OKLAHOMA CITY – Across the nation, concern is growing that oil and gas producers will shut down wells and simply walk away because of the severe slump in the energy industry.
Only a dozen drilling rigs were operating in Oklahoma on May 22, compared to 103 a year ago, according to Baker Hughes, which tracks the number of working oil and gas rigs in the U.S. weekly. Nationwide, 318 rigs were operating on May 22, compared to 983 a year ago.
According to National Public Radio, there may be more than one million abandoned wells scattered across the country. Pennsylvania’s Department of Environmental Protection estimates as many as 560,000 abandoned wells in that state alone.
“Based on what has happened during past economic downturns in the oil industry, we expect to see the number of abandoned wells increase unless there is a quick turnaround in present conditions,” said Matt Skinner, chief public information officer for the Oklahoma Corporation Commission, which regulates the oil and gas industry in this state.
Some of these “orphaned” or “abandoned” wells are more than 100 years old, while others were drilled within the past decade. Many lack proper state records, meaning crews have to improvise when cleaning them up, NPR noted.
In the nomenclature of the Oklahoma Corporation Commission, “orphaned” wells “can be taken over and produced,” Skinner said. “We don’t plug them; we have them on a list from which interested operators can choose.”
“Abandoned” wells, in contrast, are wells for which no responsible party can be located and are plugged, Skinner said. The commission has hired private contractors to plug 463 abandoned wells in the past five fiscal years. Oklahoma has approximately 200,000 active oil and gas wells, including injection disposal wells, commission ledgers indicate.
The agency’s fund for plugging abandoned oil/gas wells is underwritten by a fee paid by current oil and gas operators in Oklahoma. The fee is a fraction of an excise tax imposed on natural-gas and on each barrel of oil produced and is intended to “maintain the Corporation Commission Plugging Fund at a $5 million maintenance level,” state statute provides. (That fund is scheduled to “sunset” in July 2021 unless the Legislature renews it.)
Bond forfeitures also are earmarked for plugging wells. The operator of a well is responsible for paying for any damage and remediating the site, Skinner said. An operator has to post a bond to cover the cost of plugging a well if the operator goes out of business. That bond is $25,000 per operator, not per well, Skinner said.
The average cost of plugging an abandoned well varies by geographical district, he said.
• In District 1, the average cost is $5 per foot of well depth. That district encompasses 18 counties: Adair, Cherokee, Craig, Creek, Delaware, Kay, Lincoln, Mayes, Muskogee, Noble, Nowata, Ottawa, Pawnee, Payne, Rogers, Tulsa, Wagoner and Washington.
• The average cost in District 2 is $5.50 per foot. The 19 counties in D2 include Alfalfa, Beaver, Blaine, Canadian, Cimarron, Custer, Dewey, Ellis, Garfield, Grant, Harper, Kingfisher, Logan, Major, Oklahoma, Roger Mills, Texas, Woods and Woodward.
• The average cost per foot in District 3 is $6. The 19 counties in D3 are: Beckham, Caddo, Carter, Cleveland, Comanche, Cotton, Garvin, Grady, Greer, Harmon, Jackson, Jefferson, Kiowa, Love, McClain, Murray, Stephens, Tillman and Washita.
• The average cost of plugging an oil/gas well in District 4 is $6 per foot. Those counties include Atoka, Bryan, Choctaw, Coal, Haskell, Hughes, Johnston, Latimer, LeFlore, McCurtain, McIntosh, Marshall, Okfuskee, Okmulgee, Pittsburg, Pontotoc, Pottawatomie, Pushmataha, Seminole and Sequoyah.
(Osage County is the lone outlier. The Corporation Commission has no jurisdiction over energy exploration/ production in that county. Minerals beneath the surface throughout Osage County still are owned by the Osage Nation. The energy industry and others doing business underground in Osage County are regulated by the U.S. Bureau of Indian Affairs and the U.S. Environmental Protection Agency.)