Wyoming is passing up millions of federal dollars that could go toward closing down some low producing oil and gas wells.
The state is eligible for up to $5 million from a federal program called Mitigating Emissions from Marginal Conventional Wells. It’s part of the Inflation Reduction Act and focuses on oil and gas wells that aren’t on federal land and are either idle or produce less than 15 barrels of oil per day.
The money could’ve been used to reduce harmful emissions at the sites, but also help shutter the wells. The shuttering part is why Wyoming’s Governor Mark Gordon said he didn’t apply for the funding, as he felt like it was an attack on the state’s oil and gas industry.
“This approach – concocted by [Washington] D.C. bureaucrats – shows a complete disregard for the importance of this industry to Wyoming’s economy,” Gordon said in a press release. “These are wells that have, and will continue to produce, significant amounts of oil; provide jobs through hundreds of small businesses; and generate revenues for schools, the state and local government.”
He added that these low producing wells provide about 10 percent of the state’s total oil production, or about $265 million in annual revenue.
But, Katherine Stahl, community organizer for the Powder River Basin Resource Council (PRBRC), said the press release was misleading.
“It really makes it seem from the press release, like if we accepted this funding, we would have to start shutting down wells. But that's not the case,” Stahl said. “Any sort of well, plugging that would happen with this money would be voluntary. So no one's forcing anything.”
According to the grant information, applicants do have to have the intent of plugging wells, but it is voluntary to get the money. Stahl said the millions of dollars could’ve helped pay for operators who already were planning to shut down a low-producing or non-producing well.
“Anything that would happen with the funding is voluntary. An oil and gas operator is not going to voluntarily choose to harm themselves,” she said.
Ryan McConnaughey, director of communications for the Petroleum Association of Wyoming, echoed Gordon’s statements, saying their group is glad Wyoming is passing this money up.
“Because we don't have solid information on how this money should actually be spent,” McConnaughey said. “And how we could do so without harming those small operators.”
The federal document explaining the grant is 74 pages long – detailing what the money is for and what projects it could be spent on. This includes, permanently plugging, measuring methane emissions and environmental restoration of low producing wells on non-federal lands. The document goes on to say the overall goal is to “result in methane and other greenhouse gas emission reductions and provide environmental benefits through the restoration completed as part of well abandonment requirements for the wells.”
Notably, Wyoming does have an industry-funded program to shutter idle and abandoned wells. When operators close their wells and restore the land, they use the bond money they put up initially, and if that isn’t enough there’s a state fund that’s padded by a ‘conservation tax’ that comes directly from the industry. Additionally, the Wyoming Department of Environmental Quality is in charge of a leak detection program that works closely with industry.
But, Stahl, with PRBRC, maintains that this federal money could’ve only helped, as it would’ve made more money available to operators who were interested. The deadline for the grant is Oct. 10.
“So Wyoming could still apply if we wanted to change our minds and do something useful,” Stahl said.
