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What To Do With Texas’ Leftover Oil & Gas Wells

News Article Sponsored by Hanby PetroAnalysis

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When the oil and gas fields of Texas are booming, it’s busy times for the state agency that regulates the industry. And when there’s a downturn, it can be even busier. One reason: abandoned oil and gas wells.

That was a big takeaway from a meeting this week of the Texas House Energy Resources Committee.  The topic came up when Chairman Drew Darby (R-San Angelo) said people around his hometown are seeing oil and gas companies get into financial trouble and walk away from their wells.

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“That’s not unexpected; it happens every cycle,” replied Christi Craddick, a Commissioner on the Railroad Commission of Texas, the strangely-named agency that is in charge of plugging abandoned wells.

The problem is that there is already a backlog of wells that need to be plugged.  Craddick said there are around 9,500 abandoned wells in Texas right now, and they can leak and damage water supplies, emit chemicals in the atmosphere and pose dangers to people who live nearby. But the oil and gas downturn could raise that number to 12,000. And just as the number of wells is rising, money to plug them is shrinking.

The reason? The agency makes a lot of its revenue through industry fees. A bust means fewer permits sold, more wells to plug, and less money to plug them.

The agency’s approach to plugging abandoned wells “sounded like triage,” said Dallas State House member Rafael Anchia. “That tells me, as someone whose engaging in oversight, that there are a lot of dangerous abandoned wells out there that we’re not getting to.”

Lawmakers heard that the problem, again, is funding. Well operators put down a bond when they start operating a well in case the state needs to step in and plug it. But that only covers 17 percent of the cost of plugging a well. The rest is covered by the Railroad Commission.

Commissioner Ryan Sitton said the agency could not plug all 9,500 wells even if it used its entire $80 million budget.  “If all we devoted our money to was well plugging, we still couldn’t get them all done,” said Sitton.

Craddick said it would be up to state lawmakers to increase the bonding fees to cover more cost or provide added state revenue for well plugging.

“To your knowledge, have any commissioners ever asked that [funding to plug wells] be increased? Have you ever asked that be increased?” Anchia asked Craddick.

“That’s not been a priority for us at this point,” said Craddick.


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