOVs for abandoning oil and gas wells without plugging them for a total of 103-- 20 percent more than in the first quarter.   Read more here.

Only $15/Well On Hand To Plug Wells

DEP records show the agency has less than $15 per well available to plug the over 100,500 active conventional oil and gas wells that now have permits because of woefully inadequate well plugging bonding requirements.  Read more here.

The average cost to taxpayers to pay to plug a well is $33,000.  Read more here.

It would cost taxpayers over $3.3 billion to plug these inadequately bonded wells, if operators walked away, and they try to do that almost every day.

In addition, any conventional oil and gas well drilled before April 1985 is exempt entirely from the need to post any bond.

It would cost taxpayers over $1.8 billion to plug these wells.

This means state taxpayers are on the hook to pay for over $5.1 billion in well plugging and cleanup costs.   Read more here.

Risks Federal Well Plugging Funds

House Bill 2644 risks Pennsylvania not receiving the once-in-a-generation funding to plug oil and gas wells conventional drillers abandoned under the new well plugging program established in the federal Bipartisan Infrastructure Act.

The federal law requires states to review their regulations to prevent new wells from becoming abandoned wells.  Making sure well plugging amounts are adequate to cover the taxpayer cost of plugging them is a big part of that prevention effort.  Read more here.

By preventing any increase in the woefully inadequate bonding amounts DEP has now, this legislation gets in the way of that requirement and further burdens taxpayers.

The bill would also set aside 20 percent of the federal money Pennsylvania is receiving from the Bipartisan Infrastructure Act for conventional oil and gas well plugging to be used as grants to companies interested in plugging wells with few qualifications and no check on whether they have outstanding environmental or other contracting violations.  Read more here.

The bill also sets limits on how deep a well must be plugged in terms of feet not in terms of the effectiveness of the plug in cutting off possible routes to contaminate ground or surface water and preventing methane emissions.

The bill also provides well plugging companies with civil immunity from any damage it causes and for any violations of environmental laws and regulations.

Bills On Governor’s Desk:

-- Bills On The Governor’s Desk - Will Wolf Hold Oil & Gas Drillers Accountable?  [PaEN]

Related Articles This Week:

-- PA Environmental Council: Without A Veto Of HB 2644, PA's Abandoned Oil & Gas Well Problem May Be All But Permanent  [PaEN]

-- PA Environmental Council/Environmental Defense Fund + 12 Other Groups: HB 2644 Unjustifiably Limits Bonding For Oil & Gas Wells, Risks Eligibility For Federal Well Plugging Funds  [PaEN]

-- Evangelical Environmental Network Urges Senate To Vote Against The HB 2644 Subsidy & Bailout For Conventional Oil & Gas Drillers - ‘Stop Rewarding Industry For Not Being Responsible’  [PaEN]

-- DEP Issues 20% More NOVs To Oil & Gas Well Drillers For Abandoning Wells Without Plugging Them In 2nd Quarter [PaEN]

-- At The Request Of The Natural Gas Industry, House, Senate Give Final Approval To Bill Prohibiting Communities From Moving To Cleaner Energy Sources To Address Climate Change [PaEN]

-- House Committee Meets July 11 On Letter To IRRC Opposing Final Oil & Gas Facility Methane Reduction Regulation  [PaEN]

Related Articles:

-- New Abandoned Wells: DEP Records Show Abandoning Oil & Gas Wells Without Plugging Them Is Pervasive In Conventional Drilling Industry; Who Is Protecting Taxpayers?  [2.23.22]

-- 12 Unconventional Shale Gas Drillers Issued DEP Notices Of Violation For Abandoning Wells Without Plugging Them At 35 Well Pads In 17 Counties [3.2.22]

 -- DEP Federal ‘Orphan’ Well Plugging List Includes 7,300 Active Conventional Wells With Identified Owners; DEP Says Cost Recovery A Priority  [5.23.22]

PA Environment Digest:

-- Links To Oil & Gas Drilling Articles

[Posted: July 7, 2022]

7/11/2022