The Oklahoma Bar Journal May 2024

plugging program. In fiscal year 2023, the state program resulted in the plugging of 376 wells at an average cost of $17,861. 9 Oklahoma has most recently attempted to use carbon offset credits to incentivize the plugging of abandoned or orphaned wells. A carbon offset credit, in this con text, can become available when a party that is not otherwise liable to plug a well does so and prevents a measurable amount of harmful gas, usually methane, from being released into the atmosphere. Such a credit becomes profitable when another party purchases it to offset its carbon footprint. In 2023, Gov. Stitt signed SB 852 into law. Authored by Sen. Dave Rader and Rep. Brad Boles, this bill amended 52 O.S. §310 to allow the Commission to establish a framework by which carbon offset credits can be created by plugging abandoned wells. The

Act (IIJA) was passed, providing federal funds to plug abandoned and orphaned wells. As a result, the Commission received $25 million to begin plugging in 2022. After an initial delay to ensure compliance with the program, the Commission began plugging abandoned wells in April 2023. In the 2023 fiscal year ending on June 30, the Commission contracted to plug 106 abandoned wells using federal funds. The first four of those wells were plugged at an average cost of $20,125. At that average cost, the first payment of federal funds can plug 1,242 orphaned wells. An additional $560 million is available from the IIJA, divided amongst various states. The U.S. Department of the Interior estimates Oklahoma’s share of that money to be as high as $281 million. Wells plugged pursuant to the IIJA include requirements, such as methane testing, that are not required by the state-funded

of plugging. Statute does allow the Commission to consider total plugging liability but only upon an application brought by an oper ator to reduce their bond upon a determination that their plugging liability is less than $25,000. Efforts to address the surety scheme and use it to encourage responsible operation of oil and gas wells have stalled, but more success has been made in efforts to plug and remediate wells after they have been orphaned. The $25,000 Category B surety requirement scheme dates back to June 7, 1989. In 2022, Sen. Zack Taylor and Rep. Brad Boles intro duced legislation to increase surety requirements to as much as $150,000 for operators with more than 200 wells. That legislation died in the House Energy and Natural Resources Committee. On Nov. 15, 2021, the Infrastructure Investment and Jobs

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL