Congress has dedicated $4.7 billion to orphan well plugging, remediation, and restoration activities nationwide through the Infrastructure Investment and Jobs Act (“IIJA”). A substantial portion of this money will be apportioned to the various states based on each state’s capacity and ability to effectively utilize the funds to plug orphan wells. Louisiana Senate Bills 23 and 245, filed by Senator Bret Allain, are designed to maximize Louisiana’s share of IIJA funds by streamlining the procedures for depositing monies into the Oilfield Site Restoration Fund and then utilizing those funds quickly and efficiently. According to Allain, these bills could position Louisiana to receive up to $200 million for the closure of orphan wells.
Orphan wells in Louisiana are plugged by the Louisiana Department of Natural Resources (“DNR”) using money from the Oilfield Site Restoration Fund (the “Fund”), and this Fund has many restrictions. Currently, the Fund is primarily financed by fees imposed on oil and gas production within the State and is capped at $14 million. The DNR must engage in a formal bidding process before it can spend money from the Fund on orphan site closure. Each year, certain orphan wells are designated as priority wells for restoration, and the assistant secretary of the DNR cannot create bid packages involving multiple nonpriority wells unless doing so would not reduce the number of priority wells that could be closed that year.
Senate Bills 23 and 245 aim to loosen some of these restrictions. SB 23 has already passed in the Senate and would ensure that federal dollars do not count towards the $14 million cap on the Fund. SB 245 would grant new powers to the DNR secretary to appoint an executive director and any other personnel necessary to efficiently administer the Fund. It would also move the authority for closure and restoration of nonpriority orphan wells from the assistant secretary to the secretary. The secretary would then have authority to package together nonpriority wells into projects as long as doing so would decrease the total number of orphan wells in a cost effective manner. Furthermore, the secretary would not be bound to a formal bidding process for the first $30 million received into the Fund for the purpose of plugging orphan wells.
Testifying before the Senate Natural Resources Committee, Senator Allain asserted that passage of these bills would situate Louisiana to receive upwards of $200 million from the IIJA to plug orphan wells. Not only would this money enable the State to significantly reduce the number of orphan wells, but it would also create jobs in the oilfield for workers who lost employment during the pandemic. As stated by Allain, “this is also an employment act.”
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