State Managed Plugging Program to Get Boast from Infusion of Federal Funds

State Managed Plugging Program to Get Boost from Infusion of Federal Funds

The Railroad Commission is working to take advantage of the state’s large share of federal funds available for the plugging of orphaned wells. On Jan. 31, the Department of Interior announced Texas was authorized a $25 million initial grant and $82.56 million in Phase I formula funds. The RRC will go through an application process before the funds are distributed.

The funding will enable RRC to significantly increase its efforts to plug orphaned wells via its award-winning State Managed Plugging Program, which has exceeded legislative goals for plugging for five years in a row and is an important part of the agency’s mission to protect public safety and the environment. “By plugging more than 43,000 orphan wells over the last 35-plus years, the State Managed Plugging Program has shown to be effective and efficient in protecting the State of Texas,” said Keith May, Project Manager for the plugging program. In fact in November, the Interstate Oil and Gas Compact Commission recognized the RRC and its partners with an award for the plugging of 11 orphaned wells in the Padre Island National Seashore near Corpus Christi. The project occurred from January to April 2021 and helped preserve sensitive ecological systems for both wildlife and visitors to park. RRC’s plugging program targets the most problematic wells for plugging first. “Orphan wells are prioritized using a wellestablished methodology, a priority system that includes four factors relating to the threat a wellbore poses to public safety and the environment,” May said, noting further details are in the FY 2021 Oilfield Cleanup Program Annual Report. The initial grant of $25 million should allow the RRC to plug approximately 1,000 wells, said Clay Woodul, Assistant Director of Field Operations. With the boost in available funds on top of the state’s allocation, Woodul says the State Managed Plugging Program should be able to plug up to 1,800 wells in Fiscal Year 2023. “The formula grant, which is the much larger pot of money, will allow us to increase our efforts to upwards of an estimated 2,000 to 2,250 wells per year, depending on contractor and staffing availability,” Woodul said. The initial grant and the Phase I formula funding earmarked for Texas are part of a larger $4.7 billion pot of money approved for well plugging in the Bipartisan Infrastructure Law, which passed Congress in November. In total, Texas is slated to receive an estimated $343.7 million via the program.

In addition to orphaned wells, the funds will also be available to remediate soil and to decommission or remove associated pipelines, facilities and infrastructure. The effectiveness of the funding will depend on the impact of inflation, which has been soaring recently, in part, because of Russia’s war in Ukraine, causing a spike in the price of oil and motor fuels. “Depending on how long the current increase in fuel costs last, it could have a significant impact on our goals,” Woodul stated. Even with the challenges of inflation and rising fuel costs, the State Managed Plugging Program has a strong track record of finding the best value out of available funding. “Our contracting processes is competitive, and we carefully make sure we use contractors that offer the best value to the state,” May said. More information about these federal funds, including information for prospective contracts, can be found on RRC’s website.