The PA Environmental Council and Environmental Defense Fund and 12 other environmental energy and health groups are urging members of the General Assembly to vote against House Bill 2644 because the legislation "unjustifiably limits financial assurance requirements for the conventional oil and gas industry, shifting considerable cost to the citizens of Pennsylvania. It may also impede Pennsylvania’s eligibility for federal well plugging investments."

The Senate Appropriations Committee is due to consider the bill today, July 6 and the full Senate shortly thereafter.  Read more here.

The text of the letter of opposition follows--

On behalf of the fourteen undersigned organizations, we urge you to oppose House Bill 2644 (P.N. 3187). This legislation unjustifiably limits financial assurance requirements for the conventional oil and gas industry, shifting considerable cost to the citizens of Pennsylvania. It may also impede Pennsylvania’s eligibility for federal well plugging investments.

Estimates from both the Department of Environmental Protection (DEP) and the conventional industry itself place the average cost of well plugging at approximately $33,000 per well – though costs can only go up from there, and the DEP recently estimated average plugging costs for orphan wells in the $70,000 range.

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

House Bill 2644 also eliminates the ability of the Environmental Quality Board to adjust these bonding amounts. 

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

Conventional operators, several of whom are large companies active in several 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.

To put it bluntly, this legislation 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 – the vast majority of which stem from un- or under-regulated conventional operations.

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.

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

Pennsylvania has by far the largest orphan well burden in the United States, likely costing billions or even tens of billions to fix.

In the absence of additional federal support, which this bill would strongly deter, it is unlikely that Pennsylvania will ever be able to manage this problem on its own.

House Bill 2644 will make an already untenable situation worse and pass future costs on to the people of Pennsylvania.

At a time when the General Assembly is contemplating changes to financial assurance for other types of energy development, it should do the same for the conventional industry and hold them accountable.

There are many tools in the regulatory toolbox to accomplish this, and other states have made significant progress on this issue – Arkansas requires full-cost financial assurance for low-flow wells on transfer, and Colorado recently completed a comprehensive financial assurance overhaul with industry support.

Pennsylvania should be exploring, and not foreclosing, efforts to eliminate orphan well burden in the future.

We urge you to oppose this legislation. Thank you for your consideration.

Sincerely,

Environmental Defense Fund

Clean Air Council

Clean Water Action

Conservation Voters of Pennsylvania

Earthworks

Keystone Energy Efficiency Alliance

Moms Clean Air Force

PennEnvironment

PennFuture

Jewish Earth Alliance Pennsylvania Chapter

Pennsylvania Environmental Council

Project CoffeeHouse

Responsible Decarbonization Alliance

Sierra Club Pennsylvania Chapter

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]

-- 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 6, 2022]

7/11/2022