For immediate release
July 8, 2022
Josh Raulerson, PEC
Legislation Lets Oil & Gas Operators Off the Hook for Legacy Impacts
Without Veto, PA’s Abandoned Wells Problem May Be All But Permanent
HARRISBURG — Yesterday 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. Those violation numbers have continued to grow in 2022.
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. 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.