PEC and Environmental Defense Fund (EDF) jointly sent the following letter to Members of the Pennsylvania House Environmental Resources and Energy Committee on June 6, 2022:
On behalf of the Pennsylvania Environmental Council (PEC) and Environmental Defense Fund (EDF), 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.
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. What makes this even more egregious is that the legislation appears to prevent DEP from being able to deny the award of remediation dollars to operators who have outstanding compliance issues.
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 for their own activities. 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 burdens in the future.
We urge you to oppose this legislation. Thank you for your consideration.
SVP, Legal & Government Affairs
Pennsylvania Environmental Council
Senior Attorney, Energy
Environmental Defense Fund