There's Suddenly Money to Plug Methane-Leaking Oil Wells, but There Are Millions to Get Through
By Ed Ballard
There's Suddenly Money to Plug Methane-Leaking Oil Wells, but There Are Millions to Get Through
By Ed Ballard
Plants & Goodwin rig workers prepare to plug a leaking well near Bradford, Pa., earlier this year.
PHOTO: JEREMY VARNER
Among the legacies of a century and a half of drilling for oil and gas in the U.S. are countless forgotten wells that continue to spew greenhouse gases. A surge of government funding has suddenly boosted demand for companies that plug them.
“People are in this mad scramble trying to find equipment and labor,” said Luke Plants, CEO of Plants & Goodwin, among a handful of specialists in plugging wells to prevent methane leaks and soil and water contamination.
Methane plays an important role in driving up global temperatures. It’s a more potent warming agent than carbon dioxide but breaks down faster in the atmosphere. Curbing methane emissions would be like easing off the global-warming accelerator pedal.
Scientists say reducing methane emissions by 45% this decade could avert 0.3 degrees Celsius of warming by 2045.
The Biden administration’s methane policies target the energy industry, which emits methane—natural gas—through leaky infrastructure. As well as introducing a charge for methane emissions, it’s eyeing the abandoned wells.
Well owners are supposed to reserve money to plug them, but many have gone bust or walked away. Nobody knows how many unplugged wells the U.S. has. The Environmental Protection Agency pegs it at 2.1 million and the typical annual methane leakage at 0.13 metric tons.
If the warming impact of different greenhouse gases is compared over a 100-year period, those annual figures equate to the carbon-dioxide emissions from 2.1 million cars, according to a 2020 study by the Center on Global Energy Policy at Columbia University and Resources for the Future, which said the true numbers could be higher.
Satellites can detect giant methane leaks, but not myriad tiny ones. Finding the often-overgrown wells is the first challenge. Accessing them safely is another—towns now surround some drilling sites. Operators use specialist rigs to remove old equipment and debris before injecting cement and mud.
Plants & Goodwin plugged fewer than 250 wells in the northeastern U.S. last year for private operators and the government. It employs around 100 people. To tap all the new government funding, Plants says the company would need to expand tenfold—and so would all its competitors. Workers are not easy to find. The job is physically demanding and can require months of technical training.
Plants & Goodwin was acquired by a company called Zefiro Methane in May. Zefiro CEO Curt Hopkins says the deal was a step toward building a company that can plug 1,000 wells a year by 2026.
Zefiro, whose founders include former JPMorgan carbon traders, wants to generate extra revenue by selling carbon offsets. Zefiro estimates the emissions saved by plugging a leaky well by sealing it inside a kind of tent, moving air through and measuring the methane that emerges. It announced its first credit sale last week.
The price wasn’t disclosed. Zefiro says it could sell offsets for 80,000 to 120,000 tons of carbon dioxide in its first year, but demand for this new kind of credit is uncertain.
Carbon revenue could improve well-plugging margins but won’t cover the full costs, which generally fall somewhere below $100,000 per well, Hopkins said. Plugging orphaned wells depends on government largesse.
At $100,000 per well, the $4.7 billion earmarked in the 2021 infrastructure bill would cover fewer than 50,000 wells. Carbon credits could make that money go further.
These figures point to a question that also hangs over the future of efforts to destroy long-lived PFAS chemicals and the quest to create an industryremoving carbon dioxide from the atmosphere. How much money and energy will we spend cleaning up messes?
The well backlog will probably lengthen as more dry up. Offshore oil wells aren’t covered by the federal package.
“I can see a workload that currently exists that my children and my children's children will continue working on,” Plants said.
Tell me what you think: Send your feedback and suggestions to ed.ballard@wsj.com. And if somebody forwarded you this email, you can subscribe here.