Plugging forsaken oil and gas wells could cost $280 billion

"The American public is facing a potential bill of $280 billion for the cleanup of 2.6 million unplugged oil and gas wells, according to 'Billion Dollar Orphans,' a report from London-based think tank Carbon Tracker," Justin Mikulka reports for Desmog, a nonpartisan climate-scientist website. "While this number is alarming, it does not even include an estimated 1.2 million undocumented orphan oil and gas wells."

The petroleum industry defines "orphan wells" as those that don't produce oil or gas and have no financially viable operator to plug them. "With the current state of the oil and gas industry, the number of financially viable operators is rapidly decreasing while bankruptcies rise, which is exacerbating this whole issue," Mikulka reports. "One troubling aspect of this problem is that it should not exist. Regulators at both the federal and state levels have the tools in place to hold companies accountable for the costs of well plugging and abandonment. Yet those regulators have not used those tools, and now, as the industry is struggling financially, in many cases it simply may be too late."

Oil and gas companies must buy a surety bond to get a permit to drill a well, to ensure that the cost of plugging it will be covered, even if the operator goes bankrupt. "But regulators have set the limits for those surety bonds far below the actual costs to plug and abandon wells," Mikulka reports. "Carbon Tracker estimates that these bonds currently would only cover approximately 1% of the estimated $280 billion clean up tab — leaving the rest of the bill to be paid by the public."