Pegah Jalali
In 2022, we finally started addressing the orphaned well crisis in Colorado.
Our state has thousands of non-producing wells for which no owner can be found or there is no legally responsible party to plug the well due to bankruptcy. For years, companies have left them unplugged while many of these sites leak pollutants that threaten our climate and community health. Cleaning up these orphaned wells is crucial, and this year we received funding to do just that. This is a big first step, but we can do more to hold oil and gas companies accountable, stop Colroadans from paying tax dollars to clean up orphaned wells, and prevent this crisis from ballooning into a catastrophe.
In January, using funding from the Infrastructure Investment and Jobs Act (also known as the Bipartisan Infrastructure Law), the Interior Department announced states could apply for federal grants to fund the closure and cleanup of orphaned wells. In August, the Interior Department began awarding funding to 24 states — including Colorado — to begin plugging and remediating high-priority orphaned wells, and newly introduced legislation would authorize additional funds to help identify and plug abandoned wells. However, without a fix to the root cause of the crisis, more funding will be needed in the future to continue cleaning up a health and environmental hazard that none of us created.
While funding orphaned well cleanup is a necessary step, this money is still being provided at the expense of all of us as taxpayers. And the federal aid available isn’t even enough to cover the full cost of clean-up. We need to fix the underlying problem threatening our public lands through federal bonding reform to ensure that clean-up is funded in full by the companies who are making the mess, so this isn’t a crisis our communities continue to have to pay for on our dime.
Coloradans can’t afford to go another year paying to clean up the oil and gas industry’s mess.
In March, state regulators in Colorado moved in this direction, tightening up their own bonding rules and approving sweeping new financial requirements for oil and gas companies drilling on state lands. The rules mandate companies provide additional funds to cover potential cleanup costs, with the aim of better protecting our public dollars. However, Coloradans won’t be fully protected until similar action is taken at the federal level.
Minimum federal bonding rates have not been updated for more than 60 years, meaning oil and gas companies haven’t been required to put down enough money in advance to fund clean-up efforts, sticking taxpayers with the enormous bill to clean up their mess. In a 2021 report, the Department of the Interior itself said federal bonding levels are “inadequate” and “increase the risk that taxpayers will be required to cover the cost of reclaiming wells.” The department can and must increase bonding requirements to prevent the current orphaned well crisis from getting worse by holding oil and gas companies — and not the rest of us — responsible for the full cost of plugging and reclaiming their well sites on public lands.
Thankfully, U.S. Sen. Michael Bennet of Colorado understands this. Last year he introduced the Oil and Gas Bonding Reform and Orphaned Well Remediation Act, which would modernize federal reclamation bonds for the first time in decades so that oil and gas companies pay their fair share. Bennet’s bill, which U.S. Sen. John Hickenlooper of Colorado co-sponsored, would ensure companies pay up front for the true cost of clean-up. It would also create a fund to provide jobs to help identify wells that need to be capped, and then ensure they are properly cleaned up so our communities don’t have to foot the bill.
A federal oil and gas leasing system that serves the needs of all Coloradans — not just oil and gas companies — is finally within reach. The Department of the Interior and our leaders in Congress should join Bennet and deliver reforms to the federal oil and gas leasing system to increase federal bonding rates. Coloradans can’t afford to go another year paying to clean up the oil and gas industry’s mess.
Pegah Jalali is the environmental policy analyst for the Colorado Fiscal Institute, a nonpartisan, nonprofit organization that advances fiscal and economic policies that promote equity and widespread prosperity. This commentary is republished from Colorado Newsline under a Creative Commons license.
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