Topline: Colorado’s oil and gas wells are not profitable enough to cover their own cleanup costs.
A new study from the Carbon Tracker Initiative says low-producing, aging “legacy” wells will only generate another $1 billion in revenue before they must be decommissioned at a cost of $4 billion to $5 billion. That leaves a gap of at least $3 billion that taxpayers will likely be responsible for.
Key facts: The study analyzed Colorado’s more than 27,000 legacy oil and gas wells which represent 57% of all wells in the state. When active wells are included, the cleanup cost rises to up to $8.5 billion, but many of those wells are profitable before they're shut down, so taxpayers funds might not be used.
A single well can cost over $110,000 to “plug,” according to The Guardian. If it's not done properly, the well can leak carcinogens and methane. When oil companies don’t have enough money to do it themselves, the responsibility falls to the state.
Colorado passed laws in 2019 that were supposed to make sure energy companies had enough cash to decommission their own wells. But the Carbon Tracker Initiative says the rules are filled with loopholes and will only save taxpayers $654 million by 2029 in the “best-case scenario.”
The state has also struggled to enforce its law. It ordered drilling company K.P. Kauffman to save $133 million over the next 10 years for well decommissions, but the company has already said it can’t pay a $2 million fine levied by the state, according to The Guardian.
Sixty-six energy companies haven’t submitted plans to cover the cost of cleaning up their unplugged wells, but so far they’ve only been “sent some enforcement letters,” The Guardian reported.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
Background: As of 2022, there were at least 120,000 “orphan wells” in the U.S with no owners to be found. Some estimates say there could be another 1 million waiting to be discovered, according to The Washington Post.
President Biden’s Bipartisan Infrastructure Law allocated $4.7 billion to help states clean them up.
Summary: Most Americans are taught as early as kindergarten to pick up after themselves. Someone needs to remind oil companies of basic etiquette.
The #WasteOfTheDay is brought to you by CEO & founder, Adam Andrzejewski, with Jeremy Portnoy. Learn more at OpenTheBooks.com.
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