2024 Top 400 Sourcebook: Orphan Well Cleanup Gets $775M From Feds

The U.S. Interior Dept. in August advanced $775 million in federal grants to 21 energy producing states to boost efforts to clean up closed or abandoned oil and gas wells that have no responsible party and can pose environmental risks. The latest funding under the 2021 infrastructure law will expand work to cut methane leaks and surface water and groundwater risks.

Texas is eligible for the largest amount, $318 million, followed by Pennsylvania, $305 million; Ohio, $231 million; Oklahoma, $205 million; California, $141 million and West Virginia, $117 million. More than $1 billion in funding has been used to remediate about 8,000 identified orphan wells, Interior said.

85%
Proportion of 1,000 green or blue hydrogen production projects announced since 2015 that do not yet have final investment decisions, says a new report from management consultant McKinsey 

The Interstate Oil and Gas Compact Commission, a 38-member U.S.-Canada energy source preservation group, said that despite ongoing work—as of Dec. 31, 2023, the number of documented orphan wells in 29 responding states rose 54% since 2020 to nearly 142,000. It also noted 1.6 million drilled and unplugged wells in those states, also up from 2020. The group tied recent increases largely to better state documentation of orphan well owners and operators, and “existence, status, and location of wells using field inspection and drone surveillance.”

Eligible states have until Dec. 13 to apply for funds, which require them to measure methane emissions from plugged wells, screen for water source impacts and include communities in cleanup work. Agency guidance also “encourages” states to use project labor agreements.

A Texas state spokeswoman says it “will review requirements” before deciding whether to apply for funding. Wyoming, the nation’s seventh largest oil-producing state, has declined to apply for new funding, despite being eligible for $35 million. “We do not agree with several conditions placed on the grant by [Interior], and believe these conditions do not follow the language of the law,” says Tom Kropatsch, supervisor of the Wyoming Oil and Gas Conservation Commission. “We will continue to evaluate requirements … in future phases.” The state has a well-plugging program, he says, funded by forfeited bonds and a conservation tax on energy producers.

Congress allocated a total of $4.7 billion in the law for orphan well cleanup, including $300 million for work on public and tribal lands.

Upset Giant LNG Project in Texas Wants Feds to OK Later Finish

Photo courtesy Golden Pass LNG

Citing on-site turmoil this year that resulted in layoffs, cost overruns, delays and the departure of lead contractor Zachry Group, owners of the Golden Pass liquefied natural gas export terminal under construction in Texas since 2019 asked the Federal Energy Regulatory Commission on Aug. 30 to approve a three-year extension until November 2029 to finish the estimated $11-billion, three-unit megaproject set to produce 18 million metric tons per year.  

The extra time “will allow for rehiring and remobilization of over 4,000 skilled workers and provide for potential schedule uncertainties,” said the filing by LNG owners ExxonMobil and Qatar Energy. Golden Pass said its  “goal is to produce first LNG around the end of 2025 with commercial operations following thereafter. 

 Zachry filed for bankruptcy in May in a dispute over $2.4 billion in cost overruns, replaced by its former joint venture partners McDermott International and Chiyoda Corp. Work on the three gas-processing units is 83%, 46% and 31% complete, respectively, the Golden Pass filing said.  

—Debra K. Rubin