RRC Showcases Speedy Work Plugging Orphaned Wells with Federal FundsApril 03, 2023
AUSTIN – The Railroad Commission of Texas highlighted the agency’s extensive work and expertise in plugging orphaned oil and gas wells during a visit from U.S. Secretary of the Interior Deb Haaland in Houston last week.
When a well ceases production, the majority of operators fulfill their obligations and responsibly plug their wells to prevent leaks and protect the environment. Last year 88% of wells plugged were plugged by operators. The RRC steps in to plug wells when an operator goes out of business, and collects on the operator’s financial assurance and seeks reimbursement through legal proceedings.
In October, Texas was the first state in the nation to begin plugging orphaned oil and gas wells using an initial grant from the federal Infrastructure Investment and Jobs Act. The RRC has plugged more than 430 wells so far with that federal grant.
Those well pluggings supplement RRC’s annual well pluggings in the State Managed Plugging Program (SMP). No taxpayer money is used at all for the SMP; all the funding is through oil and gas industry revenue including, but not limited to multiple fees, and bonds and financial security paid by oil and gas operators.
The next inflow of federal well plugging funds will be through formula grants. RRC submitted comments on draft formula grant guidance recently issued by the U.S. Department of the Interior. The RRC is concerned the draft requirements place administrative burdens that go beyond the scope of the legislation that authorized the well plugging funds. There’s also concern about a proposed phased approach to releasing formula funds, versus releasing the total amount at once.
“Among all oil and gas producing states, we’re a leader in addressing orphan wells, and the Legislature has passed several measures to create incentives to reduce orphan wells in Texas,” said Wei Wang, RRC Executive Director. “We’ve built great momentum using federal funds to plug wells, and we urged Secretary Haaland to help us keep the momentum. Less than two percent of oil and gas wells in the state are orphaned, and getting the formula funds quickly will help us proceed without unnecessary interruptions.”
The RRC anticipates plugging about 800 wells this fiscal year using the initial federal grant, which would be in addition to at least 1,000 well pluggings through the SMP.
The agency’s comments on the draft formula grant guidance can be found on the RRC website at https://www.rrc.texas.gov/media/4ilhvfga/iija-draft-formual-grant_rrc-texas-comments_2_24.pdf
About the Railroad Commission:
Our mission is to serve Texas by our stewardship of natural resources and the environment, our concern for personal and community safety, and our support of enhanced development and economic vitality for the benefit of Texans. The Commission has a long and proud history of service to both Texas and to the nation, including almost 100 years regulating the oil and gas industry. The Commission also has jurisdiction over alternative fuels safety, natural gas utilities, surface mining and intrastate pipelines. Established in 1891, the Railroad Commission of Texas is the oldest regulatory agency in the state. To learn more, please visit https://www.rrc.texas.gov/about-us/.