Oil bust leaves huge well cleanup

Associated Press

BIGFOOT, TEXAS

The worst oil bust since the 1980s is putting Texas and other oil-producing states on the hook for thousands of newly abandoned drilling sites at a time when they have little money to plug wells and seal off environmental hazards.

As U.S. rig counts plunge to historic lows, and with at least 60 oil producers declaring bankruptcy since 2014, energy-producing states are confronting both holes in their budgets and potentially leaking ones in the ground. In Texas alone, the roughly $165 million price tag of plugging nearly 10,000 abandoned wells is double the entire budget of the agency that regulates the industry.

The problem is forcing states to get creative: Texas regulators want taxpayers to cover more of the cleanup, supplementing industry payments. Oklahoma is reshuffling money among agencies in the face of a $1.1 billion state budget shortfall, while regulators grapple with earthquakes linked to oil and gas activities.

“As downtown turns go, this one happened faster and accelerated. It moved downward faster than the big downturn we had in the ’80s,” said John Graves, a Houston oil consultant. Crude prices that peaked above $100 a barrel in 2014 plunged by 60 percent in just six months.

These responses are years from meeting the growing backlog of untended wells. Texas officials predict the number of orphaned wells could soar to 12,000, which would be nearly 25 percent more than what regulators can’t keep up with now.

Landowners, meanwhile, are growing restless with abandoned pump jacks and damage while drillers warn that crackdowns would only put them out of business faster at a time when oil has finally crept from below $30 a barrel to about $50.

Orphaned wells are potential environmental hazards below ground as well as rusted-out eyesores above. A 2011 report by the multistate Ground Water Protection Council found at least 30 cases of groundwater contamination in Texas caused by orphan wells between 1993 and 2008.