By Laurie Barr, Ulysses, PA

On Monday, April 23, 2023 The Environmental Resources and Energy Committee (EREC) held a public hearing on conventional oil and gas well plugging and bonding. Environmental Resources & Energy  Chair Greg Vitali began by providing a quick summary of a December 2022 Department of Environmental Protection report. Between 2017 and 2021, two thousand four hundred and forty six conventional wells were abandoned in Pennsylvania (PA). Vitali explained wells were being abandoned at a higher rate than they were being plugged. 

In September of 2021 the Sierra Club, Clean Air Council, Earthworks, Mountain Watershed Association, PennFuture, and Protect Penn-Trafford filed a petition asking the environmental quality board to raise bonding levels for conventional oil and gas wells. 

Subsequently,and possibly in response HB 2644 was introduced by (now) Minority Chair Martin Causer and became law. The 2022 Act 96 amended the Oil and Gas Act, freezing individual well bonds at $2,500 per well and froze blanket bonds (that cover all of an operator’s wells) at $25.000. This bond amount has never been increased since 1984.The Act also removed the Environmental Quality Board’s authority to adjust bond amounts for conventional oil and gas wells.

House Bill 962, would “restore the authority taken away from that bill” explained Majority Chair Greg Vitali.

Representative Martin Causer explained he doesn’t believe raising bonds solves the problem. He suggested the DEP focus on making the plugging program work. Rep. Causer continued, If they’re “using public dollars for plugging wells and it’s costing one hundred thousand dollars on average, that’s not making the program work.” 

David Hess, Former Secretary of the Department of Environmental Protection provided testimony during the hearing. Mr. Hess has over 40 years experience dealing with issues related to the oil and gas industry. He pointed out that there is a real opportunity for leadership on the part of the industry, DEP, the General Assembly and the Governor, if we work together.  “A business practice based on abandoning hundreds of wells a year– either by transferring them to financially impaired new owners or by just walking away, is simply not sustainable.”

Kelsey Krepps, Pennsylvania Sierra Club offered testimony.”Uncapped wells sitting in our landscapes aren’t just a legacy issue, current policies in Pennsylvania including the legislatures decision last year to keep remediation bonds for conventional wells at a tiny fraction of the actual costs to plug, actively encourages operators of today to leave non-producing wells uncapped, making it harder for state regulators to address the long list of environmental harms associated with uncapped wells.

Krepps said oil and gas prices are unstable and the markets for fossil fuels are full of risks,  booms and busts. In order for the state to ensure that we will have the means to support a massive abandonment of conventional wells when prices fluctuate the state has to have the funds in place and not rely on tax payers to bare the burden.

Kurt Klapkowski, Acting DEP Secretary, Oil and Gas Management offered testimony, explaining to the members of EREC; in response to the passing of Act 96, in 2022, former Governor Wolf directed the Office of Oil and Gas Management to prepare a report reviewing the existing processes and procedures to address abandoned wells and violations of the applicable laws. The report was released on December 22, 2022. Mr. Klapkowski explained his office was directed by DEP Acting Secretary Negrin to develop approaches to slow and eliminate the improper abandonment “to meet our constitutional obligations and to protect Pennsylvania’s tax payers from bearing the burden of future well plugging responsibility.”

Mr. Klapkowski said the Department recently began addressing the abandoned wells using funds provided by the Infrastructure Investment and Jobs Act (IIJA). This was signed into law by President Biden.on Nov 15 2021. Klapkowski said the department has twenty two and a half million dollars in plugging contracts to plug more than 200 wells across the state. Pennsylvania has the potential to receive another 386 million dollars to plug wells through grants provided by IIJA funding between now and the year 2030.

The average cost to US tax payers plug a conventional well in Pennsylvania through the recent IIJA contracts is $94,191.50 per conventional well.

According to a Carnegie Mellon (CM) study titled Economic Incentives and Regulatory Framework for Shale Gas Well Site Reclamation in Pennsylvania, the boom and bust cycles of oil and gas development complicate efforts to hold liable parties responsible. The study, published in 2012 clearly spelled out the low well bonding requirements & related risks of well abandonment. CM researchers concluded (in 2012) that the financial assurance mechanisms that Pennsylvania uses to ensure compliance with Pennsylvania’s Oil and Gas act of 1984 were outdated.