Students and faculty working with the Graduate School of Public and International Affairs (GSPIA) Shale Gas Governance Center released two papers in the USAEE Working Paper Series as part of their ongoing work to understand the impact of abandoned oil and gas wells in Pennsylvania.
When wells stop producing oil or gas, most states require operators to "reclaim" them by plugging them with cement, removing equipment, and restoring land, water, and vegetation to pre-drilling conditions. But many wells drilled in past eras have not been reclaimed: they are "abandoned." Abandoned wells can leak harmful gases and liquids, provide pathways for the contamination of water at the surface and underground, fragment natural habitats, and interfere with alternative land uses.
A recent working paper by former student Nick McClure, current student Ion G. Simonides, and GSPIA professor Jeremy Weber provides an improved understanding of the cost of reclaiming wells. The paper uses reclamation data for more than 1,200 conventional wells to find that bonding requirements for conventional wells have been far lower than actual reclamation costs. The same is true of unconventional shale wells.
PhD student Max Harleman authored a second paper which includes a Cost Benefit Analysis to determine how much money state officials should require shale gas well operators to set aside as bonds to achieve a socially desirable outcome.
A discussion of issues and policies related to abandoned wells was part of the SGGC Fall 2018 event series.
A summary of the analysis and findings is available on the GSPIA Energy and Environment blog.