Nonprofits clean up ‘dirty little secret’ of oil and gas industry: abandoned wells
The following story was first published by Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.
Curtis Shuck stumbled upon what he calls one of the oil and gas industry’s “dirty little secrets” while visiting Montana for a work-related trip in 2019. It was a rusted, uncapped oil well in the middle of a wheat field — literally a hole in the ground. And there wasn’t just one; there were several.
“These were images that I could not get out of my mind that day,” Shuck said. At the time, he had worked for 30 years in the oil and gas industry. “I was alarmed, disappointed, embarrassed and shocked that the industry would leave something like this behind without at least cleaning up after itself. I could not ‘unsee’ this stuff.”
The wells aren’t just eyesores. They can leak hydrogen sulfide, benzene and arsenic into the groundwater and are a significant source of methane — a highly flammable, powerful gas that traps heat in the Earth’s atmosphere.
Shuck’s discovery in Montana led him to establish the Well Done Foundation, a nonprofit organization that in the past year has plugged more than 22 orphaned and abandoned oil wells in nine states.
But there are at least one million more abandoned wells to plug. President Joe Biden’s Bipartisan Infrastructure Package provides up to $4.7 billion to plug some of them, including $560 million awarded this year to 24 states to address some of the worst polluting wells. Some estimates say the cost to close all of the abandoned wells could be several times more than the amount provided in the infrastructure law.
The wells, in backyards, fields and even community parks, were abandoned by oil and gas companies that went bankrupt over the decades. Regulations requiring the wells to be closed, or plugged, didn’t even exist till the middle of the 20th century. But the problem isn’t just historical. One investigation showed the number of such wells has increased 12% since 2008, as companies that were active in the hydraulic fracturing boom defaulted.
“Bankruptcy is the business plan for many oil companies,” said Scott Eustis, community science director for the Louisiana-based environmental advocacy group Healthy Gulf.
“If the USA wants to tackle the methane issue, we need a larger policy shift, a just transition, because we are likely to see many more wells abandoned at a faster rate in the near future,” he said. “I think we must focus on hiring more workers and getting more of them plugged, in whatever form that takes.”
Companies that drill on federal land are required to provide a bond to plug wells when they are done with them, but a 2019 Government Accountability Office report found that in more than 80% of cases, the bonds didn’t provide nearly enough money to properly close the wells. According to the report, the average bond was $2,122 per well. The cost to cap wells starts at about $65,000, said Adam Peltz, a senior attorney at the Environmental Defense Fund who studies the abandoned and orphaned well problem.
He points out, however, that federal wells represent just 10% of the onshore wells in the country—the majority are on state land, where oil and gas producers are often allowed to post a single bond for all of their wells in an area or a state. That amount is generally enough to close and cap just a fraction of the wells. “It’s woefully underfunded,” he said.
In addition to bonding, since 1993, oil and gas companies in Louisiana have had to pay a small fee on the oil and gas they produce to help pay to clean up the orphaned wells. Mike Moncla, president of the Louisiana Oil and Gas Association, said there’s simply not enough money to plug all of the historically abandoned wells.
The industry lobbying group, the American Petroleum Institute, in response to a request for comment about the rate of abandoned wells, directed Floodlight to its blog post about new well plugging standards.
“Today, a company cannot just walk away from a well, and most producing states require a bond or other form of assurance from the well owner to provide financial support for future well plugging and remediation,” according to the post. “The vast majority of orphaned wells to be addressed date to the 1800s and early 1900s.”
Making a difference
Enter nonprofit foundations like Well Done.
Shuck’s foundation solicits donations from individuals and corporations in exchange for a certificate showing they have offset a portion of their carbon footprint through the plugging of a well. Tito’s Handmade Vodka, of Austin, Texas, has supported the work, saying in part, it aligns with the company’s environmental, social and governance mission.
“To date, we have not accepted a single dollar of taxpayer money,” Shuck said. “We feel there is a market-based approach to handling the work we do.” A $140 donation, for example, offsets 20 metric tons of carbon, according to Well Done.
Well Done has capped oil wells in nine states, including three in Louisiana and more on tap in Caddo Parish this year.
“The whole notion of climate change is so overwhelming,” Shuck said. “It sometimes feels like nothing I do really matters. So you feel helpless. What’s awesome about our work is that we are making a difference. One well at a time.”
Louisiana is on tap to receive $25 million of the $560 million from the Bipartisan Infrastructure Law to plug up to 900 abandoned wells the state has deemed high priority. There are more than 4,600 abandoned and orphaned wells in Louisiana.
Environmental Innovators of America, an Oklahoma nonprofit created by top executives from several oil and gas companies, is going after private donations from large corporations to fund their work. The federal money allocated for plugging wells has too much red tape and bureaucracy to bother dealing with, according to Derek Williamson, one of the founders of the group. It is focusing on Oklahoma for now but has longer term plans to operate in Louisiana and other fossil fuel producing states. Fellow Environmental Partners, also based in Oklahoma, is a third nonprofit focused on closing the abandoned wells.
Williamson nor Shuck blame the oil and gas industry for how out of control the issue is.
Williamson said there is a lot of interest in getting the wells closed, but few people want to donate their money. Environmental Innovators is also using carbon offsets to entice people to donate.
“It is very difficult to raise money around this cause,” Williamson said. “This is probably not the way we saw our vision in the beginning, but it is the way the reality of the world has turned our vision.”
As vast as the orphaned well problem is, Peltz says that the appearance of the nonprofits on the scene to help with the problem is welcome.
“The scale of this problem is so vast, we need 100% of all plugging resources,” he said. “The more the merrier.”