The Orphaned Wells Program : Understanding the Funding Allocation, Challenges & Environmental Impact
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For more than 100 years, millions of wells have been drilled across the United States to extract oil and gas. These wells have now led to an inordinate number of “abandoned” or “orphaned” wells, posing a significant risk to the environment and the health of neighbouring communities, while contributing uncontrolled greenhouse gas emissions to the atmosphere.
An orphaned well refers to a well that has no responsible operator, leaving the financial responsibility to plug and remediate the wells to local, state, or federal agencies. In response to the risks posed, President Biden’s Bipartisan Infrastructure Law has directed the Secretary of the Interior to establish programs to inventory and properly close orphaned wells, allocating a historic investment for the program’s effective implementation.
Ahead of her keynote presentation at the Methane Mitigation America Summit in Houston, from 5-7 December, on ‘Establishing the Orphaned Wells Program’, we sat down with Kimbra Davis, Director of the Orphaned Wells Program Office, Department of the Interior, for an exclusive interview. Acting as the driving force behind the program, Kimbra shares valuable insights into the program’s alignment with global environmental and energy policy goals, the funding allocation, and the challenges it may face.
Maryam Irfan, Industrial Decarbonization Network: Can you tell us about the Orphaned Wells Program and the key drivers behind it?
Kimbra Davis: On November 15, 2021, President Biden signed the Bipartisan Infrastructure Law, directing the Secretary of the Interior to establish programs to inventory, plug, and remediate orphaned wells across the nation. To facilitate this, the law provided the department a budget of $4.7 billion for orphaned well site plugging, remediation, and restoration activities, encompassing federal, Tribal, state, and private lands.
The bulk of these funds, approximately $4.3 billion, will be issued to states through grants designed to address orphaned wells on state and private lands. A lesser yet substantial amount of $250 million is dedicated towards orphaned wells on public lands and waters, and the third category of funding of approximately $150 million is allocated towards cleaning up wells on Tribal lands.
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The implications of this historic investment will reduce methane and other greenhouse gas emissions originating from orphaned wells, help clean up and prevent water contamination, restore native habitats, protect landowners from safety hazards, create good-paying union jobs, and improve disproportionately impacted communities.
One key driver of this effort is that millions of Americans across the country reside near orphaned oil and gas wells. At least 4.6 million Americans live within half a mile of documented orphaned oil and gas wells, while 14 million live within just one mile. These legacy pollution sites pose environmental hazards such as jeopardizing public health and safety by contaminating groundwater, emitting noxious gases such as methane, littering the landscape with rusted and hazardous equipment, and adversely harming wildlife.
Furthermore, the burden of orphaned wells often falls disproportionately on communities of color, low-income communities, and Tribal and indigenous communities. These very communities often possess the fewest resources to respond to and address these hazards.
Recognizing the importance of this program, in January of this year, Secretary Haaland established the Orphaned Wells Program Office (OWPO) within the Department of the Interior to oversee these financial assistance programs. The OWPO was established to ensure effective, accountable, and efficient implementation of the Bipartisan Infrastructure Law's historic investment in orphaned well plugging and remediation.
Maryam Irfan, Industrial Decarbonization Network: How does the Orphaned Wells Program align with global environmental and energy policy goals, such as reducing methane emissions and promoting clean energy?
Kimbra Davis: As you’re aware, orphaned wells are known to emit harmful greenhouse gases like methane and leak hazardous pollutants into groundwater and surface water resources. Since the law's enactment, the Department disbursed $560 million in initial grants to states, almost $100 million to our federal partners, and most recently, nearly $40 million to Tribes, all to mitigate the damaging effects of orphaned wells on communities.
Methane reduction is a key component of orphaned well plugging, remediation, and restoration. In fact, the orphaned wells program is authorized and funded under the "Methane Reduction Infrastructure" title of the Bipartisan Infrastructure Law, highlighting the importance of addressing methane emissions. Federal agencies that receive funding to plug wells, as well as Tribal governments, are required to detect and measure methane leaking from these wells.
In the first round of state grants distributed last year, states were not required to detect and measure methane emissions, it was simply recommended as best practice. However, to our delight, a number of states embraced the challenge head-on and are actively quantifying the amount of methane being emitted. In the upcoming round of state grants, known as formula grants, states are mandated to measure the rate of methane leaking when they exceed background levels. This requirement will allow the Department to demonstrate the reduction in methane emissions into the atmosphere resulting from federally funded well-plugging efforts.
Furthermore, earlier this year, the Biden administration established a new Cabinet-level Methane Task Force for a government approach to tackling methane emissions. In late July, the White House hosted the first-ever Methane Summit to kick off the task force and the orphaned wells program was one of the two initiatives highlighted by the Interior Department, which is an honour.
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In addition to providing funding for plug and remediate orphaned wells, the Bipartisan Infrastructure Law also allocated an investment of $30 million for the Department of Energy (DOE) to develop a program focused on identifying and the addressing undocumented orphaned wells. As part of this program, the DOE is refining technologies and approaches to detect and quantify methane from unplugged wells. This program goes hand-in-hand with the Interior Department's orphaned wells program, especially concerning methane emissions.
Maryam Irfan, Industrial Decarbonization Network: Can you explain the funding allocation process for setting up well plugging infrastructure and addressing high-priority wells?
Kimbra Davis: The Bipartisan Infrastructure Law (BIL) provides $4.675 billion to the Department of the Interior for orphaned well plugging, remediation, and restoration activities. These funds are available for the Department to obligate until September 30, 2030.
State Grant Program: $4.275 billion is designated for work on state and private lands. This includes initial, formula, and performance grants.
Tribal Grant Program: $150 million for work on Tribal lands. This encompasses development grants, implementation grants, and an option for in-lieu-of-grant funding.
Federal Program: $250 million for work on public lands and waters across five federal agencies: the Bureau of Land Management, National Park Service, Fish & Wildlife Service, Bureau of Safety and Environmental Enforcement, and U.S. Forest Service.
It is important to note that most of the funding in the BIL is set aside for state grants, because more orphaned wells are located on state and private lands. A smaller portion of oil and gas wells in general are located on public and Tribal lands.
An essential component of the grant application process is the requirement for applicants to have a process to prioritize orphaned wells based on factors like threats to public health and safety, environmental harm, particularly due to methane emissions. Additionally, applicants should consider other land use priorities, including the remediation of hazardous sites in overburdened and underserved communities. For more information on how states currently prioritize the plugging of orphaned wells based on various factors, I recommend reviewing the recent report released by the Interstate Oil and Gas Compact Commission: https://iogcc.ok.gov/sites/g/files/gmc836/f/prioritization_report_7.10.23.pdf
Maryam Irfan, Industrial Decarbonization Network: How do you plan to ensure timely and transparent implementation?
Kimbra Davis: The Bipartisan Infrastructure Law (BIL) lays out several deadlines and milestones, including annual reports to Congress, reporting requirements for states, and the issuance of grants within certain timeframes. To ensure the transparent fulfilment of these requirements, the Orphaned Wells Program Office will be leading the Department's efforts.
All information related to timelines for states and Tribal governments to apply for orphaned well grants, will be accessible through detailed guidance documents and Frequently Asked Questions (FAQs), available on the Department's orphaned wells webpage: https://doi.gov/orphanedwells. Plus, to ensure maximum public awareness, this information will also be announced through official Departmental press releases.
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Additionally, in January 2022, several federal agencies and stakeholders, including the Interior Department signed a Memorandum of Understanding (MOU), establishing a framework to implement the orphaned wells program, promptly and transparently. The full MOU can be found here: https://www.doi.gov/sites/doi.gov/files/orphan-well-mou-01-13-2022.pdf
Maryam Irfan, Industrial Decarbonization Network: What are the key challenges you anticipate in implementing the program, and how do you plan to overcome them?
Kimbra Davis: Sustaining and growing the workforce needed to administer and execute the orphaned wells program is one of our most challenging issues. This encompasses the federal, state, Tribal agency staff, the personnel that manages the $4.7 billion in funds, as well as the contractors responsible for the actual on-the-ground well plugging, remediation, and reclamation work.
While well plugging efforts were happening before the Bipartisan Infrastructure Law, the historic investment of funds has supercharged the industry and requires new workers, both within and outside the government, to ensure the efficient utilization of these funds.
Traditionally, well plugging has been a relatively niche facet of the oil and gas industry. But now, there is a critical need to equip new field operations personnel with the knowledge, skills, and capabilities to carry out the plugging of orphaned and abandoned wells reliably, effectively, and safely, in addition to executing the necessary reclamation work.
To overcome this shortage, the first step is to acknowledge that compensation matters. The BIL’s historic $4.7 billion investment creates good-paying jobs, following the requirements of the Davis Bacon Act, ensuring workers receive prevailing wages for the work performed. Additionally, we are actively working with states to promote workforce development programs and integrate workforce strategies into their project development and implementation plans.
Maryam Irfan, Industrial Decarbonization Network: How will the program measure its success and the impact of its efforts?
Kimbra Davis: One of the OWPO’s primary tasks is distributing funding to eligible federal agencies, states, and Tribal governments. To date, we have successfully awarded approximately $700 million in funding, and have strategic planning in place to allocate the remaining funds in the coming years.
As these funds are deployed, we are accumulating a growing amount of data and evidence to demonstrate the success of the program, from plugged well location information and well type to pre and post plugging methane emissions measurements. We are also collecting facts related to the remediation of contaminated water resources and acres of habitats restored, along with environmental justice metrics such as whether the projects are located in communities of color, low-income communities, or Tribal and indigenous communities.
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We aim to report on the data collected and share success stories and the impact of these efforts through various channels, including our contribution to the Department's annual report to Congress, slated for release towards the end of this year. Our annual congressional reports will also describe the positive economic impacts of these funds, such as the direct and indirect jobs created and saved, a priority highlighted in the Bipartisan Infrastructure Law.
Maryam Irfan, Industrial Decarbonization Network: What milestones should we expect to see in the coming years?
Kimbra Davis: The continued release of orphaned well funds to our federal agency partners, states, and Tribal governments represents significant milestones for the duration of the program.
In the context of state grants, we have over $2 billion in formula grants to award over the next several years. States have the opportunity to apply in up to six phases with the initial phase, offering a substantial $660 million in grants, open until the end of December. Moreover, states can anticipate additional opportunities to apply for matching and regulatory improvement grants in the years to come.
We are collecting data from our federal partners to prioritize projects for a third round of federal funding to be disbursed in fiscal year 2024. Additionally, we're planning to unveil a new opportunity for Tribes to receive more funding in the next fiscal year.
The success of our grant and award recipients relies heavily on experienced contractors who are on the ground engaging in and completing this important work. To date, over 4,000 wells have been successfully plugged, and we have received extraordinary testimonials from impacted individuals and communities, attesting to the funds' positive impact in protecting communities, creating good-paying jobs, and mitigating the harmful effects of pollution caused by orphaned wells.
We are also excited to see technological improvements as advances in detecting and quantifying methane continue to evolve. Our methane measurement team is well-positioned to capitalize on these advances as we work collaboratively with the U.S. Geological Survey, Department of Energy, Environmental Protection Agency, and industry stakeholders. This approach ensures that the best available technology is deployed to accurately quantify the impacts of methane reduction from orphaned wells.
Maryam Irfan, Industrial Decarbonization Network: What are you most looking forward to at this year’s Methane Mitigation America Summit?
Kimbra Davis: I am looking forward to the opportunity to hear from other groups regarding their experiences in the field using various tools and techniques to measure and quantify emissions. Understanding what methods are effective, what the challenges are, and what the future holds in terms of new and innovative technologies.
I am also excited to share information related to the Bipartisan Infrastructure Law and the $4.7 billion investment aimed at reducing emissions from orphaned wells.
Interested in learning more?
Visit www.methanemitigationamerica.com or download your copy of the Official Event Guide here to learn more about America’s leading event focused on mitigating the oil and gas industries methane emissions.
