Proposal would position Louisiana to receive $200 million to fix orphaned oil wells
This story was first published by the Louisiana Illuminator. View the original coverage here.
A Louisiana lawmaker has proposed legislation that would position the state to receive nearly $200 million in federal funding to fix abandoned oil and gas wells.
Senate Bill 245, sponsored by Sen. Bret Allain, R-Franklin, would give the state Department of Natural Resources more flexibility on how much it can spend to plug and restore orphaned oil wells in a given fiscal year.
There are roughly 4,600 orphaned oil and gas wells across Louisiana, many of which are leaking and polluting the environment. The total price tag to fix all of them has been estimated to be around $650 million.
Enacting the legislation, Allain said, will allow Natural Resources to maximize the amount of money the state can receive from the Infrastructure Investment and Jobs Act that President Joe Biden signed into law in November.
Louisiana is slated to receive an initial $25 million grant and can compete among 26 states for a share of $2 billion that will be allocated based on performance. States that are more economically efficient at fixing abandoned wells can receive larger shares.
“We never imagined that we would have this kind of money,” Allain said.
Under current law, the state can fix non-priority wells only if doing so doesn’t limit the number of priority sites that could have been restored in a given fiscal year. The legislation would, among other things, give the Natural Resources secretary the authority to package together more non-priority wells into attractive bid packages. The expanded authority must be used to decrease, “in a cost effective manner,” the total number of orphaned wells, the bill states.
“It really gives them the flexibility to get the most bang for the buck,” Allain said.
Allain said state administrators have been researching the Infrastructure Investment and Jobs Act grants as soon as they were announced and looking for the best ways to procure the most money.
Blake Canfield, Natural Resources executive counsel, said the legislation would position the state to receive about $150 million on the low end, which Allain called a “modest” estimate and said it could be closer to $200 million.
“As many of y’all know, orphan wells are a major problem and something we need to address,” Canfield said.
The restoration work is performed by industrial contractors the state pays out of a fund that relies on fees collected on the production of oil and gas.
Allain said his legislation would bring in enough federal money to create new jobs.
“There are people that have been laid off and unemployed in the oil field for a long time …” Allain said. “This is employment.”