Plugging and abandoning (P&Aing) wells is a policy priority because unplugged wells present potential financial and environmental risks to the public. Offshore wells, compared with land wells, generally produce more, cost more to P&A and present different environmental risks. Here we estimate that the cost to P&A all 14,000 unplugged, non-producing wells in US Gulf of Mexico offshore waters, inland waters and wetlands is US$30 billion. Wells in shallower waters closer to shore make up 90% of inactive wells but only 25% of total P&A costs. They also present larger environmental risks. Prior owners of wells in federal waters (deeper and farther from shore) can be held liable for P&A costs if the current owner does not P&A them. We find that 88% of outstanding P&A liability in federal waters is associated with wells currently or formerly owned by one of the large, financially stable ‘supermajor’ companies.
This is a preview of subscription content, access via your institution
Subscribe to this journal
Receive 12 digital issues and online access to articles
$119.00 per year
only $9.92 per issue
Rent or buy this article
Get just this article for as long as you need it
Prices may be subject to local taxes which are calculated during checkout
With the exception of data from Enverus, all data are publicly available via Harvard Dataverse (https://doi.org/10.7910/DVN/EE4SLR). Commercial Enverus data were made available to us through Enverus’ academic programme.
Replication code and data are available at Harvard Dataverse (https://doi.org/10.7910/DVN/EE4SLR).
Statistical Review of World Energy (BP, 2022).
Kaiser, M. J. & Pulsipher, A. G. Idle Iron in the Gulf of Mexico (US Department of the Interior, Minerals Management Service, 2007).
Muehlenbachs, L. A dynamic model of cleanup: estimating sunk costs in oil and gas production. Int. Econ. Rev. 56, 155–185 (2015).
Alboiu, V. & Walker, T. R. Pollution, management, and mitigation of idle and orphaned oil and gas wells in Alberta, Canada. Environ. Monit. Assess. 191, 611 (2019).
Ide, S. T., Friedmann, S. J. & Herzog, H. J. CO2 leakage through existing wells: current technology and regulations. In 8th International Conference on Greenhouse Gas Control Technologies 19–22 (International Energy Agency Greenhouse Gas R&D Programme, 2006).
Pekney, N. J. et al. Measurement of methane emissions from abandoned oil and gas wells in Hillman State Park, Pennsylvania. Carbon Manage. 9, 165–175 (2018).
Finch, B. E., Marzooghi, S., Toro, D. M. D. & Stubblefield, W. A. Phototoxic potential of undispersed and dispersed fresh and weathered Macondo crude oils to Gulf of Mexico marine organisms. Environ. Toxicol. Chem. 36, 2640–2650 (2017).
Stefansson, E. S. et al. Acute effects of non-weathered and weathered crude oil and dispersant associated with the Deepwater Horizon incident on the development of marine bivalve and echinoderm larvae. Environ. Toxicol. Chem. 35, 2016–2028 (2016).
Faksness, L.-G., Altin, D., Nordtug, T., Daling, P. S. & Hansen, B. H. Chemical comparison and acute toxicity of water accommodated fraction (WAF) of source and field collected Macondo oils from the Deepwater Horizon spill. Mar. Pollut. Bull. 91, 222–229 (2015).
Martínez-Gómez, C. et al. A guide to toxicity assessment and monitoring effects at lower levels of biological organization following marine oil spills in European waters. ICES J. Mar. Sci. 67, 1105–1118 (2010).
Lin, Q. & Mendelssohn, I. A. Impacts and recovery of the Deepwater Horizon oil spill on vegetation structure and function of coastal salt marshes in the northern Gulf of Mexico. Environ. Sci. Technol. 46, 3737–3743 (2012).
Esbaugh, A. J. et al. The effects of weathering and chemical dispersion on Deepwater Horizon crude oil toxicity to mahi-mahi (Coryphaena hippurus) early life stages. Sci. Total Environ. 543, 644–651 (2016).
Heintz, R. A., Short, J. W. & Rice, S. D. Sensitivity of fish embryos to weathered crude oil: part II. Increased mortality of pink salmon (Oncorhynchus gorbuscha) embryos incubating downstream from weathered Exxon Valdez crude oil. Environ. Toxicol. Chem. 18, 494–503 (1999).
Anderson, C. J. & Hess, T. A. The effects of oil exposure and weathering on black-needle rush (Juncus roemerianus) marshes along the Gulf of Mexico. Mar. Pollut. Bull. 64, 2749–2755 (2012).
Pezeshki, S. R. & Delaune, R. D. United States Gulf of Mexico coastal marsh vegetation responses and sensitivities to oil spill: a review. Environments 2, 586–607 (2015).
Mendelssohn, I. A. et al. Oil impacts on coastal wetlands: implications for the Mississippi River Delta ecosystem after the Deepwater Horizon oil spill. BioScience 62, 562–574 (2012).
Valentine, D. L. et al. Fallout plume of submerged oil from Deepwater Horizon. Proc. Natl Acad. Sci. USA 111, 15906–15911 (2014).
Passow, U. & Stout, S. A. Character and sedimentation of “lingering” Macondo oil to the deep-sea after the Deepwater Horizon oil spill. Mar. Chem. 218, 103733 (2020).
Montagna, P. A. et al. Deep-sea benthic footprint of the Deepwater Horizon blowout. PLoS ONE 8, e70540 (2013).
White, H. K. et al. Impact of the Deepwater Horizon oil spill on a deep-water coral community in the Gulf of Mexico. Proc. Natl Acad. Sci. USA 109, 20303–20308 (2012).
Joye, S. B., Teske, A. P. & Kostka, J. E. Microbial dynamics following the Macondo oil well blowout across Gulf of Mexico environments. Bioscience 64, 766–777 (2014).
Crespo-Medina, M. et al. The rise and fall of methanotrophy following a deepwater oil-well blowout. Nat. Geosci. 7, 423–427 (2014).
Römer, M. et al. Amount and fate of gas and oil discharged at 3,400 m water depth from a natural seep site in the southern Gulf of Mexico. Front. Mar. Sci. 6, 700 (2019).
Valentine, D. L. et al. Propane respiration jump-starts microbial response to a deep oil spill. Science 330, 208–211 (2010).
Negron, A. M. G., Kort, E. A., Conley, S. A. & Smith, M. L. Airborne assessment of methane emissions from offshore platforms in the U.S. Gulf of Mexico. Environ. Sci. Technol. 54, 5112–5120 (2020).
Yacovitch, T. I., Daube, C. & Herndon, S. C. Methane emissions from offshore oil and gas platforms in the Gulf of Mexico. Environ. Sci. Technol. 54, 3530–3538 (2020).
Ayasse, A. K. et al. Methane remote sensing and emission quantification of offshore shallow water oil and gas platforms in the Gulf of Mexico. Environ. Res. Lett. 17, 084039 (2022).
Böttner, C. et al. Greenhouse gas emissions from marine decommissioned hydrocarbon wells: leakage detection, monitoring and mitigation strategies. Int. J. Greenhouse Gas Control 100, 103119 (2020).
Kang, M. et al. Direct measurements of methane emissions from abandoned oil and gas wells in Pennsylvania. Proc. Natl Acad. Sci. USA 111, 18173–18177 (2014).
Lebel, E. D. et al. Methane emissions from abandoned oil and gas wells in California. Environ. Sci. Technol. 54, 14617–14626 (2020).
Williams, J. P., Regehr, A. & Kang, M. Methane emissions from abandoned oil and gas wells in Canada and the United States. Environ. Sci. Technol. 55, 563–570 (2021).
Shavell, S. The judgment proof problem. Int. Rev. Law Econ. 6, 45–58 (1986).
Boomhower, J. Drilling like there’s no tomorrow: bankruptcy, insurance, and environmental risk. Am. Econ. Rev. 109, 391–426 (2019).
Boyd, J. Financial responsibility for environmental obligations: are bonding and assurance rules fulfilling their promise? Preprint at SSRN https://doi.org/10.2139/ssrn.286914 (2001).
Davis, L. W. Bonding requirements for U.S. natural gas producers. Rev. Environ. Econ. Policy 9, 128–144 (2015).
Gerard, D. The law and economics of reclamation bonds. Resour. Policy 26, 189–197. (2000).
Shogren, J. F., Herriges, J. A. & Govindasamy, R. Limits to environmental bonds. Ecol. Econ. 8, 109–133 (1993).
Oil and Gas: Bureau of Land Management Should Address Risks from Insufficient Bonds to Reclaim Wells (GAO, 2019).
Ho, J. S., Shih, J.-S., Muehlenbachs, L. A., Munnings, C. & Krupnick, A. J. Managing environmental liability: an evaluation of bonding requirements for oil and gas wells in the United States. Environ. Sci. Technol. 52, 3908–3916. (2018).
Purpera, D. G. Performance Audit. Audit Control #40120061. Office of Conservation, Department of Natural Resources Oil and Gas Regulation and Orphaned Wells (Louisiana Legislative Auditor, 2014); https://app.lla.la.gov/PublicReports.nsf/D6A0EBE279B83B9F86257CE700506EAD/$FILE/000010BC.pdf
Raimi, D., Krupnick, A. J., Shah, J.-S. & Thompson, A. Decommissioning orphaned and abandoned oil and gas wells: new estimates and cost drivers. Environ. Sci. Technol. 55, 10224–10230 (2021).
Isgur, M. Fieldwood Energy LLC and The Official Committee of Unsecured Creditors. Case No. 20-33948 (United States Bankruptcy Court for the Southern District of Texas, 2021).
Idle and Orphan Oil and Gas Wells: State and Provincial Strategies (IOGCC, 2019).
Idle and Orphan Oil and Gas Wells: State and Provincial Strategies Supplemental Information (IOGCC, 2020).
Idle and Orphan Oil and Gas Wells: State and Provincial Regulatory Strategies 2021 (IOGCC, 2021).
Raimi, D., Nerurkar, N. & Bordoff, J. Green Stimulus for Oil and Gas Workers: Considering a Major Federal Effort to Plug Orphaned and Abandoned Wells (Resources for the Future and Center for Energy Policy at Columbia University, 2020).
Kang, M. et al. Orphaned oil and gas well stimulus—maximizing economic and environmental benefits. Elem. Sci. Anth. 9, 00161 (2021).
Boomhower, J. Orphan Wells in California: An Initial Assessment of the State’s Potential Liabilities to Plug and Decommission Orphan Oil and Gas Wells (California Council on Science and Technology, 2018). https://ccst.us/wp-content/uploads/CCST-Orphan-Wells-in-California-An-Initial-Assessment.pdf
Andersen, M. & Coupal, R. Economic issues and policies affecting reclamation in Wyoming’s oil and gas industry. J. Am. Soc. Min. Reclam. 2009, 1–17 (2009).
Cook, K. A. An “Inescapable Obligation”–The Treatment of Well Decommissioning Liability in Recent Oil and Gas Bankruptcies. MSc thesis, Univ. of Texas at Austin (2019).
Dachis, B., Shaffer, B. & Thivierge, V. All’s Well That Ends Well: Addressing End-of-Life Liabilities for Oil and Gas Wells (C.D. Howe Institute, 2017).
Gardner, G. Inactive Oil and Gas Wells on Federal Lands and Minerals: Potential Costs and Conflicts (The National Wildlife Federation and Public Land Solutions, 2021).
Kang, M. et al. Identification and characterization of high methane-emitting abandoned oil and gas wells. Proc. Natl Acad. Sci. USA 113, 13636–13641 (2016).
Kang, M., Mauzerall, D. L., Ma, D. Z. & Celia, M. A. Reducing methane emissions from abandoned oil and gas wells: strategies and costs. Energy Policy 132, 594–601 (2019).
CalGem SB 1147 Report: Offshore Oil & Gas Operations Abandonment (California Geologic Energy Management Division, 2022).
Braslow, L. D. Coastal petroleum’s fight to drill off Florida’s Gulf Coast. J. Land Use Environ. Law 12, 343–381 (1997).
Reporting Requirements for Decommissioning Expenditures on the OCS (BSEE, 2016).
Kaiser, M. J. Rigless well abandonment remediation in the shallow water U.S. Gulf of Mexico. J. Pet. Sci. Eng. 151, 94–115 (2017).
Moeinikia, F., Fjelde, K. K., Saasen, A. & Vrålstad, T. An investigation of different approaches for probabilistic cost and time estimation of rigless P&A in subsea multi-well campaign. In SPE Bergen One Day Seminar (OnePetro, 2014).
Moeinikia, F., Fjelde, K. K., Sørbø, J., Saasen, A. & Vrålstad, T. A study of possible solutions for cost efficient subsea well abandonment. In ASME 2015 34th International Conference on Ocean, Offshore and Arctic Engineering (American Society of Mechanical Engineers Digital Collection, 2015).
Øia, T. M., Aarlott, M. M. & Vrålstad, T. Innovative approaches for full subsea P&A create new opportunities and cost benefits. In SPE Norway One Day Seminar (OnePetro, 2018).
Vrålstad, T. et al. Plug & abandonment of offshore wells: ensuring long-term well integrity and cost-efficiency. J. Pet. Sci. Eng. 173, 478–491 (2019).
Bakker, S., Vrålstad, T. & Tomasgard, A. An optimization model for the planning of offshore plug and abandonment campaigns. J. Pet. Sci. Eng. 180, 369–379 (2019).
Bakker, S. J., Wang, A. & Gounaris, C. E. Vehicle routing with endogenous learning: application to offshore plug and abandonment campaign planning. Eur. J. Oper. Res. 289, 93–106 (2021).
Vreugdenhil, N. Booms, Busts, and Mismatch in Capital Markets: Evidence from the Offshore Oil and Gas Industry (2020). https://nvreug.github.io/paper/bbm.pdf
Kaiser, M. J. Offshore decommissioning cost estimation in the Gulf of Mexico. J. Constr. Eng. Manage. 132, 249–258 (2006).
Kaplan, E. L. & Meier, P. Nonparametric estimation from incomplete observations. J. Am. Stat. Assoc. 53, 457–481 (1958).
We thank the Center for Global Energy Policy at Columbia University for supporting this work.
The authors declare no competing interests.
Peer review information
Nature Energy thanks Steffen Bakker, Charles Mason, Daniel Raimi and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.
Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Agerton, M., Narra, S., Snyder, B. et al. Financial liabilities and environmental implications of unplugged wells for the Gulf of Mexico and coastal waters. Nat Energy 8, 536–547 (2023). https://doi.org/10.1038/s41560-023-01248-1