Researchers suggest that wetlands, coastal areas and offshore waters near Alabama, Louisiana and Texas have more inactive oil and gas wells than producing wells, and the cost of permanently sealing and abandoning them could reach $30 billion.
Paper published today in the journal nature energy It examines the cost of capping 14,000 wells that have not been active and have not been produced in five years and are unlikely to be reactivated in the Gulf of Mexico region, which is the center of US offshore oil and gas operations.
Wells can pose future environmental and financial risks to the public, said Mark Agerton, assistant professor at the University of California, Davis and lead author of the paper, and the cost difference for plugging wells onshore versus those in offshore waters is significant.
Leaks from nearshore wells are more likely to damage coastal ecosystems and release greenhouse gases such as methane into the atmosphere, than from deepwater wells. The study found that more than 90% of the inactive wells are located in shallow areas, and that the cost of blocking these wells will be $7.6 billion, or 25% of the total $30 billion.
directing policy decisions
“Wells aren’t supposed to leak into the environment, but they do leak sometimes,” said Agerton, of the Department of Agricultural and Resource Economics. “How do you get the most environmental benefit with the least amount of money?”
The findings could help states prioritize clean-up, especially as they amount to $4.7 billion in federal funds authorized by the Infrastructure Investments and Jobs Act. The money is for methane reduction programs, including clean-up of old oil and gas wells, said Gregory Upton, associate research professor at the Louisiana State University Center for Energy Studies and a co-author on the paper.
“Countries have a good idea of the cost of plugging these wells on land, but there is a lot of uncertainty about the cost of these offshore wells,” Upton said during a media briefing about the paper.
It is the responsibility of the previous owners to clean up abandoned wells in federal waters if the current owner becomes insolvent and is unable to cover the costs. Agerton said that major US oil companies own or currently own 88% of the wells in federal Gulf of Mexico waters and will legally assume cleanup obligations to taxpayers.
But in state waters, each jurisdiction handles liability differently, and previous ownership doesn’t play a role. States supervise programs to plug in orphan wells whose owners have gone bankrupt, although the cost of plugging an abandoned well offshore increases with well length and water depth.
“The bulk of the costs come from plugging wells in deeper waters where the environmental consequences are lower than in a shallow well closer to shore,” said Agerton. “This money would probably be better spent on the state’s waters as they can’t go after the previous owners for clean-up costs and it would be a cheaper clean-up job with more environmental benefits.”
Louisiana State University Siddhartha Nara, Brian Snyder, and Gregory P. Upton Jr. contributed to the research.