Cleanup of inactive Gulf of Mexico wells estimated at $30 billion
Waters off Alabama, Louisiana and Texas are home to 14,000 nonproductive
wells

Date:
May 8, 2023
Source:
University of California - Davis
Summary:
A new article examines the cost to plug 14,000 wells that are
inactive, have not produced for five years and are unlikely to be
reactivated in the Gulf of Mexico region, which is the epicenter
of U.S. offshore oil and gas operations.


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==========================================================================
FULL STORY ========================================================================== Wetlands, coastal areas and offshore waters near Alabama, Louisiana
and Texas have more inactive oil and gas wells than producing ones,
and the cost to permanently plug and abandon them could be $30 billion, University of California, Davis, researchers suggest.

A paper published today in the journal Nature Energy examines the cost
to plug 14,000 wells that are inactive, have not produced for five years
and are unlikely to be reactivated in the Gulf of Mexico region, which
is the epicenter of U.S. offshore oil and gas operations.

The wells could pose future environmental and financial risks to the
public, and the cost differential for plugging onshore wells versus those
in offshore waters is large, said Mark Agerton, an assistant professor
at UC Davis and lead author of the paper.

Leaks from wells closer to shore are more likely to damage coastal
ecosystems and release greenhouse gases like methane into the atmosphere, compared to wells in deep waters. The study found that more than 90%
of inactive wells are in shallow areas, and the cost to plug those would
be $7.6 billion, or 25% of a total $30 billion.

Informing policy decisions "The wells aren't supposed to be leaking
into the environment, but sometimes they do," said Agerton, of the
Department of Agricultural and Resource Economics. "How do you get the
most environmental benefit for the least amount of money?" The findings
could help states decide cleanup priorities, especially as they access
$4.7 billion in federal money authorized by the Infrastructure Investment
and Jobs Act. That money is set aside for methane reduction programs,
including cleanup of old oil and gas wells, said Gregory Upton, an
associate research professor at the Louisiana State University Center
for Energy Studies and co-author of the paper.

"States have a pretty good idea of what it costs to plug these wells
on land, but there is really a lot of uncertainty as to what the costs
were for these offshore wells," Upton said during a media briefing about
the paper.

Liability for cleaning up wells abandoned in federal waters falls to
prior owners if the current owner becomes insolvent and is unable to
cover costs.

Large American oil companies currently own or have owned 88% of the
wells in federal Gulf of Mexico waters and would legally shoulder cleanup liabilities before taxpayers, Agerton said.

But in state waters, each jurisdiction handles liability differently,
and prior ownership doesn't come into play. States oversee plugging
programs for orphaned wells whose owners have gone bankrupt, though the
cost to plug an abandoned offshore well increases with the length of
the well and the depth of the water.

"The bulk of the costs comes from plugging wells in deeper water where
the environmental consequences are less than for a shallow well closer
to shore," Agerton said. "That money is probably better spent on state
waters where they can't go after prior owners for cleanup costs and it's
going to be a cheaper cleanup job with more environmental benefit."
Siddhartha Narra, Brian Snyder and Gregory B. Upton Jr. of Louisiana
State University, are co-authors on the research.

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========================================================================== Story Source: Materials provided by
University_of_California_-_Davis. Original written by Emily Dooley. Note: Content may be edited for style and length.


========================================================================== Journal Reference:
1. Mark Agerton, Siddhartha Narra, Brian Snyder, Gregory
B. Upton. Financial
liabilities and environmental implications of unplugged wells for
the Gulf of Mexico and coastal waters. Nature Energy, 2023; DOI:
10.1038/ s41560-023-01248-1 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2023/05/230508190604.htm

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