Though different jurisdictions have varying criteria for what exactly qualifies as an abandoned oil well, generally speaking an oil well is considered abandoned when it has been permanently taken out of production. Similarly, orphaned wells may have different legal definitions across different jurisdictions, but can be thought of as wells whose legal owner it is not possible to determine. State legislatures in the United States have specific definitions based on local needs and priorities. For example, the section on abandoned wells in Texas' Natural Resource Code defines an "inactive well" as "an unplugged well that has had no reported production, disposal, injection, or other permitted activity for a period of greater than 12 months." Pennsylvania's definition of abandoned well includes not producing for 12 months, "considered dry and not equipped for production within 60 days after drilling, redrilling or deepening, and from which the equipment needed to extract resources or produce energy has been removed." Ohio legislation defines "idle and orphaned wells" based on whether or not a well bond has been forfeited or the money to plug it is unavailable. It defines a "temporary inactive well status" as not having produced for two or eight statutorily defined reporting periods or one that has produced "less than 100,000 cubic feet of natural gas or 15 barrels of crude oil."
Orphaned and abandoned wells can cause environmental damage by leaking pollutants into the atmosphere or water supplies. Important determinants of how much orphaned and abandoned wells impact the environment include the techniques used and precautions taken when first drilling the well, whether it is a gas well, oil well, or combined oil and gas well, and if and how the well was sealed. If wells are not properly sealed when orphaned or abandoned, there can allow oil and gas to contaminate groundwater. It is also possible for orphaned and abandoned wells to be significant emitters of methane into the atmosphere. Furthermore, brine present in wells dug into shale formations can contain some radioactive and toxic substances that contaminate groundwater if the well leaks. Plugging wells can reduce the risk of explosions and protect groundwater, but does not always prevent methane emissions. The costs to mitigate the impact of orphaned and abandoned wells varies, but may include removing all equipment from the site, restoring the land and topsoil, and planting local species, in addition to plugging the well itself. For example, plugging a well and restoring the surrounding land costs an average of $100,000 for wells in the Marcellus Shale. One problem with studying the impacts of orphaned and abandoned wells is that data about them can be scarce and incomplete. In the United States, it is possible for wells to have been orphaned or abandoned for over a century, and information about them, if it exists at all, can be difficult to find.
Responses
One way to encourage well owners not to abandon or orphan wells and to make sure wells are safely abandoned is to use well bonds. These are bonds paid by well operators to a surety company and are held by an obligee until the well has been satisfactorily plugged and the land surface restored. A significant challenge of making well bonds an effective policy tool is to set their price to a point that does not make market entry prohibitively expensive, but also does not incentivize well operators to forfeit the bond instead of undertaking the abandonment requirements specified in local law. Another way to encourage well owners not to abandon or orphan wells is to retrofit oil and gas wells to produce geothermal energy. One benefit of this approach is that it is less expensive to retrofit an abandoned well to produce geothermal energy than it is to drill a new oil or gas well. It also saves the cost of exploring sites for geothermal fields. Avoiding new exploration and drilling avoids the environmental impacts of these activities. However, geothermal fluids can contain environmentally hazardous chemicals such as hydrogen sulfide, ammonia, methane, arsenic, mercury, and lead. A third option is to mandate that well operators establish reclamation trusts which would be used to pay reclamation costs if the operator does not perform the necessary plugging and land restoration within a given time period after abandoning the well. This policy option has been used to mitigate the environmental impact of mines in the United States as part of a combined command-and-control and market incentive policy response to environmental protection. One risk attached to this policy option is that if wells become economically unproductive before the period planned for in the trust agreement, the abandoned well could become a liability held by the relevant government authority.
