The U.S. is now the world’s largest producer of crude oil, and a lot of that is coming from wells in West Texas. But there's a problem: Thousands of wells are no longer being used and some are quietly spewing brine and releasing millions of metric tons of methane.
Across the country, billions have been spent plugging up old wells. And often, governments are forced to pick up the tab. But now, a new bill ready to be signed into law by Texas Governor Greg Abbott seeks to put more of that responsibility on oil companies.
This story is about inactive wells and how they become orphan wells. Inactive wells still have companies in charge.
“To be an orphan well, you have to not have a responsible and solvent operator,” said Staci Taruscio, CEO of Rebellion Energy Solutions.
They’ve been abandoned by companies and left to the government to plug. This happens when producers decide not to plug a well just in case, said Michael Lozano with the Permian Basin Petroleum Association.
“You never know when a price environment may benefit that well and may be able to exploit the resources down-hole,” he said.
Companies are allowed to delay plugging wells for years, said Mark Agerton, a professor of agriculture and resource economics at the University of California, Davis.
“As the wells stay inactive longer, and the kind of costs pile up, and maybe a company accumulates more inactive wells, the company may become more at risk of going bankrupt, and that's when these costs would fall onto the taxpayer,” he said.
Tom Seng, a professor at Texas Christian University’s Neely School of Business, said the new bill in Texas adds pressure on operators to make a decision.
“They will then have to essentially say, ‘OK, we either A, we can't increase production in this well, or B, we choose not to, due to economics,” he said. “Now we're going to have to basically permanently seal it.”
But Virginia Palacios, executive director of Commission Shift, said the bill — which was supported by the oil and gas industry — offers too many loopholes.
“What we were hoping this law would end up as would be something that would limit those plugging extensions based on time, but instead of that, now there's just different options,” she said.
Still, she’s hopeful the bill will hold companies more accountable.