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Montana, Wyoming set sights on federal funds to cap hundreds of abandoned wells

Jim Halvorson stands in front of a row of files
Kayla Desroches
Yellowstone Public Radio
Jim Halvorson, chair of the Board of Oil and Gas Conservation, stands in front of a row of files in Billings on January 11, 2022.

Nestled behind big box stores in west Billings is a building filled with shelves and shelves of folders dating back to the early 20th century.

Somewhere in the folders are records of the state’s nearly 280 orphaned wells, explains Jim Halvorson, the chair of the Board of Oil and Gas Conservation, a regulatory body under the Montana Department of Natural Resources and Conservation that oversees oil and gas production.

"Orphaned wells are the wells that are left by companies that either dissolve or they were drilled pre-regulatory," he said.

Latest numbers from the Bureau of Land Management show there are 130,000 documented orphaned wells nationwide, more than double an estimate from a few years ago.

BLM is set to roll out a program on Friday addressing orphaned oil wells across the country — and Montana and Wyoming are eyeing the pot of money. They're among the 26 states with plans to request part of the $4.7 billion in funding included in the infrastructure bill passed last year.

The new program will provide each eligible state with up to $25 million dollars to clean up orphaned well sites by sealing leaks, plugging wells and restoring surrounding land.

The wells can pose environmental and health risks by leaking water-borne toxins like arsenic and greenhouse gasses like methane, which contributes to climate change.

Halvorson says the state takes those factors into consideration when it prioritizes well sites to clean.

"It’s based on a combination of well condition and surface use disruption or threat to the surface," he said.

Large old rusty oil well pump jack surrounded by cattle panel fence out in field with very blue sky in winter.
Susan Vineyard/Getty Images/iStockphoto
The Bureau of Land Management says there are 130,000 documented orphaned wells nationwide, more than double an estimate from a few years ago.

The Government Accountability Office in 2019 found that the federally required minimum bond amounts companies put down on wells before drilling them are outdated, and the bonds often fail to cover the full cost of well cleanup. The BLM’s new program is part of the federal government’s answer to the problem.

Currently, Montana pays for well site reclamation from $650,000 in mineral production taxes set aside every two years. Halvorson says the cost to clean up an orphaned well can range from $10,000 to more than $100,000.

"It’s important for us to take advantage of some federal money that’s available for us to speed up our plugging and reclamation program," he said.

Wyoming is in a similar situation: Records show that hot spots for orphaned wells include northeast Wyoming’s Powder River Basin.

Tom Kropatsch with the Wyoming Oil and Gas Conservation Commission was a panelist at a meeting the BLM recently held about the federal orphaned well program.

"In about 2010, a downturn in Wyoming’s coalbed methane industry created a significant increase or orphaned well in the state," he said.

Kropatsch says Wyoming has been chipping away at 6,000 orphaned wells since then, and is now down to roughly 1,400.

The BLM says the Department of the Interior will announce funding amounts through the new program in the coming weeks. And while states wait to tap into the those federal funds, a Montana nonprofit that formed in 2019 is focusing on using private funds to clean up wells and the greenhouse gasses they emit.

Well Done Foundation chairman Curtis Shuck says Montana has fewer orphaned wells than other states where he’s recently capped wells, like Louisiana and Pennsylvania.

"But what I tell people is whether it's a little old orphan well up in north central Montana or a well in Pennsylvania in somebody's neighborhood, it's cumulative," he said. "And we all share the same space.”

Kayla writes about energy policy, the oil and gas industry and new electricity developments.