Cleaning up 14,000 inactive oil wells in Gulf of Mexico will cost $30 billion

A new study from the University of California, Davis has revealed that the Gulf of Mexico region, particularly the coastal areas and offshore waters near Alabama, Louisiana, and Texas, contains more inactive oil and gas wells than producing ones. 

The cost to permanently plug and abandon these oil wells in the Gulf of Mexico could reach an alarming $30 billion. This groundbreaking research was published today in the journal Nature Energy and has significant implications for both environmental and financial risks to the public.

The study meticulously examined the cost of plugging approximately 14,000 wells, which have been inactive for over five years and are unlikely to be reactivated in the Gulf of Mexico region. The region is considered the epicenter of U.S. offshore oil and gas operations. 

Mark Agerton, an assistant professor at UC Davis and the lead author of the paper, highlighted the cost differential for plugging onshore wells versus those in offshore waters, which is substantial.

The environmental impact of these inactive wells is another area of concern. Leaks from wells closer to shore are more likely to damage coastal ecosystems and release greenhouse gases like methane into the atmosphere compared to wells in deep waters. 

What the researchers learned from the study

The study discovered that over 90 percent of inactive wells are located in shallow areas, with the cost to plug them estimated at $7.6 billion, or 25% of the total $30 billion. 

Professor Agerton noted: “The wells aren’t supposed to be leaking into the environment, but sometimes they do. How do you get the most environmental benefit for the least amount of money?”

The study’s findings could help states determine cleanup priorities, particularly as they access $4.7 billion in federal money authorized by the Infrastructure Investment and Jobs Act. This funding is earmarked for methane reduction programs, including the cleanup of old oil and gas wells. 

Gregory Upton, an associate research professor at the Louisiana State University Center for Energy Studies and co-author of the paper, explained: “States have a pretty good idea of what it costs to plug these wells on land, but there is really a lot of uncertainty as to what the costs were for these offshore wells.”

Who is responsible for the cleanup?

Regarding the liability for cleaning up abandoned wells in federal waters, it falls on prior owners if the current owner becomes insolvent and is unable to cover the costs. 

Professor Agerton pointed out that large American oil companies currently own or have owned 88 percent of the wells in federal Gulf of Mexico waters and would legally shoulder cleanup liabilities before taxpayers. 

However, in state waters, each jurisdiction handles liability differently, and prior ownership does not come into play. States are responsible for overseeing plugging programs for orphaned wells whose owners have gone bankrupt, but the cost to plug an abandoned offshore well increases with the length of the well and the depth of the water.

“The bulk of the costs comes from plugging wells in deeper water where the environmental consequences are less than for a shallow well closer to shore,” said Professor Agerton. “That money is probably better spent on state waters where they can’t go after prior owners for cleanup costs, and it’s going to be a cheaper cleanup job with more environmental benefit.” 

This research, co-authored by Siddhartha Narra, Brian Snyder, and Gregory B. Upton Jr. of Louisiana State University, emphasizes the urgent need for governments and the oil industry to address the issue of inactive wells and prioritize their cleanup to protect both the environment and taxpayers.

More about offshore drilling

Offshore drilling refers to the extraction of oil and natural gas deposits beneath the ocean floor. This process involves drilling deep into the Earth’s crust through the seabed to access hydrocarbon reserves. 

Offshore oil wells are the infrastructure that facilitates the extraction and production of these resources. Offshore drilling has become a crucial component of the global energy mix, supplying a significant portion of the world’s oil and natural gas.

There are several types of offshore drilling platforms, which can be categorized based on their design, mobility, and water depth capabilities:

Fixed Platforms

These are immovable structures built on the ocean floor, designed for long-term use in shallow to moderately deep waters. They are typically made of steel or concrete and are anchored to the seabed using piles driven deep into the ocean floor.

Compliant Towers

These are slender, flexible structures used in water depths ranging from 1,500 to 3,000 feet. They consist of a narrow tower attached to a foundation on the seabed, with a platform for drilling and production equipment.

Semi-Submersible Platforms

These platforms are partially submerged in water and supported by large pontoons or columns. They are used in deep and ultra-deep waters and are kept in place using dynamic positioning systems or anchored to the seabed.

Drillships

These are specialized ships equipped with drilling equipment and machinery, allowing them to drill in deep and ultra-deep waters. They are mobile and can be moved to different locations as needed. Drillships are also equipped with dynamic positioning systems to maintain their position over a well.

Tension Leg Platforms

These platforms are used in deep waters and consist of a floating structure tethered to the seabed by tensioned cables, which keep the platform stable during drilling operations.

Spar Platforms

These are large, cylindrical structures that float vertically in the water and are anchored to the seabed. They are used for drilling and production in deep and ultra-deep waters.

Offshore drilling and production have their set of challenges and risks, including:

Environmental Impact

Offshore drilling can lead to oil spills, which can have devastating effects on marine life and ecosystems. Additionally, the process generates waste materials that can contaminate the surrounding environment if not properly managed.

Worker Safety

Offshore drilling operations are carried out in harsh and remote environments, posing a risk to worker safety. Accidents, such as explosions or platform collapses, can result in fatalities and severe injuries.

Technical Challenges

Offshore drilling in deep and ultra-deep waters demands advanced technology and equipment, as well as skilled personnel to manage the complex operations.

Economic Factors

Offshore drilling projects often require significant investment and are subject to fluctuations in oil and natural gas prices. These projects can be economically unviable if prices drop or if costs exceed initial estimates.

Political and Regulatory Factors

Offshore drilling activities are subject to various regulations and policies imposed by governments and international organizations. These can impact the feasibility and profitability of offshore drilling projects.

Despite these challenges, offshore drilling remains an essential part of the global energy landscape. As technology advances and new methods are developed to mitigate risks and reduce environmental impact, the offshore oil and gas industry will continue to play a crucial role in meeting the world’s energy demands.

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