All's Well that Ends Well: Addressing End-of-Life Liabilities for Oil and Gas Wells

Drilling Like There’s No Tomorrow: Bankruptcy, Insurance, and Environmental Risk

“…The large majority (83 percent of the oil and 94 percent of the natural gas) was produced on land ("onshore") and the remainder came from drilling in the ocean ("offshore"). 6 While offshore drilling tends to be dominated by large multinational companies, onshore production requires a relatively modest investment and many wells belong to small independent firms. For example, in Texas during the period studied in this paper, more than 5,000 operators reported production each year and the large majority had annual revenues below $1 million.…”

“…The primary environmental concern in this industry is pollution of groundwater or surface water with crude oil, natural gas, drilling fluids, or concentrated saltwater 6 Statistics are from US EIA "Crude Oil Production" and "Natural Gas Gross Withdrawals." Value is calculated using annual average prices at Cushing, OK and Henry Hub, LA, and assuming a natural gas heat content of 1,037 Btu per cubic foot.…”

A Roadmap to Municipal Reform: Improving Life in Canadian Cities

“…In some cases, the taxes have become so high a cost for energy producers in Alberta that their property tax arrears are causing them to declare bankruptcy. In addition to the economic cost, these companies leave behind disused wells that cause major environmental harm and risks, such as leaks or explosions, to the local population (see Dachis, Shaffer, and Thivierge [2017] for a measure of the extent of this problem). 26 Beyond typical property taxes, Alberta municipalities can also levy taxes on the value of machinery and equipment (a direct tax on capital) and a one-time tax on the depth of a well -a distinct municipal excise tax.…”

An updated look at petroleum well leaks, ineffective policies and the social cost of methane in Canada’s largest oil-producing province

“…In the Canadian Province of Alberta, where the economy is strongly linked to the energy sector, 70% of methane emissions come from upstream oil and gas activities (AER n.d.). Alberta has over 450,000 registered petroleum wells, and 155,000 of them are no longer producing and waiting to either be reactivated for production or permanently plugged and the land reclaimed (Dachis et al 2017). Currently, there are roughly 81,000 petroleum wells in Alberta classified as suspended (Petrinex Alberta Public Data database).…”

“…Further to this, she offers that the externalities that result from these inactive wells may lead to a socially suboptimal outcome. Inspired, in part, by Dachis et al (2017) and the economic modelling work conducted by Muehlenbachs (2015Muehlenbachs ( , 2017, this paper seeks to improve upon the state of the knowledge of the true risk and cost to the public of having these wells remain in the suspended state.…”