Colorado’s Energy and Carbon Management Commission recently announced that 33 oil and gas well operators would receive grant funding to cover the costs of plugging marginal natural gas wells, which emit more climate-warming greenhouse gases than usable natural gas.
Earthworks Senior State Policy Adviser Andrew Forkes-Gudmundson said the grant will help Colorado as it grapples with a $1.2 billion budget hole created by the Big Beautiful Bill Act.
“(The grant) makes the $1.2 billion worth of budget math that the state is going to have to do at least a little bit easier,” he said. “It keeps our tax dollars going to necessary services instead of cleaning up oil and gas messes.”
Senate Bill 24-229 created the Orphan Well Mitigation Enterprise, which mandates that every oil and gas producer in Colorado has to pay $115 per well they operate. That flat fee generates about $5 million, according to a ECMC news release, which when combined with $12.6 million of federal funding from the Methane Emissions Reduction Program, covers the costs operators have to pay to plug marginal wells before they become orphaned.
Natural gas is defined by the U.S. Department of Energy as “predominantly made up of methane (CH4).” When burned, natural gas emits fewer air pollutants than coal or crude oil, but the methane that makes up natural gas is “84 times more potent than carbon dioxide measured over a 20-year period,” according to the United Nations’ Environment Programme.
Forkes-Gudmundson said these marginal wells do not yield enough usable natural gas to justify the methane they emit into the atmosphere.
“These wells are really just sitting out, scattered across Colorado, trickling a few barrels of gas a year into a tank that somebody will come and capture and sell for an extremely small amount of money,” he said. “They don’t really benefit anybody, because they pollute more than they actually produce.”
ECMC spokesperson Kristin Kemp said that in the past, marginal wells were at higher risk of becoming orphan wells, in which the operator abandons them because they no longer produce enough natural gas to remain profitable, while still emitting methane. Orphan wells become the state’s problem, wherein it has to pay to plug that well.
“If an operator abandons a well – whether they go bankrupt and they don’t get bought out, or for any number of business reasons – it becomes a ward of the state and comes into our orphan well program,” she said. “The state is in the process of plugging all of the orphan wells out there. But there are thousands. So that marginal well program is one way that we’re trying to reduce the likelihood of wells becoming orphaned.”
Kemp said orphan wells occur more frequently among small operators that often do not have enough money to plug marginal wells on their own, which can often cost upward of six figures per well. The grant funding, in which every operator in the state pays into, covers those costs, therefore incentivizing smaller operators to plug their marginal wells. In turn the wells’ methane is sealed in the ground and the state saves money, she said.
Senate Bill 24-229 also stipulates that fees oil and gas well operators have to pay go toward public transit and habitat conservation efforts from Colorado Parks and Wildlife. That, Forkes-Gudmundson said, allows the state to generate more tourism revenue.
“Where some of these wells are located are lands that draw a lot of tourist interest in Colorado and generate a lot of revenue in and of themselves,” he said. “We get these wells and the land remediated, which can only be for the better.”
Forkes-Gudmundson said the program gets the oil and gas industry to invest more money into the state. In addition to the environmental benefits of the program, jobs are created to help plug the wells and remediate the land. Additionally, the state does not have to pay for any of it, because oil and gas operators pay into the fund, allowing lawmakers to focus on other ways to save money as they figure out how make up for the federal government’s funding cuts.
“There are many, many more urgent problems facing Coloradans and Americans,” he said. “Climate change is still a serious threat. So plugging these wells permanently removes them as a pollution vector, and putting people to work plugging wells is a great use of industry revenue.”
sedmondson@durangoherald.com
