ACR, a nonprofit enterprise of Winrock International, has approved its Methodology for the Quantification, Monitoring, Reporting and Verification of Greenhouse Gas Emissions Reductions and Removals from the Plugging of Orphaned Oil and Gas (OOG) Wells . The Methodology developed in partnership with Dr. Mary Kang of McGill University.
This methodology provides the eligibility requirements and accounting framework for the creation of carbon credits from the reduction in methane emissions by plugging OOG wells.
Orphaned wells are unplugged, inactive and have no solvent owner of record. Many of these wells have fallen into advanced states of disrepair and are leaking methane, a potent greenhouse gas. Unplugged wells can also leak other toxic chemicals that lead to air pollution, groundwater contamination, soil degradation, damage to ecosystems, and risk of explosions.
While oil and gas operators are required to plug wells at the end of their productive lives, more than 160 years of oil and gas operations has left the legacy of a huge number of orphaned wells in the U.S. and Canada, for which no operator exists. In these cases, responsibility for plugging the wells falls to states/provinces, federal agencies or Native American tribes, which have historically lacked the funding needed to address the problem in a meaningful way.
OOG wells pose a serious climate threat. Researchers at McGill University, together with the Environmental Defense Fund (EDF), have produced a map of 120,000 documented OOG wells across 30 states in the U.S. However, estimates of additional undocumented OOG wells range as high as several million across the country. Because of this, the United States Environmental Protection Agency (EPA) classifies abandoned wells, of which orphaned wells are a subset, as one of the most uncertain sources of methane emissions in the US, estimating 7-20 million metric tons of CO2 equivalent annually.
Proper plugging and remediation of all U.S. and Canadian OOG wells is now an extremely large financial burden for local and federal governments, and there are significant backlogs because of lack of resources, equipment, and experienced personnel. While roughly $4.7 billion in funding was made available through the REGROW Act (part of the 2021 Infrastructure Investment and Jobs Act), a Columbia University report estimates that the cost of plugging a mere 500,000 wells could be as high as $24 billion. Carbon markets can provide financial incentives for additional action that complements other private, philanthropic, state and government led initiatives.
The potential costs for capping wells vary widely. While carbon credit purchases may be enough to cover the full costs of capping some wells, most funding will be supplemental to additional state, non-profit and federal funding for well capping. Each state has different rules and regulations that will determine whether participating in the carbon market is the right investment. For some states the contribution to bonds to cover the costs of wells may be adequate, but that isn’t guaranteed now or in the future.
