P@A will cost Texas Taxpayers $117 Billion.

[Dan Clemmensen + 1,011]

According to the Houston Chronicle:

https://www.houstonchronicle.com/business/energy/article/Texas-taxpayers-could-face-117B-cost-to-clean-up-15611824.php

a recent study shows that the surety bonds for P@A will cover less than one percent of the required P@A, and the states will be forced to cover the rest. Texas will take the biggest hit, but other gas and oil producing states will also be hit. Basically, the oil industry privatizes profits and externalizes losses, just as does every company (and other organization) that can get away with it. This is neither good nor bad, it's just a consequence of the imperatives that all companies face: survive and make a profit. The same thing happened with pensions in the auto and other industries. The population of Texas is about 30 million, so each Texan will pay about $3900 to P@A those wells.

[Gerry Maddoux + 3,627]

Are you sure?

As a driller/producer/working interest owner, you pay into a fund that does this. 

(Update: Railroad Commission spokesperson Ramona Nye emailed StateImpact Texas to say that “the plugging of orphan wells and cleanup of abandoned sites is primarily funded by fees collected from the industry and deposited in the Oil & Gas Regulation Cleanup Fund, formerly the Oilfield Cleanup Fund. Texas taxpayers do not pay into this fund.”)

In truth, when times were good and people actually thought oil and gas was worth a damn, no one spoke. But now, when it's time to pile on, the liberal newsmen from Houston are more than willing to bend the truth a little bit. Texas has benefitted mightily from oil and gas, and the industry polices itself fairly well (except for runaway flaring). Texas and Oklahoma oil won WWII.

True, there were an awful lot of wells that got left behind. I can show you plenty of slush pits from the fifties that are still unsafe and pose environmental hazards. Give me a hundred years and I'll be able to show you the collateral damage from peppering the earth with solar panels. Not being defensive, though it sounds like it.

Like mining for lithium, getting at oil and gas tears up the earth (though not nearly as much as mining for lithium). Take a look at "Lithium Valley" in Nevada, then at the Cobalt mining sores in the Congo, the nickel smelters. Nevada doesn't have a "cleanup fund." Neither does the Congo.

Fact: The average non-oil-involved Texas will not pay one cent for oil and gas cleanup. The little hit job in the Houston Chronicle is about as accurate as the one in the Christian Science Monitor about Hunter Biden's missionary work.

[Dan Clemmensen + 1,011]

16 minutes ago, Gerry Maddoux said:

Are you sure?

Nope, not sure at all. I posted this to try to get further info from knowledgeable folks. The story in the Houston Chronicle is apparently not their own investigative reporting, but rather a report on a study done by some greenie organization whose methodology may or may not be valid. The TRRC response does not mention any numbers, though. I doubt that they have $117 billion tucked away in a fund somewhere.

Sure lithium and cobalt mining are environmentally unfriendly, like many other things. Those are separate topics. Note that the power industry will probably move quickly away from batteries that use lithium and cobalt. Those batteries are optimized for EVs, not stationary storage stationary batteries can be heavier, less energy dense, and much cheaper (e.g., sodium-ion batteries). EV batteries will move away from cobalt, but will keep lithium, at least in the near term. Both lithium and cobalt will be recycled. Ultimately the question will be how much environmental damage per MWh produced.

 

[Gerry Maddoux + 3,627]

35 minutes ago, Dan Clemmensen said:

The TRRC response does not mention any numbers, though. I doubt that they have $117 billion tucked away in a fund somewhere.

You have got to be kidding me!

Okay, the way this works is that if you are the operator of a well in Texas, you have to put a certain amount of money into a special bank account. If you own 600 wells, you must put in 600X. There are an awful lot of independent owners and operators in Texas who have from $250,000 to ten million in such a fund. 

The owners and operators of wells have for years been forced to do this. The rogue wells--the true orphans from long ago--must be cared for in some fashion. The cleanup fund provides for those too. 

This P&A business is huge in Texas. For even a pretty shallow well, it can easily cost $20,000 to P&A under current specification standards. But will the non-oilman have to pay for these? Never. 

To suggest that each Texan will pay up to $3900 for orphan well cleanup is so ridiculous that it's not worth printing. The greenies will say anything at all to cast aspersion upon an industry that for decades was the lifeblood of Texas.  

Edited October 27, 2020 by Gerry Maddoux
to clarify

[Enthalpic + 1,496]

1 hour ago, Gerry Maddoux said:

Are you sure?

As a driller/producer/working interest owner, you pay into a fund that does this.

They pay into a fund that is probably woefully underfunded due to years of companies being trusted to clean up their own mess.

In Alberta the list is pretty long, I imagine everything is bigger in Texas.

https://www.aer.ca/regulating-development/project-closure/liability-management-programs-and-processes/orphan-well-association

 

 

Edited October 27, 2020 by Enthalpic

[john bozeman + 42]

I'm sitting on hold by phone with the Texas Sec of State so I have time to respond to this.  I started to respond a while back when I first read this article.  I wanted to point out that the outfit that wrote the piece was a green oriented outfit trying to badmouth oil and gas-I really have trouble with this site because of all the agenda-based posts that do not admit their bias (Jay-are you reading this ?)-  I AM A BIASED OIL AND GAS PRODUCER-

I did not spend too much time analyzing the numbers in the article but the number of wells to plug was obviously crazy-high.  It looks more like the total number of wells in Texas rather than current orphan wells.  Basically, every inactive well in Texas (or elsewhere in the states) that is operated by someone who wants to be in business next year will be plugged by that operator.  The RRC did a fine job of reducing the number of orphan wells until the recent problems.  In my area (Texas Panhandle) the "recent problems" stem mostly from gas CONTRACTS, not low prices.  We now have a great many wells (gas wells and oil wells producing associated gas) that are uneconomic because of gas contracts-not low prices.  I've talked to every politician I could catch (and that's a bunch-they are pretty slow) but none of them understood that these contract problems would eventually work down to un-plugged wells.

Gary was spot-on as to cost.  A single shallow well will cost an operator approx 20K to plug.  Shallow wells are often part of leases with as many as a hundred closely packed wells-that reduces that plugging and remediation cost per well.  The RRC spends twice what we do (govt work).   Deeper wells (say, deep Anadarko-Morrow @ 10-15000 feet) cost more but they have a bit more salvage value.  We plug 9000 foot Morrow wells regularly for $30,000 including site cleanup and remediation-again the RRC will spend twice that.  Horizontal wells don't cost any more.  So some quick math shows that the 117 Billion is just plain propaganda.  There will be, however, some cost to taxpayers eventually if the ever-increasing and accelerating change to windmills continues as the transformation will likely catch O&G producers (me, for example) with no market for my products to sell so I can meet my plugging obligations.  Perhaps that aspect of the cost of renewables should be addressed.

Let's have some fun.  I was raised on a small, irrigated stock farm in the Texas Panhandle.  There have been a total of 6 wells drilled on our home section (one square mile-640 acres).  Four of these wells were plugged in the 1970s with ZERO remediation performed.  Those wells were Marmaton oil producers with associated gas so they had 7000 foot holes, pipe, pumping units, multiple tanks for oil and salt water, and individual roads to each well.  Again , there was NO remediation performed other than simply hauling off the iron.  Here's the fun, I will buy a steak dinner (or tofu if required) to the first person who can take me out to this farm and show me those old wellsites (disclosure-the wells were drilled off-pattern)  Fact is, crude oil is all natural and will clean up without much help at all.  Taken on a realistic time scale, we humans don't really make much difference at all.

Well, I'm off hold now, so back to some hopefully productive activity.

[Gerry Maddoux + 3,627]

19 minutes ago, john bozeman said:

Fact is, crude oil is all natural and will clean up without much help at all.  Taken on a realistic time scale, we humans don't really make much difference at all.

John, thanks for writing a down-to-earth response. You're completely correct. We have several deep wells just over the border from you, including one well that was drilled to 29,000 feet back in 1980. For such a project, there was remediation, but there's almost no sign of that well. Or any other well. In fact, if you failed to notice the large gathering units, you could drive right through there and be completely unaware that at one point there were 250 working rigs between Elk City and the Texas border--the lights were beautiful at night.  

This whole industry has become demonized by people who are intrigued by it but have very little knowledge of the hard work that goes into not only drilling for oil and gas but sweeping up. Very few people realize just how precious a commodity oil really is. For example, it takes organic humus just about exactly one-million years at the perfect temperature and pressure to make oil. Too little heat and pressure, you have immature oil--kerogen. Too much and you cook it. Oil is a gift from the ages; we should treat it with a little respect.

Examples: Oil helped mightily to win WWII. Oil basically powered the Industrial Revolution. Natural Gas was a precious commodity: that deep well I mentioned was for deep gas, which at that time was selling for $12/tcf. It warmed the hearth of millions of people. From oil and gas, drugs and medical devices are made, as well as hair-dryers and car fenders.  

It's easy to post something made up from flatus and moonbeams, and to drone on about the "carbon-neutrality" of the renewables, but they're no free lunch. If the younger generation doesn't screw up the planet with windmills and solar panels any worse than we did with a naturally-occurring commodity that took Mother Nature a million years to get just right, well then, my grandfather will rest in peace. 

And I second your position: this is an oil and gas site. It's okay with me if folks want to post information about renewables and batteries and absolutely no collateral damage, as long as they do it tongue-in-cheek, realizing that there will indeed be collateral damage. To get the energy from wind and solar that is now being provided by fossil fuel is going to require hundreds of millions of windmills and solar panels that have to be manufactured from something, using petrochemicals in prodigious quantities. Lithium Valley up in Nevada is not exactly an environmental enterprise. Solid-state batteries will need lithium and rare earth elements. God only knows what's going to happen when the solar energy that would normally be absorbed by the ground is subverted into an electricity grid--especially in the billions of panels we're talking about. Hydrogen cells are going to have their own problems. Nuclear? Well, let's wait and see; so far, no mas.

It's going to be very interesting to see how this little global experiment plays out. In a hundred years, how many millions of acres will be taken up by dead solar panels and windmills? How many toxic dumps will be collecting greenish-yellow water in Lithium Valley? Will anything be left of the south of France when the ITER blows its lid and boils all the water out of the river? Will some robot from Wheeler County be bitching about a bunch of windmill blades flying off their sun-cracked plastic rotors? HaHaHaHa. I think so. And meanwhile, all those wells on John's farm will have returned to the earth from which they came. Nobody gets a yummy tofu dinner from John Bozeman!

[Enthalpic + 1,496]

 

After the ground is covered with vegetation a reclaimed site looks pretty good to an untrained eye but long-term effects exist.  Aggressive or invasive species repopulate the land faster than native or endangered species.

One of my friends does beetle research related to land recovery.  The total number of beetles recovers fairly quickly but the diversity of beetles does not.

An agronomist friend studies the differences between natural (fire) and unnatural (industrial activity, herbicides, intense cattle grazing) disturbances to grasslands. Significant differences.

My brother did research on mouse populations and magnitude of their tick infestation related to different types of forest disturbance. Massive effects you would never notice without extensive trap, tag, and release studies.

 

My point is the changes to vegetation, rodent and insect populations are not noticeable but are very, very real and important.

 

Edited October 29, 2020 by Enthalpic

[john bozeman + 42]

Enthalpic, I'm sure your point has some validity and I suspect you can back up your points very well with your educational and professional background.  My point is that 117 billion dollars is hogwash and should have been identified as coming from a person with an anti-oil agenda.  I guess windmills and solar panels don't have real impacts on the ground they occupy (not).  If you really want to disturb the environment, simply have children.  If you really want to preserve nature, don't have children. That is the logical extension of environmental movement.  Don't want to go to extremes ?  Well then, I think having electricity available is very much worth sacrificing a few mice around my gas wells (not that I really believe I AM sacrificing said mice).  Obama thought that sacrificing a few eagles was ok, too.  To paraphrase Pogo, "we have identified the enemy of the environment and he is us"

[Enthalpic + 1,496]

2 hours ago, john bozeman said:

Enthalpic, I'm sure your point has some validity and I suspect you can back up your points very well with your educational and professional background.  My point is that 117 billion dollars is hogwash and should have been identified as coming from a person with an anti-oil agenda.  I guess windmills and solar panels don't have real impacts on the ground they occupy (not).  If you really want to disturb the environment, simply have children.  If you really want to preserve nature, don't have children. That is the logical extension of environmental movement.  Don't want to go to extremes ?  Well then, I think having electricity available is very much worth sacrificing a few mice around my gas wells (not that I really believe I AM sacrificing said mice).  Obama thought that sacrificing a few eagles was ok, too.  To paraphrase Pogo, "we have identified the enemy of the environment and he is us"

I don't have any children (IUD is a great invention).

Scientists are both saving and and destroying the world simultaneously, mostly destroying.

 

 

[Gerry Maddoux + 3,627]

2 hours ago, Enthalpic said:

I don't have any children

So this ends here.

Thank God!

[Eric Gagen + 713]

The VAST majority of wells which eventually get P&A'ed don't get that cost covered by the surety bonds - they get covered by the ongoing operational budgets of oil and gas operators. The bond is merely an emergency 'backstop' in the event that somehow for some reason the well isn't properly abandoned in the course of normal business.  A few wells DO fall through the cracks, and they are P&A'ed at state expense (sometimes covered in part by the bond fee's, sometimes not) but it's not a significant number of wells or a significant amount of money in places like TX, and LA which have responsible and functional oil and gas oversight and regulation.  

Unfortunately the same cannot be said for some other places - most notably in Pennsylvania there are an enormous number of poorly documented shallow oil and gas wells from the early days of the industry. Many of them were not properly abandoned and there were no legal requirements for the original companies to do anything about it, and it's too late to go back and fix it retroactively - you can't extract P&A funds from companies which went out of business 75 or 100 years ago.  Eventually there will be significant costs to the state there to sort that mess out.  

[Eric Gagen + 713]

On 10/27/2020 at 5:46 PM, Enthalpic said:

They pay into a fund that is probably woefully underfunded due to years of companies being trusted to clean up their own mess.

In Alberta the list is pretty long, I imagine everything is bigger in Texas.

https://www.aer.ca/regulating-development/project-closure/liability-management-programs-and-processes/orphan-well-association

 

 

Your presumption that Texas would be 'behind' Alberta in this case is incorrect.  Starting roughly in the 80's Texas and most (not all)  other US states with historically large oil and gas industries got aggressive about going after and eliminating orphan wells, usually by getting the original owners or heirs to resolve the issue, or on their own if necessary.  The number of orphans wells in TX today is around 1,500 or so,  and the data is easy to find:

 

Website with information: https://www.rrc.state.tx.us/oil-gas/environmental-cleanup-programs/state-managed-plugging/

Spreadsheet detailing every wellsite requiring attention:  https://www.rrc.state.tx.us/media/59948/wells-remaining-09-20.pdf