Natural gas companies have drilled hundreds of thousands of gas wells, many in central Appalachia. Tens of thousands of wells in our region that no longer produce any meaningful amount of gas for energy use. Yet old wells tend to leak potent greenhouse gases, primarily methane. And lots of it. Research detailed by Bloomberg suggests that gas leaching from old wells in Appalachia is one of the dirtiest components of the U.S. energy system.
Companies responsible for these wells are legally required to report the leakage. Unfortunately, many companies do not do so. Even more, the many regulatory agencies do not enforce the requirement.
In addition to the untold environmental damage they cause, unplugged wells are also a major property rights issue. Many of these wells are owned by large companies, but located on private property owned by individuals. An abandoned well reduces the value of the landowners’ property until it is plugged.
Cleaning up these wells could cost hundreds of billions of dollars. When operators fail to plug old wells, it can fall on taxpayers or landowners to pay for the plugging and deal with any leaks, property damage, or neglected equipment. The business model is based on harvesting cash flows from its wells and delaying plugging and clean up costs for as long as possible. “The model seems like it’s built on abandoning those assets,” says Ted Boettner, who has studied abandoned wells at the Ohio River Valley Institute (ORVI), a regional research organization. “It looks like a liability bomb that’s destined to explode.”
If the companies that own low-producing wells in the region were to go out of business, states could be on the hook for billions in plugging costs. ORVI recently released a report detailing the issues related to this problem. We cannot let these companies leave the wells unplugged, leaving tax payers and property owners with the burden.
Appalachian Mountain Advocates is doing something about it. We recently filed a complaint in federal court on behalf of West Virignia property owners asking one company to take responsibility for the thousands of these wells it owns. Read the complaint here.