A June 2020 report, It’s Closing Time, explains how the oil and gas industry is legally obligated to plug and abandon (P&A) wells, but it hasn’t set aside the resources to do so. The paper notes that regulators have not required the industry to set aside funds to retire these wells. The industry cannot afford to retire. If industry can’t pay, then its lenders, investors, creditors and ultimately oil-producing states will eventually be forced to foot the bill. Else, landowners and citizens will be left to live with the consequences of millions of unplugged wells.
An October 2020 report, Billion Dollar Orphans, estimates that plugging 2.6 million documented onshore wells in the U.S. alone will cost $280 billion. This estimate excludes costs to plug an additional estimated 1.2 million undocumented onshore wells. The report advises that states can act against this risk now by increasing bond amounts to reflect actual costs. By so doing, states can shift financial responsibility to industry and simultaneously position themselves to receive U.S. federal aid.