Groups Ask State to Require Full Bonding for Gas Wells

A coalition of environmental groups has filed petitions asking the state Department of Environmental Protection to require oil and gas drillers to pay bonds equal to the full cost of plugging their wells at the end of their life span.

The groups, which include the Sierra Club, Clean Air Council, and PennFuture, filed petitions with the state Environmental Quality Board (EQB) seeking to raise the bond amounts that companies must post when drilling a new conventional or unconventional well.

Under Act 13, passed by the state legislature in 2012, the bond amount for conventional wells is $2,500 per well, with the option to post a $25,000 blanket bond for multiple wells. The bond amount for unconventional wells – those that involve horizontal drilling and fracking - varies depending on the wellbore length and the number of wells, with a maximum of $600,000 for more than 150 wells. The EQB can adjust bond amounts every two years.

“Current bond amounts are so low companies are incentivized to go out of business instead of cleaning up. They’ve been allowed to abandon thousands of wells across Pennsylvania, leaving taxpayers to cover the cost,” said Sierra Club Senior Campaign Representative Kelsey Krepps in a news release. “Pennsylvania needs to raise its bond amounts to ensure that these companies doing the drilling and polluting in our state, not taxpayers, are the ones accountable for cleaning up their messes.”

Pennsylvania faces a significant issue with abandoned oil and gas wells, many of them “legacy” wells – conventional wells that were drilled many years ago before detailed records were kept by companies that have long since gone out of business. Studies suggest that there may be at least 200,000 additional legacy wells that have not yet been identified in addition to 8,000 already in the state’s database. Oil and gas drillers pay a surcharge of $150 to $250 per well to the state’s well-plugging program, but both the bond amounts and surcharge do not cover the full cost if the state must step in and plug an abandoned well. The state’s liability is estimated at between $280 million and $6.6 billion, according to the DEP. In the past few years, thousands of conventional wells have been abandoned, and the problem is expected to grow.

Leaking abandoned wells are an environmental and safety concern, as they emit can methane, a potent greenhouse gas, into the atmosphere, foul drinking water supplies, and lead to potential explosions.

The petitions call for a bond amount of $38,000 per conventional well, and $83,000 per unconventional well, and blanket bonds for multiple wells would be equal to the sum of the individual well bonds.

If the DEP determines that the petitions are complete, they will be forwarded to the EQB, which will then decide whether to consider raising bond levels.

The infrastructure bill proposed by the Biden administration includes millions for plugging abandoned wells, but its future is uncertain. However, DEP is building a database of plugging contractors and service companies it can mobilize if a large-scale effort is undertaken.

The Center for Energy Policy will host a webinar on “Abandoned and Orphan Wells: An Expensive Environmental Legacy” at 11 a.m. Nov. 10. The webinar will be presented by Seth Pelepko, Subsurface Activities Division Manager for the Bureau of Oil and Gas Planning and Program Management at Pennsylvania Department of Environmental Protection. Registration for this free event will open soon. Watch the website and newsletter for details.