By Assistant Professor Jeremy Weber and Andrew Earle
Pennsylvania has a long legacy of natural gas drilling. One unfortunate aspect of the legacy is a host of abandoned shallow gas wells throughout the state, some of which likely leak gases or liquids harmful to animals, plants, or people. This raises the question of the fate of the more than 10,000 unconventional natural gas wells that have been drilled in the state over the last decade, with more drilled each day.
Pennsylvania, like many other states, uses a bonding system to motivate companies to properly reclaim wells. Before the state grants a permit for a well, it requires that the company operating the well commits funds that, if the well is eventually abandoned, would be forfeited and used by the state for reclamation. Bond amounts vary in a tiered structure based on the quantity of wells operated by a company (see table). As an example, a company with 55 wells must pay a flat fee of $290,000 to cover the first 50 wells and an additional $10,000 for each of the last 5 wells, leading to a total of $340,000 in bonds. Companies operating many wells benefit from caps on total bond amounts: a company operating up to 150 wells would never pay any more than $430,000; a company operating more than 150 wells would never pay more than $600,000. Read more.