May 28, 2020
North Dakota wants to use $33.1 million in federal coronavirus aid to plug “orphaned” oil wells, many of which have been abandoned by companies financially disrupted amid low energy prices and sparse demand brought on by the pandemic according to a May 15, 2020 EnergyWire report.
State and industry officials said the idea is both a jobs program for energy workers and an attempt to curb a growing problem in western North Dakota’s oil patch.
The North Dakota Emergency Commission, headed by Republican Gov. Doug Burgum, approved the funding May 12th. The commission in total approved $524 million, or 42% of the $1.25 billion given to the state as part of the federal stimulus package approved in March. Burgum said the money approved by the commission is to support economic recovery.
Department of Mineral Resources Director Lynn Helms said 549 wells have been identified as abandoned in North Dakota’s oil-producing region, including about 10% that companies have walked away from in recent weeks. Helms said thousands of wells have been idled in recent weeks, amounting to about 550,000 barrels of lost oil production daily, or more than a third of the state’s production from a few months ago.
Companies are required to post a $100,000 bond for a producing oil well, but the cost of plugging and reclaiming a site averages about $150,000, Helms said.
The problem, Helms said, is that the oil companies don’t have the money needed to plug and reclaim the sites, and bonding companies are not willing to sell more bonds to cover the costs.
Plugging an orphaned well consists largely of filling it with cement and sealing it. Helms said it takes a crew of about 15 about five days to plug a well.
The program is aimed only at plugging wells at present, but Helms said his agency likely will request a similar amount of funding to reclaim the sites, which takes a crew of 12 about three days for each site.
What this means to you
North Dakota wants to use $33.1 million in federal coronavirus aid to plug “orphaned” oil wells, many of which have been abandoned by companies financially disrupted by low energy prices and sparse demand brought on by the pandemic.
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