Plugging old oil and gas wells may cost as much as ten times what the industry routinely estimates, according to a new report from Carbon Tracker. As oil and gas companies walk away from their “stranded liabilities,” the public may be left to pick up the tab. When oil and gas companies are finished with old wells, they are supposed to close them and pay for the cleanup. However, often the wells are abandoned, or “orphaned,” left idled but not plugged up for good. In many cases, these wells are dumped onto local and state governments, leaving taxpayers to pay for the cleanup.
The problem is not new, however. “Bonding” for oil and gas wells have been around for many years, but the actual requirements are lax almost everywhere. Companies are not required to pay the full cleanup costs upfront, the logic often being that they will earn money as they go, better equipping them to pay for cleanup later on.