By John Walliser, PA Environmental Council

Yesterday [July 7], the General Assembly passed legislation – House Bill 2644 – that would all but ensure that the state’s legacy of orphaned and abandoned wells will continue for decades to come.

This legislation unjustifiably locks in insufficient financial assurance requirements for the conventional oil and gas industry, continuing to put Pennsylvanians at risk of covering the costs for failed well closure and remediation.

To make matters worse, House Bill 2644 may also jeopardize Pennsylvania’s future eligibility for federal well-plugging funding.

The Pennsylvania Environmental Council (PEC) calls on Governor Wolf to veto this detrimental legislation.

There are hundreds of thousands of active, abandoned, and orphaned oil and gas wells in our Commonwealth.

A significant number of active conventional wells, due to marginal production, failure to comply with existing standards, and inability to compete with the unconventional industry, are on the precipice of closure or abandonment.

Estimates from both the Department of Environmental Protection (DEP) and the conventional industry itself place the average cost of conventional well plugging around $33,000 per well.

House Bill 2644 arbitrarily limits bonding requirements for conventional wells to $2,500 per well, or a not-to-exceed blanket bond amount of $100,000 no matter how many wells are owned by an operator.

House Bill 2644 also eliminates the ability of the Environmental Quality Board to adjust these bonding amounts for the next decade – when many of these active wells are likely to be abandoned.

Using average plugging costs, the bonding levels in House Bill 2644 would only cover the plugging costs of three wells in a best-case scenario.

Conventional operators, several of whom are large companies active in multiple states, own anywhere from dozens to thousands of these 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. [Read more here.]

Those violation numbers have continued to grow in 2022.  [Read more here.]

House Bill 2644 effectively hands liability for well plugging to the citizens of Pennsylvania at a time when billions of dollars in public funding have already been dedicated to address orphaned wells.

One of the metrics the federal government will use for distribution of federal Infrastructure Investment and Jobs Act funding will be whether states improve financial assurance, idle well management, and well-transfer rules.  [Read more here.]

House Bill 2644 potentially puts Pennsylvania at risk of losing millions of dollars in support for orphaned well plugging by allowing conventional operators to continue to flout their responsibilities and disregard the actual costs of their impacts.

Other states, with the support of industry, have ramped up their financial assurance requirements.

Pennsylvania should be expanding, and not foreclosing, means to eliminate orphan well burdens in the future.

House Bill 2644 is a step in the wrong direction.

For more information on programs, initiatives and special events, visit the PA Environmental Council website, visit the PEC Blog, PEC Bill/Regulation Tracker, follow PEC on Twitter or Like PEC on Facebook.  Visit PEC’s Audio Room for the latest podcasts.  Click Here to receive regular updates from PEC.

(Photo: Plugging an abandoned gas well in Erie County.)

(Reprinted from PA Environmental Council Blog.)

Bills On Governor’s Desk:

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

Related Articles - New Abandoned Oil & Gas Wells:

-- Gov. Wolf Now Has To Decide To Hold Oil & Gas Drillers Accountable, Or Create A $5.1 Billion Cleanup Liability For Taxpayers  [PaEN]

-- EQB Accepts Petitions For Study To Increase Oil & Gas Well Bonding; DEP Has $15 Per Well Available In Bonds To Plug Conventional Wells

-- 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]

-- 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]

-- Financial Assurance, Plugging Regulations To Be Reviewed To Prevent New Abandoned Oil & Gas Wells Under Federal Bipartisan Infrastructure Law Plugging Program  [4.25.22]

 -- 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 8, 2022]

7/11/2022