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Plugging Abandoned & Orphaned Oil and Gas Wells

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The American Carbon Registry (ACR), a nonprofit enterprise of Winrock International, is currently authoring a first of its kind Methodology for the Quantification, Monitoring, Reporting and Verification of Greenhouse Gas (GHG) Emissions Reductions from the Plugging Abandoned & Orphaned Oil and Gas (AOOG) Wells. The methodology, developed by ACR in partnership with Dr. Mary Kang of McGill University, provides the eligibility requirements and accounting framework for the creation of carbon offset credits from the reduction in methane emissions by plugging AOOG wells.

AOOG might emit methane when unplugged or improperly plugged. The U.S. Environmental Protection Agency (EPA) reports that abandoned wells emit 280,000 metric tons (MT) of methane per year. Since methane is approximately 30 times more potent than carbon dioxide (CO2) in a 100-year period, this conversion magnifies 280,000 MT to almost 8 million MT CO2e per year. However, several studies report that methane emissions from these wells might be underestimated. One of the main factors contributing to this potential underestimation is that the total population of AOOG wells is still uncertain. Estimates in EPA reports cite a number of 2.3 to 3.2 million abandoned wells. Researchers such as Dr. Kang and other scientists that have studied AOOG wells in the U.S. note that in Pennsylvania alone, the number of these wells is as high as 750,000.

Before a well is plugged and abandoned, wells are often idled for a certain amount of time. The maximum length of time that a well can be idled varies from state to state, after which wells are considered temporarily abandoned (T.A.) The initial term of the T.A. stage varies from as little as 12 months in certain states to as long as 60 months. However, many states and provinces allow the T.A. stage to be extended and even perpetuated by demonstrating that the well has “future utility.” The requirements for determination of “future utility,” however, are not applied uniformly across states. Ultimately, the T.A. extension process allows wells that in many cases will never be productive again to remain in that status for decades, which allows methane to continue to emit and the risk of groundwater contamination to persist long past the point that these wells could have been plugged/remediated.

Proper plugging and remediation of all of the U.S. and Canada’s AOOG wells would be an extremely large financial burden for U.S. states. And while State and provincial regulations do require financial assurance through bonds, reports show that bonding amounts are insufficient to cover plugging documented wells, much less undocumented ones. Reports cite prices that range from USD 24-435 billion to plug and remediate up to 500,000 wells for the lower value and an estimate of most of the existing documented AOOG wells for the upper value.

The ACR methodology is intended to incentivize the plugging of oil and gas wells in the U.S. and Canada creating a pathway for carbon markets to help finance this activity.

ACR plans to publish the methodology for stakeholder consultation in the summer of 2021.

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