Saturday, April 20, 2024

Louisiana adopts stronger rule to tackle orphaned oil well problem

by BIZ Magazine

By Wes Muller, Louisiana Illuminator

The Louisiana Department of Natural Resources finalized a new rule Friday to help reduce the number of orphaned oil and gas wells throughout the state.

At one point last year, Louisiana had more than 4,600 wells considered orphaned, meaning they were abandoned with no financially viable owner to take responsibility. These wells can pose a significant risk to the environment through leaks or damage and can be costly for taxpayers to repair. 

There are also approximately 17,000 non-productive oil and gas wells in Louisiana registered as having future utility, meaning the operator claims they could be used in the future. As a result, the state doesn’t require the operator to plug the well. 

Unplugged wells can leak methane into the air, contaminate water, reduce property values and prevent other economic uses of the land. The longer a well sits idle and unplugged, the more likely it is to become orphaned. 

The new Natural Resources regulation puts limits on extensions of the future utility status oil and gas drillers can receive and increases fees on wells that have been inactive and unplugged for five years or more. It also reduces fees for operators who plug 10 or more wells in a year. 

The federal government is providing Louisiana with more than $100 million through 2030 to plug orphaned wells. With that funding, the Department of Natural Resources has hired contractors to plug about 500 wells so far this year. 

Once wells have been in future utility status for three years or more, only 20% return to service. Of those that do, more than 80% of their lifetime production will have already happened, according to the Environmental Defense Fund. 

The new regulation helps make Louisiana eligible for up to $70 million more in federal funding to help tackle the orphaned well problem.

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