Two bills proposed in the U.S. Senate could speed up plugging and reclamation at orphan oil and gas well sites and create stronger bonding requirements for operators on federal leases. Sen. Michael Bennet, D-Colo., unveiled the legislation he says will create jobs, protect the environment, and give the public a stronger voice in federal lands management.
It’s not the first time this year that increased reclamation activity has shown up as a potential jobs-generator. In the wake of this spring’s oil price crash, Wyoming state legislators at a June committee meeting discussed authorizing the Wyoming Oil and Gas Conservation Commission to double its $7.5 million annual funding for reclaiming orphan wells.
Proponents said the move would help create jobs for a wave of unemployed oilfield workers and help the state make progress on its orphan well list, which included 2,324 wells as of Oct. 5. In 2019, the commission remediated 533 wells. The September Supervisor’s Report shows 523 wells have been removed from the list so far in 2020.
Wyoming wasn’t the only state looking to boost oilfield employment through increased reclamation activity. In May, North Dakota appropriated $33.1 million from its federal CARES Act stimulus funds for well-plugging work.
A July analysis from the Center for Global Energy Policy at Columbia University and Resources for the Future found that a federal stimulus program focused on plugging 500,000 wells nationally had the potential to create 120,000 jobs.
Bennet’s proposed legislation follows a 2019 Government Accountability Office report, which found that between 84% and 99% of reclamation bonds for wells drawing from federal minerals are insufficient. Bond rates with the Bureau of Land Management haven’t changed in more than 50 years, and wells that have not been properly plugged can leak methane into the atmosphere and pollute groundwater.
“Investing in orphan well clean up would create good-paying jobs while helping reduce pollution, restore habitat, and protect our climate,” Bennet said in a statement. “Together, these bills restore the role of local leaders to have a greater voice in lease sales, hold all companies operating on public lands to the same high standards that responsible operators follow, and ensure that local governments and taxpayers aren’t burdened with the cost of cleanup.”
His proposed Oil and Gas Bonding Reform and Orphaned Well Remediation Act seeks to create jobs through a multibillion-dollar orphan well fund to be administered by the U.S. Department of Interior, along with other federal agencies.
It would also update bonding requirements for federal wells. Currently, operators can choose to pay $10,000 for a single-well bond or $25,000 for a statewide bond. The bill draft increases those figures to $75,000 and $200,000, respectively, and proposes new standards for inactivity and cleanup. While $10,000 is roughly in line with costs to plug and reclaim a shallow coalbed methane well, the now more common deep horizontal wells can cost as much at $150,000 apiece to remediate. Under the proposed bill, the Interior Department would receive $500 million during the first two years of the cleanup program. The funding would come from oil and gas royalty revenue. From 2022 to 2029, the program would receive $250 million annually.
Bennet’s second bill, the Public Engagement Opportunity on Public Land Exploration (or PEOPLE) Act, would increase transparency in the lease sale nominations and bid processes, and would provide more robust opportunities for public engagement.
According to their respective spokeswomen, Wyoming’s Republican senators, John Barrasso and Mike Enzi, have not had time to review the legislation, which was introduced Sept. 21.