Infrastructure Investment and Jobs Act (IIJA)
On Monday, November 15, 2021, President Biden signed the
federal Infrastructure Investment and Jobs Act (IIJA) into law. The IIJA allocates more than $1 trillion to advance various infrastructure projects across the nation. Among other things, this legislation has the potential to provide $400 million to Pennsylvania to plug abandoned and orphan (AO) oil and gas wells across the commonwealth over the next 10 years. This webpage documents how DEP is preparing to successfully utilize this increased funding in order to maximize the environmental protection, economic development, and public health and safety benefits associated with plugging Pennsylvania’s many AO oil and gas wells.
While the exact number of AO wells remains unknown due to the long history of oil and gas exploration in Pennsylvania, a 2015 study by the U.S. Department of Energy National Energy Technology Laboratory, Oak Ridge Institute for Science and Education, the University of Pittsburgh and the Pennsylvania Department of Conservation and Natural Resources estimated that between 305,000 and 395,000 oil and gas wells have been drilled in Pennsylvania.
At this time, DEP can account for approximately 160,000 wells. Based on this research and current oil and gas well databases, DEP estimates there may be at least an additional 200,000 undocumented AO oil and gas wells in the commonwealth.
DEP recognizes that plugging AO oil and gas wells is an important step toward not only addressing the historic potential risks to public health, public safety and the environment posed by AO wells – but also to combatting climate change by potentially reducing greenhouse gas emissions. The United States Environmental Protection Agency (EPA) estimates that, on average, each unplugged AO well emits 0.13 metric tons of methane annually. Recently published studies, including some conducted in Pennsylvania, have produced estimates ranging from 0.03 to 0.19 metric tons of methane emitted annually per AO well. These estimates vary based on limited data and the use of different standard methodologies to measure these emissions.
The 2012 Oil and Gas Act (58 Pa.C.S. §§ 3201-3274) authorizes DEP to plug AO wells, and DEP’s Well Plugging Program was established to plug oil and gas wells where there is no identifiable responsible party. DEP’s existing plugging program has prioritized its plugging efforts based on the threat to public health, public safety and the environment posed by an AO well. In general, an AO well is prioritized for plugging if that well has been determined to be associated with a stray gas migration investigation or if that well has a high score based on the agency’s
internal scoring system.
Since the Well Plugging Program began, DEP has plugged more than 3,000 wells; however, a lack of adequate funding has restricted well plugging activities for AO wells over the past several years.
Funds to plug Pennsylvania’s AO oil and gas wells are collected via permit surcharges of $150 and $250 per oil and gas well, respectively. This amounts to the Well Plugging Program having an active budget of under $500,000 annually. While the cost to plug an abandoned well depends on multiple variables, including the condition of the well to be plugged, the location of the well and the level of complexity to plug, the Department estimates a cost of $68,068 is required to plug a typical AO well in Pennsylvania. As illustrated below, the permit surcharges have not been adequate to allow the commonwealth to sufficiently address the liability associated with Pennsylvania’s AO oil and gas wells.
|
Year |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
|
Oil and Gas Wells Plugged by DEP | 46 | 37 | 10 | 5 | 5 | 9 | 18 | 17 |
Because of the historic level of funding provided for plugging AO wells under IIJA, DEP looks forward to significantly increasing the number of AO wells plugged in Pennsylvania. The Department is targeting IIJA funds to plug the currently documented inventory of approximately 27,000 known AO wells across the commonwealth. Included in DEP’s AO well plugging goals is meeting the US Department of Interior’s directives to comply
with the Federal government’s Justice 40 initiative for Climate and Economic Justice.
President Biden’s Executive Order on Implementation of the IIJA can be found here:
Executive Order on Implementation of the Infrastructure Investment and Jobs Act | The White House The items below are designed to summarize Pennsylvania DEP’s AO well plugging plans. This page is subject to change without advance notice. Viewers are encouraged to check back often. Additional information about DEP’s Abandoned and Orphan Well Program up until IIJA funding became effective is available by clicking here:
Rewriting Pennsylvania's Legacy (pa.gov).
Accordion
Expand AllClick here for a more accessible versionThe IIJA funding that pertains to the plugging of AO wells in the commonwealth by the Office of Oil and Gas Management (OOGM) is comprised of the following separate potential funding sources:
✔ Initial Grant $25 million available to Pennsylvania. This is a one-time grant issued in Year One of the IIJA. 90% of this Grant must be in contracts or grants within 90 days of receipt and obligated within one year.
DEADLINE: May 13, 2022.
STATUS: U.S. Department of Interior (DOI) released
the Initial Grant guidance on April 11, 2022. DEP applied for the initial grant on May 12, 2022.
The U.S. Department of the Interior approved the application as submitted for the full $25 million on August 25, 2022 with an effective “date of receipt” of Initial Grant funding of October 1, 2022.
✔ Formula Grant Potentially $300 million over five years. Money must be obligated within five years of receipt and spent over a ten-year period.
STATUS: Notice of Intent to apply for the Formula Grant submitted to DOI on December 23, 2021.
DOI awarded $79,178,000 in Phase One of Formula Grant funding to Pennsylvania on January 31, 2022. Approximately $1.5 billion in Formula Grant funding remains to be allocated by DOI. Awaiting further guidance from DOI on how to apply for this funding.
✔ Performance Grant – Regulatory Improvement Potentially two $20 million grants for a total of $40 million are available until 2030 that must be spent in five years. Pennsylvania can qualify for these grants through (A) strengthening plugging standards and procedures designed to ensure that wells are plugged in an effective manner; and, (B) making improvements designed to reduce future orphaned well burdens, such as financial assurance reform, alternative funding mechanisms for orphaned well programs, and reforms to programs relating to well transfer or temporary abandonment.
STATUS: Awaiting further guidance from DOI on how to apply for this funding.
✔ Performance Grant – Matching Grant Potentially up to $30 million maximum over ten years. Pennsylvania can qualify for this Grant funding through certifying that it will expend more commonwealth funds for plugging wells in the upcoming Fiscal Year than the average annual amount expended by the State during the period of Fiscal Years 2010 through 2019 for plugging wells.
STATUS: Awaiting further guidance from DOI.
There are several key deadlines that require DEP to take immediate action for Pennsylvania to be eligible to receive its share of federal funding.
> The first deadline was
December 30, 2021 to submit a notification and information to the DOI relating to Formula Grants ($300 million over 5 years).
NOTE: The Department met the first major milestone for the December 30 deadline by submitting the
Formula Grant Write Up and
Notice of Intent to apply for the Formula Grant to the DOI.
> May 13, 2022 is the last day Pennsylvania can request the Initial Grant of $25 million from the DOI. DOI released the
Initial Grant guidance on April 11, 2022. DEP applied for the initial grant on May 12, 2022.
> Based on the effective “date of receipt” of Initial Grant funding of October 1, 2022, DEP must obligate 90% of the $25 million Initial Grant by September 30, 2023.
To develop data to support future Departmental efforts, the Bureau of Oil and Gas Planning and Program Management (BOGPPM) developed an online Plugging and Plugging Support Contractor Survey. The survey was sent by invitation to industry groups and contractors on October 6, 2021, as well outbound eNewsletter announcements and social media posts. The survey continues to be available on
DEP’s Office of Oil and Gas’ Home page.
As of January 14, 2022, 127 companies have completed the survey and highlights of the responses are as follows:
• 100% indicated their interest in being given an opportunity to plug orphan and abandoned wells under a federal stimulus project.
• 43% indicated that they have previously plugged wells or performed a supporting role function in plugging wells under a PA-issued contract.
• 44% indicated that they are currently registered as a supplier under the PA Supplier Portal.
• 56% are willing to complete plugging projects in all parts of Pennsylvania, while 31% are only interested in plugging wells within the NW Region and 31% are not interested in plugging wells outside of the Commonwealth.
• 82.5% indicated they would anticipate hiring additional staff if awarded plugging contracts or offers for other services.
✔ Initial Grant: DEP will use the Initial $25 million Grant to move well plugging contracts through our Construction Contracts Request to Bid process.
✔ DEP Bureau of Oil and Gas Planning and Program Management has produced well plugging projects which aim to address wells with the greatest threat to the environment and public health & safety in an attempt to maximize contract efficiencies while effectively plugging the most possible wells with the Infrastructure Investment and Jobs Act (IIJA) initial grant funds.
The projects were selected from DEP’s Abandoned Orphan (AO) Well List of approximately 8,900 wells that have had a full inspection and investigation. A well is placed on DEP’s AO well list when no responsible party can be identified and a thorough AO well investigation has been conducted by the Department. A component of an AO well investigation includes determining a risk score to apply to the individual well. A score is calculated based on the type of well, its condition, and its proximity to sensitive receptors (for example, surface water, buildings, water supply wells, etc.).
Approximately 50 wells with the highest score on the AO well list were selected as priority wells to plug and were established as individual projects. Additional AO wells, identified within an approximately ½ mile radius of the priority AO well, were then added to each individual project. The goal was to produce projects containing roughly 8 to 12 proximally located AO wells which has been determined to be the most cost-efficient sized contracts based on DEP’s historic cost tracking data. DEP is preliminarily working on 50 contracts that will be released as part of this Initial Grant process or until funding is exhausted.
✔ Depending on the complexity of a particular project, it can take over 60 days from the time a Request for Bids is released until the contract is awarded. Once the contract is awarded, the contractor has the time specified in the contract to plug the identified AO wells. The time from mobilization until the AO well is properly plugged depends on the condition of the well, the total depth of the well and any surface complications such as remediation of contamination and removal of any remaining surface equipment associated with the AO well.
> Pennsylvania’s Environmental Justice Policy is a critical part of DEP’s work, and DEP acknowledges the broader works contained within President Biden’s
Executive Order 14008 on tackling the climate crises at home and abroad, wherein it promises to alleviate pollution in marginalized communities by directing 40 percent of federal resources to them.
> As such, the Bureau of Oil and Gas Planning and Program Management is committed to investing in traditionally underserved, low income, persons of color and otherwise vulnerable population areas where priority AO wells exist.
> DEP expects that the DOI will expect states to collect information on this topic and, as such, both the DEP Environmental Justice and draft EPA Justice 40 maps are taken into consideration as projects are developed.
> As AO well plugging work begins, any wells plugged, and funds spent in these areas will be tracked and reported on this page.
> DEP is working on approximately 50 contracts that will be released as part of the Initial Grant process or until funding is exhausted.
> Initial Grant phase wells -
This well list includes wells in red that are the highest scoring priority wells; all other wells are in proximity to priority wells for preferred contract grouping.