Oil & Gas News

Oklahoma Energy Industry Seeks Stimulus

Oklahoma Energy Stimulus

By: Jack Money – The Oklahoman – Congress is being lobbied to consider economic stimulus packages for energy industry states, including Oklahoma.

The Center for American Progress, an independent nonpartisan policy institute, recently urged Congress to include a disbursement to specifically help energy producing states.

States that opt-in to the program could get a one-time cash infusion to quickly fill massive gaps in their budgets caused by diminishing revenues from energy activities.

In exchange for the assistance, states would promise to return estimated revenues from future oil and gas extraction on nationally owned public lands over the next 10 years to the federal government, plus work to make their public lands emissions-neutral over that period of time.

Payments to states could reach as much as $11.2 billion if all states took advantage of the offer (Oklahoma could get about $32.5 million, the center estimates).

“The lump-sum, advance payout could result in hundreds of millions of dollars for state governments at a time when they desperately need the money to rebuild their economies and invest in local services,” states a paper published by the center on April 29.

The center also is urging Congress to appropriate $2 billion to pay for a national orphaned well plugging program that could put some idled energy industry people back to work, estimating a fund of that size could support between 14,000 and 24,000 jobs in energy producing states.

“Hundreds of thousands of these orphan wells are already scattered throughout the country — a dangerous, toxic legacy of prior market crashes and inadequate bonding policies that leaves taxpayers holding the bag for cleanup costs,” its paper states.

“Decaying wells leak methane gas, contaminate groundwater, and are safety hazards for wildlife and communities alike.”

Latest well data

The Oklahoma-based Interstate Oil and Gas Compact Commission (IOGCC) has studied idle and orphan oil and gas wells for many years, publishing reports on the issue in 1992, 1996, 2000, 2008 and in 2019.

Its most recent report issued in December was based upon survey responses from 30 states and five Canadian provinces belonging to the organization.

“Many idle wells have the potential for oil or gas production or associated uses; however, they may pose a risk to the environment, public health, and safety if not properly maintained,” the commission stated as part of its 2019 report.

Based on survey responses, the commission estimates nearly 263,000 documented wells have been drilled but not plugged in Oklahoma. It estimates that just more than 2,000 of those have been authorized to exist in an idled status by regulators.

In 2019, Oklahoma classified just more than 1,300 wells as orphaned, estimating it could have between 25,000 and 100,000 undocumented orphaned wells, the commission report shows.

As for addressing the issue, Oklahoma producers and royalty owners have voluntarily contributed to a fund administered by the Oklahoma Energy Resources Board to clean up abandoned oil and gas sites across the state for decades.

OERB officials said last year the organization had spent $120 million the past 25 years to plug wells or otherwise clean up nearly 17,000 abandoned or orphaned oil and gas sites in Oklahoma.

In Oklahoma

The Petroleum Alliance of Oklahoma isn’t waiting to see if Congress might appropriate additional funds for the purpose of plugging orphaned wells.

Last week, the alliance urged the Oklahoma Corporation Commission to ask Gov. Kevin Stitt to release some of $1.2 billion the state received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act for that purpose.

The alliance stated it expected the stimulus could help restore jobs for oilfield service workers displaced by the pandemic-driven price crash.

Brook A. Simmons, the alliance’s president, noted in a letter he sent to the agency that some other states are using CARES Act funds to directly support the oil and gas sector.

“Oklahoma’s economy is intricately tied to the success of crude oil and natural gas producers, midstream companies, refiners, and hundreds of service companies that support the industry or help turn commodities into consumer products,” Simmons said.

“For a state so dependent on the oil and natural gas industry, we should leverage CARES Act funding to support Oklahoma’s bedrock industry and restore jobs for oilfield workers impacted by the COVID-19 pandemic,” Simmons wrote. “It is a clear way to boost Oklahoma’s economy, with the added benefit of improving our environment and preparing the state for future drilling activity as we recover.”

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