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Ohio Industry, Enviros Join Forces for More Oil, Gas Well Plugging Funds

The energy industry and environmentalists have come together in a rare display of unity in Ohio to push for passage of a bill that they claim would accelerate ongoing efforts to plug thousands of orphaned oil and natural gas wells.  

HB 225 unanimously passed the state House earlier this month. The Ohio Oil and Gas Association (OOGA) and the Ohio Environmental Council (OEC) are urging lawmakers in the state Senate to do the same.

Rep. Andy Thompson, a Republican who represents a district in a heavily drilled region of Southeast Ohio, introduced the bill, which is designed to significantly increase funding for the Ohio Department of Natural Resources’ (ODNR) Orphaned Well Program; streamline historical title and landowner research requirements; allow the agency to directly pay contractors to plug abandoned wells on private land instead of reimbursing property owners; and require the agency to report its well plugging progress to the legislature annually.

OOGA spokesman Mike Chadsey said the bill would “uniquely position” the state “to totally eradicate orphaned wells.” As in other producing states across the country, OOGA and OEC officials said thousands of orphaned wells have yet to be discovered in Ohio. ODNR currently has a list of 700 wells that have been identified for plugging. Some of the wells date back to the nineteenth century and were drilled long before the state passed its first comprehensive oil and gas regulations in the 1960s.

OEC’s Melanie Houston, director of climate programs, said the orphaned wells are in rural and urban areas across the state. They’ve been found under buildings and streets, on lawns and in recreation areas. The wells, Houston said, create risks of fire, oil, gas and brine leaks, and groundwater contamination.

While some of HB 225’s measures would make it easier to get wells plugged, ODNR’s program would primarily be accelerated through an increase in funding, OEC and OOGA officials said during a joint conference call with reporters last week. The program is financed by the state’s Oil and Gas Well Fund, which generates money through fees, severance taxes and penalties paid by the industry. Thompson’s bill would increase the Orphan Well Program’s minimum funding from 14% to 45% of the revenue credited to the oil and gas well fund during the previous fiscal year.

That, according to ODNR, is a problem that has been overlooked during the bill’s journey through the legislature.

“We agree with the technical changes to the Orphan Well Program under HB 225, but feel that the most effective way to determine the appropriate funding for the Orphan Well Program would be through the biennium budget process to set an aggressive, but more importantly, realistic goal,” ODNR spokesman Steve Irwin said.

As it stands, the bill would require a minimum of $37 million to be spent on well plugging each year. While ODNR’s program has plugged more than 2,000 wells since it was established in 1977, the agency only spent $2.8 million in the first half of fiscal year 2018 to plug 40 orphan wells.

The bill, ODNR said, has advanced “without any calculation or business analysis. And throughout discussions, there has been no dispute that ODNR will not be able to spend $37 million per fiscal year.” Texas, for example, which is widely considered to have one of the nation’s most robust plugging programs, only spent $11.6 million of its $14 million budget for well plugging last year.

Irwin also said that ODNR’s plugging program is limited by a variety of other federal, state and local regulations that also affect how quickly orphan wells can be plugged. For instance, ODNR is currently restricted to 29 certified contractors. Only seven of those are actively pursuing contracts, Irwin said.

OOGA and OEC officials said they believe both the financial resources and labor expertise are available to get the program working better, faster and safer. For its part, OOGA has said that the bill is one of its leading legislative priorities this year. HB 225 is awaiting action in the Senate.

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