Orphaned by Design
A growing crisis of unplugged and leaking wells plagues the Mountain West and Great Plains. Public regulators are fueling the fire.
Across the West, farmers, ranchers, tribal citizens, land managers, and others strive to pass the land on to the next generation in better condition than we found it. But today, a handful of wealthy oil and gas companies are undermining our efforts. They are allowed to profit off the land and then are given a pass when they fail to do their share to restore it.
Hundreds of thousands of oil and gas wells, tanks, pipelines, pits, and roads across the West have been built without assurances that they will ever be cleaned up. The rules that are intended to protect the land are out of date and assume that oil and gas companies are too big to fail. But they’re not—more than 240 oil and gas companies declared bankruptcy in the past five years.
Fundamentally flawed regulations, lax tracking and enforcement, and decades of corporations abandoning their obligations combine to create a perfect storm of conditions, seemingly leaving wells orphaned by design. Congress is proposing a massive investment to clean up these left-behind wells. Bu cleaning up existing wells alone won't break this cycle—oil and gas regulators like the Bureau of Land Management need to change their system.
Part I: Crisis is Brewing
An orphaned well near Cut Bank, Montana, which sat idle and leaking for 20 years before the state stepped in to plug it. (Photo: Montana Board of Oil and Gas Conservation)
By failing to put up reclamation funding before construction begins, companies and regulators have left the public on the hook for the cost of cleanup—if it ever happens. The thousands of identified “orphaned” wells left behind by bankrupt operators are only the start of the massive and continually growing liability.
Orphan wells already dot the landscape of the four-state region we will focus on for this story. At the beginning of the summer in 2020, orphaned wells in Montana, North Dakota, Wyoming, and Colorado totaled almost 4,000. In 2018 alone, these four states have spent $3.75 million to plug just 246 wells and restore 9 sites.
In the map below, use the magnifying glass in the top left corner to search for orphaned wells near your city or town.
More than 4,000 orphaned wells reported by states as of June 2020.
While one well may seem a small eyesore, the cumulative effect is alarming. In addition to leaking cancer-causing gases known as volatile organic compounds, all unplugged wells emit methane, a potent greenhouse gas. Odorless and invisible, it captures 86 times more heat than CO₂ over two decades and at least 25 times more over a century. Every year, unplugged wells in the United States emit as much greenhouse gas as 2.1 million passenger cars. Degrading well casings can allow pollutants to contaminate groundwater. And while rare, orphaned wells can even be lethal. In 2017, two people died in a fiery explosion when a severed gas line ignited while they were replacing a basement water heater in their Colorado home. Their entire neighborhood had been built on top of a former oil and gas field that had been left off of construction maps.
Trends indicate there will be many more orphaned wells in the near future. Below you can see all of the oil, gas, and injection wells—disposal wells which shoot industrial fluids thousands of feet below the surface—that will someday need to be cleaned up in the four states. These are wells that have not yet been plugged and reclaimed; they are producing, sitting idle, or used as injection sites.
All producing, idle, or orphaned oil, gas, and injection (disposal) wells in North Dakota, Montana, Wyoming, and Colorado reported in June 2020.
How did we get here?
For decades, regulators have been tasked with maximizing the production and revenues from oil and gas operations, but we are headed towards a new reality. The global pandemic has hastened the economic decline of a chronically overburdened industry. More than 76,000 oil and gas industry jobs were lost between February and June of 2020, and few expect the industry to recover quickly. Hundreds of oil and gas companies could file for bankruptcy protection by the end of 2021, more than the previous five years combined. As new drilling slows and old wells mature, taxpayers and nearby residents are dealing with the mess left behind.
A storage tank next to a marginally producing federal well slowly leaks contaminated water. The family who runs this Wyoming ranch has fought for years for better enforcement and clean up.
While oil and gas companies are legally responsible for cleaning up their wells, companies can sell off wells nearing the end of their productivity and transfer that responsibility to small ‘mom and pop’ operators. These small operators are at higher risk of going bankrupt and leaving taxpayers on the hook to plug and reclaim the orphaned wells. And while regulators require bonding or financial guarantees from operators to ensure cleanup, those rarely come close to the actual cost of reclamation. Some orphaned wells simply pre-date bonding requirements, or their locations aren’t even known by regulators. Taxpayers either foot the cost of cleanup when funds are available or orphaned wells sit uncapped and leaking if funds are not available.
Unlike coal mining and many other industries required to post full-cost reclamation bonds, oil and gas operators are allowed to post more limited “blanket bonds.” A blanket bond covers multiple well sites and does not guarantee payment for the full cost of reclamation. In Colorado, an operator can bond up to 100 wells for only $60,000. A $100,000 bond is required for an unlimited number of wells. While many states present operators with the option to bond a single well at a set price, operators rarely own only one well and take advantage of blanket bonding for multiple wells. Available bonding data collected by Carbon Tracker suggests that states on average have only secured less than 1% of the total amount of anticipated reclamation costs.
Previous reporting by the Western Organization of Resource Councils examined the bonding rules in eleven Western states and found that the federal Bureau of Land Management’s (BLM) rules, which apply to all taxpayer-owned oil and gas deposits, are weaker than any state rules. BLM’s $25,000 minimum statewide bond, which covers unlimited federal wells in a single state, is four times lower than the typical state requirement, and BLM offers a nationwide bond option to operators at a bargain price of $150,000. BLM bond amounts have not been updated or adjusted for inflation since they were first established in the 1950s and 1960s. While the federal rules are the weakest, no state’s rules fully protect against orphaned wells.
Part II: State of the States
Methane leaking, bankrupt operators, and taxpayer liability only scratch the surface of issues stemming from our legacy of oil and gas drilling. As we take a closer look at the locations and ages of wells in our four states, stories emerge about consent and land ownership, the power of definitions, the need for good data to ensure accountability, and the disproportionate burden from orphaned wells on Indigenous people. Part II takes you on a state-by-state tour that highlights these stories.
This project turned to state data sets to develop a picture of the state of oil and gas wells in the Mountain West. While all data sets proved limited in some way, they paint a picture of overall trends and in identifying major issues.
State View: Wyoming
Since 2014, nearly 6,000 wells on state and private Wyoming land have been orphaned. About two-thirds of those have been plugged. Long idled wells, particularly federal wells, point to a much larger problem on the horizon.
Although most states recognize long-idled wells as being at high risk of being orphaned and require operators to plug and reclaim wells that have not produced in two years, this is rarely enforced. To analyze the extent of wells at a high risk of becoming orphaned across the states, we relied on a recent report by the California Council on Science and Technology (CCST) which classified wells that have had no production over the past five years as being at “high risk of becoming orphaned.”
An L.A. Times/Center for Public Integrity analysis of 40 years of state data on wells in California found that “once a well has been dormant for just ten months, there’s a 50-50 chance it will never produce again. By the time federal regulators begin raising concern — at five years of inactivity — the chance that a well is ever active again falls to one in four.”
Temporarily Abandoned and Shut-In are status categories generally used across states that indicate wells not currently in production, or "idle." The map to the right shows the 6,138 Wyoming wells with a status category indicating it has been idle for more than 5 years.
Clicking on an individual well will reveal a pop-up with a status date—the date at which a well was reported idle. Can you find the cluster of wells that have been sitting idle for more than 100 years?
Split estate, where the surface and mineral owners in a location are different, is common in the West. When some parts of the West were settled, including the Powder River Basin in northeastern Wyoming, the federal government retained much of the mineral estate. Because the mineral estate is considered dominant, the mineral owner can lease oil and gas without the consent of the surface owner, and surface owners have little control over development on their land.
Drill rig on a privately owned ranch.
The map to the right shows wells that have been sitting idle for more than 5 years and highlights the different types of mineral and surface ownership of those wells.
All red dots represent those wells with federal mineral ownership. The larger red dots are split estates where federal wells have been sited on privately owned lands. Click on the legend symbol in the bottom left corner or click on a particular dot to see what the other colors represent.
Federally leased wells pose unique challenges in Wyoming and other states. Because BLM does not consider a well idle until it has not produced for seven years, and because the agency contacts all previous lessees before considering a well orphaned, many federal wells sit idle for years or even decades without being recognized as orphaned and before being plugged and reclaimed. Wyoming has an official orphaned well backlog of thousands but, while large, this number is artificially low because it does not include any federal wells that lack an operator responsible for clean-up.
State View: Montana
In Montana, we found multiple examples of incomplete data on many wells. We need to know important details about a well including the type, current status, and date the status was verified to understand the scope of the orphaned well crisis in Montana and the resources needed to address it.
In the past two years, the Montana Board of Oil and Gas Conservation has repeatedly sent certified letters to operators with decades-old idle wells, demanding their reclamation, to find that the company ceased to exist years ago. This recent effort is the first in nearly ten years to correct their records to document wells that are orphaned and plug them.
There are 32 wells in the Montana data set where regulators do not know the type of well or only the status of the well (producing, idle, etc.) Is it an old oil well? Gas? Injection? Something else entirely?
Regulators do seem to know, or at least have guessed, when these wells were completed. Most have a well completion date sometime between the years 1900-1930. This sheds some light on why regulators may not know much about the wells, but also begs the questions, why have they not yet been cleaned-up?
Beyond the 32 wells with no status or type information, many more simply have a missing status record. Overlaying tribal reservation land boundaries with the geographic locations of all unknown status wells in Montana reveals a concerning pattern.
A disproportionate number of wells with an unknown status are within reservation boundaries. Montana has some clear inconsistencies with well tracking on tribal nations’ lands. If we don’t know the status of a well, we can’t determine the risk it poses to the communities and families next door.
The map to the right shows all Montana wells with an idle status category of Temporarily Abandoned or Shut-In. Unlike Wyoming, even when a status record does appear for a well, Montana’s data does not include status dates, making it impossible to tell from state data how many wells have been idle for more than five years, and therefore at high risk of being orphaned. The 202 wells identified by the Montana Board of Oil and Gas Conservation as orphaned may only scratch the surface of a growing crisis.
State View: North Dakota
The inadequacies of Montana well tracking data hide the problem and hinder our ability to actually clean up any orphaned wells. North Dakota data tells a slightly different story—the importance of definitions.
To the right you can see those wells in North Dakota with a Temporarily Abandoned status. Unlike all the three other states we looked at, North Dakota has no Shut-In or Orphaned classifications in their data. The North Dakota Oil and Gas Division has reported orphaned wells on some national reports, but given no indication as to which wells they consider orphaned.
North Dakota does use a classification with a definition totally unique to them—abandoned. In North Dakota, abandoned wells are those that have been shut-in for more than 12 months. This category is of particular interest because a number of the abandoned wells have been targeted by the state for clean-up using new funding from the federal CARES Act. The wells identified for clean-up have been deemed "confiscated." Whether the state will opt to confiscate operator bonds to help cover the cost for the wells they clean-up remains unclear.
Viewing the abandoned and confiscated wells separately hides an important pattern. Scroll to the sliding map below to see the two categories in relation to each other. What do you notice about the similarities and differences between the locations of abandoned and confiscated wells?
Abandoned and Confiscated wells.
Did you notice that none of the abandoned wells identified for CARES Act-funded clean-up are on, or even particularly close to, the Fort Berthold Reservation? This is likely a function of an intentionally complex patchwork of ownership, created by the federal government over centuries.
The Dawes Act sought to assimilate Native Americans into mainstream US society by annihilating their cultural and social traditions, including collective use of land, by dividing tribal lands into allotments owned by individuals and families. As a result, many reservations today are a patchwork of fee (private citizen), allottee (tribal citizen), and tribal trust lands and minerals. This mess of ownership and responsibility also contributes to a regulatory nightmare, wherein adjacent wells may have different regulations, tracking, and enforcement depending on Bureau of Indian Affairs, Bureau of Land Management, Tribal, or State authority.
In the states examined, the proportion of orphaned wells to all wells within reservation boundaries was found to be two times higher than wells outside of reservation boundaries. Considering BLM’s inadequate tracking and reporting of orphaned wells, the disparity is likely even higher.
A growing concern in the deep, modern shale development—prolific on Fort Berthold—is the unknown actual cost of reclamation. Previous estimates have been based on historical state expenditures--largely on older, simpler, and shallower wells. A 2019 analysis of recent BLM expenditures by the Government Accountability Office (GAO), a federal office tasked with watchdogging federal agency performance, found that the average reclamation expenditure is $20,000 for a low-cost well and $145,000 for a high-cost well.
But a recent report by Carbon Tracker estimated that the cost to plug a modern shale well is close to $300,000—far higher than the estimates used by companies, regulators and financial analysts—because the wells are far deeper and more complex than conventional ones.
Whether the estimates are high or low, the actual cost to cleanup the close to 100,000 wells on federal lands across the country is in the billions .
(Photo: Daryl Peterson)
Daryl Peterson, a farmer in Antler, North Dakota, estimates that old, failing oil and gas infrastructure has caused more than one million of dollars of damage to his family's land. The contaminated soil is unlikely to grow crops again, even after the state required the responsible companies to remediate the soil.
"This is what can happen to the Bakken 20 years from now when the profitability goes out of it and the equipment starts to get old," said Daryl. "And that’s what we have, all old, worn-out equipment. We have wells that have been abandoned for 20 years and they haven’t been forced to be plugged. In northern North Dakota, they kind of looked the other way because they have all these special relationships with the oil companies."
State View: Colorado
Most protective regulations in the country? Not for ensuring reclamation.
While Colorado has often been a national leader in oil and gas regulations which prioritize the long term health and wellness of communities, state regulators have copied many of the broken practices discussed and allowed orphaned and long-idled wells to proliferate.
This map shows the hundreds of wells that have been idled for more than five years or that have already been identified by the state as orphaned.
Zooming in on the southwest corner of the state, we see that 70 of Colorado’s 265 orphan wells (26.4%) are within the Ute Mountain and Southern Ute reservation boundaries. Wells at high risk of becoming orphaned, those that have sat idle for more than 5 years, disproportionately show up on reservation lands somewhat less dramatically. In contrast, the Ute Mountain Reservation and Southern Ute Indian Reservation together account for only 1.7% of Colorado’s total land area.
As a result of abrogated treaties, the allotment policy, non-Indian homesteading, and, later, restoration of unoccupied Reservation lands to the Southern Ute Tribe, the land and mineral ownership within the Reservation is a 3-D checkerboard. This patchwork of ownership within the exterior boundaries of the Southern Ute Indian Reservation means that, while the Southern Ute Tribe has diligently tracked and enforced timely plugging and reclamation standards on Indian lands, the vast majority of orphaned wells within the reservation are not the responsibility of the tribe.
The Southern Ute Tribe has been actively involved in seeking a federal solution that honors the government’s trust responsibility and the tribe’s status as a sovereign nation while preventing orphaned wells in the future.
Recent high-profile bankruptcies in the state raise concerns about the ability of companies to clean-up their wells and the inadequacy of the reclamation bonds to cover the full cost. One such company, Ursa Operating Company LLC, operates in the western region of Colorado outlined below and mapped in detail to the left.
At the time of bankruptcy, Ursa had 768 unplugged wells in CO, 199 of which are idled or temporarily abandoned. A small portion of these wells, approximately 40, are under federal leases. COGCC data shows $506,245 in plugging bonds held by the state, for an average of $659.17 of reclamation bonds per unplugged well.
With COGCC estimating an average of $82,500 plug and abandon cost per well, the cumulative shortfall is staggering.
This particular bankruptcy will not allow Ursa to orphan any wells—a 'no-asset' bankruptcy would. Many of these wells will continue to be operated or idled as Ursa goes through bankruptcy and some will be sold to even smaller companies. Considering Ursa's losses to date, whether those 199 Idle and Temporarily Abandoned wells will ever produce again is another question.
Part III: New Rules
Wyoming, Montana, Colorado, and North Dakota regulators have unique challenges to address in order to ensure timely cleanup of end-of-life wells, but one regulator’s challenges stand out—the regulation and tracking of federally managed wells is entirely inadequate. BLM tracking of well status for federal wells is not readily accessible for public viewing so we have to rely on federal agencies to analyze this data. A 2018 GAO report on BLM regulatory efforts suggests that even if available, inconsistencies between field offices and other issues with data entry calls into question the accuracy and utility of federally tracked data.
North Dakota rancher Donny Nelson stands in front of actively flaring federal wells on this property. (Photo: Dakota Resource Council)
Who bears the brunt of this? With almost no say as individuals in dictating the terms of development—even if they own the surface land—tribal members, allottees, and other split estate residents such as farmers and ranchers are forced to deal with a disproportionate amount of leaking and degrading orphaned and idled wells. The “Trust Responsibility” is a fiduciary obligation on the part of the United States to protect tribal treaty rights, lands, assets, and resources. It’s abundantly clear that responsibility is not being honored today.
By joining together to rewrite the rules, we can make sure that corporations who have done well in oil and gas communities do right by these oil and gas communities.
What might a different future look like?
Wells that have already been orphaned, where no responsible operator exists, will continue to be a hazard until dealt with by government regulators. With record-high unemployment in the oil and gas industry, orphaned well cleanup proposals are gaining popularity. Energy experts have estimated that a major federal cleanup program could create more than 120,000 jobs, putting skilled laborers in mostly rural areas back to work quickly.
But outdated reclamation bonding policies have primed the keg for another explosion of bankrupt companies shifting their cleanup liabilities to the public, erasing any progress in the backlog of orphaned wells that a program might address. Thankfully, regulators have the ability to implement several long overdue and common-sense reforms to protect taxpayers, private landowners, and public lands from this growing crisis.
- Ending blanket bonding, the practice of fixed dollar bond amounts for unlimited wells in a single state or lease, and requiring bonds based on the actual cost of reclamation of each well, similar to federal and state requirements for coal mines, would ensure money exists when wells are retired.
- Regulators will need to put stricter definitions on when retirement needs to occur, to keep operators from delaying the inevitable.
- And for wells who’s operator has already disappeared, orphaned well ‘fee and fund’ models can finance the cleanup.
Part IV: Take Action
Tell us if you are living near an oil or gas well you are concerned about! Not sure if you are near well? Use the address search on any of our maps! Click on a particular well to find out basic information about its operator and status. Contact us at: info@worc.org
Directly impacted members of the Western Organization of Resource Councils have worked with partners across the country to shape federal legislation which would clean up these left-behind wells while holding the oil and gas industry responsible for their mess.
Including these provisions in Congressional legislation requires a two-pronged solution to this decades-long problem. Establishing a new orphaned well fund and strengthening oil and gas bonding requirements will help fix the problem now and into the future. This will, in turn, create critically needed jobs for the thousands of oil and gas workers out-of-work.
Across the country, the environmental costs of orphaned wells are increasing. As more wells become orphaned, these wells continue to pollute groundwater, leak methane and toxic gases, and endanger nearby residents. Including these solutions in Congressional legislation begins to uncouple and solve this problem by putting disaffected workers back to work cleaning up impacted lands and requiring stronger financial assurances from industry to protect our lands and waters.
The Western Organization of Resource Councils (WORC) is a network of grassroots organizations that span seven Western states with more than 15,000 members. Many WORC members live on lands overlying and neighboring federal, tribal, state and privately-owned oil and gas deposits, and experience numerous impacts due to federal oil and gas production. Headquartered in Billings, Montana, WORC also has offices in Colorado and Washington, D.C.
Our eight community organizations are:
- Dakota Resource Council (North Dakota)
- Dakota Rural Action (South Dakota)
- Idaho Organization of Resource Councils
- Northern Plains Resource Council (Montana)
- Oregon Rural Action
- Powder River Basin Resource Council (Wyoming)
- Western Colorado Alliance for Community Action
- Western Native Voice (Montana)
