October 24, 2023
CRS Releases “Restoring Accountability” Follow-up Report on Taxpayer Exposure from Orphaned Oil and Gas Wells
Conservatives for Responsible Stewardship (CRS), a national grassroots organization with more than 23,000 members, has produced a new report following up on its 2021 report Broken Promises, which detailed the staggering taxpayer exposure from orphaned and abandoned oil and gas wells.
“Despite agreeing, as a condition of their drilling permit, to fully clean up and plug well sites once they are finished using them, oil and gas companies regularly skip out on that obligation, leaving us taxpayers on the hook for billions of dollars in clean-up costs,” explained CRS president David Jenkins.
This new report, with updated data, underscores how this fiscal burden on taxpayers continues to grow and explains how long overdue new rules proposed by the Department of Interior (RIN 1004–AE80) to significantly increase its oil and gas program bonding requirements can help.
In Broken Promises, we reported that at the end of FY2020, there were more than 96,000 “producible and service wells” on federal public lands, which could leave U.S. taxpayers on the hook for as much as $13.7 billion in future clean-up costs.
Since then, BLM has approved more than 11,200 additional permits for oil and gas companies to drill new wells on federal public lands—wells that, without federal bonding reform in place, potentially exposing U.S. taxpayers to an additional $1.6 billion more in clean-up costs.
Taxpayers could eventually have to pony up as much as $15 billion, and that does not account for any potential future wells from the 34,000 oil and gas leases on public land that are currently held by the industry.
“As bad as the problem is on federally managed public lands, that is just the tip of the iceberg,” Jenkins added.
Estimates of how many wells have been abandoned across the entire United States range from 130,000 to over 3 million, creating a massive long-term financial liability for taxpayers. It is a fiscal hole that will burden generations of Americans and take many decades to climb out of.
The broad scope of the problem was reflected in the 2021 Bipartisan Infrastructure Law, where the vast majority—4.275 billion of the $4.7 billion—of the federal tax dollars included for orphan well plugging and remediation is being distributed via grants to states.
The bonding reforms included in DOI’s draft rule to update the federal oil and gas leasing program, if finalized, can help keep that fiscal hole from getting deeper. It will update oil and gas operator bonding requirements to better reflect the actual cost of clean-up and protect taxpayers.
“Anyone who is fiscally conservative and cares about keeping taxes low should support DOI’s new common-sense rule to reform bonding and finally hold oil and gas operators to their obligation,” Jenkins added. “No more broken promises, the time is long overdue that the extremely profitable oil and gas industry shoulder the full cost to clean up and keep its promise to taxpayers.”