Study Shows 14,000 Unplugged Oil and Gas Wells in Gulf of Mexico

Industry has neglected thousands of unused oil and gas wells in the Gulf of Mexico. They will cost an estimated $30 billion to plug and decommission.

The Gulf of Mexico is full of unused oil and gas wells, and it could cost a fortune to clean them up. Non-producing oil and gas wells in the Gulf will cost a staggering $30 billion to safely plug and abandon, according to a new study published in Nature Energy. It identified about 14,000 such wells, the majority of which have been idle for at least five years, making them unlikely to go back into production. Of these, about 7,300 wells are in federal waters, which will cost around $28.7 billion to plug. The remaining wells are located in the state waters of Texas, Louisiana, Alabama, and Mississippi.

By law, oil and gas companies must decommission offshore infrastructure and equipment—a process that includes permanently plugging wells and removing, or otherwise securing, platforms, pipelines, and other installations. If the companies fail to meet their obligations—as they frequently have in the past—taxpayers could be liable for billions of dollars in decommissioning. What’s more, these unplugged wells pose an ongoing threat to Gulf communities and the ocean environment.

Abandoned oil and gas wells harm coastal communities, oceans, and our climate

Wells can leak oil into the environment, and leaks from abandoned wells in particular can go undetected for a long time. Over years, corrosion and storms can damage abandoned infrastructure, making leaks increasingly likely. Oil is toxic to a variety of marine creatures, including fish and shrimp. By harming sea life, oil leaks also threaten the livelihoods of fishers and coastal communities—including those who fish commercially, for recreation, or for subsistence. And the leaked oil affects the marine ecosystem and coastal communities in other ways as well. For example, ocean currents carry oil to shore, where it pollutes beaches and smothers the plants of salt marshes, damaging a vital “blue carbon” ecosystem known for sequestering even more carbon by area than forests. Unplugged wells can also release methane, a potent greenhouse gas, into the water column. Particularly in shallower waters, released methane travels up through the water column and reaches the atmosphere, where it contributes to climate change.

The U.S. has failed to hold oil and gas companies accountable for non-producing wells

The two agencies responsible for managing offshore oil and gas development in federal waters—the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE)—have historically failed to both ensure that oil and gas platforms and pipelines are removed from the ocean and that oil and gas operators are capable of paying for the cost of decommissioning.

This has happened even though, by law, oil and gas operators are required to decommission offshore platforms and equipment on the seafloor. The Outer Continental Shelf Lands Act (OCSLA) and its implementing regulations govern oil and gas leasing in federal waters. The general requirements for decommissioning include permanently plugging all wells, removing all platforms, decommissioning all pipelines, and clearing the seafloor of all obstructions, among other things. The regulations also require that within one year after the termination of a lease, wells must be permanently plugged and all platforms and facilities must be removed

Although these decommissioning obligations are set out in binding federal regulations, BOEM and BSEE do not consistently implement and enforce these requirements. In fact, the Nature Energy study found that there are more unplugged and non-producing oil and gas wells than currently active wells in the Gulf of Mexico.

The regulations sometimes allow oil and gas operators to leave pipelines on the seafloor—a process known as “decommissioning in place.” This process is only allowed in select circumstances, such as when a pipeline will not obstruct navigation or commercial fishing operations, interfere with other uses of the OCS, or have an adverse effect on the environment. But in practice, BSEE usually allows for oil and gas operators to leave pipelines on the seafloor rather than remove them. 

In fact, the Government Accountability Office reported that since the 1960s, BSEE has authorized the oil and gas industry to leave over 97 percent of pipeline mileage—nearly 18,000 miles—on the seafloor of the Gulf of Mexico. More recent data also demonstrates that decommissioning-in-place is the standard practice and not an exception. From 2015 through May 2020, BSEE approved nearly 96 percent of all applications to decommission-in-place, allowing for hundreds of pipeline segments to remain on the ocean floor. Despite the potentially serious adverse environmental consequences of leaving oil and gas pipelines in the ocean, BSEE and BOEM officials have acknowledged that the environmental impacts of decommission-in-place practices have not been well studied.

Not only has BOEM failed to adequately implement decommissioning requirements, it has also failed to require oil and gas operators to provide sufficient funding up-front for the costs of decommissioning. Oil and gas companies are supposed to provide financial assurances, such as bonds, to ensure that the federal government has enough money to pay for decommissioning even if an oil and gas company declares bankruptcy. Although BOEM has authority to require such assurances, a study by the Government Accountability Office found that fewer than 8 percent of decommissioning costs in the Gulf were covered by financial assurances, potentially leaving the public on the hook for billions of dollars in cleanup costs. Oil and gas companies already reap huge profits from exploiting public resources, damaging the environment and contributing to climate change in the process. Requiring taxpayers to foot the bill for decommissioning adds insult to injury.

The government must hold industry responsible for the costs of decommissioning

BOEM and BSEE should consistently and aggresively implement federal regulations to ensure all oil and gas platforms and pipelines are fully decommissioned and removed from the ocean. It’s time for the agencies to stop allowing oil and gas companies to exploit the Outer Continental Shelf for profit while leaving economic, social, and environmental costs of clean-up to the public.

We expect BOEM to publish a new proposed rule on financial assurances in the near future. The agency must ensure that the proposed–and final–rule prevents financially unstable oil and gas companies from continuing to inflict additional environmental damage to the ocean environment, marine fisheries and wildlife, and frontline communities that already bear the burdens of OCS development. NRDC will continue to call for BOEM to implement strong bonding requirements to ensure that companies fulfill their legal obligations to fully decommission and remove all offshore oil and gas structures.

This blog provides general information, not legal advice. If you need legal help, please consult a lawyer in your state.

Related Blogs