Essentially all abandoned wells are conventional vertical not horizontal ones

From an Article by Mike Tony, Charleston Gazette, Charleston, WV, October 8, 2022

Landowners in Harrison, Nicholas, Preston and Wetzel counties has filed the lawsuit in the U.S. District Court for the Northern District of West Virginia in July against Diversified Energy and Pittsburgh-based EQT Corp. A 2018 agreement between the company and the WV DEP requires Diversified to summarize the actions taken to plug oil and gas wells or place them into production during the past year.

Diversified Energy, the largest owner of gas wells in the country, says it doesn’t have to plug wells that West Virginia landowners allege in federal court pose health and environmental hazards, arguing that state regulators relieved them of that responsibility. Diversified Energy Company says an agreement it made with the state Department of Environmental Protection to plug or place into production a set number of gas and oil wells annually shields it from the duty to plug and abandon the wells.

The company says the federal lawsuit from eight landowners in four West Virginia counties would “usurp” the authority of the Office of Oil and Gas, the DEP’s well-plugging and reclamation regulatory unit that state officials have acknowledged is understaffed. Diversified argues it has no duty to plug wells unless it identifies them as candidates for plugging in annual reports it is required to file with the Office of Oil and Gas through 2034.

The lawsuit alleges the two companies struck transfer deals in recent years for many more wells than Diversified can afford to plug and decommission. Industry experts have made similar observations, saying the company’s business model is based on acquiring a high number of low-producing wells that yield short-term dividends but present long-term liabilities mounting as the company puts off well decommissioning obligations.

The DEP estimates older wells that have been poorly maintained will likely total more than $100,000 in plugging costs. New wells that have been properly maintained cost a few tens of thousands of dollars, per the agency. Plugging typically entails using cement to seal wells that are no longer productive to keep toxic chemicals from polluting the air and aquifers.

The landowners’ lawsuit asks the court to make EQT liable for plugging and decommissioning the wells that Diversified took responsibility for in 2018 and 2020, contending that those transfers were fraudulent. The lawsuit petitions the court to award plaintiffs and class members damages from Diversified to compensate them for the cost of plugging, remediation of the abandoned wells.

Most of Diversified’s roughly 70,000 wells are in Appalachia, acquired since 2018 from EQT and Canonsburg, Pennsylvania-based CNX Resources. Diversified acquired more than 12,000 gas wells from EQT in deals in 2018 and 2020 for roughly $700 million. In a response it filed last week to the landowners’ lawsuit, Diversified highlighted a passage of its 2018 agreement with the Office of Oil and Gas stating that the company “requires sufficient time to identify” which wells have a “bona fide future use” that merits them being placed back into production. “For the duration of that process, Diversified has no duty to plug its wells unless it identifies them as a plugging candidate in its reports, and then only on a set schedule,” Diversified’s response contends.

The DEP did not respond to a request for comment on Diversified’s filing. Per the agreement, Diversified must either place into production or plug at least 50 oil and gas wells for which no production was reported in 2017 every year from 2020 through 2034, of which at least 20 must be plugged each year. Diversified has similar consent agreements in Kentucky, Ohio and Pennsylvania. Combined, the company’s agreements in those states plus West Virginia commit the company to plugging at least 80 wells annually out of its tens of thousands of wells there.

The landowners’ lawsuit called those consent agreements a “smoke-screen” that doesn’t impact “private civil liberties that Diversified [and EQT] have to private citizens over private property rights.” The DEP has contracted with a Diversified subsidiary to plug wells. The agency has paid Diversified subsidiary Next LVL Energy LLC over $150,000 since October 2021 for well-plugging, according to West Virginia State Auditor’s Office data.

The DEP awarded Next LVL Energy two contracts to plug and reclaim orphaned gas and oil wells under the federally funded Infrastructure Investment and Jobs Act passed by Congress last year. Next LVL Energy was the low bidder on the two DEP contracts, bidding a combined $10.2 million. The DEP is requiring contractors to identify, inspect and prioritize what documented or undocumented wells to plug, in addition to plugging them and reclaiming the well sites. Under the terms of state-posted contracts, contractors will have the exclusive right to plugging orphaned, abandoned wells within the contract region.

Diversified acquired Next LVL Energy, a Pittsburgh area-based well-plugging company, in February.

Diversified also argued in its response to the lawsuit that their claims are time-barred under a two-year state statute of limitations for trespass, nuisance and negligence claims, citing past statute of limitations-focused judicial decisions. The company contends the two years the landowners had to file claims began when the wells on their properties stopped producing gas in a two-year window from 2017 through 2019.

The landowners allege that Diversified’s acquisition of thousands of wells from EQT was completed with intent to defraud creditors, including the plaintiffs, in a business model designed to push off decommissioning liabilities for decades. They say Diversified has left them with unplugged, abandoned wells that pose health risks, degrade the environment and hurt their property values.

Much of the lawsuit is based on a report published in April by the Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-renewable energy nonprofit think tank. That report predicted it was highly unlikely that Diversified will have enough money to plug and abandon all its wells. The lawsuit cites the report to allege that if Diversified had used industry norms to calculate its plugging and decommissioning obligations, then its liabilities would exceed $2 billion instead of the company’s self-reported figure of roughly $520 million, making Diversified insolvent. The report cited Diversified company data and federal projections for natural gas prices. The Ohio River Valley Institute report found that Diversified has used unusual assumptions like implausibly long economic lives of wells though 2095 and an excessively long ramp-up timeline to start plugging and abandoning most of its wells to calculate the value of its asset retirement obligations, liabilities for well plugging and abandoning costs.

In 2020, Greg Rogers, a senior advisor to Carbon Tracker, a London-based think tank researching climate change impacts on financial markets, called Diversified’s business model “a legal Ponzi scheme” in a conference call with the Capitol Forum, a corporate news analysis service. “[I]t only works as long as there’s growth and the perception of profitability,” Rogers said. States mandate that wells no longer producing gas or oil are plugged and abandoned, and that well owners secure a bond or other financial assurance that helps cover the expense of closing wells that aren’t productive anymore.

But Diversified’s critics say its business model could leave West Virginia taxpayers footing the bill for remediating many of the company’s wells. “[I]t is clear Diversified Energy’s economic model is built to fail and could leave residents of West Virginia with billions of dollars in clean up costs,” Ohio River Valley Institute senior researcher Ted Boettner said in an email.

The Office of Oil and Gas, whose authority Diversified emphasized in its lawsuit, has been beset by low inspector staff numbers. The state’s well inspection staff dwindling from 17 to nine in the past two years on the Legislature’s watch has concerned not just environmentalists but royalty owner advocates. The office has faced a $1.3 million shortfall, with officials attributing the budget crunch to permit fees having dried up amid oil and gas industry struggles. Bills that would have restored office staffing levels to what they were before they were slashed in 2020 through annual $100 oversight fees on unplugged wells failed in the Legislature amid opposition from the Gas and Oil Association of West Virginia. The industry group said the fees would be too onerous for operators.

A recent study found that low-production well sites like those dominating Diversified’s portfolio are a disproportionately large source of methane emissions. The April report published in the peer-reviewed scientific journal Nature Communications found roughly half of all well site methane emissions nationwide come from low-production well sites like Diversified’s, which emit six to 12 times as much methane as the average rate for all U.S. well sites. Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the U.S. Environmental Protection Agency, making Diversified’s deepening well footprint across Appalachia a climate concern.

Diversified Energy apparently counts with match sticks, WV & PA & OH beware

From an Article by Mike Tony, Charleston Gazette Mail, April 30, 2022

The WV well inspection staff dwindling from 18 to nine in the past two years on the Legislature’s watch has concerned not just environmentalists but royalty owners who see a corrosive connection between the state’s well inspector shortage and a growing orphaned well problem.

“[Inspectors] may spot problems that can be fixed to keep the well from becoming essentially uneconomic or they could spot a well that needs to be plugged,” West Virginia Royalty Owners Association President Tom Huber said. “As these wells grow older and older and older, that’s when they become orphaned, and then there’s no one to go after to get to plug the well.”

The Ohio River Valley Institute cited an analysis of more than 20,000 Diversified wells in Pennsylvania in observing a sharp decline in company-reported methane emissions post-acquisition.

Diversified reported a well was inaccessible for testing for leakage more than 3,200 times after wells associated with those reports were reported accessible by previous well owners more than 2,000 times the previous year. “Interestingly, [previous ownership] could get to the wellhead,” report author and Cornell University engineering professor emeritus Anthony Ingraffea said. “So I guess the trees grew up very, very quickly after Diversified acquired the wells.” Last year, Bloomberg Green reported it found methane leaks at most of 44 Diversified well sites it visited, including eight in West Virginia.

Diversified reported retiring 136 wells in 2021, exceeding its requirements of plugging 80 wells in West Virginia, Pennsylvania, Kentucky and Ohio and moving the company closer to a stated goal of plugging 200 wells across Appalachia by 2023, according to its 2021 annual report.

In a statement, Paul Espenan, vice president of environmental health and safety at Diversified, defended the company’s environmental record. Espenan said the company has invested in pursuing opportunities to use excess plugging capacity to support other operator retirements. Espenan said recent company efforts to equip well tenders with handheld methane detection devices, deploy aerial leak surveys and upgrade equipment resulted in year-over-year reductions in methane intensity as the company works toward a target of net-zero greenhouse gas emissions by 2040. “Sustainability is core to our unique approach as a responsible operator that unlocks value, delivers free cash flow and is committed to asset stewardship through the full life of acquired, low-decline producing assets,” Espenan said.

The 136 wells retired last year represent less than half of 1% of all the wells in Diversified’s portfolio. The company said in its 2021 annual report that it established an in-house plugging team in West Virginia last year.

Diversified and its subsidiaries have 22,876 non-plugged wells in West Virginia, DEP spokesman Terry Fletcher said. Diversified-owned companies have plugged roughly 130 wells in the state since 2018, Fletcher said. The DEP estimates that older wells that have been poorly maintained will likely total over $100,000 in plugging costs. New wells that have been properly maintained cost a few tens of thousands of dollars, per the agency.

The state’s Oil and Gas Abandoned Well Plugging Fund, created in 2020 by House Bill 4090 to pay for reclaiming abandoned wells without a responsible operator, has a balance of $1.86 million, Fletcher said – a fraction of Carbon Tracker’s $7.6 billion estimate of the cost to plug wells that ceased production in West Virginia.

The Office of Oil and Gas reports about 6,300 documented orphaned wells and estimates an additional 9,000 undocumented orphan wells statewide. The plugging workload for even a small portion of Diversified wells would be unlike anything the state has ever tackled before. A study last year by the Interstate Oil & Gas Compact Commission noted that West Virginia funded plugging of three orphan wells in the state from 2018 to 2020.

A total of 472 wells have been plugged under the state’s program, according to the report by the Interstate Oil & Gas Compact Commission, a multistate governmental entity that promotes what it calls efficient recovery of oil and gas resources and environmental health. Fletcher said DEP records indicate that state-funded well plugging has been occurring since at least 1993.

The DEP expects to plug 160 orphaned wells — roughly 1% of its statewide orphaned well estimate — in the initial grant phase of the Infrastructure Investment and Jobs Act enacted in November, under which states are eligible to receive up to $25 million for cleaning up orphaned oil and gas wells. Fletcher has said the DEP is identifying all areas where staff can be increased given the Office of Oil and Gas’ personnel shortage.

The state Legislature has failed to adopt bills that would restore the Office of Oil and Gas to its previous personnel level despite pressure from environmental, surface and royalty owner advocates to shore up the office’s funding.

The Governor’s Office did not respond to a request for comment on why the office did not add any measures addressing the inspector shortage to the agenda of last week’s special legislative session despite the office’s previously stated support for bills that would have increased funding for state oil and gas inspectors. The governor announces the convening of a special session through a written proclamation referred to as a “call” because it calls the Legislature into session. The Legislature cannot take up items outside the call during a special session.

“We want to make sure that these wells, the gas, the oil that is produced, is sold so the royalty owners can be paid royalties on those products and [that the gas and oil] are not wasted through leakage or broken tanks that seep the oil out into the ground,” Huber said. “So we support any effort to add inspectors.”

Burd argued a proposed $100 annual oversight fee for unplugged wells would have been onerous for operators. It would have applied to wells producing 10,000 cubic feet or more of gas daily. The bill stalled in the House after passing the Senate.

“It speaks to a kind of lax regulatory culture in West Virginia, I guess,” May said. The Ohio River Valley Institute has proposed a production fee ranging 3 to 7 cents per thousand cubic feet in West Virginia, Pennsylvania and Ohio over the next 25 years to provide enough funds to decommission most of the states’ unplugged well inventories.

But West Virginia regulators are left to make the most of sweeping federal investments in well reclamation and contend with a projected rise in gas production without strength in numbers. The big numbers are on Diversified’s side — at least for now. “I think more inspectors would mean less orphaned wells, which is a good thing in the long run,” Huber said.

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Diversified Set to Track Appalachia Oil, Gas Methane Leaks with Aerial Scans

From an Article by Matthew Veazey, Natural Gas Intelligence, December 8, 2021

Methane leak detection provider Bridger Photonics has been selected to perform multi-year aerial scans of Diversified Energy Co. plc’s natural gas production and distribution assets, initially in Appalachia.

Bridger plans to deploy its laser imaging, detection and ranging (LiDAR) equipment to track the emissions. “Our Gas Mapping LiDAR technology will efficiently detect, pinpoint and quantify typically more than 90% of basin emissions to inform and streamline Diversified’s repair and maintenance activities,” said Bridger CEO Pete Roos.

Diversified, whose Central Region holdings include the Haynesville and Barnett shales and assets in the Midcontinent, said the LiDAR program would be extended to those assets as well. The company noted that early 2021 field trials of Bridger’s LiDAR technology on a “large segment” of Appalachia pipeline detected fugitive natural gas emissions “well below” 500 parts per million, which is the U.S. Environmental Protection Agency (EPA) leak definition threshold.

Diversified said it would spend $3 million annually over the next three years on LiDAR aerial emissions scanning activities. The total $9 million commitment “supports our near-term goal to reduce our 2020 level methane emissions by 30% by 2026 on the way to net-zero by 2040,” said Diversified CEO Rusty Hutson Jr. “Adding aerial emissions detection to the handheld devices we’ve placed in the hands of our skilled well tenders further enhances our ability to detect and repair fugitive emissions across our asset base.”

By way of proposed changes to the U.S. Clean Air Act, the EPA is seeking to broadly limit methane emissions across oil and gas operations. The new mandate would add covered methane sources at well sites, natural gas gathering and boosting compressor stations, gas processing equipment, as well as transmission and storage equipment.

The Biden administration wants to curb methane emissions from oil and gas operations beyond U.S. territory as well. In November, President Biden hosted his counterparts from Canada and Mexico for a trilateral summit, which featured a pledge to develop a “‘North American strategy on methane and black carbon.’” Also, the Biden administration and the European Union have endorsed a target to cut methane emissions 30% worldwide by 2030.

You will not believe what Diversified is getting away with ....

From an Article by Mike Tony, Charleston Gazette Mail, April 30, 2022

All is often not well when gas wells end.

In 2020, Carbon Tracker, a London-based think tank researching climate change impacts on financial markets, estimated the costs of plugging gas and oil wells that ceased production in West Virginia exceeded $7.6 billion — with bonds totaling just $28.7 million to cover that expense. That same year, a senior advisor to Carbon Tracker reflected on the business model behind thousands of those wells in West Virginia and across Appalachia in a conference call with the Capitol Forum, a corporate news analysis service. The advisor called that business model a “legal Ponzi scheme.” ~~~ “[I]t only works as long as there’s growth and the perception of profitability,” Greg Rogers said.

Headquartered in Alabama and led by Lumberport native and cofounder and CEO Rusty Hutson Jr., Diversified Energy has become the largest owner of oil and gas wells in the country. Most of the company’s nearly 70,000 wells are in Appalachia, acquired since 2018 from regional producers such as Pittsburgh-based EQT and Canonsburg, Pennsylvania-based CNX Resources.

“But … if your production is falling on those wells, especially if it’s falling faster than you think, then you’re going to need to continually acquire more and more wells,” Rogers said of Diversified’s business model. “The problem is you’re acquiring more and more liabilities as you do that, these liabilities for the closure.”

“[Diversified’s] business model is built around low decline assets paying out cash flow in the form of dividends to retail investors,” Tom Loughrey wrote in a June 2020 company analysis for Friezo Loughrey Oil Well Partners, an analytics firm serving investors in the oil and gas sector. “The problem with these structures, and why they always fail, is the valuations eventually exceed the future cash flows; the company must replace assets at an increasing rate until hitting the wall.”

States mandate that wells no longer producing gas or oil are plugged and abandoned and that well owners secure a bond or other financial assurance that helps cover the expense of closing wells that aren’t productive anymore. Two recently released reports suggest Diversified’s expanding well portfolio poses long-term risks both to West Virginia’s bottom line and its environmental safety.

The Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-clean energy nonprofit think tank, published a report April 12 predicting it is highly unlikely Diversified will have enough money to plug and abandon all its wells, citing Diversified company data and federal projections for natural gas prices. Plugging and abandoning costs will be higher than the revenue generated by Diversified’s current well inventory by 2056, the report projects.

The report finds 96% of the company’s producing wells in West Virginia, Pennsylvania, Kentucky and Ohio produce less than five barrels of oil equivalent per day. Wells producing less than that amount are considered financially distressed by the Colorado Oil and Gas Conservation Commission, the report notes. “The numbers just don’t add up,” report co-author and Ohio River Valley Institute research fellow Kathy Hipple said.

A week after that report was released, a Environmental Defense Fund study found low-production well sites like those dominating Diversified’s portfolio are a disproportionately large source of methane emissions. This study published in the peer-reviewed scientific journal Nature Communications found roughly half of all well site methane emissions nationwide come from low-production well sites, which emit six to 12 times as much methane as the average rate for all U.S. well sites.

Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the U.S. Environmental Protection Agency, making Diversified’s deepening well footprint across Appalachia a climate concern in addition to a threat to states’ bottom lines. “The percentage of methane emissions is disproportionately high,” said Karan May, senior campaign representative for the Sierra Club in West Virginia. “When I put that together with Diversified, it just scares me for what’s happening in Appalachia particularly.”

Diversified is only the 15th largest producer in Appalachia despite being its largest well owner, Ohio River Valley Institute researchers found, citing Capitol Forum data. “Diversified’s business model is based on harvesting cash flows from its wells and delaying P&A [plugging and abandoning] costs for as long as possible,” the Ohio River Valley Institute report concluded.

Diversified could have 60,000 wells to plug and abandon throughout Appalachia at the end of consent agreements reached with regulators in West Virginia, Pennsylvania, Kentucky and Ohio committing the company to decommissioning some 80 wells annually for the next 15 years.

“[T]hey’ve become too big to fail,” report co-author and Ohio River Valley Institute research fellow Ted Boettner said. The Ohio River Valley Institute report finds that Diversified has used unusual assumptions like implausibly long economic lives of wells though 2095 and an excessively long ramp-up timeline to start plugging and abandoning most of its wells to calculate the value of its asset retirement obligations, liabilities for well plugging and abandoning costs.

The report also says the company appears to be avoiding its obligations to report methane leakage from its wells, citing an analysis of emissions reporting submitted by Diversified for more than 20,000 active wells in Pennsylvania. Ohio River Valley Institute’s researchers and other industry experts anticipate a rapid decline in gas production. That would leave Appalachian states particularly vulnerable to being on the hook for cleaning up thousands of additional orphaned wells.

“[W]hen one company owns so many of these wells, that risk is just huge,” Boettner said. “Who’s going to be left holding that bag? It’s important that our state oil and gas regulators take a huge look at this company and figure out a way to ensure that they can cover these costs.”

West Virginia’s leaders have let the state’s inspection unit responsible for looking after wells statewide atrophy in recent years, declining to shore up funding for well regulators even amid a surge in production. The West Virginia Department of Environmental Protection has reported major manpower shortages in its Office of Oil and Gas, which manages the state’s abandoned well-plugging and reclamation program.

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Permitting, inspecting and enforcement all need updating a.s.a.p.

>>> From an Article by Zack Budryk, The Hill (Online News), 01/05/22

WASHINGTON, DC — The U.S. has more than double the amount of abandoned oil and gas wells than previously thought, according to a preliminary analysis by the Interior Department.

In a memo Wednesday, the department said there are currently more than 130,000 documented abandoned, or orphaned, wells. Comparatively, a 2019 report from the Interior documented a total of 56,600 orphaned wells across 30 states. Across the entire country they found that the number of abandoned wells in that report ranged from zero to 13,226.

The bipartisan infrastructure bill President Biden signed into law in November of last year includes $4.7 billion to restore and plug orphaned wells. In December, the department released guidance on state applications for grants under the program.

Since then, the majority of states, 26, have submitted notices of intent to apply for the grants, according to the memo. Nearly every state documented contained orphaned wells.

States applying for funding included Alabama, Alaska, Arizona, Arkansas, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming, according to the memo.

The Interior Department is set to publish the full amount of grant funding each state is eligible to receive in the months ahead, according to the memo. On Thursday, the Bureau of Land Management will host a presentation on its orphaned-well reclamation program.

Plugging orphaned wells has been top priority for Interior Secretary Deb Haaland since her nomination. The White House’s budget request for fiscal 2022 also included a proposal to more than double the enacted 2021 budget for orphaned well cleanup and reclamation, which the administration said would create 250,000 union jobs.

The White House’s more ambitious climate and social spending bill — which has not passed either chamber of Congress — would also put $41 billion toward environmental remediation, including reclamation of orphaned wells.

Its path forward remains unclear after Sen. Joe Manchin (D-W.Va.) said in December that he would not back the package.

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SEE ALSO:WV-DEP seeks support to hire gas, oil well inspectors, Lacie Pierson, Charleston Gazette, January 18, 2022

Also during the meeting, the Department of Environmental Protection Secretary Harold Ward told the committee that department officials hope to be able to hire eight new natural gas and oil well inspectors before the state receives $165 million in federal grants to manage nearly 6,300 abandoned natural gas and oil wells.

The department currently employs nine people who are responsible for inspecting about 75,000 wells, or about 8,000 wells per inspector, Deputy Secretary of Environmental Protection Scott Mandirola told Senate Finance members during a budget presentation at the Capitol.

“Right now, we’re at a very difficult crossroads,” Ward said. “To be candid with you, we have a solution, and its proposed legislation this year.” DEP officials are asking the Legislature to approve a bill that would allow them to charge a $100 permit fee to raise $1.3 million to support the return of inspectors and other staff to the department’s Oil and Gas Division.

Senators on the committee were alarmed by the ratio of wells to inspectors, raising concerns about public safety as well as the workload on inspectors, even with the potential addition of eight more inspectors. “This is a tragedy that we’ve got wells and things that we know that are leaking,” Sen. Charles Clements, R-Wetzel, said. “Something’s got to be done.”

Many abandoned wells are not documented and still represent multiple risks

From an Article by Amy Lupica, Our Daily Planet, March 12, 2021

A new study published on Monday found that cleaning up the nation’s more than 2 million acres of oil and gas wells could result in billions of dollars of economic growth. Experts estimate that there are as many as 3.2 million gas and oil well sites no longer in use, and when companies leave or abandon these wells, they often leak harmful toxins into the atmosphere and groundwater.

For a long time, companies have claimed the cleanup is too expensive, but experts estimate the costs of cleanup are much more affordable than previously thought and could offer a much-needed economic boost to struggling former oil and gas communities.

Why This Matters: Abandoned oil and gas wells are an epidemic all on their own. The 3.2 million abandoned oil and gas wells are constantly leaking methane into the atmosphere, which captures up to 86 times more heat than CO2. The wells also put residents at risk of flammable or toxic water and even explosions. The fact that these wells are poorly mapped and challenging to find, makes them even more dangerous.

Despite these dangers to the environment and humans, the Trump administration rolled back Obama-era methane regulations that required gas and oil companies to monitor and repair leaks. But as oil and gas prices plummet, it’s clear that companies will never return for their abandoned wells, but cleaning them up is crucial to fighting climate change and ensuring that communities aren’t left behind in the transition to a green economy.

Net Benefits: The study estimates that cleaning up all abandoned oil and gas wells in the country would cost about $7 billion, a small price to pay for over 3.2 million cleanup projects. That land could then be used for green energy development, business and housing projects, and carbon sequestration.

The researchers of the study estimated that the cleanup could bring in $21 billion in benefits.

Matt Moran, the study’s lead author, said, “for people who live near that land–that [money] has real meaning.” The cleanup alone would also create thousands of jobs for people who live in regions plagued by abandoned wells. The Biden administration has expressed support for well cleanup projects. “We are going to create more than a quarter-million jobs to do things like plug in millions of abandoned oil and gas wells that pose an ongoing threat to the health and safety of our communities,” said Biden in January.

Similar projects have already had success with the support of the federal government. The Abandoned Mine Land Trust Fund (AML) grants money to states and tribes to clean up defunct coal mines. Since its inception, the AML has helped build green infrastructure, boost tourism, and create jobs across America, with the added benefit of cleaning up toxic groundwater and pollution. It’s done so well that now, a bipartisan team of lawmakers and environmental advocates are introducing legislation to extend and expand it.

The new study’s authors hope that cleaning up oil and gas wells can yield the same benefits for oil communities as mine cleanups have for coal communities.

“If you have an abandoned piece of property, and you restore it back to its original condition, it’s worth something, and it’s worth more than it costs to do that,” said Moran. “If we invest in land restoration, we get a lot out of it.”

WV-DEP inspectors perform a critical function for our State

From an Article by Jeff Jenkins, WV Metro News, March 11, 2021

CHARLESTON, W.Va. — A new fee that could bring up to $500,000 annually to the state Department of Environmental Protection’s Office of Oil and Gas will next be considered by the full House of Delegates after approval by the House Energy Committee Thursday.

The measure, SB 404, would create a $2,500 fee that would be charged each time a drilling permit has to be modified.

Those obtaining permits for drilling for oil and natural gas currently pay a one time $10,000 permit fee but are not charged if the permit is modified. There were 200 modifications to existing permits last year.

State DEP Deputy Secretary for External Affairs Scott Mandirola told the committee Thursday the agency needs $2.4 million a year to run the Office of Oil and Gas with 25 inspectors. It currently has $1.1 million for next budget year. The new fee would provide $500,000 of the remaining $1.3 million needed.

The office currently only has 10 inspectors for thousands of wells.

“There are 75,000 wells including abandoned and orphaned,” Mandirola said.

WV-DEP well inspectors are currently funded through permit fees but drilling for natural gas has slowed down in West Virginia causing a significant reduction in fee revenue.

Mandirola said a modification fee is nothing new for the WV-DEP. He said permits for coal, water and air all have modification fees but there’s been no fee for drilling changes.

The bill, which now goes to the full House for consideration, has already passed the state Senate.

Methane is accumulating in the atmosphere

Underground natural gas seepage measured at abandoned wells near fracking sites can be significant

From an Article of the  University of Vermont, ECN Magazine, October 20, 2015

As debate roils over EPA regulations proposed this month limiting the release of the potent greenhouse gas methane during fracking operations, a new University of Vermont study funded by the National Science Foundation shows that abandoned oil and gas wells near fracking sites can be conduits for methane escape not currently being measured.

The study, to be published in Water Resources Research on October 20, demonstrates that fractures in surrounding rock produced by the hydraulic fracturing process are able to connect to preexisting, abandoned oil and gas wells, common in fracking areas, which can provide a pathway to the surface for methane.

A recent paper published in the Proceedings of the National Academy of Sciences showed that methane release measured at abandoned wells near fracking sites can be significant but did not investigate how the process occurs.

“The debate over the new EPA rules needs to take into account the system that fracking operations are frequently part of, which includes a network of abandoned wells that can effectively pipeline methane to the surface,” said the new paper’s lead author, James Montague, an environmental engineering doctoral student at the University of Vermont, who co-wrote the paper with George Pinder, professor of environmental engineering at the university. The study focused on an area in New York State underlain by the Marcellus Shale formation, which had been fracked until a ban went into effect in the state in the summer of 2015.

The formation, composed of layers of shale and hydrocarbons, is beneath land that has been the site of conventional oil and gas drilling since the 1880s, when American oil companies first began operating. About 40,000 existing wells in New York, 30,000 of them located within the footprint of the Marcellus formation, are documented by the state’s Department of Environmental Conservation. But the department estimates that 70,000 wells in all have been drilled.

Because the location of so many wells is not known – a common phenomenon in many regions where fracking takes place – the study uses a mathematical model to predict the likelihood that the hydraulically induced fractures of a randomly placed new well would connect to an existing wellbore. The model put the probability that new fracking-induced fractures in the Marcellus formation would connect to an existing well bore at between .03 percent and 3 percent.

But industry-sponsored information made public since the paper was published vastly increased assumptions about the area impacted by a set of six to eight fracking wells known as a well pad – to two square miles — increasing the probabilities cited in the paper by a factor of 10 or more.

While all fracking sites are different, most have a similar enough hydrocarbon profile that they attracted conventional oil and gas drilling in the past and most, like the Marcellus, have a large number of abandoned wells, many with unknown locations.

Not all abandoned wells provide a pathway to surface for methane. Only those that are damaged, largely when the concrete that buffers the well from the surrounding earth loses integrity, can act as a conduit. But even a small percentage of damaged wellbores, given the large number of abandoned wells, can potentially pose an environmental risk, Pinder said.

Source: http://www.eurekalert.org/pub_releases/2015-10/uov-dpm101915.php

Representative Gas Well Depletion Curves

Part 4. The future expense(s) to investors, to drillers, to government, and to you!

Original Article by S. Tom Bond, Retired Professor of Chemistry and Resident Farmer, Lewis County, WV

The drilling treadmill. This is a name given to the result of rapid decline in production of shale wells. Most shale wells produce substantially for a year, then rapidly decline thereafter. Thus if a field is to maintain production, another well must be drilled in three to five years, then another, then another.

The “drilling treadmill” was first recognized by David Hughes, a prominant geologist in Canada after studying 65,000 different wells from 31 different unconventional shale rock formations. He “warned that shale gas and tight oil operations shared four big challenges: escalating capital costs, uneven performance and a growing environmental footprint, all followed by rapid depletion.” And “Shale gas can continue to grow, but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs — and its long term sustainability is highly questionable…” This study was done in 2012.

Geological consultant Arthur Berman has seconded that analysis and expanded it. In an article published in March of this year he says ” On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates.”

On oil, ” The idea that Texas shales will produce one-third of global oil supply is preposterous.” He also says, “Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let’s face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them. It is completely unreasonable to expect better performance from bad reservoirs than from better reservoirs.” And “None of this is meant to be negative. I’m all for shale plays but let’s be honest about things, after all! Production from shale is not a revolution; it’s a retirement party.”

The Telegraph of London Calls the fossil fuel industry the “subprime danger of this cycle. The article begins ” The epicentre of irrational behaviour across global markets has moved to the fossil fuel complex of oil, gas and coal. This is where investors have been throwing the most good money after bad.” Then “Data from Bank of America show that oil and gas investment in the US has soared to $200 billion a year. It has reached 20 % of total US private fixed investment, the same share as home building. This has never happened before in US history, even during the Second World War when oil production was a strategic imperative.”

One of the world’s premiere financial newspapers, it says, “A large chunk of US investment is going into shale gas ventures that are either underwater or barely breaking even, victims of their own success in creating a supply glut. One chief executive acidly told the TPH Global Shale conference that the only time his shale company ever had cash-flow above zero was the day he sold it – to a gullible foreigner.”

Energy Aspects, a consulting firm which also publishes material on the web at www.energyaspects.com, in an article entitled “The other tale of shale” has this to say about shale: “The very nature of shale wells, which exhibit high decline rates, results in the need to constantly allocate capital towards exploration drilling in order to maintain and grow production volumes. As a result, the average capital expenditure spending of the 35 companies analyzed to serve as a guide to the industry has amounted to a staggering $50 per barrel of oil equivalent (BOE) over the last five years, at a time when their revenue per BOE has averaged $51.5. For these same companies, free cash flow has been negative in almost every quarter since Q2 07.” (Free cash flow is the money a company has to distribute to investors, assuming they don’t want to use it to grow.)

This sort of explains why your friends who have royalties haven’t been getting them lately – in effect they have been making a forced loan to the driller that doesn’t cost him interest, and one he can take out without going to the bank. I know of one family suing for retained royalties in the amount of $8,000,000! And others.

Continuing damage.  As long as wells are drilled more damage is going to be done. Land use will be converted, roads broken, people made sick, future production of food and timber prevented, out door recreation destroyed, retirement possibilities for out of state couples denied, and living in the drilling field made unpleasant to impossible.

Pennsylvania state inspection records, no less, show compromised cement and/or casing integrity in up to 9.1% of the active oil and gas wells drilled since 2000, with up to a  2.7-fold higher risk in un-conventional wells drilled since 2009 relative to conventional well types. Hazard modeling suggests that the cumulative loss of structural integrity in wells across the state may actually be slightly higher than this, and upward of 12% for unconventional wells drilled since January 2009.

A recent investigative report of water contamination cases confirmed PA-DEP determination letters and enforcement orders indicating that at least 90 private water supplies across the state were damaged due to subsurface gas migration between 2008 and 2012.

Keep in mind that water in an aquifer may move very slowly. It may take years or decades for contamination to reach some water wells. Hydraulic cement decays over time. So it is not unreasonable to expect water wells will continue to be contaminated by shale drilling for a long indefinite time.

There is no formal provision for plugging shale wells. The permits only cost $25,000 and plugging is not in the leases. Plugging would cost something like $100,000. West Virginia has 51,000 abandoned wells. Can you expect history to repeat itself? I am predicting here that most shale wells that will be plugged in the next 100 years will be done at public expense.  Mark Twain is supposed to have said “History doesn’t repeat itself, but it rhymes.” I think we can anticipate this, unless we can get our citizens to intervene.

Abandoned Wells Often Not Obvious

Princeton University Study: Up to 900,000 Abandoned Oil and Gas Wells Pollute Pennsylvania’s Air

From an Article by Brandon Baker, EcoWatch.com, June 19, 2014

Pennsylvania already has a fracking problem groups struggle to inspire politicians to address. Now, a Princeton University study shows that hundreds of thousands of abandoned oil wells are adding to the state’s pollution.

CO2, Methane, and Brine Leakage through Subsurface Pathways: Exploring Modeling, Measurement and Policy Options is a first-of-its-kind study from Mary Kang that describes how abandoned oil wells serve as leakage pathways for carbon dioxide, methane, brine and more.

Based on records, Kang estimates that between 280,000 and 970,000 abandoned wells account for 4 to 13 percent of the PA state’s methane emissions.

Three of the 19 wells measured by the team are considered high emitters. Leakage was found in both plugged and unplugged wells.

“Existing well abandonment regulations in Pennsylvania do not appear to be effective in controlling methane emissions from AOG [abandoned oil and gas] wells,” Kang writes in her abstract.

“As a mitigation strategy, inclusion of gases emitted from AOG wells in Pennsylvania’s Alternative Energy Portfolio Standard may be valuable for both promoting capture and possible use of the gas as well as for reporting and monitoring of these wells.”

[P.S.  There are over 50,000 wells in West Virginia, a number well beyond the capability of the WV-DEP to inspect, monitor, or regulate in an environmentally satisfactory manner. The WV Legislature has been unable to improve the State law for oil and gas wells because of the strong industry lobby and lack of leadership from the Governor.  Federal regulations have similarly been constrained by the strong industry lobby and existing loopholes.  Concerned citizens must speak up and be heard in Charleston, Harrisburg, and in Washington, DC.]