Biden Administration Releases Draft Guidance to Access $1.5 Billion Funding to Clean up Orphaned Oil, Gas Wells

The U.S. Interior Department on Oct. 1 issued the draft guidance for states on applying for up to $40 million each in Regulatory Improvement Grant funding to clean up polluting and unsafe orphaned gas and oil wells throughout the U.S.

Through 2021 the Infrastructure Investment and Jobs Act, the department is funding the largest investment in tackling legacy pollution in U.S. history. The act invests in supporting and protecting communities by providing $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.

The department has approved around $1.1 billion in contributions to 25 states to initiate work plugging and cleaning up orphaned wells. As it stands, since the implementation of the act, states have plugged over 8,800 orphaned wells. Moreover, the plugging of gas and oil wells supports the Biden administration’s initiative under the U.S. Methane Emissions Reduction Action Plan.

Three types of grants are accessible to states to finance orphaned wells clean up: initial, formula and performance grants. Around $1.5 billion in funding is accessible under the performance grants, which can be allocated into two categories: the Matching Grants and Regulatory Improvement Grants. The Matching Grants guidance was issued by the department in May.

Following the announcement, states are entitled for two types of Regulatory Improvements Grants. The first one, Plugging Standards Grants, aims to encourage the adoption procedures that certify that wells are plugged effectively. The second, called Program Improvement Grants, aims to support other enhancements so that states can reduce forthcoming orphaned well burdens. States are entitled to receive up to $20 million for each grant, totaling $40 million per state.