Don’t mess with Texas: bill begins to tackle the clean up challenge of inactive oil and gas wells

By Colin Leyden and Adam Peltz

• A bill aimed at Texas’ 115,000 inactive oil and gas wells has passed both legislative chambers and will help address one of the state’s most critical, yet hidden, challenges. 
• A bill heading to Gov. Abbott’s desk challenges the status quo in Texas, making sure the oil and gas industry starts cleaning up its old, leaky, non-producing wells.

Texas’ oil and gas industry has long been among the national leaders in production, but with that leadership comes the responsibility  to safely and responsibly plug unproductive legacy assets. This is particularly true when it comes to the over 100,000  inactive oil and gas wells scattered across the Lone Star State. The recent passage by both legislative chambers of Senate Bill 1150 represents a modest but meaningful step toward making sure the oil and gas industry cleans up its mess and addresses one of our state’s most pressing environmental and fiscal challenges. The bill is now headed to Gov. Abbott for signature.

The hidden problem beneath our feet

Across Texas, an estimated 115,000 inactive wells sit dormant, no longer producing oil or gas but not yet properly plugged. Generally, operators are required to plug their wells after around a year of no production, but too often exploit  a mechanism allowing for “temporary abandonment” to avoid plugging liability for years or even decades. Many of these wells have been dormant for more than 15 years and even wells inactive for 5 years have very low odds of ever returning to production. When left unplugged, they can become conduits for contamination, allowing harmful substances to migrate between underground formations, and potentially reach drinking water supplies.

But the environmental concerns are just part of the story. Inactive wells reduce property values, make it harder to get land-backed loans, and threaten the economic value of the geology. If that wasn’t bad enough, these wells also represent a ticking fiscal time bomb for Texas taxpayers. Because of lax regulations that currently allow operators to postpone their plugging obligations in perpetuity, inactive wells are often the “feedstock” for future orphaned wells — when operators orphan their wells, the responsibility and cleanup costs for plugging and remediation these wells  shifts from the oil and gas industry to fall squarely and unfairly on the state’s shoulders. With plugging costs ranging from tens of thousands to hundreds of thousands of dollars per well, the potential liability runs to over $15 billion according to the Texas Railroad Commission, the state’s main oil and gas regulator.

A modest but important victory

Senate Bill 1150 doesn’t solve the inactive well problem overnight, but this industry supported legislation is an important start and, critically, a recognition that the status quo is unacceptable. The bill’s most significant provision targets wells that have been inactive for more than 15 years and were completed more than 25 years ago. Currently, there is no hard timeline for inactive well closure and operators are allowed to push plugging off indefinitely.

Perhaps most importantly for long-term accountability, the legislation mandates comprehensive annual reporting to state leadership and requires annual integrity testing for wells inactive for 15 years or more. This transparency will finally give policymakers and the public clear data on the scope and trends of Texas’s inactive well inventory.

Additionally, the legislation will initiate rulemakings at the RRC, which understands the scope and gravity of this problem, and has the technical and legal tools to mitigate the risk of long-term idle wells for Texas property owners, taxpayers and the environment.

Why this matters now

The urgency of addressing inactive wells has never been clearer. Recent studies suggest that Texas’s inventory of orphaned wells could grow substantially in the coming years as aging infrastructure and economic pressures affect smaller operators. Until broader policy reforms are made, Texas taxpayers will remain at risk for cleaning up wells that should have been cleaned up by industry — every inactive well that becomes orphaned today is a well that taxpayers will ultimately fund tomorrow.

And tackling this problem also creates economic opportunity. Our recent analysis suggests that Texas could create up to 150,000 jobs  by systematically plugging its non-producing wells, highlighting how environmental responsibility can drive economic opportunity. These jobs would span skilled trades, engineering and support services — providing good-paying work in communities across the state, and overall generating more economic activity than the cost of plugging.

A Foundation for the Future

The bill passed with broad bipartisan support, reflecting a growing recognition that environmental stewardship and economic sensibility go hand in hand — especially when the alternative is endless blowouts in the Permian on the taxpayers’ dime. As Texas continues to lead the nation in energy production, we must also lead in energy responsibility. SB 1150 provides a foundation upon which future policymakers can build, ensuring that the benefits of our energy heritage aren’t overshadowed by the costs of environmental neglect.

As Texas continues to plug orphaned wells using state and federal money, SB 1150 helps ensure that we’re not just cleaning up yesterday’s problems but preventing tomorrow’s as well. We look forward to working with the RRC on the inactive well management rulemakings required by this legislation, and continuing our data and idea sharing throughout that process.