OPINION: Tucked inside US President Joe Biden’s much-anticipated infrastructure plan is a provision for $16 billion to clean up abandoned mines and plug orphaned oil and gas wells.
Similar in scale and scope to former president Franklin D Roosevelt’s Great Depression-era New Deal, Biden’s $2.3 trillion American Jobs Plan seeks to create millions of jobs while paving the way for the US to meet its goal of net zero emissions by 2050.
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The administration says the abandoned wells and mines clean-up programme alone will create 250,000 jobs.
The number of orphaned wells in the US ranges from 57,000 to more than 3 million, depending on the how each state defines what is and is not an orphaned well.
Generally speaking, an oil or gas well is considered abandoned or "orphaned" when it has been permanently taken out of production and the legal owner responsible for its plugging is not possible to determine.
The cost of plugging and abandonment also ranges widely, from around $25,000 for a conventional vertical well to $300,000 for an unconventional horizontal well.
Carbon Tracker, a nonprofit financial think tank focused on the impact of the energy transition on capital markets, estimates that plugging the 2.6 million documented unplugged onshore wells in the US will cost $280 billion.
Texas and New Mexico, according to Carbon Tracker, have a combined 856,000 wells that will require plugging and abandonment at an estimated cost of $127 billion.
The organisation says the industry has not set enough aside to cover its asset retirement costs, which runs the risk of leaving it to taxpayers to foot the bill.
Overall, $16 billion is a tiny slice of a pie that also sets aside roughly $800 billion for investments in clean energy research and development.
But the American Jobs Plan more than provides funding for jobs and new infrastructure. It presents the traditional fossil fuel industries with an opportunity to build trust within the communities where they have historically operated.
It is time for the US oil and gas industry to stand shoulder-to-shoulder with government to address the orphaned well issue and point the way forward for future generations of energy providers.
(This is an Upstream opinion article.)