Report: Cleanup of Abandoned Oil, Gas Wells Could Cost US

Bankruptcies by well operators could saddle the government with $46 million to $333 million in reclamation liabilities

By Associated Press

BILLINGS — U.S. taxpayers could face potentially hundreds of millions of dollars in cleanup costs from abandoned oil and gas wells on public lands, a government watchdog agency said Wednesday.

The Government Accountability Office said in a report that it identified almost 2,300 wells that have not produced oil and gas since 2008 and have not been reclaimed.

The report said bankruptcies by well operators could saddle the government with $46 million to $333 million in reclamation liabilities. The wide range reflects the unknown costs of cleaning up the sites.

To avoid such a scenario, GAO recommended officials adjust the amount of bonds companies must post before drilling to better reflect possible cleanup costs.

Current rules allow companies to post bonds of $150,000 to cover their wells nationwide.

Abandoned wells have been a major issue across much of the West including Wyoming, where companies abandoned almost 6,000 oil and gas wells since 2014 amid low natural gas prices that led to a bust in the coal-bed methane industry.

The state has plugged and abandoned over 2,200 wells at a cost of $5,000-$7,000 per well, according to the Wyoming Oil and Gas Conservation Commission.

U.S. Rep. Raul Grijalva of Arizona, who had requested that GAO investigate oil and gas bonding practices, said the results underscore the need for an overhaul of federal bonding rules.

“Much to the pleasure of the oil and gas industry, bond amounts have been ignored for decades, resulting in levels today that are woefully inadequate,” said Grijalva, who chairs the House Natural Resources Committee.

American Petroleum Institute spokesman Reid Porter said the industry group was reviewing the report and had no immediate comment.

Bureau of Land Management officials did not immediately respond to a request for comment.