Program targets orphan wells
BY MEGHAN FRIEDMANN
Staff writer
For years, Louisiana has struggled to plug thousands of orphaned oil and gas wells in the state, left behind by operators who went bankrupt or failed to comply with state regulations.
The wells pose an environmental threat, and the state has struggled to find enough funds to clean them up.
Empowered by legislation passed this year, Tyler Gray, the state's Department of Energy and Natural Resources secretary, hopes a new initiative will help the agency solve that problem.
The Louisiana Natural Resources Trust Authority, created by Act 727, is aimed at giving the state a new revenue stream that will help plug abandoned wells. The law was sponsored by state Rep. Brett Geymann, R-Lake Charles, and Rep. Jacob Landry, R-Erath.
The initiative is about ''building the tools so the problems fix themselves,'' Gray said. ''We're trying to completely change the game and increase revenue.''
Typically, when an operator wants to start drilling, it must show the state a letter of credit from a bank to prove it has the means to plug a well if operations end, Gray said.
But often, the state struggles to track down operators and get the cash it needs to plug wells following abandonment.
The new trust authority will operate much like a bank. It will conduct financial
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Dilapidated infrastructure remains at an orphan well site in the Atchafalaya National Wildlife Refuge.
ASSOCIATED PRESS FILE PHOTO BY GERALD HERBERT
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risk assessments on companies and charge them money upfront based on the risk level, Gray said. The higher the risk, the higher the fee will be.
If the operator abandons the well, the state will then have in reserve the money to plug it.
"This initiative ensures that we can continue to harness the economic bene.ts of oil and gas production while protecting the environment," Andrew Young, assistant secretary of the Energy Department's Of.ce of Mineral Resources, said in a release. "By creating a robust .nancial mechanism to address the long-term impacts of energy development, we are securing the future of our state's natural resources." Since not all that money will be used to deal with abandoned wells, the program will also give the state extra cash, Gray said. And that cash will collect interest.
Gray also hopes it will be easier for operators to do business with the state than with banks, thereby stimulating the oil and gas industry, he said. In the current political climate, he added, it can be dif.cult for oil and gas operators to get help from banks.
Patrick Courreges, a spokesperson for the department, said Louisiana has an estimated 4,700 orphaned wells, with new wells being abandoned all the time. Operators abandon the wells when they go bankrupt or when they cannot comply with state regulations, and the state shuts them down. That well then becomes the state's responsibility.
The problem dates back decades. In 1993, the state began requiring operators to pay a fee to help support an Oil.eld Site Restoration Program, Courreges said.
That fund has not been suf.cient to pay for all the cleanup work the state needs to do. Between 2008 and 2013, the state plugged wells at a rate slower than the one at which new wells were being abandoned. Downturns in the oil market exacerbate the problem, causing operators to abandon more wells.
Last year, with the help of $37.5 million in federal aid, 580 wells were plugged, Courreges said, calling 2023 "a record year for the program." In years leading up to 2023, the state had averaged just 160 wells per year, Courreges said.
Though the department already has a trust program like the one Gray described, it is voluntary and applies only to certain well types, according to Courreges. The agency now hopes to expand that program, he said.
"This initiative ensures that we can continue to harness the economic benefits of oil and gas production while protecting the environment."
ANDREW YOUNG, assistant secretary of the Office of Mineral Resources in the Louisiana Department of Energy and Natural Resources
The state estimates that there are 4,700 orphaned wells in Louisiana, with new wells being abandoned all the time.
PHOTO PROVIDED BY THE LOUISIANA DEPARTMENT OF ENERGY AND NATURAL RESOURCES
