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Texas Gets Government Aid To Plug Orphan Oil Wells

·3 min read

Texas will start plugging more abandoned oil and gas wells this week, utilizing a federal grant as part of the Infrastructure Investment and Jobs Act.

The Railroad Commission of Texas will begin the plugging of around 800 abandoned wells on September 1 with a $25-million federal grant for which it has applied with the U.S. Department of the Interior, the Texas oil and gas regulator said last week.

Although most oil and gas wells that are no longer productive are plugged by the responsible operators, the Railroad Commission administers a program to plug abandoned oil and gas wells.

The extra 800 wells that are expected to be plugged will advance the RRC’s well-plugging program, which is a key part of the agency’s mission to protect public safety and the environment across the state. The wells which will be plugged with the federal funding will add to the wells being plugged by the State Managed Plugging Program (SMP).

“We will use our established success with workplans, staff expertise and contracting processes to use the grant funding to plug abandoned wells,” Clay Woodul, RRC Assistant Director of the Oil and Gas Division for Field Operations, said in a statement.

The 800 wells are a fraction of the more than 6,000 documented orphan wells in Texas as of 2019, the most part of which are on private land. That’s according to figures from the Interstate Oil and Gas Compact Commission (IOGCC) released in 2020.

In Texas, the average plugging and restoration cost per well is around $30,000, slightly higher than the national average, per a 2020 analysis by researchers at Columbia University’s Center on Global Energy Policy. The national average is a weighted average and is relatively low because the largest number of wells have been plugged in lower-cost states such as Texas, Louisiana, Wyoming, and Kansas, the researchers said.

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The initial federal grant to Texas is part of an initial $560 million from the Bipartisan Infrastructure Law to 24 states to begin work to plug, cap, and reclaim orphaned oil and gas wells. The federal investment is part of an overall $1.15 billion funding announced in January by the Department of the Interior.

Of states eligible for funding, 22 states, including Texas, have been allocated $25 million each in Initial State Grants. States will receive additional formula funding dollars in the coming months, the Department of the Interior said last week.

“We must act with urgency to address the more than one hundred thousand documented orphaned wells across the country and leave no community behind. This is good for our climate, for the health of our communities, and for American workers,” Secretary of the Interior Deb Haaland said in January, announcing the $1.15 billion in federal funding under the Bipartisan Infrastructure Law to clean up orphaned oil and gas wells across the country.

According to the Department’s estimates, Texas is eligible to receive a total federal funding of $343.7 million to plug and clean up orphaned oil and gas wells.

That’s nearly $150 million less than the expected costs of some $482 million for plugging all documented wells, The Texas Tribune reported, citing the Railroad Commission’s notice of intent to apply for federal funds it had obtained.

In Texas, the number of pluggings completed this fiscal year was a total of 1,072 wells physically plugged as of July 31, although not all of them have yet been invoiced and approved for payment, according to a monthly report of the Railroad Commission of Texas. The total cost of completed pluggings of abandoned oil and gas wells so far this fiscal year stands at $29 million, the RRC said.

By Tsvetana Paraskova for Oilprice.com

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