Texas has a cautionary tale for Biden’s infrastructure plan

“orphaned wells, often leaking methane into the air and other pollutants into local groundwater, have been targeted in President Joe Biden’s new infrastructure plan seeking to allocate $16 billion to “put hundreds of thousands to work in union jobs plugging oil and gas wells.”

“We’re rewarding the worst-performing operators,” said Virginia Palacios, executive director of Commission Shift, an advocacy group focused on the Railroad Commission of Texas, the state’s oil and gas regulatory agency. “Without substantive reform attached to [the Biden plan’s] funding, you’re sending the message that it’s ok to socialize the cost of bad business.”

“Texas is known for having one of the better plugging programs, but we’re still so far behind,” Palacios said.
The main reason is that bonds are far too low. In Texas, bonds can cost as little as $2,500 per well, even though the actual median cost to plug a well and remediate the surface around is $48,000, according to Resources for the Future. Altogether, bond revenue in Texas covers less than 16% of actual plugging costs; 43%, meanwhile, comes from the state’s general coffers. And that’s actually better than most states: Nationwide, bonds cover just 1% of the $280 billion total projected cleanup cost for all oil and gas wells.
” Another issue, Palacios said, is the judicial system. Too often during bankruptcy proceedings, remediation costs are shunted to the back of the breadline after creditors, executives, employees, and vendors take their share of the company’s assets. Taxpayers have to pick up the remainder. In one 2019 bankruptcy case, an oil company dumped $10 million cleanup costs on the state the year after paying its top executives nearly $9 million. State judges should commit to prioritizing the payment of cleanup costs, she said, and consider holding company principles personally accountable or bar those with outstanding cleanup costs from starting new drilling companies, as many often do.”
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