We need substantial steps forward from the incoming Shapiro administration for bonding reform.
By Kelsey Krepps, Senior Campaign Representative, Sierra Club's Beyond Dirty Fuels Campaign
Op-ed originally published on November 17, 2022 in the Pennsylvania Capital-Star.
This week marks the first anniversary of when Sierra Club and partners Clean Air Council, Earthworks, Mountain Watershed Association, PennFuture, and Protect Penn-Trafford had two rule-making petitions to raise bond amounts for conventional and unconventional wells accepted for study by Pennsylvania’s Environmental Quality Board (EQB).
The petition for conventional gas wells called for bond amounts to be raised from $2,500 to $38,000 per well. The petition for unconventional (fracking) wells called for bond amounts to be raised from $10,00 per well to $83,000 per well. The depths of frack wells are much larger than shallow conventional gas wells and therefore more costly to plug. These amounts more accurately represent the actual costs to plug a well to cover the costs of clean up.
The industry-controlled state legislature was swift with their rebuttal. Legislation sponsored by Rep. Martin Causer, R-McKean, (HB2644) was passed less than nine months after the petitions were filed.
The bill stripped the authority of EQB to raise bond amounts for shallow conventional wells – a key argument for the petitions – and locked in bond amounts for a time span of 10 years for conventional wells and would be far below the actual cost to plug a well.
This move was a clear benefit to the conventional oil and gas industry while ensuring taxpayers remain on the hook for cleaning up their messes.
The worst part is that the legislature clearly does understand that wells cost more to plug than the bonds can cover.
Legislation sponsored by Rep. James B. Struzzi, R-Indiana (HB2528) was passed this October to fix significant problems with the orphan well plugging grant program established in the Causer bill, which is now Act 96 of 2022.
This bill creates grants of up to $40,000 for plugging an orphan well up to 3,000 feet deep, and up to $70,000 for plugging a deeper well. These standard grant amounts are 16 times the bond requirement for shallow wells, and seven times the requirement for deeper wells.
Higher bond amounts that reflect the true costs of plugging are a way to tie companies to their assets to prevent abandonment. Gas companies get this money back once their well is plugged.
With current bond amounts so low, companies often and regularly “abandon” their wells instead of plugging them. They attempt to let them sit, unplugged, leaking harmful greenhouse gas emissions like methane into the atmosphere affecting our public health and adding to the climate crisis. In the last five years, the conventional industry has gotten over 4,000 notices of violation for trying to illegally abandon wells without plugging them.
In 2022 alone, 163 conventional wells and three unconventional fracked gas wells were given notices of violation (NOVs) by the Department of Environmental Protection.
If a company goes bankrupt before plugging these wells, the costs of cleanup – the financial, environmental, and human health costs – fall back to the state and its taxpayers and the well gets added to the state’s list of wells to plug.
Thanks to the Infrastructure Investment and Jobs Act, federal dollars are providing crucial and critical support to states with large legacy well backlogs.
But, this money is meant to address these decades-of-plugging-long-lists. Without better bonding requirements, we’ll see companies continue to abandon their wells to the state and its taxpayers, adding to the backlog, never addressing the root of well abandonment, and federal dollars will continue to be needed for decades, ultimately never fixing the underlying problem.
It’s like filling the bathtub with water, but it’s unplugged, draining all of our resources, and bailing out negligent companies forever.
Oil and gas companies have been given the upper hand – using politicians to get what they want without cleaning up their own messes and, adding insult to injury, forcing taxpayers to pay for what these companies should have done in the first place. Every day that passes without improving bonding requirements is another day that the oil and gas industry is let off the hook to continue polluting Pennsylvania communities.
Pennsylvania’s significantly under-bonded oil and gas wells continue to be abandoned.
We need substantial steps forward from the incoming Shapiro administration for bonding reform that will ensure that costs of plugging will not fall to taxpayers, incentivize faster plugging of wells, and reduce the climate and health consequences that Pennsylvanians have been subjected to.
As attorney general, Shapiro confronted the fossil fuel industry head on. And the incoming administration has the chance to continue that legacy, to put the power back into the hands of the people, and continue to hold this industry accountable.
Kelsey Krepps is a senior campaign representative for the Sierra Club’s Beyond Dirty Fuels Campaign since March of 2020, and has worked on abandoned well issues since then. She grew up outside of Titusville, Pa., and writes from Pittsburgh.