Louisiana enacts new orphan oil well law to fetch $200 million in federal money

A photo of an orphaned oil well in St. Martin Parish taken in 2010. (Louisiana Department of Natural Resources)

Legislation that positions Louisiana to receive an estimated $200 million in federal grants to fix orphan oil wells became law Tuesday as one of the first bills enacted from the 2022 regular session.

Senate Bill 245, sponsored by Sen. Bret Allain, R-Franklin, was among an initial batch of 17 bills Gov. John Bel Edwards signed. The newly passed law made changes to certain statutes concerning oilfield site restoration, giving the state Department of Natural Resources (DNR) more flexibility on how much it can spend to plug and restore abandoned wells in a given fiscal year.

There are roughly 4,600 abandoned oil and natural gas wells across Louisiana, many of which are leaking and polluting the environment. The total price tag to fix all of them has been estimated to be around $650 million.

When he first proposed the legislation in March, Allain said it would allow the DNR to maximize the amount of money the state can receive from the Infrastructure Investment and Jobs Act that President Joe Biden signed into law in November.

Louisiana is slated to receive an initial $25 million grant and can compete among 26 states for a share of $2 billion that will be allocated based on performance. States that are more economically efficient at fixing orphan wells can receive larger shares, Allain said.

Prior to the new changes, the state could fix non-priority wells only if doing so did not limit the number of priority sites that could have been restored in a given fiscal year. Thanks to the new law, the DNR secretary now has the authority to package together more non-priority wells into attractive bid packages if doing so will decrease "in a cost effective manner" the total number of orphaned wells, the bill states.

The state will receive an estimated $150 million on the low end, which Allain called a "modest" estimate and said it could be closer to $200 million.

Orphan well restoration work is performed by industrial contractors the state pays out of a fund that relies on fees collected on the production of oil and gas.

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by Wesley Muller, Louisiana Illuminator May 18, 2022

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Wes Muller traces his journalism roots back to 1997 when, at age 13, he built and launched a hyper-local news website for his New Orleans neighborhood. In the years since then, he has freelanced for the Times-Picayune in New Orleans and worked on staff at the Sun Herald in Biloxi, WAFB-9News CBS in Baton Rouge, and the Enterprise-Journal in McComb, Mississippi.