Orphan Wells

 

Orphan Well:   

In Texas, an orphan well is an inactive, non-producing well that has been dormant for a minimum of 12 months.

 

WHAT IS AN ORPHAN WELL?

Although sometimes used interchangeably, “abandoned” and “orphan” wells are fundamentally different.

“Abandoned” wells usually refer to wells that are no longer productive or economically viable, and have been properly “plugged” by an operator.

“Orphan” wells are wells that have not gone through the plugging process, or have no identifiable owner. According to the Texas Railroad Commission (RRC), the regulatory body that oversees Texas oil and natural gas development, an orphan well is an inactive and unplugged well that has not produced oil or natural gas for a minimum of 12 months.

 

It is estimated that most orphan wells across the country originate from the early days of American oil and natural gas development. Older wells – especially those drilled before the 1950s – are more likely to have been improperly abandoned and poorly documented. However, thanks to innovation and regulation, orphan wells are an incredibly rare occurrence today.
 

 

FACT ➡️   

 Currently, the number of orphan wells in Texas is less than 1 percent of all the producing wells in the state.

PLUGGING A WELL

Considered an essential step in managing the lifecycle of a well, responsible operators plug a well by removing the well’s piping and replacing it with a cement mixture at key intervals.  Plugging a well prevents the oil and natural gas reservoir fluids from migrating up the well, protecting both groundwater and the surrounding area. The well pad may also be reclaimed and reseeded to blend with the nearby ecology.

 

Texas regulation requires well operators to strategically place cement plugs throughout the wellbore at each productive horizon and usable quality water strata to prevent fluid or gas migration into the air and groundwater. The process requires each well meet the state’s requirements and any additional requirements identified in a notice of intent to plug.

 

 

FACT ➡️   

 While technology has improved and the materials used have become more standardized, the basic techniques to plug a well haven’t changed significantly since the 1970s.

RULES AND REGULATIONS

As with other operations related to oil and natural gas development, the Railroad Commission of Texas (RRC) regulates orphan wells in the Lone Star State, including enforcement and clean up. Texas state law requires all oil and natural gas well operators to pay – in the form of a bond, letter of credit or cash deposit – to plug orphan wells.

According to the Interstate Oil and Gas Compact Commission (IOGCC), Texas first established a payment system for abandoned wells in 2005. This authorized the RRC to “reimburse surface estate owners up to 50% of the documented cost or the average Commission cost” to plug the well.  In 2011, Texas created the Oil and Gas Regulation and Cleanup (OGRC) Fund, replacing previous well-plugging funds, in order to streamline the source of funds to continue to plug wells in a timely manner.

 

 

 

 FACT ➡️   

 Texas oil and natural gas development is regulated by multiple governmental agencies. Learn more about the regulatory process here.

RESPONSIBILITY AND REMEDIATION

In Texas, oil and natural gas operators are financially responsible for plugging both abandoned and orphan wells. By setting aside money before operators begin to drill, the state is able to cover most of the costs of plugging wells in the unlikely event they become orphaned.

Companies are also able to reclaim, or restart operations from, orphan wells. The responsibility of closing and plugging the well is then shifted to the operator who took over the well.

Oil and natural gas operators in Texas are increasingly more involved in the plugging of wells, both directly or indirectly via the OGRC Fund.

 

“Approximately 92% of the wells plugged in Texas on an annual basis are done so by the operator of record with no use of the Texas Railroad Commission’s Oil and Gas Regulation and Cleanup Fund.” - Texas Independent Producers and Royalty Owners Associations (TIPRO)

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JOB CREATION OPPORTUNITIES  

A Columbia University report estimates that over 120,000 jobs could be created via a federal program to plug as many as 500,000 orphaned wells in the United States.  

 

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FAST FACTS

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Orphan wells in Texas account for less than 1 percent of all drilled wells in the state.

Texas plugged the most orphan wells of any state per last counting in 2018.

4,551 wells plugged and closed in Texas from 2018 to 2020