Congressional Watchdog Says Bonds Insufficient To Reclaim Oil, Gas Wells
A U.S. government watchdog agency that works for Congress says taxpayers could potentially face hundreds of millions of dollars in cleanup costs from abandoned oil and gas wells on public lands.
The Government Accountability Office said in a report Wednesday it identified almost 2,300 wells around the country that have not produced oil and gas since 2008 and have not been reclaimed.
Frank Rusco is the director of natural resources and environment issues at GAO.
“Really the only thing that the Department of Interior has to use to plug and reclaim wells is the bond and if the bond is inadequate, as it almost always is, then ultimately the federal government will have to pick up the cost,” Rusco says.
The report says bankruptcies by well operators could cost the government between $46 million to $333 million in potential reclamation liabilities. The wide range reflects the unknown costs of cleaning up the sites.
“The bonds were established 50, 60 years ago. Since then technology has changed a great deal, wells have gotten deeper and longer and the bonds haven’t gone up. They haven’t even been adjusted for inflation,” Rusco says.
GAO recommended federal officials increase the amount of bonds companies must post before drilling. Current rules allow companies to post bonds of $150,000 to cover their wells nationwide.