The Colorado Department of Energy and Carbon Management recently awarded 33 oil and gas well operators $13.97 million to start plugging marginal wells across the state.
According to an Aug. 12 news release, marginal wells release more methane, an extremely potent greenhouse gas, than the gas they produce. These wells are still subject to Colorado state regulations, but they do not produce enough oil and gas to offset the cost to maintain and regulate them.
By sealing these wells, the gasses remain locked in the ground where they can do no harm and save both tax payers and well operators money, ECMC spokesperson Kristen Kemp said.
“The problem with marginal wells is that they're low producing, and relative to standard producing wells, they're disproportionately producing higher levels of methane,” she said.
Well operators are usually required to shoulder the costs of plugging wells, she said.
The grant receives its funding from a flat annual fee of $115 per well from all oil and gas operators in Colorado as part of the Orphan Wells Mitigation Enterprise, as well as money set aside in the federal Methane Emissions Reduction Program. The money does not come from tax payers, Kemp said.
“The other high accountability piece of this grant is that it's reimbursed,” she said. “In this case, the operator wins the grant, but then they have to spend the up front costs. They’re incentivized to get it plugged and to do it timely, because they don't get their reimbursement funds until it meets our plugging threshold.”
She said that because it's expensive to plug a marginal well – upward of $100,000 – operators tend to keep marginal wells in production. The ECMC program is helping them get plugged because they get reimbursed for the costs needed to do so. Additionally, once a well is fully-plugged, it is no longer subject to the same regulatory costs, further saving the operator money.
“We regulate any well until it's closed and fully reclaimed,” Kemp said. “so getting them fully reclaimed gets it off the books, so to speak, when we're no longer regulating.”
The new release stated that there are 922 wells that were eligible for state funding, 8,566 wells could receive the federal funds. In La Plata County, Dolores County and San Miguel County alone, there are 29 wells that received grant funding to be closed, according to ECMC documentation.
Now that the 33 grant recipients have been announced, Kemp said, remediation and plugging work is expected to begin immediately. Additionally, the grant will renew yearly, with a new set of awardees given money to help plug wells, she said.
Kemp said that marginal wells are at risk for becoming orphaned, which means the well’s operator has abandoned it. Without any entity working to maintain a well, it leaks climate-warming greenhouse gasses and harms the environment, she said.
“I think what's really great about this program is that it's proactive, it's preventive,” Kemp said. “What we don't want is orphaned wells, and this program is taking a proactive approach to plug marginal wells before they have the potential to become orphaned.”
sedmondson@durangoherald.com
