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We need US to take care of orphaned wells

New Mexico’s revenue from oil and natural gas production totaled $2.8 billion in fiscal year 2020, which is 33.5% of the $8.4 billion the state spent in 2020. However, New Mexico cannot count on this level of revenue from oil and gas in the future as the world must and will transition away from fossil fuel use to avoid disastrous climate change.

Over 100,000 gas and oil wells have been drilled in New Mexico. If left unplugged, these wells will leak methane and other greenhouse gases into the atmosphere for hundreds of years. As a powerful greenhouse gas, methane is an important cause of our climate crisis. Also, the volatile organic compounds emitted from these production sites are linked to serious health problems, including respiratory illness and pregnancy risks such as premature birth.

As these wells reach the ends of their lives, and they become inactive or abandoned, they must be plugged and their physical infrastructure removed. To avoid an unlivable climate, the world economy is transitioning away from its dependency on fossil fuels. As demand for oil and gas shrinks, more companies will be sold or enter bankruptcy, and the expensive cleanup will be left to the state. New Mexico currently has a backlog of more than 700 orphaned wells that must be plugged, which will cost at least $58 million. This amounts to $83,000 per abandoned well. The cost of plugging and reclaiming all 100,000 wells in New Mexico, at $83,000 per well, is $8.3 billion – approximately equal to the cost of one year of total state spending. The state currently has only about $2 million in financial assurance, in the form of bonds, from operators to cover those costs. We have seen this before – the heavy financial burden of cleaning up after the hard rock mining and uranium mining industry being left to future generations.

There are legislative efforts underway that seek to provide federal funds to cover the costs of plugging and reclaiming orphaned wells. U.S. Sen. Ben Ray Luján has introduced the “Revive Economic Growth and Reclaim Orphaned Wells Act” (REGROW Act) that provides over $4.6 billion to plug and clean up orphaned wells while putting thousands of people to work in areas hit hardest economically by the pandemic. This bill would provide much-needed funding to New Mexico to address the problem, but more action is needed to fix the bonding system so taxpayers are not left paying for future cleanups.

Our U.S. Rep. Teresa Leger Fernandez is proposing a bill, the Orphaned Well Cleanup and Jobs Act, that authorizes federal funding to plug and clean up orphaned wells, but her bill also updates an outdated bonding system to ensure the fossil fuel companies that are drilling the wells, and not American taxpayers, bear the cost of future cleanups. We must ensure that oil and gas companies pay the costs of cleaning up the mess they have created.

Our generation should not leave a legacy of environmental and financial debt. We should not allow vulnerable communities to bear the burden of the adverse health effects of oil and gas production. We should welcome the federal funds that are being proposed to accelerate the plugging of orphaned wells, while holding the fossil fuel industry accountable by strengthening the bonding system.




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