who will pay for plugging and abandonment of pa’s shale gas wells? austin mitchell 2 august 2013 1
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Who will pay for plugging and abandonment of PA’s shale gas wells?
Austin Mitchell 2 August 2013
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Plugging and abandonment at the end of a well’s life…
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1) Permanently isolate groundwater: pull production casing, insert cement plugs
2) Restoration of well pad: remove equipment and gravel, replace topsoil, re-vegetate land
Source: propublica.org source: statoil.com
Producing Marcellus Shale gas well
source: propublica.org
What are the risks of orphan shale gas well sites?
Stray gas / methane emissions
Allegheny National Forest, Pennsylvania
Habitat loss and fragmentation
source: PADEP
Land degradationsource: Ohio DNR
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source: witf.org
-
500,000.0
1,000,000.0
1,500,000.0
2,000,000.0
2,500,000.0
Net production revenue ($ millions)
Plugging and abandonment ($100-700,000 today)
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An
nu
al p
rod
uct
ion
(B
cf)
time
… and discounted plugging and abandonment costs have a small effect on near-term accounting.
Shale gas wells can be very profitable in the initial years of production…
Pennsylvania's oil and gas bonds:$10,000 per well,
capped at $600,000 per operator
Managing the risks of orphan shale gas well sites…
Creating individual well trusts funded by a pre-drilling fee or tax on initial production would have a small impact on profitability
(Mitchell & Casman, 2011)
5
trust deficit
Who will pay for plugging and abandonment of PA’s
shale gas wells?
6 Plugging and abandonment
1859 1940’s Today
source: NETL
Future
source: wired.com
PA oil & gas production
Acknowledgements• We are grateful to W. Michael Griffin and Joel Tarr
from Carnegie Mellon, and Roma Sidortsov from Vermont Law School.
• This work was funded by the Climate Decision Making Center (SES-3045798) and by the Center for Climate and Energy Decision Making (SES-0949710), both through cooperative agreements between the National Science Foundation and Carnegie Mellon University; and by the Gordon and Betty Moore Foundation (Award Number 1625) in support of the Carnegie Energy Research Initiative.
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