Given that all other options suck more...force them to drill and store unprofitability until it's dry. Small price to pay for decades of extraction at high rates of return. You (the oil/gas...
Given that all other options suck more...force them to drill and store unprofitability until it's dry.
Small price to pay for decades of extraction at high rates of return. You (the oil/gas industry) made your bed, now sleep in it.
Remove limited liability for executives of companies that cause widespread, ongoing and/or persistent environmental damage. Before allowing them to drill, force companies to pay for damage...
Remove limited liability for executives of companies that cause widespread, ongoing and/or persistent environmental damage.
Before allowing them to drill, force companies to pay for damage deposits on their wells large enough to cover the costs of any repairs and cleanups down the road.
Give the EPA and various State environmental agencies their teeth back.
If they can't afford to drill and extract without ensuring they don't fuck the environment up (which is our shared resource) after they're done, and pay for the cleanup when accidents happen, then...
There will be no wells drilled then. Granted that is it's own solution.
If they can't afford to drill and extract without ensuring they don't fuck the environment up (which is our shared resource) after they're done, and pay for the cleanup when accidents happen, then yeah... perhaps they shouldn't exist as a company in the first place.
Teeth to do what?... You can't bite into a company that either no longer exists or no longer contains any assets.
That suggestion was more about prevention than restitution. Given the proper funding and regulatory frameworks, those agencies can provide proper oversight of the industry through regular safety inspections/audits, threatening of fines (that actually sting) for violations, etc. But if you remove limited liability, then they actually would be able to go after the executives responsible for any damages, even after the company they created/ran no longer exists.
@Loire, this was precisely what I was thinking as well. If the company won't exist, then force the prior owners/shareholders to pay out of their pockets. And if that isn't enough? Tax the entire...
Remove limited liability for executives of companies that cause widespread, ongoing and/or persistent environmental damage.
@Loire, this was precisely what I was thinking as well. If the company won't exist, then force the prior owners/shareholders to pay out of their pockets. And if that isn't enough? Tax the entire industry high enough to cover the losses.
I work in the industry in West Virginia, representing surface and mineral owners. While abandoned wells are a bit of an issue, the greater issue is that the little gathering lines run all over the...
I work in the industry in West Virginia, representing surface and mineral owners. While abandoned wells are a bit of an issue, the greater issue is that the little gathering lines run all over the place and when they spring a leak they can leak for years before anyone even notices. Then it's often a slog to figure out who is responsible for the pipe. Then it can take quite a while before the company will actually fix the leak. On the other hand, I've seen one instance where a company went out and fixed a leak because it was a small, local company and the leak had gotten some attention on social media and they wanted to be good neighbors. They never did figure out who owned the line.
Here in West Virginia the State requires a bond, just like is discussed in the article, and similarly, the bond is hardly enough to take care of more than one well. We have been working on some legislation to get an abandoned and orphaned well fund in place (shout out to Dave McMahon and WVSORO), but even that's not going to fix all the old wells in any short timeframe. It's an issue. But it's not the apocalyptic issue that the article kind of makes it out to be.
It seems like for new wells, raising the bond and making it per-well would make it less likely for them to be abandoned? That way there is money to be made by plugging it and getting the bond...
It seems like for new wells, raising the bond and making it per-well would make it less likely for them to be abandoned? That way there is money to be made by plugging it and getting the bond money back, even after the expense of plugging it.
I also wonder how fixing leaks compares to all the other stuff people do to reduce carbon emissions? Maybe it would make sense to give carbon credits for fixing leaks. I guess the problem is that people will make leaks and fix them for the money. Maybe some other scheme would be better?
There's not as much problem these days with abandoning wells. Plugging is a cost that is built into the budget (at least, I think it is) from the beginning. The issue that the article raised is an...
There's not as much problem these days with abandoning wells. Plugging is a cost that is built into the budget (at least, I think it is) from the beginning. The issue that the article raised is an unusual one, and the bond is specifically for the unusual circumstances. I've thought it would be a good idea to raise the bond. Making it on a per-well basis is not as necessary because each well is in a different stage of its life cycle. When a company goes bankrupt, some of the wells are so new that only a fool would plug them. Others are old enough to maybe warrant plugging. Most horizontal wells in West Virginia are still producing, but some might be hitting their end of life. Bankruptcies here only result in a new owner of the well, not actual abandonment. Something really drastic would have to occur for a bunch of wells to be abandoned.
Fixing leaks would be great. I think you've hit on the problem with carbon credits and such programs in general. You have to figure out a way to mitigate abuse of the system. I don't have a good answer for that one.
In the past five years, 207 oil and gas businesses have failed. As natural gas prices crater, the fiscal burden on states forced to plug wells could skyrocket; according to Rystad Energy AS, an industry analytics company, 190 more companies could file for bankruptcy by the end of 2022. Many oil and gas companies are idling their wells by capping them in the hope prices will rise again. But capping lasts only about two decades, and it does nothing to prevent tens of thousands of low-producing wells from becoming orphaned, meaning “there is no associated person or company with any financial connection to and responsibility for the well,” according to California’s Geologic Energy Management Division.
“It’s cheaper to idle them than to clean them up,” says Joshua Macey, an assistant professor of law at the University of Chicago, who’s spent years studying fossil fuel bankruptcies. “Once prices increase, they could be profitable to operate again. It gives them a strong reason to not do cleanup now. It’s not orphaned yet, although for all intents and purposes it is.”
[...]
There’s no easy way to bring up the thousands of feet of steel and cement required to carry gas out of a well as deep as A.H.C. Church 11. That means the only way to keep the well from leaking is to fill it up. Plugging a well costs $20,000 to $145,000, according to estimates by the U.S. Government Accountability Office. For modern shale wells, the cost can run as high as $300,000.
[...]
The cost to plug just California’s deserted wells—an estimated 5,500—could reach $550 million, according to a report released earlier this year. While not an insignificant price tag, the real shock would come if the industry collapses and walks away for good. In that doomsday scenario, the costs to plug and decommission 107,000 active and idled wells could run to $9 billion. And yet so far in 2020, California has approved 1,679 new drilling permits.
[...]
Congressional efforts to create a well-plugging program for cleanup are stalled. Meanwhile, oil and gas companies have made trillions of dollars in profits over the past century and a half while enjoying relative impunity. On federal lands, where oil and gas companies actively drill, bond levels haven’t been adjusted for inflation since 1951, when they were set at $10,000 for a single well and $150,000 for however many wells a single operator controls nationwide. In California a company drilling 10,000 feet or more needs only $40,000.
Even spending all the billions of dollars required to plug the world’s millions of deserted wells won’t stave off environmental catastrophe. The vast heat and pressure of the Earth’s subsurface—the same forces that crushed dinosaur bones into hydrocarbons in the first place—mean that no plugging job lasts forever. Scientists and engineers debate how long cement can survive in the harsh environment of the Earth’s interior. Estimates typically fall from 50 to 100 years, a long enough time horizon that even some of today’s biggest oil and gas companies may no longer exist, but short enough to be uncomfortably within the realm of human comprehension. No regulations require states or federal agencies to measure emissions after wells are plugged.
Given that all other options suck more...force them to drill and store unprofitability until it's dry.
Small price to pay for decades of extraction at high rates of return. You (the oil/gas industry) made your bed, now sleep in it.
Remove limited liability for executives of companies that cause widespread, ongoing and/or persistent environmental damage.
Before allowing them to drill, force companies to pay for damage deposits on their wells large enough to cover the costs of any repairs and cleanups down the road.
Give the EPA and various State environmental agencies their teeth back.
The list goes on.
If they can't afford to drill and extract without ensuring they don't fuck the environment up (which is our shared resource) after they're done, and pay for the cleanup when accidents happen, then yeah... perhaps they shouldn't exist as a company in the first place.
That suggestion was more about prevention than restitution. Given the proper funding and regulatory frameworks, those agencies can provide proper oversight of the industry through regular safety inspections/audits, threatening of fines (that actually sting) for violations, etc. But if you remove limited liability, then they actually would be able to go after the executives responsible for any damages, even after the company they created/ran no longer exists.
@Loire, this was precisely what I was thinking as well. If the company won't exist, then force the prior owners/shareholders to pay out of their pockets. And if that isn't enough? Tax the entire industry high enough to cover the losses.
I work in the industry in West Virginia, representing surface and mineral owners. While abandoned wells are a bit of an issue, the greater issue is that the little gathering lines run all over the place and when they spring a leak they can leak for years before anyone even notices. Then it's often a slog to figure out who is responsible for the pipe. Then it can take quite a while before the company will actually fix the leak. On the other hand, I've seen one instance where a company went out and fixed a leak because it was a small, local company and the leak had gotten some attention on social media and they wanted to be good neighbors. They never did figure out who owned the line.
Here in West Virginia the State requires a bond, just like is discussed in the article, and similarly, the bond is hardly enough to take care of more than one well. We have been working on some legislation to get an abandoned and orphaned well fund in place (shout out to Dave McMahon and WVSORO), but even that's not going to fix all the old wells in any short timeframe. It's an issue. But it's not the apocalyptic issue that the article kind of makes it out to be.
It seems like for new wells, raising the bond and making it per-well would make it less likely for them to be abandoned? That way there is money to be made by plugging it and getting the bond money back, even after the expense of plugging it.
I also wonder how fixing leaks compares to all the other stuff people do to reduce carbon emissions? Maybe it would make sense to give carbon credits for fixing leaks. I guess the problem is that people will make leaks and fix them for the money. Maybe some other scheme would be better?
There's not as much problem these days with abandoning wells. Plugging is a cost that is built into the budget (at least, I think it is) from the beginning. The issue that the article raised is an unusual one, and the bond is specifically for the unusual circumstances. I've thought it would be a good idea to raise the bond. Making it on a per-well basis is not as necessary because each well is in a different stage of its life cycle. When a company goes bankrupt, some of the wells are so new that only a fool would plug them. Others are old enough to maybe warrant plugging. Most horizontal wells in West Virginia are still producing, but some might be hitting their end of life. Bankruptcies here only result in a new owner of the well, not actual abandonment. Something really drastic would have to occur for a bunch of wells to be abandoned.
Fixing leaks would be great. I think you've hit on the problem with carbon credits and such programs in general. You have to figure out a way to mitigate abuse of the system. I don't have a good answer for that one.
From the article:
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