GOP Bills Undercharge Frackers for Abandoned Wells

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Robert Swift says both of the Republican bills in the House and Senate would force taxpayers to pick up the tab for cleaning up abandoned fracking wells:

There is a widespread consensus that bond amounts established for shallow wells are too low for Marcellus wells which reach thousands of feet deeper into the bedrock and cost significantly more to plug.

The Senate measure sets various bond amounts based on the number of wells a driller operates. For example, it proposes a $10,000-per-well bond and a $140,000 maximum blanket bond if a driller has up to 25 wells deeper than 6,000 feet.

The House measure offers a similar tiered approach with a $10,000-per-well bond and $60,000 maximum blanket bond for up to 25 wells deeper than 6,000 feet…

The cost of plugging each Marcellus well and restoring the site will exceed $100,000, said Austin Mitchell, co-author of a new study by Carnegie Mellon University on gas well site reclamation in Pennsylvania.

“If owners cannot pay for reclamation, the burden falls on the taxpayers,” Mitchell said. “Improperly abandoned wells deteriorate structurally over time and cost even more to reclaim.”

The Republican position is that we shouldn’t tax frackers any more than is absolutely necessary to offset the cost of public services they use.

I think this position is repugnant, but even if you buy this argument, it’s now obvious that the Republicans aren’t even interested in meeting this absurdly low standard. They’re trying to force the taxpayers to bear a substantial portion of the downside risks from fracking.

What is supposed to be the argument for this? I guess the Republicans would say that high bonding requirements would create too high a barrier to entry, effectively blocking fly-by-night Mom and Pop frackers from getting in the game.

But that would be a feature, not a bug. If a drilling concern can’t credibly promise to cover the whole downside risk, they shouldn’t be drilling in the first place! That’s why we have abandoned wells.

The best deal for the taxpayers would be to set high enough severance tax rates and bonding requirements that small drilling concerns who don’t have the capital to pay for clean-up are priced out of the market altogether. We want this market to be dominated by a handful of large multinationals who don’t need a bailout when things go bad.

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2 Responses to GOP Bills Undercharge Frackers for Abandoned Wells

  1. The best deal taxpayers can leverage is to vote every industry-owned pol out of office ASAP. That's the only way we'll get fracking legislation out of Harrisburg that is not slanted unfairly towards industry and does little to protect Pennsylvanians from the most egregious industry abuses. Essentially, Harrisburg is allowing to regulate itself, to our great detriment.

  2. G. Smith says:

    Mostly agree – except for your final sentence. My understanding of high volume horizontal hydrofracking is that it's a complex process, and you want professionals doing it. However, I do not think that multi-nationals such as Exxon, Shell, BP, Noble, etc. should be trusted to do it right, either.