By Austin Igleheart
The Infrastructure Investment and Jobs Act (IIJA) of 2021 included $4.7 billion for the federal government to address orphaned oil and gas wells across the country, including more than $1 billion for state and tribal lands.
Nearly every state that contains oil and gas wells also requires some form of bond—a financial assurance that well owners must pay prior to receiving a drilling permit, which is meant to cover the costs of future well plugging and site reclamation. NCSL’s Energy Program is tracking the bonding requirements for every state and U.S. territory.
However, these amounts are often insufficient, particularly as wells are being drilled deeper, plugging costs have increased, and inflation continues to erode the purchasing power of the required bonds.
The federal government, for instance, has not updated its bonding requirements since they were first issued over half a century ago. While states have generally been more active in updating their bonding requirements, these too often fall short of the full reclamation costs. Unfortunately, this usually leaves state taxpayers footing the rest of the bill, which can be several times higher than the initial bond.
There are now over 100,000 documented orphaned wells across the United States, although the actual number is likely much higher when including unidentified or uncounted wells.
These unplugged wells can continue to leak methane and other pollutants into the atmosphere, creating local environmental concerns and broader climate impacts. Methane is a far more potent greenhouse gas than CO2, and its relatively short lifespan in the atmosphere—decades as opposed to centuries – makes it a popular target for efforts to quickly reduce GHG emissions and atmospheric concentrations.
The U.S. Department of Interior (DOI) has announced the creation of a new interagency partnership alongside the U.S. Department of Agriculture, the U.S. Department of Energy, the Environmental Protection Agency, and the Interstate Oil and Gas Compact Commission to help plug and remediate abandoned well sites. The interagency group, led by DOI, will collaborate to implement the oil and gas reclamation program and distribute $1.15 billion for states and tribes to establish and manage their own orphaned well plugging and remediation programs.
DOI’s Office of Environmental Policy and Compliance will lead the rollout of the well reclamation program on state and tribal lands. Funds will be distributed to the 26 states that submitted a notice of intent to apply for funding to plug orphaned wells in their jurisdictions. DOI is expected to publish the full amounts available for each state in the coming weeks, along with guidance on how to apply.
NCSL will continue to monitor these developments. To stay plugged in to the latest state energy news from across the country, subscribe to NCSL’s monthly Plugged In Newsletter.
Austin Igleheart is a policy associate in NCSL's Energy, Environment and Transportation Program