Author Topic: Railroad Commission spends millions plugging hundreds of orphan wells  (Read 1562 times)

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Offline thackney

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Railroad Commission spends millions plugging hundreds of orphan wells
http://fuelfix.com/blog/2016/12/06/railroad-commission-spends-millions-plugging-hundreds-of-orphan-wells/
December 06, 2016

The Railroad Commission of Texas, the state’s regulator of the oil and gas industry, spent millions of dollars plugging hundreds of wells in 2016, but it still fell short of its goal to plug nearly 900 wells, according to the agency’s Oilfield Cleanup Program Annual report.

The report was discussed during Tuesday’s commission meeting, the last meeting for this year. The agency is tasked with plugging thousands of wells abandoned by oil and gas operators, and uses a mix of federal grants and industry fees to pay for it. The state’s backlog of so-called orphan wells is estimated to be more than 9,000. Inactive wells that go unplugged are considered a health and safety hazard, and state regulations require that operators plug wells. Often, when operators can’t pay to plug a well, the state assumes the cost.

Here are some key highlights from the Oilfield Cleanup Program’s work this year:

The program spent around $2.8 million to plug 253 wells in the third quarter. The program also approved in the third quarter an additional 150 wells for plugging.

In 2016, the program spent $8.5 million to plug 544 wells. The agency’s goal for 2016 was to plug 875 wells.
The program spent around $15,700 to plug each well.

The program has targeted just over 1,000 wells for plugging in 2017, and has set aside around $14.4 million to do it. The cost of plugging individuals is expected to drop.
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geronl

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Re: Railroad Commission spends millions plugging hundreds of orphan wells
« Reply #1 on: December 07, 2016, 08:26:14 pm »
Okay, so which oil company can't afford to plug a well....

Offline thackney

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Re: Railroad Commission spends millions plugging hundreds of orphan wells
« Reply #2 on: December 07, 2016, 08:33:01 pm »
Okay, so which oil company can't afford to plug a well....

The ones that went bankrupt.  Long list of those over the decades. 
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Offline thackney

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Re: Railroad Commission spends millions plugging hundreds of orphan wells
« Reply #3 on: December 07, 2016, 08:36:08 pm »
http://www.houstonchronicle.com/business/columnists/tomlinson/article/Oil-and-gas-companies-leave-taxpayers-with-8337846.php
July 1, 2016

...The Legislature decided in 2011 that the Railroad Commission should become self-funded by collecting fees from the industry, which worked well until drilling activity dropped, and so did revenues for the commission.

To help guarantee that oil field operators plug their wells, the Legislature required them to post bonds of about $2,500. And the commission also collects a few pennies from the tax on every barrel of oil for the "Oil and Gas Regulation and Cleanup Fund."

In the idealized world in which Texas lobbyists live, those programs raise enough cash to cover the commission's expenses to plug wells abandoned by bankrupt oil companies. But that's not the world we live in.

Last fiscal year, 94 oil companies abandoned 1,584 wells, thereby forfeiting about $4.3 million. That same year, the commission plugged 692 wells at a cost of $11.7 million....
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Offline Ghost Bear

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Re: Railroad Commission spends millions plugging hundreds of orphan wells
« Reply #4 on: December 07, 2016, 09:15:07 pm »
Hmm, it sounds like a state agency is angling to increase their budget. It must be nearly time for the Legislature to be in session...
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