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The Railroad Commission of Texas’ program to plug abandoned wells spent US$8.5 million to plug 544 wells in the fiscal year 2016, which ended August 31, fuelfix reports.
The average cost of plugging a single well was US$15,700. Between September 1, 2015 and August 31, 2016, the commission had targeted to plug 875 wells, but fell short.
The commission uses the Oil and Gas Regulation and Cleanup (OGRC) Fund to plug abandoned oil and gas wells and clean up abandoned oilfield sites—a task that is supposed to fall on the company owning the well.
When reporting the well-plugging program status in the third quarter of the fiscal 2016 year, the commission said that fiscal year-to-date, its OGRC funds were used to plug 291 wells at a total cost of US$5.7 million. The average cost per well was US$19,522, but excluding one high-cost well, the adjusted average cost per well was US$12,286.
For fiscal year 2015 ending August 31, 2015, a total of US$10.7 million OGRC funds were used to plug 692 wells at average cost of US$15,507, the commission said in its FY 2015 annual report.
Earlier this month commission announced that it had allocated US$14.4 million in funds for the Well Plugging Program for the fiscal year 2017.
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The commission is amending some of the procedural steps in the bidding process to ensure the effective and efficient use of the funds, it said. The new regulation stipulates that a vendor seeking to contract with the RRC for well plugging services must complete and submit a well plugging solicitation packet for each Oil & Gas Division district in which they wish to perform work. This replaces the previous solicitation process in which bidders filed bids for specific packages of orphan wells.
According to fuelfix, Texas has a backlog of orphan wells estimated at more than 9,000.
Texas oil production, for its part, inched down in September, averaging 2.38 million barrels per day (bpd), compared to 2.42 million bpd for September last year, figures by the Railroad Commission of Texas showed. In August, the Commission had reported that crude oil output in Texas averaged 2.4 million barrels per day, a rise by 0.5 percent on the year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.