The number of oil wells in the Gulf of Mexico that have been temporarily sealed is growing, according to a new investigation from the Associated Press.
Oil companies sometimes put temporary caps on oil wells if there is the possibility that they will return to use the well at some point in the future. But wells that have not been permanently sealed can suffer from corrosion, leaks, and potential ruptures, posing a safety and environmental risk.
After the Deepwater Horizon catastrophe in 2010, the federal government tried to accelerate the permanent closure of wells that are sitting idle. But the AP finds that such an effort it is falling far short of its objective, with the number of temporary wells ballooning since then. Related: More Job Losses Coming to U.S. Shale
For example, the number of wells that have been placed under temporary seal for more than one year has grown by 25 percent since 2010, jumping from 2,855 to 3,576. In fact, those wells that have been sitting with temporary seals for longer than one year actually make up more than 86 percent of all temporarily sealed wells.
Worse yet, there are a handful of wells that have been under temporary seal since the 1950s, and at least 17 since the 1970s. Related: This Is Why Oil Markets Shouldn't Worry About Iran's Comeback
There are several reasons why companies might choose to close a well only temporarily. They may need to redesign a drilling operation to correct a problem, or they may simply want to wait until oil prices rise. But the proliferation of wells that have been under temporary seal for an extended period of time raises questions about the integrity of the wells themselves, which could cause oil to leak into the Gulf. It also points to loopholes in federal regulations - as long as companies say they have plans to reuse the wells, they do not have to permanently close them. Related: Oil Shipments by Rail Declining
Permanently sealing a well is a much more involved process that can ensure oil does not migrate up the well and pose a danger of leaking. But permanently closing wells also costs more than a temporary approach.
The federal government insists that it is making progress on its objectives, citing a lower backlog of temporary wells that it is targeting for permanent closure. Yet with the number of temporarily idled wells on the rise, the government's ability to get a handle on the problem seems questionable.
By Charles Kennedy of Oilprice.com
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