Biden Administration Announces $775 Million to Plug Orphaned Oil, Gas Wells Across States

The U.S. Interior Department has announced the availability of $775 million for 21 states to clean up legacy pollution, funded through the 2021 Infrastructure Investment and Jobs Act, or IIJA. The IIJA provides $11.3 billion to provide grants to states and tribes for abandoned coal mine land reclamation and $4.7 billion for orphaned well site plugging, remediation and restoration activities. Over $1 billion has already been circulated to clean up orphaned oil and gas well and well sites.

Funding issued so far has created high paying employment opportunities, facilitated economic growth, helped address methane leaks, and reduced both public and environmental health risks to surface water and groundwater resources.

This announcement marks the start of the next application window for states to apply for the $775 million formula grant. The department’s Phase 2 formula grant guidance encourages states to utilize project labor agreements as well as a unionized project workforce to carry out the tasks. The department requires states to quantify methane emission from orphaned wells plugged with formula grants, screen for groundwater and surface water impacts by orphaned wells and include their prioritization procedures polluting wells creating problems for close by underprivileged communities.

The funding allotted to plug orphaned wells includes grants to states in three categories: initial grants, formula grants, and performance grants. Since August 2022, the department has allocated $565 million in initial grants to 25 states, $444 million in Phase 1 formula 1 grants to 18 states and a $2 million performance grant to one state.

Since the enactment of the IIJA, states have plugged over 8,200 orphaned wells. Moreover, funding via the Department’s Orphaned Well Program Office is projected to have supported more than 7,200 employment opportunities and contributed more than $900 million to the U.S. economy over the last two fiscal years. Furthermore, plugging orphaned wells supports the administration’s broader efforts under the U.S. Methane Emissions Reduction Action plan and reinforces the administration’s commitment to the Justice40 initiative.

The 21 states qualify to apply for a Phase 2 formula grant. Applications are due by Dec. 13, 2024.