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Montana receiving $25M federal grant to plug orphaned oil, gas wells

capping wells
Posted at 6:04 PM, Aug 26, 2022
and last updated 2022-08-26 20:04:03-04

HELENA — Montana is set to receive $25 million from the federal government, to help plug more than 200 orphaned oil and gas wells across the state.

The U.S. Department of the Interior announced Thursday that it had awarded $560 million to 24 states, from the bipartisan infrastructure law passed last year. That money will be used to start capping thousands of high-priority well sites.

After an oil or gas well reaches the end of its useful life, it is generally “plugged and abandoned” – meaning the well shaft is filled with cement, it’s capped at the surface and the site is restored to how it was before drilling began. An “orphaned” well is one that hasn’t been plugged and no longer has a responsible operator to complete the work.

In Montana, the state Board of Oil and Gas is responsible for identifying orphaned wells and getting them plugged. Administrator Ben Jones says it’s important work.

“A lot of these older wells – especially oil wells – they don’t have any well heads, so they have the potential to emit methane emissions, so properly plugging and capping these wells would eliminate any potential to emit if there is one,” he said. “A lot of these wells are in farmers’ fields and hamper their farming operations – so getting rid of those and just getting rid of any potential environmental hazard.”

Montana has established a Damage Mitigation Account that provides funding for reclaiming well sites. It typically receives $650,000 in state funding every two years.

Jones said that program has capped 439 wells over about the last 30 years. The $25 million in federal money could be enough by itself to plug all 238 orphaned wells they currently have identified.

“It’s significant,” he said. “It’s going to be something new that we’ve never taken on before, so it’ll be a challenge.”

The Board of Oil and Gas initially identified 254 wells to be capped when it presented its plan to the federal government. Jones said the number of orphaned wells fluctuates, as some join the list when they lose their operators and others are removed when they are taken over by companies that want to restart production.

The current orphaned wells are spread across 24 counties in central and eastern Montana. The board has split them into 13 groups that will each be open for contractors to bid on separately. Jones said they will be getting more details from the federal government in September, and they hope to open bids soon after.

The state will be required to get all the projects contracted out within a year. Jones said they hope to have all the wells capped by the fall of 2025. Even after that, though, he said it won’t be the end of their work.

“We’re going to continue to gain orphan wells and continue to work toward plugging orphan wells for a long time into the future,” he said.