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US House Bill Seeks $8 Bln for Abandoned Oil and Gas Well Cleanup

April 8, 2021

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A U.S House of Representatives Democrat introduced a bill on Thursday authorizing $8 billion to plug and clean up abandoned oil wells nationwide, a measure aimed at creating jobs for oil and gas workers and reducing climate-warming emissions.

More than a century of oil and gas drilling has left behind millions of abandoned wells, many of which are emitting methane, a potent greenhouse gas, into the atmosphere. Oil and gas companies are likely to abandon many more wells as demand for clean energy replaces that for fossil fuels.

The bill, sponsored by Representative Teresa Leger Fernandez, comes a week after President Joe Biden's administration unveiled a $2 trillion infrastructure proposal—dubbed the American Jobs Plan—that called for a $16 billion investment to plug orphaned wells and clean up abandoned mines.

The Biden initiative is aimed in part at providing work for oil and gas employees likely to be displaced by a move away from fossil fuels because of climate change.

Leger Fernandez said in an interview that her bill "does the two things that the American Jobs Plan is looking at, which is both create jobs and address some of the pressing national problems we have."

Her bill would provide $7.25 billion in grants for well cleanups on state and private lands and $700 million for plugging on public and tribal lands.

State eligibility for the grants would be tied to various metrics, including the ability to put people to work quickly, a state's oil and gas job losses, the number of abandoned wells and efforts to tighten plugging regulations, reduce methane emissions and boost spending on cleanups.

Leger Fernandez's home state of New Mexico is a major oil and gas producer.

The bill would also raise bonding amounts, the money that drillers must pay to cover cleanup costs if they go bankrupt, for companies with wells on public lands. The U.S. Government Accountability Office has said that existing levels are not sufficient, leaving taxpayers on the hook for cleanups.

Bonds for wells on a single lease would rise to $150,000 from $10,000, while bonds for all of a driller's wells in a state would go to $500,000 from $25,000. Companies would also be required to pay new fees for idle wells on public lands.

(Reporting by Nichola Groom; Editing by David Gregorio and Peter Cooney)

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