Summary: TheaimofthisstudywastoevaluatethesuccessofNewYorkStatesregulatory programfortheoilandgasindustrywithrespecttopostproductionpluggingand reclamation.AnnualreportsfromtheDivisionofMineralResources,NewYorkState DepartmentofEnvironmentalConservationoverthelasttwentyfiveyearsportrayanoil andgasindustrywhichhasconsistentlyneglectedtoplugmost(89%)ofitsdepletedwells. Inthisregard,themostrecentrecordhasbeentheworst:Pluggingpercentagerates rangedfrom3.5to7.1%throughoutthe2000s.Further,thereisnoprogram,existingor proposed,toperiodicallymonitorandrepairpluggedandabandonedwellswhichhave beguntoleak.Therefore,newpluggingandreclamationguidelinespresentedinthe reviseddraftSupplementtotheGenericEnvironmentalImpactStatementfortheOil,Gas andSolutionMiningRegulatoryProgram(rdSGEISSection5.17),andproposednew regulationsforpluggingandabandoningdepletedoilandgaswells(6NYCRRSection 555.5)areinadequate.

e.Moreover,theyaremereacademicexercises:UnlesstheStateof NewYorkStatedoessomethingtodramaticallyalterthelongstandingcultureofneglect, wecanreasonablyexpectoilandgasindustryoperatorstoignoreanynewstandardsjust astheysystematicallyignoreexistingstandardstoday. Introduction: NewYorksoilandgasindustryisjustnineyearsfromitsbicentennial,sincethe pilotproject,anaturalgaswellnearFredonia,wasdrilledin1821.Asourfirstoilandgas wellswentintodecline,anewissuewasrecognized,andNewYorkbecamethefirststateto requirethepluggingofabandonedwellsin1879(1,2).Noparticularstateentityexistedto monitorcomplianceorenforcetheplugginglaw,butan1882amendmenttoitofferedhalf ofanycollectedfinestoinformantswhoreportedviolations(1).Onehundredthirtyyears later,wehaveadedicatedandsophisticatedBureauofOilandGasRegulation(BOGR) withintheDivisionofMineralResources(DMN)ofourDepartmentofEnvironmental Conservation(DEC).Stateguidancedocumentsandregulationshaveundergonemultiple updates,includingthosenewlyproposedinthereviseddraftSupplementtotheGeneric EnvironmentalImpactStatementfortheOil,GasandSolutionMiningRegulatoryProgram (rdSGEIS),and6NYCRRParts52,190,550556and560(newregulations). Withgreatattentionpaidthesedays(andjustlyso)toquestionsofpropergaswell construction,appropriatecontrolofchemicalsandwastes,andotherproductionissues, 1

HistoryofOilandGasWellAbandonmentinNewYork RonaldE.Bishop,Ph.D.,C.H.O. Chemistry&BiochemistryDepartment SUNYCollegeatOneonta SustainableOtsego,January8,2012

postproductioncleanuphasreceivedrelativelylittlenotice.Innumerousdiscussionswith bothopponentsandproponentsofshalegasdevelopment,allappeartoconsiderour stateslegacyofimproperlyabandonedoilandgaswellsarealproblem,butanold problem;thecommonperceptionisthattheDECnowhasthisissueundercontrol. However,theissueisbothnuancedandpressing,accordingtoLouAllstadt,aformer senioroilandgascompanyexecutive(3):Verylittleattentionispaidtotheendofthelife ofanoilorgaswell.Ithinkyouwillfindthatitisrareforthelargercompaniestoplugand abandontheirolderwells.Rather,atsomepoint,asmallercompanywithloweroverheads andlessexpensiveoperatingcostswilloffertobuytheoldwellsatapricethatgivesthe originalcompanyabetterreturnthancontinuedoperations.Theoriginalcompanyuses thecashtofinancenewinvestments.Thebuyingcompanyoperateswithlowercosts becausetheyspendlessonmaintenanceandsafetyitemsandtheyhavefewerwell qualifiedpeopletopay.Thechainmayendthereorcontinuethroughsmallerandever lowercostoperatorswhodonopreventivemaintenanceatall,dothebareminimumof repairstokeepthewellgoingandeventuallywalkaway,maybeafterpluggingtheholeas cheaplyaspossibleandmaybenotpluggingatall.Thesmallercompaniesoftenoperate eachwellorgroupofwellsunderaseparatecorporateentitythatisalwaysstrippedof cash,soifsomethinggoeswrongtherearenoassetstopayoffclaims.Notallsmall operatorswilldothis,butithappens. Inconventionalfieldstheseselling/buyingcyclesmightstartwhenthefieldis20 30yearsoldandrunforanother2030years.Bythetimethesewellsareabandoned,the casingshavebeensubjectedtocorrosivefluidsformanyyears.Attheendthereisjust enoughlefttosqueakpastanyinspections.Whenitcoststoomuchtorepairversuswhat mightbeproduced,thewellisabandoned.Whetheritispluggedbeforeitisabandoned dependsonthefinaloperator.Intightshalethiscouldalltakeplaceoveramuchshorter timeperiodandtheabandonedwellscouldincreasequickly.(3)Indeed,industryanalysts havepresentedevidencethattightshalegaswellsdeclinemuchmorequicklythanoiland gaswellsinconventionaldeposits.(4) Asecondareaofconcernisthatwellcasingsdeteriorateovertime,andbegintoleak (57).Duetoacombinationofcementcracksandcontinueddevelopmentofpressure fromgasesandotherfluids(5),leakshavebeenshowntodevelopinhalfofthewellcasings studiedinjustfifteenyears(6).Leaksinpluggedwellshavealsobeendemonstrated(7). Theideathatpluggedwellsareindefinitelystableisobviatedbytheseindustryreports,so tobeeffective,ouroilandgasregulatoryprogrammustnotonlyensurethatabandoned wellsareproperlyplugged,butmustalsoperiodicallyinspectand,ifnecessary,repair thepluggedandabandonedwells. Thecentralquestionofthisstudyis,Howsuccessfulhasouroilandgasregulatory programbeen,particularlywithrespecttopostproductionplugging,reclamationand inspection?Credibleanswerstothisquestionhavebeen,asthisauthordiscovered, hidinginplainsightforyears. 2

Methods: DataSources: MostdataforthisinvestigationcamefromannualreportsbytheDECsDivisionof MineralResources(DMN).ReportswhichwereaccessiblefromtheDECswebsite includedthosefrom1994through2009(8).Reportsfrom1985through1993were obtainedbyrequestfromtheDEC.Otherdatacamefromthe1994NewYorkStateReview (STRONGER)report(9)andtheNewYorkStatepriorityplugginglist(10).Thesereports constitutetheentireofficialbodyofpublicrecordsonthistopicintheStateofNewYork. InfluenceofShutinWells: Theresultsareexpressedintermsofoilandgaswellswhichhadbeenreportedas inactive,definedashavingzeroproduction.Toevaluatethemappropriately,thereader shouldnotethatanoilorgaswellmaybeconsideredinactiveeitherbecauseitisdepleted orshutin.Ashutinwellisonewhichiscapableofproducingoilorgas,butisnot connectedtoapipelineorforsomeotherreasonistemporarilysealedtopreventproduct loss.ItisunlawfultoshutinanoilorgaswellinNewYorkStateformorethanoneyear, exceptbyspecificpermissionfromtheDEC(6NYCRRPart555.2).Thedataforthisstudy werecollectedfromtheabandonedwellssectionsoftheannualreports,wheresuch sectionsexisted(reportsfrom2002andlater),andthecontextofthenarratives consistentlyimpliedthattheinactivewellscitedtherewere,infact,depleted.However, datafromearlierreportsweretakenfromoilandgasproductiontableswhichprovidedno narrativecontext.Therefore,itshouldbenotedthatanyshutinwellsinadvertently includedtheinactivecolumnwouldyieldpluggedoilandgaswellpercentageswhich wereslightlylowerthantheirtruevalues. InfluenceofOtherPluggedWells: Theannualreportsdataforpluggedwellsincludedoil,gasandotherregulated wells.Theotherregulatedwellsincludedsaltsolutionandstratigraphicgeothermal wells,andtheirnumberswereexpresslystatedinonlysevenofthereports(from2003 2009).Thenumbersoftheseotherwellsrangedfrom15to55peryear.Tomaintain consistencyofdatahandlingacrosstheentire25yearsreported,theseotherwellswere notsubtractedfromthepluggedcolumn.Therefore,itshouldbenotedthatthisyielded percentagesforpluggedoilandgaswellswhichwerehigherthantheirtruevalues.These arenotedbelowasuncorrectedvalues.

Results: TheresultsofthisstudyaresummarizedinTableI: TableI:AnnualPluggingRatesofAbandonedOilandGasWellsinNewYorkState Year Inactive* Plugged Percemt Comments 1985 2505 269 10.7 1986 2468 471 19.1 1987 2543 417 16.4 1988 2348 322 13.7 1989 2620 260 9.9 1990 2707 961 35.5 Recordhighnumberofwellsplugged 1991 2069 376 18.2 1992 1502 244 16.2 1993 1642 263 16.0 1994 1887 248 13.1 48,000totalabandonedO&Gwellsestim.(9) 1995 1784 219 12.3 1996 2215 233 10.5 96newlydiscoveredabandoned 1997 1974 187 9.5 200newlydiscoveredabandoned 1998 2169 169 7.8 1999 1748 138 7.9 270newlydiscoveredabandoned 2000 2190 131 6.0 220newlydiscoveredabandoned 2001 2259 79 3.5 150newlydiscoveredabandoned 2002 2272 146 6.5 firstmentionofpriorityplugginglist 2003 2379 142 6.0 2004 2526 145 6.0 2005 2658 150 5.6 2117knownwellsunreported 2006 2871 213 7.4 1103knownwellsunreported 2007 2460 192 7.8 822knownwellsunreported 2008 3071 221 7.2 57,000totalabandonedO&Gwellsest.(10) 2009 3043 240 7.9 2010 notyetreleasedtopublic 2011 priorityplugginglistdetails4722wells(11) *Oilandgaswellsreportedtohavezeroproduction Pluggeddividedbyinactivewellsx100 Uncorrectedvalues 4

 Asindicatedinthetable(above),oilandgasindustryoperatorshaveconsistently failedtoplugandproperlyabandonmostinactiveoilandgaswellsaslongasrecordshave beenkeptbyNewYorkState.Overthe25yearsavailableforstudy,justoneoutofevery ninedepletedwellswaspluggedproperly,(meanaverage=11.2%).Andthemorerecent segmentoftherecordisworsethantheearlierpart:throughoutthe2000s,pluggingrates rangedfrom3.5%to7.9%(uncorrectedvalues),withameanaverageof6.4%forthat10 yearperiod.Bycomparison,pluggingratesforthepreceding15yearsrangedfrom7.8%to 35.5%,withameanaverageof14.5%.Obviously,noneofthesepluggingandreclamation ratesapproached100%. However,thepercentagesshowninTableIfortheyears2003to2009areknownto beinflated,sincethenumbersofotherthanoilandgaswellswhichhadbeenplugged werereported.CorrectedpluggingpercentagesforthoseyearsarepresentedinTableII: TableII:CorrectedPluggingPercentageValues,20032009 Year Inactive Plugged Other Corrected* Percent 2003 2379 142 15 127 5.3 2004 2526 145 39 106 4.2 2005 2658 150 55 95 3.6 2006 2871 213 22 191 6.7 2007 2460 192 31 161 6.5 2008 3071 221 12 209 6.8 2009 3043 240 24 216 7.1 *Pluggedminusotherwells Correcteddividedbyinactivewellsx100 WhenthevaluesfromTableIIarefoldedintotheoveralldatasetanawkward operation,sincenotallofthepercentagevaluescanbecorrectedwiththeinformation available,theaverageoilandgaswellpluggingratefallsto10.9%over25years,the averageratefrom1985to1999remainsunchangedat14.5%,andtheaveragepercentage ofinactiveoilandgaswellspluggedfrom2000to2009fallsto5.6%,witharangeof3.5to 7.1%.Again,noneofthesepostproductioncleanupratesapproach100%. Now,thetruescaleofourproblemwithorphanabandonedoilandgaswellsinNew YorkStateisnotknown.Thereportsconsulteddidnotdistinguishbetweennewly depletedwellsandinactivewellswhichwerecarriedoverfrompreviousyears.Thus,the snapshotfoundineachannualreportdoesnotprovideabasisfromwhichonecan constructarunningtallyofthesewells.Theestimatedtotalsincludedinthetableabove one,48,000,fromtheDECsresponsein1994toanexternalreviewpanel(9)andtheother, 57,000,fromthe2008annualreport(originallyfoundin(10),butabsentfromwiththe subsequentlyrevisedonlineversion)werenotaccompaniedbyanyformofaccounting; theywere,inthisauthorsopinion,arbitraryandunsupported. 5

 Approvedwelltransferscouldconceivablyprovideameansofaccesstoabandoned oilandgaswelltotals.Some13,000suchtransfersweremadefrom19871994,and morethan1600annuallysincethen(annualreportseriesfrom1994to2009).However, aspointedoutabove(3),thereisnoformulathatrelateschangingwellownershipto numbersofdepletedwells,sothisapproachwouldnotleadtoareliableestimateforwells abandonedduringtheyearsreported,letaloneinthedecadesthatprecededanyagency records(18211966)(1,2). AnassumptionthatthewellsonNewYorkspriorityplugginglist(11)constituteall theorphanabandonedoilandgaswellsinthestatewouldalsobeunsound.Detailswithin someofthereportsdirectlycontradictsuchanotion.Forexample,theinactivewells reportedin2005plustheknown,unreportedwellsandother,knownorphanwells(12) sumtonearly9000wells,nearlytwicethe4722wellsonthecurrentpriorityplugginglist (11),andtwentytimesthenumberofwellsonthatlistin2005.Further,quotingfromthe 2009annualreport,Mostofthe[abandoned]wellsdatefrombeforeNewYorkestablished aregulatoryprogram.(13);reportsfrom2002onwardsuggestthatthelocationsoffully halfofourorphanabandonedoilandgaswellsarenotknown.Clearly,thewellsin undisclosedlocationsarenotonthepriorityplugginglist.Wemayneverknowexactly howmanyabandonedoilandgaswellsareinNewYork,butthemorethan4700onthe priorityplugginglistappeartorepresentjusttheproverbialtipoftheiceberg. Whatsignificancedoesthisissuehaveforanyone?Asiftoanswerthisquestion,the authorsofthe2002and2003annualreports(MineralResourcesDivisionDirectorBradley J.Fieldandhisstaff)(14,15)presentedcasestudiesofindividualabandonedoilandgas wells.Selectedcasesarerepresentedbelowforillustration.

Figure1:ThisPriorityPluggingListwellintheCityofRome,OneidaCountywas dischargingbrineatarateoffivegallonsperminuteintoawetlandadjacenttoBrandy Brookandhadalreadykilledoveranacreofvegetationin1998.(14) 6

 Figure2:Pipelinecompanyemployeesdetectednaturalgasemanatingfromtwo residentiallawnsintheVillageofRushville,OntarioandYatesCounty.Explosivegaslevels werealsofoundinsideagarage.Divisionstaffuncoveredtwonaturalgaswellsinthe vicinity.GasinthesoildeclinedwhenthewellswereventedunderDECdirection.Roughly 24gaswellsweredrilledinthevillageinthe1900'sandneedtobepluggedwhenfundsare available.Thebackhoeisexcavatingaleakingwellnexttoabuilding.(14) Figure3:Duringconstructionofanew busgarageattheBolivarRichburgHigh SchoolinAlleganyCounty,severalburied abandonedwellswereuncovered.Since nowellrecordswereavailable,theschool hadtobringinasmallservicerig(red equipmentinforeground)tocheckthe conditionofthewells.Allthewellshadto bepluggedbeforeconstructioncould resume.Thisisnotthefirstschoolwell incidentthattheDivisionhashandled.For example,innearbyWyomingCountyDEC pluggedagaswellthatwasleakingbrine intheparkinglotofWyomingCounty CentralSchoolin1991.(14) 7

 Figure4:TownofWestUnion,SteubenCounty...abandonedwellnearcreekleaking crudeoiltowater(15)

Figure5:OldabandonedoilwellunderwaterinTownofBolivar,AlleganyCounty(15) 8

 Figure6:AlandownerinCattaraugusCountycomplainedthatasmalloilleakintheir yardwaskeepingawaypotentialbuyersfortheirhouse.Anoldmapshowsthewelltobe partofalongabandonedlease,buttheDepartmentdoesnotknowwhotheresponsible partyis.(15)

Figure7:In2003alandownerinAlleganyCountyreportedthataleakingwellwas causinganoilscumontheirpond.Thepartyresponsibleforthewellsisaninactive companythathasbeenthesubjectofpendingDEClegalactionforover12years.Thisis justoneofthecompanyshundredsoflongabandonedwells.(15) 9

ConclusionsandRecommendations: Fromtheevidencepresented,itisclearthatNewYorkStatesproblemswith abandonedoilandgaswellshaveneverbeenbroughtundercontrolandaregrowingworse withtime.NotwithstandingeffortsbytheDECsBureauofOilandGasRegulation,industry operatorsroutinelyneglectpostproductionpluggingandreclamation,andtheilleffects arevisiblywidespreadacrossthestate.Thisfindingdirectlycontradictsstatementsfrom proindustryspokespeople(suchasrepresentativesoftheNewYorkIndependentOiland GasAssociation(NYIOGA)andothers)totheeffectthat,Thisindustryissafe.This industryisnotsafenow,hasneverbeendemonstratedtobesafe,andwillnotbecome safesolongasoilandgasoperatorsrefusetoplugtheirwellsandrestoretheirwork areas.Compliancewithexistinglawsandregulationswillarguablyrequireachangeof culturewithintheindustry,anobjectivewhichhaseludedregulatorsfromtheirearliest attempts.Fromthisperspective,NewYorkStatesoilandgasregulatoryprogramhas failed. Undercurrentregulatoryconditions,theadventofhighvolume,hydraulically fractured(HVHF)shalegasdevelopmenttoNewYorkcanreasonablybeexpectedtoresult inanescalationofenvironmentalandpublichealthimpacts,duetotheincreasedscaleof shalegasprojectsandcompressedtimeframesforprojectdevelopmentanddecline. Therefore,thisauthorsfirstrecommendationistoprohibitallHVHFprojectsuntil: (a) AlloilandgaswellsinNewYorkStatewhichareknownorsuspectedtorequire plugginghavebeenaddedtothepriorityplugginglist,and (b) Everywellonthatlisthasbeenpluggedandtheareareclaimed. Theobjectivewouldbetodemonstrateoilandgasindustrycompliancewithexistinglaws beforeapprovinganymoreintensiveindustryoperationsinthestate. Secondarytothatmeasure,BOGRofficialsshouldimmediatelybedirectedto preventfinanciallyunqualifiedownersfromobtainingoilorgaswellsthroughtransfer requests.Ifthereisntenoughmoneyavailabletolocateandplugthestatesabandoned wells,thenourbondingandsecuritylevelsaresettoolow.Regulation6NYCRRPart551 shouldbefurtherrevisedusingcomprehensivecostbasedanalysistoprovidefor bondingandfinancialsecuritylevelssufficienttoplugandreclaimalloilandgasprojects, withnodiscountformultiplewells. Theproposed6NYCRRPart555.5shouldbefurtherrevisedtoincludean evidencebasedsetofminimumpluggingstandards,insteadofthearbitrarystandards currentlyproposed.AnewparagraphshouldbeaddedtothisParttoestablishan inspectionprogramforpluggedandabandonedoilandgaswells. Section2.4.6oftherdSGEISshouldberevisedtoaccuratelyreflectthehistoryof NewYorksoilandgasindustryregulationwithrespecttopostproductionplugging, abandonmentandreclamation. 10

 Section3.2.2.3oftherdSGEISshouldberevisedtoclarifyhowtheonemilesetback ofHVHFprojectsfromabandonedoilandgaswellswillbeimplementedforabandoned wellsinunknownlocations. Section5.17ofthereSGEISshouldberevisedtopresentascientificevidencebasis forpluggingstandards,toprescribestandardsdevelopedinresponsetotheevidencebasis, andtodescribeasystematicinspectionprogramforpluggedandabandonedwells. References: 1. Chapter4:HistoryofOil,GasandSolutionSaltProductioninNewYorkState (1992);In:GenericEnvironmentalImpactStatementontheOil,GasandSolutionMining RegulatoryProgram(GEIS);DivisionofMineralResources,NewYorkStateDepartmentof EnvironmentalConservation 2. GroundWaterProtectionCouncil(May2009),Chapter4:HistoryofOilandGas Regulation,In:StateOilandGasRegulationsDesignedtoProtectWaterResources; NationalEnergyTechnologyLaboratory/OfficeofFossilEnergy/U.S.DepartmentofEnergy 3. LouisW.Allstadt,ExecutiveVicePresident,MobilOilCorporation(retired)(January 2012),PrivateCommunication 4. ArthurE.BermanandLynnF.Pittinger(August5,2011),U.S.ShaleGas:Lower Abundance,HigherCost;TheOilDrum.http://www.theoildrum.com/node/8212 5. MauriceB.Dusseault,MalcomN.GrayandPawelNawrocki(2000),WhyOilwells Leak:CementBehaviorandLongTermConsequences,SocietyofPetroleumEngineers InternationalOilandGasConferenceandExhibition,Beijing,China,November710,2000 SPEPaper64733. 6. ClaudioBrufatto,JamieCochran,LeeConn,DavidPower,SaidZakiAbdAllaEl Zeghaty,BernardFraboulet,TomGriffin,SimonJames,TrevorMunk,FerdericoJustus, JosephR.Levine,CarlMontgomery,DominicMurphy,JochenPfeiffer,TiraputraPornpoch andLaraRishmani(2003),FromMudtoCementBuildingGasWells,OilfieldReview (Schlumberger),August2003,pp6276. 7. TeresaL.WatsonandStefanBachu(2009),EvaluationofthePotentialforGasand CO2LeakageAlongWellbores,ExplorationandProductionEnvironmentalandSafety Conference,Galveston,Texas,March57,2007;SPEDrilling&Completion,March2009, pp.115126. 8. NewYorkOil,GasandMineralResourcesAnnualReports(2012),NewYorkState DepartmentofEnvironmentalConservation.http://www.dec.ny.gov/pubs/36033.html 11

9. PatriciaBeaver,JamesErb,CherylClosson,TerriLorenzon,DavidLennettandLarry Kardos(September,1994),NewYorkStateReview,IOGCC/EPAStateReviewofOiland GasExploration,ProductionandWasteManagementRegulatoryPrograms; http://www.strongerinc.org 10. NewYorkStateOil,GasandMineralResources,2008,NewYorkStateDepartment ofEnvironmentalResourcesDivisionofMineralResources.pp.2223 http://www.dec.ny.gov/docs/materials_minerals_pdf/08anrpt1.pdf 11. DepartmentofEnvironmentalConservation(August2011), 2011_Priority_Plugging_List,obtainedthroughFOILrequest;availableuponrequest. 12. NewYorkStateOil,GasandMineralResources,2005,NewYorkStateDepartment ofEnvironmentalResourcesDivisionofMineralResources.p.19 http://www.dec.ny.gov/docs/materials_minerals_pdf/05anrpt1.pdf 13. NewYorkStateOil,GasandMineralResources,2009,NewYorkStateDepartment ofEnvironmentalResourcesDivisionofMineralResources.pp.2223 http://www.dec.ny.gov/docs/materials_minerals_pdf/09anrpt1.pdf 14. NewYorkStateOil,GasandMineralResources,2002,NewYorkStateDepartment ofEnvironmentalResourcesDivisionofMineralResources.pp.2224 http://www.dec.ny.gov/docs/materials_minerals_pdf/02anrpt3.pdf 15. NewYorkStateOil,GasandMineralResources,2003,NewYorkStateDepartment ofEnvironmentalResourcesDivisionofMineralResources.pp.2426 http://www.dec.ny.gov/docs/materials_minerals_pdf/03anrpt2.pdf Acknowledgments: TheauthorwishestothankLouAllstadt,AnneBishop,NicoleDillingham,James Herman,HarryLevine,AdrianKuzminskiandJamesNorthrupforextremelyvaluable discussions. Disclosure: Thisworkwasfundedentirelybytheauthor.Allopinionsexpressedorimpliedare hisalone. 12