NAPE: Turning Orphan Wells From a Hot Mess Into a Hot Opportunity

Orphan wells pose risks to the environment and the millions of humans who live near them, but their future could be bright.

There are about 125,000 documented orphan wells—wells with no owner responsible for plugging them—dotted across the U.S., and plugging them can be expensive. On the other hand, some have the potential to provide carbon credits, speakers said during NAPE’s Energy Business Conference on Feb. 7.

A question of policy

Adam Peltz, director and senior attorney for the Environmental Defense Fund, said despite every state requiring wells to be plugged at the end of their useful life, orphan wells persist.

“Orphan wells are obviously a policy failure. We shouldn’t have that,” he said. “If we have orphan wells, something’s gone wrong, and if something’s gone wrong, it means we need to fix it.”

The main way wells wind up as orphans is by being passed down the value chain from large operators to smaller companies, which may become insolvent and unable to foot the bill for plugging the well.

“They will likely be transferred to increasingly insolvent operators until those operators walk away and leave states with big orphan well bills,” he said.

In 2021, the EDF partnered with researchers at McGill University to identify and document orphaned wells, and found there are currently about 125,000 such wells in the U.S.

Peltz said the number is not a true representation of all the orphaned wells that exist in the country.

“This is a small fraction” of the orphaned wells in the U.S., he said. Estimates could be “upwards of 800,000, and it could be even more than that. I’ve heard people say 2 million. I hope it’s not 2 million.”

These wells present a variety of hazards, he said, a fact complicated by well proximity to communities. About 18 million Americans live within a mile of a documented orphaned well.

“Something like 10% to 20% of orphan wells emit methane, but in addition to methane, it’s groundwater contamination. Groundwater contamination is the original reason why most states began requiring wells to be plugged along with resource protection,” Peltz said. “For structures that are in close proximity to these wells, they can represent an explosive hazard. There are structure explosions in Pennsylvania pretty frequently from these wells, and I keep hearing anecdotes that these wells are being discovered … under houses, under schools, under convention centers, under nursing homes, in rivers. They’re all over the place. And for the people who live near them, they represent an immediate danger.” 

In addition to getting orphan wells plugged, Peltz wants to get rid of orphan wells altogether in the future.

States are taking different approaches to securing enough money to pay for future orphaned wells, he said.

Louisiana has increased idle well fees and offered incentives to plug wells. Utah and New Mexico are adjusting their bonding programs.

“Colorado, pretty much from EDF’s perspective, solved orphan wells two years ago in a comprehensive update to their financial assurance rules,” Peltz said. “Between the financial assurance reforms and the $10 million a year fund, it’s our sense that persistent orphan wells will no longer be a problem in Colorado.”

Plugging

Rebellion Energy Solutions CEO Staci Taruscio believes idle wells should be taken care of.

“We ought to be cleaning up the wells that we’re no longer using, whether they emit methane or leak or don't. I think there’re some things you can do to avoid plugging them, but sometimes the right answer is just to step up and plug them,” she said.

Red Dirt Energy COO Scott St. John said plugging orphan wells brings uncertainty and a number of challenges. For starters, orphan wells typically lack accurate records, which leaves the company plugging the well to “make our best guess on a lot of these things,” he said.

That costs money and plays havoc with logistics.

“When you’re plugging these wells, you’ve got wire line, you’ve got cement, you’ve got pump trucks, you’ve got all these different third-party vendors,” he said. 

Typically, orphaned wells are in places lacking well pads, lease roads or other access. 

“Some of these wells have pressure built up, so those are safety concerns we have to take into account,” he said.

Finding workers to carry out operations can also be a challenge, he added.

All of these challenges add up to a hefty price tag for plugging operations, he said.

A 2021 Environmental Science and Technology study found that the average cost to plug an orphan well—based on data from 19,500 wells—was around $76,000, he said.

“There’s no magic bullet” for figuring the per-foot cost to plug a well, St. John said. In Texas, it may range from “$6 a foot to $30 a foot, just depending on where you’re at in the state. That's a pretty big range.”

And costs have gone up since 2021, he added.

Carbon credits

Certain orphaned wells can be plugged for a carbon credit.

To qualify a carbon credit, the effort must generate a measurable benefit that only happens because of the carbon credit incentive, Taruscio said.

“The difference between an operated well and an orphaned well is this additionality component here. So there are a lot of reasons to believe that an operated well would be plugged under sort of status quo, an orphan well doesn't have any mandate, frankly, doesn't have the history to suggest it will be plugged, anything like that. So that is definitively additional,” she said. 

Rebellion follows American Carbon Registry’s GHG measurement methodology to determine emissions, she said. The basic process for plugging a well for carbon credit starts with identifying wells that are eligible and then establishing a baseline for emissions. 

“You plug the well … and then you go back and you measure again and you confirm that it’s zero,” she said.

She said properly plugging orphan wells, with a focus on permanence rather than simply meeting regulations costs more and takes more time.

On the other hand, she said the type of credit such wells can generate is “very high” value.

“You’re really starting to see alignment between doing things responsibly, doing things properly, doing things at a very high standard and the value proposition that doesn’t happen often. So that marriage is very nice. And then of course there’s the desirability of these credits,” Taruscio said.