Orphans No More? Federal Infrastructure Law to Fund Clean Up of Orphaned Wells

After months of negotiations and political maneuvering, President Biden signed the Infrastructure Investment and Jobs Act into law on November 15, 2021.  With former New Orleans Mayor Mitch Landrieu in place as the so-called “Infrastructure Czar,” the administration has announced planned infrastructure projects ranging from roads and bridges, to ports and airports, to high speed internet and broadband.

One piece of the law of particular interest to Louisiana and Texas is the $4.7 billion pegged to clean up orphaned well sites nationwide.  Orphan wells are abandoned oil and gas wells with no viable responsible party to maintain or restore the wellsite.  “Millions of us — millions — live within a mile of hundreds of thousands of orphaned and abandoned wells that leak and spew.  These wells jeopardize public health and safety by contaminating groundwater; seeping toxic chemicals; emitting harmful pollutants, including methane,” according to Landrieu.

Texas (#5) and Louisiana (#10) are among the top states with orphan wells.  According to the Louisiana Department of Natural Resources (DNR), Louisiana has about 4,600 orphan wells.  The DNR estimates it would cost $401.7 million to plug and abandon these orphan wells.  Although states may have existing programs to address orphaned oilfield sites (like Louisiana’s Oilfield Site Restoration Program funded through fees on oil and gas production in Louisiana), low funding has generally resulted in restoration at a glacial pace.  For example, during the current fiscal year, the DNR has funding for restoring only 46 well sites.

The Memorandum of Understanding signed this month by the U.S. Departments of the Interior, Agriculture, and Energy, the Environmental Protection Agency, and the Interstate Oil and Gas Compact Commission establishes a framework to implement the orphaned well program, including a state grant program for states to establish and manage their own orphan well, plugging, remediation and restoration programs.  The Biden administration hopes the program will help spur economic revitalization in hard hit oil and gas communities while also cutting and remediating pollution.  Louisiana and Texas are two of 26 states to request this funding.  The Department of Interior is expected to publish the grant funding amount for each state in the coming weeks.

footer image footer image footer image