The coronavirus economy is devastating the oil and gas industry. And it looks like there may be a lot to clean up before the economy gets better.
So-called “orphan” oil and gas wells, which have been abandoned by defunct companies that cannot pay to plug them, are a growing problem in many states thanks to a recent slump in energy prices that has forced marginal operators out of business.
At last count over 30 oil and gas companies went bankrupt in North America from January through July 2020 according to Haynes and Boone, LLP, a legal firm that specializes in the oil and gas industry and tracks the energy sector’s bankruptcy filings.
Taxpayers left with the headache
Taxpayers of several states could be saddled with major cleanup costs for idle and orphan wells if a bankrupt oil and gas company is unable to reorganize.
Some oil-producing states have been concerned with orphaned wells for a long time. Texas, Oklahoma, and Wyoming all have state-sponsored active plans to cap off orphan wells that dot the landscape, but there never seems to be enough money to cap them all.
